Findings Of Fact The parties have stipulated that the only statutory criteria at issue are those related to need and long term financial feasibility as it relates to need, specifically Subsections 381 494(6)(c~ 1,2,9, and 12, Florida Statutes and Rule 10-5.011(1 (b)l. and 3. Florida Administrative Code. Nurse World, Inc. is an existing non-Medicare home health care agency and is a provider of temporary nursing services in District VII. The five biggest home health agencies in District VII are Nurse World, Visiting Nurse Association (VNA), Upjohn, PRN (no full name ever given), and Norrell. Nurse World is the largest of these as far as active staff, but is the only one of these that is not Medicare-certified. HRS is the agency responsible for certification and licensure of home health agencies. A home health agency in Florida must obtain a CON from HRS before it can be licensed and become eligible to receive Medicare reimbursement. Medicare is a federally funded health program for the elderly and certain disabled persons. Medicare reimbursement is limited to reimbursement for skilled nursing, physical therapy, speech therapy, occupational therapy, home health aid services, and medical social services. The Medicare program reimburses home health agencies on a cost reimbursement basis with a cap for each discipline. Home health agency costs in excess of Medicare caps must be absorbed by the agency. Consequently, traditional concepts of price competition have no applicability to home health agencies providing Medicare reimbursable services. Individuals become Medicare eligible for home health agencies' services in two ways. First, age makes an individual eligible when a person is over 65 and has paid a sufficient number of quarters to social security. Another way is for an individual under 65 to be declared disabled. The 1985 State Health Plan is the most current plan. The only portion of the 1985 State Health Plan which is applicable to home health agency applications is that access to home health services should be improved, specifically access for Medicaid and indigent patients. Nurse World's application satisfies this requirement. Only certain portions of the District VII local health plan are applicable to Nurse World's application. The methodology employed in the local plan was derived from a rule which was declared invalid. See infra on the inapplicability of these portions of the plans. The portions of the local plan which are applicable are the priorities that a home health agency provide a full range of service, improve access for underserved groups, and have interrelationships with the existing health care facilities and community. Since Nurse World, Inc.'s inception in August of 1981, it has grown from a staff of approximately 50-75 nurses to a current staff of close to 700 active field employees including registered nurses (R.N.s), licensed practical nurses (LPNs), nurse aides, and ancillary personnel. Nurse World's growth is due in part to quality patient care and effective and efficient employee management. A background check is done on personnel prior to hiring. Some of Nurse World's employees are screened by competency examinations. Ninety percent of its staff is made up of LPNs, Emergency Medical Technicians (EMTs) or Physician Aides (PAs). All receive additional training by Nurse World. Other home health agencies in District VII often call Nurse World to obtain nurses to fill out their shifts whereas Nurse World has never had that problem. In line with HRS' position that applicants must demonstrate that existing agencies cannot meet existing need, Nurse World submitted considerable reputation-type testimony. Upon proper predicate and under certain circumstances, evidence of character reputation and evidence of modus operandi, are admissible. "Character is distinct from reputation; reputation is evidence of character," Ehrhardt, Florida Evidence, Subsection 405.1 (2d Ed. 1984). See same text, Subsection 404.11 on modus operandi. Indeed, CON applicants traditionally try much of a contested case upon evidence of their own professional reputations, and the reputation of their competitors, privy to the case or not. This entire line of inquiry was prompted by HRS' negative burden of proof concept and upon authority of Balsam v. Department of Health and Rehabilitative Services, 486 So. 2d (Fla. 1st DCA 1986). In these contexts, reputation evidence, a hearsay exception, was admitted in evidence. Nurse World's reputation as reported from all sources in the community (District VII) is excellent, particularly for quality of care, reliability, and speed of response. This type of reputation evidence was also supplemented by opinion evidence from various witnesses' personal on-going experience. Nurse World also presented testimony that Upjohn does not have a good reputation, that VNA has an unfavorable attitude towards indigent patients, and that UpJohn and VNA nurses will contact a doctor less appropriately than Norrell or Nurse World when there is a change in the patient's condition. There was a modicum of evidence that a better nurse knows when to call a doctor and when not to. Nurse World is a continuing education unit (CEU) provider, offering seminars covering state of the art nursing skills twice monthly. This service naturally increases the proficiency and quality of Nurse World's own employees who attend, but additionally, its continuing medical education seminars serve the community as a whole, since every two years LPNs and R.N.s, must each complete 24 hours of additional training so as to be eligible to renew their professional licenses. Nurse World is the only home health agency in Central Florida that has a CEU provider number. Unlike most hospital CEUs in the area, its continuing medical education services are free of charge and it maintains a suggestion box for topics to be addressed. Its use of video tape instruction both in-house and for seminars is an advanced technique. Nurse World has the exclusive contract to provide nursing services to Hospice of Central Florida. Hospice of Central Florida is a Medicare-certified home health agency, which has no nursing staff of its own. It has only support staff. Nurse World provides all its nurses. After switching to VNA, Hospice switched back to Nurse World. Nurse World has guaranteed in its application that if the CON is issued, it will provide 3 percent of its patient visits to indigents and 3 percent of its patient visits to Medicaid-eligible patients. It is satisfied for any CON grant to be conditioned on such a requirement. Nurse World's proposal to devote 6 percent of its patient visits to the traditionally medically underserved is relatively high for a home health agency. Nurse World presently provides $8,000 in indigent care through its Hospice contract and provides one free patient visit for every five patient visits at Brookwood AMI Hospital. It also has an indigent volunteer services program which provides basic nursing skills training to families so that they can care for their loved ones at home. Nurse World is a "full service" agency. It is considered "high-tech", providing in the home C-pap, IV therapy, respirator, feeding through a chest tube catheter, hyperalimentation, passive motion and other services previously available only in hospitals. This element of its services is particularly significant because of Nurse World's availability to handle difficult cases such as AIDS victims, infants, and multiply-afflicted elderly patients on a 24 hour a day, 7 days a week basis. Nurse World proposes to offer and does offer a full range of services. No other home health agency in District VII provides the full range of services to the degree and over the 24 hour a day period as Nurse World does. These types of difficult cases appear to be underserved in District VII. Nurse World is the only home health agency in the District that effectively staffs its office seven days a week, 24 hours a day. Nurse World has done so ever since it took its first critical care patient and entered into high tech nursing. This relates directly to quality of care and being responsive to patients' needs with no endangering delay as discussed below in relation to high tech protocols. Among health care providers generally and among home health care agencies particularly, Nurse World has a unique approach to insure immediate access and responsiveness to its patients: it mans its telephones with live dispatchers with immediate access to professionals on call. No other Central Florida home health agency does this. At all times there is at least a registered nurse available by phone when a patient reaches Nurse World. There is always a second professional backup behind the professional on the phone, often the Director Ms. Denner, herself. Nurse World has adopted this approach because it feels there is not enough time for turnaround response with other systems when a critical care high tech patient or confused elderly patient gets in trouble or has an emergency. Answering services hold calls; beepers require the professional on call to find a phone and return a call to the answering service, receive the emergency message, and then, finally, call the patient. Nurse World's method allows for the professional who receives the call at any hour of the day or night, even on a weekend, to respond to most situations immediately over the phone, and if necessary to contact the 911 emergency number and the patient's own regular nurse within minutes. Nurse World was the first nursing service in the Central Florida area to render home health services to an AIDS patient, includes AIDS nursing in its continuing medical education efforts, and now gets referrals for Medicare on that basis. No other home health agency is dealing with AIDS patients to the extent that Nurse World is. Nurse World also has an agreement with Centaur, the AIDS support group for Central Florida, through which Nurse World will provide nurses at cost or at its "break even indigent rate". Nurse World has provided health care services to AIDS patients for a very minimal charge since this area of home health care-has been identified and has accelerated numerically. There are approximately 80-100 identifiable AIDS cases in the area. Nurse World has provided the bulk of care for these approximately 80- 100 diagnosed AIDS cases. Other agencies are reluctant to provide this care. Bona fide AIDS patients are eligible for Medicare. The Medicare bureaucracy is processing AIDS case applicants quickly, in 3 to 6 months, basically because there is that necessity. Dr. Robbins, a physician practicing in the Brevard, Seminole, and Orange County area in infectious diseases and internal medicine specializes in the treatment of AIDS. He sees a need for Nurse World to become Medicare certified to render services to the Medicare eligible AIDS patients, because in his experience, Nurse orld renders the best services qualitatively to these types of patients. Any number of AIDS patients (either on or off Medicare) above the number actually served by Nurse World or treated by Dr. Robbins has not been statistically demonstrated, but all testimony on the subject supports the 80-100 existing case figure and the concept that the AIDS numbers are escalating in both Medicare-certified and uncertified categories. One problem situation arising with increasing AIDS patients qualifying for Medicare is basically the same problem for all patients so qualifying. Once qualified, patients naturally must utilize one of the Medicare-certified home health agencies. The continuity of care of a patient is interrupted when Nurse World can no longer render nursing services to a former patient due to that patient becoming Medicare eligible. A break in the continuity of care unfavorably affects the quality of care rendered any patient. The patient and staff often develop a rapport and a break in care can emotionally depress the patient, leading to medical (physical) setbacks. Quality of care is likewise negatively impacted by switches in car givers because the more often a nurse sees a given patient over a period of time, the more that nurse is able to monitor the quality and progress of that patient. There is modest evidence that Nurse World is proficient in scheduling the right nurse for the right patient. Nurse World is the only home health agency that actually video tapes some cases and then trains specific nurses before ever sending them into the patient's home. There is presently a tendency to get people out of hospitals sooner than before due to the new diagnostic related grouping (DRG) regulations. Physicians then routinely refer these patients for home health care visits. As a result, in the last few years, there has been a quantifiable increase in the number of home health care visits requested in District VII. As a result of the increased demand and the inability of the Medicare-certified home health agencies to answer that demand (need), patients referred for Medicare home health services frequently will be seen only once or twice a week rather than three weekly visits as requested by their physicians. This is a significant deficiency in appropriate care for high tech critical care cases, including but not limited to the multiply- afflicted elderly. Also, nursing homes in the area are now experiencing sicker patients due to individuals getting out of the hospitals earlier through DRGs. The scope of nursing home care has increased. The patients released from hospitals cannot go directly home if their case is too complicated. Thus, many patients first go into nursing homes before going to their own homes. Nurse World provides temporary staff relief for the Americana Health Care Center, a skilled nursing home facility in-Winter Park, Florida. According to the testimony of Jill Miller, R.N., Director of Nurses for Americana, Nurse World's staff meets the high standards set at Americana whereas the other home health care agencies she has sometimes used have not. Nurse World personnel, however, are unable to follow the Medicare eligible patients home after release from Americana because Nurse World has no Medicare certificate. This breaks the continuity of care for Americana Medicare patients and can result in all the unfavorable physical and emotional setbacks set out above. Although the break in this continuity of Nurse World care is pronounced and more easily demonstrated using the Americana facility, and although it may be inferred that continuity of care is extremely important especially for the predominantly elderly population that uses Medicare regardless of which nursing home they exit, the continuity of exclusive care by Nurse World personnel specifically, falls short of representing a "special need" as that phrase has come to be understood in CON practice. This is also true for newly qualifying AIDS patients and hospital releases. Nurse World has provided high-tech in-service training at Americana free of charge. Nurse World is the only home health agency that staffs hospitals, nursing homes, and private duty visits. This sharpens the nurses' skills, especially their critical skills. Generally the existing Medicare-certified home health agencies still do not take home high-tech patients. It is advantageous to professional health care providers, the individual patients, and the community at large to encourage home care for high-tech patients. Caring for high- tech patients at home rather than in the hospital results in a cost savings to the community and for the individual patients as it is obviously much cheaper to care for patients at home. Also, the patients tend to get better quicker in their home environment. Examples of Nurse World's expertise in this area are that Nurse World was the first agency in the southeast United States to take home a baby on C-pap, a very sophisticated involved respirator. Nurse World is still the only agency located in District VII to have provided the C-pap at home. There is still no C-pap patient within District VII. Nurse World took home the first critical care, high tech patient in the Central Florida area four years ago. It is also the only agency that provides continuous passive motion care at home. Continuous passive motion care is a "state of the art" physical therapy device that provides continuous physical therapy. Nurse World has averaged three to four of these patients a week over the last year. Caring for high-tech critical care patients at home even when a "mini-intensive care unit" is necessary, costs the community much less than hospital care which can total $716 per day for a non-critical patient. Nurse World employs the largest number of critical care nurses in the area of any provider. Nurse World was the first agency that did blood gases on a patient at home, the first to take home a patient on a ventillator, the first to do home hyperalimentation, and the first to do a home I.V. patient. Two other agencies in the Orlando area now render high-tech services but not to the extent that Nurse World does. They began these services on a limited basis about a year after Nurse World began. Nurse World's "firsts" in these areas are significant because being in the vanguard of opening up these areas of practice has caused it to establish its own written in-home high tech policy and procedure (protocols) which the industry may voluntarily adopt since there is no HRS rule covering the subject matter. Most important about the protocols as developed and maintained by Nurse World are fail-safe techniques for dealing with malfunction of high tech machinery, power failure, isolation techniques for AIDS patients (sometimes considered "high tech"), and direct and immediate telephone contact with professional staff in any emergency. HRS does not presently have any methodology pursuant to rule or policy for projecting need for a home health agency. The methodology that HRS employed in reviewing the Nurse World application was contained in the District VII local health plan. That plan had adopted an HRS proposed rule which was subsequently declared invalid in Home Health Services v. Department of Health and Rehabilitative Services, 8 FALR 1510 (March 12, 1986). Sharon Gordon-Girvin, an expert in health planning, testified on behalf of Nurse World. She presented two methodologies for projecting the need for a home health agency in District VII. After the proposed rule was declared invalid, HRS developed a policy for determining the need for additional home health agencies, reflected in Petitioner's Exhibit 78, which was employed between March and August of 1986. That policy was actually used in reviewing home health agency applications, and in making decisions. HRS issued certificates of need for home health agencies based on that policy. Applying that HRS policy, which Gordon-Girvin considers "reasonable," there is a need for 35.3 home health agencies in District VII in 1986. 1986 is the planning horizon year applicable to the Nurse World application. There are 16 existing Medicare home health agencies in District VII. Direct, competent and substantial evidence supports the 16 figure which includes newly certified Profile Medical Services. HRS documentation confirms this. Uncorroborated hearsay evidence of an additional home health agency in District VII was struck. Therefore, the net need is for 19.3 home health agencies in District VII in 1986. HRS, when using this methodology, had a policy of giving out only one/third of the net need in each of three consecutive years. Gordon-Girvin would not term this latter policy nreasonable" and no one offered any acceptable justification for it. No reasonableness of this "award only 1/3 of need" policy was demonstrated and it has since been abandoned, but even by such a system, the net need in 1986 would be for 6.4 additional home health agencies in District VII in 1986. The gross need and the net need continue to increase through 1989. The methodology reflected in Exhibit 7B basically has two constants, the home health use rate and the optimal size visits. They act as constants. The increase in the number of agencies needed is attributable to the growth of the population. Ms. Gordon-Girvin also employed a methodology employed by District III as a point of comparison to see how the number of agencies needed in District VII could be affected by using a very conservative methodology. District III's methodology was selected as a conservative comparison to the former state health policy. Also, no other local health council has a need methodology. Employing the methodology reflected in Petitioner's Exhibit 7A, there is a need for 17 home health agencies in District VII or a net need for 1 additional home health agency. (Gross need minus 16 existing certified agencies). This is a very conservative methodology because it changes very slowly over time. In fact, the net need remains at 1 through 1989. Ms. Gordon-Girvin opined that this methodology employed in Petitioner's Exhibit 7A, is also a reasonable methodology but is very conservative and relies on hospital discharge rates in contrast to the discredited and abandoned HRS policy which is a use-based methodology. There are no other methodologies being employed by planners in Florida and no other methodologies were put forth by either party. Presently, HRS has no rule or policy designating a numeric methodology to determine the need for new medicare home health agencies in any given district. HRS review of CON applications for home health agencies is based solely on statutory criteria, the merits of the proposal, and the district need for the agency as demonstrated by the individual applicant. 80th need methodologies employed by Ms. Gordon Girvin contemplate the need for home heath agencies at the District level. That is, agencies operating in all four of District VII's counties. In reality, the existing home health agencies operate in only one or two mounties. For example, Profile Medical Services, the only successful applicant in the current batch, was recently issued a certificate of need under the HRS policy since discredited and abandoned, but its CON is limited so that it can operate only in 8revard county, so that actually only one-fourth the district need is being met. At the time the Nurse World application was reviewed, there were 11 licensed and approved CON home health agencies in District VII. Six of these agencies only operate in one county and five operate in only two counties. HRS is not aware of any Medicare-certified home health agency that operates in all four counties in District VII under a single certificate of need. Because HRS' policy has been invalidated as a rule and since it has been subsequently abandoned by HRS, it would be invalid to employ it in these proceedings. Even if the District III methodology determined a net need of one is reasonable, it would be unreasonable and unjustified to apply it as modified by HRS' uncodified award only 1/3 of need per year" policy, apparently also abandoned prior to hearing. Therefore, by the only reasonable need methodology presented (that of District III) there is room for one home health agency, not limited by county and not limited by the "award only 1/3 of need per year" policy. The 1/3 limitation should not apply in any case because it has no current application by HRS and because its effect varies the horizon year. Since HRS had no need methodology or policy in place at date of hearing, it took the-position that an applicant must demonstrate need by finding people who are not getting the service. Ms. Gordon-Girvin, Petitioner's expert who had been employed at HRS in health planning for 11 years, opined that there is no adequate quantifiable technique available as a health planning methodology that will allow a health planner to make use of a negative demonstration of need. She suggested use of responses to a newspaper advertisement and then demolished that method of proof as "impractical". Another difficulty with this type of negative demonstration approach is that existing agencies can deal with increased need demands by simply continuing to add staff. Gordon-Girvin knew of no applicant that had acquired a CON by proving lack of access. Additionally, a similar agency position (the Rule of 300) has been struck down by the courts. This negative burden of proof concept has been given short shrift by the courts and is rejected here as well. See Department of Health and Rehabilitative Services v. Johnson and Johnson Home Health Care, Inc., 447 So. 2d 361 (Fla. 1st DCA 1984). Richard Gramming, an expert in health planning, testified on behalf of Nurse World. He presented Petitioner's Exhibit 6 which demonstrated that there is a capacity for other agencies in District VII and that if one of those agencies were to be Nurse World, the impact would not be very significant on the available number of visits. The multiplication of the Medicare home health use rate by the 65+ population for District VII produces the potential number of Medicare home health visits for District VII which for 1986 is 317,304. The total number of home health agency visits, Medicare and non-Medicare, for 1984 in District VII was 309,920. Of these visits, 266,531 were Medicare visits. When the actual number of Medicare visits is subtracted from the potential number of Medicare visits, there are 50,773 Medicare visits available for current and existing providers. When Nurse World's projected number of visits from year two (5,625) are subtracted there are still 45,148 Medicare visits available for current providers. Nurse World's approval should have no serious impact on the short or long term financial positions of the existing Medicare providers with the possible exception of Hospice, which may have to hire its nurses elsewhere. An interest such as Hospice's is not one which Chapter 381 is designed to protect. Mr. Gramming's projections are very conservative and the untapped market is probably larger, since the Medicare eligible due to disability were not factored into his formulas and the use rate in the formula was kept constant, whereas it has been increasing over time. A review of Nurse World's past growth rate and conservatively projected growth rate reveals that Nurse World is financially secure for a long-term position. In light of the potential market as demonstrated by the foregoing findings of fact, a long-term financial feasibility of Nurse World will be assured. Home health agencies are labor intensive rather than capital intensive, with few fixed costs. The entry of Nurse World into the market will tend to keep costs as they are or perhaps lower costs through increased competition. Medicare costs caps are more effective in preventing cost inflation. Nurse World has met its minimal burden of proof to establish there will be no significant adverse impact on cost if the Nurse World application is approved; HRS has not gone forward to demonstrate there will be any adverse impact on costs if the application is approved. Nurse World has demonstrated that access to health care by the underserved population will be improved and that the opportunity for specialization within the existing market place will be enhanced by their entry into the market. Nurse World's actual growth rate from 1984 to 1985 and from 1985 to 1986 has been 20 percent per year in gross revenues. Twenty percent growth is logically anticipated for the current year despite a more conservative 12 percent calculation.
Recommendation Upon consideration of the foregoing findings of fact and conclusions of law, it is, RECOMMENDED that a Final Order be entered granting Petitioner Nurse World a CON to establish and operate a home health agency in District VII (Orange, Osceola, Brevard, and Seminole counties), conditioned upon its providing 3 percent indigent and 3 percent Medicaid qualified services. DONE and RECOMMENDED this 20th day of May, 1987, at Tallahassee, Florida. ELLA JANE P. DAVIS, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20th day of May, 1987. COPIES FURNISHED: Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Eric J. Haugdahl, Esquire 1363 East Lafayette Street Suite C Tallahassee, Florida 32302 John Rodriguez, Esquire Department of Health and 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 APPENDIX The following constitute rulings pursuant to Section 120.59(2), Florida Statutes, upon the parties proposed findings of fact (FOF): Petitioners proposed findings of fact: 1-4 To the extent not covered under "Background and Procedure," these are subordinate and unnecessary. Covered in FOF 2. Covered in FOF 8. Covered in FOF 9. Covered in FOF 3 & 10. Covered in FOF 3. Covered in FOF 10. Covered in FOF 10. Covered in FOF 12. 13-15 Covered in FOF 13. 16 Covered in FOF 16. 17-20 Covered in FOF 7. Covered in FOF 14. Covered in FOF 16-17. Rejected as a conclusion of law; see FOF 13 and conclusions of law. Accepted but subordinate to the facts as found. 25-26 Accepted but subordinate to the facts as found, cumulative FOF 7. 27-28 Rejected as unnecessary, as mere "puffing" and as subordinate to the facts as found. See FOF 10 and 18 on proposal 28. 29. Rejected as unnecessary and subordinate to the facts as found. See FOF 25.l 30-34 To the extent supported by the admissible direct competent substantial record evidence, these are covered in FOF 16; otherwise rejected. 35. Covered in FOF 6.l 36-37 To the extent supported by the record, covered in FOF 16, otherwise rejected. 38 Covered in FOF 10 and 15. 39-40 To the extent supported by the record and to the extent necessary to a determination of this cause, covered in FOF 17- 21, otherwise rejected. 41-42 Covered in FOF 19. 43-44 Covered in FOF 20-21. Covered in FOF 22. To the extent not covered in FOF 8 and 11 rejected as cumulative. Unnecessary, as mere "puffing", and as subordinate to the facts as found in FOF 14 and 25. Covered in FOF 23. Covered in FOF 24. Covered in FOF 14-16, and 25. Covered in FOF 25. Covered in FOF 25 but cumulative. Accepted as true, but rejected as subordinate and unnecessary. Except as covered as to capability of Nurse World in FOF 14 and 25, it is also largely immaterial to these proceedings in that Mrs. WiIdermuth's child is not eligible for Medicare, cannot become eligible for Medicare and resides outside District VII in Volusia County. 54-56 Covered in FOF 25. 57 Covered in FOF 3 and 8. 58-50 Covered in FOF 25. 61-62 Subordinate to the facts as found. See FOF 39 and 42. Cumulative, see FOF 23. Covered in FOF 15. 65-73 and 75-78 Except as covered in FOF 11 and 16 these proposals are rejected as subordinate, unnecessary or cumulative to the facts as found. 74 Covered in FOF 11 and 18. Covered in FOF 27-34. Rejected as a conclusion of law. 81-89 Covered in FOF 26-35 and conclusions of law. 90 Accepted for the reasons set out in the transcript reference, but as a FOF it is subordinate and unnecessary. 91-95 Covered in FOF 26-35. 96 Rejected as irrelevant since no such out of state methodology was offered. See FOF 28. 97-105 Covered in FOF 30-35. Rejected as a conclusion of law. Covered in FOF 36. Covered in FOF 37. 109-110 Accepted but unnecessary. 111-119 Covered in FOF 36-42. 120 Accepted but rejected as unnecessary. Respondent's proposed findings of fact: 1 Covered in background and procedure. 2 Covered in FOF 2, 8, 14 and 15. 3 Covered in FOF 13. 4 Covered in FOF 11. 5 Covered in FOF 10. 6 Covered in FOF 14 and 25. 7 Covered in FOF 8 and 23 (among others). 8 Covered in FOF 4. 9 Covered in FOF 5. 10 Covered in FOF 6. 11-12 Covered in FOF 26-35.
Conclusions RENDITION NO.: AHCA-·09- I Bl -S-OLC Having reviewed the Notice of Intent to Deny dated October 13, 2008, attached hereto and incorporated herein (Ex. 1), and all other matters of record, the Agency for Health Care Administration ("Agency") has entered into a Settlement Agreement (Ex. 2) with the parties to these proceedings, and being well-advised in the premises, finds and concludes as follows: ORDERED: The attached Settlement Agreement is approved and adopted as part of this Final Order, and the parties are directed to comply with the terms of the Settlement Agreement. The Applicant's initial application for registration for homemaker companion service is withdrawn from further review in accordance with the terms of the Settlement Agreement. 1 Filed March 27, 2009 1:11 PM Division of Administrative Hearings. The Petitioner's request for formal administrative proceeding is withdrawn. Each party shall bear its own costs and attorney's fees. The above-styled case is hereby closed. DONE and ORDERED this d off2ia<d .) , 2009, in Tallahassee, Leon County, Florida. Holly Bens n, Secretary Agency for ealth Care Administration 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. Copies furnished to: Karen L. Goldsmith, Esquire Jonathan S. Grout, Esquire Goldsmith and Grout, P.A. 2160 Park Avenue North Winter Park, Florida 32789 (U.S. Mail) Thomas M. Hoeler, Senior Attorney Office of the General Counsel Agency for Health Care Admin. 525 Mirror Lake Drive North, #330 St. Petersburg, Florida 33701 (Interoffice Mail) Jan Mills Honorable Lawrence P. Stevenson Agency for Health Care Admin. Administrative Law Judge 2727 Mahan Drive, Bldg. #3, MS #3 Division of Administrative Hearings Tallahassee, Florida 32308 The Desoto Building (Interoffice Mail) 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (Interoffice Mail) 2 CERTIFICATE OF SERVICE - , a- --, I HEREBY CERTIFY that a true and correct copy of this Final Order was served on the above-named person(s) and entities by U.S. Mail, or the method designated, on this -@ay of 2009. Rictiard S op, Agency Cl Agency r Health Care A ministration 2727 Mahan Drive, Building #3 Tallahassee, Florida 32308-5403 (850) 922-5873 3 CHARLIE CRIST GOVERNOR FlORJI),>, AGENCY FOR HEALTH CARE AOMINISffiATION ICA HOLLY BENSON SECRETARY October 13, 2008 CERTIFIED RECE D 71bD 3901 ,a4a 104b 4201 Vera Clark, Managing E RAl r :f'ltiitMSEL Never Alone Home Care lfic.""'= .T l 4 ZOOS SENDERS RECORD 1074 Wynn Street OC · File Number: 39965490 Sanford, FL 32773 AgMCY tor ttea,th Case #: 2008011656 A A_dmlnlstratton car OTICE OF INTENT TO DENY It is the decision of this Agency that the application for registration as a homemaker companion service for Never Alone Home Care Inc., is DENIED. Never Alone Home Care Inc. submitted an application for registration as a homemaker companion service that was received by the Agency for Health Care Administration on June 11, 2008. The application was reviewed and a letter regarding an item omitted from the application was sent on July 8, 2008, which was payment so that the fingerprint card sent for the managing employee could be reviewed and processed by the Florida Department of Law Enforcement and FBI. The payment was received on July 16, 2008 and an acceptable clearance for the fingerprint card was received by the Agency on August 20. 2008. On August 14, 2008, a complaint of unregistered activity was investigated. Never Alone Home Care was found to be operating without being registered the Agency for Health Care Administration. A Notice of Unregistered Operation was given to Vera Clark on August 14, 2008, that stated Never Alone Home Care Inc. could not provide or offer homemaker companion services according to Florida law since it was not registered. A follow up visit was made to Never Alone Home Care Inc. on September 8, 2008. There was evidence that Never Alone Home Care, Inc. was contracting to place personnel to provide personal care services including assistance with bathing, bathroom activities, and other activities of daily living included in personal care. Since the personal care services by independent contractors require a nurse registry license per state law, a Notice of Unlicensed Activity stating that Never Alone Home Care Inc. must cease and desist operating as a nurse registry was given to Vera Clark on September 19, 2008. companion and require Never Alone Home Care Inc. was found to be providing services that cannot be provided by homemakers and companions in section 400A62, F.S. Since Never Alone Home Care Inc. was providing·services-that are beyond the scope of a-homemaker service ·a. nurse registry license per state law, the application for homemaker companion services cannot be approved. 2727 Mahan Drive,MS#34 · Tallahassee, Florida 32308 Visit AHCA online at htto://ahca.myllorida .com EXHIBIT 1 Page2 October 13, 2008 Never Alone was previously registered as a homemaker companion service and this registration expired without renewal on July 13, 2006. On April 19, 2005, Never Alone was found have placed a companion in the home of a hospice patient that provided personal care and administered medication. These were services beyond the scope of the homemaker companion services registration. A Notice of Unlicensed Operation as a home health agency was sent to Never Alone on April 20, 2005. The basis for this action is pursuant to authority of Section 120.60 Florida Statutes (F.S.) and Section 408.815 (1) (c), F.S. which states as follows: In addition to the grounds provided in authorizing statutes, grounds that may be used by the agency for denying and revoking a license or change of ownership application include any of the following actions by a controlling interest: A violation of this part, authorizing statutes, or applicable rules. A demonstrated pattern of deficient performance. 400.509 Registration of particular service providers exempt from licensure; certificate of registration; regulation of registrants.-- (!) Any organization that provides companion services or homemaker services and does not provide a home health service to a person is exempt from licensure under this part. However, any organization that provides companion services or homemaker services must register with the agency. The requirements of part II of chapter 408 apply to the provision of services that require registration or licensure pursuant to this section and part II of chapter 408 and entities registered by or applying for such registration from the Agency for Health Care Administration pursuant to this section. Each applicant for registration and each registrant must comply with all provisions of part II of chapter 408. Registration or a license issued by the agency is required for the operation of an organization that provides companion services or homemaker services. 400.462, F.S. (7) "Companion" or "sitter" means a person who spends time with or cares for an elderly, handicapped, or convalescent individual and accompanies such individual on trips and outings and may prepare and serve meals to such individual. A companion may not provide hands-on personal care to a client. 400.462, F.S. (16) "Homemaker" means a person who performs household chores that include housekeeping, meal planning and preparation, shopping assistance, and routine household activities for an elderly, handicapped, or convalescent individual. A homemaker may not provide hands-on personal care to a client. rage_, October 13, 2008 400.506 (1), F.S. A nurse registry is exempt from the licensing requirements of a home health agency but must be licensed as a nurse registry. The requirements of part II of chapter 408 apply to the provision of services that require licensure pursuant toss. 400.506-400.518 and part II of chapter 408 and to entities licensed by or applying for such license from the Agency for Health Care Administration pursuant toss. 400.506-400.518. A license issued by the agency is required for the operation of a nurse registry. 400.506 (21), F.S. "Nurse registry" means any person that procures, offers, promises, or attempts to secure health-care-related contracts for registered nurses, licensed practical nurses, certified nursing assistants, home health aides, companions, or homemakers, who are compensated by fees as independent contractors, including, but not limited to, contracts for the provision of services to patients and contracts to provide private duty or staffing services to health care facilities licensed under chapter 395, this chapter, or chapter 429 or other business entities. 400.506 (6) (b), F.S. Nurse Registry " ... A certified nursing assistant or home health aide referred for contract in a private residence shall be limited to assisting a patient with bathing, dressing, toileting, grooming, eating, physical transfer, and those normal daily routines the· patient could perform for himself or herself were he or she physically capable." 408.812 (1), F.S. A person or entity may not offer or advertise services that require licensure as defined by this part, authorizing statutes, or applicable rules to the public without obtaining a valid license from the agency. A licenseholder may not advertise or hold out to the public that he or she holds a license for other than that for which he or she actually holds the license. The operation or maintenance of an unlicensed provider or the performance of any services that require licensure without proper licensure is a·violation of this part and authorizing statutes. Unlicensed activity constitutes harm that materially affects the health, safety, and welfare of clients. The agency or any state attorney may, in addition to other remedies provided in this part, bring an action for an injunction to restrain such violation, or to enjoin the future operation or maintenance of the unlicensed provider or the performance of any services in violation of this part and authorizing statutes, until compliance with this part, authorizing statutes, and agency rules has been demonstrated to the satisfaction of the agency. It is unlawful for any person or entity to own, operate, or maintain an unlicensed provider. If after receiving notification from the agency, such person or entity fails to cease operation and apply for a license under this part and authorizing statutes, the person or entity shall be subject to penalties as prescribed by authorizing statutes and applicable rules. Each day of continued operation is a separate offense. VU.LU - .L.1.!o,A.\,,f.1."'- - -.,.._,.._.._.. ._.. . ._..., ,iii UNITEOSTATES. POSTAL SERVICE. I tl..§!P- I fil9DJn Track & Confirm Search Results Label/Receipt Number: 7160 3901984810464201 Status: Delivered Your item was delivered at 9:43 AM on October 17, 2008 in SANFORD, FL 32771. Enter Label/Receipt Number. --- Optt._·00$ _ Track & Confirm by email Get current event information or updates for your item sent to you or others by email. (So>) ,,, Site.Map (;ontact.UJ; Priv cy Policy NJ,tioQal & Premier Accounts Copyright© 1999-2007 USPS. All Rights Reserved. No FEAR Act EEO Data FOIA J.# t,} i-·>.J:-:.r ;r:-, !:'1 /,t ...{·;·· ! 'fi•l'."; http://trkcnfrml.smi.usps.com/PTSinternetWeb/InterLabellnquiry.do 10/20/2008 STATE OF FLORIDA
Findings Of Fact CHS is an existing provider of home health care services in Pasco and Pinellas Counties, HRS District V, and has provided such services since 1981. CHS offers a wide range of nursing services including nurses specializing in I.V. therapy, oncology, geriatrics, obstetrics, pediatrics, and orthopedics; licensed practical nursing services; nursing assistants; home health care aides; and respiratory therapy services n the home. These services are offered solely to private payors. Only home health care providers who have been issued certificates of need are licensed and eligible to serve Medicare and Medicaid patients whose care is paid for under whose programs. CHS is applying for a certificate of need in order to be eligible to provide home health care which is paid for pursuant to Medicare and Medicaid procedures. At the time CHS' application was first considered Respondent found the application not to meet the requirements of a need methodology rule which was subsequently declared invalid. The present denial is alleged to be bared solely on statutory criteria. CHS presented one expert witness who calculated need for additional home health care services using a formula suggested by he U.S. Department of Human Services but which was never adopted as a rule by any agency. Pursuant to this formula, which takes into consideration the projected population of the service area, the age cohorts of the population, the population's historical and projected utilization of home health and related services, he service area's hospital discharge rate, and nursing home utilization data, an unmet need for services for 62,541 potential home bed health care patients in 1985, with 13,960 in Pasco and 49,581 in Pinellas Counties, was found. Based on the historical utilization of home health area services by patients in District V, the existing licensed home health agencies, of which there are 12, are projected to serve 25,424 patients in 1985 Exhibit 3). This would leave a potential unmet need for some 28,000 patients in District V. However, serious questions were raised as to the efficacy of the assumption in the formula since this methodology was never adopted by the U.S. Department of Health and Human Services, has not been tested by empirical verification, and the definition of home health services used in this formula is not limited to part-time or intermittent services. Home health care providers differ from other medical care providers principally in the fact that the capital outlay in establishing home health care is minimal. This is so because such care is personal service oriented with little tangible property required. As an example, CHS employs some four or five full-time employees and maintains a list of approximately 350 nurses and aides that can be called to provide the home health care services needed. Accordingly, there is no large fixed payroll to meet when work is slack and services can be increased by any home health care provider simply by employing nurses as the jobs arrive and stop their pay when the care is no longer needed. There is no large overhead to be concerned with in this type operation. CHS is financially capable and has the personnel resources to provide the proposed service. CHS has a line of credit with a commercial bank of $100,000, has the organizational ability to operate as a home health care provider, and has personnel available to provide all services needed. CHS proposes to serve all Medicaid patients who apply for services and to provide services throughout District V as needed. No evidence was presented that patients needing home health care are unable to get such care from existing providers. CHS presently serves private pay patients and holds itself out as able to provide all home health care required within District V. No evidence was presented that those 12 licensed home health care providers in District V are unable to provide all authorized Medicare and Medicaid home health care needed. Since any of them can increase the availability of services simply by employing additional personnel to provide such services as needed actual need for additional certificate of need holders will be difficult to prove. CHS presented evidence that when its private pay patients who are Medicare eligible are hospitalized and subsequently discharged from the hospital needing home health care, the hospital usually refers these patients to a licensed home health care provider who can be compensated by Medicare. This results in CHS losing these patients. Home health care providers get approximately one-half of their patients referred to them by a doctor and one-half referred by a hospital. This ratio is accurate for Petitioner and for the licensed home health care providers The advent of diagnostic relate groupings (DRGs) could impact on home health care providers, but no evidence was presented (if available) of the actual impact DRGs will have on nursing homes or on home health care providers.
The Issue Whether applications for Certificates of Need filed by Medshares of Florida, Inc., and National Healthcare, L.P., for Medicare Certified Home Health Agencies in Health Planning District 8 for the July 1997 Planning Horizon, should be granted or denied by the Agency for Health Care Administration.
Findings Of Fact The District District 8 is composed of Sarasota, DeSoto, Charlotte, Lee, Glades, Hendry, and Collier Counties. Rule 59C-1.031(2)(e), Florida Administrative Code, Section 408.032(5), Florida Statutes. If granted, the requested certificates of need will enable Medshares and NHC to provide Medicare-certified home health services throughout the entire district. The parties disagreed as to the number of District 8 home health companies with Medicare-certified home health agency CONs. For purposes of the 1997 planning horizon, the district has thirty-five home health care companies (reporting and non- reporting) with certificates of need for Medicare-certified home health agencies. The Parties Medshares of Florida, Inc., (Medshares) was formed "pretty much immediately prior to the application [in this case]." AHCA No. 10, p.15. Although it recently received a CON to establish a Medicare-certified home health agency in District 9, there has not been enough time for Medshares to build a record in Florida. But Medshares is a member of a family of companies (the "Medshares Family") founded in Tennessee in 1985. The Medshares family has now expanded into 12 states. Through 2000 employees, it provides various home health services, including Medicare-certified home health services, private nursing services, management services for home health agencies, infusion services, and consulting services. In 1996, the Medshares Family provided approximately one million visits through its Medicare-certified home health agencies and approximately 1.7 million visits through its non- Medicare-certified and managed home health agencies. Recent growth in Medshares Family business is attributable to increased admissions, not to increased home health visits. It is Medshares Family policy for each of its home health agencies which have operated for three years to seek accreditation from the Joint Commission on the Accreditation of Healthcare Organizations (JCAHO). This policy, of course, is applicable to a Medshares District 8 agency should the Medshares application in this case be granted. In the nursing home business for over 26 years, National HealthCare, L.P., (NHC) is a national nursing home company and a southeastern regional home health care company. It has thirty- three home care offices in three states and did in excess of 750,000 home health visits in 1996. It owns or manages one hundred and five nursing homes throughout the United States. It owns eight nursing homes in Florida of which five have a superior rating. NHC manages thirty-two other centers in Florida. NHC currently has three nursing home facilities which it owns or manages in District 8. The facilities, in Collier, Sarasota, and Charlotte Counties, have a total of 420 beds. Because of this ownership of existing facilities in the district, NHC has developed significant community linkages, training programs, and community involvement in the district. Obtaining a certificate of need for a Medicare-certified home health agency in District 8 will enhance NHC's continuum of care in District 8. NHC has a well-developed corporate and regional management structure dedicated to providing high quality care to its patients. The management structure places a significant amount of decision making at the home health agency level. The corporate and regional structure's purpose is to support the local delivery of health care services. The Agency for Health Care Administration is designated by statute as the "single state agency to issue, revoke, or deny certificates of need . . . in accordance with the district plans, the statewide health plan and . . . federal and state statutes." Section 408.034(1), Florida Statutes. Need Projections Paragraph (a) of Section 408.035 AHCA's rule setting a home health agency need methodology was invalidated several years ago. See Principal Nursing v. Agency for Health Care Administration, 16 FALR 10465, reversed in part, 650 So. 2d 1113 (Fla. 1st DCA 1995). AHCA did not publish a fixed need pool for Medicare-certified home health agencies for the July 1997 planning horizon applicable to these applicants. AHCA did not propose any methodology in its initial, free-form review or testimony of the applications. Instead, AHCA left it to the applicants to develop and present need methodologies in support of their applications. Medshares' Need Methodologies and AHCA Criticism The Medshares application presented various need methodologies and estimates of need for additional Medicare- certified home health visits in District 8. The primary Medshares methodology is a clinical need model based upon data obtained from the National Center for Health Statistics. The model develops home health use rates by sex for four age groups, 0-64, 65-74, 75-84, and 85+, and by geographic region. Patient volume and visits projections are made by developing individual use rates for each diagnostic category collected in the data survey. Each use rate is the result of dividing the total number of visit characteristics for the specific age and sex combination by the matching age and sex population estimates. To project need for 1997, the developed use rates are applied to the projected 1997 District 8 population by diagnostic category. For the 1997 planning horizon for District 8, Medshares' clinical need model estimates total visits of 3,488,290, which is an increase of approximately 1.6 million visits over 1994 (the latest year for which data was available at the time of the application). The Agency criticized Medshares' clinical need model because it included population aged 64 and under. The criticism fails on two counts. First, Medicare-certified home health agencies are expected to provide home health services to persons under age 65. Second, inclusion of the population and use rates for those under age 65 does not have any significant impact on Medshares needs projections since only 3 per cent of the originally projected visits are attributable to population under 65. AHCA's major criticism of Medshares clinical need model is that it considers the model's total visits projection of 3.4 million in 1997 to be an unreasonable increase over the actual visits in 1996 shown in AHCA publications. (These publications were not available at the time of the filing of the applications and so were not used by Medshares.) AHCA's published actual visits for 1996 of 2.4 million, however, are, without doubt, not accurate. The figure assumes that 9 agencies which did not report in 1996 conducted the same number of visits in 1996 as they reported in 1995, that is, 900,000. Whether this assumption is to high or too low, there is little question that it is not correct. If, for example, an agency not reporting in 1996 did not do so because it did not conduct any visits (not an unreasonable assumption since the agencies are obligated by law to report) then the 1995 reported visits are much too high for that agency as a figure for 1996 visits. On the other hand, if the non-reporting agency simply failed to report in 1996, the number of 1995 visits is likely lower than the actual number of visits in 1996. Home health care visits have been on the increase in District 8, a trend mirroring the state-wide trend. Utilization of home health care agencies is increasing because of growth in elderly population and an increase in the number of visits per patient. Furthermore, the amount of time spent by patients in hospitals has been decreasing. The decrease translates into an increased need by the patients for home health care visits. The need for home health care will continue to increase because it is a cost-effective alternative to nursing home placement and hospital care. In sum, AHCA's criticism of the Medshares clinical need methodology is based on inaccurate assumptions. Perhaps AHCA is correct that Medshares' projected visits for 1997 is unreasonably high. But the projection squares with the direction that home health visits are going, both because of increase in population and increase in use rate as well as decrease in hospital's lengths of stay. In addition to the clinical need model, Medshares projected need by two other methodologies. Through the first of these two, the clinical need model was tested by comparing its results to projections based upon the average Medicare-certified home health use rate growth from 1991 to 1995. This methodology yielded an estimate of 3.6 million for the 65 and over population of District, thus supporting the need projected by the clinical need model. In the second of the two additional methodologies, Medshares estimated the number of home health visits based upon the number of hospital discharges of patients within a certain Major Diagnostic Category (MDC). This methodology yielded an estimated need for 2,704,910 visits in 1997. All three of Medshares' methodologies provided an estimate of need for at least two additional Medicare-certified home health agencies in District 8 in 1997. NHC's Need Methodologies One of NHC's methodologies computes the increase in the home health use rate from 1993 to 1994 and applies a reduced increase in use rates to the projected population for each year to the horizon year of 1997. The methodology yields projected visits of 2,403,630 visits in 1997, for an increase from 1994 of 550,950 visits. In contrast to AHCA's determination that the Medshares' methodologies were unreasonable, AHCA agreed that NHC's methodology was reasonable. AHCA found fault with the NHC opinion of need, however, because of the data NHC used in its calculation of need. The AHCA document relied on by NHC for its base year (1993) visits of 1,656,112 was later revised by AHCA to reflect 1,702,106 visits in 1993. As a result, AHCA contends, the initial use rate increase used by NHC (7.6 per cent from 1993 to 1994) is higher than the actual use rate increase (4.8 per cent), which means that NHC's projections are overstated. Other criticisms were leveled by AHCA at NHC methodologies used in the application. The Agency's criticisms do not hold sway. Overlooking for the moment that any error was caused by faulty data provided NHC by the Agency, given the undisputed increase in the use rate, the NHC forecast for 1997 visits compared to actual 1996 visits shows the 1997 forecast to be conservative. After taking all of the Agency's criticisms into account, there was competent substantial evidence to establish a need for five more home health agencies in the district. The inadequacy of the criticisms was underscored when NHC's health planning expert used a "median agency size" in his calculations, an approach now favored by AHCA as it attempts to develop a new rule methodology for ascertaining Medicare-certified home health agency numeric need. Employing such a method still yielded a need for at least two more Medicare-certified home health agencies in the district. State Health Plan Preferences The Florida State Health Plan establishes six preferences for applicants of certificates of need for Medicare- certified home health agencies. The State Health Plan provided for preference to an applicant proposing to serve AIDS patients, (Preference 1). Both Medshares and NHC meet Preference 1. Medshares will provide services to AIDS and HIV-positive patients. The Medshares family has a history of providing services needed by these patients and Medshares proposes to condition its certificate on provision of services to AIDS patients. NHC is actively involved and has seen patients for Bay Aids Services Information Coalition, Tallahassee AIDS Support Services and Big Bend - Comprehensive AIDS Residential Education Services. NHC provided extensive documentation in its application to demonstrate current provision of significant levels of AIDS care. It has the organizational capability to continue to do so. Preference is given by the State Health Plan to an applicant proposing to provide a full range of services, including high technology services, unless they are sufficiently available and accessible in the same service area, (Preference 2). NHC surveyed existing home health agencies in the district to reveal that 29 agencies do not provide dietary guidance, 28 do not provide homemaker services, 26 do not provide medical supplies, 21 do not provide respiratory services, six do not provide speech therapy and five do not provide social services. NHC will provide all of these. NHC meets Preference 2. Medshares provides a full range of skilled nursing, homemaker, and therapy services including cardiac care, continuous IV therapy, diabetes care, oncology services, pediatrics, rehabilitation services, pain therapy, total parenteral nutrition, speech, physical and occupational therapies, respiratory therapies, audiology therapy, and infusion therapy. Medshares meets Preference 2. The State Health Plan provides a preference to applicants with a history of serving a disproportionate share of Medicaid and indigent patients in comparison with other providers within the same AHCA service district and proposing to serve such patients within its market area (Preference 3). There is no definition of "disproportionate share" and no data available to determine the level of Medicaid and indigent care provided by home health providers in District 8. Nonetheless, it is fair to find that NHC meets this preference and Medshares, based on the experience of the Medshares family, meets the spirit of this preference. In addition, both have committed to continue to provide Medicaid and indigent care; in the case of NHC, 2 per cent of patient visits to Medicaid patients and 1.5 per cent of its visits to the indigent, in the case of Medshares, its application is conditioned on 1 per cent of its patients being Medicaid and another 1 per cent being indigent. The State Health Plan provides a preference to an applicant proposing to serve counties under served by existing home health agencies (Preference 4). No demonstration was made that any of the counties in District 8 were underserved by existing home health agencies. The fifth State Health Plan preference is for applicants which commit to provide the department with consumer survey data measuring consumer satisfaction. Both Medshares and NHC meet this preference. The final preference in the State Health Plan is for an applicant proposing a comprehensive quality assurance program and proposing to be accredited by the Joint Commission on Accreditation of Hospital Organizations. Both Medshares and NHC meet this preference with NHC conditioning its application on implementation of a quality assurance program and successfully obtaining JCAHO accreditation. The District 8 Health Plan The District 8 Health Plan contains two allocation preferences for applicants for Medicare-certified home health agencies. The first is for the applicant able to demonstrate community contacts and relationships with hospitals, nursing homes, hospices, psychiatric, substance abuse, mental health, and other outpatient facilities within the proposed service area. The second is for the applicant showing a commitment to, or a historical record of, service to the medically indigent or other healthcare underserved population groups. NHC has developed significant community linkages through its existing nursing home beds in the health planning district with the types of health care providers listed in the preference. Further, NHC has agreed to condition its CON on the satisfaction of this preference. Medshares does not have operations in the district currently. But its application contained evidence of contact with local District 8 health care providers. As discussed earlier, both NHC and Medshares meet the second preference of the local health care plan. Availability and Access Paragraph 408.035(1)(b) Access issues become much less important for applicants who have demonstrated a numeric need for their proposals. Nonetheless, the addition of both NHC and Medshares Medicare- certified home health agencies will enhance both availability and access to these health services. Competition and Cost Effectiveness Paragraph 408.035(1)(l) Competition among home health providers in District 8 is more restricted than the number of providers would indicate because the District 8 market is dominated by a few large providers. Four companies provide 75 per cent of home health visits. Seventeen of the agencies are hospital-based and 10 of these are owned by one hospital. Competition will be enhanced by approval of the Medshares and NHC proposals. Both Medshares and NHC have the ability to compete effectively with the large providers in District 8. Cost effectiveness should be enhanced as well. District 8 has the highest average cost per home health visit in Florida. The 1994 average was $71.48. Generally, hospital-based home health agencies have higher costs. Hence, it is not surprising that District 8, with its many hospital-based agencies, has the highest average cost per home health visit. The cost per visit projected by Medshares in its second year is $65.21. Approval of the Medshares and NHC applications should help to lower the district-wide average cost per visit. Past and Proposed Provision of Services to Medicaid Patients and the Medically Indigent Paragraph 408.035(1)(n) As discussed above, both Medshares and NHC meet this statutory criterion. Multi-level Health Care System Paragraph 408.035(1)(o) Home health services play a key role in the continuum of care in a multi-level health care system by providing a less restrictive and less costly setting for discharges of patients from hospitals and nursing homes to their homes or assisted living facilities. Medshares participates in programs which promote a continuum of care, including a pre-heart transplant and post-heart transplant program, a "Healthy Homecomings" program for high risk pregnancies and a program which enables physically challenged persons to remain employed. NHC proposes to provide home health care in a continuum of care in conjunction with NHC's own nursing home and assisted living facilities located throughout District 8. An award to NHC would expand the continuum of care already provided by NHC.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Agency for Health Care Administration enter its final order granting the applications of Medshares of Florida, Inc., and National HealthCare L.P. for CON Nos. 8412 and 8413, respectively. DONE AND ORDERED this 3rd day of February, 1998, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of February, 1998. COPIES FURNISHED: Mark Thomas, Esquire Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Fort Knox Building III Tallahassee, Florida 32308-5403 Alfred W. Clark, Esquire Post Office Box 623 Tallahassee, Florida 32301-0623 Gerald B. Sternstein, Esquire Frank P. Rainer, Esquire Sternstein, Rainer & Clarke, P.A. 314 North Calhoun Street Tallahassee, Florida 32301 Jerome W. Hoffman, General Counsel Agency for Health Care Administration Fort Knox Building 3 2727 Mahan Drive Tallahassee, Florida 32308-5403 Sam Power, Agency Clerk Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403
Findings Of Fact This proceeding involves certificate of need (CON) application No. 4912 by Home Health Care of Bay to establish a Medicare-certified home health agency to serve Bay County Florida. Home Health Care of Bay's CON application was timely filed on December 15, 1986. Home Health Care of Bay's application was deemed complete on March 2, 1987. On April 30, 1987, DHRS preliminarily denied Home Health Care of Bay's CON application based on a determination that: There was no need demonstrated by Home Health Care of Bay for an additional home health agency in Bay County. Home Health Care of Bay is owned by Mark Ehrman, M.D. Dr. Ehrman is a board-certified internist, hematologist, and oncologist. Dr. Ehrman has been in private practice in Fort Walton Beach, Florida, since November, 1984. Prior to 1984, Dr. Ehrman was involved in the organization and delivery of medical services, the teaching of medicine, and the practice of medicine in Canada. Home Health Care of Bay will serve all patients regardless of race, income, sex, ethnic background, religion, or physical handicap. Home Health Care of Bay will provide 3 percent Medicaid and 3 percent indigent home health visits. Dr. Ehrman, both in his office and in his durable medical equipment (DME) company, goes to great lengths to ensure that indigent persons receive medical services. Dr. Ehrman, in his office practice, provides medical services to all persons regardless of their ability to pay. He is a participating physician in Medicare, Medicaid, and other insurance programs. Dr. Ehrman's participation in these programs and his determination not to screen patients financially has increase access to medically underserved patients. Dr. Ehrman's private practice includes approximately 5 percent Medicaid patients. In the past, home health agencies have tended to focus on acute medical problems. The traditional model for home health care has been to shorten an acute hospital stay for a discrete problem. Even chronically ill patients still came to the hospital when they had an acute episode. There has been little focus on avoiding hospitalization. There is now a shift in home health care which attempts to avoid hospitalization in appropriate cases. Dr. Ehrman, in treating patients at home, has become involved with sophisticated triage procedures, home pain management, and other procedures which maximize a patient's time outside the hospital. Such procedures allow patients to remain safely and comfortably in their homes. Procedures which can be safely done in the home include the starting of I/V morphine drips or I/V antibiotics. These procedures have traditionally not been done in the home. Nationally, and in Bay County, several factors are causing a shift to home health use. First, pressure is being applied in the form of reimbursement mechanisms to reduce the expense of institutional care. Patients are discharged from the hospital sooner and there is more pressure to use home health services. Second, an increased incidence of chronic illnesses, such as AIDS, will increase the use of home health services. The incidence of AIDS and AIDS related diseases will continue to increase and has obvious implications for increased home health usage. Home health care will make "hospital-like" care more available and less expensive for AIDS patients. Third, health consumers want to maintain the quality of their lives and remain at home as long as possible. HOME HEALTH CARE OF BAY'S PROPOSAL Home Health Care of Bay will provide medical personnel services in the disciplines of registered nursing, certified home health aides, occupational therapy, speech therapy, physical therapy, and medical/social work. These services will be provided to Medicare, private insurance, and indigent patients. Home Health Care of Bay will provide traditional home health services and many "high-tech" services which currently are not available at all or are not routinely done in Bay County. Such services include the transfusion of blood and blood products, professional pain management, the drawing of arterial blood gases, the care of Groshong and Hickman catheters, and the care of subcutaneous pumps and subcutaneous venous access devices. Home Health Care of Bay's proposed services will be utilized by many different types of patients, including renal patients, chronic pulmonary patients, chronic heart disease patients, and cancer patients. Home Health Care of Bay will provide health care services to AIDS patients. Petitioner's Exhibit 5 contains a complete list of services which Home Health Care of Bay will provide. Home Health Care of Bay's services will be available 24 hours a day, 7 days a week. This is an important commitment because home health care patients need services regardless of the time of day or day of the week. Even more important than the discrete list of services that Home Health Care of Bay will provide is the integration of all these services into one agency. In that way, patients are not shuttled from place to place; their care can be organized and integrated for maximum benefit. This integration will be accomplished by formulation of a plan of therapy which will include evaluation by a social worker and a physician in order to deal with the patient's total needs. Home Health Care of Bay's commitment to a total integration of patient services is evidenced by its plan to provide 4 percent of its visits in the medical/social work category. Such services are important in providing comprehensive care. The provision of medical/social work services will help patients and their families identify both medical and non- medical needs. Once such needs are identified, the patients and families can be channeled to the appropriate services, agencies and resources. Home Health Care of Bay will provide the physician with direct and timely communication about the patient. This will include daily delivery of complete medical records. Such a service is crucial in order to provide home care to patients with complicated problems. Home Health Care of Bay has a budget line item for marketing of $21,000 in the first year and $18,000 in the second year of operation. This money will be used to change the perception and pattern of home health use. Patients and doctors will be made aware of the availability of new home health services and the integration of those services with existing services. Home Health Care of Bay's marketing effort will overcome the reluctance of some physicians to utilize home health services. The demographics of the subdistrict of Bay County were analyzed and compared to the demographics of District II. The analysis shows that from 1986 to 1989, 3,076 persons 65 and over will be added to the population of Bay County. This represents a growth rate of 21.5 percent in Bay County compared to a district growth rate of 12.4 percent. Of the elderly growth in District II of 7,355, approximately 40 percent of such growth is occurring in Bay County. Forty percent (40 percent) is a high percentage in a 14 county district and indicates that the elderly population in Bay County is growing at a very rapid rate. Elderly persons are the most frequent users of home health services. Thus, rapid population growth is occurring in the segment of the population most in need of home health services. STATUTORY CRITERIA 1/ Consistency With State Health Plan Home Health Care of Bay`s proposal was reviewed for conformity with the State Health Plan and is consistent with that plan. The 1985-1987 Florida State Health Plan states: Home health agencies provide nursing, health aid, therapy and other kinds of services to patients in their homes. This allows individuals to remain at home rather than use more expensive institutional care to recover from acute illness or to manage chronic conditions. The State Health Plan further states: Home health services can be a cost effective form of long term care for the elderly and the infirm. The provision of home health services proposed by Home Health Care of Bay will provide residents of Bay County with a lower cost alternative to institutionalized long term care as referenced in the above State Health Plan excerpts. The State Health Plan also addresses the unwillingness of many providers to serve the medically needy: Medicare is the largest payor for home health care to the elderly, though some private insurers and Medicaid both cover home health services. Policy makers are increasingly concerned about providers' willingness to serve Medicaid recipients and medically indigent Floridians. Home Health Care of Bay has committed to provide at least 3 percent Medicaid and 3 percent indigent visits. Such a commitment will greatly increase access of medically underserved groups. Approval of a provider who accepts a significant portion of Medicaid patients will encourage current providers to accept such patients in order to retain their Medicare and private referrals. Physicians and discharge planners are much more willing to refer to an agency that will care for all their patients. The State Health Plan contains the following objective: OBJECTIVE 1.5.: To assure that the number of home health agencies in each service area promote the greatest extent of competition consistent with reasonable economies of scale by 1987. The methodology utilized by Home Health Care of Bay to project need maximizes competition consistent with economies of scale by allowing additional providers to enter the market while maintaining existing agencies at a size at which they can operate efficiently. Consistency With Local Health Plan Home Health Care of Bay's proposal was reviewed in relation to the 1986 District Two Health Plan and is consistent with that plan. The local health plan contains a section on long-term care services, including home health services. This section contains a numerical methodology to determine need. That methodology indicates a need for an additional agency in Bay County. The local health plan also contains priorities for home health services. Priority C states that: Priority will be given to home health services applications who have a history of providing, or will commit to provide, services to Medicare, Medicaid and medically indigent patients. Dr. Ehrman, the owner of Home Health Care of Bay, has a record in his practice of providing services to all payor groups. He has committed to continue to do so in his home health agency. Priority D of the Local Health Plan states: Priority will be given to home health services applicants who have a history of providing, or will commit to provide, a public marketing program for their services which includes pamphlets, public service announcement and various other community awareness activities. Home Health Care of Bay has budgeted for and committed to an extensive marketing program. A marketing priority is unusual in a local health plan and indicates an awareness of the need to educate the public about home health services. Determination Of Need DHRS currently has no rule governing the need for home health agencies. A historical summary of the regulation of home health agencies in Florida is described in a memorandum prepared by Ms. Marta V. Hardy. Ms. Hardy was the Deputy Assistant Secretary for Regulation and Health Facilities, DHRS, from September 1984 through June 1987. Ms. Hardy was responsible for all CON decisions and was the ultimate decision-maker in regard to the preliminary denial of Home Health Care of Bay's CON. In the fall of 1984, DHRS attempted to promulgate a rule to replace the invalidated Rule of 300. This proposed rule was based on a use rate methodology, but was invalidated in a rule challenged proceeding in 1985. After the invalidation of the proposed rule, DHRS implemented an interim policy which it used to review home health agencies. This interim policy is reflected in the "Bob Sharpe memo," dated May 15, 1986. The interim policy was applied to home health agency application beginning with the first batching cycle in 1986. The interim policy utilized a variation of the previously invalidated rule and attempted to correct the problems which caused the proposed rule to be found invalid. The interim policy is a use rate/population methodology which projects the number of Medicare enrollees using home health services in the future. This number is multiplied by the average number of visits per Medicare home health user. The total number of visits is divided by an agency size of 9,000 visits to yield the gross number of agencies needed. The total number of licensed and approved agencies is subtracted from the gross need number to yield the net number of agencies needs. The interim policy phased in the needed agencies over a three year period. DHRS defended the interim policy in circuit court when the Florida Association of Home Health Agencies (FAHHA) sought to stop DHRS from using the policy. DHRS defended the interim policy in December, 1986, before the First District Court of Appeal. Use of the interim policy resulted in the approval of 23 home health agencies. DHRS abandoned its interim policy sometime in the fall of 1986. No notice was given to the public or to interested parties that a change in DHRS policy had occurred. DHRS published no document rescinding the Sharpe memo. Only after applications were filed in the second batching cycle of 1986, were applicants informed that DHRS had changed its interim policy. Applicants in the December, 1986, batching cycle, including Home Health Care of Bay, were asked for an unlimited extension of time within which DHRS could render a decision. Applicants who refused to agree to an extension were evaluated on the basis of the "statutory need criteria." Applicants who did not agree to an extension were denied. In only one instance was a CON granted after abandonment of the interim policy. This occurred in Franklin County, where no home health agency existed at the time of that approval. DHRS' new "policy" was not developed by DHRS health planners. The "policy" put the burden of proof on the applicant to demonstrate an unmet need. Such a demonstration would be difficult to make. The Office of Community Medical Facilities, the office within DHRS responsible for preliminary CON review, reviewed Home Health Care of Bay's application using the "policy" based on "the thirteen statutory criteria." Such a review required Home Health Care of Bay to prove need by demonstrating an unmet need. However, as evidenced by the Office of Community Medical Facilities' review of Home Health Care of Bay's application, a policy requiring an applicant to meet a negative burden of proof is unreasonable. It imposes a standard which is virtually impossible for an applicant to meet. Ms. Joyce Farr was the DHRS employee responsible for the review of Home Health Care of Bay's application and for the development of the related State Agency Action Report (SAAR). The SAAR was the only work product Ms. Farr prepared in regard to Home Health Care of Bay's application. Ms. Farr has never been qualified as an expert witness in the home health area. Ms. Farr has no formal education in health planning and is unfamiliar with Medicare reimbursement. Ms. Farr does not consider herself to be an expert in financial feasibility projections, staffing, or quality of care. Ms. Farr is not in a policy-making position at DHRS. Ms. Farr was given no instructions by her superiors as to how to review Home Health Care of Bay's application. DHRS presented the testimony of Ms. Farr to attempt to explain how Home Health Care of Bay's application was reviewed. Ms. Farr was tendered and accepted, not as an expert health planner, but as an expert in "CON review." Ms. Farr articulated the standard she used to determine need: [I]f an applicant or residents of a county or community resources of a county or just about any organization basically says that there is an unmet need, meaning that there is no home health services available or there is an accessibility problem where certain groups are not being served -- certain services are not being offered -- I become aware of it by their simply documenting, "I cannot get home health services," like CAPS [Capitol Area Community Aging Agency] that said, "They aren't serving these people. We need somebody in here to serve these people." That would show that there was an unmet need. Unless an applicant, or community resource, could demonstrate an accessibility problem, no need existed according to Ms. Farr. Ms. Farr did not review the Medicare cost reports of current providers to determine the services they provided prior to recommending denial of Home Health Care of Bay's application. Ms. Farr reviewed utilization data of current providers for only one year. Ms. Farr did no analysis of the types of visits provided by existing providers. Ms. Farr looked only at the total number of visits. The only information Ms. Farr utilized in regard to the type of visits being provided was information given to her by existing providers. In determining that no need existed for medical/social work services, Ms. Farr relied on the list of social service agencies included in the local health plan, but did no analysis as to what services such agencies offered. Ms. Farr determined that no Medicaid access problem existed in Bay County based on information current providers gave her. She did not verify these representations with the Medicaid office. Ms. Farr did no charge comparison in her review. At the time of her review, Ms. Farr did not know when a new competitor last entered the market in Bay County. Ms. Farr did not address Objective 1.5 of the State Health Plan in her review. She was unaware of Objective 1.5 until it was pointed out to her in deposition. Ms. Farr utilized no planning horizon in determining need, though she admitted that one of the purposes of CON review is to plan for future health needs. Ms. Farr's review of Home Health Care of Bay's application was deficient for several reasons. First, Ms. Farr's review did not look at a projection of future need. It did not analyze demographics or utilize a planning horizon. It contains no elements of a needs analysis. A mere review of what currently exists misses the point of health planning. Second, in making a determination of no need, Ms. Farr relied solely on comments of existing providers who told her that there was no need for a competing agency. Dr. Deborah Kolb, vice-president of Jennings, Ryan, Federa & Co., participated in the preparation of Home Health Care of Bay's CON application. In preparing the needs assessment portion of the application, Dr. Kolb reviewed the State Health Plan, the Local Health Plan, utilization data, home health CON decisions, and services offered by current providers. The need methodology which appears in Home Health Care of Bay's application is contained in Dr. Kolb's expert report. The methodology appearing in her report and the application was the interim policy in use by DHRS at the time the application was filed. This was the methodology in the Bob Sharpe memo. Home Health Care of Bay will provide home health services to the residents of Bay County. Bay County is in DHRS Service District II. According to the 1986 District II Health Plan, District II is composed of 14 separate subdistricts. Each subdistrict is composed of one county. Bay County is a reasonable service area for Home Health Care of Bay. Dr. Kolb utilized a two-year planning horizon to project the need for home health agencies. This is a reasonable planning horizon. Table 3 of Dr. Kolb's report analyzes need on a district-wide basis. Two time frames, July, 1988, and January, 1989, are shown because Home Health Care of Bay's application was filed in December, 1986. Two years from that date would be December 1988. The official population projections from the Governor's Office focus on July and January of each year. Use of the two project dates straddles the December, 1988, planning horizon. The population numbers of District II for 65 and over are 62,546 for January, 1988, and 63,558 for January, 1989. The 1984 Medicare use rate, which is an estimate of the number of Medicare home health visits per elderly person in Florida for 1984, is multiplied by the projected elderly population to arrive at a projected number of visits. The number of projected visits in Table 3 of 118,565 in July, 1988, and 120,483 in January, 1989, is a result of multiplying the use rate by the projected population. To determine the number of agencies needed, the projected number of visits is divided by optimal agency size. This calculation yields a gross agency need of 13 agencies in the district in July, 1988, and January, 1989. The number of licensed and approved agencies, 12, is subtracted from gross need, 13, to yield net need of one (1) agency in July, 1988, and January, 1989. Dr. Kolb utilized 9,000 for the optimal agency size figure. This is consistent with the interim policy and with data which suggests that is where economies of scale occur. An optimal agency size of 9,000 appears in the Local Health Plan methodology. Table 4 of Dr. Kolb's report presents the same analysis as Table 3, described above, on a subdistrict basis to determine where the one agency found to be needed in District II should be located. Use of the same methodology results in a gross agency need of three. The two existing agencies are subtracted from the gross need of three to yield a net need for one agency in July, 1988, and January, 1989, in Bay County. The methodology described above is a reasonable one for determining need. The methodology utilizes a common health planning approach. It is the same methodology used by DHRS as an interim policy. It is the same type of methodology used by DHRS in planning for other types of health services. Beyond the numerical analysis discussed above, other factors indicate the need for an additional home health agency in Bay County. Bay County has a very low home health use rate and a very high nursing home use rate. The Bay County home health use rate is 1.5 visits per person 65 years and older. The Bay County use rate is significantly lower than the state use rate of 1.89. This disparity indicates a gap between real need and historical utilization. At the same time, Bay County has a nursing home use rate of 41 beds per thousand elderly compared to a state rate of 23 beds per thousand. Additionally, the occupied nursing home beds per thousand elderly is much greater in Bay County than in the state. In the state there are 21.3 occupied beds per thousand elderly. The utilization of Bay County's nursing home beds is approximately 75 percent greater than utilization in the state as a whole. These statistics suggest an inappropriate allocation of resources between home health care services and more expensive institutional nursing home services. Nursing home utilization would decrease with more sophisticated home health care. Many people are inappropriately institutionalized in nursing homes and could be cared for at home. From a medical perspective, Dr. Ehrman was of the opinion that an additional home health agency was needed. Availability, Quality Of Care, Efficiency, Appropriateness, Accessibility, Extent Of Utilization, And Adequacy Of Like And Existing Services There are currently two Medicare-certified home health care agencies serving Bay County. One way to evaluate agency performance is to analyze the mix of services and the number and types of visits being provided. Current providers have concentrated heavily on providing nursing and aide visits. Of approximately 18,000 visits provided each year, approximately 16,000 visits comprised the nursing and aide categories. Neither provider did any specifically medical/social work visits in 1985 or 1986. Additionally, the total number of visits delivered to the residents of Bay County has remained constant in 1985 and 1986. Bay County's constant use rate illustrates the need for more education in regard to home health services. While current providers do certain high tech procedures if directed to by a doctor, current providers are not committed to consistently doing high tech procedures. High tech services are not the most profitable. Their margins are often low and it is more economically beneficial for current providers to provide aide services. Transfusions, initiation of I/V antibiotics, continuous infusion of morphine, pain nursing, and catheter care are all services which existing agencies have rarely done or do with great difficulty. Without doing such procedures as a regular basis, competency is difficult to maintain. Bay Home Health Care Agency d/b/a Home Health of Panama City (Home Health of Panama City) is a free-standing home health agency and has been in business for 11 1/2 years. Home Health of Panama City does no Medicaid visits. Bay Medical Center Home Health receives referrals from Home Health of Panama City because Home Health of Panama City does not take Medicaid or indigent patients. Home Health of Panama City does no medical/social work visits. Home Health of Panama City has no money budgeted for marketing. Bay Medical Center Home Health is a hospital based home health agency. It functions as a department of Bay Medical Center, an acute care hospital located in Panama City, Florida. In the past two years, Bay Medical Center Home Health has provided no medical/social work visits though some of those services were provided by nurses during nursing visits or by other departments of Bay Medical Center. Bay Medical Center Home Health does not currently provide care of certain high tech devices such as the Denver pleuroperitoneal pump or the subclavian pump. Its staff would have to be trained to provide such care. Bay Medical Center Home Health has never given blood transfusions or cared for a Denver shunt. Bay Medical Center Home Health has a very low number of average visits per patient (6.8) when compared to the state average of 30 visits per patient. Bay Medical Center Home Health does a low percentage of Medicaid visits. In 1986, Bay Medical Center Home Health was reimbursed for 120 Medicaid visits out of a total of 3,280 Medicaid-reimbursed visits provided in District II. A comparison of reimbursed Medicaid visits provided by Bay Medical Center Home Health to District II as a whole demonstrates a Medicaid access problem. In 1986, Bay County had 25 percent of the district's population and 16 1/2 percent of the district's Medicaid eligible. Yet only 3.7 percent of the district's Medicaid-reimbursed home health visits were provided in Bay County. If services were Medicaid accessible, the number of Medicaid visits would be closer to the Medicaid percent of the population. Bay Medical Center Home Health Care's Medicaid visits represented only 1 percent of their total visits for 1986. When Home Health of Panama City's zero (0) Medicaid visits is considered, out of all home health visits provided in Bay County only 0.7 percent were Medicaid visits. Approximately 25 percent of Dr. Ehrman's patients from the Panama City area are Medicaid or indigent. This evidences a need for more Medicaid services. Bay Medical Center Home Health has no line item for marketing and advertising. Ability of the Applicant To Provide Quality of Care Dr. Ehrman is a highly trained and experienced physician. While in Canada, Dr. Ehrman established a hematology and oncology health care delivery system in Montreal. This system is still in existence and working well. Dr. Ehrman has been instrumental in improving the delivery of health care in his practice area. He has established tumor boards at local hospitals and provided many new procedures and devices in the home. Dr. Ehrman has raised the level of awareness on the part of other practitioners in his area as to a team approach to the delivery of services. This has increased the type of home services now available. Dr. Ehrman has responded to the needs of his patients for a multi- disciplinary approach to oncology by associating a clinical psychologist. This person deals with the psychological needs of the cancer patients seen by Dr. Ehrman. Dr. Ehrman has been instrumental in beginning many new and innovative practices in his office. For instance, he administers chemotherapy to Medicare patients in his office. He accomplished this by arranging with local pharmacists to mix and supply chemotherapy drugs. Dr. Ehrman will work with these same pharmacists in Home Health Care of Bay. Dr. Ehrman is involved in a durable medical equipment company. Many new devices and treatments were first used in the area by Dr. Ehrman's company. Dr. Ehrman has been a leader in the community in keeping up with new home health care developments. Home Health Care of Bay will have adequate staff on a full-time basis and add staff as utilization increases. Dr. Ehrman currently contracts with two nurses who are well trained and have over 1,000 hours of in-service training. Home Health Care of Bay is committed to keeping up with state-of-the- art home health care services and will add new services as they are developed. Availability and Adequacy of Alternatives There are no realistic alternatives to the establishment of a new home health agency. The alternative of nursing home care is not satisfactory. Most persons would prefer home care to nursing home care when at all possible. The alternative to home care which is currently being used is to shuttle the patient from the emergency room to the hospital to the doctor's office. Eventually the patient drops out of the system or settles for a lower level of services. Availability of Resources, Including Health Manpower, Management Personnel and Funds for Capital and Operating Expenditures . . . Extent to Which the Proposed Services Will Be Accessible to All Residents The staffing requirements for Home Health Care of Bay are shown on Table 11 of the application. That staffing plan is reasonable. Home Health Care of Bay will have a full-time administrator at a salary of $27,000. A capable administrator can be recruited at that salary. Home Health Care of Bay will employ a full-time nurse supervisor at a salary of $21,000. A nurse supervisor can be hired at that salary. Home Health Care of Bay will employ a full-time clerical person at an annual salary of $16,000. A clerical person can be hired at that salary. The above salaries and Home Health Care of Bay's ability to recruit such persons is reasonable based on Dr. Ehrman's experience employing similar personnel in his office. Home Health Care of Bay will hire contract staff to provide skilled nursing services, physical therapy services, speech therapy services, occupational therapy services, medical/social work services, and home health aide services. Such persons can be contracted with to provide the type of services Home Health Care of Bay proposes based on discussions with such persons. Dr. Ehrman currently contracts with two nurses in Ft. Walton Beach to provide nursing services similar to those proposed by Home Health Care of Bay. Such services are provided mainly to non-Medicare patients and the arrangement has worked very well. Funds for Capital and Operating Expenditures Project costs are depicted on Table 25 of the application. The costs are reasonable. Home Health Care of Bay can be started for $22,600. Immediate and Long-Term Financial Feasibility of the Proposal At hearing, DHRS admitted the short-term financial feasibility of Home Health Care of Bay's proposal. The statement of projected income and expense in Figure 7 of the application and on page 14 of Dr. Kolb's report was prepared under Dr. Kolb's supervision. The majority of assumptions on which the pro forma is based have been stipulated to by DHRS as reasonable assumptions on which to base a financial projection. The only assumptions not admitted by DHRS relate to utilization and payor mix. DHRS, however, introduced no evidence that refuted the reasonableness of these assumptions. The utilization projection used to calculate gross revenue in the pro forma was 3,800 visits in 1988 and 8,500 visits in 1989. The utilization projections are reasonable based on the agency's demographic base and Dr. Ehrman's commitment to education and marketing. The projection of costs and charges depicted on page 45 of the application is reasonable based on Dr. Ehrman's current office experience. The number of visits is multiplied by the charge per visit type to calculate gross revenue. This calculation yields a gross revenue of approximately $200,000 in year 1 and $462,000 in year 2. The payor mix for Home Health Care of Bay is found on Table 7 of the application. Home Health Care of Bay predicts 3 percent Medicaid visits, 80 percent Medicare visits, 14 percent private pay and insurance visits, and 3 percent indigent visits. The pay mix projections are reasonable based on the mix of patients Dr. Ehrman currently sees. Ms. Farr admitted that the projections were reasonable. The difference between Medicare and Medicaid reimbursement and full charges results in the contractual allowances figure. Bad debt and charity deductions were calculated based on 3 percent indigent and 3 percent Medicaid visits. Deductions from gross revenue, which are funds not received because of contractual allowances, bad debts, or charity, are subtracted to yield net revenue. Deductions from revenue are approximately $38,000 in year 1 and $135,000 in year 2. Net revenue is approximately $162,000 in year 1 and $327,000 in year 2. The second portion of the pro forma lists expenses. This list contains all the expenses expected for a new home health agency. All the expenses listed are reasonable. The pro forma shows a loss of $28,505 in the first year and a profit of $13,207 in the second year. Home Health Care of Bay has the equity to sustain a loss in the first year. In the second year of operation, based on the above assumptions, expenses are $314,000 and net revenue is $327,000 for a net income of $13,000. These projections indicate that the project is financially feasible in the long term. Table 26 on page 41 of the application presents the project timetable anticipated when the application was filed. Any delay in this timetable due to this litigation will not materially change the projections or commitments contained in the application. Impact of the Proposal on Costs of Providing Health Services, Including Effects of Competition and Improvements in Financing and Delivery of Health Services Which Foster Competition and Services To Promote Quality Assurance and Cost Effectiveness The introduction of a new home health agency into the Bay County market will stimulate competition. Such competition will stimulate growth in competitors and increase the overall level of services. Approval of a new competitor where there has been no new competition for nine to ten years will put pressure on providers to provide a wider range of services as well as higher quality services. Ms. Young, administrator of Bay Medical Center Home Health, admitted that if Home Health Care of Bay's CON is approved, her agency might begin educating physicians in regard to available services, rather than waiting for physicians to request a service. As the current providers testified, as agency visits go up or down, the number of staff required can be adjusted without incurring unreasonable costs. Current providers have control over their costs and staffing. Home Health Care of Bay's charges are competitive. In some areas, such as skilled nursing and home health aide, Home Health Care of Bay's charges are lower than current providers' charges. Price competition allows competition for private pay patients. Impact The addition of Home Health Care of Bay to the home health market will not significantly affect current providers. Studies have indicated that new entrants into the home health market do not significantly affect existing providers. The elderly population of Bay County is growing rapidly. When the 1984 home health use rate is applied to elderly population growth between 1986 and 1989, approximately 5,800 new visits are attributable to population growth alone. Home Health Care of Bay projects it will deliver 3,800 visits in its first year of operation and 8,500 visits in its second year. Thus, a large percentage of those visits are attributable to population growth alone. Home Health Care of Bay's marketing and education programs will raise the local use rate and generate more visits. Dr. Kolb analyzed the financial impact of Home Health Care of Bay's project on current providers. Her analysis considers a worst case scenario and assumes that current providers' visit levels will be affected by the introduction of a new provider. The analysis then calculates the financial impact on current provider. In order to do this, Table 11 calculates the average cost per visit from existing agencies' 1985 Medicare cost reports. Home Health Care of Panama City's average cost per visit is $37.18. Bay Medical Center Home Health's average cost per visit is $41.76. The Medicare program pays agencies the lower of Medicare cost caps or actual costs. The current providers in Bay County are well below the Medicare cost caps and so will be paid their actual costs. Table 11 calculates the difference between actual agency costs and Medicare cost caps. Home Health of Panama City was 18 percent below its cost caps. Bay Medical Center Home Health was 24 percent below its cost caps. Thus, Home Health Care of Bay could provide the number of visits it projects and even if all those visits came from existing providers, the current providers could still operate at a level of cost that would be Medicare reimbursable. The approval of Home Health Care of Bay's application will not have a significant adverse impact on existing providers.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Health and Rehabilitative Services enter a Final Order granting CON No. 4912 to Home Health Care of Bay County, Florida, Inc., to establish a Medicare-certified home health agency in Bay County, Florida. DONE AND ENTERED this 17th day of December, 1987, in Tallahassee, Florida. DIANE K. KIESLING Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 17th day of December, 1987. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 87-2151 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted by the parties in this case. Specific Rulings on Proposed Findings of Fact Submitted by Petitioner, Home Health Care of Bay County, Florida, Inc. Each of the following proposed findings of fact are adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 1-3(1-3); 5(4); 7-10(5-8); 12-16(48- 52); 18(53); 19 & 20 (54); 21(55); 24-27(56-59); 28- 31(59-62); 37-52(9-24); 54-57(25-28); 58-77(28-47); 78-89(63-74); 91-102 (75- 86); 104-114(87-97); 116-129(97-110); 130(110); 131(111); 133-135(112); 136- 139(113); 140 & 141(114); 142-153(115-126); 154-163(126-135); 165-175(136-146); 179-182(147-150); 183(150); 184 & 185(151); 186(152); 187 & 188(153); 189- 191(154); 192 & 193(155); 194 & 195(156); 196(157); 197(158); 200-203(159-162); 207(163); 209(164); 210(165); 212-218(166-172); and 219-225(172-178). 2. Proposed findings of fact 17, 32-36, 53, 90, 103, 115, 132, 164, 176- 178, 198, 199, 204-206 and 211 are subordinate to the facts actually found in this Recommended Order. Proposed findings of fact 22, 23 and 208 are rejected as being unsupported by the competent, substantial evidence. Proposed findings of fact 4 and 11 are rejected as being unnecessary and/or irrelevant. Specific Rulings on Proposed Findings of Fact Submitted by Respondent, Department of Health and Rehabilitative Services Each of the following proposed findings of fact are adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 1(1 & 2); 2(3); 6(Footnote 1); 7(148) and 13(4). Proposed findings of fact 3-5, 8-12, 14-40, 43-45 and 47-53 are subordinate to the facts actually found in this Recommended Order. Proposed finding of fact 42 is rejected as being unsupported by the competent, substantial evidence. Proposed findings of fact 4 and 46 are rejected as being unnecessary and/or irrelevant. COPIES FURNISHED: Byron B. Mathews, Jr., Esquire Vicki Gordon Kaufman, Esquire McDermott, Will and Emory 101 N. Monroe Street Tallahassee, Florida 32301 Theodore E. Mack, Esquire Assistant General Counsel Department of Health and Rehabilitative Services Regulation & Health Facilities Ft. Knox Executive Center 2727 Mahan Drive Tallahassee, Florida 32308 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 =================================================================
The Issue The issue for determination is whether Petitioner must reimburse Respondent for payments totaling $29,701.19 that Petitioner admittedly received from the Medicaid Program between May 1, 1996, and March 31, 1998, in compensation for the provision of home health services. Respondent contends that Petitioner is not entitled to retain the payments in question, primarily on the allegations that the compensated services were not medically necessary, were improperly documented, or both.
Findings Of Fact The evidence presented at final hearing established the facts that follow. The Agency is responsible for administering the Florida Medicaid Program. As one of its duties, the Agency must recover "overpayments . . . as appropriate," the term "overpayment" being statutorily defined to mean "any amount that is not authorized to be paid by the Medicaid program whether paid as a result of inaccurate or improper cost reporting, improper claiming, unacceptable practices, fraud, abuse, or mistake." See Section 409.913(1)(d), Florida Statutes. This case arises out of the Agency's attempt to recover alleged overpayments from Monef, a Florida-licensed home health agency. As an enrolled Medicaid provider, Monef is authorized, under a Medicaid Provider Agreement with the Agency, to provide home health services to Medicaid recipients. Under the Medicaid Provider Agreement, Monef assented to comply with “all local, state and federal laws, rules, regulations, licensure laws, Medicaid bulletins, manuals, handbooks and Statements of Policy as they may be amended from time to time.” The home health services at issue consisted of skilled nursing care rendered either by a registered nurse (“RN”) or a licensed practical nurse (“LPN”), as the needs of the recipient required, together with personal care provided by a home health aide. The "audit period" that is the subject of the Agency's recoupment effort is May 1, 1996 to March 31, 1998. During this audit period, the Medicaid Program reimbursed Monef for all of the skilled nursing and home health aide services that are the subject of this dispute. Largely (though not entirely) on the allegation that the home health services in question were not medically necessary, the Agency contends that Monef collected overpayments totaling $29,701.19 in compensation for services rendered to nine separate patients. The following table summarizes the Agency's allegations. PATIENT NAME GROUND(S) FOR DENIAL ALLEGED OVERPAYMENT Louisiana S. No medical necessity $8,498.17 Robert M. No medical necessity $3,615.54 Mario P. No medical necessity $2,403.33 Angel S. No medical necessity $2,089.12 Ana G. No medical necessity $2,015.94 Joann N. No medical necessity $1,705.12 C. Watson No medical necessity $1,268.76 Yvette F. Service refused $122.16 Rosa P. Multiple $7,983.05 Medical Necessity The proof was in conflict concerning the medical necessity of the challenged home health services that Monef provided to the foregoing patients. There were three categories of expert opinion evidence on this issue, described below. The attending physicians' opinions. To be Medicaid compensable, home health services must be provided pursuant to a written treatment plan that is prepared individually for each recipient and approved by his or her attending physician. The treatment plan——called a "plan of care" or "plan of treatment"—— must be reviewed and updated periodically (about every two months) and also as the patient's condition changes. A required component of all plans of care is the attending physician's certification that the services specified in the plan are medically necessary.1 The fact that a treating doctor, by prescribing, recommending, or approving a medical service, has attested to its medical necessity is not sufficient, in itself, to support a finding that the resulting care was medically necessary. See Rule 59G-1.010(166)(c), Florida Administrative Code. Nevertheless, the attending physician's opinion regarding medical necessity is relevant evidence, even if it is not inherently dispositive. In this case, all of the services that the Agency contends were not medically necessary had been determined to be medically necessary by the respective patients' treating physicians. The peer-review organizations' opinions. During the audit period, the Medicaid Program would not reimburse a home health agency for any home visits in excess of 60 visits per recipient per fiscal year unless the provider had obtained authorization to provide such care, in advance, from the Agency or its designee. Such "prior authorization" was required to be based on medical necessity. At times during the audit period the Agency was under contract with a company called Keystone Peer Review Organization ("KePRO"), which acted as the Agency's designee in regard to pre-approving services above the 60-visit limit. At other times this function was performed by Florida Medical Quality Assurance, Inc. ("FMQAI"). In a couple of instances, the Agency itself gave Monef prior authorization to perform services that it now contends were not medically necessary. By statute, a peer-review organization's written findings are admissible in an administrative proceeding as evidence of medical necessity or lack thereof. See Section 409.913(5), Florida Statutes. Monef had obtained prior authorization based on medical necessity for most of the services that the Agency has challenged as medically unnecessary. The opinions of the Agency's designees, KePRO and FMQAI, are relevant evidence of medical necessity. Dr. Sullenburger's opinion. Dr. John Sullenburger is the Agency's Medicaid physician. He would have testified at the final hearing as an expert witness for the Agency, but the parties stipulated that Dr. Sullenburger's ultimate opinion, based on the medical records, was that each of the claims that the Agency alleges was not medically necessary was, in fact, unnecessary. By entering into this stipulation, Monef effectively waived its right to cross-examine Dr. Sullenburger and thereby expose the particular facts upon which his opinion was based. For its part, the Agency relinquished the opportunity to have the doctor explain the reasons why he had concluded that the patients' attending physicians——and also, in many instances, the Agency's designated peer-review organizations——had erred in making their respective determinations that the subject services were medically necessary. As a result of the parties' stipulation concerning Dr. Sullenburger's testimony, the factfinder was left with a naked expert opinion that merely instructed him to decide the ultimate factual issue of medical necessity in the Agency's favor. In making findings regarding medical necessity, the factfinder settled on the following rules of thumb. Greatest weight was accorded the opinions of KePRO and FMQAI. These were deemed to have the highest probative value because the peer- review organizations' determinations of medical necessity were made before the services in question were provided, and neither of the Agency's designees had any discernable motive to stretch the truth one way or the other. Certainly, the peer-review organizations more closely resemble a disinterested, neutral decision-maker than either the patient’s treating physician or the Agency's expert witness (whose opinions were formed after the services had been rendered and the claims paid); indeed, if anything, KePRO and FMQAI might be expected to tilt in the Agency's direction (although there was no evidence of such bias in this case).2 The hearsay opinions of the treating physicians, on the one hand, and Dr. Sullenburger, on the other, were considered to be about equally persuasive——and none was particularly compelling.3 It should be stated that the attending physicians' certifications of medical necessity, each of which lacked analysis that might have connected the facts concerning a patient's medical condition with the need for services, were as conclusory as Dr. Sullenburger's ultimate opinion. Consequently, in those instances where a peer-review organization gave Monef a mandatory prior authorization to render services that the attending physician had certified as being medically necessary, it has been found that, more likely than not, the services in question were medically necessary. In contrast, a closer question arose in those instances where there was no evidence of prior authorization when such was required. The expert opinions——the attending physician's on one side, Dr. Sullenburger's on the other—— essentially canceled each other out. While ordinarily in an evidential tie the party without the burden of proof (here, Monef) would get the nod, in this case the Agency had the slightest edge, on the strength of Rule 59G-1.010(166)(c), Florida Administrative Code. Under this Rule, an attending physician's approval of a service is not, "in itself," sufficient to support a finding of medical necessity.4 Because of the Rule, Monef needed to introduce some additional, persuasive evidence (e.g. the attending doctor's testimony regarding the need for the service) to overcome Dr. Sullenburger's opinion.5 Louisiana S. At the time that the services in question were provided, from May 7, 1997, until December 20, 1997, this patient, an obese woman in her late 60s, was being treated for diabetes, hypertension, and coronary artery disease. She was not able to self-administer the insulin shots that were needed to prevent complications from diabetes. For the period from May 5, 1997, through June 30, 1997, KePRO gave prior authorization to 53 skilled nursing visits and 23 home health aide visits.6 Monef was reimbursed for 42 skilled nursing visits and 23 home health aide visits conducted in this period. From July 1, 1997, until September 1, 1997, Monef provided a total of 66 combined skilled nursing and home health aide visits to Louisiana S. The Medicaid Program paid for 60 of them. Because these were the first 60 visits of the fiscal year, which began on July 1, 1997, prior authorization was neither needed nor obtained. During the period between September 1, 1997, and November 1, 1997, Monef made 96 skilled nursing visits, out of 124 that KePRO had pre-approved, and 20 of 27 authorized home health aide visits. KePRO gave prior authorization for 124 skilled nursing and 27 home health aide visits for the period from November 1, 1997 to January 1, 1998, of which 54 and 18, respectively, were made. Based on the levels of service that KePRO had approved before July 1, 1997, and then after September 1, 1997, it is reasonable to infer, and so found, that the first 60 combined visits to this patient in fiscal year 1997-98 would have been pre-approved had Monef been required to obtain prior authorization. The home health care services that Monef provided to Louisiana S. between May 9, 1997, and December 30, 1997, for which the Medicaid Program paid $8,498.17, were medically necessary. Robert M. Robert M., a man in his mid-40s who received home health care from Monef from November 26, 1997, through March 27, 1998, suffered from arteriosclerosis, hypertension, acute bronchitis, and schizophrenia. His residence was an assisted living facility ("ALF").7 FMQAI gave prior authorization for 61 skilled nursing and 61 home health aide visits to occur between November 26, 1997, and January 26, 1998. Monef provided 55 nursing and 59 home health aide visits during this period. Monef requested prior approval for 25 skilled nursing and 63 home health aide visits for the period from January 26, 1998, and March 26, 1998. Although prior authorization was needed for these services, which exceeded the limit for fiscal year 1997-98, there is no evidence in the record that FMQAI granted Monef's request for approval. FMQAI authorized 23 skilled nursing visits and 30 home health aide visits for the period from March 26, 1998, to May 28, 1998. However, Monef provided just one skilled nursing visit during this time, on March 27, 1998. The home health care services that Monef provided to Robert M. between November 26, 1997, and January 26, 1998, and on March 27, 1998, were medically necessary. Lack of medical necessity was established, however, for the services provided between January 26, 1998, and March 26, 1998. The Medicaid Program paid the following claims, totaling $1,442.49, for this period: One RN visit, $34.04; 21 LPN visits, $549.99; and 51 home health aide visits (35 at $17.46 apiece and 16 at $15.46 each), $858.46. Mario P. From November 25, 1997, through March 28, 1998, Mario P., a septuagenarian who was being treated for acute gastritis, an enlarged prostate, and mental illness, received home health visits at the ALF where he lived, the services provided by Monef. FMQAI approved 43 skilled nursing and 61 home health aide visits for the period from November 26, 1997, through January 26, 1998; 11 skilled nursing and 62 home health aide visits for January 26, 1998, until March 26, 1998; and 25 skilled nursing visits for March 1, 1998, through May 1, 1998 (overlapping the immediately preceding period by about three- and-a-half weeks). The actual number of skilled nursing and home health aide visits for which the Medicaid Program reimbursed Monef was within the pre-approved service levels for each period. The home health care services that Monef provided to Mario P. between November 26, 1997, and March 28, 1998, for which the Medicaid Program paid $2,403.33, were medically necessary. Angel S. Angel S. was a man in his middle 50s who had been diagnosed with gastroduodenitis (an inflammation of the stomach and duodenum) and mental illness. Monef obtained prior authorization from KePRO to provide Angel S. with 34 skilled nursing and 62 home health aide visits between November 25, 1997, and January 25, 1998. During this time, the Medicaid Program reimbursed Monef for 32 skilled nursing and 44 home health aide visits. FMQAI pre-approved 26 skilled nursing and 27 home health aid visits for January 25, 1998, through March 25, 1998. Monef was reimbursed for 20 and 21 such visits, respectively. The home health care services that Monef provided to Angel S. between November 25, 1997, and March 25, 1998, for which the Medicaid Program paid $2,089.12, were medically necessary. Ana G. When she was a client of Monef, Ana G., a woman in her 60s, was suffering from acute gastritis and major depression. She lived in an ALF. FMQAI pre-approved 50 skilled nursing visits and 40 home health aide visits for the period from November 25, 1997, through January 25, 1998. In that time, Monef rendered 28 skilled nursing visits and 42 home health aide visits for which it received compensation from the Medicaid Program. For the period from January 25, 1998, through March 25, 1998, FMQAI gave prior authorization for 9 skilled nursing and no home health aide visits. During this time, Monef provided 15 skilled nursing visits and 15 home health aide visits for which Medicaid paid. The services that Monef rendered to patient A. Garcia between November 25, 1997, and March 23, 1998, were medically necessary except for 17 home health aide visits (at $17.46 apiece) and 6 skilled nursing visits (at $24.19 each), making a total of $441.96 in overpayments. Joann N. In her late 30s at the time of the services in question, Joann N.'s principal diagnosis was major depression. She also suffered from hypertension and a type of diabetes. Because Joann N.'s primary diagnosis was a mental illness, the home health services provided to her may not have been Medicaid-compensable due to an exclusion that bars coverage for mental health and psychiatric services.8 The Agency, however, did not disallow Monef's claims on this basis, relying instead exclusively on the allegation that the services were not medically necessary. None of the skilled nursing and home health aide visits that Monef provide Joann N. between February 16, 1997, and September 1, 1997, was pre-approved. There is evidence that Monef sought KePRO's prior authorization of 26 skilled nursing and ten or 12 home health aide visits for the period from April 16, 1997, to June 16, 1997, but no proof was adduced showing that approval was granted. Based on the number of combined visits that Monef provided both before and after July 1, 1997 (the start of fiscal year 1997-98), it does not appear that prior authorization was required. There are no grounds in the record, however, from which to infer that prior authorization(s) would have been given if needed. Accordingly, lack of medical necessity was established for all of the home health services that Monef provided Joann N, for which the Medicaid Program paid a total of $1,705.12. C. Watson C. Watson was a teenager with cerebral palsy and quadriplegia who received care in her home between May 12, 1997, and March 31, 1998. The Agency alleges that all of the skilled nursing services that Monef provide C. Watson were medically unnecessary but acknowledges that the home health aide visits were appropriate and covered. The Agency itself pre-approved the home health care visits that Monef had requested for the period from May 12, 1997, through June 30, 1997, namely, 24 skilled nursing and 40 home health aide visits. The Medicaid Program reimbursed Monef for 12 skilled nursing and 38 home health aide visits made during this period. The Agency gave prior authorization for home health care to be provided between July 1, 1997, and September 1, 1997. FMQAI also pre-approved the following services for the same period: five skilled nursing visits and 43 home health aide visits. Monef was reimbursed for 17 skilled nursing visits made during this time. For the periods of September 1, 1997 to November 1, 1997; November 1, 1997 until January 1, 1998; and January 1, 1998 through March 1, 1998, KePRO pre-approved levels of skilled nursing services (nine, four, and nine visits, respectively) that were not exceeded by Medicaid-paid claims for these services rendered by Monef during the subject timeframes. FMQAI gave prior authorization for four skilled nursing visits to occur between March 1, 1998 and May 1, 1998, but Monef did not submit any claims for such services rendered during this period. Lack of medical necessity was established for 12 skilled nursing visits made during the period from July 1, 1997 through September 1, 1997. The Medicaid Program paid a total of $319.13 for these visits (One RN visit at $31.04 and 11 LPN visits at $26.19), and this sum constitutes an overpayment subject to recoupment. The rest of the skilled nursing visits that Monef furnished to C. Watson were medically necessary. Yvette F. Yvette F. was a patient in her 30s suffering from complications relating to HIV infection. On Christmas Day, 1997, Yvette F. refused most of the skilled nursing services that had been scheduled, to spend time with her family. The Agency has sought to recoup the $122.16 that the Medicaid Program paid for an RN's visit to Yvette F.'s home on December 25, 1997. This sum reflects four hours of service. The medical records in evidence establish that the patient's refusal of treatment occurred after the RN had arrived at her residence, and that, despite the patient's refusal of service, the RN did perform an assessment on Yvette F. that day. The Agency failed to establish that, under these circumstances, Monef is entitled to no reimbursement. Yet, common sense instructs that the covered claim should not encompass four hours of services when clearly that much time was not spent on this particular visit. Unfortunately, nothing in the record, including the parties' legal arguments, provides guidance for resolving this particular problem. In the absence both of controlling authority and evidence of the actual time spent, the factfinder has determined that the claim should be equitably apportioned to do rough justice, with Monef being compensated for one hour of service and the balance returned to the Medicaid Program. On this basis, then, lack of medical necessity has been shown for three hours of skilled nursing services, making an overpayment of $91.62. Rosa P. Rosa P. was a woman in her late 30s with multiple health problems, including uncontrolled diabetes, recurring infections, renal failure, respiratory insufficiency, and mental illness. Monef rendered home health care to Rosa P. from November 22, 1996, until February 1, 1998, for which the Medicaid Program paid $24,543.27 on 1,012 separate claims. The Agency seeks to recoup a little more than one- third of the amount previously paid to Monef for this patient's home health care, alleging a number of grounds to disallow a number of claims. The following table summarizes the Agency's contentions regarding the challenged claims. ("Doc." is an abbreviation for "documentation." "PC" is an acronym for plan of care. The alphanumeric claim identifiers in the left-hand column were assigned by the Administrative Law Judge for ease of reference.) CLAIM ID DATE(S) SERVICE(S) GROUND(S) FOR DENIAL ALLEGED OVERPAYMENT RP-1 11-22-96 Nursing No doc. $29.04 RP-2 12-9-96, 12- 10-96, 12- 14-96 Aide No doc./POT not followed (x3) $52.38 RP-3 12-25-96 to 1-5-97 Aide No PC rendered (x11) $192.06 RP-4 1-6-97, 1-7- 97, 1-9-97, 1-10-97, 1- 11-97, 1-12- 97 Aide POT not followed (x6) $104.76 RP-5 1-22-97 to 3-22-97 All POT not signed by MD or RN $4,009.37 RP-6 3-24-97 to 5-2-97 Aide No PC rendered (x40) $698.40 RP-7 5-2-97 Nursing No doc. $29.04 RP-8 5-3-97 to 7- 4-97 Aide No PC rendered (x62) $1,032.52 RP-9 7-21-97 to 7-26-97 Aide POT not followed (x6) $87.309 RP-10 8-4-97 to 8- 10-97 Aide PC not rendered (x7) $122.22 RP-11 10-29-97 Nursing Documented only 1 of 2 billed visits $31.04 RP-12 11-3-97 Aide No doc. $17.46 RP-13 11-4-97 Aide No doc. $17.46 RP-14 11-14-97 Aide No doc. $17.46 RP-15 11-15-97 Aide No doc. $17.46 RP-16 11-16-97 Aide No doc. $17.46 RP-17 11-22-97 to 11-26-97 Aide No doc. (x10) (2 billed visits per day) $52.3810 RP-18 12-1-97 Aide No doc. $17.46 RP-19 12-2-97 Aide No doc. $17.4611 RP-20 12-3-97 Aide No doc. $17.46 RP-21 12-28-97 to 2-28-98 Nursing POT not signed by MD or RN $1,724.37 The total of these alleged overpayments, without adjustment for the several minor arithmetic or typographical errors in the Agency’s papers, see endnotes 9 - 11, is $7,983.05. Each claim or claim set will be addressed in turn below. RP-1. The medical records contain a "Time Record Nursing Progress Note" dated November 22, 1997, that documents a skilled nursing visit to the patient on that day. Therefore, the Agency failed to prove its allegation of overpayment regarding RP-1. RP-2. Included in the patient's records is a "Weekly Activity Report and Time Slip" for the week beginning Monday, December 9, 1996, that was filled out by the home health aide who cared for Rosa P. during that seven-day period. To keep track of tasks performed, the form instructed the aide to check boxes in a table that cross-referenced particular duties (e.g. oral hygiene, change linens, turn & position), which are described in the left-hand column, with the days of the week, which are listed, Monday through Sunday, in the top row. For the days in question (December 9, 10, and 14, 1996), the aide checked boxes showing that, among other things, she had given the patient a shower and assisted her in a wheelchair, both of which are Medicaid-covered services. See Paragraphs 133, 137, infra. Handwritten notes inscribed on the Agency's work papers next to each of the three dates at issue state: "only p/c [personal care] [is a] shower —— not following POT [plan of treatment]." The first of these points is incorrect: assistance with a wheelchair, like showering a patient, is a covered home health aide service. The plan of care that covered the subject dates disproves the second assertion. The written treatment plan explains that the home health aide will "provide personal care, asst [assist] [with] ADL's [activities of daily living] including bath, skin/foot care." The aide was following this course of action on December 9, 10, and 14, 1996. The Agency did not prove an overpayment in connection with RP-2. RP-3. The Agency seeks to recoup payments of $17.46 apiece for 11 home health aide visits made between December 25, 1996 and January 5, 1997, on the ground that the aide did not perform any covered personal services. Although a dozen such visits were made during this particular period, the Agency's work papers reveal that the claim for services rendered on December 29, 1996, was approved. The aide's time sheets for the relevant period substantiate the Agency's allegation, with one exception. The aide's entry on December 26, 1996, is identical to that of December 29, 1996, the latter which the Agency correctly deemed sufficient to make Medicaid financially responsible. On both days, the aide helped the patient with a tub bath and shampoo, which are covered personal services. For the other ten days, review of the aide's time sheets reveals that many services were rendered in the category of "light housekeeping" and "meal preparation." These fall within the exclusion for "housekeeping, homemaker, and chore services, including shopping" and hence are not covered services. Handbook, at p. 2-6; see also Rule 59G-4.130(8)(a)2., Florida Administrative Code (1996).12 (Curiously, the Agency did not specifically rely upon this exclusion.) In its Proposed Recommended Order, Monef points out that the aide made a written notation each day concerning the patient's voiding of bowel and bladder. Because the non- exclusive list of covered home health aide services included "toileting and elimination," see Rule 59G-4.130(5)(b)3.b., Florida Administrative Code (1996), it is possible that the aide was providing a compensable service during the period in question. The trouble is, it cannot be determined from the evidence whether the aide actually assisted the patient——or whether the aide merely wrote down on the time sheet what had been observed regarding the patient's use of the bathroom facilities. Although the question is close, it is determined that simply observing and commenting daily about the patient's elimination of bodily wastes is not enough, without more, to constitute a Medicaid-compensable home health aide service.13 Being unable on the present record to find that the aide did more than watch and write, it is determined that covered services in the area of "toileting and elimination" were not persuasively shown to have occurred. Consequently, lack of medical necessity has been established as to 10 home health aide visits. The total overpayment on RP-3 is $174.60. RP-4. For the week from Monday, January 6 through Sunday, January 12, 1997, the Agency alleges that six home health aide visits are not covered because the aide failed to follow the plan of treatment. Notations on the Agency's work papers suggest another basis: "only shower - incomplete," meaning, presumably, that the only covered personal care provided was assistance in the shower. See discussion regarding RP-2, supra. The aide's time sheet for the relevant period contradicts the Agency's contention. First, bathing assistance was not the only covered personal care rendered on the days in question. The aide also helped the patient with her wheelchair, which is a service covered under the rubric of "transfer and ambulation." Rule 59G-4.130(5)(b)3.e., Florida Administrative Code (1996). Second, the aide's entry for January 8, 1997——for which claim the Agency is not seeking to recover——is substantially the same as those for the challenged days. The only material difference is that on January 8 the aide checked the box indicating that she had shampooed the patient's hair. Nothing in the Rule or the Handbook, however, provides that a shower with shampoo is covered but a shower without shampoo is excluded from coverage, and the Agency failed to prove a factual basis, or advance a logical one, for drawing such distinction. Consequently, the Agency did not establish an overpayment with regard to RP-4. RP-5. The medical records in evidence contain a "Home Health Certification and Plan of Care" for Rosa P. that was signed and dated, on January 22, 1997, by the RN and by the patient's attending physician, Dr. John Prior. This plan of care covers the period from January 22, 1997 through March 22, 1997. The Agency did not present any evidence that either the doctor's or the nurse's signature appearing on this form are inauthentic or that either or both failed to sign on January 22, 1997, as recorded. Therefore, the Agency's allegation that the plan of treatment for the period in question is invalid was not proved. RP-6. This claim set encompasses five full weeks plus five days of home health aide service, or 40 visits in all. The Agency alleges that no covered personal care was provided during these visits. The time sheets demonstrate that the aide provided a covered service, namely assistance in the shower, on all days between March 24, 1997 and April 6, 1997, and also on the five days from April 28 through May 2, 1997. The Agency therefore failed to prove its allegation as to these 19 visits. The Agency made its case, however, in connection with the remaining 21 visits from April 7 to April 27, 1997, inclusive. The time sheets for these dates do not adequately document the provision of a covered service.14 Accordingly, lack of medical necessity was established for 21 home health aide visits at $17.46 each, making a total overpayment on RP-6 of $366.66. RP-7. The Agency has sought to recover payment of $29.04 for an RN visit to the patient on May 2, 1997, alleging lack of documentation. The medical records show that on this particular date, an LPN treated the patient from 8:00 a.m. to 8:45 a.m. Later that same day, at 5:00 p.m., an RN arrived to provide care, which she did, afterwards leaving the patient’s residence at 5:45 p.m. These two visits are documented in separate "Time Record Nursing Progress Note" forms. The Agency did not establish that the nursing notes are inauthentic or incredible.15 Thus, the allegation regarding RP-7 was not proved. RP-8. The Agency contends that 62 home health aide visits between May 3, 1997, and July 4, 1997, were not compensable because no covered personal care was provided. The aide's time sheets establish that a covered personal care (assistance in the shower) was given on May 3 through May 17, inclusive (15 visits at $17.46 apiece), and also on June 20 through 22, 1997 (three visits at $17.46 each). Shower assistance was also provided on May 26 through June 1, 1997 (seven visits at $15.46 each). Skin care, a covered service, was provided on June 7, 1997 (one visit, $15.46). And ambulation assistance, a covered personal care service, was rendered on seven visits from June 9, 1997, through June 15, 1997, at $15.46 per visit. For the remaining 29 visits, however, the aide's time sheets fail adequately to document the provision of a covered service. Ten of these visits were billed at $15.46, the others at $17.46 apiece. Thus, with respect to RP-8, the Agency established an overpayment of $486.34. RP-9. This claim set involves six home health aide visits on the dates of July 21 through July 26, 1997, inclusive, during which, the Agency alleges, the plan of treatment was not obeyed. (The Agency did not seek to recoup the payment made for aide services rendered on Sunday, July 27, 1997, even though that date’s visit is included within the same time sheet as the Monday through Saturday visits, and the services rendered on July 27 were identical to those performed earlier in the week.) According to the pertinent time sheet, covered personal care services (bathing and assistance with ambulation) were provided in connection with the challenged claims. Further, the plan of treatment in effect at that time stated that the aide would "assist with personal care, ambulation, prepare meals, grocery shop, wash clothes, [and] straighten bedside unit." The time sheet establishes that the aide complied with these instructions. Accordingly, the Agency failed to prove its allegation regarding RP-9. RP-10. The Agency alleges that none of the home health aide visits from August 4 through August 10, 1997, entailed covered personal care services. The aide's time sheet for that week, however, documents that bathing care, specifically showering, was provided. Because showering the patient is clearly a covered item, the Agency failed to carry its burden of proof in respect of RP-10. The patient's medical records contain two "Time Record Nursing Progress Note" forms dated October 29, 1997, which document separate RN visits on that date, one lasting from 4:30 p.m. to 5:15 p.m., the other from 6:00 p.m. until 7:40 p.m. The Agency therefore did not establish, by a preponderance of evidence, its allegation that Monef had provided documentary support for only of one of two nursing visits on October 29, 1997. RP-12, -13, -14, -15, and -16. The Agency alleges that these five home health aide visits, occurring over a two- week period from November 3, 1997 to November 16, 1997, are not adequately documented. The visits of Monday, November 3, and Tuesday, November 4, 1997, which the Agency challenges, are reported on the same time sheet as those of November 5 through 9, 1997, which the Agency accepts. The duties performed on each of these days, both challenged and unchallenged, were identical, except that on November 4 and 8 the aide shampooed the patient. Numerous covered personal care services were rendered each day during the week, including bathing, oral hygiene, skin care, and assistance with ambulation. The duty descriptions on the aide's time sheet for the week beginning Monday, November 10, 1997——a week that included three challenged visits (November 14 through 16)——are substantially similar to one another (though the Agency accepted claims for November 10 through 13) and nearly identical to those given for the preceding week. Once again, covered personal care services rendered consistently throughout the week of November 10 to 16, 1997, included bathing, oral hygiene, skin care, and ambulation assistance. The evidence, therefore, does not support the Agency's allegation that the services in question were not adequately documented. RP-17. The Agency alleges that home health aide visits made from November 22 through November 26, 1997, were not documented. The medical records demonstrate that one such visit per day was provided, for a total of five. The records show further, however, that Monef was reimbursed for two visits for each of the days in question, receiving double the amount to which it was entitled based on the documented number of visits. The Agency, therefore, has proved an overpayment of $87.30 (five visits at $17.46 apiece). RP-18, -19, and -20. The Agency contends that there is insufficient documentation for home health visits on December 1 through 3, 1997. But the aide's time sheet for the week beginning Monday, December 1, 1997, adequately establishes that such visits actually occurred——and that covered personal care services (bathing, oral hygiene, skin care, and ambulation assistance) were provided during each of them. However, as with RP-17, the records show that Monef was reimbursed for two visits for each of the days in question, receiving double the amount to which it was entitled based on the documented number of visits. The Agency, therefore, has proved an overpayment of $50.38 (two visits at $17.45 apiece and one billed at $15.46) with regard to RP-18, RP-19, and RP-20. RP-21. The Agency seeks to recover payments for all nursing services rendered from December 28, 1997 through February 28, 1998, on the ground that the plan of treatment for the subject period was not signed and dated by the attending physician, as required. In fact, the pertinent treatment plan was signed by a Dr. Roxana Lopez, and by the RN. Neither signature, however, was dated. Thus, the Agency is correct in its assertion that the plan of treatment is deficient. But, the record also contains a letter from KePRO dated December 29, 1997, which grants prior authorization for 124 skilled nursing and 61 home health aide visits for the period from December 28, 1997 through February 28, 1998. According to this letter, Monef's request for pre-approval was made on December 22, 1997. One of the items that must be submitted to the peer- review organization with a request for prior authorization is the written plan of treatment. Thus, it is reasonable to infer, and so found, that KePRO had in its possession the deficient plan of treatment and, in granting prior authorization, overlooked the fact that the doctor had not dated her signature. Monef did not urge that KePRO's pre-approval of the services in question effected a waiver of the Agency's right to disallow the ensuing claims based on what is, in these circumstances, clearly a technicality,16 or that the Agency should be estopped from raising this particular objection, although little imagination is required to perceive the potential merit in either argument. It is not necessary to reach waiver or estoppel issues, however, for KePRO's approval letter establishes persuasively that the doctor and the nurse signed the plan of treatment before December 29, 1997——and hence at or before the start of care and services thereunder. Plainly, in other words, the attending physician timely approved the plan of treatment, even though she failed to date her signature. Under the particular facts of this case, therefore, where the treatment plan is in substantial compliance with the requirements, and neither the Medicaid Program nor the patient suffered any conceivable prejudice as a result of a demonstrably harmless (on these facts) and unintentional deficiency, it is determined that the Agency has failed to prove a sufficient basis to recoup payments totaling $1,724.37 for pre-approved, medically necessary services that were actually provided to an eligible patient. The following table summarizes the foregoing findings relating to claims for services to Rosa P. CLAIM ID DATE(S) SERVICE(S) GROUND(S) FOR DENIAL ACTUAL OVERPAYMENT RP-1 11-22-96 Nursing No doc. $0 RP-2 12-9-96, 12- 10-96, 12- 14-96 Aide No doc./POT not followed (x3) $0 RP-3 12-25-96 to 1-5-97 Aide No PC rendered (x11) $174.60 RP-4 1-6-97, 1-7- 97, 1-9-97, 1-10-97, 1- 11-97, 1-12- 97 Aide POT not followed (x6) $0 RP-5 1-22-97 to 3-22-97 All POT not signed by MD or RN $0 RP-6 3-24-97 to 5-2-97 Aide No PC rendered (x40) $366.66 RP-7 5-2-97 Nursing No doc. $0 RP-8 5-3-97 to 7- 4-97 Aide No PC rendered (x62) $486.34 RP-9 7-21-97 to 7-26-97 Aide POT not followed (x6) $0 RP-10 8-4-97 to 8- 10-97 Aide PC not rendered (x7) $0 RP-11 10-29-97 Nursing Documented only 1 of 2 billed visits $0 RP-12 11-3-97 Aide No doc. $0 RP-13 11-4-97 Aide No doc. $0 RP-14 11-14-97 Aide No doc. $0 RP-15 11-15-97 Aide No doc. $0 RP-16 11-16-97 Aide No doc. $0 RP-17 11-22-97 to 11-26-97 Aide No doc. (x10) (2 billed visits per day) $87.30 RP-18 12-1-97 Aide No doc. $17.46 RP-19 12-2-97 Aide No doc. $15.46 RP-20 12-3-97 Aide No doc. $17.46 RP-21 12-28-97 to 2-28-98 Nursing POT not signed by MD or RN $0 The Agency, in sum, proved overpayments totaling $1,165.28 in relation to Rosa P. The Bottom Line The Agency established that Monef received overpayments in connection with six patients. The following table summarizes these overpayments. PATIENT NAME GROUND(S) FOR DENIAL OVERPAYMENT Robert M. No medical necessity $1,442.49 Ana G. No medical necessity $441.96 Joann N. No medical necessity $1,705.12 C. Watson No medical necessity $319.13 Yvette F. Service refused $91.62 Rosa P. Multiple $1,165.28 Accordingly, the Agency is entitled to recover from Monef the principal sum of $5,165.60.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency enter a final order requiring Monef to repay the Agency the principal amount of $5,165.60. DONE AND ENTERED this 14th day of November, 2001, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of November, 2001.
The Issue Whether the applications for certificate of need numbers 8380, 8381, 8382 and 8383, filed by Petitioners RHA/Florida Operations, Inc., Care First, Inc., Home Health Integrated Health Services of Florida, Inc., ("IHS of Florida,") and Putnam Home Health Services, Inc., meet, on balance, the statutory and rule criteria required for approval?
Findings Of Fact Care First The Proposal Care First, the holder of a non-Medicare-certified home health agency license, was established in March of 1996. Owned by Mr. Freddie L. Franklin, Care First is the successor to another non-Medicare-certified home health agency also owned by Mr. Franklin: D. G. Anthony Home Health Agency ("D. G. Anthony"). Established in May of 1995, D. G. Anthony provided over 10,000 visits in its first 10 months of operation mostly in Leon and Wakulla Counties, pursuant to a contract with Calhoun-Liberty Hospital Association, Inc. Very few of the 10,000 patients were referred to D. G. Anthony by Calhoun-Liberty; they became D. G. Anthony's patients through community-based networks, including physicians, created through the efforts of Mr. Franklin and D. G. Anthony itself. D. G. Anthony was dissolved in 1996. Both its patient census and its staff of 45 were absorbed by Care First. D. G. Anthony's contract with Calhoun-Liberty was substantially assumed by Care First so that it provided service to Medicare patients as Calhoun-Liberty's subcontractor. From the point of view of the federal government, the Medicare patients served by Care First were Calhoun-Liberty's patients, even those who had not been referred to Care First by Calhoun Liberty and who had been referred from other community sources. Care First, therefore, was simply a sub- contractor providing the services on Calhoun-Liberty's behalf. The contract was terminated effective December 1, 1996. Calhoun-Liberty was free to terminate Care First with 30 days notice, a peril that motivated Mr. Franklin to seek the CON applied for in this proceeding. With the termination of the contract, Care First ceased serving Medicare patients, "because Mr. Franklin did not want to enter into another subcontractor arrangement because of all the issues and problems," (Tr. 934,) associated with such an arrangement. Mr. Franklin is involved with nursing homes as the administrator at Miracle Hill Nursing Home in Tallahassee. He is an owner of Wakulla Manor Nursing Home in Wakulla County, and he owns a 24 bed CLF, Greenlin Villa, also in Wakulla County. Miracle Hill has the highest Medicaid utilization of any nursing home in District 2. Both Miracle Hill and Wakulla Manor are superior rated facilities. On the strength of Mr. Franklin's extensive experience with community-based organizations and health care services, as well as Care First's succession to D. G. Anthony and other historical information and data. Care First decided to proceed with its application. In the application, Care First proposes to establish a home health agency that, at first, will serve primarily Franklin, Gadsden, Jefferson, Leon, Liberty and Wakulla Counties. It plans to expand into Madison and Taylor Counties in its second year of operation. Five of these eight counties have high levels of poverty; six of the eight are very rural, with the population spread widely throughout the county. Ninety-six percent of Care First's patients are over age Minority owned, approximately 65% of the patients are members of minorities. Many of the patients live in rural areas and are Medicaid recipients or are uninsured low income persons who do not qualify for Medicaid but cannot afford home health care. Since it will be serving the same patient base as a Medicare-certified agency, Care First has committed to the provision of 7% of its visits to Medicaid patients and 1% of its visits to patients requiring charity/uncompensated care. Care First projects 18,080 visits in its first year and 29,070 in its second year. Care First will promote efficiency through the use of a case management approach. Each patient will be assigned a case manager who will act as the patient advocate to provide care required and to identify and assist the patient with access to other "quality of life" enhancing services. Care First proposes an appropriate mix of services, including skilled nursing, physical therapy, speech and language therapy, occupational therapy, home health aide services and social services. Care First estimates its total project cost at $25,808. Of this amount, $2,000 is indicated as "start-up cost", with nothing allocated to salaries. Care First indicates no "capital projects" other than its proposal for the home health agency in District 2. Care First's proposal would be funded from a $60,000 bank line of credit. Projected Utilization Potential patients will be able to gain access to Care First through several avenues, including physician referral, hospital referral, nursing home discharge, assisted living referrals from community agencies and organizations such as Big Bend Hospice and through private referral. In addition, there are several natural linkages to the community for Care First. Wakulla Manor and Miracle nursing facilities offer Care First's services to discharged residents in need. Very often, residents and families choose Mr. Franklin's agency because they are familiar with him, staff or the quality of care provided. Residents of Greenlin Villa, owned by Mr. Franklin, frequently chose Care First when in need of home health agency services. Mr. Franklin's civic, church, and community involvement is impressive. He is president of the Florida Health Care Association, chairman of the board of the Tallahassee Urban League, superintendent of the Wakulla County Union Church Group, and serves on the advisory board for the Allied Health Department for Florida A&M University. In the past, he has served on the Board of Trustees of Tallahassee Community College. He was accepted as an expert in long-term care administration in this proceeding based in part on his service on the Governor's Long Term Care Commission. Miracle Hill has held a "Superior" licensure rating for the last ten consecutive years. It is the highest rating awarded by the AHCA licensure office and is intended to blazon the high quality of care provided by the facility. Although reported through Calhoun-Liberty, very few of D. Anthony's and Care First's past referrals have been generated through that affiliation. Rather, they have come through community contacts and getting the referrals from "talking with physicians," (Tr. 922), in Tallahassee and the surrounding areas, many of whom Mr. Franklin has gotten to know through his post as Administrator of Miracle Hill Nursing Home. By far, it is through physician referrals that Care First receives most of its patients. Care First's physician referral list includes 47 doctors who referred patients to D. G. Anthony since May, 1995. These doctors practice in urban areas and some have rural clinic offices which they staff on certain days of the week. Physicians are willing to refer patients to Care First because of the quality of care which has been provided by Care First, as well as the reputation of its owners. The Care First application included letters of support from eight physicians who have referred patients to Care First in the past and state that they will continue to support Care First with referrals in the future. Among the letters included are those from Dr. Earl Britt, a practitioner of internal medicine and cardiology in Tallahassee, and Dr. Joseph Webster, who practices internal medicine and gastroenterolgy in Tallahassee. Many of the patients of these two physicians are elderly. Dr. Britt's patients often have chronic hypertension or heart disease, are diabetic or suffer strokes. These two physicians provided over half the total number of patient referrals to D.B. Anthony and Care First. Dr. Britt and Dr. Webster established through testimony that Freddie Franklin and Care First have an excellent reputation for provision of quality of care and enjoy significant support among physicians within the service area. Moreover, Dr. Britt, although based in Tallahassee, stressed the importance of Care First's proven ability to provide home health services in the rural setting both from the standpoint of understanding the needs of the rural patient and from being able to travel over rural terrain in order to deliver services. (Tr. 1151, 1152, 1154). Approximately 11,500 visits were performed by D. G. Anthony staff from the period of May 1995, through April 1996, before they became the staff of Care First. Since the agency has established a presence in the district and has physician and other referral mechanisms in place, it is reasonable to project that Care First will continue to grow and will experience between 18,000 and 20,000 visits in its first year and 28,000 to 31,000 visits in year two as a Medicare-certified home health agency. These projections stem from the historical and very recent monthly growth of D. G. Anthony, as well as demand it is experiencing from Franklin and Jefferson Counties, two counties it does not serve regularly at present but plans to serve regularly in the future. The reasonableness of Care First's projections is bolstered by the conservative number of visits per patient the projections assume, 35, when typically Medicare-certified agencies average at least 35 visits and as many as 60 visits per patient. Care First's utilization projections are reasonable. It enjoys an excellent reputation for quality of care and ability to deliver services. Together with its predecessor, D. G. Anthony, it has a proven track record and has benefited from a referral network that remains in place. These factors, together with the conservative assumptions upon which its projected utilization is based demonstrate that its projected utilization is reasonable. Financial Feasibility of Care First The total project cost for the Care First agency is projected to be $25,808. The majority of the costs are reasonable for this type of health care project. The majority of the project development costs, the application fee and much of the cost of the consultant and legal fees, have already been paid by Care First. Care First's Schedule 2 was prepared in conformance with the requirements of the agency and accurately lists all anticipated capital projects of Care First. The necessary funding for the Care First project will come from Care First's existing $60,000 line of credit with Premier Bank, in Tallahassee. This method of funding the project is reasonable, appropriate, and adequate. Care First has demonstrated the short term financial feasibility of its project. Care First's schedule 6 presents the anticipated staffing requirements for its home health agency. The staffing projections are based upon the historical experience of D. G. Anthony and Care First, taking into consideration the projected start-up and utilization of the agency. The projected salaries are based upon current wages being paid to Care First employees, adjusted for future inflation. Care First's schedule 6 assumptions and projections are reasonable, and adequate for the provision of high quality care. The staffing proposed by Care First is sufficient to provide an RN or an LPN and an aide in each of the eight counties Care First proposes to serve in District 2. Care First's schedule 7 includes the payor mix assumptions and projected revenue for the first two years of operation. Medicare reimburses for home health agency services based upon the allowable cost for providing services, with certain caps. The Care First revenues by payor type were based upon the historical experience of D. G. Anthony and Care First, as well as the preparation of an actual Medicare cost report. The Care First payor mix assumptions and revenue assumptions are reasonable. Care First's projection of operating expenses in Schedule 8A is also based on the historical experience of D. G. Anthony and Care First, as modified for the mix of services to be offered and the projected staffing requirements. The use of historical data to project future expenses adds credibility to the projections. Care First's projected expenses for the project are reasonable. The Care First application presents a reasonable projection of the revenues and expenses likely to be experienced by the project. Care First has reasonably projected a profit of $8,315 for the first two year of operation. Care First's proposal is financially feasible in the long term. As the result of its community contacts, Care First has been offered the use of donated office space in Franklin, Jefferson, Wakulla, and Gadsden counties. The use of donated office space will decrease the cost of establishing a physical presence and providing services in those counties since Care First will not have a lease cost for a business office and a place to keep supplies. Quality of Care Through the experience of D. G. Anthony, Care First has identified the particular needs of the community it served. This experience has been carried over into Care First's provision of services. In the 9 months of Care First's existence at the time of hearing, it provided quality of care. Its predecessor, D. G. Anthony, also provided quality of care. While Care First's experience is relatively limited, there is no reason to expect, based on the experience of both Care First and its predecessor D. G. Anthony, that quality of care will not continue should its application be granted. IHS of Florida The Application IHS of Florida is a wholly-owned subsidiary of Integrated Health Services, Inc. ("IHS") formed for the specific purpose of filing CON applications. IHS operates other home health agencies under other subsidiary names. Pernille Ostberg is a senior vice president of the Eastern Home Care Division of Symphony Home Care Services, Integrated Health Services. In that capacity she oversees nearly 195 operations in six states, including Florida. Her operations include home health agencies, durable and medical equipment distributions, and infusion therapy offered by pharmacists. Under Ms. Ostberg's guidance, IHS has grown to its current roster of 195 agencies in only three years, from a beginning of only five agencies. IHS first acquired Central Park Lodges, primarily a nursing home company which also owned five home health agencies. Once these agencies became Medicare certified, IHS made a corporate decision to acquire additional Medicare certified home health agencies. Beginning approximately three years ago, IHS undertook a series of acquisitions which included Central Health Services, Care Team, ProCare/ProMed, and Partners Home Health. More recently, IHS has acquired the Signature Home Health and Century Home Health Companies. And, immediately prior to the final hearing in this matter, IHS acquired First American Home Health Care, making IHS the fourth largest provider of home health services in America. Of all the home health agencies overseen by IHS, 95% are Medicare certified, and 62-63 are located in Florida. IHS now has a presence in all districts except District 1 and 2. IHS personnel also have extensive experience in starting up new home health agencies. IHS personnel have opened over 40 locations across the United States. IHS employees have extensive experience bringing new home health agencies through successful surveys by the Joint Commission on the Accreditation of Hospital Organizations ("JCAHO") recommendations. Of 18 branches personally taken through initial survey by IHS's Pernille Ostberg, none were recommended to change their operations and none were cited for a deficiency. IHS has recently opened, licensed, and certified new home health agencies in AHCA Service District 5, 6, and 10. They have also received licensure in District 7, 8, and 11. Based on the extensive expensive of IHS personnel, a start up home health agency typically experiences 8,000 - 15,000 visits per first year. Opening a new program requires two months for licensure. It will require a registered nurse for three months to make certain all manuals are in place and that quality personnel are recruited. After achieving licensure, one must wait for a certification survey, which may take as long as six months. The three IHS home health agencies that became certified recently have experienced 200 visits in the first month, a good sign of growth. IHS' umbrella organization for home health organizations is Symphony. Most of their home health companies retained their original names. Other IHS home health companies include ProCare, Central Health Services, Partners Home Health, Nurse Registry, and First American. IHS of Florida has applied for applications in other districts. This applicant filed applications in District 7, 8 and 10 and each were approved. IHS of Florida's CON application number 8382 was prepared by Patti Greenberg with the significant input of IHS and IHS of Florida's operational experts. Ms. Greenberg has prepared 75-100 CON applications, 20-25 of which sought approval for Medicare Certified Home Health Agencies. Each of these prior applications had been approved or otherwise reached settlement before litigation. The Proposed Project Once the needs analysis was complete, IHS examined geographic issues within the 14 county district. IHS examined where the populations required home health agencies and what niche of the market IHS could expect to achieve. Projected visits were determined by examining month by month, how this agency would grow. This projected utilization was subdivided among sub-visit types. Existing IHS home health agencies visit mix (skilled nursing as opposed to home health aide or therapy visits) was used to estimate skill type of the projected total volume. The projected utilization was also subdivided by payor class. This payor class projection was derived specifically for District 2, its poverty levels and its managed care penetration. In the aggregate, IHS projects 7,650 visits in year one and 17,100 visits in year two. This projection is reasonable and achievable. Witnesses for the Agency agreed that IHS of Florida's projected number of visits was "definitely attainable". Past and Proposed Service to Medicaid Patients and for Medically Indigent The payor class analysis allowed IHS to conclude it should condition its approval of its application under the performance of 5% Medicaid and 1% charity care. The balance of the population served by an IHS Medicare Certified Home Health agency would be covered by Medicare. The condition is important as it is a requirement which, if not achieved, will subject IHS of Florida to fines and penalties by the agency. Improved Accessibility The applicant will improve the efficacy, appropriateness, accessibility, effectiveness and efficiency of home health services in District 2 if approved. IHS of Florida will provide good quality of care, should its application be granted. Quality of Care Through competitive forces, the applicant's approval will also improve the quality of care offered by home health agencies in District 2. The approval of IHS of Florida's application will also comply with the need evidenced by the extent of utilization of like and existing services in District 2. Economies from Joint Operations Certain economies derived from the operation of joint projects are achieved by IHS of Florida's proposal. IHS has a home office and corporate umbrella which oversees all of its operations for home health services. This master office offers economies of sale by sharing resources across a wide array of home health agencies in Florida and other states. Thus, the incremental expense for corporate overhead is reduced as compared to a free-standing home health agency. Additionally, this national oversight provides better economies to provide the most recent policies and procedures, billing systems, and other systems of business operation. Financial Feasibility IHS of Florida has the resources to accomplish the proposed project. As demonstrated on schedule 1, and schedule 3 of IHS exhibit 1, the budget for the project is only $144,000. This budget includes all appropriate equipment for both the initial and satellite offices. Budgeted amounts include all required lease expenses, equipment costs and even start-up costs such as salaries for the recruitment of training and staff prior to opening. In total, $52,000 of pre-opening expenses are projected, which is reasonable. IHS of Florida filed applications for other home health agency start-ups in three different districts. The applicant had more than $180,000 in cash on hand and an additional $226,000 assured from a commitment letter from IHS which was also contained in the application. A letter of commitment from Mark Levine, a director and executive vice president of IHS, indicated IHS will provide $250,000 in capital for this specific project. Additionally, IHS will provide up to $1 million in working capital loan to assure no cash flow problems ever arise. A similar letter of commitment appears in each of the CON applications which IHS of Florida has filed. IHS has committed to fund each of the CON applications applied for by IHS of Florida. Each of these letters of commitment for the various CON applications sought by this applicant are on file with the AHCA. In total, the applicant projects $600,000 in capital commitments assured. IHS' balance sheet, reveals access to $60 million in cash and cash equivalent. The record clearly demonstrates an ability of IHS to fund all capital contributions required by the applicant. The current assets of IHS approximate $240 million. In addition to having cash in the bank, IHS is a growing concern and is, in fact, a Fortune 500 company that is publicly traded on the New York Stock Exchange. IHS generates revenues which exceed its annual expenses. In the last year, IHS derived $30 million more than it experienced in expenses. The application is financially feasible in the short- term. IHS' application is also feasible in the long-term. IHS of Florida's utilization projections are reasonable. Budgeted staffing and salaries are reasonable. The cost limit calculation and reimbursement calculation by payor source, which is provided in great detail in Schedule 5 of IHS of Florida's application, is reasonable. Projected expenses associated with this project were reasonably calculated based on the actual experience of other IHS Home Health operations. The reasonableness of these costs are also demonstrated when compared with the cost per visit by existing agencies in District 2. In fact, IHS of Florida predicted it would be a lower cost provider than the expected cost of existing agencies at the time IHS of Florida's operations would begin. IHS of Florida's proposal will have a healthy, competitive effect on the cost of providing services by other providers. Putnam The Proposal Putnam proposes to establish a Medicare-certified home health agency with its primary office located in Bay County. Bay County was selected as the primary office based upon the locations of existing and approved agencies in District 2, the aggregate utilization of each, and the number of individuals aged 65 and over distributed among the existing District 2 counties and agencies. Mr. Alan Anderson is Putnam's sole stockholder, Director, and President. Under the ownership and administration of Alan Anderson, Putnam has provided Medicare-certified home health services in AHCA District 3 continuously since 1986. Mr. Anderson is also the sole owner, director, and president of Anderson Home Health, Inc., a Medicare-certified home health agency serving AHCA District 4 since 1992. Anderson Home Health's CON was obtained by Putnam through the same process undertaken by the prospective applicants in this proceeding. Putnam's District 3 agency has successfully served District 3 residents since 1986 at first through its Palatka office, then growing to its current size of four offices. In District 4, Anderson Home Health, Inc. has also experienced successful operations having grown from its principal office in Duval County to a total of four offices. Putnam's District 3 home health agency began with the original office located in Palatka, followed by offices opened in Gainesville, Ocala and Crystal River. Anderson Home Health, Inc.'s District 4 operation began with the original office located in Jacksonville; the second office was opened in Daytona Beach, followed by the opening of the third office in Orange Park; and the fourth office was opened in Macclenny. Putnam's District 3 agency is JCAHO accredited "with commendation." As part of CON application No. 8383, Putnam has agreed to certain conditions upon award. First, the proposed project will locate its primary office in Bay County. Putnam also conditions its approval with the provision that 0.25% of its admissions will be persons infected with the HIV virus. Four percent of its patients will be Medicaid or indigent patients. Finally, Putnam has conditioned its approval upon the provision of various special programs such as high tech home health services, a volunteer program, and the establishment of a rural health care clinic. History or Commitment to Provide Services to Medicaid and Indigent Patients For Medicare reimbursement purposes, Putnam proposes to maintain a Medicare-only agency and private sister agency which provides services to non-Medicare patients. The private sister agency will provide service to the Medicaid and indigent patients. The costs of providing services to these non-paying or partial paying patients will be absorbed by the agency as a contribution to the community. The establishment of a private sister agency to handle the non-Medicare patients is common in the home health industry. As a condition in the application, Putnam will accept up to 3.0% Medicaid patients. Although it stated in its application that it would accept between .5%-1.0% indigent patients, its conditioning of the application on 4.0% Medicaid and indigent patients would necessitate that it accept at least 1.0% indigent (if not more, should the Medicaid patients fall below 3%) in order to meet the 4.0% Medicaid and indigent care condition. The percentages proposed by Putnam are consistent with the statewide average (approximately 95% Medicare) and the District average (approximately 92.1% Medicare). Bay County's average of Medicare patients is approximately 96.4% Medicare. To meet the 4.0% Medicaid and indigent condition, Putnam's average of Medicare patients might have to be less than the Bay County average but not by much. Certainly, meeting the condition is achievable. The agency's position is that Putnam's Medicaid/indigent commitment is not a ground for denial of the application. Quality of Care Putnam has continuously owned and operated a licensed Medicare-certified home health agency in District 3 since 1986 and has been JCAHO accredited with commendation status since 1994. In an effort to continuously provide quality care, Putnam has developed a comprehensive set of policies and procedures to guide its staff, its physicians, volunteers, patients, as well as patients families. No evidence was presented to suggest that Putnam does not have a history or ability to provide quality care. Availability of Resources, Including Health Manpower, Management Personnel and Funds for Capital and Operating Expenditures Putnam has provided Medicare-certified home health service to the residents of District 3 for ten years. Putnam will be able to share its existing personnel and operations expertise with the proposed District 2 agency. Administrative, Managerial, and Operational Personnel Putnam intends to utilize existing administrative personnel in the start up and overall operation of the proposed agency. These management personnel include the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Data Processing Director, Director of Volunteers, Personnel Director. These experienced personnel will be available to provide valuable management support to the proposed agency. The proposed agency will be operated by an administrator who will report directly to Putnam's CEO, Alan Anderson. The agency's administrator will be actively involved in budget preparation, physician relations, community education, and preparation for regulatory agency surveys. The proposed agency will rely upon the demonstrated experience of key personnel in its initiation. Ms. Nora Rowsey, experienced in the start-up phases of home health agencies, will personally supervise and implement the start up phase of the proposed District 2 agency. Putnam intends to hire individuals to work within the proposed agency who already have experience in the provision of the necessary services. Current employees of Putnam's as well as contract personnel of the District 3 agency have indicated a willingness to provide services in Bay County once the application is approve. Funding and Capital Resources Putnam projects the total costs of initiating the proposed agency to be approximately $70,000. Putnam has simultaneously applied for two other Medicare-certified home health agencies, in Districts 6 and 7. Each of these projects area also projected to cost approximately $70,000. Putnam, therefore, has projected costs associated with all three projects of approximately $210,000. Additionally, there is a $10,000 contingency cost related to the District 3 offices bringing the total expenditure for all capital projects of $220,000. Putnam's application includes two letters from First Union National Bank of Florida which substantiate that there are funds on hand to finance all of Putnam's capital expenditures, including the District 2 proposed agency. As of April 18, 1996, Putnam's bank account had a twelve month average balance of $245,949.02. As of April 18, 1996 the accounts of both Putnam and Anderson Home Care Inc., had a combined twelve month average balance of $676,656.93. The evidence established that these funds exist and are available for all proposed capital projects. In the two years prior to hearing, Putnam showed sound management, significant growth, and a strong financial position. It continues to do so. In an interoffice memorandum dated May 28, 1996, from Roger L. Bell to Richard Kelly, Health Services and Facilities Consultant, Putnams' financial position was described as follows: The current ratio of .62 indicates the current assets are not adequate to cover short term liabilities. The long term debt to equity and equity to assets ratios are very weak. This, along with the negative equity make a weak financial position. The profit margin at .1% is also very weak, and raises some concern with the applicant's ability to cover operating expenses . Putnam Ex. No. 4. This criticism was answered by Putnam. The agency may not have considered certain factors applicable to a predominantly Medicare-reimbursed home health agency. Putnam's current liabilities are payable in a longer term than the receivables are collectible. Furthermore, with provision of 98% Medicare services, which is solely cost reimbursed, there remains only two percent of the operation left to make a profit. A .1% profit from the small amount of insurance and private pay patients indicated financial health. Putnam, moreover, is a viable operation because of its historical success, its knowledge of the industry, its expansion to six locations, its growth in staff, and its growth in patient visits. Putnam has the resources available to provide the necessary administrative, managerial, and operational manpower needed by the proposed home health agency. AHCA's financial criticisms are unfounded; Putnam has on hand the capital necessary for the accomplishment of the proposed project. Putnam has the experience and know-how to make the proposed project work in District 2's rural areas. Financial Feasibility Putnam has the resources to implement this project if approved. Putnam has the same capability that existed when three offices were opened during the period from April 1992 through February 1993, and the same resources when four offices were opened in 1995. In every instance, the new offices were started up with cash on hand from operation. Mr. Anderson, Putnam's President and sole shareholder and director, testified that he spends much time in the financial area of the operations. As of November 29, 1996, after deducting all accounts payable, Putnam has a cash balance of approximately $390,000. Anderson Home Health, Inc. had a balance of approximately $425,000. Mr. Anderson testified that the First Union letters in the application at pages 231 and 232 were correct and that Putnam is in even better shape now than when the letters were written. Putnam is financially feasible in the short term. AHCA contends Putnam's project is not financially feasible in the long term because the projected visits stay the same in the second year and because it does not project a profit in year two of operation. This fails to take into account Putnam's performance over the past ten years which, as the agency conceded at hearing, is an important consideration . Mr. Anderson purchased Putnam in 1986. At that time the agency had a single office in Palatka doing 4,000 visits. Following Mr. Anderson's purchase of the agency it had grown to over 55,000 visits and close to a hundred employees. After the success experienced by Mr. Anderson in Palatka, Putnam filed a CON application for District 4, with a proposed principle site in Jacksonville. The District 4 CON was approved by the agency--without any concerns for financial feasibility nor with any concerns for Putnam's cash flows. Without having any experience or referral sources in Jacksonville, Putnam began doing approximately 7,000 visits. The number of visits jumped to 45,000 in the second fiscal year, 123,000 in the third fiscal year, and as of September 30, 1996 the Jacksonville office performed 158,000 visits. Aside from the extraordinary growth experienced in the Palatka and Jacksonville offices, already discussed, Putnam has opened rural offices also doing very well. The Macclenny office in rural Baker County had over 15,000 visits in the first twelve months and is currently averaging over 1800 visits. The Crystal River office in rural Citrus County made over 12,000 visits in its first year and is currently doing approximately 1400 visits a month. Every new office opened by Putnam or Anderson Home Health since 1991 has been break even or better. Putnam has a proven track record for the successful and profitable operation of new Medicare-certified home health agencies. Putnam's project is financially feasible in the long term. Utilization Projections The application sets forth reasonable utilization projections. Based on Putnam's utilization in the past, there is no reason to believe the projections set forth in the application are or unreasonable or will not be achieved. Impact on Costs Putnam is a high tech provider of home health services and will provide some services not currently available or available only in a limited number of agencies. The impact of approval of Putnam's application on costs in the District will be minimal due to the reimbursement issues associated with Medicare which is cost based. RHA A Not-for-Profit Corporation in District II RHA is not-for-profit corporation whose purpose is to provide a continuum of care to the community. All profits are returned to its nursing homes or agencies as a way of continuing to build the programs. RHA owns two nursing homes in AHCA District II; Riverchase Care Center in Gadsden County and Brynwood Center in Jefferson County. If approved, RHA is proposing to locate its Medicare certified home health agency in existing space within the Riverchase and Brynwood nursing facilities. Both of these facilities are managed and operated by HealthPrime, Inc., a company which operates approximately 40 facilities in 13 states. While RHA is technically the owner and therefore applicant for this CON, HealthPrime would operate the proposed Medicare certified home health agency within the nursing homes. RHA's home health agency would have two offices. The office located in the Riverchase facility would serve Gadsden, Liberty, Franklin, Gulf, Wakulla, Jackson, Calhoun, Washington, Holmes and Bay Counties. The office located in the Brynwood facility would serve Leon, Jefferson, Madison and Taylor Counties. Financial Feasibility The only questions raised by AHCA concerning RHA's financial feasibility went to the ability of RHA to fund this project in conjunction with other CON projects listed on Schedule 2 of its CON application. The largest project on Schedule 2 of RHA's application was a CON application for a 20 bed addition to Riverchase Care Center. At hearing it was determined that since the filing of the instant home health CON application, the 20 bed application had been withdrawn, was no longer viable, and was not being pursued by RHA. Once AHCA's financial expert learned that the 20 bed addition to the Riverchase Care Center had been administratively withdrawn and that its costs should therefore no longer appear on Schedule 2, questions about the financial feasibility of the project were resolved. RHA's project was shown to be financially feasible in the short term based upon the financing commitment of HealthPrime. RHA proved that its assumptions and projections made in its financial analysis are reasonable. These assumptions were based on actual experience in the operation of similar skilled nursing facility based home health agencies, as well as prior experience of other home health agencies in their first two years of operation. RHA's proposed project shows a net income in years one and two and is financially feasible in both the short and long term. Availability and Access of Services To the extent that the number of people needing home health care will increase in the future, there is need for new providers of home health services to provide such availability and access. RHA's willingness to condition its application on service to AIDS, indigent and Medicaid patients can only improve the availability and access to services in the district. In addition, RHA's approval to provide nursing home based home health services is unique to the provision of home health services in District II. Efficiency RHA's proposal, which would place its home health agency within its nursing homes, is unique among the applicants in this proceeding. Such an arrangement provides not only an efficient continuum of care to the patients, it also provides efficiencies and cost savings in the sharing of resources. RHA's proposed project is cost effective because it utilizes existing space and equipment in its nursing homes. Skilled nursing home based Medicare certified home health agencies are specifically recognized by the Federal Medicare program in their cost reports. Home health reports are filed as a part of the nursing home cost report and there is an allocation of the nursing home's cost to the home health agency. This benefits both the provider and the Medicare program through cost savings. RHA's cost per visit to the Medicare program of $48 will be substantially less than the District II average of $66 per visit projected for the time RHA will be operational under the applied- for CON. RHA's proposed project will have no impact on its costs of providing other health care services. Appropriateness and Adequacy RHA proposes to provide the entire range of home health services throughout the district. Given the project need in the planning horizon, RHA's proposal is more than adequate to meet the demand for such services. Quality of Care An applicant's ability to provide quality care is another important factor in statutory and rule criteria. RHA and HealthPrime have shown, through operation of their nursing homes in Florida, all of which have superior ratings, that they have the ability to provide quality health care. In addition, HealthPrime, which will actually operate the home health agency, has experience operating four other nursing home based home health agencies. HealthPrime will utilize its quality assurance programs already in place in its other home health agencies and will seek JCAHO accreditation of this proposed agency. By combining a home health agency with its existing nursing homes, RHA will improve the case management of its patients by providing vertical integration of its services in a continuum of care. Such continuum of care provides a stability in personnel and providers that are working with the patient. Economies and Improvements from Joint or Shared Services As previously discussed, RHA's unique proposal to operate a nursing home based home health agency not only offers a continuum of care for the patient, it also provides fiscal economies to the agency as well as the Medicare program. Resource Availability Based on RHA's experience of hiring personnel for its existing nursing homes in the district, there will be no problem in hiring sufficient personnel for RHA's agency. Fostering Competition The addition of other Medicare certified home health agencies in a district consisting of 10 counties and only 23 providers will promote increased competition and more options for patients. Findings Applicable to All Four Applicants No Fixed Need Pool The agency has no rule methodology to determine the need for Medicare-certified home health agencies. The agency's most recent home health need methodology was invalidated in Principal Nursing vs. Agency for Health Care Administration, DOAH Case No. 93-5711RX, reversed in part, 650 So.2d 1113 (Fla. 1st DCA 1995). There is, therefore, no numeric need determination, or "fixed need pool", established by the agency applicable in this proceeding. District 2 AHCA District 2 is composed of 14 counties. The applicants propose to concentrate their service in various, different parts of the district. Local and State Health Plan Preferences District 2 Health Plan Services to Medicaid and Medically Indigent The first preference under the District 2 Health Plan provides a preference to applicants with a history of providing services to Medicaid or medically indigent patients or commitment to provide such services in the future. Mr. Franklin of Care First has such a history. He is an owner of Wakulla Manor, which had a Medicaid occupancy rate of 88.09% for the period of July-December, and the administrator of Miracle Hill Nursing Home which had a Medicaid occupancy rate of 95.74% for the same period. In the face of such a record, Care First’s commitment of 7% Medicaid and 1% uncompensated/charity patients might seem to pale. But it is a significant commitment, given the nature of the home health agency business, and one upon which Care First agrees its application should be conditioned. IHS conditioned its application on 5% Medicaid and 1% charity care. Putnam conditioned its application on an “Indigent and Medicaid participation equal[ling] 4.0%.” Putnam Ex. No. 1, pg. 51. Putnam, moreover, proposes a Medicare-only agency. Establishment of a private sister agency, a practice common in the home health care industry, will allow Putnam to provide service to the Medicaid and indigent patients separate from its Medicare-only agency. RHA has provided a high percentage of Medicaid/charity days at its Riverchase facility (92.10%) and at its Brynwood facility (90.24%). In addition, RHA is willing to condition its CON on the provision of a minimum of 1% of annual visits to indigent care and 5% to Medicaid. Service to Unserved Counties. Preference 2 states that “[p]reference should be given to any home health services CON applicant seeking to provide home health care services in any county within the District which is not presently served by a home health agency.” There are no counties within District 2 that are not presently served by a home health agency. Service Through a County Public Health Unit Preference 3 states that “[p]reference should be given to a home health services CON applicant seeking to develop home health care services to be provided through a county public health unit in the district in order to more adequately serve the elderly and medically indigent patients who are isolated or unable to travel to permanent health care sites." Of the four applicants, only IHS of Florida’s application is conditioned on working with public health units. IHS has experience working with public health units, working with them currently in Martin County, Manatee County and Broward County. Nonetheless, IHS of Florida will not be providing its services “through” a public health unit. Public Marketing Program Preference 4 states, “[p]reference should be given to a home health services applicant who has a history of providing, or will commit to provide, a public marketing program for services which included pamphlets, public service announcements, and various other community awareness activities. These commitments should be included on the granted CON as a condition of that CON.” Care First currently markets its services to the community and commits to a public marketing program in the future as a condition of its CON. IHS of Florida committed to performing at least one community awareness activity per calendar quarter as a condition of its application. It also indicated, moreover, that it would work to develop public service announcements and marketing programs with the help of public health units or any other appropriate vehicle. The latter indication, however, was not made a condition of the application. Putnam provides educational services to the community, its employees, patients and patients’ families, including the provision of pamphlets, and presenting audio and video tapes as appropriate to the patient and their families. Putnam, however, did not condition its application on a commitment to a public marketing program or commit to such a program in any other way in its application. RHA stated it would accept a condition on its CON to provide a public marketing program for services, including pamphlets, public service announcements and other community awareness activities. It did not reflect such a condition on the “Conditions” page of the application, but, given its statement that it would accept such a condition, there is nothing to prevent the agency from imposing such a condition should it grant RHA’s application. Access Requirements Preference 5 is, “[p]reference should be given to a home health services CON applicant who agrees, as a condition of the CON, to meet the following access requirements for each county in which services are provided: 1) 24 hour local telephone call (or toll-free) contact. 2) 24 hour call/response capability. 3) Maximum on one (1) hour response time following call. Care First currently meets the requirements of Preference 5 in the counties in which it now provides services, and has committed to continue to meet these requirements as a Medicare certified home health agency in all counties in which it will provide services. Care First has made as conditions of its CON, provision for 24-hour accessibility by answering service and installation of a toll-free access line and maintenance of a log of calls during the hours the agency is closed, including documenting of response time to each call. IHS of Florida conditioned grant of its CON on a 30 minute response time, and 24-hour phone availability on a toll-free hot line. Putnam presently provides the services in this preference in its District 3 Medicare certified home health agency and agrees to meet this preference within 90 days of initiating services. It did not, however, make a commitment to meet this preference on the “conditions,” page of its application. There is nothing to prevent the agency from making Putnam’s CON, if granted, conditional upon compliance with this preference. RHA has agreed to have its CON conditioned to meet the access requirements of Preference 5. 2. State Health Plan Service to Patients with AIDS The first preference under the State Health Plan is that “[p]reference shall be given to an applicant proposing to serve AIDS patients.” All four applicants are committed to serving AIDS patients. Full Range of Services. Preference 2 of the State Health Plan is “[p]reference shall be given to an applicant proposing to provide a full range of services, including high technology services, unless these services are sufficiently available and accessible in the same service area." There are currently 11 hospital-based Medicare certified home health agencies in District 2. Several of them provide the high tech services which are sometimes needed by discharged hospital patients. Very few referrals for high tech care have been received by D. G. Anthony or Care First since May, 1995, and there is no indication such services are not available in District 2. Care First has identified, however, an unmet need for the pediatric and pre-hospice home health agency services and has conditioned its application on the provision of those services to the community. IHS of Florida proposes, among other high tech services, infusion therapies, pain management therapies and chemotherapy. There is no evidence, however, that these therapies are not available in District 2. The same is true of Putnam as to the high tech therapies it proposes to provide. There is no evidence that they are not available in District 2. Although RHA indicated in its application that it intended to provide the entire range of services that a home health agency can provide, again, there is not evidence that they are not available in District 2. Disproportionate Share Provider History Preference 3 is “[p]reference shall be given to an applicant with a history of serving a disproportionate share of Medicaid and indigent patients in comparison with other providers within the same AHCA service district and proposing to serve such patients within its market area." Care First, having been formed in March, 1996, did not have a history of providing Medicaid and indigent patients. Care First has committed to 7% of its visits to Medicaid patients, well above the average of existing District 2 agencies of 2-3% Medicaid. Care First has committed to 1% of its visits to charity/uncompensated care. IHS of Florida has committed to 5% Medicaid and 1% charity care. Like Care First, IHS of Florida, as a newly formed corporation, does not have a history of serving a disproportionate share of Medicaid/indigent care patients. Putnam’s commitment is 3% to Medicaid and 1% to charity care. This commitment will be met through its sister home health agency and not the Medicare-certified home health agency for which the CON is sought. RHA has committed to set aside 5% total annual visits to Medicaid patients and 1% of annual visits to indigent care. It has a history of providing a disproportionate share of services to Medicaid patients at its two skilled nursing facilities in District 2, Riverchase Care Center in Quincy and Brynwood Center in Monticello. Underserved Counties Preference 4 is [p]reference shall be given to an applicant proposing to serve counties which are underserved by existing home health agencies. The rural areas of District 2 are traditionally underserved. Putnam will serve Bay County, an underserved county; the three other applicants will serve rural areas of more than one county in District 2. Consumer Survey Data Preference 5 is "[p]reference shall be given to an applicant who makes a commitment to provide the department with consumer survey data measuring patient satisfaction." Care First has committed to providing such data to the agency. IHS of Florida will maintain a data base of results of patient satisfaction surveys and make them available to the agency, just as it already does. Putnam will make available to the agency the results of surveys similar to surveys measuring patient satisfaction Putnam has already developed. Putnam has conditioned its application on providing these surveys to the agencies as well as surveys measuring physician satisfaction. RHA has cited on its “Conditions” page, “. . . (it) will provide the Agency for Health Care Administration with consumer survey data.” Quality Assurance Program and Accreditation The State Health Plan’s Sixth Preference is “[p]reference shall be given to an applicant proposing a comprehensive quality-assurance program and proposing to be accredited by either the National League for Nursing or the Joint Commission on Accreditation of Healthcare Organizations." Care First included in its application a copy of its Quality Assurance Program which has been in use since May, 1995. The program meets the state and federal licensure and certification requirement and the stringent requirements of JCAHO. Moreover, Care First has conditioned its application upon JCAHO accreditation. IHS of Florida submitted documentation regarding its Quality Assurance Program through initiatives such as Total Quality Management and Continuous Quality Improvement. It will seek accreditation from JCAHO within one year of receiving its CON. Putnam, an existing home health agency in District 3 since 1986, has over the years developed and refined a comprehensive quality assurance program which is above the industry standard. The District 3 agency, using its quality assurance program, has attained its JCAHO accreditation “with commendation,” a distinction received by less than 4% of all applicants. Putnam will seek accreditation from JCAHO for its District 2 operation within one year of receiving its CON. RHA is willing to condition its CON on the provision of a comprehensive quality assurance program and accreditation by the JCAHO. Need 1. Numeric Need Since there is no published fixed need pool applicable to this proceeding, the parties, other than the agency, developed their own methodologies for determining numeric need. Each of the methodologies employed by the parties was reasonable. After taking note of the statistics for actual patient visit growth in District 2 from 1991 to 1994, Michael Schwartz began with a conservative number of 60,000 new patient visits per year, a number half of the growth for the lowest growth year of that time period. Multiplying that number times the three horizon years of 1994-97 equals 180,000 new patient visits from 1994 which yields a need for 5.2 agencies. The reasonableness of numeric need in excess of four is supported by other factors. After the filing of the four applications at issue in this proceeding, there are two fewer Medicare-certified home health agencies with certificates of need in District 2. At the same time, home health care visits have been on the increase not only in the district as discussed, above, but in the state as well. Statewide, home health care visits grew from 18 million to 22 million between 1991 and 1994. The utilization of home health care agencies is increasing because of population growth and an increase in the number of visits per patient. The amount of time spent by patients in the hospital is decreasing. The decrease translates into increased need by patients for visits from home health agencies. The need for home health is going to continue to increase because it is a cost-effective alternative to nursing home placement and hospital care. From 1991 to 1994, the number of home health visits more than doubled: from 369,396 to 869,893. This trend continued in 1995. The recent significant growth in the utilization of home health agencies in District 2 is expected to continue. The growth is attributable not only to a population increase in the district but to increase in the use rate for home health agency services as well. The growth in use rates can be explained, in part, by the increase in the senior population (65 and older) and the pressure exerted by managed care for earlier hospital discharges and home health agency services as a viable alternative in some cases to inpatient treatment. The senior population in District 2 is reasonably expected to grow approximately 8% in the five years after 1996, with 15% growth expected reasonably in the 75 to 84 year old population and even higher growth, 25%, in the population over 84 years old. 2. Other Indications of Need Local physicians have experienced difficulty arranging for the existing home health agencies to provide services to patients located in remote areas of District 2. Specialized groups, such as AIDS patients, would, in all likelihood, benefit from additional home health agencies in District 2. Furthermore, a study conducted by IHS of Florida showed that the district has an unusually high rate of diabetes and in four counties has a diabetes death rate 100% greater than the statewide average. Well Springs home health agency is one of the two Medicare-certified home health agencies to cease providing Medicare-certified home health services after the four applicants in this proceeding filed the applications at issue here. Well Springs was licensed in all 14 counties of District 2 and had physical locations in Franklin, Gadsden, Bay, Leon, Liberty, Taylor and Madison Counties. It had a significant share of the District 2 Medicare certified home health agency market with 13.1% of the 1994 visits, the second highest in the District. With Well Springs discontinuing Medicare-certified home health agency services, a void was left for such services in District 2, particularly in those counties in which Well Springs had a physical presence.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Agency for Health Care Administration enter its final order granting CON Nos. 8380, 8381, 8382 and 8384 to RHA/Florida Operations, Inc., Care First, Inc., Home Health Integrated Health Services of Florida, Inc., and Putnam Home Health Services, Inc., respectively. DONE AND ENTERED this 9th day of June, 1997, in Tallahassee, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 9th day of June, 1997. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Fort Knox Building III Tallahassee, Florida 32308-5408 Jerome W. Hoffman, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Fort Knox Building III Tallahassee, Florida 32308-5403 Richard Ellis, Esquire Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Fort Knox Building III Tallahassee, Florida 32308-5408 W. David Watkins, Esquire Watkins, Tomasello & Caleen, P.A. 1315 East Lafayette Street, Suite B Tallahassee, Florida 32301 Mark Emanuel, Esquire Panza, Maurer, Maynard & Neel NationsBank Building, Third Floor 3600 North Federal Highway Fort Lauderdale, Florida 33308 Paul Amundsen, Esquire Amundsen & Moore 502 East Park Avenue Tallahassee, Florida 32301 Theodore E. Mack, Esquire Cobb Cole & Bell 131 North Gadsden Street Tallahassee, Florida 32301
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: Gulf Coast Home Health Service of Florida, Inc. is an existing licensed provider of Medicare-certified home health services in Pinellas County. The parties have stipulated that Gulf Coast has standing to participate as a party in this proceeding. Metro Home Health Care, Inc. is a proprietary agency owned by Ann Durham, Robert Carver and John Timp, a Certified Public Accountant. Metro was incorporated in November of 1984 and has been operating as a home health agency since June of 1985. It currently provides facility staffing with nurses, nurses' aides and mental health workers, and also takes private duty calls from hospitals. Due to the fact that so many patients who are in need of home health care are elderly and eligible for Medicare, referring hospitals and physicians attempt to utilize those home health agencies which are Medicare-certified. Metro proposes to expand its services to provide treatment to Medicare patients, and thus filed an application for a Certificate of Need in December of 1985. A home health agency in Florida must obtain a Certificate of Need from HRS before it can be licensed and become eligible to receive Medicare reimbursement. As the agency is already operational, there is no cost associated with this project. Metro realizes that there is a lag time between the provision of services to Medicare patients and Medicare reimbursement for such services. In order to avoid interest costs, Metro proposes to utilize the profits from its current staffing services to support its home health care program, in lieu of using a commercial line-of credit. Metro believes, however, that lines of credit with banking institutions can be acquired if operational funds are needed in the future. Metro has encouraged and supported the training and continuous education of its staff by providing information and funds for courses offered in the community. It intends to continue this practice. Metro proposes to provide skilled nursing services, physical therapy services, occupational therapy services, speech therapy services, IV therapy, rehabilitative services, social services and home health aid services. Some of these services will be obtained on a contractual basis, as opposed to in-house staffing, depending upon the need for and utilization of such services. Metro proposes to provide two percent of its services to Medicaid patients and two percent of its services to indigent patients during the first year after obtaining a Certificate of Need. During its first year as a Medicare-certified provider, it is anticipated that Metro will provide approximately 75 percent of its services to Medicare patients, 10.5 percent to private pay patients, 10.5 percent to third-party payor patients and 4 percent to Medicaid and indigent patients. In its second year, Metro proposes an aggregate of five percent of its services to be offered to Medicaid and indigent patients. By the end of its first decade, the intent is to have incrementally increased the level of service to indigent and Medicaid patients to ten percent. Metro's current charges for skilled nursing care are in the median range of charges by other home health agencies in the area. Charges for this service range between $40.00 and $60.00, and Metro charges $47.00 per visit. While Metro's Director, a registered nurse, did not have intimate knowledge of the bookkeeping, interim payment reports, cost reports, record keeping or computerization required by Medicare, one of the owners of Metro is a Certified Public Accountant. Since the filing of the Certificate of Need application, the owners of Metro have met with an assigned intermediary for the Medicare program, and they have discussed the completion of forms, patient claims and annual reports, as well as the Medicare reimbursement system. The Medicare program reimburses providers at a rate which represents the lowest of either costs, charges or the Medicare cap for the service provided. Thus, there is little or no profit element in the provision of Medicare services. However, Metro will realize a positive net income through the provision of services to Medicare, private, third party payor, Medicaid and indigent mix of patients proposed for the first year of operation. This is true even with a tripling of the amount of calculated contractual allowances set forth in Metro's application. The figures and projections contained in the pro forma statement of revenues and expenses included in Metro's Certificate of Need application are outdated and some of the utilization estimates may be exaggerated. However, Metro is of the opinion that its existing profits which have greatly increased since the date of its application, will enable it to operate in a financially feasible manner on both an immediate and long-term basis. Metro desires to offer Medicare services so that it will be competitive with other agencies which do so and can receive a fair share of referrals. Hopefully, more referrals will include more private pay and insurance covered patients, which will produce greater profits. The reimbursement rate for services to Medicaid patients is even lower than for Medicare patients, though it has recently been raised. The per visit reimbursement rate for Medicare purposes can be negatively affected by increasing the number of Medicaid and indigent patients served. It would not be financially feasible for a home health agency which served only Medicare patients to provide Medicaid and indigent services. When HRS initially reviewed Metro's application, it utilized an invalid methodology to determine the need for additional home health services in Pinellas County. HRS no longer utilizes this methodology and did not attempt to do so during the final administrative hearing. HRS does not presently have any methodology pursuant to rule or policy for projecting numeric need for new home health agencies. Instead, it looks at the general statutory criteria applicable to Certificate of Need review for all health care services. There were no numeric need methodologies for home health care services offered at the final hearing. While neither the State Health Plan nor the local District Health Plan specifically address or identify the need for home health agencies, both plans emphasize the improvement of access to the medically underserved. There are approximately 29 licensed and approved Medicare-certifed home health agencies in District 5, which includes Pinellas County.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED THAT Metro Home Health Care, Inc. be GRANTED a Certificate of Need to operate a home health agency in Pinellas County, with the condition that a minimum of two percent of total visits be provided to Medicaid patients and two percent of total visits be provided to indigent patients. Respectfully submitted and entered this 5th day of November, 1987, in Tallahassee, Florida. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of November, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-3556 The proposed findings of fact submitted by the parties have been accepted and/or incorporated in this Recommended Order, except as noted below: Petitioner Gulf Coast: 9. Rejected as contrary to the evidence. 10, 11. Rejected as irrelevant and immaterial. 13-15. Rejected as irrelevant and immaterial. 17. Rejected as irrelevant and immaterial. 22. Rejected as hearsay. 23-27. Rejected as irrelevant and immaterial. 29-30. Rejected as irrelevant and immaterial. 31. Partially rejected. It must be assumed that goals in the State and District Plans reflect need. 36. Rejected as contrary to the evidence. Last sentence accepted. 38. Rejected as contrary to the evidence. 39 & 41. Rejected as too broad a conclusion to be drawn from the evidence. 45. Second sentence rejected as hearsay. 50, 51, & 53. Rejected, not supported by sufficient evidence. Last sentence accepted only if private pay or insurance-covered patients are not considered. Last sentence accepted only if private pay or insurance-covered patients are not considered. 60. Accepted only-if it is assumed that the percentage of care rendered to private pay or insurance-covered patients decreases. 62 & 63. These factual findings are accepted, but are incomplete in that they fail to recognize the importance of becoming a Medicare-certified provider in order to also obtain referrals of non-Medicare patients. 64-73. These "findings of fact" are addressed in the Conclusions of Law. Respondent HRS: p. 3, last full sentence Accepted only if it is assumed the agency serves only Medicare patients. p. 4, last sentence of first full paragraph Rejected as not supported by competent evidence. Respondent Metro: The "proposed recommended order" submitted on Metro's behalf does not contain proposed findings of fact, and is more in the nature of closing argument. Consequently, it is not possible to render specific rulings upon Metro's proposed findings of fact. COPIES FURNISHED: Leonard A. Carson, Esquire Carson & Linn, P.A. 1711-D Mahan Drive Tallahassee, Florida 32308 John Rodriguez, Esquire Assistant General Counsel 1323 Winewood Boulevard Building One, Suite 407 Tallahassee, Florida 32399-0700 Ann Durham, Director Metro Home Health Care, Inc. 10707 66th Street North Pinellas Park, Florida 33565 R. S. Powers, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
