The Issue Should the Agency for Health Care Administration (Agency) approve Certificate of Need (CON) Application No. 10499 of Marion Community Hospital, Inc. (Marion Community), d/b/a West Marion Community Hospital (West Marion), to add 12 comprehensive medical rehabilitation (CMR) beds to its facility? Should the Agency approve CON Application No. 10496 of Florida Hospital Waterman, Inc. (Waterman), to add 12 CMR beds to its facility?
Findings Of Fact Stipulations There is a published need for 12 CMR beds in District 3. Waterman is an existing licensed hospital that currently operates a 269-bed facility in Service District 3, Sub-District 7, Lake County. Ocala Regional Medical Center (Ocala Regional) is an existing licensed hospital that operates a 222-bed acute care facility in Service District 3, Sub-District 4, Marion County. West Marion is an existing licensed hospital that currently operates a 138-bed facility in District 3, Sub-District 4, Marion County. Marion Community Hospital, Inc., d/b/a Ocala Regional Medical Center, is a verified Level II trauma center. West Marion and Waterman satisfy the CON review criteria regarding 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. § 408.035(1)(h), Fla. Stat. (2018).1/ Schedules 1 through 10 of each hospital’s application are reasonable. West Marion and Waterman satisfy the CON application review criteria regarding the immediate and long-term financial feasibility of their proposals. § 408.035(1)(f), Fla. Stat. Parties The Agency The Agency is the state agency charged with administering the CON program. Section 408.034(1), Florida Statutes authorizes the Agency to evaluate CON applications. West Marion Marion Community owns West Marion and Ocala Regional. Both are acute care hospitals. Marion Community proposes to establish a 12-bed CMR unit at its West Marion campus. This is a new service. West Marion and Ocala Regional operate using one tax ID number and one Medicare billing number. One medical executive committee governs the medical staff for both facilities. They have the same Chief Executive Officer and Chief Financial Officer. They have different physical facilities and locations. These facilities, along with Summerfield freestanding emergency department, operate as the Ocala Health System (Ocala Health). Ocala Regional is located in Ocala, Marion County, Florida. West Marion is also located in Ocala. West Marion’s primary service area is Marion County (Sub-District 4). Ocala Health is a fast growing health system. It serves a large geriatric (65 and older) population. West Marion and Ocala Regional provide acute health care services to patients who need CMR services. Ocala Regional treats a more acutely ill patient population. That population includes patients recovering from bilateral joint replacements (replacing both knees at once); patients recovering from trauma injuries, especially severe brain and spinal cord injuries; and patients recovering from strokes. Marion Community plans to locate the CMR beds at West Marion. West Marion is located on 50 acres that provide plenty of space for the CMR unit and room for future growth. West Marion should complete its most recent expansion by March 2019, increasing its inventory of acute care beds to 174. West Marion plans to contract with Strive Physical Therapy Centers (Strive). Strive is the contracted physical therapy, occupational therapy, and speech therapy provider for the Ocala Health System, providing outpatient and inpatient services. It is a competent professional health care provider. West Marion operates a very busy orthopedic joint replacement program that has become a destination center for total joint replacement patients. The joint replacements conducted at West Marion include many of the most complex types, including bilateral replacements, revision replacements of joint replacements, surgeries for severely overweight patients, and surgeries for patients over the age of 85. Many of these patients require intensive and prolonged rehabilitation. CMR services would benefit them greatly. This category of West Marion’s patients experiences problems accessing CMR services. Ocala Regional recently began a $64 million expansion project. It includes the addition of 12 emergency department beds, 34 additional beds at the hospital, two additional operating rooms, and the infrastructure necessary for comprehensive stroke center certification. Ocala Regional operates a Level II trauma center. Trauma service is a regional program. The sweep of a 40-mile radius around the hospital circumscribes Ocala Regional's trauma service area. The area includes Marion, Citrus, and Hernando Counties. It contains approximately one million people. Ocala Regional’s trauma center is the fourth busiest trauma center in Florida. Since opening in December 2012, the trauma center has experienced a yearly growth rate of 11 percent. This is greater growth than other Florida trauma centers, likely the result of growth in the size of the area’s geriatric population. Members of that population are more prone to serious injury in accidents. Ocala Regional’s Trauma Center treats approximately 3,500 trauma patients a year. Ocala Regional’s high acuity trauma program cares for patients with traumatic brain and spinal cord injuries. Ocala Regional has a highly trained staff, including seven trauma critical care physicians and three neurosurgeons, specializing in treatment of traumatic brain injuries and severe spinal cord injuries. Ocala Regional recently expanded its facility to include a state of the art intensive care unit that will increase the number of high acuity patients in need of CMR services. Sixty-five percent of Ocala Regional’s trauma patients come from Marion County. The rest come in roughly equal numbers from Lake, Sumter, and Citrus Counties. Ocala Regional is also a receiving facility for trauma patients from The Villages Regional Hospital in Sumter County, and for advanced trauma patients of another area hospital, Munroe HMA Hospital, LLC, d/b/a Munroe Regional Medical Center.2/ Need for CMR services correlates naturally with the provision of trauma services because trauma patients often require intensive and prolonged rehabilitation therapies to return to normal daily activities. These patients can benefit greatly from the intensive rehabilitation services offered through CMR units. Ocala Regional also operates a certified primary stroke center. It currently provides all treatment modalities, with the exception of interventional neurology. Ocala Health serves a high volume of stroke patients, in part due to the large geriatric population that it serves. As with trauma services, the elderly are more likely to need CMR services than the general population. Stroke patients are the biggest driver of CMR admissions because a stroke patient requires the intensive, multi-discipline therapies that CMR units provide. West Marion operates a primary stroke center. Patients of this center also experience problems accessing CMR services. Ocala Regional is in the final stages of obtaining approval to operate as a comprehensive stroke center. This provides care for patients suffering large vessel strokes, the most serious sort. When a stroke patient meets the criteria for large- vessel disease, a primary stroke center is not as good a treatment option as a comprehensive stroke center, which is able to provide necessary interventional neurology services. Comprehensive stroke patients are a primary driver for the need for inpatient rehabilitation services. CMR services benefit these patients by addressing immediate post-stroke deficits such as aphasia, hemiparesis (weakness on one side of the body), and cortical blindness. These patients will immediately require the largest amount of CMR services. Certification of Ocala Regional as a comprehensive stroke program will enable Ocala Regional to serve as the comprehensive stroke program for Marion, Lake, Sumter, and Citrus Counties, an area with a population of approximately one million people. This will promptly drive an increased need for CMR services not accounted for by the Agency rule. The Emergency Medical Treatment and Labor Act requires that large vessel stroke patients be transported to a comprehensive stroke center. The comprehensive stroke programs closest to Marion County are located in Tampa, Gainesville, and North Florida.3/ Once certified, Ocala Health will be the first and only comprehensive stroke center in Ocala. The number of severe stroke patients treated at Ocala Regional will rise and correspondingly immediately increase the need for CMR beds in Marion County. The geriatric population is growing in District 3, in general, and in Marion County specifically. This area also experiences a seasonal influx of elderly when “snowbirds” come to Florida during the winter. The geriatric population greatly benefits from access to CMR services. It also generates an increased need for CMR services. Access to CMR beds is a consideration for certification as a trauma center and certification as a comprehensive stroke program. This demonstrates a correlation between these programs and a more robust need for CMR services. Ocala Health’s significant programs in these vital service areas are a strong consideration in favor of approving CMR services at West Marion. The new CMR beds will ensure access to needed health care services in the community. Ocala Regional is also developing a graduate medical education (GME) program for various disciplines. A GME program typically increases the sub-specialties available at a hospital. This in turn facilitates treatment of more complex cases and patients more likely to need CMR services. Establishment of the GME program is helping transform Ocala Regional into a tertiary facility serving the needs of Marion, Lake, Sumter, and Citrus Counties. The GME program will also improve services for trauma patients, complex cardiology cases, and advanced neurosurgical cases. The corresponding increase in patient acuity will bolster the need for CMR beds in a manner which the need rule cannot anticipate. These patients will benefit greatly from sufficient and timely access to CMR beds and the continuity of care that accompanies location of a CMR unit in conjunction with an acute care hospital. Waterman Waterman is a not-for-profit 269–bed acute care hospital located in Tavares, Lake County, Florida, in the southeastern corner of District 3. It serves residents of north, central, and west Lake County. Waterman proposes to establish a 12-bed CMR unit at its Tavares facility. Waterman accepts all patients, regardless of their ability to pay. Waterman is part of the Florida Hospital System, which has facilities on 23 campuses and serves communities throughout Florida. Waterman is also part of the Adventist Health System. The system owns a broad variety of health care facilities including 42 hospitals in ten states. Waterman is opening a 60-bed skilled nursing facility on its campus. Waterman’s new skilled nursing facility will provide some rehabilitation services to patients discharged from the hospital. The services, however, will not be an adequate substitute for the more intense CMR services. This is also true of home health services. Waterman is a tertiary level hospital. It serves a large, fast-growing area. It is the busiest hospital in Lake County as measured by emergency visits and discharges. Waterman offers a wide array of high quality medical and surgical services. They include an accredited cancer institute, open-heart surgery, knee and hip replacements, extracorporeal membrane oxygenation, and 24-hour advanced emergency services. Waterman is also a primary stroke center. It is not currently, and is not in the process of becoming, a certified comprehensive stroke center. Waterman is also not a designated trauma center. Waterman operates a robust outpatient rehabilitation unit, the Florida Hospital Waterman Rehabilitation Institute (Institute). The Institute provides a wide variety of treatments and unique specialty care such as physical therapy, hand therapy, speech therapy, language therapy, pelvic rehabilitation, neurological therapy, amputee rehabilitation, orthopedics, and sports medicine. Waterman CMR patients will benefit from Waterman’s use of the skills, caregivers, and experience of the Institute in operating its CMR unit. The Florida Hospital system operates several successful CMR programs. Waterman’s CMR services will have the benefit of assistance from the administrators and clinicians from these sister facilities as it develops, implements, and operates its CMR unit. These resources require finding that Waterman will more quickly bring enhanced quality of care to the District. Waterman also operates a Home Care Agency. The agency has provided home health care -- including physical, occupational, and speech therapy services -- to residents of Lake County and the surrounding areas since 1977. Waterman has several expansion projects underway. A related organization is building a 120-bed nursing home on the Waterman campus. Waterman is also completing a $75 million capital improvement project that will increase the size of its emergency department and will add a patient tower for pediatrics and women’s services. Waterman plans to house the proposed CMR unit in the tower. West Marion and Waterman are well-staffed, high-quality hospitals, affiliated with high-quality health care systems. They each provide their patients good care and are fully capable of establishing and operating the CMR units for which they seek certificate of need approval. CON Regulation and Need Every six months the Agency publishes projected numeric need for CMR beds in each health care planning district. Florida Administrative Code Rule 59C-1.039 regulates establishment of new CMR services and the addition or construction of new CMR beds. The Agency’s rule provides that a determination of need for CMR beds “shall not normally be made” unless the rule’s numeric methodology calculates one. The rule establishes a simple formula for calculating CMR bed need. The formula calculates the current utilization ratio for CMR services in the district by dividing the number of patient days reported for inpatient CMR beds and dividing it by the district population for the same period. It then multiplies the ratio times the projected population for the planning horizon, five years into the future. The rule divides that product by 365 times 85 percent. The rule specifies that 85 percent “equals the desired average annual occupancy rate for [CMR] beds in the district.” This operation calculates the gross number of beds needed for the district. The rule subtracts the licensed and approved CMR beds in the district from that number. The resulting number is the net number of beds needed. The rule does not account for markets in which patients needing CMR services receive similar, but not equivalent, less intense services from providers such as home health agencies, skilled nursing homes, or acute care hospitals without designated CMR beds, due to limited access to CMR beds. It also looks back, not forward. The need methodology promotes competition and access when the use rate in a service area falls below the statewide average use rate. The need rule also provides that, regardless of whether the formula shows need, “no additional [beds] shall normally be approved unless the average annual occupancy rate of the beds in the district was at least 80 percent for the 12 month period ending six months prior to the beginning date of the quarter of the publication of the Fixed Bed Need Pool.” Fla. Admin. Code R. 59C-1.039(5)(d). The Agency’s rule calculated a need for 12 new CMR beds in District 3 for the January 2023 planning horizon. District 3 includes Alachua, Bradford, Citrus, Columbia, Dixie, Gilchrist, Hamilton, Hernando, Lafayette, Lake, Levy, Marion, Putnam, Sumter, Suwannee, and Union Counties. The Agency had not published a need for CMR beds in District 3 for many years. This is because changes in CON regulation allowed existing providers to add beds in ten-bed increments if they met a specific occupancy threshold. In Ocala, HealthSouth Rehabilitation Hospital (HealthSouth) did this assiduously, effectively stifling what would otherwise have been a natural progression of need pool determinations. West Marion and Waterman agree that “not normal circumstances” establish a need for at least 12 CMR beds in addition to the 12 generated by the numeric need formula. This is an unusual CON case in this way. There is not a party arguing that either application should be denied or offering evidence to support denial. This includes the Agency, which offers only technical legal arguments against approving both applications. Effectively, the Agency implicitly concedes the need for both programs. The Agency’s tacit concession that circumstances are not normal in District 3 manifests in another way. The Agency, without comment or explanation, proposes approving a new 12-bed CMR unit. This is despite rule 59C-1.039(3)(c), which states, “A general hospital providing Comprehensive Medical Rehabilitation Inpatient Services should normally have a minimum of 20 Comprehensive Medical Rehabilitation Inpatient beds.” The Agency’s proposed approval of a 12-bed CMR unit confirms that something is not normal in District 3 when it comes to CMR services. Rule 59C-1.039(5)(f)3. grants priority consideration to an applicant that is a designated trauma center as defined in Florida Administrative Code Rule 64J-2.011. West Marion claims entitlement to a preference for trauma centers based upon the fact that all of the Ocala Health system facilities operate under the same license. The facts do not support the argument. Although Marion Community’s hospital license is for all Marion Community facilities, the trauma designation is for the Ocala Regional facility, not the West Marion facility. A review of the trauma center rule 64J-2.011, including an application that it incorporates by reference, makes clear that the trauma center designation is for a facility not a system. For instance, the Level II Trauma Center Application Manual (DH Form 2043-A, January 2010) requires the following facility-specific information: Recovery/Post-Anesthesia Care Unit; Trauma Resuscitation Area; helicopter landing site; an immediately available adequately staffed operating room for trauma patients 24 hours a day; a second adequately staffed operation room available within 30 minutes after the primary operating room is occupied; a post-anesthesia recovery area; airway control and ventilation equipment in the operating room; invasive hemodynamic monitoring equipment; and a fracture table. It is inconceivable that a trauma center could satisfy these requirements by having some of the facilities, such as the primary operating room, in one location and other facilities, such as the backup operating room or helicopter landing site, in another. This does not, however, mean that the presence of a trauma center in the district is not relevant to considering the need for CMR. Trauma center patients have a greater and more frequent need for CMR services than general acute care patients. CON Applications The Agency maintains that the applications did not present a “not normal circumstances” theory and that, therefore, the parties cannot advance the theory at this point. The applications, however, did. The applications of West Marion and Waterman sought approval relying upon arguments specific to their service areas and facilities, as well as relying on the calculated need. The arguments amount to claims that their projects should be approved because of “not normal circumstances.” In the context of the application review and of this proceeding, each applicant had to advance two theories. The first is why it should be selected to satisfy the numeric need. The second is why, regardless of calculated need, “not normal circumstances” call for approval of the applicant’s proposal. The facts and reasoning supporting each argument are congruent if not identical. Consequently, there was no need to label application assertions in the applications or evidence at hearing as applying to one theory or the other. West Marion’s CON application sought to fill the 12-bed numeric need. It also relied upon “not normal circumstances” for approval of its proposed 12-bed unit. West Marion’s application discusses the unavailability of CMR beds at HealthSouth, the county’s only CMR provider. It reviews the fact that HealthSouth has operated at or near capacity since opening, despite two ten-bed additions. Then West Marion concludes, on page 18 of the application, “This chronic unavailability of inpatient beds at HealthSouth creates a severe accessibility problem for the growing population of Marion County, and constitutes a not normal circumstance.” (WM Ex. 1, p. 22)4/ (emphasis added). Another part of West Marion’s application discussing the unavailability of beds at HealthSouth makes a similar assertion. Page 52 of West Marion’s application (WM Ex. 1, p. 55) states, “The chronic shortage of CMR beds in Marion County, especially given the location at ORMC of a Level II trauma center serving the residents of TSA 6 (Marion, Citrus and Hernando counties), is a not normal circumstance.” (emphasis added). The same page of the application states that the consistently high utilization of HealthSouth creates significant difficulty obtaining suitable CMR services for patients discharged from Ocala Health’s trauma program. West Marion’s application repeatedly notes that its approval will not adversely affect existing providers or the proposed Waterman CMR unit. Waterman’s CON application sought to fill the 12-bed need calculated by the Agency. It also relied upon “not normal circumstances” for approval of its proposed 12-bed unit. The statement on page 6 of the application (WH Ex. 1, p. 118) is explicit. “[Waterman’s] proposal has been developed to respond to the published numerical need for additional CMR services in District 3, as well as health planning factors that exist even in the absence of numerical need. The need for a CMR unit at [Waterman] is based on a lack of accessible CMR services for residents of Lake County that is evidenced by the following facts.” (emphasis added). A list of seven factors follows, including that the Lake County population aged 65 or older is increasing faster than the district’s and the fact that approval of beds for Waterman would not adversely affect existing providers. Page 30 of Waterman’s application (WH Ex. 1, p. 142) repeats the assertion of “not normal circumstances.” It states, “[Waterman] has developed this proposal in response to the published need for additional CMR beds in the District, as well as facility and market-specific factors that clearly show the beds should be located within Lake County and at [Waterman].” (emphasis added). Waterman’s application continues the theme on page 37 (Waterman Ex. 1, p. 149) asserting, “there is a barrier to accessibility of inpatient rehabilitation services for residents of Lake County and those who are discharged from [Waterman].” West Marion committed to a minimum of seven percent of its annual discharges being a combination of Medicaid, Medicaid HMO, and self-pay/other (including charity) patients. This commitment is consistent with its financial projections that show 8.89 percent of its first-year revenue/charges attributed to services for that population. It will enhance access to CMR services. Waterman made no commitment to serve these populations. Waterman’s first-year financial projections show 5.3 percent of revenue/charges attributed to services for that population. CMR Services and District 3 CMR services are provided to patients discharged from an acute care hospital after treatment for an ailment or event that requires substantial rehabilitation before the patient resumes normal daily activities. For example, patients with complex nursing or medical management needs or conditions such as spinal cord injury, amputation, multiple sclerosis, hip fracture, brain injury, and neurological disorders need CMR services. Fla. Admin. Code R. 59C-1.039(2)(d). Patients recovering from an acute episode such as a severe trauma injury or stroke and patients recovering from complex orthopedic joint replacement surgeries such as bilateral joint replacements and patients with a high body mass index (BMI) recovering from joint replacements also need CMR services. The continuum of care for physical rehabilitation services comprises a range of levels, depending primarily on patient condition/goals, medical management requirements, and the ability to participate in therapy. Patients can receive physical rehabilitation in an acute rehabilitation unit inside a hospital or freestanding facility (a CMR unit), a skilled nursing facility, through a home health agency, or in an outpatient setting. CMR units, which are at issue in this case, provide the most intense level of rehabilitation. Determinations of whether a CMR admission is necessary depend on whether the medical record demonstrates a reasonable expectation that certain criteria are met at the time of admission to a CMR unit. The criteria include: (1) requiring active and continuing intervention of multiple therapy disciplines (Physical Therapy, Occupational Therapy, Speech-Language Pathology, or prosthetics/orthotics), at least one of which must be PT or OT; (2) requiring an intensive rehabilitation therapy program of three hours of therapy per day at least five days per week; (3) having an ability to actively participate in, and benefit significantly from, an intensive rehabilitation therapy program; (4) requiring supervision by a rehabilitation physician, with face-to-face evaluations at least three days per week; and (5) requiring an intensive and coordinated interdisciplinary team approach to the delivery of rehabilitative care. Family support and involvement play a vital part in the rehabilitation process. Family members are also part of the care- giver team. Additionally, positive attitudes and reinforcement from family members can inspire the patient and help her adapt to new physical challenges or limits. Finally, family members are able to assist staff in motivating the patient and maintaining communication between the patient and the rehabilitation team. Travel distance plays a significant role in an eligible CMR patient’s decision to enter a CMR unit. Elderly patients and/or their families often do not choose to travel far from their home even though the patient needs the CMR services, because travel places an unreasonable burden on patients and their families. CMR facilities focus on speech, physical, and occupational therapies. A CMR facility provides intensive therapy on a frequent, consistent basis. This helps patients recover more quickly than they would in another setting. The Federal Center for Medicare and Medicaid Services (“CMS”) establishes the requirements for CMR facilities, which are designated by CMS as “inpatient rehabilitation facilities.” CMR facilities are also sometimes referred to as acute rehabilitation facilities. HealthSouth is the only CMR provider in Marion County in District 3. Lake County does not have a CMR provider. There was a CMR unit located at Leesburg Regional Hospital North in Lake County until July 1, 2016. That facility closed. The CMR beds from the Leesburg facility were transferred to The Villages, which is located in Sumter County. The evidence is insufficient to establish the reason for this. HealthSouth is the closest CMR provider to West Marion and Ocala Health. It is a stand-alone CMR facility in Ocala. The facility has been authorized to add ten more beds. The record is silent on when the beds will be added. HealthSouth opened in 2011 with 40 beds and has grown to 60 beds in ten-bed increments. Since 2012, HealthSouth has maintained an occupancy rate of 90 percent or higher. Despite its incremental growth, HealthSouth has not had sufficient available beds to meet the needs of patients from Ocala Health and West Marion or the district in general. District 3’s CMR occupancy rate is 86.5 percent. This is the highest rate for any district and is above the 85 percent that Agency rule establishes as the desired occupancy rate. All clinicians and experts in this case agree that rehabilitation services at skilled nursing facilities, long-term acute care hospitals, and home with home health care are not acceptable alternatives to CMR. They also agree that patient outcomes in those settings are not as good, since those settings simply do not provide the same level of care as a CMR unit. Access Problems There is no legal mandate requiring a licensed facility to accept CMR patients. A CMR facility may refuse any patient that it wishes. This means that HealthSouth can cherry-pick patients based on the most desirable payor source, leaving patients with less desirable payment providers, such as Medicaid, without access to CMR services. HealthSouth has demonstrated a preference for certain payors (including Medicare-eligible patients, patients with commercial insurance including some Blue Cross policies). It typically does not accept Medicaid or charity care patients. Ocala Health providers often do not even try to refer a Medicaid or charity care patient to HealthSouth because, based on experience, staff expects that HealthSouth will not admit those patients. HealthSouth frequently refuses to accept patients discharged from Ocala Health who qualify for CMR services under the CMS guidelines, including trauma, stroke, and complex orthopedic joint replacement patients. A large number of the patients that Ocala Health refers to HealthSouth each month are not accepted and are not able to receive CMR services that would improve their outcomes. HealthSouth’s admissions practices leave many Ocala Health patients needing CMR services without access to them. This vitiates consideration of HealthSouth as a reason to not add CMR beds in Marion County and District 3. There is a large unmet need for additional CMR beds to serve Ocala Health patients and other district residents. Some patients rejected by HealthSouth are admitted to skilled nursing facilities in Marion County. For patients needing CMR services, those facilities, although they provide some rehabilitative care, are not the correct solution. For example, treatment of the large vessel stroke patients, which Ocala Health’s comprehensive stroke center will serve, at a skilled nursing facility is not appropriate. Similarly, a skilled nursing facility would not meet the CMR needs other higher acuity patients, like bilateral transplant patients, the multidiscipline, intensive three hours a day therapy that a CMR facility provides. A skilled nursing facility provides rehabilitation services for approximately one to one and a half hours daily. This can result in a longer recovery time for high acuity patients. A skilled nursing facility is geared more toward patients with a simple hip fracture. Patients with more complex issues like bilateral joint replacements and spinal cord injuries need more. In a CMR facility, the patient sees a physician every day. In a skilled nursing facility, a patient usually sees a physician once a month. A skilled nursing facility is not optimal for higher acuity acute patients. However, due to the utilization and admission practices of HealthSouth, patients who need CMR services are often treated in skilled nursing facilities. This unusual circumstance causes the CMR need formula to under- calculate District 3’s need for CMR beds since these skilled nursing patients are not taken into consideration, whereas they would be if they were being treated in a CMR unit, as they should be. HealthSouth admission practices, consistently high occupancy rates, and delays in responding to referrals result in many patients who are ready for discharge with a physician order for CMR services, languishing in acute care beds at Ocala Regional or West Marion for longer lengths of stay or force the patients to travel to a CMR facility further from the patient's home and support system. These problems can negatively affect patient outcomes because the sooner patients start ambulating and leave an acute care facility, the less chance they have of suffering complications. When a patient cannot gain admission into a CMR facility and remains in an acute care bed, the patient is not receiving the needed CMR services ordered by the physician. This can cause a decline in their ability to benefit from therapy or an avoidably prolonged recovery. Because many of District 3 patients are elderly, their stay in a CMR facility, if and when they are admitted, ends up being longer than it would have been if they were more promptly placed. Younger patients also suffer from the lack of timely access to CMR. For example, a younger patient suffering from paralysis who has to remain in the hospital would benefit from approval of both applications because the patient will receive more therapy and opportunities for family support. While the hospital provides rehabilitative therapies in the acute care hospital setting, those services are provided at bedside and are limited in time and intensity compared to what a patient would receive in a CMR unit. The difficulty and delays in transferring patients to appropriate rehabilitation facilities cause Ocala Health hospitals to have a length of stay that is greater by a day or a day and a half than other trauma centers. The lack of availability of access to CMR services and the lack of timely access to CMR services negatively affects the Marion Community hospitals and their patients’ access to necessary services. When a patient is ready for discharge but has to remain in an acute care bed due to lack of availability of CMR beds, the availability of an acute care bed for a new acute care patient is reduced. This can result in the hospital going on “bypass,” meaning no new patients are taken in through the emergency room. In District 3 during the 12-month period ending December 31, 2016, six facilities with 202 licensed CMR beds served the entire district. The facilities are UF Health Shands Rehab Hospital, Seven Rivers Regional Medical Center (now closed), HealthSouth Rehabilitation Hospital of Spring Hill, Leesburg Rehabilitation Hospital, The Villages Regional Hospital (The Villages), and the HealthSouth facility. The District 3 beds are located in Marion, Sumter, Hernando, and Alachua Counties. None are in Lake County. These facilities experienced an 84.15 percent utilization rate. This is only .85 percent less than the Agency’s desired annual occupancy rate and is nearly five percent greater than the 80-percent occupancy rate the Agency’s rule sets as a trigger for approving additional beds. Fla. Admin. Code R. 59C- 1.039(5)(d). This was the highest CMR occupancy rate in the state. The statewide average CMR occupancy rate was 69.61 percent. These circumstances are not normal. The portion of CMR discharges covered under traditional Medicare or managed Medicare in District 3 is also significantly higher than the state average. This is reasonable since 27.2 percent of District 3’s population is 65 and older, while just 20.1 percent of the statewide population is 65 or older. In 2016, 74.1 percent of the statewide CMR discharges were covered under traditional or managed Medicare. For District 3, the number was nearly 81 percent. Lake County has no CMR services, even though it is the second largest population center in the district. Waterman is located a significant distance from the CMR providers in District 3. The closure and transfer of beds from Leesburg Regional Medical Center’s CMR unit to The Villages in Sumter County increased the travel time to CMR services for residents of the area. The Villages is still the closest CMR provider to Waterman, but travel from Waterman to The Villages can take 38 minutes to over an hour depending upon traffic and time of year. All other CMR providers are over an hour away, limiting access to CMR services. “Conversion rate” is the percentage of acute care patients that are discharged to a CMR provider. Analysis of the conversion rate of acute care patients discharged to CMR for both Lake County and Waterman also indicates that the population’s access to CMR services is limited. The district and state conversion rate to CMR is approximately two percent. The 2016 rate for Hernando County was 4.1 percent. The rate for Marion County of 2.6 percent was just over the district average. Lake County’s rate is 1.5 percent, and Waterman’s is .4 percent. This analysis demonstrates limited access to CMR services for Lake County residents and residents of Waterman’s service area. The record offers no other explanation. The analysis of discharges to CMR beds confirms the analysis. So does physician experience. Like Marion County, Lake County has a rapidly aging and growing population. As a result, there are many Waterman service area and Lake County residents who are appropriate for and could benefit from CMR, but are not accessing these services due to travel and distance constraints. The demographic and utilization data presented in this case demonstrate that there is a lack of accessible CMR services for residents in District 3 generally, and in Marion County and Lake County specifically. During the most recent reporting period (12 months ending on December 31, 2016), the average annual District 3 occupancy rate for the 202 CMR beds was 84.15 percent. Existing CMR services are clustered in just a few areas of this 16-county district. Patients of both applicants suffer from limitations on access to CMR services.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: The Agency for Health Care Administration render a final order granting Florida Hospital Waterman, Inc., d/b/a Florida Hospital Waterman, a Certificate of Need to establish 12 Comprehensive Medical Rehabilitation Beds. The Agency for Health Care Administration render a final order granting Marion Community Hospital, Inc., d/b/a West Marion Community Hospital and Ocala Regional Medical Center, a Certificate of Need to establish 12 Comprehensive Medical Rehabilitation Beds. DONE AND ENTERED this 6th day of February, 2019, in Tallahassee, Leon County, Florida. S JOHN D. C. NEWTON, II 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 6th day of February, 2019.
Conclusions Having reviewed the Amended Administrative Complaint, and all other matters of record, the Agency for Health Care Administration finds and concludes as follows: 1. The Agency has jurisdiction over the above-named Respondent pursuant to Chapter 408, Part II, Florida Statutes, and the applicable authorizing statutes and administrative code provisions. 2. The Agency issued the attached Amended Administrative Complaint and Election of Rights form to the Respondent. (Ex. 1) The Election of Rights form advised of the right to an administrative hearing. 3. The parties have since entered into the attached Settlement Agreement. (Ex. 2) Based upon the foregoing, it is ORDERED: 1, The Settlement Agreement is adopted and incorporated by reference into this Final Order. The parties shall comply with the terms of the Settlement Agreement. 2. The Respondent shall pay the Agency $500.00. If full payment has been made, the cancelled check acts as receipt of payment and no further payment is required. If full payment has not been made, payment is due within 30 days of the Final Order. Overdue amounts are subject to statutory interest and may be referred to collections. A check made payable to the “Agency for Health Care Administration” and containing the AHCA ten-digit case number should be sent to: Office of Finance and Accounting Revenue Management Unit Agency for Health Care Administration 2727 Mahan Drive, MS 14 Tallahassee, Florida 32308 1 Filed February 20, 2014 10:02 AM Division of Administrative Hearings ORDERED at Tallahassee, Florida, on this | 4 day of Fehon eng , 2014. he. Elizab¢th ae Agen for Health Care Administration
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE I CERTIFY that a true and correc. y of this Final Order was served on the below-named persons by the method designated on this /7day of 7 , 2014. Richard Shoop, Agency Cler Agency for Health Care Administration 2727 Mahan Drive, Bldg. #3, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone: (850) 412-3630 Jan Mills Finance & Accounting Facilities Intake Unit Revenue Management Unit (Electronic Mail) (Electronic Mail) Deborah E. Leoci Blake J. Delaney, Esquire Office of the General Counsel Buchanan Ingersoll & Rooney PC Agency for Health Care Administration 401 East Jackson Street, Suite 400 (Electronic Mail) Tampa, Florida 33602 Thomas P. Crapps Administrative Law Judge Division of Administrative Hearing (Electronic Mail)
The Issue This proceeding initially involved certificate of need (CON) application number 10168 filed by Rockledge HMA, LLC, d/b/a Wuesthoff Medical Center -- Rockledge (Wuesthoff), wherein Wuesthoff sought to add a 14-bed Comprehensive Medical Rehabilitation (CMR) unit to its existing acute care hospital in Brevard County (District 7); and CON number 10169 filed by Osceola Regional Hospital, d/b/a Osceola Regional Medical Center (Osceola) wherein Osceola sought to add a 28-bed CMR unit to its existing acute care hospital in Osceola County (District 7). The CON Applications submitted by Wuesthoff and Osceola were comparatively reviewed with the application of Nemours Children’s Hospital (CON 10167) wherein Nemours sought to establish a new inpatient CMR unit in District 7. On December 7, 2012, the Agency for Health Care Administration (“AHCA”) preliminarily approved the CON application submitted by Nemours and denied all other co-batched applications. Each of the denied applicants filed a Petition for Formal Administrative Hearing to contest the denial of its application. The matters were consolidated into a single proceeding at DOAH. The denied applicants did not challenge the initial approval by AHCA of Nemours’ application, allowing the approval to stand without further proceedings. Wuesthoff and Osceola’s administrative proceedings were consolidated into a single case. At the final hearing, Wuesthoff and Osceola presented evidence and testimony to support the approval of their respective CON applications. An intervenor, HealthSouth of Sea Pines Limited Partnership, d/b/a HealthSouth of Sea Pines Rehabilitation Hospital (HealthSouth), presented evidence in opposition to the Wuesthoff CON application. HealthSouth did not oppose Osceola’s application. Subsequent to the final hearing, Wuesthoff filed a notice of voluntary dismissal of its petition for formal administrative hearing. The voluntary dismissal rendered HealthSouth’s intervention moot. Wuesthoff’s proceeding was then severed from this previously consolidated matter. The issue remaining in this matter is whether the CON application filed by Osceola in AHCA District 7 satisfies, on balance, the applicable statutory and rule review criteria sufficiently to warrant approval and, if so, whether the application should be approved.
Findings Of Fact Stipulated Facts (As set forth in Prehearing Stipulation) On July 20, 2012, AHCA published a fixed need pool of zero for CMR beds in District 7. Osceola timely submitted a Letter of Intent for its CON proposal. Osceola timely submitted its initial CON application and Omissions Response. AHCA reviewed the [co-batched] applications and issued a State Agency Action Report (SAAR) preliminarily approving the CON application filed by Nemours Children’s Hospital and preliminarily denying the application filed by Osceola. Osceola filed a Petition for Formal Administrative Hearing to challenge the denial of its application. The parties stipulated to the final approval of Nemours Children’s Hospital’s application which was severed from this case for final approval. Osceola is a general acute care hospital located in Osceola County, Florida, AHCA Health Planning District 7. Osceola has a history of providing health care services to Medicaid patients and the medically indigent, and has proposed the amounts of Medicaid and indigent care as stated in its application. AHCA stipulates that Osceola’s proposal meets the statutory review criteria set forth in section 408.035(1)(c), (d), (f), (h), and (i), Florida Statutes. The Program at Issue AHCA is the state agency responsible for, inter alia, managing the certificate of need program whereby health care providers may seek approval for certain regulated health care services. One such health care service is comprehensive medical rehabilitation (CMR), a level of comprehensive in-patient rehabilitation for persons with certain designated diagnoses and treatments. In furtherance of its duties, AHCA develops and publishes a need calculation for new CMR beds in each of the 11 service districts around the State twice a year. Interested applicants for new CMR beds may apply by filing a CON application in response to the published need. In the event there is no need found by AHCA, an applicant may seek approval for new CMR beds by way of “not normal” circumstances. AHCA has seen an unusually large number of applications for CMR beds in the recent past which allege special circumstances or a not normal situation. This fact has greatly concerned the regulators as they wonder whether citizens are having difficulty accessing services they need. The Agency has not found any evidence to justify such a concern. As set forth in Florida Administrative Code Rule 59C- 1.002(41), “Tertiary health service” means: 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. Examples of such service include, but are not limited to, organ transplantation, specialty burn units, neonatal intensive care units, comprehensive rehabilitation, and medical or surgical services which are experimental or developmental in nature to the extent that the provision of such services is not yet contemplated within the commonly accepted course of diagnosis or treatment for the condition addressed by a given service. . . . CMR beds are, by rule, deemed a tertiary health service. As such, CMR beds are regulated by AHCA so that the service remains “limited to, and concentrated in, a limited number of hospitals . . . .” Id. The reason for establishing services as tertiary is to focus more attention, money, staff and resources to that particular service so that the service retains a higher quality. Persons who need CMR services are generally patients who are discharged from an acute care hospital after treatment for a specified ailment or event. In order to qualify for placement in a CMR bed, a patient must require substantial rehabilitation. At least 60 percent of all patients in a CMR unit must have a primary diagnosis within one of 13 medical conditions, often referred to as CMS-13 categories, established by the Center for Medicare and Medicaid Services. Those conditions include active polyarticular rheumatoid arthritis, amputation, brain surgery, burns, congenital deformity, fracture of femur, hip or knee joint disease, spinal cord injury, stroke, and systematic vasculidities with joint inflammation. Patients with those conditions very often need extensive rehabilitation before resuming normal activities of daily living. Osceola argues that inasmuch as some data show that CMR services are used more locally than regionally, CMR service is not actually a tertiary service. However, absent a challenge to the rule identifying CMR as a tertiary service, Osceola’s arguments are not compelling. CMR services may be less “tertiary” than some other services, but they are still by rule a tertiary service for regulatory purposes. AHCA health planning District 7 comprises Brevard County, Orange County, Osceola County, and Seminole County. There are four existing and two approved providers of CMR services in District 7. One of them, HealthSouth, is in Brevard County. Florida Hospital, Orlando Regional Medical Center, and Winter Park Memorial Hospital have CMR beds located in Orange County. The two approved programs, totaling 63 CMR beds at Central Florida Regional Hospital and HealthSouth Seminole, will be located in Seminole County. There are no existing or approved CMR beds in Osceola County. There are 67 counties in Florida; only 29 of them have a CMR program. Of the 219 acute care hospitals in Florida, only 36 have a CMR unit. The average annual occupancy of the 173 CMR beds in District 7 for calendar year 2011 was deemed by AHCA to be 62.17 percent. Part of AHCA’s occupancy calculation included a 53.35 percent occupancy rate in Orlando Regional Hospital’s CMR unit. However, only 34 of Orlando Regional’s 53 licensed CMR beds were operational during that period of time. AHCA’s calculation is therefore somewhat skewed. However, with two CMR facilities currently being under-utilized and two new programs having been approved in District 7, AHCA’s determination of no need appears justified. In this proceeding, there was no published need for new CMR beds in District 7 for the September 2012 batching cycle. The bed need calculation by AHCA resulted in a finding of a net need of minus 94 beds, rounded up to zero. AHCA’s occupancy calculation error would not have changed the finding of zero need. Faced with a finding of no need, Osceola attempted to prove a need for its proposed project by way of “not normal” circumstances. Osceola Osceola is a JCAHO-accredited general acute care hospital located in Kissimmee, Osceola County, Florida. It has 257 licensed beds, consisting of 247 acute care beds and 10 Level II neonatal care beds. Osceola provides comprehensive inpatient and outpatient services, including adult open-heart surgery, interventional cardiology, neurosurgery, and orthopedic surgery. It is accredited as a chest pain center and is certified as a primary stroke center. The hospital is a subsidiary of Hospital Corporation of America (HCA), the second largest provider of inpatient rehabilitation services in the nation. HCA has over 1,200 Medicare certified inpatient rehabilitation beds located in over 50 hospitals from Alaska to Florida. There are seven HCA comprehensive inpatient rehabilitation programs in Florida. Osceola proposes to establish a 28-bed CMR unit at its hospital plant in Kissimmee. Osceola would locate its CMR unit in a “multi-purpose patient tower” that is currently under construction. If its application is approved, Osceola would add a fourth floor on the tower to house the CMR unit. Osceola’s geographic service area is primarily Osceola County; its secondary service area includes two zip codes in southern Orange County and one zip code in Polk County. Its patient population is elderly: of the hospital’s 18,000 total annual acute care discharges, approximately 7,200 are patients age 65 and older; of those, roughly 5,200 reside in Osceola County. Osceola sets forth eight bases which it believes justify the approval of its proposed project. Each of those will be discussed in detail below. Number 1 -- Osceola County is the most populous county in Florida without any existing or approved CMR beds. -- That information does not establish a need for CMR beds in Osceola County; it merely establishes a geographical fact. Notwithstanding its geographic location, there are CMR services available in the general service area. Number 2 -- The population of Osceola’s primary service area is larger than several other Florida counties which already have licensed and approved CMR programs. Of 29 counties in Florida with licensed or approved CMR beds, 10 of those have fewer residents than Osceola’s service area. -- Again, this is a statement of information that in no way establishes need for a new program, in and of itself. It merely establishes that Osceola is located in a highly populated area vis-à-vis other locations in Florida. Number 3 -- There has not been a published need for new CMR beds in several years. CMR providers can add beds by way of the CON exemption process, so it is unlikely a need will arise under the existing formula. CMR service delivery is becoming more localized. -- These facts do not establish a need for additional CMR services in Osceola County. They merely describe some aspects of CMR services. AHCA contends that some CMR services are provided by hospitals to essentially their own patients and no one else. Other CMR providers are not so limited as to their patients. Number 4 -- The CMR CON rule has not been amended since 1995. -- This fact does not establish need for new CMR services in Osceola County. Number 5 -- Osceola believes that data show that CMR units primarily serve their own acute care discharges and other residents of their home county. -- This is another tertiary services argument that, absent a challenge to the existing rule, is irrelevant in this CON proceeding. Number 6 -- There are gaps between the age-adjusted rates of acute care discharges to CMR in District 7 hospitals and the State as a whole. -- Inasmuch as there are no established criteria for “age-adjusted rates of acute care discharges in CMR” facilities, this statement does not establish a need for new CMR beds in Osceola County. Each area of the State may be different, so there could be many reasons for this alleged gap. Number 7 -- There is a difference between the expected and actual discharges to CMR beds from District 7 hospitals and primary service area/secondary service area residents. -- There was no persuasive testimony at final hearing to explain this difference in expected versus actual discharges, nor why such an unexpected difference creates a need for new CMR beds in Osceola County. Number 8 -- The purported shortfall in CMR utilization (as evidenced by the difference between expected versus actual discharges) represents a “suppressed demand that will drive utilization of the 28-bed unit” proposed by Osceola. Thus, concludes Osceola, its proposal will not have a significant adverse impact on any existing provider. That is, Osceola believes its patients who are not currently utilizing CMR services will use the service once it is provided by Osceola. -- Osceola’s contention that it will meet the needs of only its own patient base does not establish a need for new CMR beds in the District. None of the “not normal” allegations made by Osceola in its application establish a condition which would warrant approval of a new CMR program in the Osceola County area of District 7. Osceola demonstrated that provision of rehabilitative services in settings other than CMR beds, e.g., nursing homes, is “lesser in every sense” than what a patient could expect in a CMR setting. In nursing homes, there may be fewer hours of rehabilitative care, rendered by less qualified individuals, using equipment and a physical plant less suited to rehabilitation. That is, care could potentially be better at a CMR unit for Osceola’s patients. These facts, however, fall far short of establishing a need for services; certainly a CMR might provide better services, but the necessary services do exist in the District. Osceola also established facts showing that its patients have to travel further than some other patients in Florida to access comprehensive medical rehabilitation in a CMR unit. Osceola’s physicians expressed frustration that their patients might receive better care in a CMR unit, but none testified that their patients were not now receiving adequate care. Osceola established a strong desire for its own CMR unit and showed that the unit would be financially lucrative. None of those facts is a basis for approving new CMR beds in Osceola County absent a bed need under the existing rule. Osceola also contends that its “not normal” arguments are essentially the same arguments set forth by Central Florida Regional Hospital in CON application No. 10128. That CON application was approved by AHCA, allowing a 13-bed CMR unit at the hospital in Seminole County, which is also part of AHCA District 7. However, the facts surrounding the approval of that CON application are not before the Administrative Law Judge in the present action. Whether or not that application was similar or not is not dispositive of the decision in the present case. As AHCA’s counsel so aptly put it, citing an old Native American adage, “You never step in the same river twice.” Just because the facts in the prior case constituted a not normal situation, the same is not necessarily true in the instant matter. Osceola has the ability to provide quality care and has a record of providing quality care to its patients. Osceola has the resources necessary to accomplish the creation of a CMR unit at its hospital. The CMR unit proposed by Osceola could be financially feasible in the short term and long term. The cost and methods of construction are reasonable. Osceola has a history of providing services to Medicaid and medically indigent patients and its proposal for provision of services to those groups in the CMR is reasonable. Osceola has previously provided and is expected to continue providing services to Medicare and Medicaid-eligible patients. Despite satisfying many of the review criteria which govern whether an application should be approved, Osceola did not demonstrate the need for a 28-bed CMR unit at its hospital in District 7.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Agency for Health Care Administration denying CON application No. 10169 filed by Osceola Regional Hospital, Inc., d/b/a Osceola Regional Medical Center. DONE AND ENTERED this 10th day of December, 2013, in Tallahassee, Leon County, Florida. S R. BRUCE MCKIBBEN 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 10th day of December, 2013. COPIES FURNISHED: Richard M. Ellis, Esquire Stephen A. Ecenia, Esquire Rutledge, Ecenia and Purnell, P.A. 119 South Monroe Street, Suite 202 Tallahassee, Florida 32302 Richard J. Saliba, Esquire Lorraine Novak, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Elizabeth Dudek, Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Stuart Williams, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308
The Issue The issue presented is whether Petitioners are entitled to additional benefits pursuant to the State of Florida Employees Group Health Self Insurance Plan.
Findings Of Fact At all times material hereto, Petitioner Della G. Sphaler (hereinafter "Petitioner") has been an employee of the State of Florida with health insurance coverage under the State of Florida Employees Group Health Self Insurance Plan (hereinafter "the Plan"). The Plan is administered by Blue Cross and Blue Shield of Florida, Inc. (hereinafter "Blue Cross/Blue Shield"), pursuant to an Administrative Services Agreement between the State and Blue Cross/Blue Shield. On or about November 14, 1989, Petitioner's doctor recommended that she be admitted to Humana Hospital-Palm Beaches for psychiatric services on an emergency basis. At the time, Petitioner knew that Humana was not a Preferred Patient Care Provider (hereinafter "PPC") under the Plan. A PPC provider has an agreement with Blue Cross/Blue Shield to provide health care services at set fees to individuals under the Plan. The Plan provides higher benefits when PPC providers are used. Petitioner told her doctor that Humana was a non-PPC provider and that she did not want to go to a hospital unless her bill would be paid by her insurance. However, her doctor wanted her to go to Humana specifically, and she agreed. Thereafter, Petitioner and William Sphaler (hereinafter "husband") went to Humana Hospital. They spoke to an employee at Humana regarding Petitioner's insurance coverage under the Plan, and that unidentified employee telephoned Blue Cross/Blue Shield. Petitioner was not a party to the conversation between the Humana Hospital admissions clerk and the unidentified employee of Blue Cross/Blue Shield, and her husband heard none of the conversation. Further, neither Petitioner nor her husband personally made any contact with Blue Cross/Blue Shield or Respondent regarding the existence or extent of any insurance coverage under the Plan if Petitioner were admitted at Humana. After her conversation, the clerk at Humana told Petitioner that Blue Cross/Blue Shield would pay 80 percent for the first three days of admission and 100 percent thereafter, according to Petitioner's and her husband's testimony. Petitioner was admitted to Humana on November 14, 1989, with an admitting diagnosis of major depression. She remained there until her discharge on December 8, 1989. As a result of the phone call from Humana, on November 14, 1989, the Blue Cross/Blue Shield computer generated a form letter to Petitioner advising her that under the Hospital Stay Certification component of the Plan Petitioner's emergency hospital stay was certified for three days and that contact by the hospital would be necessary to recertify the admission for additional days. That letter further advised as follows: We remind you that the review was limited to determining the appropriate length of stay for the emergency admitting diagnosis and did not question medical necessity. We further remind you that payment of benefits is still subject to the terms of your Health Insurance Policy. Neither Petitioner nor her husband contacted Blue Cross/Blue Shield to verify or ascertain benefits upon their receipt of that letter. Petitioner's total bill for her stay at Humana was $17,652.53. The bill was primarily for room charges. Humana charged $463 a day for eleven days in a semi-private room and $713 a day for an additional thirteen days in a semi- private room. Blue Cross/Blue Shield paid a total of $6,751.50 of Petitioner's hospital bill. That payment covered portions of Petitioner's bill for the entire stay. Since Humana is a non-PPC hospital, payment for services is controlled by Section II.A.1. of the Plan's Benefit Document, amended effective July 1, 1988, which covers non-PPC hospital inpatient room and board services as follows: When confined to a semi-private or private room or ward, 80 percent of the hospital's average semi-private room rate shall be paid but not to exceed an actual payment of one-hundred and fifty-two dollars ($152.00) per day. The Benefit Document also establishes deductibles under the Plan in Section VI.C. as follows: "Two hundred dollars ($200.00) per admission to a non-PPC provider hospital, specialty institution or residential facility." The Hospital Stay Certification component of the Plan, like the Pre- admission Certification component, if complied with, does not increase the benefits payable under the Plan. Rather, Section XXIV.C. of the Benefit Document provides that the benefits set forth in Section II.A. will be paid if an elective admission to a non-PPC hospital is certified and will not be paid if the admission is not certified. Since Petitioner obtained certification, she was entitled to benefits as provided in Section II.A., i.e., a maximum of $152 per day for room charges. Blue Cross/Blue Shield properly calculated and paid the benefits to which Petitioner is entitled. Petitioner is entitled to no additional benefits under the Plan.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered denying Petitioners' claim for additional benefits for the November 14, 1989, Humana hospitalization. DONE and ENTERED this 5th day of April, 1994, at Tallahassee, Florida. LINDA M. RIGOT Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of April, 1994. APPENDIX TO RECOMMENDED ORDER DOAH CASE NO. 93-5971 Petitioners' proposed findings of fact numbered 1-4 and 6 have been adopted either verbatim or in substance in this Recommended Order. Petitioners' proposed finding of fact numbered 5 has been rejected as not being supported by the weight of the competent evidence in this cause. Respondent's proposed findings of fact numbered 1-5 and 8-10 have been adopted either verbatim or in substance in this Recommended Order. Respondent's proposed finding of fact numbered 6 has been rejected as being unnecessary to the issues involved herein. Respondent's proposed findings of fact numbered 7, 11, and 12 have been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. COPIES FURNISHED: John P. Marinelli, Esquire John P. Marinelli, P.A. 1615 Forum Place Suite 4-B, Barristers Building West Palm Beach, Florida 33401 Augustus D. Aikens, Jr., Esquire Chief, Benefit Programs and Legal Services Division of State Employees' Insurance 2002 Old St. Augustine Road, B-12 Tallahassee, Florida 32301-4876 William H. Lindner, Secretary Department of Management Services Knight Building, Suite 307 Koger Executive Center 2737 Centerview Drive Tallahassee, Florida 32399-0950 Paul A. Rowell, General Counsel Department of Management Services Knight Building, Suite 307 Koger Executive Center 2737 Centerview Drive Tallahassee, Florida 32399-0950
The Issue Whether the Respondent's policy of requiring justification of a hospital's rate of increase in its GRAA in excess of the National Hospital Input Price Index (hereinafter referred to as the "NHIPI") is an invalidly promulgated rule?
Findings Of Fact The following findings of fact were contained in the Joint Prehearing Stipulation: The Petitioner's name and address are Doctors Memorial Hospital, 401 E. Byrd Avenue, Bonifay, Florida 32425. Doctors Memorial is a 34-bed short-term general acute care hospital located and operating in Holmes County. Doctors Memorial is owned by National Healthcare of Holmes County, Inc. The name and address of the agency affected are the Hospital Cost Containment Board, Executive Office of the Governor, State of Florida, Woodcrest Office Park, Building L, Suite 101, 325 John Knox Road, Tallahassee, Florida 32303. The HCCB I.D. number of Doctors Memorial is 10-0078. On or about March 27, 1986, Doctors Memorial submitted to the HCCB its projected 1987 fiscal year budget. Doctors Memorial's 1987 fiscal year begins on July 1, 1986, and runs through June 30, 1987. On May 16, 1986, Doctors Memorial received the Staff analysis and preliminary findings and recommendations relative to its 1987 fiscal year budget. Doctors Memorial was advised that the Staff would recommend to the HCCB that Doctors Memorial's budgeted gross revenue per adjusted admission and net operating revenue per adjusted admission for fiscal 1987 be adjusted downward for reasons set forth in the Staff analysis. Doctors Memorial timely filed its petition challenging Staff's recommendations on May 30, 1986. Doctors Memorial has standing in these matters based on the facts alleged in its petitions. The Respondent indicated in its preliminary findings and recommendations that the following policy applied to the review of the Petitioner's 1987 budget: Current agency policy states that hospital's [sic] exceeding the MARI can only increase gross revenue per adjusted admission to the National Hospital Input Price Index (NHIPI) of 3.7 percent without further justification. Any increase in excess of the NHIPI must be sufficiently justified and quantified to staff. The NHIPI is an average rate of inflation for hospitals in the United States. It represents the additional costs of providing services by hospitals in the country caused by inflation. The policy contained in the Respondent's preliminary findings and recommendations was developed and imposed upon the Petitioner after the Respondent's analysis, Mr. Lasko, had made an initial draft of his review of the Petitioner's budget for fiscal year 1987. After learning of the policy, Mr. Lasko redrafted his review which was signed on May 15, 1986 and subsequently sent to the Petitioner. The policy contained in the Respondent's preliminary findings and recommendations was contained in a memorandum dated May 16, 1986 (hereinafter referred to as the "May 16 Memorandum"), and signed by Mr. Pattillo, the Chief Financial Analyst of the Respondent, on May 22, 1986. In the May 16 Memorandum it was stated that: Any increase over the previous year's GR/AA inflated by the NHIPI, shall be justified by the hospital to the staff's satisfaction utilizing the statutory review criteria of section 395.509(5), Florida Statutes. The policy contained in the Respondent's preliminary findings and recommendations and its May 16 Memorandum, based upon instructions contained in the May 16 Memorandum, is to apply to all 1987 budgets that are subject to budget review. The policy contained in the May 16 Memorandum was further explained in a memorandum dated June 19, 1986 (hereinafter referred to as the "June 19 Memorandum"). The June 19 Memorandum was signed by Mr. Pattillo. In the June 19 Memorandum it was indicated that hospitals subject to review may even have to justify an amount of increase less than the NHIPI. The policy of the Respondent embodied in its May 16 Memorandum and its June 19 Memorandum has not been adopted as a rule pursuant to Section 120.54, Florida Statutes (1985).
Conclusions Having reviewed the First Amended Administrative Complaint, and all other matters of record, the Agency for Health Care Administration finds and concludes as follows: 1. The Agency has jurisdiction over the above-named Respondent pursuant to Chapter 408, Part Il, Florida Statutes, and the applicable authorizing statutes and administrative code provisions. 2. The Agency issued the attached First 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: 4. The Settlement Agreement is adopted and incorporated by reference into this Final Order. The parties shall comply with the terms of the Settlement Agreement. 5. The action seeking the revocation of the Respondent’s assisted living facility’s license is withdrawn. The Respondent shall pay the Agency $5,000.00. If full payment has been made, the cancelled check acts as receipt of payment and no further payment is required. If full payment has not been made, payment is due within 90 days of the Final Order. Overdue amounts are subject to statutory interest and may be referred to collections. A check made payable to the “Agency for Health Care Administration” and containing the AHCA ten-digit case number should be sent to: Office of Finance and Accounting Revenue Management Unit Agency for Health Care Administration 2727 Mahan Drive, MS 14 Tallahassee, Florida 32308 Filed August 29, 2014 9:45 AM Division of Administrative Hearings ORDERED at Tallahassee, Florida, on this 24 day of Atuguat , 2014. wp oh fh Dud ecretary Agency for Heath Care Administration
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE I CERTIFY that a true and correct copy.of this Final Order, was served on the below-named persons by the method designated on this _A~S"day of hagas i 2 , 2014. Agency for Health Care Administration 2727 Mahan Drive, Bldg. #3, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone: (850) 412-3630 Jan Mills Finance & Accounting Facilities Intake Unit Revenue Management Unit (Electronic Mail) (Electronic Mail) Alba M. Rodriguez, Senior Attorney Rawsi Williams, Esq. Office of the General Counsel Rawsi Williams Law Group Agency for Health Care Administration 1395 Brickell Avenue - Suite 900 (Electronic Mail) Miami, Florida 33131 (U.S. Mail) Jessica E. Varn Administrative Law Judge Division of Administrative Hearings (Electronic Mail)
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.
