The Issue Whether Certificate of Need (CON) Application No. 10009, filed by HealthSouth Rehabilitation Hospital of Ocala, LLC (the applicant or HS-Ocala) to establish a new freestanding 40-bed comprehensive medical rehabilitation (CMR) hospital in Marion County, Agency for Health Care Administration (AHCA or Agency) District 3, satisfies, on balance, the applicable statutory and rule review criteria for approval.
Findings Of Fact The Parties The Applicant HS-Ocala is a wholly-owned subsidiary of HealthSouth Corporation (HealthSouth). Founded in 1984, HealthSouth is the nation's largest provider of inpatient rehabilitative healthcare services in terms of revenue, number of hospitals, and patients treated. HealthSouth employs over 22,000 people in approximately 93 rehabilitation hospitals, six long-term care hospitals, approximately 48 outpatient rehabilitation satellites and 25 hospital-based home health agencies across 26 states and Puerto Rico. All HealthSouth facilities, including the facilities in Florida, are either accredited by the Joint Commission (f/k/a the Joint Commission on Accreditation of Healthcare Organizations – JCAHO) or the Commission on Accreditation of Rehabilitation Facilities (CARF) or both. HealthSouth has created specific programs for different conditions, including a specialized Stroke Rehabilitation Program nationwide. HealthSouth is one of only four hospital companies receiving Joint Commission Stroke Rehabilitation Certification: 21 of 25 hospitals that have this certification are HealthSouth facilities. HealthSouth owns and operates nine freestanding CMR hospitals in Florida. HealthSouth also owns and operates a 40- bed long-term acute care hospital in Sarasota and owns eight outpatient centers in the state. HealthSouth will provide patients with an interdisciplinary team that includes the services of a physician/physiatrist, physical therapists, occupational therapists, speech/language pathologists, psychologists, rehabilitative nurses, case managers, therapeutic recreation specialists, dieticians, and respiratory therapists. Shands Shands Teaching Hospital and Clinics, Inc., was incorporated in 1979 as a Florida not-for-profit corporation. Shands is located in Gainesville, Florida, and operates a health care delivery system that includes the flagship teaching hospital for the School of Medicine of the University of Florida and Shands Rehab Hospital (a division of Shands), a 40-bed freestanding inpatient rehabilitation hospital. Shands serves patients throughout District 3, as well as other areas of Florida. Co-located in the same building with Shands Rehab Hospital is Shands Vista (a division of Shands), an inpatient psychiatric and substance abuse facility licensed to operate 81 beds, of which 57 are psychiatric and 24 are substance abuse. Shands also operates Shands AGH, a 367-bed acute care community hospital in Gainesville; Shands at Lake Shore, a 99- bed acute care community hospital located in Starke, Florida; and Shands Live Oak, a 15-bed acute care hospital located in Live Oak, Florida. Another subsidiary of Shands is Shands Jacksonville Medical Center, a 696-bed teaching hospital in Jacksonville, Florida. Shands Rehab is accredited by the Joint Commission, the Florida Brain and Spinal Cord Injury Program and CARF. Shands Rehab offers a full array of CMR services. Patients at Shands Rehab are served by an interdisciplinary team. LRMC LRMC is a 309-bed acute care hospital located in Leesburg, Florida. LRMC provides a broad array of services including open-heart surgery and neurosurgery and also offers stroke specialty service. LRMC's CMR unit, also known as the Ohme Rehabilitation Center (Ohme), is a 15-bed hospital-based CMR unit located in its North Campus in Leesburg, Florida. Ohme is accredited by the Joint Commission and CARF. CARF has also accredited Ohme as a stroke specialty program. LRMC is part of the Central Florida Health Alliance, which also includes The Villages Regional Hospital (120 beds) located within the development known as The Villages, located in Lake, Sumter, and Marion Counties, and north of LRMC. The Villages is located approximately 15-to-20 minutes from LRMC. Ohme's patients work with an interdisciplinary team of professionals, including a medical director, case managers, registered nurses, rehabilitation techs, certified nursing assistants, physical therapists, occupational therapists, speech/language pathologists, recreational therapists, rehabilitation therapists, social workers, and dieticians. AHCA AHCA is the state health planning agency and administers the CON program pursuant to the Health Facility and Services Development Act, Sections 408.031-.0455, Florida Statutes. CMR Services and Facilities CMR facilities are licensed pursuant to Chapter 395, Florida Statutes. CMR services are defined by Section 408.032(17), Florida Statutes, as tertiary health services, which "means a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost- effectiveness of such service." Id. The services are integrated and intensive, provided in an inpatient setting by a multidisciplinary team to patients with severe physical disabilities, such as stroke, spinal cord or brain injury, congenital deformities, amputation, major multiple trauma, femur fracture, neurological disorders, polyarthritis, and burns. The patients served by CMR facilities are clinically complex and require an acute care level of nursing and rehabilitative therapies. Facilities such as the one proposed are reimbursed prospectively by the Medicare program under the inpatient rehabilitation prospective payment system, 42 C.F.R. Part 412, and are exempt from the Medicare inpatient prospective patient system for short-term acute care inpatient hospitals. To be eligible for Medicare reimbursement as an inpatient rehabilitation facility, 60 percent of the patients admitted to a CMR facility must have a medical condition that falls within one or more of 13 diagnoses established by the Centers for Medicare and Medicaid Services (CMS), which indicate a need for intensive rehabilitative services. These are commonly known as the "CMS-13" criteria. The CMS-13 criteria include: stroke, spinal cord injury, congenital deformity, amputation, major multiple trauma, femur fracture (hip fracture), brain injury, neurological disorders, burns, active polyarthritis, systemic vasculidities, advanced osteoarthritis, and knee or hip replacement with additional co-morbidities. If a CMR facility falls below the 60 percent threshold, it will be reimbursed by CMS as a short-term acute care inpatient hospital. In addition to the above requirements, the federal government mandates that a patient admitted to a CMR facility must require an acute care level of nursing services; that physicians determine the admission of the patient to be medically necessary; and that the patient be able to tolerate three hours of therapy services per day (900 minutes over five days) over a five-day period administered by licensed therapists. Therapy services included in the three-hour requirement include physical, occupational, speech, recreational, neuropsychological, and prosthetics and orthotic. Services or treatments rendered by aides may not be included in the three-hour per day minimum therapy requirement; however, services or treatments provided by licensed assistants can be included in the three-hour per day requirement. Unlike acute care services, access to CMR services is non-emergent. The process used to identify and admit patients from an acute care setting to a CMR facility begins early in the patient's stay, e.g., at an acute care facility. (Patients can be admitted from other entities or from home, but most are admitted from hospitals.) Typically, a patient will be assessed upon admission to an acute care hospital to determine what services they will need upon leaving the hospital. The assessment process involves discharge planners, case managers, physicians, nurses, the patient's insurance provider, and the patient and his or her family. In making the decision as to where a patient should be discharged, those involved in the decision-making process determine the amount of therapy the patient can tolerate; the age of the patient; and any co-morbidities or other conditions the patient may have. Once a decision is made as to what types of post-acute care services are needed, the acute care hospital's discharge planner or case manager is charged with coordinating the required care for the patient. CMR services include the close involvement of a physician (physiatrist) and the availability of 24-hour nursing care because the patients requiring CMR services typically have significant medical conditions and co-morbidities. In the CMR setting, nurses are trained to be a part of the entire therapeutic team. In coordinating post-acute care for a patient, some Marion County acute care hospitals such as Munroe Regional use the Allscripts or ECIN electronic referral system. Other local hospitals, such as Ocala Regional and West Marion, do not. However, the director of admissions at TimberRidge has access to patient charts at Ocala Regional and West Marion. (It appears that eight Ocala-area SNFs are listed on the ECIN system.) The ECIN system allows hospitals to transmit a patient's medical information to post-acute care facilities for consideration for admission in electronic format. The system also allows a hospital and the potential discharge facility to communicate if additional information or explanation is needed. The system is viewed as a valuable tool because it allows CMR facilities to obtain detailed information on potential admissions without having to travel to the referring facility to review medical records. The Allscripts system is also utilized by a CMR facility to assist with placement decisions at the time the patient is discharged from the CMR facility. Once the patient is referred to a CMR facility, the CMR admissions team receives the patient's information and begins its own assessment to determine whether the patient is a good candidate for admission. Typically, a nurse liaison is assigned to a referred case and gathers information on the patient to be used in the admissions decision. A patient assessment sheet is typically completed and the CMR admitting physician will be called on to review the information. The admitting physician will look for information regarding the nature and extent of a patient's illnesses and whether the patient had any complications that could affect the patient's ability to participate in rehabilitation. The ability to participate in rehabilitation is significant to a CMR facility because the patient is typically expected to begin exercising as soon as possible after admission. All of the above factors are considered in addition to the CMS-13 criteria. Even if a patient falls within one of the CMS-13 diagnosis codes, the CMR facility staff also determines if the patient requires at least two disciplines of therapy as required by Medicare. A patient who does not meet this criterion may not be considered a candidate for admission to a CMR facility notwithstanding the fact that he or she may fall within one of the CMS-13 diagnoses. Utilizing all of the above indicators, a final decision is made and communicated to the acute care facility or other referring entity to coordinate the transfer of the patient or re-refer the patient to a more appropriate setting. When a patient is admitted to a CMR facility, a patient assessment instrument that captures the patient's diagnostic and functional abilities must be completed. During this admission assessment process, the patient's level of independent functioning is measured for a number of activities. This comprehensive review of the patient's functions is performed within three days of admission. This measurement is known as the patient's functional independence measurement (FIM) score. The FIM score is both a quality and outcome and progress measure. The FIM measures 18 items on a scale of 1 (most severe) to 7 (independent). FIM scores are not utilized in the skilled nursing home industry, which has made it more difficult to compare the care delivered in CMR facilities and skilled nursing homes. All CMR providers utilize FIM scores. The FIM score in part determines the level of reimbursement the facility receives from Medicare because it indicates that the patient will typically require more services. FIM scores are measured again upon discharge. The Proposal HS-Ocala proposes to build a new 40-bed freestanding CMR hospital in Ocala, Florida, at a cost of $19,620,449 in a 49,900 square foot facility. All of the beds will be private. This prototype has been built by HealthSouth at least ten times since 2001, including twice within Florida. HS-Ocala plans to build the hospital on 6.2 acres located on Southwest 19th Avenue Road in, Ocala, Florida. The property is a portion of the approximately 7.63-acre tract identified as Marion County tax parcel number 23721-003-00. HealthSouth has an active contract to purchase the property. The projected construction cost contained in the application is $9,237,800 or $185.12 per gross square feet. The applicant agreed to condition the proposed project on the following: providing a minimum of 2.5 percent of the hospital's annual inpatient patient days to Medicaid and charity patients; implementing a Stroke Rehabilitation Program to begin upon licensure; obtaining Joint Commission Certification of its stroke rehabilitation program; and providing an AutoAmbulator and other appropriate technology upon licensure. In its preliminary approval of the application, AHCA conditioned the approval on the conditions indicated above, and that the facility is located in close proximity to the intersections triangulated by Interstate 75, SR 200, SR 40, and U.S. Highway 27. The applicant proposes to offer a full range of CMR services. The applicant does not propose to have a spinal cord or brain injury unit. These patients are typically transferred to a facility like Shands Rehab consistent with the tertiary nature of CMR services. HealthSouth CMR facilities have traditionally offered high quality CMR services at all of its facilities, including the nine facilities in Florida. Consistent with the general description of CMR services provided herein, HealthSouth has developed diagnostically distinct programs which offer specialized inpatient and outpatient services with an interdisciplinary approach. These programs are developed and implemented at each HealthSouth facility consistent with the needs of the market. These specific programs improve outcomes for the patients. HealthSouth's interdisciplinary therapy team primarily consists of physical, occupational, and speech therapists. The physical therapy team integrates with the other interdisciplinary team members, including physicians, nurses, prosthetists, orthotics, and other team members. From the initial assessment, the interdisciplinary team develops a plan of care through treatment interventions provided to the patient. A comprehensive review of the patient's functionality, including the FIM score determination, is performed on each patient is performed within three days of admission. Throughout the patient's stay, patient goals are constantly being assessed and implemented. Conferences are held with the patient and family to make sure the goals are being accomplished. The team also evaluates the home setting and prepares the patient and the family for discharge. HealthSouth's main mission is to provide quality outcomes. The outcomes are measured on admission, throughout the patient's stay and on discharge. HealthSouth takes the necessary measures to assure that it provides the patient with at least three hours of therapy a day. HealthSouth uses state-of-the-art technology as part of its ongoing quality initiatives. The Ocala facility will have access to state-of-the-art equipment including the AutoAmbulator, a device developed and implemented by HealthSouth and only offered at most of the HealthSouth facilities in the United States. (The AutoAmbulator is a sophisticated treadmill using the therapeutic concept of body weight supported ambulation and robotics to help patients with gait disorders. The equipment has produced quality outcomes for HealthSouth patients. There are no studies that compare the use of this device with other similar devise such as a LocoMat.) HealthSouth also proposes to offer other technology such as the Balance Master (assessment of balance); EquiTest (used to diagnose and treat imbalance and postural instability); Visipitch (computerized analysis of voice); SaeboFlex wrist splint and exercise station (promotes increased function in shoulder, wrist, elbow, and hand); Interactive Metronome (promotes motor learning); and VitalStim (targets swallow function); and Bioness (helps patients regain lost mobility for upper and lower extremities). See T. 707-16. HealthSouth tracks and measures quality provided to the patient pursuant to its contract with the Uniform Data System for Medical Rehabilitation, which is the most widely used system in the country. This system tracks function outcomes for CMR patients through the use of FIM data captured from approximately 900 rehabilitation hospitals in the United States. HealthSouth monitors patient satisfaction outcomes. Each HealthSouth CMR facility has a quality review council that examines patient safety measures, FIM outcome data, patient satisfaction data, and infection controls. HealthSouth encourages family participation before admission, during treatment, and after the patient is discharged from one of its CMR facilities. Travel barriers may impact the ability of family members to access a CMR facility. District 3 and the Proposed Service Area (PSA) District 3 is the largest health service planning district in the state of Florida composed of 16 counties, including Hamilton, Suwannee, Lafayette, Dixie, Columbia, Gilchrist, Levy, Union, Bradford, Putnam, Alachua, Marion, Citrus, Hernando, Sumter, and Lake. § 408.032(5), Fla. Stat. District 3 encompasses more than 11,000 square miles with nearly 1.6 million residents. Much of District 3 is rural covering approximately 20 percent of the state's land areas, but home to approximately eight percent of the state's population. Marion County is the most populated county within District 3 with more than 317,000 residents. There is a natural geographic barrier in the area with the forest to the east of Marion County. The service area for the proposed facility defined in the application comprises zip codes in Marion County and the easternmost portion of Levy County. A portion of zip code 32784 is located in Lake County. As of calendar year 2007, the total population for all of the zip codes within the PSA was 334,868 and is projected to increase to 377,543 by calendar year 2012, a 12.7 percent increase. The applicant projects receiving approximately 95 percent of its patients from within the PSA. Ms. Kelleher and Ms. Greenberg developed the PSA with the assistance of Wanda Pearman of Dixon Hughes. The process included the creation of various maps outlining the service area as it evolved prior to filing the application. The process utilized an August 2007 market analysis performed by Dixon Hughes on 27 or 28 markets across the United States, including the Marion County/Ocala market. The August 2007 market analysis was not performed specifically for the purpose of the CON Application. Rather, it was performed on potential markets across the country as a "50,000-foot" level market analysis of demographics and lack of CMR services in an effort to identify potential markets. HealthSouth would use the information to look further into each identified potential market and decide what the appropriate service area would be. Beginning on January 22, 2008, a number of zip codes were realigned and deleted from the original Dixon Hughes document to form the service area identified in the application. The HealthSouth team examined existing in and out- migration patterns for existing hospitals within Marion County. Existing roadways were driven. Local providers, including local doctors, were contacted and provided favorable comments regarding the proposed project. The Villages were excluded because they were not in close proximity to Ocala. Any area south of the Marion County line was also excluded due to travel distances. The analysis led to the conclusion that the Ocala area has developed into its own medical market and that the placement of a CMR facility in the Ocala area would not overlap with Ohme's or Shands Rehab's service areas such that their CMR services (quality of care, e.g.) would be compromised in any significant way. It was also important to the applicant that trauma patients, spinal cord and brain injury patients would continue to go to the Shands system for their post-acute care. From a demographic standpoint, 2007 data indicated that approximately 23 percent of the residents in the Ocala area are 65 years of age or older (increasing to approximately 25 percent by 2012) compared to the statewide average of 17 percent. This age cohort is expected to increase approximately 20 percent between 2007 and 2012 with some zip codes increasing between 24 and 37 percent. Approximately 75 percent of CMR patients are covered under Medicare and Medicare managed care. Statutory and Rule Review Criteria Section 408.035(1)(a): The need for the health care facilities and health services being proposed. "A favorable need determination for proposed new or expanded [CMR] inpatient services shall not normally be made unless a bed need exists according to the numeric need methodology in paragraph (5)(c) of this rule." Fla. Admin. Code R. 59C-1.039(5)(a). "The future need for [CMR] inpatient services shall be determined twice a year and published by the agency as a fixed need pool for the applicable planning horizon." Fla. Admin. Code R. 59C-1.039(5)(b). Pursuant to the Agency's need methodology, Florida Administrative Code Rule 59C-1.039(5)(c), the Agency published a fixed need pool of zero (0) for CMR beds for District 3 in the CON batching cycle at issue in this case in the Florida Administrative Weekly, Volume 34, Number 4 (January 25, 2008). By Agency precedent, this determination creates a presumption of no need. The applicant seeks approval based on "not normal" circumstances. Generally, pursuant to Subsection 408.035(1)(a), the need for a tertiary health service such as CMR is to be determined on a district-wide basis. See T. 2324, 2327-2332. But see Conclusions of Law 349-52. By its express terms, Subsection 408.035(1)(b) requires consideration of the stated criteria in reference to the service district of the applicant. Using the applicant's service area approach yields bed need projections in excess of those established by the Agency's rule, in large part because the applicant established a PSA using a series of zip codes in an area where there is no existing CMR facility. The applicant ultimately concluded that the PSA is a unique (and not-normal) market for which CMR services are unavailable. The Agency preliminarily approved the project based on the applicant's representations in its CON application of need for the service in the 25 zip code area. See generally T. 2327- 2390. The Agency considered several factors including the disparity in the "conversion rate" of patients who reside in the 25 zip codes comprising the applicant's PSA compared to other areas of the state where HealthSouth operates CMR hospitals; transportation difficulties; letters of support; and physician concerns in transferring patients to existing hospitals in the District. B. Section 408.035(1)(b): The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant. Availability, accessibility, and utilization There are four acute care hospitals, ten skilled nursing facilities, and one long-term care hospital within the PSA. The acute care hospitals are: Munroe Regional Medical Center (Munroe Regional)(421 beds); Ocala Regional Medical Center (ORMC) (200 beds); West Marion Community Hospital (West Marion)(70 beds), a satellite of Ocala Regional Medical Center; and Nature Coast Regional Hospital (Nature Coast) (40 beds). The long-term care hospital, Kindred Hospital Ocala (31 beds), is located on the fifth floor of Munroe Regional. There is no persuasive evidence that area hospitals are experiencing problems placing patients in post-acute care settings. Munroe Regional has an average daily census of approximately 300 and offers open-heart surgery, cardiovascular services and neurological services, and orthopedic surgery. HS-Ocala's application contained numerous letters of support, including letters from ORMC and West Coast.2/ See HS Ex. 1 at 663-705 and JPS at HealthSouth's exhibit list, p. 1, n.1. Most of the letters were not authenticated. There was no objection to letters of support submitted by Drs. Tabbaa and Canon and the letter of support submitted by Linda F. Berry, RN, PCRM, employed with the University of Florida College of Medicine, Department of Orthopaedics and Rehabilitation, apparently as a case manager. Id. T. 497-98, 504-505, 525-27, 579; HS Ex. 1 at 664 and 667; HS Ex. 24. There are three existing CMR facilities in District 3. HealthSouth Rehabilitation Hospital-Spring Hill (Spring Hill), in Hernando County, is a 70-bed (16 private and 54 semi- private rooms) freestanding rehabilitation hospital and has been approved to add ten beds pursuant to a CON exemption. Spring Hill is approximately 70 miles from the downtown Ocala area. Spring Hill's primary service area is Hernando County and a small piece of Pasco County and Spring Hill receives 85-to-90 percent of its patients from its primary service area. (In seeking approval of the original 60-bed Spring Hill hospital around the Fall of 1999, the applicant used Marion County data to support its argument that there was a need for the facility and included Marion County as part of its defined service area.) Between 2004 and 2007, Spring Hill comprised 60 beds, a majority of which were semi-private. During that same time period, the average daily census at Spring Hill ranged from 50 to 57, with the average number of available beds ranging from three to ten. In 2008 and thus far in 2009, Spring Hill was at 92 and 94 percent occupancy, respectively, with an ADC of 64 and 66 for these years for 70 beds. Shands Rehab Hospital is a 40-bed freestanding rehabilitation hospital, and is part of the larger Shands Health Care System (with over 1,000 acute care beds) described above and which provides over 70 percent of the referrals to the Shands Rehab unit. Shands Rehab has 16 private and 24 semi-private beds. Shands Rehab is located approximately 40 miles from the downtown Ocala area or the center point of the PSA. There are two primary physician groups that work within Shands Rehab: University of Florida Division of Physical Medicine and Rehabilitation, which includes Shands Rehab's medical director, Dr. James Atchison and Southeastern Integrated Medical (SIMED). While it may vary from week to week, SIMED covers approximately 60 percent of the inpatient population at Shands Rehab, whereas Dr. Atchison's group has the remaining 40 percent. The two physician groups have agreed to accept only two unfunded (charity) patients each "at any particular time," although for key diagnostic groups that are seen regularly, such as brain and spinal cord injury and stroke patients, the physicians will consider serving them if Shands Rehab is the best facility for the patient. Dr. Atchison further explained that if Shands Rehab did not have an opening for an unfunded patient on a particular day, the referring facility would be told to consider waiting a few days to refer a patient as an alternative pathway with the decision to refer or not left with the referring facility. No such restriction exists for other patients including Medicaid patients. (From approximately April 2006 through November 2008, it appears that a few patients were not admitted to Shands Rehab because the allotted charity beds (not other beds) were full, including approximately three patients at Munroe Regional and one patient from West Marion Community Hospital.) Between 2004 and 2007, Shands Rehab operated with an average daily census (ADC) of between 26 and 31, and runs at functional capacity at an ADC of 39 for its 40 beds. T. 1653, 1688; HS Ex. 66 at 25, 41, and 53. But see SL Ex. 212 for years 2004 through 2007 - ADC range of 25 to 28 and an average of 12 to 15 available beds. For 2008, the ADC was 29 and up to 31 in 2009. HS Ex. 69 at 144. Shands Rehab has a strong referral base from within the Shands Health Care System. Shands Rehab does not admit many patients from the Ocala area acute care hospitals and has not been successful in increasing referrals from the "northern tier" in and around Lake City, and "southern tier" in and around the Ocala area, notwithstanding a potential patient population to be served. But see Findings of Fact (FOF) 319-20. LRMC's Ohme Rehabilitation Center is a 15-bed unit (seven private and eight semi-private beds) located in the north campus of and approximately one mile from LRMC. Ohme is located approximately 50 miles from the downtown Ocala area. The CMR unit is located on the third floor of a building that also houses the 120-bed nursing home on the second floor. The gym for the CMR unit is located on the first floor of the same building. Between 2004 and 2007, the ADC at LRMC ran between 11 and 12 beds and the available number of beds ranged between three and four. In or around 2006, LRMC received an exemption from the Agency to add seven beds to its existing CMR facility. However, at the time of the final hearing the exemption granted to LRMC had expired. It appears that LRMC's senior executive team decided not to add the beds in light of a declining census and because of the significant expense to satisfy code requirements. LRMC considers the Spring Hill location as a distinct medical market. Since 2005, approximately 90 percent of Ohme's CMR patients were admitted from hospitals within the LRMC system or hospitals within the Lake County area. Since 2005, between 69 to 77 percent of the CMR patient admissions have come from LRMC. See also FOFs 328-339. A negligible number of patients have been referred to and admitted from Ocala area acute care hospitals, i.e., Munroe Regional, Nature Coast Regional Hospital, Ocala Regional Medical Center, and West Marion Community Hospital. The persuasive evidence indicates that LRMC does not do any meaningful marketing in the Ocala area for CMR patients. Sixteen CMR beds have also been approved for Seven Rivers Medical Center in Citrus County. The Seven Rivers unit was scheduled to become operational by June 2009. However, testimony indicated that the beds were still under development at the time of the hearing. For the year ending December 31, 2007, the occupancy rate for all CMR beds in District 3 was 82 percent. As noted, there are ten skilled nursing facilities in the PSA with 1,552 licensed beds. TimberRidge Nursing and Rehabilitation Center (TimberRidge), is a skilled nursing facility (SNF) and comprises 180 beds (174 semi-private and six private) and owned by Munroe Regional. TimberRidge provides nursing and rehabilitative care based on a patient's needs and is Medicare-certified. TimberRidge is located on the west side of Interstate 75 next to Munroe Regional's new freestanding emergency department. TimberRidge is not at functional capacity and had 50 available beds at the time of this hearing. Approximately 40-to-50 percent of TimberRidge's admissions come from Munroe Regional and approximately 25-to-30 percent from Ocala Regional and the same percentage from West Marion. (If Munroe Regional has 100 discharges, TimberRidge receives 20 percent of those which comprise 40-to-50 percent of TimberRidge's admissions.) TimberRidge and Oakhurst Rehab and Nursing Center are the Ocala area largest SNF recipients of discharges from Munroe Regional. TimberRidge has not had a physiatrist on staff for approximately seven years. The applicant argued that approval of the proposed facility would promote quality of care based on the assertion that patients in the PSA are not being admitted to a CMR facility but are instead admitted to a "lesser, and often inappropriate, level of care" such as long-term acute care hospitals or SNFs. However, this contention was not persuasively supported by the facts. The issue of whether patients are better served in one post-acute care setting versus another, and in particular, whether particular patients should be admitted to SNF or CMR facilities, including resulting outcomes, is a debated topic. In response to the debate, CMS has engaged the services of Research Triangle Institute (RTI) to conduct a study known as the CARE Project. The CARE Project was created to undertake research to develop a common tool or instrument that could be used to assess patients in multiple settings so that home health agencies, CMRs, and SNFs would be able to report comparative data. CMRs and SNFs provide different levels of care service. SNFs, even when providing rehabilitation services and therapies, do not provide the level of intense interdisciplinary rehabilitation services provided at CMR facilities. In general, a SNF, such as TimberRidge, offering rehabilitation services in a distinct portion of the SNF, provides appropriate rehab care for the patients it serves. TimberRidge, however, is not a pure substitute for a CMR facility. Richard Soehner, the Administrator for TimberRidge testified in opposition to HS-Ocala's representation that SNFs are often inappropriate levels of care for patients needing inpatient rehabilitation. TimberRidge's 180 beds are split into three 60-bed wings -- West, East, and South. The West Wing houses the most acute, intensive rehabilitation patients. Additionally, the rehabilitation population overflows into the East Wing. The remainder of the East Wing and South Wing house long-term residents. TimberRidge provides nursing and rehabilitation services to geriatric patients in and around Ocala. Employees of TimberRidge are involved in daily communications with discharge planners at hospitals, and help to determine whether TimberRidge can accept a resident. A registered nurse will often visit patients in hospitals and discharge planners to gather necessary information for admission to TimberRidge. TimberRidge employs or contracts with 30 to 35 therapists and has a medical director. Rehabilitation therapy disciplines include physical, occupational, and speech therapy. Therapists are available seven days a week and coordinate a patient's particular clinical needs with one another. Nursing care is provided 24-hours a day. After admission, each patient at TimberRidge undergoes a lengthy assessment process by therapy staff, nursing staff, social services, activities, dining services, and dietician. Then, a care plan is formed that outlines the goals and objectives and how these goals and objectives are going to be reached by the interdisciplinary care plan team. Physician orders and a therapist's judgment are used to determine how much therapy a patient can tolerate and what the patient needs. TimberRidge also receives input from families from the assessment standpoint. Families are encouraged to visit, attend and participate in care-planning meetings. Families are a key component of successful rehabilitation. Family members are also provided training by nurses or therapists. In like manner, families are an important component of the patient services offered at CMR facilities. Mr. Soehner reviewed HS-Ocala Exhibit 1, Bates Stamp 556, which contains the chart summarizing differences in care between area SNFs and Florida CMR hospitals. Although not a clinician, he testified the average charges for therapy of $62 per patient day indicated in the exhibit is diluted because the calculation includes patient or resident days related to patients not receiving rehab therapy. As a SNF administrator, Mr. Soehner knows of no correlation in the size of gym space or lack of gym space being detrimental to care provided. Therapy is still provided with successful outcomes. (On average, among CMR facilities in Florida, more space is devoted to gym space as a percent of the total square footage, than in Ocala area SNFs.) The chart on HS-Ocala Exhibit 1, Bates Stamp 556, states that the average pharmacy and lab charges are $16 and $2 a day, respectively, which would indicate that the patients are not receiving very much medication or lab work. However, this data tends to dilute the numbers for pharmacy and lab charges per patient day because the total patient days used includes long-term patients. Notwithstanding the testimony of Mr. Soehner, Ms. Greenberg's analysis of the different levels of service generally offered at SNFs and CMR facilities is at least consistent with the finding that CMR facilities offer more intense levels of rehabilitation services (for the categories shown) to its patients. Patients are admitted to a SNF. The first five days are considered to be an initial assessment period. TimberRidge provides different levels of rehabilitation based on a patient's needs. The Medicare program has established Resource Utilization Groups or RUGs. SNFs are reimbursed according to dollar allocations among the various RUG codes. But, RUGs are not outcome based. Each code represents a specific skilled level code or reimbursement code. The "R" codes are rehabilitation codes. There are several rehabilitation RUGs. There are five ultrahigh categories, i.e., RUX, RUL, RUC, RUB, and RUA. This means that each patient in this ultrahigh category must receive a minimum of 720 minutes (12 hours) of therapy over a five-day period (within a seven-day period) and includes more than one discipline. This also equates to 2.40 hours per day. (The rehab very high category requires 500 minutes of therapy per week.) In contrast, a person in a CMR facility must be able to tolerate three hours per day of therapy over a five-day period, whereas a patient receiving rehab in a SNF may have a minimum of approximately 2.40 hours per day if they are classified in the ultra high category. There are other levels of rehabilitation categories very high, high medium, and low, with RUG subcategories within each. For example, there are five RUG classifications within the very high category, e.g., RVC, RVB, RVA, RVX, and RVL. The RUGs categories are represented by a three-digit alpha code, with the first two digits representing the level of rehab, e.g., RU being rehab ultrahigh, and the last character, C, B, A, X, or L representing activities of daily living scores and the nursing care needs of the patient.3/ The RUG category for a patient can change throughout their stay. In other words, a patient may initially be assigned and placed in an ultra-high RUG category and later assigned a lower category. The RUG factors, like RUC (ultra high), are a measure of the intensity of therapy. It does not necessarily mean that the patient is any sicker than other patients, but it does mean that at least they have the stamina to tolerate more therapy. Medicare reimburses SNFs for rehabilitation services based on RUG scores and the amount of rehabilitation therapy a patient receives, whereas Medicare pays a CMR facility a total amount depending on a particular diagnosis of a patient. Like Ms. Gill, Mr. Soehner testified that reimbursement is determined by a comprehensive assessment, including the amount of rehabilitation projected or provided. Although it is not an outcome based reimbursement system, the RUG system is designed to reimburse a skilled nursing facility based on the resources a patient is expected to consume while admitted. TimberRidge's goal is to provide patients the services needed to attain and maintain the highest level of functioning the patient can sustain regardless of whether TimberRidge is reimbursed for it. In rare cases, this goal may allow for three hours of therapy a day, but for most cases, the patient cannot tolerate that intense level of care nor is it medically necessary. Ms. Gill examined data regarding rehabilitation patients admitted and discharged from TimberRidge by RUG classification based on age and length of stay during 2008.4/ Patients fitting within the rehab ultra high and very high, high, medium, and low were separated from the other rehab categories. The ultra-high category was chosen because any patient admitted to a SNF and deemed appropriate for any category lower than ultra high means that the patient cannot tolerate any more than 500 minutes (two and a half hours of therapy a day) of therapy a week, which would disqualify them from admission to a CMR facility. Thus, the ultra-high category was chosen as a proxy for CMR services, at least for therapy utilization. Approximate 35.8 percent of the ultra-high patients were over the age of 75 and 28.9 percent were 85 and older. Approximately 60 percent of the patient population is over 75 years of age, which is different from what one would normally see in a CMR facility. Of the 881 total rehab patients admitted and discharged from TimberRidge in 2008, 461 (or approximately 52 percent) were placed in the ultra-high category and 420 in the remaining rehab categories. (Based on a 2008 Medicare cost report, TimberRidge's ultra-high RUGs have grown from 26 percent to 50 percent, which, according to Ms. Greenberg, places TimberRidge on par with the state averages.) The ultra-high category has increased significantly since 2001. Of the 461 patients, 28.7 percent returned to home; 43.8 percent returned to home with home health; 18.7 percent returned to a hospital; and other small percentages were discharged to other settings. The percentages are slightly higher for those patients returning to home and some with home health when age is considered. Patients in the other rehab categories (very high, high, medium and low) had lower percentages of patients discharged to the home (20.1 percent) and home with home health (30.8 percent) and a higher percentage discharged to a hospital (27.2 percent). It is a fair inference that these patients may not have been able to tolerate significant therapy and were also sicker and with co-morbidities. The number of patients in the ultra-high and high RUG therapy categories is consistent with statewide averages and is normal. The same is true for the level of RUG therapy provided by SNFs in areas where HealthSouth has a CMR facility. The applicant views this information as an indication that SNFs are "filling a role, but they are not filling a gap." TimberRidge has won the local area's rehabilitation award and Reader's Choice award as the area's number one nursing home. The facility receives a lot of repeat business and referrals. There is a fair inference that TimberRidge is an appropriate placement for patients. TimberRidge is not at functional capacity; as of June 22, 2009, TimberRidge had 50 available beds. The evidence at the hearing demonstrated that the care provided through SNFs in the Ocala area is appropriate and produces quality outcomes. On the other hand, the rehabilitation services provided to SNF rehabilitation patients is not a pure substitute for the rehabilitation services, including therapies, provided at a CMR facility for patients requiring that particular service. Also, as noted herein, there are several material differences between CMRs and SNFs.5/ Thirty-to-50 percent of the patients at a SNF such as TimberRidge could be placed in a CMR or in a SNF. Overall, patients receiving rehabilitation services in the Ocala area appear to be receiving appropriate care, and the quality and intensity of care being provided by the existing SNF rehabilitation providers is equivalent to, if not better, than national averages and does not present a not normal circumstance. Alternative bed-need methodologies HS-Ocala's healthcare planner performed several bed- need analyses. The applicant assumed that 95 percent of the patients would come from within the proposed service area of 25 zip codes. The first methodology considered bed need by age mix. The bed-need methodology yielded a need for 45, 46, and 48 beds by 2010-2012 at 85 percent occupancy. The second bed need was based on a discharge use rate for freestanding CMR market areas versus the areas that did not have a freestanding CMR. This methodology yielded a bed need of 53, 55, and 57 for 2010-2012 with the same occupancy rate. A third bed-need approach was based on an analysis of CMS 13 diagnostic codes in relation to the population within the proposed 25 zip code service area. This analysis is also known as the conversion rate analysis. Based on this analysis, the applicant projected a bed need of 51, 52, and 54, for years 2010, 2011, and 2012, respectively. The applicant projected that 12 of the 54 beds or 22 percent of the bed need is potentially attributable to stroke patients and 42 to non-stroke patients. These projections are based on a 15 percent conversion rate. The "conversion rate" The argument that "not normal" circumstances exist in District 3 is based in large part on a comparison of "conversion rates" in various areas of the state with the proposed service area. The "conversion rate" is a ratio calculated by the applicant to determine the utilization of CMR services by Medicare fee-for-service patients in the primary service area of each of HealthSouth's facilities. HealthSouth has used this conversion rate as a means of evaluating the success of its facilities since approximately 2004. The calculation begins by determining the primary service area for each HealthSouth Florida facility. The applicant defines the primary service area of any particular facility as the zip codes from which that facility derives between 75 percent and 85 percent of its patients. The HealthCare Concepts Group of Dixon Hughes, a consulting firm retained by HealthSouth, determined the zip codes comprising the primary service area for each HealthSouth Florida facility using HealthSouth patient admission information (not Medicare or MedPar data) for calendar year 2007. Dixon Hughes determined the zip codes from which each facility derived approximately 80 percent of its patient admissions for each HealthSouth CMR facility. Although Dixon Hughes sought a goal of 80 percent, the percentage of patient admissions comprising the primary service area for the Florida facilities used in calculating the conversion rate varied somewhat, ranging from as low as 73.6 percent at HealthSouth Treasure Coast, to as high as 90.83 percent at HealthSouth Sea Pines. HS Ex. 53A, Bates Stamp 515-44. After establishing the zip codes comprising the primary service area of each facility, Dixon Hughes requested another consulting firm, Health InfoTechnic (HIT), to provide summary data for certain CMS-13 discharges and admissions for each primary service area for the nine HealthSouth CMR facilities. This CMS-13 data was collected from HIT in 2008 and available to HealthSouth in January of 2009. The summary tabulated data provided by HIT was generated from the MedPar database (approximately 13,300,000 records per year) for federal fiscal year 2006 (October 2005 through September 2006). (HIT received the MedPar data file around September 2007.) MedPar data only includes fee-for-service patients and does not include any Medicare HMO or Medicare Advantage patients. The MedPar database records and generates information contained in the medical history of patients covered by the Medicare fee-for-service program and discharged from acute care hospitals. The MedPar database records up to nine diagnosis codes for each patient. Using the MedPar database, HIT first determined the number of Medicare fee-for-service patients discharged from only acute care hospitals who resided in a HealthSouth facility's primary service area (by zip code provided by Dixon Hughes) and who had one of the CMS-13 diagnosis codes in their medical history. These were identified as CMS "qualifying patients." Once the qualifying patients were identified, HIT determined how many of those qualifying patients (within the primary service area for each HealthSouth CMR facility) were discharged to a CMR facility anywhere in the United States. HIT used the diagnosis procedure codes that are HIPPA protected fields to determine whether the patient is a CMS qualified patient. Other information, such as the patient's name, date of birth, and the codes are prohibited from release. HIT is prohibited by CMS and pursuant to a data use agreement from providing any of the underlying claims data to anyone including HealthSouth. The number of diagnosis codes examined to determine whether a patient qualified as a potential admission to a CMR facility under CMR rules varied depending on the particular impairment group being examined. For example, for brain injury and for burns, only two of the nine available diagnosis codes were examined. For stroke, only four of the nine available diagnosis codes were examined. For joint replacement and hip fractures, all nine available procedure codes were examined. No evidence was presented to determine the number of diagnosis codes examined for the other CMS-13 diagnoses, such as amputation, major multiple trauma, neurological disorders, spinal cord injury, congenital deformities, osteoarthritis, rheumatoid arthritis, and systemic vasculidities. A patient with a psychiatric or obstetrical condition who may have also had a qualifying CMS-13 diagnosis code in his or her medical history was automatically excluded from the total CMS-13 qualifying patients for purposes of determining the conversion rate. Patients who died in an acute care hospital were not excluded. Patients in rehab facilities were excluded. A summary of the analysis generated by HIT was provided to Dixon Hughes in order to calculate a conversion rate for each of the nine HealthSouth Florida facilities by dividing the number of qualifying patients discharged to a CMR facility by the total number of qualifying patients. For example, for HealthSouth Spring Hill, there were 1,206 total CMS-13 cases (by discharge and derived from MedPar data and HIT) that were discharged from acute care hospitals for patients residing within one of the zip codes within the facility's primary service area. Of the 1,206 patient discharges, 305 or approximately 23 percent were discharged to a CMR facility somewhere in the United States. See, e.g., HS Ex. 53A at 2. The 23 percent number is the conversion rate for that facility. (Again, in order to establish the zip codes for each HealthSouth CMR facility, all of the admissions (not just Medicare fee-for-service) were recorded from HealthSouth's internal admission data.)6/ The conversion rate for each of HealthSouth's nine Florida facilities, as determined in the manner described above, is contained in HS-Ocala Exhibit 53, Bates Stamp 484. The numbers on HS-Ocala Exhibit 53 are a subset of all the CMS 13 discharges because the data used is MedPar data. As stated by Mr. Edward Stall for Dixon Hughes, the conversion rate is not a market penetration rate. "It's really a measure of does a specific market utilize rehab care or does it not? It's more of an indicator of reasonable access to care" for the nine HealthSouth CMR facilities. Ms. Greenberg opined that the conversion rate was synonymous with a penetration rate, i.e., it is a determinant of what percentage of patients are likely users of a service. Ms. Bedard considers a conversion rate to mean the number of patients coming to rehab. She was not used to seeing data arrayed in the manner depicted on HS-Ocala Exhibit 53, Bates Stamp 484. The applicant originally calculated a conversion rate of 17.7 percent. However, the applicant was unable to produce any persuasive documentation supporting the calculation and, upon attempting to recreate the conversion rate, arrived at an average conversion rate of 17.9 percent. The Ocala Conversion Rate Once the PSA was defined, the applicant determined the Ocala Conversion Rate using the area from which the proposed facility would generate 95 percent of its patients. The Ocala Conversion Rate was generated using discharge information from the AHCA database for calendar year 2006, rather than MedPar data. Unlike the MedPar database, the AHCA database captures discharge information for all patients discharged from acute care hospitals, regardless of payor. Also unlike the MedPar database, the AHCA database records up to 31 diagnosis codes for each. The AHCA database is far less restrictive than the MedPar data base. The AHCA database was used to determine the Ocala conversion rate "because that's the universe of the patients that [the applicant] will serve." She did not use MedPar data because it contains only Medicare fee-for-service patients only. She used MedPar data to determine the conversion rate for the nine HealthSouth facilities because HealthSouth uses MedPar data as a benchmark to compare their market across the country and the data was available. Using the AHCA database, it was determined the number of patients residing in each of the 25 zip codes comprising the PSA who were discharged from an acute care hospital with a medical history including one or more CMS-13 diagnosis code In short, the applicant's analysis assumed that any discharge with a CMS-13 diagnosis code in the patient's medical history as described in the above paragraph would be a "qualifying patient" for purposes of calculating the Ocala Conversion Rate. This method yielded a total of 3,658 qualifying patients from the PSA for calendar year 2006. This method is also called a resident service rate. Of the 3,658 discharges, approximately 80 percent came from the four acute care hospitals in the service area; two percent from Leesburg; and 10 percent from Shands. The remaining discharges came from facilities outside the service area other than the facilities mentioned. Having identified the qualifying patients, the AHCA rehab data base was used to determine how many of the qualifying patients were discharged to a CMR facility. The determination of the number of patients discharged to a CMR facility included patients discharged to a CMR facility anywhere. This method yielded a total of 90 qualifying patients who were discharged to a CMR facility.7/ Dividing the number of qualifying patients discharged to CMR facilities (90) by the total number of qualifying patients (3,658) yielded the Ocala Conversion Rate of 2.46 percent. HS-Ocala contends that the Ocala Conversion Rate of 2.46 percent is unacceptably low compared to the 17-to-18 percent average conversion rate for HealthSouth's nine Florida facilities. According to the applicant, this comparison indicates "not normal" circumstances which are indicative of artificial geographic and programmatic barriers to accessibility to CMR services to residents of the proposed PSA. However, there are numerous problems with the conversion rate approach that make it inappropriate for use in determining need. The "conversion rate" is a self-defined concept unique to HealthSouth. It is not a use rate, nor a concept recognized in any rule governing the CON process, or recognized in the discipline of health planning, but it is used by HealthSouth. Rather, the conversion rate analysis is a marketing tool that is driven by and relies solely on HealthSouth's own experience. The HealthSouth Conversion Rate is driven by, among other things, HealthSouth's determination of what constitutes a primary service area for its own facilities. HealthSouth is the sole determinant of what constitutes a particular facility's primary service area. Because the calculation of the HealthSouth Conversion Rate begins with the determination of each HealthSouth facility's primary service area, the procedure cannot truly be replicated except in those areas where existing HealthSouth facilities are located. For example, there is no way to determine if Orange County has a conversion rate consistent with the HealthSouth Conversion Rate because HealthSouth does not have an established facility with a primary service area there. HealthSouth's determination of what constitutes the service area of the proposed Ocala facility also drives the determination of the Ocala Conversion Rate. Because there is no existing HealthSouth facility in the PSA, there is no historical HealthSouth patient admission data from which to determine a primary service area. Instead, HealthSouth "carved out" a 25 zip-code area within District 3 from which it claims the proposed Ocala facility will derive approximately 95 percent of its patient admissions. Even among the nine HealthSouth facilities in Florida, the areas HealthSouth has designated as the primary service area varies greatly. For example, while the primary service area for HealthSouth Treasure Coast constitutes the area from which the facility derives approximately 73.6 percent of its admissions, the primary service area for HealthSouth Sea Pines constitutes the area from which that facility derives approximately 90.83 percent of its admissions. Put another way, the primary service area of HealthSouth Sea Pines is over 23 percent larger in terms of admissions than the primary service area of HealthSouth Treasure Coast. The record is devoid of any explanation of whether this difference affects the HealthSouth Conversion Rate and, if so, how. Moreover, the variance in the conversion rate among HealthSouth's nine Florida facilities is also substantial, ranging from a low of 10.8 percent at HealthSouth Treasure Coast to a high of 25.29 percent at HealthSouth Spring Hill. There is no persuasive evidence in the record to explain why the conversion rate for HealthSouth Spring Hill is almost two and a half times that of HealthSouth Treasure Coast. According to the applicant, based on 93 HealthSouth markets around the United States, HealthSouth's conversion rate is approximately 16 percent. As noted above, the PSA constitutes the area from which the proposed facility will derive approximately 95 percent of its admissions. This service area is almost 30 percent larger in terms of patient admissions than that for HealthSouth Treasure Coast and is over 18 percent larger than the stated goal of 80 percent used to determine the HealthSouth Conversion Rate. The result of the larger patient origin percentage for the PSA is that it tends to overstate the potential demand for CMR services. The conversion rate is also driven by the manner in which HealthSouth chose to analyze the patient data to calculate the rate. HealthSouth used MedPar data, which only captures Medicare fee-for-service patients, for the calculation of the HealthSouth Conversion Rate. HealthSouth further limited the potential pool of patients by only using a portion of the data available in the MedPar database. For example, HealthSouth's consultant reviewed only primary and secondary diagnosis codes for certain CMS-13 categories, four diagnosis codes for others, and potentially all nine diagnosis codes in the MedPar database for other CMS-13 diagnosis categories. However, when the PSA conversion rate was determined, the potential patient pool was not limited in a similar manner. Rather, there was testimony that the use of the AHCA database, which includes patients from all payors, increased the pool of CMS-13 qualifying patients used for the calculation of the Ocala conversion rate. Since the MedPar data is a subset of the AHCA data, the number 3,658 would have been approximately 70 percent of 3,658 if MedPar data was used. Stated otherwise, the 3,658 number contains approximately 30 percent more people than would have been included if MedPar data was used. The MedPar database captures far less diagnosis codes than the AHCA database. This difference serves to further inflate the pool of CMS-13 qualifying patients in the PSA. Although the applicant could have evaluated the patient population for the PSA in the same manner that HealthSouth did to arrive at the HealthSouth Conversion Rate, the applicant chose not to do so. The MedPar and AHCA databases are not comparable. Mr. Balsano, in an attempt to compare apples-to-apples, calculated a conversion rate for HealthSouth's nine Florida facilities using AHCA data limited to Medicare fee-for-service patients only. Utilizing the same zip codes that HealthSouth used to calculate the HealthSouth Conversion Rate, Mr. Balsano calculated a conversion rate of 13.2 percent for the nine HealthSouth facilities, compared to the 17.9 percent determined using the MedPar database. Thus, the AHCA database, even when limited to Medicare fee-for-service like MedPar, yields a lower conversion rate. Mr. Denney, with HIT, testified that there are several reasons not to use the AHCA database for such an analysis. For example, the discharge status codes used by AHCA are not the same as universal billing codes and are not always in what are called UB04, or universal bill 04, codes as used by MedPar. Another problem with using the AHCA database is that Florida law allows distinct rehabilitation units of acute care hospitals not to report admissions to AHCA. The inconsistencies described herein do not allow for a valid comparison of the HealthSouth and Ocala Conversion Rates. The HealthSouth Spring Hill Case Study The application also contains a historical analysis of the conversion rate for the HealthSouth Spring Hill facility to support the argument that there is a need for the proposed facility. HS Ex. 1, Bates Stamp 550. Ms. Greenberg testified at length regarding the method by which she personally conducted the HealthSouth Spring Hill Case Study, including the method she used to determine the Spring Hill conversion rate utilized in the case study. Ms. Greenberg performed the Spring Hill Case Study using the AHCA database for calendar year 2006, but limited to only Medicare fee-for-service patients, arriving at the conversion rate for Spring Hill of 25.6 percent for calendar year (CY) 2006 (4.3 percent in CY 2002 prior to operation). This means that 25.6 percent of the CMS 13 discharges were residents within Spring Hill's primary service area (as defined by the applicant) who went to a CMR facility somewhere. (In HS-Ocala Ex. 53, Bates Stamp 484, the conversion rate is 25.3 percent.) Ms. Greenberg testified that the similarity in the numbers generated using the AHCA database limited only to Medicare fee-for-service and those generated using the MedPar database supports her conclusion that the MedPar and AHCA databases are comparable data sources. It was ultimately acknowledged that, in fact, like the HealthSouth Conversion Rate, the Spring Hill Case Study presented on pages 41-43 of the CON Application was derived from a summary of MedPar data for fiscal years 2002 and 2006 (October 1, 2005-September 30, 2006) that HealthSouth provided to Ms. Greenberg. The actual MedPar database was not reviewed. Rather, the analysis for the Spring Hill Case Study consisted of calculating the percentages based on the summary MedPar data provided by HealthSouth. Because the HealthSouth Spring Hill Conversion Rate was calculated in the same fashion as was the HealthSouth Conversion Rate, it does not reasonably serve as a comparison to the Ocala Conversion Rate for the same reasons. A conversion rate for the HealthSouth Spring Hill facility was calculated using the AHCA database prior to completing the application. However, that calculation was not included in the application. The summary data sheet, HS-Ocala Ex. 53, was sent to counsel for Shands and LRMC in a letter dated April 24, 2009. The information was then conveyed with the HealthSouth Conversion Rate to the applicant's health care planner. The underlying work papers were not saved. The applicant had to examine the 2006 Medpar data base and rerun the numbers. HS Ex. 53. The applicant produced a document indicating the reworked HealthSouth Conversion Rate along with the April 24, 2009, letter (written to counsel for Shands). HS Ex. 53, Bates Stamp 484. The document appearing as HS-Ocala Ex. 53, Bates Stamp 484 is a recreation of the numbers given to Ms. Greenberg. The underlying data upon which the applicant based the HealthSouth Conversion Rate, including the zip codes comprising the primary service area for the HealthSouth facilities, was available and in HealthSouth's possession (its computers) throughout the discovery phase of this proceeding. While some summary documents were provided, the underlying data which apparently would support the evidence was not. Instead, Mr. Stall and Mr. Denney described the process that was used to calculate the HealthSouth Conversion Rate. However, the testimony only served to further highlight some of the inconsistencies between the methodologies used to calculate the HealthSouth and Ocala conversion rates and to further support the conclusion that the rates are not necessarily comparable. Without the underlying data, it was difficult to confirm the comparison between the Spring Hill Conversion Rate and the Ocala Conversion Rate. Geographic and Programmatic Access The applicant alleges that there are geographic and clinical (programmatic) access problems that compromise the level of care and clinical outcomes of patients who would benefit from CMR services. Family travel distance can impact a patient's decision to access CMR services. The family access issue described by the applicant in this proceeding is not unique to District 3 or Marion County. Transportation of patients from acute care to CMR facilities is accomplished by emergency vehicles and, in some instances other forms of transport, including family automobiles. Potential patients within the applicant's PSA would not have typical or not normal problems accessing existing CMR providers in District 3. Shands provides free transportation to families who visit patients at its facility, and to those who need to be involved in the discharge planning process. Shands also provides other accommodations either free or at reduced costs. HealthSouth has a corporate policy of not providing transportation for Medicare patients to bring their family members to one of its CMR facilities for visits. The same policy applies for all patients. For HealthSouth, it is a compliance issue and considered an improper inducement. T. 544. Whether free transportation is improper is not resolved based on the record in this proceeding. But see HS Ex. 76. Interstate 75 is the main road through the Ocala area and runs north to Gainesville and south to Leesburg. Interstate 75 is a four-lane road and even six lanes in some instances. There are segments of road configurations which are composed of two-lane black tops with little or no lighting. Roadway segments north and south of the PSA are often rural with soft shoulders. There is evidence that some of these roads north and south out of the PSA are congested depending on the time of day and other conditions. The forest east of Marion County represents a natural geographic barrier. Florida Administrative Code Rule 59C-1.039(6) addresses the access standards for patients in need of CMR services. CMR "inpatient services should be available within a maximum ground travel time of 2 hours under average travel conditions for at least 90 percent of the district's total population." The applicant, and Shands and LRMC jointly, engaged traffic experts to conduct travel time studies to measure the length of time it takes for residents of the area to reach area hospitals. The applicant's travel expert, Lorin Brissett of Kimley-Horn and Associates, Inc., conducted a travel time study from Shands Rehab Hospital and LRMC to various locations or points within the PSA. Locations 1 through 4 were based on zip code information provided by the applicant in terms of the general coverage of the PSA, and denote the centroid of different population densities in the four quadrants of the PSA.8/ Location 5 represented the approximate center of the City of Ocala and the PSA. Mr. Brissett used a floating car method in performing the travel time study between locations one through four and location five. This method involves the driver attempting to pass as many cars as passed him, that is, the car would float with the traffic. Two runs were performed for each of the routes, going from locations one through four to location five. Two runs were performed for each return route. The runs were performed during peak travel times (typically between 4:00 p.m. and 6:00 p.m.) on a typical weekday, that is, Tuesday, Wednesday, or Thursday. The weather was clear and no accidents were noted. The travel study indicated that the average travel time to and from Shands was 52 minutes, with a high of 67 minutes and a low of 33 minutes. The average travel time from and to LRMC was 63 minutes, with a high of 90 minutes and a low of 37 minutes. The overall average travel time was 46 minutes from the center of the PSA to either Shands or LRMC. Mr. Brissett also commented that these travel times may be a bit longer for elderly drivers and that elderly drivers tend to travel more on local roads. Also, older drivers are not likely to drive using the floating car method. (None of the drivers used in the study were 65 years of age or older.) The travel study also noted that many of the roadway segments were rural in nature and there were conditions where the road was not properly lit. Mr. Brissett was not asked to conduct any study that would indicate what percentage of the District 3 population would be within two hours' average travel time to any existing CMR facility in District 3. Mr. Brissett was not asked to conduct travel studies for any CMR facility in District 3 other than Shands and LRMC and he did not do so. Mr. Brissett stated that rural roadways are not unique to Marion and Levy Counties, but exist in other Florida counties as well. Mr. Brissett concluded that anyone within the five zones would be able to access Shands Rehab Hospital in less than 70 minutes, even driving from 4:00 p.m. to 6:00 p.m., although it may take the elderly a bit longer. The travel expert retained by Shands and LRMC, William Tipton, Jr., based travel time runs on the location of the existing CMR facilities and population data for 2008 and 2013 published by AHCA for District 3. According to Mr. Tipton, "[l]ooking at the district and knowing the road systems available and the orientation of the populations to the existing facilities, it was evident that the adjacent counties to existing facilities could certainly make their runs within the access rule standard of less than two hours" or "substantially less time than two hours by each of the existing facilities within District III." Mr. Tipton's team conducted two runs in the morning peak hour, 7 a.m. to 9 a.m.; two runs in the midday off-peak hour, 11 a.m to 1 p.m.; and two runs in the evening peak hour, 4 p.m. to 6 p.m. to arrive at a complete cross section of the different travel patterns throughout the day.9/ Additionally, one of the test drivers in Mr. Tipton's team, was 70 years old and accomplished runs on 441 from Ocala to Shands, and on U.S. Highway 441 from Ocala down to Leesburg Regional Medical Center, and also the Interstate 75 runs. The elderly test driver's results were consistent with other runs accomplished by non- elderly drivers. Mr. Tipton's team also used the floating car method, but adjusted the methodology so that none of the drivers exceeded the posted speed limit by more than five miles per hour. In Mr. Tipton's opinion, this adjustment would give results that are more typical of what an average driver would do and more accurately reflects the driving patterns of elderly drivers. Mr. Tipton's results show that all of the facilities could be reached by at least 90 percent of the population in one hour or less; half the time required by rule. The roads traveled for Mr. Tipton's analysis were typical roadways found throughout central Florida. Mr. Tipton's study concluded that existing CMR facilities could be accessed within the requirements in Florida Administrative Code Rule 59C-1.039(6) and that a geographic access issue for an elderly person or someone else did not exist. Although the applicant argued that conditions existed that led to patients and family members not accessing CMR services, no testimony at hearing from area residents supported the contention. No residents of the PSA testified as to their personal experiences accessing existing CMR hospitals in the District. Rather, several of the applicant's expert witnesses testified as to their experience with local road conditions driving from the PSA to and from Shands Rehab and LRMC. Dr. Lohan opined that elderly persons may find it more difficult to drive at night versus the daytime, which is consistent with the evidence in this record. Further, the transportation of patients to CMR facilities is not problematic because they are usually transported by ambulance or similar method of transport. It does not appear that patient safety or quality of care has been compromised because of the alleged travel times and distances to existing CMR hospitals. On the other hand, the construction of the proposed facility would reduce the average travel time to an existing CMR hospital for persons residing within the PSA. However, the number of persons whose travel time will likely be enhanced was not persuasively quantified by the applicant, aside from projecting occupancy rates for the first two years of operation. It is expected that patients with multiple trauma, brain, and spinal cord injuries would most likely be referred to Shands Rehab. For the most part, patients with brain and spinal cord injuries are receiving rehabilitation and typically are referred to Shands Rehab. The applicant does not propose a spinal cord and brain injury unit like the service offered at HealthSouth's Spring Hill facility. Consequently, whatever travel challenges might exist for these patients and their families would still exist even after HealthSouth is approved. The testimony was consistent that, in part due to the nature of CMR services as tertiary, patients and their families at times experience problems accessing such services. These problems, or challenges, include not only the time and distance required to reach such facilities, but other factors, such as whether a patient should be admitted to a CMR facility rather than to other post-acute care settings and whether the patient's insurance policy provides coverage for such services. The testimony was also consistent that these challenges occur not only throughout Florida but, in fact, occur throughout the nation on a daily basis. These challenges do not represent "not normal" circumstances but are normal. Quality of Care No evidence was presented indicating any deficiencies in the quality of care provided by Shands or LRMC. The services or equipment to be provided at the proposed facility are not necessarily superior to the services that are provided at Shands or LRMC. The applicant will offer the use of an AutoAmbulator to its patients. The AutoAmbulator was developed for and is exclusively available at HealthSouth facilities. No independent study indicates that the use of the AutoAmbulator results in better outcomes for patients, compared to similar equipment used at existing District 3 CMR facilities. Economic Access Notwithstanding the applicant's proposed commitment to provide at least 2.5 percent of its annual inpatient days to Medicaid and charity patients, there is no persuasive evidence that there are financial barriers to access CMR services by the residents of the PSA. It was not proven that the resident population of the PSA, including the medically indigent, Medicare recipients, and the elderly, has been or is likely to be denied access based on economic factors. See Fla. Admin. Code R. 59C-1.030(2). Section 408.035(1)(c): The ability of the applicant to provide quality of care and the applicant's record of providing quality of care. The applicant's quality of care will benefit from the hospital's affiliation with its parent, HealthSouth, which offers high quality CMR services country-wide. HealthSouth has invested in state-of-the-art quality measurement systems to monitor processes and outcomes, allowing each facility to maintain high standards of quality of care. The applicant has demonstrated that it has the ability to adequately staff the facility and will provide high quality of care. Section 408.035(1)(d): The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation. HealthSouth is a publicly traded corporation and is the largest provider in inpatient rehabilitative health services in the United States in terms of revenue, number of hospitals, and patient treated. HealthSouth has the financial resources needed to ensure project accomplishment and operation of the proposed project. HealthSouth is committed to assisting the applicant with fiscal and legal services, specialized accounting functions, and reimbursement expertise and information system services. There continues to be a shortage of healthcare personnel in Florida and it is inevitable that a portion of the staff for the proposed facility may come from other facilities in District 3. Nevertheless, the applicant is able to draw upon the managerial resources and broad range of established and services provided by HealthSouth, including the recruitment and retention of staff. The applicant has the available resources, including health and management personnel for the completion and operation of the project. Schedule 6 of the application describes the applicant's estimate of the projected staff and staff needed for the project HealthSouth will need 17 new RNs in Year Two based on its staffing projections. HealthSouth recruits personnel to staff its facilities locally as well as on a national and international level. HealthSouth also satisfies its staffing demands internally, as its employees have the ability to transfer from one HealthSouth facility to another. HealthSouth has been successful in recruiting therapists and nurses to staff its facilities. HealthSouth uses a variety of tools to recruit its nurses, and once hired, HealthSouth invests significant efforts in training its employees. From time-to-time, HealthSouth has paid for contract nurses to fulfill its staffing demands. HealthSouth is not expected to limit its recruiting efforts to the Ocala area, but will recruit from other areas as is necessary to appropriately staff the facility. There was a difference of opinion offered by the parties' experts as to whether the applicant's staffing projections in its application were reasonable. Testimony from the applicant's experts indicated that the staffing projections included in the application were reasonable and appropriate based upon the projected occupancy and utilization numbers for the proposed facility. Shands' and LRMC's experts testified that the applicant's projected therapist staffing needs in the application were inadequate to fulfill the projected utilization by patients at the proposed facility. It was also estimated that the FTEs projected in the application for therapy staff was short by anywhere from four- to-five FTEs. Despite the challenges presented by medical personnel shortages and the shortfall in the staffing needs projected in the CON application, it is reasonable to conclude that the applicant will be able to recruit the staff needed for the proposed facility. Staffing of the proposed facility may impair to some degree the ability of Shands and LRMC to staff their facilities, but not to the extent that the services and the quality of care provided will be reduced. Weighing all the testimony presented on this issue, the evidence supports the conclusion that the applicant's staffing projections are reasonable. The proposed average annual salaries in Schedule 6A are reasonable. Appropriate funds have been budgeted for management personnel. Section 408.035(1)(e): The extent to which the proposed services will enhance access to health care for residents of the service district. The applicant's proposed CMR facility will enhance access to health care for the residents of that portion of District 3 within the PSA, except for patients with brain injury or spinal cord injury who are expected to go to Shands. Notwithstanding historical referral and admission patterns, at the very least, Shands and LRMC are viable alternatives for the residents needing CMR services residing within the applicant's PSA. Section 408.035(1)(f): The immediate and long-term financial feasibility of the proposal. Immediate Financial Feasibility Immediate or short-term financial feasibility refers to the ability of an applicant to fund construction, start-up, and operation of the proposed project. By rule, the Agency incorporated by reference Schedule 3 among other portions of the CON application. Fla. Admin. Code R. 59C-1.008(1)(f). The applicant's witnesses testified it was feasible for the project to be financed internally or by a third party in which case the third party would finance the acquisition of the property and the construction of the building and the applicant would lease the property from the third party. In support of its ability to obtain financing for the project, the applicant submitted a letter from GE Healthcare Financial Services (GE) with its application. The letter from GE did not represent a binding or enforceable commitment to provide the financing described in the letter. Notwithstanding the testimony regarding the GE letter, the ability of the applicant to obtain funding through a third party or to internally finance the building and startup costs of the project was established. Neither Shands' nor LRMC's witnesses disagreed with the applicant's ability to obtain sufficient funds for capital and initial operating expenses. The project is financially feasible in the short- term. Long-term Financial Feasibility Long-term financial feasibility is generally referred to as the ability of a project to show a profit at the end of its second year of operation. The projected utilization of a proposed facility is a critical factor to assess when determining whether the facility will be financially feasible in the long-term, given that projected revenues and expenses are driven by utilization projections. Schedules 7 and 8 set forth the financial projections for the project for years one and two. The applicant projects a net profit for Year Two from operations of $483,512 (net operating revenue minus total operating expenses) and an overall net profit of $299,777. These dollar amounts are derived based on projected utilization of the project in Year Two minus projected expenses. Shands and LRMC contend that HealthSouth overstated projected revenues and understated projected expenses. The projected revenues appear to be overstated, whereas the projected expenses appear to be reasonable. The projected utilization was determined by applying the "conversion rate" equal to 15 percent of the discharges identified. The conversion rate was then applied, which is based only on Medicare fee-for-service patients, to both Medicare and non-Medicare patients. Application of the use rate to the projected population in the proposed service area yielded 9,828 patient days and approximately 677 admissions in the second year of the facility's operation. The patient days projected in turn yielded an occupancy rate of 67.3 percent in year two. HS-Ocala Ex. 1, Bates Stamp 639-640. The 3,658 patients identified by Ms. Greenberg as potential patients requiring CMR services generated 90 admissions to a CMR facility in 2006. It is not reasonable to assume that the population defined in the PSA area will generate almost six times the number of admissions to CMR facilities that are presently generated. The applicant also assumed that 95 percent of the patients would come from the PSA area and five percent from other areas (in-migration). Mr. Balsano noted the financial projections are based upon the assumption that CMR admissions of patients residing in the PSA would increase from 90 patients in 2006 to approximately 644 patients by Year Two of the proposed project. Mr. Balsano testified that such a significant increase is not a reasonable assumption and overstates the market. As a result, Mr. Balsano's opinion was that revenues included in the applicant's financial projections were significantly overstated and that he had serious concerns about the proposed project's financial feasibility. The applicant did not provide financial projections assuming it would build and own the proposed facility itself without the involvement of a third party. According to Mr. House, this was because the costs were greater to HealthSouth if it were to utilize third party financing, so basing the financial projections on such a scenario presented a more conservative picture of the financial projections. Mr. House testified that the financial projections included in the application were reasonable. The rent expense included in the financial projections in Schedule 8 of the application included a cushion of approximately $371,000. Applying the cushion results in an increase in year two profit from $483,512 to $854,512. It appears that funding is available on the same terms as proposed in the GE letter and that that the rent projections are reasonable. Schedule 8 of the application did not include a management fee charged by HealthSouth to its subsidiaries despite the fact that the application's narrative assumptions represented that a management fee of five percent was included. Ms. Greenberg prepared the assumptions and she inadvertently indicated that a management fee was included. The actual management fee charged by HealthSouth at the time of the hearing was approximately three percent (2.78 percent in 2008). If the management fee referenced in the application is factored into the equation at the rate of five percent, it adds $515,548 in expenses to the project. If the management fee is factored at the rate of three percent, it adds $309,328 in expenses to the project expenses. Ms. Greenberg stated that the rent expense included in the financial projections did not include an adjustment for sales tax. At 6.5 percent, this would add approximately $95,000 to the expenses. Assuming this additional expense for Year Two, the effect would be to reduce the net profit from operations from $854,512 to $759,512, which would not affect the long-term financial feasibility of the project. Mr. Balsano also opined that the real estate taxes included in the financial projections were understated by approximately $158,000. In response, Ms. Greenberg opined that if a shortage existed, it would be between $113,341 and $153,244, with an average of $133,293. When coupled with the omitted sales tax (-$95,000), and after adjusting for the inflated rent expense (+$371,000), this reduces Schedule 8, Line 27 from $854,512 ($483,512 plus $371,000) to approximately $450,184 (-$309,328/management fee of three percent and -$95,000/sales tax on rent at 6.5 percent). The profitability in year two would be reduced further if the real estate taxes are considered, i.e., $316,891(Greenberg projection) versus $292,184 (Balsano projection). Further, according to Mr. Balsano, the staff projections included in the application are understated by $469,391 assuming a shortage of 6.2 FTEs, or approximately $300,000 assuming a shortage of four FTEs. The applicant did not concede a shortfall existed. Also, as noted herein, the staffing projections are reasonable and there is no projected shortage. In balancing the net effect of the adjustments suggested by Shands and LRMC and the applicant's responses, it is concluded that the project will be profitable in Year Two if the applicant achieves the projected net operating revenue on Schedule 8A, Line 1. (It was conceded that if the management fee charged by HealthSouth to its subsidiaries was 2.7 percent as opposed to five percent as stated in the application's assumptions, a $20,000 profit in year two would be projected.) While reasonable persons could differ as to whether the expenses in the financial projections included in Schedule 8A are reasonable, the long-term financial feasibility of the proposed project is based upon revenues which are calculated using the projected utilization from Schedule 5 of the application. The projected utilization is driven by the conversion rate calculated by the applicant that materially overstates the potential market for these services in the proposed PSA. Because the applicant's revenue projections are not reasonable, the proposed facility is not likely to be financially feasible in the long-term. Section 408.035(1)(g): The extent to which the proposal will foster competition that promotes quality and cost- effectiveness. Mr. Gregg testified that there is no evidence within the Agency's ability to analyze whether the application will foster competition that promotes quality and cost-effectiveness. However, as Mr. Gregg testified, the ability of healthcare providers to promote competition is very limited because payors have very narrow policies about what they will pay. The overwhelming portion of patients who require CMR services are served by the Medicare program. There is no price competition involved in the provision of the services proposed in this application. 306 There is no persuasive evidence showing that competition for the services proposed is lacking, that the quality of the care provided to residents of the District is other than excellent, or that the services or equipment proposed are superior to those already available to patients in the District. While approval of the project will likely provide some residents of the PSA a closer alternative to CMR services and perhaps some savings in terms of travel expenses and time, no persuasive evidence proved that the project is likely to foster competition that promotes quality and cost-effectiveness. Section 408.035(1)(h): The costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction. The projected costs of construction in Schedule 1 are reasonable. The architectural plans are a reasonable. The architectural design and space for the proposed 40-bed freestanding rehabilitation facility are reasonable. The projected duration for construction of the facility is reasonable. The dates for construction are no longer accurate and would need to be extended due to the timing of the hearing. The projected land cost for the hospital is reasonable. The equipment listed in HS-Ocala Exhibit 6 is reasonable for the proposed facility. The equipment list does not include certain equipment, such as the AutoAmbulator, Bioness, and SaeboFlex, identified on pages 56-57 of the application. The cost of the AutoAmbulator was not included in equipment costs (although it is included on HS-Ocala Exhibit 6 at 8 of 16) because it is part of HealthSouth's research and development budget. The projected costs of the equipment are reasonable. Section 408.035(1)(i): The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent. HealthSouth has a history of providing health care services to Medicaid patients and the medically indigent, notwithstanding compliance issues relating to several of HealthSouth's Florida CMR facilities. Overall and based on the experience of HealthSouth, the applicant meets this criterion. Section 408.035(1)(j): The applicant's designation as a Gold Seal Program nursing facility pursuant to s. 400.235, when the applicant is requesting additional nursing home beds at that facility. This criterion is not applicable. Adverse Impact Shands and LRMC contend that approval of the proposed project would have a substantial negative impact on their operations. The issue of adverse impact is resolved in favor of Shands and LRMC, although it is a closer call than suggested by these parties, given the historical referral and admission of patients from within the PSA to Shands and LRMC. Consideration of adverse impact on existing providers is relevant to prove standing in a formal hearing involving a CON application pursuant to Section 120.57, Florida Statutes, and is a relevant factor to consider under Section 408.035(2), Florida Statutes, which includes consideration of the impact of approving a new hospital on an existing hospital in the same service district. Baptist Med. Ctr. of Clay, Inc. v. Agency for Health Care Admin. and Orange Park Med. Ctr., Inc. d/b/a Orange Park Med. Ctr., Case Nos. 06-0555CON, 06-0563CON, and 06-0843CON (DOAH Dec. 3, 2007, at ¶ 316; AHCA May 30, 2008), per curiam aff'd, 12 So. 3d 756 (Fla. 1st DCA 2009). Impact on Shands Mr. Balsano and Ms. Greenberg looked at the admissions to Shands from the defined PSA to determine the projected impact of the proposed facility on Shands. For the 12-month period ending June 30, 2007, Shands admitted 119 CMR patients from the zip codes comprising the PSA. To assess impact, Mr. Balsano and Ms. Greenberg agreed that patients with spinal cord or brain injury should not be considered, because those patients will likely continue to be treated at Shands. This left a total of 77 admissions. Mr. Balsano multiplied Shands' average contribution margin per patient, which he calculated to be $6,673, by the 77 patients to conclude that Shands would lose $513,821 in contribution margin. Mr. Balsano also considered the admissions to Shands from the secondary service area for the proposed facility that was referenced in the pre-application materials developed by Dixon Hughes. In 2007, Shands admitted 24 cases from this extended service area after subtracting the brain and spinal cord injury cases. Mr. Balsano concluded that Shands would lose half of those admissions. Applying the contribution margin to those cases resulted in an additional $80,076 of lost contribution for a total of $593,897. Ms. Greenberg disagreed with Mr. Balsano's use of the patients from the extended service area in his analysis of the potential impact on Shands. Ms. Greenberg opined that the use of these patients was inappropriate given the service area defined in the CON application, and the fact that HealthSouth considers the PSA a distinct medical market. Ms. Greenberg testified that major multiple trauma patients would also continue to be treated at Shands and, therefore, should be removed from the pool of at-risk patients. By doing so, Ms. Greenberg determined there were approximately 54 at-risk patients. Ms. Greenberg further reduced this number to account for patients who were admitted to Shands Rehab from within the Shands system because, according to Ms. Greenberg, those patients are likely to continue to be treated at Shands rehab. Applying this methodology to the 54 at-risk patients, Ms. Greenberg determined that the maximum number of at-risk patients was 19.3 and that the minimum number of at-risk patients was 13.5. Ms. Greenberg then multiplied Shands' average contribution margin per patient, which she determined to be $5,98410/ by the minimum and maximum at-risk patients she calculated, to determine that the impact to Shands would range from $80,787 to $115,196 in lost contribution margin. Using the contribution margin determined by Mr. Balsano resulted in a range of impact from $90,086 to $128,789 in lost contribution margin. Assuming consideration of the criticisms, Mr. Balsano testified that his estimate of 77 cases lost from the PSA was reasonable. Mr. Balsano based his conclusion, in part, on the fact that HealthSouth is projecting in excess of 600 admissions from the PSA in the Year Two. According to Mr. Balsano, to meet those projections, it is reasonable to assume the 77 non- spinal/non-traumatic brain injury patients that Shands is currently serving from the PSA will be redirected to the proposed facility. Having considered all of the evidence on this issue, including the historical referrals and admissions of patients to Shands, see, e.g., FOF 87, and while there is a wide variation in projected losses, it is concluded that Shands would lose significant dollars in contribution margin if the proposed facility were constructed. Impact on LRMC Similar to the analysis conducted with respect to Shands, Mr. Balsano looked to the admissions to LRMC from the applicant's HealthSouth defined PSA to determine the projected impact of the proposed facility on LRMC. For the 12-month period ending June 30, 2007, LRMC admitted 13 patients from the zip codes comprising the applicant's PSA. Notwithstanding the financial impact noted herein, from 2006 through 2008, the financial performance (excess revenues over expenses) of LRMC's CMR facility has improved. Mr. Balsano then multiplied LRMC's average contribution margin per patient which he calculated to be $8,007, by these 13 at-risk patients from the applicant's defined PSA to determine that the impact to LRMC for these 13 patients if the proposed facility is built would be $104,091 in lost contribution margin. Mr. Balsano also considered the admissions to LRMC from the extended service area for the proposed facility that was referenced in the pre-application materials developed by Dixon Hughes. In 2007, LRMC admitted 205 cases from the extended service area. Mr. Balsano determined that it was reasonable to assume that LRMC would lose half of those cases. Applying the contribution margin to those cases would result in an additional $824,721 in lost contribution for a total combined impact of $928,812 in lost contribution margin to LRMC if the proposed facility is built. Ms. Greenberg disagreed with Mr. Balsano's use of the patients from the extended service area in his analysis of the potential impact on LRMC. Ms. Greenberg felt that the use of these patients was inappropriate, given the service area defined in the CON application, and the fact that the applicant considers the PSA a distinct medical market. See FOFs 91-92. Ms. Greenberg's impact analysis focused on the hospitals from which LRMC derives its patients. Based on LRMC's data, Ms. Greenberg determined that in 2007, approximately 89 percent of LRMC's patients came from Leesburg Regional, Villages, Waterman or South Lake hospitals. In 2008, approximately 90 percent of LRMC's patients came from those hospitals with 81 percent coming from the Leesburg facilities. Since there were no admissions to LRMC from the three acute care hospitals in Marion County in 2007 and 2008, Ms. Greenberg determined that the likely impact to Leesburg if the proposed facility is built would be zero. For purposes of determining an upper limit of the potential impact on LRMC, Ms. Greenberg assumed that LRMC would lose the 10 percent of patients not coming from Leesburg Regional, Villages, Waterman or South Lake. Multiplying the 10 percent by the 13 total cases admitted to LRMC from the PSA, Ms. Greenberg determined that a total of 1.3 patients were at risk. Multiplying these at-risk patients by the contribution margin used by Ms. Greenberg of $7,27011/ results in an impact to LRMC of $9,451 in lost contribution margin. Notwithstanding the minimal impact to LRMC calculated by Ms. Greenberg, there is considerable overlap, in terms of either like or contiguous zip codes, between the Leesburg area and the PSA. For example, in fiscal year 2008, LRMC admitted eight patients from zip code 34491, three patients from zip code 32195, two patients from zip code 34420, and three patients from zip code 32784, or 16 patients. These zip codes are included in the defined PSA. LRMC admitted 37 patients from zip code 32159, 39 patients from zip code 32162, and 21 patients from zip code 34788, which are all zip codes that are contiguous to the defined PSa. In all, for fiscal year 2008, LRMC admitted 113 patients from zip codes that are either within or contiguous to the PSA. See also T. 2119. Applying Ms. Greenberg's contribution margin for LRMC to those 113 cases results in a loss to LRMC of $821,510. These 113 patients represent approximately 41 percent of LRMC's admissions. According to the Agency, a loss of approximately one-third of LRMC's admissions would be considered a substantial disruption of the patient flow pattern. Additionally, it is reasonable to assume that the applicant may attract patients from zip codes contiguous to its service area. Further, it is expected that the applicant will aggressively market to areas including contiguous zip codes and not stop at a bright line between zip codes. Having considered all of the evidence on this issue, including but not limited to the number of patients admitted from Ocala area hospitals, see, e.g., FOFs 91-92, it is concluded that while there is a wide variation in projected losses, LRMC, like Shands, would potentially lose significant dollars if the proposed facility were constructed. Such a loss in contribution margin and therefore admissions would substantially affect the facility. The loss of the contribution margins, coupled with the potential impact on existing staff and programs, is substantial enough to recognize the standing of Shands and LRMC.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying CON Application No. 10009. DONE AND ENTERED this 24th day of November, 2009, in Tallahassee, Leon County, Florida. S CHARLES A. STAMPELOS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 24th day of November, 2009.
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 Respondent requested a formal administrative hearing. 4. The parties have since entered into the attached Settlement Agreement. (Ex. 2) Based upon the foregoing, it is ORDERED: 1. The Administrative Complaint is withdrawn. ' ORDERED at Tallahassee, Florida, on this 227day of Appett , 2014. Elizabeth Duek, Secretary Agency for Hgalth Care Administration 1 Filed April 22, 2014 4:56 PM Division of Administrative Hearings
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE I CERTIFY that a true and correct copy oP this Final Order was served on the below-named persons by the method designated on this ual day of GOL: WA , 2014. Richard Shoop, Agency CTe 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) i (Electronic Mail) Alba M. Rodriguez Noraisy Perez , Administrator Office of the General Counsel Galloway Adult Care, Inc. Agency for Health Care Administration 10740 S.W. 87" Avenue (Electronic Mail) Miami, Florida 33176 (U.S. Mail) Todd P. Resavage Administrative Law Judge Agency for Health Care Administration Division of Administrative Hearings (Electronic Mail)
Findings Of Fact CMS is a program office within HRS. Petitioners are medical facilities located in New Orleans, Louisiana. For purposes of this proceeding, they are referred to collectively as Ochsner or as Petitioners. CMS, in the conduct of its operations contracts with various hospitals in Florida to provide Regional Perinatal Intensive Care Centers (RPICCs). Broward General Hospital contractecd with CMS to become such a RPICC and provided RPICC services during the time of the events in question. Baby M was born in Broward General Hospital on January 12, 1986 and became a client of CMS due to his family's financial status and the severe medical deficiencies attendant to his birth. His physician at Broward General Hospital was Dr. Brian Udell. Dr Udell diagnosed Baby M as having a respiratory difficulty or deficit which required him to undergo ECMO. No Florida hospital provided this procedure. Therefore, Dr. Udell arranged for Baby M to be transferred to Ochsner, which did provide that treatment at the time and since. Baby M was transferred to Ochsner and underwent that treatment from January 12, 1986 through February 6, 1986, whereupon he was returned to Broward General Hospital. Ochsner has billed CMS the sum of $65,372.28 for these services. Dr. Udell was a neonatal consultant for CMS and treating physician of Baby M at Broward General Hospital. Linda Lasso Reynolds was the CMS nursing director at the time. The contract between CMS and Broward General Hospital requires Broward General Hospital to have a neonatal director, who CMS looks to for accountability when it monitors the particular quality of care at a particular hospital. Dr. Udell was that neonatal director at Broward General Hospital. Broward General Hospital contracted with CMS to provide those neonatal services. Dr. Udell, in turn, contracted with Broward General Hospital, along with his group of physicians, to provide the neonatal or RPICC services that Broward General Hospital had contracted with CMS to provide. Dr. Udell was the director of the neonatal component of RPICC, which was a CMS program. Appropriate expertise regarding ECMO was not available in Florida. The condition from which Baby M suffered had at least an 80% mortality rate and was clearly an immediate, life-threatening, emergency situation. If the ECMO procedure had not been performed by Ochsner when it was, Baby M would have died. Therefore, the ECMO procedure was clearly necessary to preserve the life of Baby M. Accordingly, he was transferred to Ochsner and underwent the treatment. The expenses incurred have not yet been paid, hence this dispute. Concerning the issue of Ochsner's entitlement to payment by CMS, Dr. Ausbon, the Assistant Secretary and Program Director for CMS; Dr. Udell, the CMS consultant and treating physician of Baby M; Ms. Linda Lasso Reynolds, the CMS Nursing Director; Ms. Denice Eshleman, the Supervisor of Financial Counseling at Ochsner; and Ms. Darlene Jones Bourgeois, the Patient Administration Coordinator at Ochsner, testified concerning the issue of whether there was an agreement by which CMS was bound to pay Ochsner for the treatment at issue. Baby M was transferred to Ochsner by Dr. Udel1 on the specific representation that CMS would pay in full for the services rendered by Ochsner. Dr. Udell, as well as Denice Eshleman, established that Dr. Udell told Ms. Eshleman that he had authority to commit CMS to pay for the treatment. Ms. Eshleman inquired whether it would be a medicaid-type of reimbursement, and she was assured that it was not and that reimbursement would be in full by CMS. Dr. Udell's job description includes the right to determine the medical eligibility of children for the program and provided that his authority was not limited to the specific authority stated in the job description. See, Petitioners' Exhibit 1, pages 1- 3. Dr. Udell established that this was an emergency, nighttime situation and that the guidelines of CMS only required him to attempt to contact his superior, which he did prior to committing CMS funding to the out-of-state transfer of the baby for treatment. Dr. Udell's testimony is corroborated by the language of the pertinent regulation, 10J-1, Section 1.006, Florida Administrative Code, which provides: In the event of absence or unavailability of both the District Medical Director and the District Assistant Medical Director, the Nurse Director will assume all responsibilities for the direction of the local office. At such times all matters requiring immediate medical decisions will be referred to a CMS consultant physician designated by the District Medical Director. Dr. Udell attempted to contact a CMS official regarding transfer of Baby M to Ochsner for the ECMO treatment and was unable to find the appropriate superior to approve the transfer. It was established that Dr. Udell was a "designated CMS consultant physician". Consequently, he was empowered to make the decision to transfer Baby M and commit the CMS funding. Additionally, CMS had followed a practice of allowing him the authority to make out-of-state transfers of patients. The testimony of Linda Lasso Reynolds showed that prior to the subject transfer of Baby M, Dr. Udell had sent several clients out-of-state for research or experimental types of procedures, some of whom were RPICC neonatal patients. Since RPICC is a program of the CMS office, some of the babies involved in these transfers were CMS babies. This testimony by Ms. Reynolds was corroborated by that of Dr. Udell, himself. He recalled previously transferring a baby out of state on his own initiative and having the services reimbursed by CMS. The fact of Dr. Udell's authority to order the transfer and commit CMS funding was supported by the acts of Ms. Reynolds, the Nurse Director of CMS, around the time bf the transfer and acceptance of the patient by Ochsner. She called Ochsner and told an Ochsner official, Ms. Darlene Jones Bourgeois, that Dr. Udell had the authority to authorize the transfer and admission of Baby M at Ochsner. She indicated to Ochsner that Dr. Udell was eligible to make that decision, but that the only question she had concerned whether the procedure and treatment was experimental in nature. She related this to Ochsner during the conversation with Ms. Bourgeois by telephone on January 21, 1986, when the issue of Dr. Udell's authority to make the transfer to Ochsner arose. Ms. Reynolds assured Ms. Bourgeois that he was eligible to make that decision but that she had a concern regarding whether the experimental nature of the program allowed payment or not. Dr. Udell had the authority, as shown by the evidence of record, under the pertinent regulation, to transfer Baby M due to the fact, also, that it was an emergency situation. Dr. Ausbon, in his deposition, agreed with Dr. Udell that there was an 80% mortality factor for Baby M in the emergency respiratory situation which occurred. Certain CMS guidelines are contained in Exhibit 3, which provide that: "Out-of-state hospitals may be utilized upon the recommendation of the local CMS Medical Director and approval of the CMS program staff director, when the appropriate expertise is not available within the state." Dr. Udell established that this immediately necessary procedure was definitely not available in Florida in 1986. Under the CMS guidelines for "types of services" which can be provided by CMS, it is provided: Services to be provided or purchased include, but are not limited to, the following:... (d) provision of services at an out-of- state facility may be approved if the specialized expertise is unavailable in the state. Approval for out-of-state services *may* be granted in advance by the local CMS medical director with the concurrence of the CMS program staff director that the expenditures are reasonably necessary to maintain established standards. (emphasis supplied between *) This section, thus, indicates that approval "may" be granted in advance. This provision, and the preponderant evidence, does not establish that failure to obtain advanced approval precludes reimbursement for resulting transfers and treatment. In any event, in an emergency situation, there is a specific exception to the pre-authorization requirement. This emergency exception is contained in Section 10J-2.006 and 3.006, Florida Administrative Code, which provides that in emergency situations CMS must be notified the next business day for reimbursement to be granted, contingent upon available funding. Indeed, next day notice was provided here, as shown by the testimony of Ms. Reynolds to the effect that the perinatal nurse, a CMS employee, was informed about the transfer the next day. Additionally, it was established that Dr. Udell called Dr. Fannizi, the Medical Director of CMS, the day after Baby M was transferred to Ochsner, informed Dr. Fannizi of the situation and the emergency requirement to transfer Baby M. Additionally, there was no showing that reimbursement could be precluded because CMS did not have available funding. Thus, the required next- day notice occurred here, as is further corroborated by the fact that on a patient data card, an entry was made indicating that CMS was aware of the transfer of Baby M to Ochsner for treatment on the following day. It was thus shown that Dr. Udell had authority to bind CMS in this emergency situation to provide funding for the out-of-state transfer. CMS did not establish that the basis for its denial of reimbursement for this claim was for lack of available funding. In fact, Dr. Ausbon acknowledged that the only reason Baby M's treatment was not paid was the alleged lack of pre-authorization and the experimental nature of the out-of-state treatment. Even if Dr. Udell was not shown to have authority to order the transfer and treatment out of state at Ochsner, the facts of the case establish without question that this was an emergency situation and that without the transfer and treatment at Ochsner, Baby M would have died. Under these circumstances, there is no doubt, given the totality of testimony and evidence of record considered herein, that had Dr. Ausbon or Dr. Fannizi been located and contacted by Dr. Udell late that night when the transfer was contemplated, they would doubtless have approved the transfer under these undisputed, emergency circumstances. The evidence reveals that, in reality, the objection by the Respondents to reimbursement for the treatment provided by Ochsner really relates to the view of CMS that it was experimental in nature and that CMS had a policy guideline that it would not reimburse for out-of-state treatment of an experimental nature. In any event, it was established that Dr. Udell had the authority to make the commitment under the circumstances delineated above. The Petitioners assert that in addition to Dr Udell's authority to transfer Baby M and to bind CMS in such an emergency situation to fund the out- of-state transfer and treatment of Baby M, CMS is estopped to deny reimbursement to Ochsner for the services rendered. The Petitioners base this position on alleged affirmative action and inaction of CMS, representations of material fact made by it and reliance upon the same by Ochsner in incurring the costs of its treatment efforts. In this regard, there is no doubt that the documentation of Baby M's admission to the CMS program shows that Baby M was enrolled as a CMS funded baby and that the RPICC records show that CMS was aware of the transfer of Baby M to Ochsner and back as a "sponsored infant" throughout the time he was being treated at Ochsner. Thus, affirmative acts were made by CMS to enroll Baby M and, through its agents or employees, to refer Baby M to Ochsner for treatment. Express representations of material fact were also made by Dr. Udell, who had authority to transfer Baby M for the reasons found above and who represented that CMS would pay for the services in full. Also, the nursing director of CMS, Linda Lasso Reynolds, represented to Ochsner, shortly after the transfer, that Dr. Udell was eligible to make the transfer decision and referral. Ms. Reynolds did, however, raise the question of whether the procedure was experimental in nature and indicated, as a representative of CMS, that that agency had a question about funding the procedure and the transfer, if it was an experimental procedure. Thus, Ochsner was informed that there was some question or contingency with regard to whether CMS would, indeed, fund the treatment. Ochsner's representative, in that telephone conversation, informed Ms. Reynolds that the procedure, in its view, was not experimental and, indeed, Ochsner went ahead to undertake the treatment of Baby M after that communication with Ms. Reynolds. According to Ms. Eshleman, Ochsner screens the financial situation when expensive procedures such as ECMO are involved to make sure it will be reimbursed for the services rendered. Ms. Reynolds, in communication with Ms. Bourgeois, assured them that Dr. Udell had authority to refer Baby M but raised the question regarding the experimental nature of the procedure. Ochsner did change its position by incurring the medical costs and services rendered to Baby M in the amount of $65,372.28. It has not been established, however, that Ochsner relied upon that representation entirely in providing the treatment and services. The evidence rather reveals that Ms. Reynolds raised the question about whether the procedure was experimental and was assured by Ms. Bourgeois that it was not. What followed was that Ochsner immediately accepted Baby M for treatment. It has not been proven that Ochsner accepted Baby M merely upon Dr. Udell's and Ms. Reynolds' representations about reimbursement. In fact, the "exceptional circumstances" which the Petitioners raise as a basis for estopping the state agency and which it concedes are necessary before a government agency can be held to estoppel, really relate to the reason Ochsner actually accepted Baby M for treatment or at least a substantial portion of the reason. That is, Baby M was in a life-threatening situation, late at night, with an 80% mortality rate. Thus, Ochsner was placed in a position, as was CMS, that an immediate and quick decision had to be made since any delay would likely result in Baby M's death. This must be considered to have been the prevailing influence on Ochsner accepting Baby M, rather than any representation made by Ms. Reynolds or Dr. Udell regarding payment. In other words, although the representation was made by Ms. Reynolds and Dr. Udell regarding reimbursement, this was not the primary reason treatment was accorded Baby M by Ochsner, especially in the face of Ms. Reynolds' raising of the question of the experimental nature of the procedure as that relates to whether CMS would pay for it. Ochsner, at that point in the conversation, made a representation to CMS that it was not experimental, thus, by its own representation, assisting in cementing the treatment arrangement for Baby M. It is true that Dr. Udell and Ms. Reynolds knew that Baby M was transferred and that Ochsner had been told that CMS would pay for the services rendered. Dr. Ausbon also knew that Ochsner had been informed that CMS would pay for the services rendered. Further, Dr. Udell informed Dr. Fannizi on January 14, 1986, the day after the transfer was completed, of the transfer. Thus, the appropriate CMS personnel were aware of the transfer, the reason for it, and that Ochsner had been informed that CMS would pay for it. It is also true that Ochsner was not notified, according to the testimony of Ms. Eshleman, which is accepted, that the services would not be reimbursed until February 7, 1986, one day after Baby M was transferred back to CMS at Broward General Hospital. The Petitioners maintain that the decision not to reimburse had actually been made on January 14, 1986, the day Dr. Udell informed Dr. Fannizi of the situation. The Petitioners, thus, allege that CMS purposely and wrongfully waited to inform Ochsner that it would not be paid until after the treatment was completed and Baby M was transferred back to Broward General Hospital in order to deceitfully induce Ochsner to render the full treatment without its knowing that reimbursement was not forthcoming. This motive, however, has not been proven in this record and is not an "exceptional circumstance" as that relates to the estoppel issue. Although it is true that CMS did not actually inform Ochsner that no reimbursement was forthcoming until after the treatment was completed, it is just as likely that the treatment was allowed to be completed before the monetary dispute was raised because if the treatment were not carried through to completions Baby M would not receive the full benefit of it and would likely die. It must be remembered that this was an extreme, life-threatening situation and time for both parties to deliberate and consider their legal options and alternatives was not afforded either of them. The transfer had to be arranged by telephone call in the middle of the night and Baby M flown to New Orleans on a very expedited basis in order to save his life. Once Baby M was installed in the treatment facility, it would not have been practical nor in accordance with good health-care principles to transfer Baby M back to Broward General Hospital before his treatment was completed merely on account of a monetary dispute. It is, therefore, found that CMS did not harbor a motive of wrongfully withholding information regarding reimbursement from Ochsner in order to induce it to complete the treatment. Both parties obviously wanted the treatment to be successfully completed in order to safeguard the health of Baby M, and this was the primary consideration, rather than the question of payment for it. While Ochsner obviously wanted advanced information as to whether it would be reimbursed in order to safeguard the financial viability of its ECMO program and received a representation from Dr. Udell that payment would be in full, it also received the representation of Ms. Reynolds that some question might arise as to the experimental nature of the program, as that relates to the likelihood of reimbursement. Thus, Ochsner did not prove that it changed its position to its detriment on the representations made by Dr. Udell and Ms. Reynolds. Ochsner's representation that the treatment was not considered experimental might be said to have induced Ms. Reynolds to authorize the transfer in her capacity and Nurse Director of CMS and any representation made regarding payment. Finally, the other basis for denial of reimbursement was the alleged experimental nature of the treatment. Dr. Ausbon, himself, indicated in his testimony that although the lack of prior authorization had been an initial factor in denying reimbursement, it was not the real basis upon which he denied it. Rather, he denied it based upon his view of CMS policy to the effect that experimental procedures could not be paid for by the CMS program. The CMS rules and regulations pertaining to out-of-state transfers are contained in Exhibit 3, Section 11-3, pages 5 and 6. The only condition precedent to an out-of-state transfer is contained in the precatory language which states: "Occasionally, children's medical services authorize services for children in other states because such services are not available in Florida and the provisions of these services are necessary to preserve the life of the CMS patient." It is undisputed that at the time in question, the ECMO procedure was not available in Florida, and Dr. Udell established that the ECMO was necessary to preserve the life of Baby M. Thus, the two regulatory bases for out-of-state transfers, as permitted under Section 11-3, were met in this instance. The testimony of Dr. Ausbon and other testimony adduced by the Respondents indicates that there is a policy espoused by the Respondents to the effect that out-of-state transfers for experimental procedures shall not be reimbursed. The Petitioners attack this putative policy as an improperly promulgated rule adopted, in effect, without following the procedures for rule enactment, citing Amos v. HRS, 444 So.2d 43 (Fla. 1st DCA 1983). 1/ Even though there may be a policy by CMS precluding payment for experimental procedures performed outside the State of Florida, the evidence in this record establishes that the ECMO treatment at the time in question, and under the circumstance's, was not experimental. Therefore, that is an invalid basis upon which to deny reimbursement to the Petitioners. The Respondents' position that ECMO was experimental in nature was based upon the opinion of Dr. Curran, a neonatal consultant employed by CMS. Dr. Curran considered this question at the behest of Dr. Ausbon, the staff director of CMS. He based his opinion upon his view of the medical literature. His opinion was shown to be in error, in part because he testified that there were no Ochsner studies published concerning ECMO at the time he made his decision in 1986. In fact, the evidence shows that Ochsner's studies concerning this procedure had been published prior to that time and were available. He also indicated in his testimony that ECMO had been well documented in medical literature at the time he testified, but did not agree that ECMO had been so well documented prior to August of 1985. In fact, this was not correct. Exhibit 10 is an article entitled "Long Term Follow-up of Infants and Children Treated with Ecmo". This article was contained in the Journal of Pediatric Surgery, Vol. 20, August 1985, at page 410, and states: "The ecmo technique has been well documented in other reports." This and other literature referenced in the Petitioners' evidence establishes that the procedure was well documented in United States medical literature at the time in question in 1986. In fact, in his decision that the procedure was experimental, as reflected by his opinion that the procedure was not well documented in medical literature commonly relied upon by experts in his field, Dr. Curran relied upon the so-called "Bartlett Studies." These studies, however, were performed in 1977, almost nine years prior to the time when Dr. Curran rendered his opinion to Dr. Ausbon. They were clearly no longer current at the time in question. Moreover, Dr. Curran was not familiar with a commonly-accepted, learned treatise entitled "Pulmonary Diseases and Disorders" by Alfred S. Fishman, published in 1980. This treatise was published by an author affiliated with the same medical school attended by Dr. Curran. The treatise revealed that there had been ten-year studies regarding the use of ECMO in the treatment of acute respiratory insufficiencies, as shown in Exhibit 10 in evidence; however, Dr. Curran was not familiar with that literature. Additionally, Dr. Curran acknowledged that he did not disagree with the conclusion reached in the literature which was contrary to his conclusion that ECMO was experimental. For example, he could not disagree that since 1973, ECMO had been used successfully to treat infants and children, as shown by the above-referenced publication in the Journal of Pediatric Surgery, Vol. 20, August 1985, at page 410. Dr. Curran also testified as to his familiarity with the article entitled "Extracorporeal Circulation and Neonatal Respiratory Failure, A Prospect of Random Study", Pediatrics, Vol. 6, October 1985. This article is referenced in Exhibit 10 in evidence, and Dr. Curran acknowledged that he was unable to disagree with the conclusion reached in that study; that moribund infants can recover, with normal growth and development, when treated with ECMO and that the study proves that it improves survival rates when compared to conventional treatment. It is equally noteworthy that Dr. Curran testified that he later changed his mind about the experimental nature of ECMO and concluded that it was no longer experimental, based upon the so-called "Ann Arbor Studies". In fact, however, the Ann Arbor studies were performed much earlier than the situation at bar and were available in recognized medical literature in 1982 and in 1985, as shown by Petitioners' Exhibit 10. Dr. Curran simply was unaware of them or ignored them. Thus, Dr. Curran's conclusion of the experimental nature of the ECMO procedure was impeached sufficiently to establish the error of that conclusion. Moreover, the Petitioners proved, by independent evidence, that ECMO was not experimental. Dr. Udell established that in 1986, ECMO had already been written of extensively in the most important medical journals, including the Journal of Pediatrics, and that medical specialists in the field in various parts of the nation, including at Ochsner, had treated many patients with this method. Moreover, Dr. Udell established that it was the only treatment readily available which would be efficacious in treating Baby M's disease. Dr. Udell established that he was familiar with the literature on the subject and opined that based upon his familiarity with the literature and his experience, the procedure was not experimental at the time Baby M was referred to undergo it. His opinion is accepted. Additionally, Dr. Arensman, the pediatric surgeon at Ochsner who treated Baby M, testified that the procedure was not experimental in 1986. Although the number of facilities providing ECMO has greatly increased since that time, the evidence shows that the relatively low number of medical facilities providing that treatment in 1986 was not due to the fact that it was experimental in nature but rather that the equipment, facilities and training necessary to render the service were very expensive, which tended to retard the rapid attainment of the capability to provide that treatment by hospitals across the country. Moreover, it is noteworthy that, as established by Ms. Eshleman, ECMO was being taught to residents at the Ochsner Medical Foundation, a teaching hospital, in 1986 and that the procedure was being fully reimbursed by insurance companies and other third-party payors at that time, all of which shows that the procedure was not then considered experimental. In summary, the evidence establishes that the therapy performed on Baby M in early 1986 was not at that time an experimental procedure.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, and the candor and demeanor of the witnesses, it is, therefore, RECOMMENDED that a Final Order be entered by the Department of Health and Rehabilitative Services awarding the sum of $65,372.28 to the Petitioners as reimbursement for medical services rendered to Baby M. DONE and ENTERED this 1st day of May, 1990, in Tallahassee, Leon County, Florida. P. MICHAEL RUFF, 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 Administrative Hearings this 1st day of May, 1990.
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 Administrative Complaint is withdrawn. ORDERED at Tallahassee, Florida, on this 21 day of Oe bu 2013. en ~N Elizabe udek, Seg an Agency for Health Care 1 Filed October 31, 2013 3:15 PM Division of Administrative Hearings
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE I CERTIFY that a true and corre: of this Final Order was served on the below-named persons by the method designated on this Pty of Z eobne fT , 2013. Pp Agency for Health Care Administration 2727 Mahan Drive, Bldg. #3, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone: (850) 412-3630 Jan Mills Arlene Sanchez, Administrator Facilities Intake Unit Royal Gardens Villa (Electronic Mail) 1270 Northeast 112" Street Miami, Florida 33161 | Nelson E. Rodney Robert E. Meale Office of the General Counsel Administrative Law Judge Agency for Health Care Administration Division of Administrative Hearings (Electronic Mail) (Electronic Mai!)
The Issue Whether the Department of Health and Rehabilitative Services should issue certificates of need, in District 11, for the addition of 33 comprehensive medical rehabilitation beds to West Gables Rehabilitation Hospital, and/or for the establishment of a 45-bed comprehensive medical rehabilitation hospital to HealthSouth Rehabilitation Corporation.
Findings Of Fact HealthSouth filed CON Application No. 6654 on March 25, 1991, to convert space in HealthSouth Regional Rehabilitation Center for use as a 45-bed inpatient comprehensive medical rehabilitation ("CMR") unit. The parties stipulated that HealthSouth filed an adequate letter of intent, corporate resolution, notice of publication, and a complete application. HealthSouth is an eight-year old proprietary company specializing in the provision of rehabilitative services through the ownership and operation of inpatient and outpatient rehabilitation facilities across the United States, and some acute care hospitals specializing in orthopedic and neurological conditions. HealthSouth Regional, a 180-bed facility, presently licensed as a skilled nursing facility ("SNF"), was acquired by HealthSouth in September, 1986. Of the 180 beds, 120 beds function as a skilled nursing facility providing long-term care, skilled nursing care and subacute medical light rehabilitation care. HealthSouth has received HRS approval to delicense the remaining 60 nursing home beds and is seeking, in this application, to renovate that space to accommodate a 45-bed inpatient CMR unit with ancillary support space for the CMR programs, for a total project cost of $2,079,000. HealthSouth presently has modified its space and provides inpatient rehabilitation services in its 45 bed rehabilitation unit. These include 10 dedicated head trauma beds and four dedicated pediatric rehabilitation beds. HealthSouth also provides outpatient rehabilitation services. HealthSouth is located in south Dade County, in HRS District 11, for Dade and Monroe Counties. If approved, it would be the southern-most inpatient CMR provider in District 11 and the State. Its service area includes central and Southwest Dade County, and Monroe County. The parties stipulated to HealthSouth's accreditation history, as follows: HealthSouth although licensed as a SNF, was first accredited by the Commission on Accreditation of Rehabilitation Facilities ("CARF") in 1989, for one year, for acute inpatient and outpatient medical rehabilitation. That accreditation was again awarded in 1990, for three years. In 1991, CARF accredited HealthSouth's brain injury acute rehabilitation and work hardening rehabilitation programs for three years. CARF applies the same standards to SNF and CMR licensed facilities. In December 1991, HealthSouth was surveyed by the Joint Commission on the Accreditation of Health Care Organizations ("JCAHO"), and accredited as an acute comprehensive medical rehabilitation unit. Baptist is a 513-bed acute care hospital located in southern Dade County, approximately 15 to 30 minutes from HealthSouth. Baptist's services include the Davis Rehabilitation facility with a 36 bed inpatient CMR unit, distributed in three "pods", one each for brain injury services, orthopedic rehabilitation, and stroke and general rehabilitation services. Baptist has 10 beds designated for treatment of head trauma. Baptist employs 170 to 180 persons in its rehabilitation program. Baptist is CARF accredited for inpatient and outpatient rehabilitation services and has JCAHO hospital accreditation. Baptist has not sought CARF specialty accreditation for its head injury program, but has used CARF guidelines in establishing the program. Disputed CMR Rule Criteria A. Need Under Rule Formula There is no numeric need for additional CMR beds in HRS District 11, using the methodology of the formula in Florida Administrative Code Rule 10- 5.039. The bed need methodology formula in the rule indicates a need for 142 beds. It is a poor indicator of need since this projection of 1996 need, is fewer beds than are currently in use, with an average daily census of 232 patients in the 288 licensed beds in the district. In addition, while the rule formula assumes a correlation in the growth of acute care and CMR admission, acute care admissions have decreased, while CMR admissions have increased. District 11 utilization and bed capacity have increased 46% from 1986 to 1990. In part, due to the short-comings of the existing rule, HRS had published a proposed CMR rule revision, which was the subject of an administrative challenge at the time of this hearing. Testimony regarding the effect of the proposed rule was proffered at hearing. Notice has been given that, subsequent to the conclusion of these proceedings, a Final Order was entered upholding the new CMR rule, and on that basis Baptist requests that the proffer of evidence regarding the effect of the new rule be received into evidence. The proffer is rejected based on the inapplicability of the new rule to this batching cycle. Notwithstanding a zero fixed need pool, based on the rule formula, HRS has a history of approving CMR beds when other statutory and rule criteria indicate need, and where special circumstances exist in a district. District Occupancy New rehabilitation units will not normally be approved unless average annual occupancy for existing CMR beds exceeds eighty-five percent (85%) for the most recent 12 months available three weeks prior to HRS' publication of the fixed need pool. Florida Administrative Code Rule 10-5.039(2)(c)2. There are 288 licensed CMR beds in District 11, 20 more approved at Mercy Hospital, and 33 more approved at West Gables, as a result of South Miami's voluntary dismissal of consolidated Case No. 91-5704, for a total of 341 CMR licensed beds. Existing CMR beds at District 11 have occupancy levels of 87%, 89%, 92%, 97% and 99%, at Baptist, Mount Sinai Medical Center, South Miami Hospital, West Gables Rehab, and Parkway Regional Medical Center, respectively. Overall district utilization has increased proportionate to the increase in available CMR beds. Two facilities operating at approximately 60 and 70% are Jackson Memorial Hospital and Bon Secours Hospital. HealthSouth has demonstrated that Jackson Memorial and Bon Secours Hospitals have historically had lower occupancy levels, which have skewed district-wide occupancy rates downward. Jackson Memorial operates 78 of its 80 CMR beds, and maintains 15 beds in designated units for its regional spinal cord and trauma center, serving 43% of patients who come from beyond the district, but with an overall occupancy consistently below 70%. Similarly, while district occupancy has increased, Bon Secours Hospital's occupancy has steadily declined since approximately 1988. In addition, due to its location in the extreme northeast of Dade County, and relative distance from HealthSouth, in the extreme southwest of Dade County, Bon Secours does not offer a reasonable alternative to CMR services at HealthSouth. Considering the special circumstances at Jackson Memorial and Bon Secours Hospitals, a need is shown for additional CMR beds as determined by the threshold consideration of the CMR rule occupancy standard. In addition, as stated by the district health plan ". . . the special status of Jackson Memorial's rehabilitation unit as a regional spinal cord center and teaching hospital seems to set most of its beds outside the available pool for the South Florida Community." Regrettably, the district plan does not quantify "most", although it does go on to state that the CMR bed supply is adequate through 1993. If "most" is equated to only 51%, then only 38 of Jackson Memorial's 78 operational beds are available for district use. This would be consistent with the data showing the 43% of Jackson Memorial's patients come from beyond the district and it is reasonable that District 11 patients in need of the types of services provided at a regional facility would also be treated at Jackson. With a total district inventory of licensed and approved beds of 341, but with two Jackson Memorial beds not in use, and at least 40 not available to serve district CMR bed need, then the available licensed and approved district bed inventory is reduced to 299. Alternative CMR rule factors - historic, current, and projected incidence; trends in utilization; existing and projected inpatients The expert health planners who testified for HealthSouth and Baptist disagree on the extent of the need beyond the existing District 11 CMR beds. Various alternative methodologies resulted in projections for a gross need ranging from 295 to 441 CMR beds. The estimates for pediatric bed need ranged from 14 to 17, and for brain injury beds from 38 to 41. HealthSouth's alternative methodology for the determination of need, based on actual district utilization for the year ending June 30, 1991, projected forward to 1996, with the assumption that the rate of utilization remains constant, showed a gross need exists for 295 rehabilitation beds in District 11. HealthSouth's expert also calculated need using the "Orange County" methodology. This has been a widely used health planning tool, although it is based on somewhat dated 1982 data from Virginia. It also uses a 30.3 day average length of stay (ALOS), although Rule 10-5.039 contains a 28 day ALOS and the District 11 actual ALOS was 33.1 days in 1989, 26.9 in 1991 and below 26 in 1991. This methodology projected a gross rehabilitation bed need of 314 beds, of which 41 beds would be required for head injury patients and 17 beds needed for pediatric patients. These categories overlap, because some pediatric patients require rehabilitation for head injuries. Therefore, the total number of head injury and pediatric beds required could be less than 58. HealthSouth's expert also prepared a projection based on District 11 incidence rates, which projected a gross rehabilitation bed need of 342, using a 36 day ALOS. Another HealthSouth incidence rate analysis, using Florida incidence rates projecting the incidence of conditions resulting in the need for inpatient rehabilitation to increase at a rate of 4% per year from 1991 to 1996, resulted in a projected need for 441 rehabilitation beds. Baptist's expert prepared a bed need projection also using an incidence analysis, which showed a gross bed need for 1996 District 11 rehabilitation beds of 321 beds, of which 38 would be for brain injury patients and 14 beds would be for pediatrics. Baptist suggests that the methodologies used by the two experts which resulted in the most similar numbers should be accepted, and that the correct projection of gross need ranges from 310 to 325 beds, 38-41 for brain injury and 14-17 pediatrics. Using 299 as the actual number of available District 11 CMR beds, rather than 277 used by HealthSouth, but accepting HealthSouth's use of District 11 incidence rate methodology which results in a gross need for 342 beds, the net need for new District 11 CMR beds is in the range of 40 to 45 beds. The district incidence rate is accepted as the most accurate indicator of need, in part, due to the following statements in the 1990-92 District XI Health Plan According to the state formula (3.9 rehabilitation admissions per 1,000 acute care discharges with a 28 day ALOS), 136 rehab beds will be needed in District XI in 1993. Despite the fairly restrictive formula, additional beds have been licensed and approved in District XI by exception. Occupancy rates continued to increase until 1987 when there was some decrease. Experience in South Florida has always been very different from the HRS rule criteria. That is, even in 1984, rehab admissions were 4.4 per 1,000 acute care discharges. This rate has increased steadily since that time. and, at p. 9., South Florida is an area that has a growing need for rehabilitation services. One third of all functionally disabled people are age 65 and over. In District XI, there are 286,863 people in this age group. [footnote omitted] at p. 14, and The greater Miami community and the Keys are areas in which sporting accidents occur. These accident victims are often left with disabling conditions as a result of their injury(s). In addition, there is a large number of motor vehicle accidents contributing to the incidence of trauma cases in the area. As a result, South Florida has a higher incidence of spinal cord injuries than the national rate. at p. 15. These statements emphasizing the differences in South Florida support HealthSouth's use of the district incidence rate, including the use of an average length of stay which is consistent with that associated with more severe CMR cases, such as spinal cord injuries. Finally, the district plan concedes that to varying degrees rehabilitation services are being offered in other settings, such as nursing homes or by home health agencies, but with Medicaid and Medicare constraints which limit the number of therapy sessions. HealthSouth's census of 29 to 34 CMR patients is consistent with the fact that alternatives are being sought as a result of demand exceeding the supply of licensed CMR beds. Jackson Memorial with 10 beds and HealthSouth with 10 beds, are the only CARF accredited brain injury programs in District 11. 1/ Jackson refers brain injury patients to HealthSouth in cases in which the patients have low levels of cognitive functioning, as measured on the RANCHO scale. Because a low level on the scale is indicative of the need for a longer stay, Jackson Memorial, as a regional trauma center, seeks to move long term patients to other facilities to keep its beds available. Jackson also transfers patients funded by the state impaired drivers and speeders trust fund and others with similarly managed care requirements to HealthSouth, because those funds pay for vocational rehabilitation only in CARF accredited brain injury programs. Baptist asserts that the total District 11 brain injury CMR bed inventory is sufficient, with 10 at Jackson, 10 at Bon Secours, 21 at West Gables, 6 at Baptist, and an anticipated brain injury program at Mercy Hospital. Baptist also asserts that CARF specialty accreditation is not required and is not a basis to determine that these programs are not capable of providing the same services as Jackson and HealthSouth provide. Even assuming that all providers are capable of providing quality care to the same patients, Rule 10-5.039(2)(b)2., Florida Administrative Code, includes trends by third party payors as a consideration of need. On that basis, distinctions made by the State of Florida Division of Vocational Rehabilitation for the Impaired Drivers and Speeders Trust Fund and other managed care payors are factors contributing to the need for CMR beds at a CARF accredited brain injury unit such as that at HealthSouth. All parties agree that it has been necessary to transfer pediatric patients out of the district for services, and that this was a critically unmet need in District 11. Only Jackson Memorial offered pediatric services, in 12 beds. Baptist asserts that an additional 6-bed pediatric unit at West Gables, which became available approximately four months prior to hearing, and Baptist's own ability to accommodate up to 4 pediatric beds in its CMR unit, have now satisfied the need. Baptist does not have a designated pediatric unit and only served one pediatric patient in 1991. West Gables and Jackson Memorial combined total of 18 beds is consistent with the projected gross need for 14 - 17 pediatric CMR beds made by experts for HealthSouth and Baptist. The calculation was made by HealthSouth using the conservative and dated Orange County methodology, which was rejected in favor of the district incidence rate as an indicator of total CMR bed need. However, HealthSouth failed to provide adequate information from which a determination of pediatric need can be made using the district incidence rate. In addition, the expert doctors who testified that pediatric needs were not being met, as of February, were generally unfamiliar with the unit recently established at West Gables. Therefore, HealthSouth has failed to provide evidence that the need for District 11 pediatric CMR services is still not met, due to numeric need or third party payor constraints. State and District Health Plans HealthSouth asserted that it meets the spirit of the applicable state and district health plans preferences for conversion of acute care beds to CMR beds; for special services not available within the district to the pediatric and brain injured patients in specialty distinct programs; to further teaching activities by its university internship site affiliations; for the provision of services to the Medicaid and medically indigent population by its commitment to 5% Medicaid, 2% indigent and by its history of commitment to Medicaid in its SNF units; and for the provision of discharge planning and comprehensive outpatient rehabilitation services through its CARF specialty accredited outpatient CMR center. HealthSouth does not meet the preference in the state health plan for the conversion of acute care beds to rehabilitation beds. While HealthSouth's proposed conversion of nursing home beds to rehabilitation beds is preferable to new construction, the state health plan preference is specific in its emphasis on acute care bed conversion. The preference in the state health plan for providers proposing specialty services not currently available in the district, is met, in part, by HealthSouth's proposal to provide specialty programs for CARF accredited brain injury, but the need for HealthSouth's pediatric rehabilitation services was not established. See, Findings of Fact 19 and 20. The third preference in the state health plan for teaching hospitals, is not met by HealthSouth. The fourth preference in the state health plan, for disproportionate share providers, is, in part, inapplicable to HealthSouth, because HealthSouth is not licensed as a hospital. The preference also applies to providers who have historically provided Medicaid and indigent care. Based on the prehearing stipulation that Baptist did not challenge the historical provision of such services, HealthSouth is determined to meet this preference. See, also, 381.705(1)(n). The final preference in the state health plan, for providers who coordinate inpatient rehabilitation services with outpatient follow-up, is met by HealthSouth. In addition to containing CON allocation factors, the local health plan contains two applicable elements, one for additional pediatric rehabilitation beds, and a second for high quality rehabilitation programs in SNF. Baptist suggests that the pediatric element is no longer a priority due to the opening of the pediatric unit at West Gables, and HealthSouth failed to provide evidence of additional pediatric CMR bed need. The element favoring high quality rehabilitation programs in skilled nursing homes, is consistent with the state health plan statement that head trauma and other specialty services in nursing homes will increase competition to existing rehabilitation hospitals. Because HealthSouth can meet CMR needs in 45 beds, with the remaining 120 SNF beds, at generally lower costs than acute care CMR hospitals, this application is consistent with the element. HealthSouth's application also meets the continuum of care and cost containment goals of the local health plan. Two of the elements of the local health plan are the same as the state health plan. There is a preference for applications proposing to convert acute care beds to rehabilitation beds and a preference for disproportionate share Medicaid and indigent providers. As was discussed above, the HealthSouth proposal does not meet those preferences. See, Findings of Fact 22 and 25. The local health plan includes a preference for rehabilitation providers whose occupancy exceeds 85%, when the District's average occupancy exceeds 80%. HealthSouth cannot meet the first part of this standard because it does not have licensed rehabilitation beds. The average utilization for the licensed rehabilitation beds in District 11 for the application based period was 74.9%. However, excluding Jackson Memorial and Bon Secours Hospitals, as special circumstances justify in this case, occupancy levels for District 11 average over 92%. See, Findings of Fact 13 and 14. HealthSouth meets the local health plan element preference for programs which meet CARF standards, as is evident from its CARF accreditation. HealthSouth meets the local health plan element favoring comprehensive discharge planning, as a part of its service. Availability, quality of care, accessibility and utilization of like and existing services, Subsection 381.705(1)(b), Florida Statutes HealthSouth, if approved, will be the southernmost provider of CMR services in District 11. The only two CARF brain injury programs in the District, are the ten beds at Jackson Memorial Hospital and the ten beds at HealthSouth. HealthSouth, Jackson Memorial and West Gables offer the distinct CMR pediatric programs. Baptist acknowledged that at the time the Applicant filed its application, Baptist had no pediatric rehabilitation program or patients and that it had only one pediatric admission in 1991. Based upon the only need calculations for pediatric beds made by both HealthSouth and Baptist, there is a gross need for 14-17 pediatric beds in District XI, which is satisfied by the 18 beds at Jackson Memorial and West Gables. There are only 20 CARF accredited brain injury beds in the District, 10 at Jackson and 10 at HealthSouth and, based upon the need for brain injury beds calculated by experts for both HealthSouth and Baptist, there is a net need in the range of 38-41 beds for brain injury patients. Based on payor trends, however, some of these beds need to be CARF accredited. No evidence was provided that existing providers do not provide adequate quality inpatient rehabilitation care, except that which results from over-utilization of all except two facilities, which operate inconsistently with the district trends. Applicant's record of and ability to provide quality care. Subsection 381.705(1)(c), Florida Statutes, and Florida Administrative Code Rule 10- 5.039(2)(c)4. and (d) 1. HealthSouth meets the Commission on Accreditation of Rehabilitation Facilities (CARF) standards for hospital based acute care comprehensive medical rehabilitation services. It is CARF accredited for comprehensive in-patient rehabilitation, out-patient rehabilitation, acute brain injury rehabilitation and work injury rehabilitation. HealthSouth is accredited as an acute care hospital by the Joint Commission on Accreditation of Health Care Organizations. The evidence demonstrates that HealthSouth provides quality care, with the appropriate medical specialists and adequate staff working as an interdisciplinary team, and meets or exceeds all program requirements. Availability of alternatives. Subsection 381.705(1)(d), Florida Statutes. HealthSouth has failed to establish that the specialized needs of children for CMR services are not currently met in the district. HealthSouth has established that individuals needing catastrophic acute CMR care for head and spinal cord injuries, particularly those with lower RANCHO Levels, or those whose third party payors require CARF accreditation do not have adequate district services. Jackson Memorial is not an available alternative to its designation as a regional trauma and spinal cord center. See, Finding of Fact 19. Jackson Memorial is also not an available alternative for vocational rehabilitation services funded by the Impaired Drivers and Speeders Fund. HealthSouth was requested by the Division of Vocational Rehabilitation, Impaired Drivers and Speeders Fund to obtain CARF specialty accreditation in CMR inpatient brain injury and thereby become an alternative provider in District XI due to limitations on patient access to Jackson Memorial. Baptist is also not an available alternative. Although Baptist provides CMR services, its lack of CARF accredited specialties prohibits its' admission of vocational rehabilitation-funded brain injury patients. All parties stipulated that outpatient CMR does not provide the intense therapy need for some CMR patients. Resources and funds for project accomplishment and operation; impact on clinical needs of health professional training programs; accessibility to district residents. Subsection 381.705(1)(h), Florida Statutes. HealthSouth has adequate specialized staffing to run its acute care CMR program as currently operated. Its staffing patterns meet CARF standards, are consistent with industry standards for acute care CMR hospitals and are appropriate to its patient mix. HealthSouth has adequate international, national and state recruitment processes. HealthSouth also participates as an internship site for clinical training programs, which allows HealthSouth to attract new employees from the students who intern at HealthSouth for six weeks to three months. HealthSouth's manpower and staffing proposals, based upon a projected licensure change, are reasonable. HealthSouth has demonstrated that it has the ability to recruit the additional staff required. See, also Florida Administrative Rule 10-5.039(2)(b)4. Costs and methods of construction. Subsection 381.705(1)(m), Florida Statutes. Renovation as an alternative to new construction. Subsection 381.705(2)(c), Florida Statutes. HealthSouth presented evidence that the construction costs of $95.00 per square foot are reasonable, based upon prior recent construction experience within South Florida, familiarity with design and construction standards for specialty hospitals in Florida, prior design and construction experience with other HealthSouth facilities. Detail plans for phasing construction were not presented, although a general description of the proposed phasing is included in the application. Overall project costs of $2,079,000 including permitting fees are reasonable. HealthSouth will be renovating the interior, but will not be making exterior wall changes, will not have to replumb or rewire the 1983 structure, but only relocate connections and will not have to purchase any equipment. HealthSouth's construction will occur to up-grade its facility from nursing home to hospital licensure construction standards. The contingency fee of 10% identified for unforeseen expenses during construction is the industry standard and is reasonable. Demolition costs of $3.50/SF for the partial demolition of the existing building are accurately projected and reasonable based upon demolition project costs experienced by HealthSouth in Dade County. Based upon the assessment of patient needs and by the occupancy experienced in HealthSouth's CMR unit, discontinuation or a reduction of the service was an option which would exacerbate the need for CMR beds in the district. The construction of a new facility is more costly than the alternative of renovating a current facility. The schematic plan for the proposed renovation meets the code and licensure requirements. Immediate and long-term financial feasibility. Subsection 381.705(1)(i), Florida Statutes. Impact on competitors and costs. Subsection 381.705(1)(e). The parties stipulated that the HealthSouth proposal is financial feasibly in the short term and that HealthSouth has adequate resources to fund capital operations. Interest on the total debt will, at current rates result in reducing projected project costs by approximately $70,000, and HealthSouth has the ability to finance the proposed renovations. Income and expense projections are reasonable, based on HealthSouth's experience in other CMR facilities. Because HealthSouth currently serves acute care CMR patients, its actual historical utilization data is a reasonable basis for projecting future utilization. Baptist noted that HealthSouth's RANCHO level II patients and others currently admitted after stays in other CMR units, would not qualify for admission to HealthSouth's CMR unit, if approved. Baptist's Exhibit 3 demonstrates Baptist's assertion that 13 patients in 1990, and 12 patients in 1991 at HealthSouth were not appropriate candidates for inpatient rehabilitation services. Given the need for 40 - 45 beds in the district, appropriate CMR patient demand should exceed any inappropriate CMR patients. Baptist has sent some of these patients to HealthSouth's SNF. These patients will continue to be able to use the SNF and have the advantage of a continuum of rehabilitation care in the same facility. Finally, non-CMR patients reasonably can be expected to be offset by those CMR patients HealthSouth has previously been unable to attract due to its SNF licensure. HealthSouth will be able to meet the CMR rule occupancy standards. See, also, Florida Administrative Code Rule 10- 5.039(2)(c)2. HealthSouth projects that charges per patient day and its fee structure for CMR patients currently treated at HealthSouth will remain the same. The projected in-patient revenue per patient day of $874.00 for 1992 is the current rate at HealthSouth for CMR patients. While the charges HealthSouth projects are, in general, among the lower charges in the district, they are not all inclusive. Ancillary charges, drugs, therapies and supplies would be billed to patients above the per diem charge. The salary expense projections made at the time of the application are consistent with those paid in the industry and those currently paid by HealthSouth, and are reasonable. According to Baptist, HealthSouth's expenses are understated on its pro forma projections. Although Baptist concedes that these errors do not affect the long term financial feasibility of the project, Baptist contends that the errors do affect the patient charges and costs. Specifically, Baptist asserts that it is unlikely that HealthSouth can complete its renovations within the budgeted project costs and that HealthSouth failed to include in the pro forma a management fee of 5% of gross revenues which must be paid to its parent corporation. HealthSouth's proposed charge structure should reflect the costs of the management fee. When the pro forma is corrected to included the management fee, the proposal is still financially feasible. If HealthSouth's 5% management fee is passed directly to patients, then recalculating HealthSouth Exhibit 22, revenue per patient day would increase from $874 to $926. As ranked on HealthSouth's Exhibit 38, at $926 per patient day, HealthSouth would continue to be below the district average of $1,004 and still be second lowest charge provider in the district. Baptist's assertion that the inclusion of the management fee negates HealthSouth's ability to be a lower cost provider is rejected. HealthSouth's proposal will have little or no impact on existing providers because HealthSouth already has a CMR average daily census of 29 historically, and 34 currently. In addition, Baptist Exhibit 3 shows that Baptist transferred 8 patients to HealthSouth in 1991 due to the absence of available beds at Baptist. The approval of HealthSouth's proposal will foster competition through the availability of a lower charge provider and ultimately benefit consumers and employers by offering its lower health care costs. Past and proposed provision of services to Medicaid and medically indigent. Section 381.705(1)(n), Florida Statutes. The Applicant made a 5% and 2% commitment respectively as part of its CON application to serve Medicaid and medically indigent patients. The Medicaid commitment is 4.1% higher than the district-wide average of patient days available and will improve access within the district. There is no clear showing, however, of the lack of services to Medicaid CMR patients, except as may be assumed based on statutory and health plan preferences. Availability of less costly, more efficient, or more appropriate alternatives. Section 381.705(2)(a), Florida Statutes. HealthSouth's proposal was the most efficient, least costly alternative based on the determination of need for additional CARF accredited brain injury CMR beds in the district XI, and the lower cost of renovating a facility which is already providing these services. CMR services, due to high occupancy rates, are not reasonably available at other inpatient facilities in the district, or at Bon Secours or Jackson Memorial Hospitals. See, Finding of Fact 19. Appropriateness and efficiency of existing facilities providing similar services. Section 381.705(2)(b), Florida Statutes. The district occupancy excluding Jackson Memorial and Bon Secours Hospitals is in excess of 85% which is beyond that considered an efficient or optimal operating levels. Probability of serious access problems in the absence of proposed services. Section 381.705(2)(d), Florida Statutes. Jackson Memorial is the only hospital licensed CMR provider with a CARF accredited brain injury service with only 10 beds available. This creates a serious access problem for patients with third party payors requiring their treatment in CARF accredited brain injury units.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Health and Rehabilitative Services issue a Final Order approving Certificate of Need application number 6654 for the establishment of a 45-bed comprehensive medical rehabilitation unit and program by HealthSouth Rehabilitation Corporation, d/b/a HealthSouth Regional Rehabilitation Center. RECOMMENDED this 23rd day of June, 1992, at Tallahassee, Florida. ELEANOR M. HUNTER 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 23rd day of June, 1992.
Findings Of Fact Tampa General Hospital is a 530 bed short term general acute care hospital. Hillsborough County Hospital is a 157 bed general acute care hospital. Both are divisions of Hillsborough County Hospital Authority, a public hospital system located in Tampa, Florida. T. 25; Hearing Officer E. 1. Tampa General Hospital and Hillsborough County Hospital filed timely petitions and have standing to seek such hearings. On January 29, 1987, both petitioners filed fiscal year 1986 actual reports as required by statute and rules of Tampa General Hospital. On April 23, 1987, Tampa General Hospital filed in revision to its actual report with respect to RPICC charges and receipts. It is officially recognized that a recommended order has been entered on this date in the consolidated DOAH case numbers 87-5207H and 87-5208H recommending that the April 23, 1987, revision be deemed final and not a correction submitted pursuant to section 12, chapter 87-92, Laws of Florida. If this conclusion is correct, the question of approval or disapproval of the April 23, 1987, revision is moot. The Board, however, contends that it has generally has the authority to disapprove a report of this nature pursuant to its rules and the statutes establishing the Board. On June 9, 1987, and the weeks thereafter, both Petitioners sought to correct their 1986 actual reports with respect to funds received by the Petitioners from Hillsborough County pursuant to the special sales tax enacted pursuant to chapters 84-373 and 85-555, Laws of Florida. These proposed corrections were submitted pursuant to section 12, chapter 87-92, Laws of Florida. The Hospital Cost Containment Board contends that it generally has authority to disapprove reports filed with the Board by hospitals regulated by the Board, and specifically contends that authority extends to revisions sought by the Petitioners with respect to both the sales tax funds and the RPICC funds. The Board has proposed to adopt rule 27J-1.0075 pursuant to its interpretation of it is authority and cites section 395.505, Fla. Stat. (1987) as general authority for such rulemaking. The portion of rule 27J-1.0075 challenged in this case provides; (2) A hospital may correct its 1986 fiscal year data for purposes of the redistribution of the Public Medical Assistance Trust Fund surplus, if such correction is verified by the hospital's independent certified auditors. Such corrections shall not be considered if received at the Board office after September 29, 1987. All such corrections shall comply with the following criteria, to the Board's satisfaction. (E.S.) The proposed rule was not published in the Florida Administrative Weekly until September 4, 1987, well into the period for filing corrections to 1986 actual reports pursuant to section 12, chapter 87-92, Laws of Florida. Since the record in these cases is consolidated with the section 120.57(1), Fla. Stat., cases, all of the findings of fact in the recommended order in DOAH case numbers 87-5207H and 87-5208H entered this same date, including the Appendix to that recommended order, are incorporated in this order by reference for purposes of background information in this rule challenge.
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 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. ORDERED at Tallahassee, Florida, on this / / day of 0 ote be,~ , 2012. tary e Administration 1 Filed October 12, 2012 2:35 PM Division of Administrative Hearings
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE 1 CERTIFY that a true and correct copy of this Final Order was served on the below-named persons by the method designated on this ize tay of thee , 2012. Richard Shoop, Agency 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) Tria Lawton-Russell, Senior Attorney Myrtle Merina Peterson —_| Office of the General Counsel Owner Agency for Health Care Administration 120 Maple Avenue (Electronic Mail) Ft. Pierce, Florida 34982 (U.S. Mail) Stuart M. Lerner Administrative Law Judge Division of Administrative Hearings (Electronic Mail)
The Issue The issues are whether Respondent withdrew controlled substances from the narcotics dispensing system and failed to document the administration or wastage of those substances; if yes, whether this conduct fails to conform to minimum acceptable standards of prevailing nursing practice; and, if yes, what penalty should be imposed on Respondent's license as a registered nurse.
Findings Of Fact The Department is the state agency charged with regulating the practice of nursing in the State of Florida. Respondent Marla Gunderson ("Respondent") is, and has been at all times material hereto, a licensed registered nurse in the State of Florida, having been issued license number 2832622 by the Florida Board of Nursing in 1994. Respondent was employed by Lee Memorial Health Care System Rehabilitation Hospital ("Lee Memorial") as a registered nurse from about January 29, 2001, until about March 22, 2001. During the first three or four weeks of Respondent's employment, she participated in a full-time training program through Lee Memorial's education department. A part of this training included training in the administration of medications to patients. After completing the three or four-week training program, Respondent began working directly with patients. From about mid-February 2001 through early-March 2001, Respondent had no problems with documenting the administration of medications to patients. Some time in or near the middle of March 2001, Melanie Simmons, R.N. ("Simmons"), Lee Memorial's Nursing Supervisor, received a complaint from the night nurse following Respondent's shift. The complaint alleged that a patient's wife reported that the pain medication her husband was given by Respondent was not the Codeine that had been ordered by the physician. Pursuant to Lee Memorial's policies and procedures, Simmons conducted an investigation into the allegations of the above-referenced complaint regarding the Respondent. Lee Memorial's policies and procedures set out a specific method for conducting investigations regarding the administration of medications to patients. First, the physician's orders are checked to see what medications have been ordered for the patient. Next, the Pyxis records are pulled to determine if and when medications were withdrawn for administration to patients. The Pyxis system is a computerized medication delivery system. Each nurse has an assigned user code and a password, which must be entered before medication can be withdrawn from the Pyxis system. Then, medication administration records (MARs), the documents used by nurses to record the administration of medications to patients, are checked to verify whether the nurse documented the administration of the medications to the patients for whom they were withdrawn. Finally, the Patient Focus Notes, the forms used by nurses to document non-routinely administered medications, are also checked to determine if, when, and why a medication was given to a patient. If after comparing the physician's orders, Pyxis records, MARs, and Patient Focus Notes, it is determined that medications were not properly administered or documented, the nurse making the errors is advised of the discrepancy and given an opportunity to review the documentation and explain any inconsistencies. Simmons' investigation, which included comparing the physician's orders, Pyxis records, MARs and Patient Focus Notes, revealed discrepancies in medications withdrawn by Respondent and the MARs of the three patients under her care. The time period covered by the investigation was March 12 through March 17, 2001. Of the six days included in the investigation period, Simmons determined that all the discrepancies had occurred on one day, March 13, 2001. Nurses are required to record the kind and amount of medication that they administer to patients. This information should be recorded at or near the time the medication is administered. It is the policy of Lee Memorial that should a nurse not administer the medication or the entire amount of the medication dispensed under his or her password, that nurse should have another nurse witness the disposal of the medication. The nurse who serves as a witness to the disposal of medication would then enter his or her identification number in the Pyxis. As a result of that entry, the nurse who observed the disposal of the medication would be listed on the Pyxis report as a witness to the disposal of the medication not administered to patients. Such excess medication is termed waste or wastage. The physician's order for Patient F.R. indicated that the patient could have 1 to 2 Percocet tablets, to be administered by mouth, as needed every 3 to 4 hours. On March 13, 2001, at 14:06 Respondent withdrew 2 Percocet tablets for Patient F.R. However, there was no documentation in the patient's MAR, focus notes, and other records which indicated that Respondent administered the Percocet tablets to Patient F.R. The physician's order for Patient G.D. indicated that 1 to 2 Percocet tablets could be administered to the patient by mouth as needed every 4 to 6 hours. On March 13, 2001, at 11:18 Respondent withdrew 2 Percocet tablets and on that same day at 17:16, Respondent withdrew another 2 Percocet tablets for Patient G.D. However, there was no documentation in the patient's MAR, focus notes, or any other records which indicated that Respondent administered the Percocet tablets to Patient G.D. The physician's order for Patient T.G. indicated that 1 to 1.5 Lortab/Vicodin tablets could be administered to the patient by mouth as needed every 4 to 6 hours. On March 13, 2001, Respondent withdrew 2 Lortab/Vicodin tablets for Patient T.G. However, Respondent failed to document on the patient's MAR, focus notes, or other records that the medication had been administered to Patient T.G. With regard to the above-referenced medications withdrawn by Respondent on March 13, 2001, there is no documentation that any of the medications were wasted. All the medications listed in paragraphs 13, 14, and 15 are narcotics or controlled substances. Because Respondent did not document the patients' MARs or focus notes after she withdrew the medications, there was no way to determine whether the medications were actually administered to the patients. Proper documentation is very important because the notations made on patient records inform nurses on subsequent shifts if and when medications have been administered to the patients as well as the kind and amount of medications that have been administered. Without such documentation, the nurses taking over the subsequent shifts have no way of knowing whether medication has been administered, making it possible for affected patients to be overmedicated. Respondent has been a registered nurse since 1994 and knows or should have known the importance of documenting the administration of medications to patients. Respondent does not dispute that she did not document the administration and/or wastage of the narcotics or controlled substance she withdrew from the Pyxis system on March 13, 2001, for the patients identified in paragraphs 13, 14, and 15. Moreover, Respondent provided no definitive explanation as to why she did not properly document the records. According to Respondent, she "could have been busy, called away, [or] got distracted." Following Simmons' investigation of Respondent relating to the withdrawal and/or administration of medications, Respondent agreed to submit to a drug test. The results of the drug test were negative. Prior to being employed by Lee Memorial, all of Respondent's previous experience as an R.N. had been in long- term care. Except for the complaint which is the subject of this proceeding, there have been no complaints against Respondent's registered nurse's license.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Health enter a Final Order (1) imposing an administrative fine of $250; (2) requiring Respondent to remit the Agency's costs in prosecuting this case; (3) requiring Respondent to complete a continuing education course, approved by the Board of Nursing, in the area administration and documentation of medications; and (4) suspending Respondent's nursing license for two years. DONE AND ENTERED this 1st day of April, 2002, in Tallahassee, Leon County, Florida. CAROLYN S. HOLIFIELD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 1st day of April, 2002. COPIES FURNISHED: Reginald D. Dixon, Esquire Agency for Health Care Administration General Counsel's Office-Practitioner Regulation Post Office Box 14229 2727 Mahan Drive Tallahassee, Florida 32317-4229 Marla Gunderson 1807 Northeast 26 Terrace Cape Coral, Florida 33909 Ruth R. Stiehl, Ph.D., R.N. Executive Director Board of Nursing Department of Health 4080 Woodcock Drive, Suite 202 Jacksonville, Florida 32207-2714 Mr. R. S. Power, Agency Clerk Department of Health 4052 Bald Cypress Way, Bin A02 Tallahassee, Florida 32399-1701 William W. Large, General Counsel Department of Health 4052 Bald Cypress Way, Bin A02 Tallahassee, Florida 32399-1701
The Issue Whether University Community Hospital should be issued Certificate of Need Number 6936 to convert 20 acute care beds to 20 comprehensive medical rehabilitation beds.
Findings Of Fact UCH is a 424 bed acute care hospital located in northern Hillsborough County. UCH is the applicant for CON Number 6936 to convert 20 medical/surgical acute care beds to 20 comprehensive medical rehabilitation ("CMR") beds. Its service area is northern Hillsborough and eastern Pasco Counties. AHCA is the successor to HRS as the designated agency to administer the CON laws. UCH currently operates 404 acute care beds and 20 skilled nursing beds. Its services include an emergency room, open heart surgery, obstetrics, and a home health agency. From 1982 to 1990, UCH operated an inpatient comprehensive rehabilitation unit, certified by HRS and recognized by the Federal Health Care Finance Administration ("HCFA") as a 9-bed unit in 1984, and as an 18-bed unit from 1985 through 1988. Substantial renovation of the unit's sixth floor south wing, in 1987 and 1988, was intended to meet the standards of the Commission on Accreditation of Rehabilitation Facilities ("CARF"). UCH was never actually CARF accredited. After the enactment of a CMR rule, HRS preliminarily determined that UCH was a "grandfathered" 9-bed provider of CMR services. That preliminary determination was successfully challenged in University Community Hospital v. Department of Health and Rehabilitative Services, 11 FALR 1150 (HRS Final Order 2/13/89), and the unit was closed in 1990. In September 1990, UCH applied for CON 6412 to convert 20 acute care beds to 20 CMR beds. That application was denied. University Community Hospital v. Department of Health and Rehabilitative Services, et al., 14 FALR 1899 (HRS Final Order 4/15/92). NEED IN RELATION TO STATE AND LOCAL HEALTH PLAN Five preferences in the 1989 Florida State Health Plan relate to CMR programs and are applicable to the review of the UCH application. The first preference relates to applicants proposing the conversion of excess acute care beds to establish a distinct rehabilitation unit within a hospital. AHCA agrees that the UCH application is consistent with this preference. The second preference, favoring applicants proposing specialty inpatient or outpatient rehabilitation services not currently offered in the district, it not met. In District VI, three CMR providers have a total of 112 licensed beds, 111 beds in operation: 59 at Tampa General Hospital in Hillsborough County, 24 at Winter Haven Hospital in Polk County, and 28 at L.W. Blake in Manatee County. The third preference applies to the teaching hospitals. UCH is not a teaching hospital although it does have contracts with teaching institutions to allow students to gain clinical experience at UCH. See, Subsection 408.035(1)(g), Fla. Stat. (1992 Supp.). The fourth preference, is for applicants with a history of providing a disproportionate share of charity care and Medicaid patient days. The preference specifically requires qualifying hospitals to meet Medicaid disproportionate share hospital criteria. UCH is not a disproportionate share provider, and does not meet this preference. The fifth preference, for applicants with an existing comprehensive outpatient rehabilitation facility ("CORF"), is met. UCH planner's testimony was not refuted and AHCA concedes that UCH offers a number of therapies to outpatients. The June 1990 District VI Allocation Factors Report, prepared by the Health Council of West Central Florida, Inc., is the local health plan applicable to the review of this application. The first preference favors disproportionate share providers, and does not support the UCH application. See, Finding of Fact 10. UCH is entitled to the second local preference for the conversion of existing medical/surgical beds. See, Finding of Fact 7. The fourth preference is for existing providers of fewer than 20 beds seeking to add more beds and is, therefore, not applicable to the UCH application. POPULATION CONDITIONS AND NEED The third local preference, for additional rehabilitation services if existing ones are not meeting community needs, is the essence of the UCH claim that its services are needed. The local factor is also directly related to the criteria of Subsection 408.035(1)(b), Florida Statutes, and Florida Administrative Code, Rule 59C-1.039(2)(b). The rule is as follows: Historic, current and projected incidence and prevalence of disabling conditions and chronic illness in the population in the Department service district by age and sex group; Trends in utilization by third party payers; Existing and projected inpatients (e.g., orthopedic, stroke and cardiac cases) in need of rehabilitation services; and The availability of specialized staff. Based on rule methodology for computing numeric need, there is zero need for additional CMR beds in District VI. That methodology is based on the assumption that there will be 3.9 CMR beds needed for every 1000 acute care discharges. In terms of population conditions, UCH has urged the consideration of the actual statewide use rate of 8.46 CMR admissions for every 1000 acute care admissions, which would equate to a need for an additional 132 beds in the District. In District VI, there are 6.67 CMR admissions for every 1000 acute care admissions which, considering projected population increases, equates to a need for 80 additional beds. According to UCH, CMR bed availability is a factor in determining utilization In District VI, there are 7 CMR beds per 100,000 people. UCH points to the actions of AHCA in approving an increase from 8 to 12 CMR beds per 100,000 people in District IX in the absence of any published numeric need. AHCA emphasizes that empty CMR beds exist in District VI, which had 1990-1991 occupancy rates of 72.07 percent, below the 85 percent minimum for approval of new beds absent not normal circumstances. Tampa General's rate was 82.77 percent, but Winter Haven's was 50.82 percent and L. W. Blake in Manatee County was 67.36 percent occupied. As AHCA also indicated, population projections and numeric need are calculated to determine future need. UCH has demonstrated that the geographic and economic accessibility of Winter Haven in Polk County is limited for patients from the UCH area. In part, the limitations result from the requirement of third party payers for CARF accredited facilities, when intense, inpatient rather than outpatient CMR services are needed. Winter Haven is not CARF accredited. In addition, during the time there was a low rate of utilization at Winter Haven, some licensed beds were not in service due to construction. Utilization in the first quarter of 1992 reached just under 80 percent at Winter Haven. UCH also claims that AHCA approved beds at Winter Haven based on the geographic inaccessibility of beds in Tampa. AHCA filed a Request for Official Recognition on February 3, 1993, which shows the award of beds to Winter Haven resulted from a stipulated settlement. UCH's Exhibit 9 does include the distance to Tampa as one of several factors considered in the agency's approval of the stipulated settlement with Winter Haven. L. W. Blake in Manatee County is also geographically inaccessible for Hillsborough County patients and their families, particularly the elderly proposed to be served by UCH. In addition, L.W. Blake's utilization increased to an average of 84 percent in the first quarter of 1992. Tampa General has 59 of its 60 CMR beds in service. All rooms at Tampa General are semi-private, necessitating same gender placements, except one isolation room. In addition, patients with similar injuries are grouped together. Tampa General is a regional referral center for vocational rehabilitation and a state designated center for head and spinal cord injuries. These factors limit the availability of Tampa General's beds to serve District VI residents, as does its occupancy rate of 85 percent. In the past, when UCH operated and then closed a CMR unit, there was no statistical impact on Tampa General. Currently, Tampa General has a waiting list and patients average a 9 day wait. For the reasons identified by UCH, including geographic and economic inaccessibility, the district incidence of CMR admissions as compared to acute care admissions, UCH has provided sufficient, credible evidence of the need for the services proposed by UCH in additional CMR beds in District VI. AHCA has amended its CMR rule to better predict need. Although it is not applicable to computing numeric need for this cycle, AHCA asserts that its new rule methodology is the alternative which should be used rather than other factors, such as the ratio of CMR beds to acute care admissions, or population. Under the new rule methodology, there is no numeric need for additional CMR beds in District VI. Assuming arguendo, that AHCA is correct, the other factors related to the accessibility and availability of services at the three existing providers could not be disregarded. PROJECT COSTS AND FINANCIAL FEASIBILITY In this application, UCH proposes to operate a 20-bed CMR unit in the renovated space of the sixth floor south wing. That space currently is being used as an overflow area for 30 medical/surgical beds. UCH estimates total project costs of $248,596, with major expenses for consulting, legal, and accounting expenses, and $67,496 of the total or $3.66 per square foot for redecorating the renovated wing. No additional construction is anticipated. AHCA acknowledges that UCH has the funds to finance the project, but asserts that the costs are understated by $150,000 due to the failure of UCH to include construction costs to bring the wing into compliance with the Americans with Disabilities ACT ("ADA"). UCH notes, and AHCA concedes, that the rule requiring compliance with ADA standards was not adopted until a year after this application was filed. In addition, ADA compliance is required for new construction, not redecorating. AHCA also criticized UCH for omiting the cost of relocating 10 medical/surgical beds, after the conversion of 20 of the existing 30 beds to CMR beds. UCH asserts that the conversion or relocation of the 10 beds is properly an expense item in the project which would utilize the 10 beds and is included in other pending CON applications for difference services. Other CON projects however, are not certain to be approved. If none are, UCH's expert planner testified that the 10 beds will be located in a general surgical area which is being redecorated. UCH also maintains that as long as it can bring the CMR beds on line within the total project costs within the application, it should be allowed to do so, even if that involves shifting amounts among the various expense items. AHCA has not estimated the cost of relocating the 10 beds, nor contradicted UCH's alternative plans for covering that cost. UCH's projected total project costs are, therefore, accepted as reasonable. AHCA agrees that UCH could profitably operate a CMR unit, particularly, as proposed to provide stroke and orthopedic services to medicare patients. When UCH operated an 18-bed unit, occupancy ranged from 77 percent to 84 percent, with 80 to 85 percent of the patients transferring from UCH acute care beds. Projected charges, deductions from revenue, payor mix, and expenses are reasonable. AHCA did not dispute UCH's assertions that its proposal is the most cost-effective alternative for increasing district CMR beds, because no other provider could initiate such services without substantial construction costs, and that utilization of CMR beds is increasing. ADDITIONAL CON CRITERIA AND CMR PROGRAM REQUIREMENTS UCH, as acknowledged by AHCA, has a history of providing quality care and is accredited by the Joint Commission on Hospital Accreditation. UCH has a staff physiatrist to serve as CMR Medical Director. The types of therapists needed to provide a coordinated multidisciplinary approach to rehabilitation are already on staff at UCH. The staffing and renovations of the wing in the late 1980's indicate that UCH will meet the requirements for CARF accreditation. UCH does not propose to offer CMR services as a joint venture with any other health care facility, nor does it propose to offer a service which is not available in adjacent districts. In fact, AHCA notes that District V providers had occupancy rates of 53.31 percent for 1990-1991. The agency's rule, however, places at issue the historic, current and projected population conditions in the Department service district by age and sex group.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered issuing Certificate of Need No. 6936 to University Community Hospital to convert 20 medical/surgical acute care beds to 20 comprehensive medical rehabilitation beds in District VI. DONE and ENTERED this 19th day of October, 1993, at Tallahassee, Florida. ELEANOR M. HUNTER 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 19th day of October, 1993. APPENDIX TO CASE NO. 92-5107 University Community Hospital Accepted in Findings of Fact 1 and 3. Accepted in Finding of Fact 1. Accepted in Finding of Fact 4. Accepted in Finding of Fact 5. Accepted in Finding of Fact 5. Accepted in Finding of Fact 4. Accepted in Findings of Fact 1 and 5. Accepted in Finding of Fact 29. Accepted in Finding of Fact 29. Accepted in Finding of Fact 6. Accepted in Preliminary Statement. Accepted in Preliminary Statement. Accepted in Finding of Fact 17. Accepted in Finding of Fact 18. Accepted in Finding of Fact 18. Accepted in Finding of Fact 18. Accepted in or subordinate to Finding of Fact 19. Subordinate to Finding of Fact 19. Accepted in Findings of Fact 20 through 24. Accepted in Finding of Fact 16. Subordinate to Finding of Fact 21. Subordinate to Finding of Fact 21. Accepted in Finding of Fact 29. Accepted in part and rejected in part in Findings of Fact 6-16. Accepted in Finding of Fact 8. Accepted in Finding of Fact 20. Accepted in Finding of Fact 20. 28. Accepted in Finding of Fact 21. 29. Subordinate to Finding of Fact 21. 30. Accepted in Finding of Fact 22. 31. Accepted in Finding of Fact 22. 32. Accepted in Finding of Fact 24. 33. Subordinate to Finding of Fact 24. 34. Subordinate to Finding of Fact 24. 35. Subordinate to Finding of Fact 24. 36. Accepted in Finding of Fact 23. 37. Subordinate to Finding of Fact 23. 38. Subordinate to Finding of Fact 23. 39. Subordinate to Finding of Fact 23. 40. Subordinate to Finding of Fact 23. 41. Subordinate to Finding of Fact 23. 42. Accepted in Finding of Fact 23. 43. Subordinate to Finding of Fact 23. 44. Subordinate to Finding of Fact 23. 45. Subordinate to Finding of Fact 23. 46. Subordinate to Finding of Fact 23. 47. Subordinate to Finding of Fact 24. 48. Subordinate to Finding of Fact 24. 49. Subordinate to Finding of Fact 24. 50. Subordinate to Finding of Fact 24. Accepted in Findings of Fact 7 and 27. Accepted in Finding of Fact 29. Accepted in Finding of Fact 29. Accepted in Finding of Fact 29. Accepted in Finding of Fact 30. Accepted in Finding of Fact 27. Accepted in Findings of Fact 26 and 28. Subordinate to Finding of Fact 27. Accepted in Finding of Fact 27. Accepted in Finding of Fact 27. Accepted in Finding of Fact 27. Accepted in Findings of Fact 31 and 32. Subordinate to Finding of Fact 1. Accepted in Findings of Fact 27 and 32. Subordinate to Finding of Fact 27. Subordinate to Finding of Fact 30. Subordinate to Finding of Fact 30. Accepted. Accepted in Finding of Fact 32. Accepted and subordinate to Finding of Fact 1. Agency For Health Care Administration 1. Accepted in Findings of Fact 1 and 3. 2. Accepted in Findings of Fact 1 and 3. 3. Accepted in Finding of Fact 1. 4. Accepted in Finding of Fact 4. 5. Accepted in Finding of Fact 5. 6. Accepted in Finding of Fact 6. 7. Accepted in Findings of Fact 1 and 4. Accepted in Findings of Fact 26 and 28. Accepted in Finding of Fact 27. Accepted in Finding of Fact 32. Accepted in Finding of Fact 1. Accepted in Finding of Fact 29. Accepted in Finding of Fact 5. Accepted in Finding of Fact 6. Accepted in Finding of Fact 7. Accepted in Finding of Fact 8. Accepted in Finding of Fact 9. Accepted in Finding of Fact 10. Rejected in Finding of Fact 11. Accepted in Finding of Fact 12. Rejected in Finding of Fact 16. Accepted in Finding of Fact 13. Accepted in Finding of Fact 14. Rejected in Findings of Fact 20 and 22. Accepted in Finding of Fact 15. Subordinate to Finding of Fact 32. Accepted in Finding of Fact 19. Accepted in Finding of Fact 21. Rejected in Findings of Fact 20-23. Accepted in Finding of Fact 17. Accepted in Findings of Fact 8, 17 and 19. Accepted in Finding of Fact 17. Accepted in Finding of Fact 16. Accepted in Finding of Fact 16. Rejected in Findings of Fact 20-23. Rejected in Findings of Fact 20-23. Accepted in Finding of Fact 18. Rejected in Finding of Fact 24. Accepted in Finding of Fact 18. Accepted in Finding of Fact 25. Rejected in Finding of Fact 24. Accepted in Finding of Fact 16. Accepted in relevant part in Finding of Fact 21. Accepted in Finding of Fact 16. Conclusion Rejected in Findings of Fact 20-23 and 29. Accepted in Finding of Fact 16. Accepted in Finding of Fact 32. Accepted in Finding of Fact 20. Accepted in Finding of Fact 20. Rejected in Finding of Fact 29. Accepted in Findings of Fact 29 and 4. Rejected in Finding of Fact 29. Accepted in Finding of Fact 21. Subordinate to Findings of Fact 21-24. Accepted in Findings of Fact 21-24. Accepted in Findings of Fact 21-24. Subordinate to Finding of Fact 24, and Accepted in Finding of Fact 33. Accepted in Findings of Fact 4, 21 and 32. Rejected in Findings of Fact 4, 21, and 32. Subordinate to Finding of Fact 21. Subordinate to Finding of Fact 21. Accepted in Finding of Fact 33. Accepted in Finding of Fact 33. Accepted in Finding of Fact 9. Accepted in Finding of Fact 9. Subordinate to Finding of Fact 29. Subordinate to Finding of Fact 29. Subordinate to Finding of Fact 29. Accepted in Finding of Fact 29. Rejected in relevant part in Findings of Fact 27 and 28. Rejected in Findings of Fact 27. Subordinate to Finding of Fact 21. Accepted in Finding of Fact 23. Rejected in Finding of Fact 27. Accepted in Finding of Fact 29. Issue not reached. See Finding of Fact 27. Issue not reached. See Finding of Fact 27. Issue not reached. See Finding of Fact 27. Accepted in relevant part in Finding of Fact 28. Subordinate to Finding of Fact 29. Rejected in Findings of Fact in 21-24. Rejected in Finding of Fact 23. Accepted, except last sentence in Findings of Fact 21-24. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Lesley Mendelson, Senior Attorney Agency for Health Care Administration 325 John Knox Road, Suite 301 Tallahassee, Florida 32303-4131 Cynthia S. Tunnicliff, Esquire Post Office Box 190 Tallahassee, Florida 32302
Findings Of Fact Introduction Tampa General Hospital is a 530-bed short-term general acute care hospital. Hillsborough County Hospital is a 157 bed-general acute-care hospital. Both are divisions of Hillsborough County Hospital Authority, a public hospital system located in Tampa, Florida. T. 25; Hearing Officer Ex. 1. Tampa General Hospital and Hillsborough County Hospital filed timely petitions for formal administrative hearings, and have standing to seek such hearings. Tampa General Hospital and Hillsborough County Hospital historically have provided high levels of uncompensated indigent care. T. 26. If Tampa General Hospital prevails on the RPICC issue and the sales tax issue, it will be due a total of $4,713,108, subject to a final adjustment factor. Hearing Officer Ex. 1, ex. C-4. If Tampa General Hospital prevails only upon the RPICC issue as reported in its April 23, 1987, correction to its fiscal year 1986 actual report, it will be due a total redistribution of $3,806,371, subject to the final adjustment factor. Hearing Officer Ex. 1, ex. C-1. If Tampa General Hospital prevails only upon the sales tax issue, by comparison of exhibits C-1 and C-4 to Hearing Officer Ex. 1, the total redistribution due will be increased by the difference between the two amounts in the last two paragraphs, or by $906,737. The Hospital Cost Containment Board's proposed agency action is contrary to the position urged by Tampa General Hospital on the two issues, and the proposed agency action would result in a total distribution of $3,015,907, subject to the final adjustment factor. T. 29; Hearing Officer Ex. 1, ex. C-5. If Hillsborough County Hospital prevails on the single issue that pertains to it, the sales tax issue, its total redistribution will be $315,543, subject to the final adjustment factor. Hearing Officer Ex, 1, ex. D-2. The preliminary determination of the Hospital Cost Containment Board is that Hillsborough County Hospital should receive $247,883 as a total redistribution, subject to the final adjustment factor. Hearing Officer Ex. 1, ex. D-1. Relevant definitions from the FBURS manual Account 5940, "contractual adjustments-other," of the FHURS manual, providers in part that: These accounts must be used to report the differential (if any) between the amount, based on the hospital's full established rates, of contractual patients' charges for hospital services which are rendered during the reporting period and are covered by the contract, and the amount received and to be received from third-party agencies in payment of such charges, including adjustments made at year end, based upon cost reports submitted. * * * In any instance in which the difference between the amount of a patients' [sic] bill and the payment received by the hospital from a third-party agency is recoverable from the patient, any resulting uncollected amounts should be reported in the appropriate bad debt or uncompensated care category and should not be reported in contractual adjustments. (E.S.) Account 5960, "charity/uncompensated care-other," of the FHURS manual, provides in part that: Account 5960 shall be used to report the differential between the amount, based on the hospital's full established rates, of bills for hospital services to charity/ uncompensated care patients and the amounts to be received from patients or on behalf of patients (including amounts received from voluntary agencies or government agencies on behalf of specific indigent patients) in payment for such services. (E.S.) Account 5960 further requires that the hospital have a verifiable process for determining indigency for each individual patient. Indigency is defined generally as a family income for the preceding 12 months less than 150 percent of the federal poverty guidelines. The instructions for account 5960 further provide that: When the hospital receives lump-sum grants or subsidies (rather than specific payments for individual patient's bills) from governmental or voluntary agencies for the care of medically indigent patients, the amount of the lump-sum grant or subsidy must be reported under "Restricted Donations and Grants for Indigent Care." (Account 5970). (E.S.) Account 5970, "Restricted Donations and Grants for Indigent Care," of the FHURS manual, provides: This account is used to report voluntary and governmental agency grants or subsidies for the care of non-specified medically indigent patients during the current reporting period. (E.S.) Account 9130, "Unrestricted Tax Revenue and Appropriated Funds," of the FHURS manual, provides: This account contains the revenue obtained from assignment of unrestricted tax revenue and funds appropriated by governmental entities. The RPICC issue, Tampa General Hospital The April 23, 1987, revision to Tampa General Hospital's 1986 actual report Tampa General Hospital's fiscal year ends on September 30th. On January 29, 1987, Tampa General Hospital filed its prior year report of its fiscal year 1986 actual experience. P. Ex. 2. As originally filed, Tampa General Hospital reported the following on worksheet C-2: $14,466,596 on line 11 as contractual adjustments-other; nothing on line 13, charity/uncompensated care-other; and ($2,633,338) on line 14, restricted donations and grants for indigent care. Id. Included in the amounts on line 11 of the report as a contractual adjustment-other were the total charges for all patients served by the RPICC program at Tampa General Hospital in fiscal year 1986, and included in line 14 as restricted donations and grants for indigent care were all the amounts received by Tampa General Hospital in fiscal year 1986 from the RPICC program. T. 38. Prior to July 1, 1987, the Hospital Cost Containment Board accepted corrections to prior year reports of actual experience. Dep. (James Bracher), p. 6. On about April 23, 1987, Tampa General Hospital filed a revision to worksheet C-2 of its 1986 report of actual experience. P. Ex. 3. The revision reported $2,067,928 on line 11 as contractual adjustments-other, $32,104,116 on line 13, charity/uncompensated care-other, and made no change to line 14. (A negative $2,633,338 was still reported on line 14 as restricted donations and grants for indigent care.) Id. The April 23, 1987, revision moved the RPICC charges from line 11, contractual adjustment-other, to line 13, charity/uncompensated care-other. There was no change to line 14 since Tampa General Hospital had already reported all amounts received from the RPICC program on line 14 as restricted donations and grants for indigent care. T. 39-40. The fortieth day from April 23, 1987, was June 2, 1987. In the 40 days that followed April 23, 1987, and including a reasonable time thereafter for filing of the April 23, 1987, revision, Tampa General Hospital was given no written notice by the Hospital Cost Containment Board that the April 23, 1987, revision to its fiscal year 1986 report did not conform to the Hospital Uniform Reporting System Manual requirements, or did not otherwise conform to rule or statute. T. 42; Dep. (James Bracher), p. 27. Such written notice was not given until October 28, 1987. James Bracher, Executive Director to the Hospital Cost Containment Board, testified that it was his "understanding" that "we did discuss the possibility with the hospital of having, conducting a site visit to review this information." Dep. (James Bracher), p. 19. But on cross examination, Mr. Bracher qualified the implications of that statement. He was asked: "You earlier testified about some discussions with unnamed hospital people about a site visit on the RPICC issue. When did those discussions occur?" Mr. Bracher testified: "I don't recall that I said I discussed with them. I think I said I discussed with HCCB staff about the need to make site visits as a result of the April submission by Tampa General." (E.S.) Id. at pp. 51-52. The examination continued: Q. So you're not aware of any discussions between staff and the hospital? A. I did not participate in any direct discussions, no. Q. And you're not aware of any? A. I could not give you a date on any specific ones. The only other witness who testified as to oral communications to Tampa General Hospital concerning the issues in dispute in this case was Bill Summers. Mr. Summers was under going examination only with respect to the sales tax issue, not with respect to the RPICC issue. T. 181. Mr. Summers was asked "[W]hat did you do before October 13th, in reviewing this issue. Anything?" He answered in pertinent part: "I made a visit to the facility and reviewed their patient accounting records, in terms of determining medical indigency. I have had numerous conversations with hospital personnel, Mr. Powers, and others." T. 182. In summary, the testimony of Mr. Summers did not clearly pertain to either the April 23, 1987, revision or the RPICC issue. Thus, even if there had been visits or discussions with Tampa General Hospital, there is no evidence that the position of the Hospital Cost Containment Board concerning the RPICC issue was orally conveyed to Tampa General Hospital. Moreover, Mr. Summers provided no dates of such visits or discussions. On this record, one cannot determine if the visits and discussions occurred near the October 13, 1987, the end date used in the question, or in the 40 days following April 23, 1987. Similarly, Mr. Bracher's testimony is insufficient to determine when the Hospital Cost Containment Board orally notified Tampa General Hospital that the April 23, 1987, revision was nonconforming, or, indeed, that such notification in fact did occur. Consequently, there is no credible evidence to infer that within forty days after April 23, 1987, the Hospital Cost Containment Board orally notified Tampa General Hospital that its April 23, 1987, revision was nonconforming. On July 17, 1987, the Hospital Cost Containment Board determined the amount of redistribution due Tampa General Hospital pursuant to section 12, chapter 87-92, Laws of Florida, and advised Tampa General Hospital of its decision by a memorandum of that date. P. Ex. 4. The memorandum states that the redistribution has been determined "based on 1986 actual audited data." The redistribution formula attached to the first page of the memorandum shows the redistribution calculation. One factor accepted by the Hospital Cost Containment Board for its determination of redistribution was the amount of charity care ($32,104,116) contained in Tampa General Hospital's April 23, 1987, revision to its 1986 actual audited data. Id.; T. 40-41. Thus, the initial calculation of redistribution by the Hospital Cost Containment Board was based upon the accounting classifications contained in the April 23, 1987, revision to Tampa General Hospital's 1986 actual report. As a general policy, if, after July 1, 1987, a hospital did not attempt to correct its fiscal year 1986 actual report, the redistribution to that hospital would have been calculated upon the prior actual report of the hospital. T. 174-76. In the case of Tampa General Hospital, however, the magnitude of the change prior to July 1, 1987, was the reason that at some time after July 17, 1987, the staff of the Hospital Cost Containment Board decided to subject the change to scrutiny. The prior year report of actual experience contains two parts. The first is a detailed report containing worksheets and must be prepared pursuant to the uniform financial accounting system of the FHURS manual. The first report is not certified by a certified public accountant. See e.g., P. Ex. 2. The second is a summary report certified by the hospital's certified public accountant. Worksheet C-2 is contained in the first report which is not certified by a certified public accountant. Dep. (James Bracher), p. 4-5; P. Ex. 2. The April 23, 1987, revision to the original 1986 prior year report filed by Tampa General Hospital on April 23, 1987, was only a revision to worksheet C-2, and thus was only a revision to the first detailed report. Consequently, the April 23, 1987, revision was a revision to a report that did not require certification by the hospital's certified public accountant. The Hospital Cost Containment Board has a policy that when a hospital requests that a correction be made to a prior year actual report, the staff of the Hospital Cost Containment Board asks the hospital to have the correction reviewed by its CPA firm to determine why the correction better conforms to the accounting definitions in the FHURS manual. This policy has been in existence for approximately one year preceding December 1987. Dep. (James Bracher), p. 6. The basis for the policy was not explained in the record. Certification by a CPA, however, is not deemed to be sufficiently reliable to result in automatic approval of the proposed change. Dep. (James Bracher), p. 7. The Hospital Cost Containment Board did not apply this policy to Tampa General Hospital until after forty days from the date the April 23, 1987, revision was filed. The policy was not applied until about August 3, 1987. On that date, Mr. Bracher sent a letter to Newell France, Tampa General Hospital's chief executive officer. The letter stated that "the revised worksheets for your 1986 actual report have been received." P. Ex. 6. At that point, the only "revised worksheets" for the 1986 actual report were the April 23, 1987, revisions. Mr. Bracher's letter stated that the revision had to be verified "by the independent auditor who originally prepared the audited financial report for the fiscal year in question." In response to the letter of August 23, 1987, from Mr. Bracher, by letter dated September 28, 1987, Tampa General Hospital filed a revised worksheet C-2 certified by Price Waterhouse, certified public accountants. Price Waterhouse was the independent certified auditor for Tampa General Hospital for fiscal year 1986. T. 89. The amount of a negative $2,633,338, as "restricted donations and grants for indigent care" on line 13 was the same on both the September 28, 1987, and April 23, 1987, revisions. As discussed above, this amount represented the receipts from the RPICC program in 1986. The amount of "charity/uncompensated care-other" reported on the September 28, 1987, worksheet C-2, line 13, changed to $11,457,248. P. Ex. 6. (It was $32,104,116 on the April 23, 1987, report.) Nonetheless, it is clear from the record that the amount of $11,457,248 on the September 28, 1987, revision contained the RPICC charges for 1986 as reported in the April 23, 1987, revision. First, the parties stipulated that exhibit C-3 to Hearing Officer Ex. 1 contained "Tampa General's 9/28/87 submission, which continues to include the RPICC classification." Exhibit C-2 contains $11,457,248 as "charity care," thus reconciling to the September 28, 1987, worksheet C-2. The amount of $11,457,248 of "charity care" could not "continue to include the RPICC classification" unless it contained the same report and classification of RPICC charges as was contained in the immediately preceding report, which was the April 23, 1987, revision. Moreover, having been given the opportunity to deny such continuity, witnesses for the Hospital Cost Containment Board seemed to agree that the September 28, 1987, revision did not change the amounts and classifications of RPICC charges and receipts from the April 23, 1987, revision. T. 200-201; Dep. (James Bracher), p. 64. As a part of the September 28, 1987, revision Price Waterhouse submitted a letter dated September 25, 1987, to Mr. Bracher that stated that it had been asked by Tampa General Hospital to "review the Hospital's original and amended HCCB 1986 Actual Report for its method of presenting deductions from revenue." (E.S.) P. Ex. 6. The letter appended to the September 28, 1987, revision from Price Waterhouse then explicitly states that "the $11,457,248 reclassified from Contractual Adjustments-Other to Charity/Uncompensated Care- Other is arithmetically accurate and represents a correction to the original submission in order to comply with the definitions contained in . . . the FHURS Manual definitions of account numbers 5940 and 5960." (E.S.) The letter from Price Waterhouse further states on page 2 that the RPICC reclassification relates to "unpaid portion of gross bills for services rendered to patients economically eligible for the RPICC grant funds," and demonstrates that this amount, which has been placed into the Charity/Uncompensated Care-Other category, is $6,141,002. In the same calculation, the review shows that Tampa General Hospital received $2,633,338, in RPICC grants in fiscal year 1986. P. Ex. 6. Upon consideration of findings of fact 24 through 27, it is further concluded that on September 28, 1987, Price Waterhouse, as certified public accountants, independently verified and approved the accounting classifications contained in the April 23, 1987, revision. b. The proper FHURS manual accounting classifications of RPICC charges and receipts: characteristics of the RPICC program The RPICC (Regional Perinatal Intensive Care Center) program is a state program administered by the Children's Medical Services (CMS) program office of the Department of Health and Rehabilitative Services. The program is established to provide state funding of services at designated hospitals for high risk pregnant women and infants. These patients typically have long (45 to 50 day) stays in the hospital. T. 29-30. RPICC funds are grant funds. P. Ex. 11; sections 383.17, 383.171, 383.18, and 383.19, Fla. Stat. (1987). RPICC funds do not constitute restricted or unrestricted revenues provided to a hospital by local governments or tax districts. Persons eligible for RPICC services must be indigent, and must be individually qualified. P. Ex. 11, attachment I; T. 75-77. The hospital has to maintain logs of specific patients in the RPICC program, and the patients have to meet certain criteria. Dep. (James Bracher), p. 44. The hospital must maintain detailed records containing information specific to each RPICC patient served. By statute, the procedures for disbursement of RPICC funds must be pursuant to and according to the terms of contracts. Sections 383.117, 383.18, and 383.19(3), Fla. Stat. (1987). These contractual agreements must provide "that parents or guardians of those patients who are financially eligible to participate in the RPICC program shall not be additionally charged for treatment and care which has been contracted for by the [Department of Health and Rehabilitative Services]." Section 383.18, Fla. Stat. (1987). Thus, no hospital bills may be sent to RPICC patients or to their guardians, and these persons may not be charged by the hospital. Tampa General Hospital did not send any bills to its RPICC patients, or to the guardians of those patients. By statute and by contract, a hospital that participates in the RPICC program must serve all patients eligible, regardless of-funding from HRS. T. 35. Tampa General Hospital entered into a contract with HRS to be a Regional Perinatal Intensive Care Center, and received RPICC funds during fiscal year 1986 pursuant to that contract. P. Ex. 11. By contract, Tampa General Hospital was promised what the contract called a "fixed price," subject to availability of state funds. P. Ex. 11. Contracts for administration of RPICC grants do not in effect have a fixed contract price, but provide instead a lump sum that is the maximum amount promised, to be paid according to the conditions of attachment I to the contract. P. Ex. 11, attachment I. Attachment I further provides that the "grant funds" specified in lump sum amount "will be disbursed and accounted for according to the approved RPICC neonatal care (NCG) payment system for hospital services . . . The "payment schedule" requires submission by the hospital of the "expenditure report" which is the form marked exhibit K, P. Ex. 11. Tampa General Hospital was by contract entitled to receive each month the lesser of the prorated portion of the grant or the "total expenditures" for that month. P. Ex. 11. The hospital is normally paid a fixed prorated share of the total grant amount each month. T. 31. The monthly payment does not fluctuate by numbers of patients seen in that month. T. 33-34, 80-81. The RPICC program does not make payments for specific services rendered to specific patients, and does not make payments for specific bills of patients, and thus is not like the Medicaid or Medicare programs, or an HMO contract. Dep. (James Bracher), pp. 47, 60. Instead, the RPICC program has a provision that if certain minimum levels of service are not reached, the total amount of funds will not be disbursed to the hospital. Id. Even when all RPICC funds are not "earned," the result is not patient-specific. Funds which are not earned must, pursuant to the RPICC contract, be paid back to HRS at the end of the year. T. 86; P. Ex. 11, attachment I, paragraph D.1.d. The hospital also has the option of having the shortfall applied to funds due in the next fiscal year. Dep. (James Bracher), pp. 48, 53. The RPICC program requires the submission of a cost report at the end of the year, but monthly payments are not made by cost reports. Dep. (James Bracher), p. 25; T. 32. Medicaid reimbursement is based on cost reports at the end of the fiscal year. T. 33. Under the RPICC program, there is no relationship between actual costs and payments made. Id. With Medicaid and Medicare, the more patients the hospital treats, the more money the hospital receives. The same is true for HMO contracts. Payment is thus made for services rendered to specific patients for these programs. Dep. (James Bracher), p. 47. This is not true in the RPICC program. Although Tampa General was obligated by law and its contract to serve all RPICC eligible patients, the maximum that it would be paid was the fixed price stated in its contract. Tampa General Hospital applied the payments it received from HRS in the RPICC program to its general ledger accounts, not to specific patient accounts. T. 120. A grant may have a contract involved for administration of the grant. Dep. (James Bracher), pp. 44, 46. It is not unusual for a governmental agency that administers a grant program to require the recipient of the grant to substantiate that it used the grant for the purposes intended by the grant program. T. 122. Tampa General Hospital's charges associated with RPICC patients have historically far exceeded the state funding of this program. T. 81; P. Ex. 12. In fiscal year 1986, RPICC charges at Tampa General Hospital were $10,067,448, and Tampa General Hospital received only $2,633,338 in RPICC payments. T. 34; Ex. 12. Tampa General Hospital thus has never had to return overpayments due to unearned funds. The sales tax issue Introduction Pursuant to chapters 84-373 and 85-555, Laws of Florida, Hillsborough County was authorized to enact a 1/4 cent sales tax, the proceeds of which could be allocated to health care providers for certified indigent patients who were residents of the county. Pursuant to this authority, Hillsborough County enacted ordinance 85-2, levying a tax from April 1, 1985, through March 31, 1987. P. Ex. 14. In fiscal year 1986, Hillsborough County Hospital and Tampa General Hospital received funds from this 1/4 cent sales tax. The funds were appropriated to the Hillsborough County Hospital Authority for allocation to both hospitals. Revisions submitted by Hillsborough County Hospital. Hillsborough County Hospital submitted its fiscal year 1986 report of actual experience on January 29, 1987. P. Ex. 22. On worksheet C-2 of that report, Hillsborough County Hospital reported the difference between patient charges and funds received on line 7, bad debts, (FHURS account 5900). T. 52. On about June 9, 1987, Hillsborough County Hospital filed a revision to its fiscal year 1986 report, changing the manner in which the sales tax charges and receipts were accounted on worksheet C-2 of the original prior year report. P. Ex. 23; T. 52. The revision still reported the charges for services provided with sales tax funds on line 7, provision for bad debts, but did not deduct the receipts associated with those services as reported in the original fiscal year 1986 report. Instead, receipts of $647,543 were classified as "unrestricted tax revenue and appropriated funds," FHURS account 9130 (line 39a, worksheet C-4) and were moved to worksheet line 29, non-operating revenue. T. 52. As a result, both lines 7 and 29 increased by $647,543 on the revised worksheet C-2. 55. The June 9, 1987, revision by Hillsborough County Hospital was accompanied by a certification by Price Waterhouse, certified public accountants, verifying the changes in classifications of sales tax patient charges and receipts on worksheet C-2 for Hillsborough County Hospital. P. Ex. Although the verification was submitted by Price Waterhouse in connection with a main penalty issue, the verification concerned only the June 9, 1987, revision as an amendment to the fiscal year 1986 actual report. The verification pertained to the amended report, which itself has multiple uses, including the redistribution at issue in this case. In sum, the verification was not limited to main penalty issues. The Price Waterhouse verification of June 9, 1987, stated that the sales tax funds received by Hillsborough County Hospital were from the special county sales tax that had been appropriated to the Hillsborough County Hospital Authority, and then allocated among both Hillsborough County Hospital and Tampa General Hospital. On June 30, 1987, counsel for Hillsborough County Hospital sent to counsel for the Hospital Cost Containment Board a letter with numerous attachments. P. Ex. 14. The letter was sent in connection with the main penalty issue concerning Hillsborough County Hospital, but generally addressed the sales tax issue from the perspective of the Hillsborough County Hospital Authority, and expressly mentioned both Hillsborough County Hospital and Tampa General Hospital. The documents were received by the Hospital Cost Containment Board shortly after June 30, 1987. Hillsborough County Hospital filed two revisions to worksheet C-2 after June 9, 1987. P. Exs. 25 and 26. Both revisions were filed by Hillsborough County Hospital at the request of staff of the Hospital Cost Containment Board and both contained accounting classifications for the sales tax issue with which Hillsborough County Hospital then disagreed. The September 28, 1987, revision as to the sales tax issue was filed under protest. P. Ex. Likewise, the revision of October 12, 1987, was filed under protest. P. Ex. 26. As to the sales tax issue, neither revision is a revision adopted by, or a revision of, Hillsborough County Hospital. When the September 28, 1987, revision was filed under protest, Price Waterhouse did not renew its verification of the sales tax accounting because the September 28, 1987, submission was incorrect, in its opinion, and because Price Waterhouse believed the June 9, 1987, submission to be correct. P. Ex. 25; T. 91-95. Price Waterhouse has not verified the accounting methods for the sales tax funds in the October 12, 1987, revision, and did not testify during the hearing that those methods are correct. Thus, the Price Waterhouse verification of June 9, 1987, of the classification of sales tax charges and receipts has never changed and remains as the verification of the June 9, 1987, revision relevant to this case. By letter dated October 28, 1987, the Hospital Cost Containment Board notified Hillsborough County Hospital that it rejected Hillsborough County Hospital's method of accounting for sales tax receipts. The letter stated that the FHURS manual required that the difference between indigent patient charges and sales tax receipts be reported as charity/uncompensated care-other, FHURS account 5960. P. Ex. 27. There remains the question of when did the Hospital Cost Containment Board first advise either of the Petitioners that their method of reporting the sales tax issue did not conform to the FHURS manual. Mr. Summers and Mr. Bracher were the only members of the staff of the Hospital Cost Containment Board who worked on the calculations to determine the initial distribution of Public Medical Assistance Trust Fund monies and to review corrections filed by hospitals to their 1986 prior year reports. T. 146-47. No one else testified for the Hospital Cost Containment Board. Thus, their testimony on this issue should be examined closely. Mr. Summers testified that in the middle of the summer he told both hospitals that the sales tax charges and receipts should be "grossed up" rather than "netted down." T. 150. He had previously defined "grossing up" in the context of the sales tax as reporting patient charges on line 13 of worksheet C- 2 (charity/uncompensated care-other) and reduction of those charges by a negative amount on line 14 (restricted donations and grants for indigent care) T. 147. Although the communication did take place, the timing of this communication by Mr. Summers is not supported by the preponderance of the evidence in the record. On September 28, 1987, Hillsborough County Hospital filed the first revision under protest. The amount reported in line 7, worksheet C-2, in the September 28, 1987, revision, was the same as reported in the original fiscal year 1986 actual report filed January 29, 1987, less $148. Compare P. Ex. 22 to P. Ex. 25. The letter transmitting the September 28, 1987, revision stated that the sales tax accounting remained "netted in total deductions from revenue," which is the case since the net was still contained on line 7. The letter of transmittal stated that Hillsborough County Hospital filed the September 28, 1987, revision because "of the position that you and your staff have taken on this issue." It was not until sometime between September 28, 1987, and October 12, 1987, that Mr. Summers changed his position, and told Hillsborough County Hospital to "gross up." P. Ex. 26. In summary, from the testimony of Mr. Summers it is unclear as to when he told Hillsborough County Hospital that its June 9, 1987, revision did not conform to the FHURS manual. Mr. Bracher was asked if he was aware of any written notice to either of the Petitioners that anything in the reports submitted June 9, 1987, was not conforming. He answered that he was not aware of any specific notice. He said he thought the issue was wrapped up in the main penalty case, and would be resolved when that case was heard. Dep. (James Bracher), p. 28-29. It is concluded that there is no evidence that within the forty days following June 9, 1987, the Hospital Cost Containment Board communicated written notice to either Petitioner that the June 9, 1987, revision with respect to sales tax associated charges and receipts was not in conformance with the FHURS manual. Nonetheless, on June 30, 1987, counsel for Hillsborough County Hospital sent a letter to counsel for the Board transmitting a package of information concerning the sales tax. P. Ex. 14. It is inferred from the efforts of counsel for Hillsborough County Hospital that there was disagreement between the parties at this stage. It is also inferred that the package of explanatory documents was sent to the Hospital Cost Containment Board by Hillsborough County Hospital on June 30, 1987, because Hillsborough County Hospital and the Hillsborough County Hospital Authority then knew that the Board disagreed with the June 9, 1987, revision. Moreover, on July 17, 1987, the Hospital Cost Containment Board transmitted to Hillsborough County Hospital its initial calculation of the redistribution. The amount of charity care shown on the accompanying calculation ($2,559,133) is obviously from line 7, worksheet C-2, of the original fiscal year 1986 actual report. P. Exs. 22 and 24. From this it is clear that as of July 17, 1987, the Hospital Cost Containment Board had rejected the accounting on that line contained in the June 9, 1987, revision. Thus, from these activities, it is inferred that within forty days of receipt of the June 9, 1987, revision, the Hospital Cost Containment Board did orally communicate to both Petitioners its disagreement with the June 9th revision with respect to the sales tax question. Revisions submitted by Tampa General Hospital Tampa General Hospital originally reported the differential between charges for patients associated with the sales tax funds and receipts of sales tax funds on line 7, of worksheet C-2, FHURS account 5900, "provision for bad debts." T. 52. On September 28, 1987, Tampa General Hospital filed a "revision" to its fiscal year 1986 actual report. P. Ex. 6. The cover letter from Mr. Powers stated that the sales tax monies "remain netted in total deductions from revenue (lines 7-17)." However, the letter made it clear that Tampa General Hospital disagreed with this accounting method, and that the report was submitted "because of the position that you and your staff have taken on this issue." Like the September 28, 1987, "revision" filed by Hillsborough County Hospital, which was submitted with an identical cover letter, the September 28, 1987, report by Tampa General Hospital was not adopted by Tampa General Hospital. Also as discussed above, the September 28, 1987, revision by Tampa General Hospital as to the sales tax issue was not verified by the hospital's certified public accountant. Thus, it is clear that Tampa General Hospital did not file its own formal written revision to its fiscal year 1986 report with respect to sales tax funds within the ninety-day period following July 1, 1987. Nonetheless, it is inferred from the evidence that the Hospital Cost Containment Board was aware that Tampa General Hospital was seeking within 90 days of July 1, 1987, to change its sales tax reporting in the same manner as Hillsborough County Hospital. This inference is based upon the following: The initial revision submitted by Hillsborough County Hospital on June 9, 1987, contained a discussion by Price Waterhouse, and in that discussion of the nature of the sales tax funds, Price Waterhouse stated that the funds were appropriated to the Hillsborough County Hospital Authority and allocated to both Hillsborough County Hospital and Tampa General Hospital. The letter from Price Waterhouse further stated that Price Waterhouse were the auditors for the Authority. It was thus evident from the June 9, 1987, submission that the sales tax issue applied to the Hillsborough County Hospital Authority, and thus applied equally to Hillsborough County Hospital and to Tampa General Hospital. The letter of June 30, 1987, from counsel for Hillsborough County Hospital to counsel for the Hospital Cost Containment Board, while concerned with the main penalty and Hillsborough County Hospital, stated that the funds went to the Authority, and noted that the Authority was composed of both hospitals. Much of the communication between the parties in this case was with Paul Powers, who is the Chief Financial Officer for the Authority and for both hospitals. As previously discussed, it is evident that staff of the Hospital Cost Containment Board orally advised representatives of the hospitals that the Board disagreed with the June 9, 1987, revision. Both hospitals filed revisions dated September 28, 1987, showing that both hospitals were actively discussing the matter during this period with the Hospital Cost Containment Board. After the September 28, 1987, revisions were filed, staff of the Hospital Cost Containment Board advised both hospitals to resubmit worksheets C- 2, "grossing up" the monies by reporting charges for sales tax patients on line 13, and receipts on line 14. T. 54-57. (Staff of the Hospital Cost Containment Board later determined this advice to have been erroneous.) Both hospitals complied under protest. P. Exs. 7 and 26. Further, while Price Waterhouse did not on June 9, 1987, formally certify that the sales tax funds should be accounted for by Tampa General Hospital in the same manner as reported by Hillsborough County Hospital in its June 9, 1987, revision, the identity of the issues discussed above for both hospitals causes that result in effect. The June 9, 1987, certification made it clear that the funds were appropriated to the Authority, and thus the character of the funds, for accounting purposes, would be the same for both hospitals that compose the Authority. Moreover, certification as to the exact dollar amounts involved in the reclassification for Tampa General Hospital was made by Price Waterhouse during the de novo formal administrative hearing. In sum, the record contains a certification by a certified public accountant as to the sales tax accounting change sought by Tampa General Hospital, both as to amount and as to classification. The proper FHURS manual accounting for sales tax funds: characteristics of the sales tax funds In fiscal year 1986, both Hillsborough County and the Hillsborough County Hospital Authority budgeted and appropriated sales tax funds to Tampa General Hospital and Hillsborough County Hospital for indigent care. T. 44, 101-102. Hillsborough County is a governmental agency. As an appropriation, these sales tax funds were set aside for a specific purpose, indigent care, by Hillsborough County. T. 96-100. The method of distribution of sales tax funds was not specified by statute or by contract. T. 79. As discussed above, the enabling statutes simply stated that the funds were to be used for indigent patients who were county residents. The record does not contain any credible evidence to explain how the fiscal year 1986 sales tax appropriations were supposed to have been distributed to the two Petitioners. It might have originally been based on specific patient bills, or it might have been lump sum distribution, but there is no evidence. At least this is known: the sales tax money was not available until ad valorem appropriations were spent, and those appropriations were not being spent because there were insufficient numbers of patients meeting the ad valorem eligibility requirements. T. 66-67. Midway through the fiscal year, it was determined by Hillsborough County that the appropriated funds were not being transferred to the two Petitioners as originally intended. 44-45, 65-67. In fact, no funds had been transferred by June, 1986, the ninth month of the fiscal year. P. Exs. 17 and 18. Hillsborough County then determined to spend the money by a method other than what was originally envisioned. It did so by arbitrarily and substantially loosening eligibility requirements and expanding the distribution to other programs. T. 67, 69-71, 45. Since there is no clear evidence in the record as to how the sales tax program was originally intended to have operated, and since the only clear evidence in the record is that the County chose drastically to alter the method of transferring the sales tax appropriated funds to the two Petitioners, it must be concluded as a matter of fact that for accounting purposes, the only relevant facts are those facts showing how the sales tax program was changed midway through the fiscal year. In particular, due to the change made by the County, references to earlier plans to transfer the money in the May 22, 1985, minutes of the Board of County Commissions, exhibit 3, P. Ex. 14, are not relevant. It is important to note that the change in the manner of transferring the sales tax appropriations to the Petitioners was caused solely by the fact that the original method did not work. Thus, the County had no underlying basis to determine how to loosen eligibility requirements and to select new programs to cover. Requirements were loosened and new programs were covered until the prior appropriated funds were transferred. The only requirement was that the funds pay for patients who were medically indigent. T. 108. Thus, the method of selection of requirements to loosen and programs to cover was essentially arbitrary. T. 69-74, 103-104, 45, 47-48. At least 25 percent of the sales tax funds was paid on a per diem basis, based upon specific patients and days elapsed. T. 72, 68. But not all was based on per diem, contrary to the testimony of Mr. Summers. T. 152. At least 25 percent of the sales tax funds paid for the specific charges of specific patients who suffered catastrophic illnesses (charges in excess of 125 percent of annual income). T. 72-73. Other sales tax funds paid for amounts not paid (funds exhausted or not yet available) in the RPICC program, the tuberculosis program, the Medicaid program, and the Medicare kidney program. T. 45-46. In fact, payments were superficially made based upon charges submitted by specific patients in all cases, although payment was limited to a set per diem rate for those patients who qualified based upon the original indigency criteria. T. 73-74. Although the method of transfer of sales tax funds to the Petitioners was superficially by payments for charges associated with specific patients, that observation does not go far enough. The context of the payments cannot be ignored. Specific patient charges were identified in the transfer process only to give the County assurance that the money was going for indigent services. T. 109. Moreover, the payments were made for specific charges solely pursuant to the arbitrary change in the sales tax program discussed above, which was motivated solely by the desire of the County to expend all of the sales tax funds (the entire lump sum) previously appropriated to the two Petitioners. T. 73-74. Neither of the two Petitioners had any preexisting contract with the County that establish a system of payment of charges for specific patients. Nor is there any evidence that the County itself, as it shifted gears midway in the fiscal year, established a program to pay charges for specific patients based on reasoned criteria for identification of such patients. Instead, as discussed above, the choices of programs and eligibility requirements was driven only by the desire to spend a prior determined lump sum amount. The observed effect was the transfer to the Petitioners of the entire appropriated amount in only three months, the last three months of the County's fiscal year. P. Exs. 17 and 18. In context, then, the payments for charges associated with specific patients was not fundamentally a series of discrete payments of charges for specific patients, but was merely the mode of transfer of a lump sum payment. Exhibit 12, P. Ex. 14, initially relied upon by Board staff, contains a mixture of payments made by the County from ad valorem tax funds and sales tax funds. Compare to P. Ex. 17 and 18. Thus, for this reason, in addition to the discussion above, one cannot conclude from this exhibit that sales tax funds were transferred to the Petitioners as specific payments for specific patients. The proper accounting classification for the sales tax monies (or the RPICC funds, for that matter) depends upon the nature of the payment mechanism. T. 145. Mr. Summers was of the opinion that if Hillsborough County determined to distribute the sales tax funds by an arbitrary method, totally changing the prior method, with the only criteria that the funds pay for services to indigent patients, then receipts from the sales tax funds should be reported on line 14 of worksheet C-2, FHURS manual account 5970, "restricted donations and grants for indigent care." T. 189-90. That is in fact what occurred. The distribution to the Petitioners with respect to the sales tax issue will be the same whether the receipts of sales tax funds are classified on line 29 or on line 14 of worksheet C-2. T. 94-95.
Recommendation For these reasons, it is recommended that the Hospital Cost Containment Board enter its final order: Confirming that the April 23, 1987, revision by Tampa General Hospital to its 1986 actual report conforms to the FHURS manual by operation of rule 27J- 1.010(3). Due to the definition of charity care in section 12, chapter 87-92, Laws of Florida, denying to Tampa General Hospital recalculation of distribution from the Public Medical Assistance Trust Fund with respect to the RPICC program. Correcting the 1986 actual reports of Tampa General Hospital and Hillsborough County Hospital with respect to sales tax funds, reporting charges on line 13, "charity/uncompensated care-other," and receipts on line 14, "restricted donations and grants for indigent care," and recalculating the redistribution due the two hospitals based upon these corrections. (The result appears to be stated in findings of fact 6 and 8.) DONE and ENTERED this 9th day of March, 1988. WILLIAM C. SHERRILL, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of March 1988. APPENDIX TO RECOMMENDED ORDER IN DOAH CASE NUMBERS 87-5207H AND 87-5208H The following are rulings upon findings of fact proposed by the parties which have been rejected or adopted by reference in this Recommended Order. The numbers correspond to the numbers of the proposed findings of fact as used by the parties. Findings of fact proposed by the Petitioner: 9. The last half of the paragraph is an issue of law, not fact. All but the first sentence are cumulative and unnecessary. Irrelevant. 17. The motive of the county is irrelevant. 19. Not supported by the record cited. Mr. Bracher qualified his testimony with the phrase "I guess," and then qualified his opinion. Dep. (James Bracher), p. 27. 24. Irrelevant since the April 23, 1987, revision is operative. These findings of fact are adopted by reference. Irrelevant. The first two sentences are true, but are subordinate to findings of fact adopted in the recommended order. These findings of fact, however, are adopted by reference. The first sentence is not supported by the record. The first sentence is rejected in the conclusions of law. The first sentence is rejected in the conclusions of law. The first sentence is rejected in the conclusions of law. The existence or absence of cost reports is not persuasive that account 5940 is or is not applicable. The phrase "cost reports" in the FHURS manual with respect to account 5940 only appears in a parenthetical, "including adjustments made at year end." As such, it is inclusive of circumstances where adjustments are made at year end based on cost reports, but is not necessarily limited to that circumstance. 38. Blue Cross accounting occurs in account 5930, and thus reference thereto is irrelevant for this case. 40 and 41. Irrelevant. A formal administrative hearing is intended to formulate agency action, not to review prior action. McDonald v. Department of Banking and Finance, 346 So.2d 569, 584 (Fla. 1st DCA 1977). 42 and 43. These proposed findings of fact are true but are not relevant. A formal administrative hearing is intended to formulate agency action, not to review prior action. McDonald v. Department of Banking and Finance, 346 So.2d 569, 584 (Fla. 1st DCA 1977). 44. This is an issue of law, not fact. 50. The last sentence is true, but is subordinate to findings of fact adopted in the recommended order. This finding of fact, however, is adopted by reference. The second sentence is irrelevant. A failure to make the recalculation by October 15, 1987, while a technical violation of the statute, could hardly have been intended by the Legislature to result in no recalculation at all. The last portion of the sentence is incompetent as legislative history. 59. The distributions were initially and superficially calculated on specific patients' charges, but were not ultimately "based" thereon, as discussed in the findings of fact. 63. The second through fifth paragraphs are true, but are subordinate to findings of fact adopted in the recommended order. These findings of fact, however, are adopted by reference. 63-64. These proposed findings of fact are true, but are subordinate to findings of fact adopted in the recommended order. These findings of fact, however, are adopted by reference. Irrelevant for lack of sufficient credible evidence showing identity of-circumstance to justify the comparison. Irrelevant for lack of sufficient credible evidence showing the lack of identity of circumstance to justify the comparison. 68-70. These proposed findings are issues of law, not fact. 71-72. Irrelevant. Findings of fact proposed by the Respondent: 2-4. These are issues of law, not fact. The second sentence is contrary to the record. T. 52, 55-56; P. Exs. 7 and 26. The remainder is irrelevant. These proposed findings have been rejected in findings of fact 79-86. The first four sentences, while true, are not adopted as findings of fact because of little help in resolving the question of which expert to believe. Both parties have submitted proposed findings of fact concerning the shifting bases of expert opinion. About all that can be concluded from these proposed findings, all of which are true, is that the accounting definitions are so unclear and loose that experts have difficulty finding their way. The next sentence is true, and is adopted by reference. Although the testimony cited would lead to the finding that the Petitioners originally classified the sales tax differential on line 13, this is in conflict with testimony at T. 52 that the differential was originally reported in bad debts, line 7. Moreover, there is no entry on line 13 on the original submission. P. Exs. 2 and 22. The proposed finding to this extent is rejected for these reasons. While the basis for Mr. Summer's ultimate opinion is relevant to this case, the path he took to that opinion is not. The formal hearing is de novo, and Mr. Summer's opinion at the hearing is the only one relevant. While the proposed finding of fact is true, and is adopted by reference, the ultimate conclusion has been rejected because the payment mechanism was, in effect, by lump sum. The first paragraph is cumulative to other findings of fact, and thus not necessary. 21. There is not sufficient evidence in the record to adopt the proposed finding that the original RPICC accounting by Tampa General Hospital was "consistent with the manner in which other hospitals report it." This paragraph is an issue of law, not fact. The proposed finding that the Hospital Cost Containment Board notified Tampa General Hospital that it "intended to review Petitioner's records" has been rejected by findings of fact 19-21. Moreover, notice of intent to review records is irrelevant. The notice required by the rule is notice that the report of April 23, 1987, did not conform to FHURS manual accounting classifications. While it is true that the July 17, 1987, memorandum was a preliminary document with respect to the amount of distribution that might be received ultimately by a hospital, it was preliminary only with respect to changes that might occur due to corrections filed by individual hospitals that elected to file such a change pursuant to the opportunity afforded by section 12 chapter 87-92, Laws of Florida. There was no reason for it to be preliminary with respect to reliance by the Hospital Cost Containment Board upon the fiscal year 1986 actual reports filed by hospitals that were already final and would not be changed by a new correction. All sentences after the first two are true, but are subordinate to findings of fact adopted in the recommended order. These findings of fact, however, are adopted by reference. However, the proposed finding that the RPICC cost reports were "like those required by Medicare and Medicaid" is rejected because the RPICC cost reports were not used to settle up at the end of the year. The sentences in this paragraph are true, but are subordinate to findings of fact adopted in the recommended order. These findings of fact, however, are adopted by reference. The record in this case does not explain how the NCG system works. Thus, this proposed finding of fact must be rejected. These proposed findings of fact are not supported by the record. It appears that cost reports were not used to settle up or in the manner used by cost reports in the Medicaid and Medicare programs. 34 and 35. These proposed findings accurately reflect the assumed facts that underlie the opinions at the hearing of Mr. Summers and Mr. Bracher, and are adopted by reference. This is not, however, an adoption as fact of the matters which form the basis of opinions. 36. These proposed findings are essentially arguments of law that have been considered in the conclusions of law. COPIES FURNISHED: John H. Parker, Jr., Esquire 1200 Carnegie Building 133 Carnegie Way Atlanta, Georgia 30303 Gary Walker, Esquire Hospital Cost Containment Board 325 John Knox Road Building L, Suite 101 Tallahassee, Florida 32303 James J. Bracher Executive Director Hospital Cost Containment Board 325 John Knox Road Building L, Room 101 Tallahassee, Florida 32303 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
