The Issue Whether the State of Florida Employees Group Health Self Insurance Plan is responsible for paying medical expenses incurred by Petitioner's newborn child where Petitioner had only individual coverage in effect at the time of the child's birth.
Findings Of Fact The State of Florida makes available to its employees several group insurance programs. In the area of health insurance, employees may choose to participate in the State of Florida Employees Group Health Self Insurance Plan (State Group Plan), or they may enroll in other plans, such as HMOs. The State Group Plan is a plan of self insurance established by the State and administered by Blue Cross/Blue Shield. This plan is described in general terms by a Plan Brochure and is described in more detail by the contract of insurance contained in the State Self Insured Health Plan's Benefit Document (Plan Document). The State Group Plan is regulated by those rules contained in Chapter 22K, Florida Administrative Code. At the time employees begin their employment with the State, they may select which, if any, of the optional health insurance programs offered by the State they desire. Thereafter, employees may only join one of the insurance programs or switch between programs during an annual open enrollment period. An employee who elects coverage from the State Group Plan may purchase either individual coverage or family coverage. Individual coverage provides health insurance coverage for only the individual employee. Family coverage provides health insurance coverage for the individual employee and the employee's eligible dependents for whom the employee has elected coverage. Family coverage does not begin until after the application for coverage is processed and the premium for family coverage is paid. The monthly premium for family coverage is paid one month in advance. An employee can, but he does not have to, wait for an open enrollment period to switch from individual coverage to family coverage. An employee having individual coverage may change to family coverage at any time during the year prior to the acquisition of an eligible dependent or at a time that is within 31 days of the date of acquisition of any eligible dependent. If family coverage is requested after the acquisition of the dependent, there is a gap in the coverage of the dependent between the date of acquisition and the date coverage begins. There is no retroactive coverage. An employee who completes the pertinent application for family coverage, who submits the application, and who pays the first month's premium for family coverage prior to the acquisition of the dependent has family coverage in place at the time the dependent is acquired through birth, adoption, or other means. Consequently, there is no gap in coverage between the date of acquisition and the effective date of coverage for that dependent. Petitioner is an associate professor of management and Director of the Doctoral Studies Program in the College of Business Administration at Florida International University (FIU). Petitioner teaches courses in a variety of areas including business administration, wage and salary administration, and insurance benefits. Petitioner enrolled in the State Group Plan in 1982. Petitioner was knowledgeable about the State Group Plan and had, from time to time, compared its benefits to those of other plans. At the time of their marriage, Petitioner and his wife reviewed their insurance coverage and decided not to convert their individual policies to one policy with family coverage. From the date of his initial enrollment until April 1989, Petitioner had individual coverage. On March 8, 1989, Petitioner executed the forms that were necessary to change his individual coverage to family coverage. Petitioner's family coverage went into effect on April 1, 1989, after the application was processed and the premium was collected. In March 1988 Petitioner married Annette Wellinghoff. Petitioner and his wife retained their respective individual insurance policies after their marriage. Mrs. Kroeck was not a state employee so the insurance coverage she had was independent of her husband's coverage. In August 1988 Petitioner and his wife learned that Mrs. Kroeck was pregnant with an expectant due date in February 1989. In August 1988, Petitioner telephoned the personnel office at FIU to inquire as to obtaining coverage for the expected child. The general information given Petitioner in response to his questions was accurate. He was told that he could convert his individual coverage to family coverage, if he so desired, during the open enrollment period scheduled for December 1, 1988, through January 31, 1989. There was no evidence that Petitioner specifically inquired as to when he should begin family coverage in order to have the child's birth expenses covered. Likewise, there was no evidence that Petitioner was specifically told that he could convert his coverage to family coverage after the birth of his child and have the medical expenses covered from the time of birth. Petitioner did not request any written information about the conversion process, nor did he request an application form to effectuate the conversion. Petitioner did not know the name of the person with whom he was speaking, only that she was a representative of the personnel office. Petitioner did not contact the FIU Personnel Office again until after the birth of his son. Instead, Petitioner relied upon his wife to take care of securing health insurance. Petitioner delegated this responsibility to his wife because she was also experienced and knowledgeable in matters concerning employee benefits and health insurance plans. Mrs. Kroeck has had at least 3 years experience in health insurance benefits administration. In December 1988 general information relating to the open enrollment program was mailed to all state employees, including Petitioner. Included in the information package were a Plan Brochure for the State Group Plan and an enrollment form for the various insurance options offered to State employees. Mrs. Kroeck read the application form and a portion of the Plan Brochure. Neither Petitioner nor his wife read, prior to the birth of their child, the section of the Plan Brochure entitled "Purpose of This Brochure". That section states that the Plan Brochure is not intended to be a contract document, that it is intended to give a summary of available benefits, and that an employee should contact either his personnel office or the office of the Division of State Employees' Insurance for the answer to questions. The employee is told that the contract document is the Plan Document and that a copy of the Plan Document is on file at the employee's personnel office. That section also contains the following admonition: The agency personnel office will provide needed assistance to State officers and employees enrolling in the Plan; however, such officers or employees should take care to assure that they receive the coverage applied for and that proper deductions are made. On January 9, 1989, Mrs. Kroeck telephoned the personnel office at FIU with questions relating to listing the unborn child as a dependent on the application form that had been mailed to Petitioner in December. Her questioning centered on how to complete the name, date of birth and social security number for an unborn dependent. Clara Martinez, the employee in the personnel office to whom Mrs. Kroeck spoke, does not recall talking to Mrs. Kroeck on January 8, 1989. At the time of this conversation, Ms. Martinez knew that family coverage had to be in place prior to the acquisition of a dependent for the dependent to be covered as of the date of acquisition. If Ms. Kroeck had asked Ms. Martinez a question to which Ms. Martinez did not know the answer, Ms. Martinez would have contacted the office of the Division of State Employees Insurance in Tallahassee for the answer. The evidence fails to establish that Mrs. Kroeck was misinformed by Ms. Martinez or that she specifically inquired as to the effective date of the family coverage. On February 19, 1989, Mrs. Kroeck had her baby. The baby was admitted to the hospital in his own name and incurred, in his own name, expenses in the amount of $4,274.95, for which Petitioner and his wife were responsible. On March 8, 1989, Petitioner signed an application to change his individual coverage to family coverage. Family coverage became effective on April 1, 1989, after the application was processed and the premium for family coverage was collected. At the time of the birth of his son, Petitioner had individual coverage issued through the State Group Plan. Petitioner's son was not a beneficiary under the State Group Plan at the time the medical expenses which are at issue were incurred. Petitioner's request for payment of the medical expenses incurred by his son at birth was denied by Respondent and this proceeding followed.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondent, Department of Administration enter a final order which denies the claim for payment of the medical expenses incurred by Petitioner's son prior to the effective date of family coverage. DONE AND ENTERED this , 27th day of December, 1989, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of December, 1989. APPENDIX TO RECOMMENDED ORDER, CASE NO. 89-4929 The following rulings are made on the proposed findings of fact submitted on behalf of Respondent. 1. The proposed findings of fact in paragraph 1 are adopted in material part by paragraph 7 of the Recommended Order. 2. The proposed findings of fact in paragraph 2 are adopted in material part by paragraph 7 of the Recommended Order. 3. The proposed findings of fact in paragraph 3 are adopted in material part by paragraph 8 of the Recommended Order. 4. The proposed findings of fact in paragraph 4 are adopted in material part by paragraph 9 of the Recommended Order. 5. The proposed findings of fact in paragraph 5 are adopted in material part by paragraph 9 of the Recommended Order. 6. The proposed findings of fact in paragraph 6 are adopted in material part by paragraph 9 of the Recommended Order. 7. The proposed findings of fact in paragraph 7 are adopted in material part by paragraph 11 of the Recommended Order. The proposed findings of fact in paragraph 8 are adopted in material part by paragraph 13 of the Recommended Order. The proposed findings of fact in paragraph 9 are rejected as being subordinate to the findings made. The proposed findings of fact in paragraph 10 are adopted in material part by paragraph 12 of the Recommended Order. The proposed findings of fact in paragraph 11 are rejected as being unnecessary to the conclusions reached. The proposed findings of fact in paragraph 12 are adopted in material part by paragraph 12 of the Recommended Order. The proposed findings of fact in paragraph 13 are rejected as being unnecessary to the conclusions reached. The proposed findings of fact in paragraph 14 are adopted in material part by paragraph 10 of the Recommended Order. The proposed findings of fact in paragraph 15 are rejected as being unnecessary to the conclusions reached. The proposed findings of fact in paragraph 16 are rejected as being unnecessary to the conclusions reached. The proposed findings of fact in paragraph 17 are rejected as being unnecessary to the conclusions reached. The proposed findings of fact in paragraph 18 are rejected as being unsubstantiated by the evidence as to Ms. Alam and as being unnecessary to the conclusions reached as to Ms. Martinez. The proposed findings of fact in paragraph 19 are rejected as being subordinate to the findings made. The proposed findings of fact in paragraph 20 are rejected as being unnecessary to the conclusions reached. The proposed findings of fact in paragraph 21 are adopted in material part by paragraph 13 of the Recommended Order. The proposed findings of fact in paragraph 22 are rejected as being unnecessary to the conclusions reached. The proposed findings of fact in paragraph 23 are adopted in material part by paragraph 8 of the Recommended Order. The proposed findings of fact in paragraph 24 are adopted in material part by paragraph 18 of the Recommended Order. The proposed findings of fact in paragraph 25 are adopted in material part by paragraph 16 of the Recommended Order. The proposed findings of fact in paragraph 26 are adopted in material part by paragraph 5 of the Recommended Order. The proposed findings of fact in paragraph 27 are adopted in material part by paragraph 4 of the Recommended Order. COPIES FURNISHED: Augustus Aikens, Jr., Esquire Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550 Kark G. Kroeck 9853 Costa del Sol Boulevard Miami, Florida 33178 Alette A. Lhutes, Secretary Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550 William A. Grieder, Esquire Office of the General Counsel Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550
The Issue The issues are (1) whether certain medical expenses incurred by petitioners' daughter should be covered under the state group health insurance program, and (2) whether the state is estopped from denying the claim based upon erroneous misrepresentations made by its agent.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: Background Petitioner, Etta Aldridge, is a full-time employee of Sunland Training Center in Marianna, Florida and is a participant in the state group health insurance program (the plan). James Aldridge, her husband and also a petitioner in this cause, and Jerrilyn Aldridge, her daughter, are covered by the plan. On November 3, 1987, Jerrilyn, then around seventeen years of age, was severely injured in an automobile accident near her home in Greenwood, Florida. Among other things, she suffered a skull fracture, abrasions, crushed pelvis and hip, and punctured lungs and stomach. She was initially taken to a Marianna hospital for emergency treatment and then transferred to a Tallahassee hospital for longer-term care. While at the Tallahassee hospital, Jerrilyn was diagnosed by her neurologist as having a closed, diffuse brain injury and brain stem contusions. After Jerrilyn was treated in Tallahassee for two and one-half months, which included one month in the hospital and forty-five days at the hospital's extended care facility, her parents were advised that, due to her poor prognosis, they had a choice of putting her in a nursing facility or taking her to their home. Although Jerrilyn was still in a coma, petitioners decided to take her home and care for her in a bedroom which had been converted into a hospital room setting. After six or seven weeks at home, and contrary to earlier medical expectations, Jerrilyn opened her eyes, made noises and manifested some slight arm movement. Based upon these encouraging signs, petitioners sought further medical advice and were told that, given the foregoing signs of improvement, treatment in a facility that specialized in brain injury rehabilitation would improve their daughter's condition. Petitioners contacted the National Head Injury Foundation and were given a list of health care facilities in the state that provided rehabilitative services for brain injured patients. This list included Manatee Springs Nursing Center, Inc. d/b/a Mediplex Rehab-Bradenton (MRB), a facility licensed by the state as a skilled nursing facility but which specialized in rehabilitating brain injured patients. MRB is the largest brain injury rehabilitation facility in the southeastern united States. Since the Aldridges did not have the financial resources to pay for any additional treatment for Jerrilyn, it was essential that they selected a facility that would be covered by the plan. After James Aldridge spoke with and received information from most of the facilities on the list, and conferred with Jerrilyn's neurologist, he eventually narrowed his choice to several facilities, including MRB, which impressed him because of its good reputation and specialty in head injury rehabilitation. To confirm whether coverage would be provided for further treatment, James Aldridge telephoned the customer service unit of Blue Cross and Blue Shield of Florida, Inc. (BCBS), the plan's administrator. He also contacted MRB and authorized it to make an inquiry with BCBS on his behalf. On March 28, 1989 Aldridge received favorable advice from a BCBS service representative concerning coverage and benefits for Jerrilyn at MRB. This advice was independently confirmed by MBR on the same date, and Jerrilyn was accepted as a patient at the facility effective March 31, 1988. Some three months later, and after some of the bills had been paid, BCBS advised MBR and petitioners that a "computer" error had been made and that the requested benefits applied only when rendered in a licensed hospital and not a skilled nursing facility. BCBS accordingly declined to pay the bills. That prompted petitioners to initiate this proceeding. The bills in question total over $225,000. The Insurance Plan The State has elected to provide a self-insured group health insurance program for its employees and their dependents. The legislature has designated respondent, Department of Administration, Division of Employees' Insurance (Division), as the responsible agency for the administration of the plan. To this end, the Division has entered into an agreement with BCBS to administer the plan. Among other things, BCBS provides verification of coverage and benefits, claims payment services, actuarial and printing services, and medical underwriting of late enrollee applications. Including dependents and retirees, there are almost 300,000 persons who are covered by the plan. Upon enrolling in the plan, all employees, including Etta Aldridge, were routinely given an insurance card with BCBS's telephone number and a brochure entitled "State of Florida Employees Group Health Self Insurance Plan Brochure" (brochure) containing a general description of the plan. The brochure warns the insured that the brochure is not a contract since it does not include all the provisions, definitions, benefits exclusions and limitations of the plan. It also contains advice that if the brochure does not answer an employee's question, he should telephone the Division's customer service section in Tallahassee. In actual practice, however, if an employee contacts the Division number, he is told to telephone BCBS's customer service unit in Jacksonville regarding any questions as to coverage and benefits, claims or other problems concerning the plan. The Division generally becomes involved only when an employee is unable to resolve a claims problem with BCBS. BCBS has established a service unit that deals exclusively with inquiries regarding coverage and benefits under the state group health plan. There are approximately twenty- eight service representatives in that unit. Each representative receives four weeks of training before being certified as a customer service representative. After being certified, a representative's primary responsibility is to respond to inquiries from state employees, health providers and physicians regarding verification of benefits and coverage under the state group policy. It should be noted that a distinction exists between verification of benefits and coverage. To verify coverage means to verify that a person has an active policy at the time services are rendered. To verify benefits means to confirm that a specific service is covered under the policy. In this case, there was an inquiry by the insured and provider regarding both benefits and coverage. In the event a representative is unsure as to the licensing status of a facility or provider, the representative has access to BCBS's master registry department which maintains the provider number and licensure status of every facility in the state. That registry identified MRB as a skilled nursing home. BCBS representatives have the authority to make decisions regarding benefits and coverage. It is only when an inquiry falls within a "grey area" that the final decision is referred from the unit to either the Legal or Medical Division of BCBS. The Division, with the assistance of BCBS, has prepared a seventy-five page benefit document (document) which governs all claims arising under the plan. However, the document is for BCBS in-house use only and is not given to state employees or providers. The document first became effective on May 1, 1978 and has been subsequently amended from time to time. When Jerrilyn was admitted to MRB, the document effective October 1, 1987 was controlling. The document was further amended effective July 1, 1988, which was three months after her admission to MRB. As is pertinent here, the July 1, 1988 amendments increased the deductibles and narrowed the definition of a "hospital". According to the state benefits administrator, the document is "the final word" on any dispute regarding coverage or claims. The BCBS service unit uses this document to verify coverage and benefits. Included in the document are numerous definitions that are used to resolve disputed claims. Relevant to this controversy is the definition of a hospital at the time Jerrilyn was admitted to MRB: "Hospital" means a licensed institution engaged in providing medical care and treatment to a patient as a result of illness or accident on an inpatient/outpatient basis at the patient's expense and which fully meets all the tests set forth in 1., 2., and below: It is a hospital accredited by the Joint Commission on the Accreditation of Hospitals, or the American Osteopathic Association or the Commission on the Accreditation of Rehabilitative Facilities; It maintains diagnostic and therapeutic facilities for surgical or medical diagnosis and treatment of patients under the supervision of a staff of fully licensed physicians; It continuously provides twenty-four (24) hour a day nursing service by or under the supervision of registered graduate nurses. It is undisputed that, while MRB may have provided many services comparable to those rendered by a licensed hospital and is considered to be an atypical nursing home, MRB is still licensed by the state as a skilled nursing facility. Thus, MRB cannot qualify as a hospital under the benefit document. Payment for services in a skilled nursing facility, such as MRB, are much more limited and restrictive than for a hospital. To qualify for payment of benefits in a skilled nursing facility, the insured must have been hospital confined for at least three consecutive days prior to the day of hospital discharge before being transferred, upon a physician's advice, to a skilled nursing facility. Once admitted to such a facility, the insured's room and board reimbursement is limited to a maximum of $76 per day. Further, payment of services and facilities is limited to sixty days of confinement per calendar year. In contrast, benefits for hospital care include, for example, unlimited days of coverage per calendar year and much higher reimbursement rates for room, board and other services. In this case, besides having been admitted to MRB directly from her home, and not a hospital, Jerrilyn had already used up forty- five of the sixty days of annual benefits at the extended care unit of a Tallahassee hospital. BCBS also has a fee schedule that is used in paying all covered claims. However, the schedule was not introduced into evidence. Estoppel Before he made a final decision as to where to send his daughter, James Aldridge spoke by telephone with several BCBS representatives, including Michelle Sahdala and Rhonda Hall, the unit supervisor and considered its most experienced representative. 1/ Aldridge made these telephone calls because he wanted to positively confirm which facilities would be covered by the plan. During one conversation, Sahdala advised Aldridge that the proposed treatment would not be covered in several facilities named by the National Head Injury Foundation, including New Medico Rehabilitation Center of Florida in Wauchula, Florida and Capital Rehabilitation Hospital in Tallahassee. Aldridge advised BCBS that he might want to place his daughter in MRB, but only if such treatment was covered under his wife's insurance plan. He heard nothing further from BCBS until a week later. Aldridge contacted MRB on March 21, 1988 and advised an MRB representative that he wished to place his daughter in the facility if his wife's insurance covered the treatment at MRB. He also gave MRB the BCBS unit supervisor's name (Rhonda Hall) and telephone number. To verify coverage and benefits, MRB's admission coordinator, Patricia Dear, telephoned Hall on March 22, 1988. Such an inquiry is routinely made by the provider on behalf of the insured and before the patient is admitted to the facility. This is to ascertain if the prospective patient is insured, and if so, to verify the amount of benefits. Dear identified herself and advised Hall that she was requesting benefits information on Jerrilyn Aldridge, an insured. She told Hall that MRB was a skilled nursing facility and not a hospital, the nature of services that would be provided to Jerrilyn and her need to determine whether such services would be covered under the plan before Jerrilyn was accepted as a patient. When asked if she would need further information in hand concerning MRB before determining the amount of benefits, Hall responded affirmatively. Accordingly, Dear sent Hall by overnight mail a letter and brochure describing the facility's services. They were received by BCBS the next morning, or March 23. The letter included information concerning MRB, the fact that it was a skilled nursing facility and not a hospital, the type of services that MRB provided, a summary of the expected charges for treating Jerrilyn (from $600 to $850 per day), the average length of stay of a patient (3 to 9 months), and an offer to answer any additional questions that BCBS might have. When Dear heard nothing further from Hall within the next few days, she made a follow-up telephone call to Hall on March 28 to see if Hall had any questions and to verify benefits coverage. Hall acknowledged receiving the letter of March 22 with attachment. After Dear discussed each of the disciplines and types of services to be provided and their expected cost, including physician services, physical therapy, neuropsychology, central supply, pharmacy, laboratory services and a room and board charge of $351 per day, Hall advised Dear that the only policy exclusions on coverage would be occupational and speech/language therapy. She added that all charges would be subject to medical necessity, and ambulance costs to transport Jerrilyn to the facility would be covered. The two also discussed the fact that there were no time limitations under the policy and that almost $475,000 in lifetime coverage still remained. Hall represented that after the Aldridges satisfied their $1500 deductible on which BCBS paid only 80% of the bills, BCBS would thereafter pay 100% of all medically necessary charges. In making that representation, Hall did not disclose the fact that BCBS has a fee schedule and that all payments were subject to the limitations specified in that schedule. After verifying that Hall had cited all policy limitations, and consistent with her longtime experience in verifying benefits with other insurance carriers, Dear properly assumed that if the policy contained a provision which limited payment to something less than 100% of covered services, Hall would have said so. Dear asked Hall if there was any reason not to admit Jerrilyn and Hall replied "no." Dear also asked Hall if she (Hall) was in a position to verify benefits and Hall represented that she was. Dear then told Hall that Jerrilyn would be presented to the admissions committee the next day and, if clinically appropriate, she would be admitted. Dear ended the conversation by advising Hall that a letter confirming their understanding would be sent after Jerrilyn was admitted. After speaking with Hall, Dear had a clear understanding that coverage and benefits had been approved and, except for occupational and speech/language therapy, BCBS would pay 80% of all medically necessary charges until the Aldridge's $1,500 deductible was met, and then to pay 100% of all remaining medically necessary charges. 2/ After receiving the favorable advice, Dear telephoned Aldridge the same day and told him the results of her conversation with Hall. Within a few moments after speaking with Dear, Aldridge received a telephone call from an unidentified female BCBS representative who informed him that BCBS would pay for his daughter's treatment at MRB. Jerrilyn was accepted as a patient by MRB's admissions committee on March 28, 1988. Both the provider and the insured relied upon Hall's representations in admitting Jerrilyn to the facility. Had Jerrilyn not been covered by the plan, the committee would not have approved her admission. Also, if the Aldridges had known that the treatment at MRB was not covered, they would have sent their daughter to another facility covered by the plan. On April 4, 1988, and pursuant to her last telephone conversation with Hall, Dear sent Hall by overnight mail the following letter: This is to confirm the admission of Jerrilyn Aldridge on March 31, 1988, to the specialized head trauma rehabilitation program at Mediplex Rehab-Bradenton, Florida. The following benefits information has been verified by you and Patricia Dear, R. N., Admissions Coordinator on March 28, 1988. Effective date: 10/1/79 Benefits: After $1,500 - out of pocket/yr- 100% coverage Days available: Unlimited days Monies available: $474,533.79 Exclusions: Occupational Therapy, Speech- Language Therapy Limitations: Treatment subject to "Medical Necessity" If I do not hear from you, I will consider you to be in agreement with the above information. Please place this in the client's file. Thank you for your prompt attention to this matter. (Emphasis supplied) Although BCBS's records reflect that Dear's letter was received, Hall did not advise Dear that there were any problems concerning Jerrilyn's coverage and benefits under the plan or that Dear's understanding of the benefits to be paid was inaccurate or in error. Of some note is the fact that Hall is considered one of the most knowledgeable BCBS representatives on state health plan benefits and recognizes that her statements concerning benefits are relied upon by providers. Even though Hall was specifically advised both orally and in writing that MRB was licensed as a nursing home, and she had access to BCBS's master registry to confirm MRB's licensure status, she failed to discern that a nursing home was not a covered facility for the requested services within the meaning of the plan. Indeed, she later acknowledged by deposition that she knew that "the state does not pay for nursing homes" and that she had made a mistake by failing to properly "investigate" the matter more thoroughly. By failing to convey accurate advice to James Aldridge and MRB and to note that the proposed treatment would not be covered if rendered by a nursing home, Hall failed to use reasonable care and competence in responding to the inquiry. Three months after Jerrilyn's admission, James Aldridge received notice that BCBS had changed its position and now asserted it was not going to pay for Jerrilyn's rehabilitation and treatment at MRB. Proposed agency action confirming this decision was later issued by the Division on October 21, 1988. Miscellaneous All medical services received by Jerrilyn were medically necessary within the meaning of the benefit document. The necessity of Jerrilyn's placement in a rehabilitation facility was established by Dr. James D. Geissinger, her Tallahassee neurologist, who based it upon Jerrilyn's improvement after leaving the Tallahassee hospital and made her a candidate for brain rehabilitation. Doctor Geissinger also noted that, as a result of receiving treatment at MRB, Jerrilyn had made "remarkable" improvement and was able to partially regain her language function, use her left arm and hand, and improve her "activities of daily living." There are expectations that she will be able to walk again within a year. Further, based upon the testimony of an MRB staff physician, the services and treatment received by Jerrilyn at MRB were medically necessary to facilitate her neurologic and functional recovery. Given the nature of her injury and MRB's nursing staffing ratios, the required intensive medical rehabilitation and monitoring of Jerrilyn's medical and neurological condition was comparable to care in a hospital intensive care unit. These matters were not contradicted. On April 1, 1988, the Aldridges executed a standard financial agreement with MRB whereby they agreed to indemnify MRB for all charges which were not paid by BCBS. As is normally done, they also authorized MRB to directly bill BCBS for all charges incurred by Jerrilyn while being treated at the facility. Finally, the Aldridges authorized MRB to make inquiries on their behalf with BCBS to verify insurance coverage and benefits for Jerrilyn. MRB submitted to BCBS all bills for services and treatment given to Jerrilyn during her five or six month stay at the facility. A summary of the dates of service, charges, payments made by BCBS and balance due is contained in petitioners' exhibit 17. In all, there are thirty-eight outstanding bills totaling $227,139.27. The parties have stipulated that the bills in exhibit 17 represent services that were actually performed and supplies that were actually received by the patient. As noted in finding of fact 21, all such supplies and services were medically necessary. For the reasons given in the conclusions of law portion of this recommended order, the doctrine of equitable estoppel applies, and petitioners are entitled to be reimbursed for all unpaid bills filed with BCBS in accordance with the representations of agent Hall. These include room and board charges (at the intensive care room rate), physician services, neuropsychology, physical therapy, central supply, pharmacy and laboratory charges as more fully described in petitioners' exhibit 17. Such reimbursement should be not be subject to the limitations prescribed in the fee schedule.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the amended petition of Etta and James Aldridge be GRANTED, and the Division order Blue Cross and Blue Shield of Florida, Inc. to reimburse petitioners $227,139.27 as reflected in petitioners' exhibit 17. DONE and RECOMMENDED this 7th day of August 1989, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of August, 1989.
The Issue Whether the Amended Notice and Order to Show Cause issued in DOAH Case Number 11-1150, with which this unadopted rule challenge is now consolidated, contains an agency statement that comes within the definition of a rule but has not been adopted through rulemaking procedures, in violation of section 120.54(1)(a), Florida Statutes, and if so, whether costs and attorney’s fees should be awarded.
Findings Of Fact The Financial Services Commission has responsibility over rules implementing provisions of the Florida Insurance Code conferring duties upon the Commission or its subunits. The Office of Insurance Regulation (the Office) is a subunit of the Financial Services Commission responsible for enforcing the provisions of the Florida Insurance Code with respect to licensees of the Office. Guarantee Trust Life Insurance Company (GTL) is a foreign insurer, domiciled in Illinois, which holds a certificate of authority to transact business as a life and health insurer in Florida. GTL offers insurance products nationwide, except for New York, including Medicare long-term care, supplemental, cancer, college student, accident, and sickness policies. GTL is subject to the jurisdiction of the Office under the Florida Insurance Code, including fines and disciplinary actions. It is substantially affected by the Office’s action and is entitled to a hearing to determine if the Administrative Complaint filed against it constitutes an unadopted rule. On or about May 5, 2010, GTL sent a Termination Letter to at least 216 Florida residents (Members) covered under an out-of-state group major medical policy (Policy), as well as to about 70 Florida residents who held individual policies offered by GTL.1/ The Termination Letter advised that major medical coverage would not be renewed and that GTL would no longer be offering major medical type coverage. On January 12, 2011, the Office served GTL with a Notice and Order to Show Cause alleging that GTL had violated the Florida Insurance Code by continuing to non-renew policies and failing to offer converted policies. A conversion policy is a form of replacement insurance coverage for which certificate holders in a group policy may be eligible when their coverage under a group policy is terminated. On January 28, 2011, GTL filed a Petition for Administrative Hearing with the Office. It amended that Petition on February 1, 2011, still maintaining that it was not required to offer conversion policies. On September 2, 2011, an Order was issued granting the Office’s Unopposed Motion to Amend Notice and Order to Show Cause. Counts I and II of the earlier complaint were amended. The earlier complaint had charged in these counts that “Guarantee Trust violated the Florida Insurance Code by failing to offer converted policies as required by Section 627.6675, Florida Statutes.” Amended counts I and II alleged that “Guarantee Trust violated the Florida Insurance Code by issuing the Termination Letter without offering converted policies required by the Florida Insurance Code and Section 627.6675, Florida Statutes.” On November 15, 2011, GTL filed a Petition to Challenge Unadopted Rule. The Petition was served on the Office more than 30 days before it was filed with the Division of Administrative Hearings, as stipulated at hearing. The Financial Services Commission has not adopted the statement that it was a violation of provisions of the Florida Insurance Code for GTL to “issue a termination letter without offering converted policies as required by Section 627.6675,” or any similar statement, by rulemaking procedures.
The Issue The issue in this case is whether the expenses incurred by Petitioner incident to admission to Town & Country Hospital on December 11, 1999, resulted from an intentional self-inflicted injury, to wit: attempted suicide, and are therefore excluded from coverage under the State of Florida Employees Group Health Self Insurance Plan.
Findings Of Fact At all times pertinent hereto, Petitioner, Sarah Nuding, was employed by the University of South Florida and was a participant in the State of Florida Employees Group Health Self Insurance Plan (PPO). Respondent, Department of Management Services, Division of State Group Insurance (DSGI), administers the state's self- funded group insurance plan for employees and has secured the services of BCBS as its third party administrator. On December 11, 1999, Petitioner called the Hillsborough County Sheriff's office after ingesting a handful of Wellbutrin and four tablets of Neurontin. Deputy Sheriff Midarst initiated involuntary examination pursuant to Section 394.463, Florida Statutes, (Baker Act), and Petitioner was admitted through the emergency room to Town & Country Hospital, Tampa, Florida. Petitioner was placed in the Hospital's Intensive Care Unit for observation of her seizure activity and remained there under observation and treatment until her release on December 13, 1999. Upon admission and after examinations, Petitioner was diagnosed with chronic anemia by the admitting physician who ordered consultation with the treating physician before medical services and treatment were provided. The admitting and treating physician, after review of Petitioner's hematocrit and hemoglobin levels which were above that normally requiring hospitalization, determined that Petitioner should be treated for the anemia condition before her discharge on December 13, 1999. Petitioner's State of Florida Employees Group Health Self Insurance Plan Booklet and Benefit Document excludes coverage for services rendered for treatment of self-inflicted wounds, in pertinent part provides: The following are not Covered Services and Supplies under the Plan. The Participant is solely responsible for the payment of charges for all such services, supplies or equipment excluded in this Section. 5. Any services and supplies received due to the following circumstances: (b) Resulting from an intentional self- inflicted injury whether the Participant was sane or insane. An injury is intentionally self-inflicted if the Participant intended to perform the act that caused the injury regardless of whether the Participant intended to cause the injury. On or about July 31, 2000, BCBS notified DSGI that of the Hospital's statement totaling $8,244.00 for services and supplies rendered December 11-13, 1999, only $1,030.25 were directly related to a diagnosis of "anemia"; the remaining charges are for the diagnosis of "drug overdose" and are not covered expenses under the State PPO Plan. The decision by both BCBS and DSGI, to pay those charges related to Petitioner's diagnosis and treatment for anemia and to not pay those charges related to the suicide attempt, including two days intensive care unit cost of $1,150.00 per day, are supported by preponderance of the evidence, and is in accord with the terms and conditions of the insurance plan exclusion provision. Petitioner's position is that her prolonged hospital stay, medical treatment and supplies were: (a) not at her request and consent, (b) that her anemia condition was a pre- existing, and therefore, a covered condition, and (c) intensive care placement ($1,500.00 per day for two days) was not necessary to treat her pre-existing anemic condition, therefore, only her first day hospitalization expenses should have been excluded. However, Petitioner's position ignores the fact that her hospital admission was for a suicide attempt, and her stay resulted from the requirements of the Section 394.463, Florida Statutes, to wit: mandatory involuntary placement for 72 hours.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Management Services, Division of State Group Insurance, issue a final order dismissing with prejudice the petition for administrative review. DONE AND ENTERED this 14th day of August, 2001, in Tallahassee, Leon County, Florida. FRED L. BUCKINE 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 August, 2001. COPIES FURNISHED: Julia P. Forrester, Esquire Department of Management Services 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399-0950 Sarah C. Nuding 15501 Bruce B. Downs Boulevard Apartment 3705 Tampa, Florida 33647 Cynthia Henderson, Secretary Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950 Mallory Roberts, General Counsel Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950
The Issue Does the Prescription Drug Services Plan administered by the Division of State Group Insurance provide coverage for the drug Xenical as prescribed to the Petitioner?
Findings Of Fact The Plan The Division of State Group Insurance is authorized to provide health insurance coverage to employees of the State of Florida through a fully insured plan or a self-insured plan. The decision to offer a self-insured plan is explained in the State of Florida Employees Group Health Self Insurance Plan Booklet and Benefits Document (the "Plan Booklet and Benefits Document"): As is the case with many major employers, the State of Florida determined that a self- insured plan would result in significant savings to the participating members, and, therefore, implemented the current self- insured program in 1978. Being self-insured means that Claims are paid directly from funds belonging to the State of Florida, with the State earning interest on all fund balances. In addition, the Plan avoids charges normally charged by insurance companies such as retentions, reinsurance, risk factors, and other insurance related charges. (Petitioner's Ex. 7, p. 2.) Denominated the State of Florida Employees' Group Health Insurance Plan, the Plan has both a Servicing Agent and a Prescription Drug Program Administrator. At the time the events leading to this case arose, the Servicing Agent was Blue Cross/ Blue Shield of Florida, Inc., and the Prescription Drug Program Administrator was Eckerd Health Services ("EHS"). By designation of the Florida Legislature, however, the Division is responsible for the administration of the Plan. In the capacity of Plan Administrator, "the Division . . . has full and final decision-making authority concerning eligibility, coverage, benefits, claims, or interpretation of the Benefit Document." (Id.) Mr. Magee, Diabetes and Hypercholesteremia Dennis J. Magee is an employee of the Department of Corrections. He has been covered by State Health Insurance since he commenced his employment with the state in 1971. Mr. Magee has participated in numerous health insurance plans over the course of his employment. For the past three or four years, at least, he has participated in the State of Florida Group Health Self-Insurance Plan administered by the Division. Approximately twelve years ago, Mr. Magee was diagnosed with diabetes. Since the initial diagnosis, his diabetes mellitus type 2 has become complicated by microangiopathy, nephropathy, retinopathy, hypercholesterolemia (elevated serum cholesterol) and obesity. With regard to obesity, Mr. Magee was determined near the time of hearing to have a body mass index of 32.25, an index beyond the threshold for obesity. Dr. Croom and Xenical Mr. Magee's physician is William P. Croom, M.D. Dr. Croom is an endocrinologist specializing in the treatment of types 1 and 2 diabetes mellitus. On July 22, 1999, Dr. Croom prescribed Xenical, a drug used in the control of obesity, at a dosage of 150 milligrams for Mr. Magee. The prescription was medically necessary in Dr. Croom's view because Mr. Magee "has been unsuccessful in managing his obesity with diet and exercise" (Petitioner's Ex. 2) and because "his diabetes and hyperlipidemia [elevated cholesterol] are driven by his obesity . . . ." (Petitioner's Ex. 3). Attempt to Fill the Prescription Mr. Magee presented the prescription to Express Pharmacy Services. It was not honored. On August 3, 1999, Express Pharmacy Services wrote to Mr. Magee that "[t]his item is not covered by your insurance. Please contact your benefits rep. if you have questions." Petitioner's Ex. 4. Appeal to the Division Eckerd Health Services, the Prescription Drug Program Administrator, affirmed the denial of the prescription. Mr. Magee appealed the decision to the Division. The Department of Management Services has an appeals committee, which reviews all denials of coverage by EHS. The appeals committee is composed of three members within the Division: the director, the assistant director and the Policy and Development Bureau Chief. The Director, at the time Mr. Magee's appeal was considered, Mr. Slavin, is a diabetic. The appeals committee looked into Xenical as a treatment for diabetes. It obtained information through literature and internet research and from consultation with physicians at Blue Cross/Blue Shield. On the basis of the research, the committee concluded that Xenical is used only for the treatment of obesity and not for the treatment of diabetes. The appeal resulted in the letter from Director Slavin (referenced in the Preliminary Statement of this order) in which the Director wrote, "I am writing in response to your appeal of the decision by Eckerd Health Services (EHS) to deny coverage for Xenical [and] [r]egrettably, we must concur with EHS' determination." The Plan Booklet and Benefits Document Basis for the Denial The Division's concurrence with EHS that coverage for Xenical should be denied was based on the Prescription Drug Program Section of the Plan Booklet and Benefits Document. The program is described in Part XXVIII, Section W. Subsection 1., Covered Drugs, on p. 57 lists "(a) [f]ederal legend drugs" and "(b) [s]tate restricted drugs" as among those drugs covered. Among the list under Subsection 5., entitled "Exclusions," however, is "(c) [a]nti-obesity drugs." The listing of anti- obesity drugs under Part XXVIII, Section W., Subsection 5, the "Exclusions" subsection, ultimately, is the basis for the Division's denial of coverage of Xenical as prescribed for Mr. Magee. The Plan Booklet and Benefits Document is prepared on an annual basis by the Division. Typically, the Plan Booklet and Benefits Document is "enacted by the Legislature every year through the appropriation[] process of Section 8 of the Appropriations Act." (Tr. 54). For example, the Conference Report on Senate Bill 2500, General Appropriations for 1999- 2000, under Specific Appropriation states: 9) All State Group Health Insurance Plan benefits as provided in the State of Florida Employees Group Health Insurance Plan Booklet and Benefit Document effective January 1, 1998, . . . shall remain in effect. Changes to the benefits provided by the Plan Booklet and Benefits Document are normally initiated by submission of the Governor in his Legislative Budget Request. Benefit changes must be approved by the Legislature. The Plan Booklet and Benefit Document provides, among many, the following definitions: "Covered Services and Supplies" shall mean those health care services, treatments, therapies, devices, procedures, techniques, equipment, supplies, products, remedies, vaccines, biological products, drugs, pharmaceutical and chemical compounds which expenses are covered under the terms of the Benefit Document. The Administrator has final authority to determine if a service or supply is covered or limited by the Plan. * * * "Medical Supplies or Equipment" means supplies or equipment that must be: ordered by a Physician; of no further use when medical need ends; usable only by the Participant patient; not primarily for the Participant patient's comfort or hygiene; not for environmental control; not for exercise; manufactured specifically for medical use. (Petitioner's Ex. 7, Definitions 21 and 50, pgs. 17 and 23, respectively.) Drugs are services as defined by the Plan Booklet and Benefits Documents. But drugs that are excluded from coverage, such as anti-obesity drugs, are not "covered services" as defined by the Plan Booklet and Benefits Document since by definition, an exclusion prevents them from being "covered." As a "service," moreover, Xenical is not covered by virtue of Section G. of the Benefits Document, also entitled "Exclusions." Petitioner's Ex. 7., p. 38. With regard to services "related to obesity and weight reduction," the Benefits Document states the following: G. EXCLUSIONS The following are not Covered Services and Supplies under the Plan. * * * All services and supplies related to obesity or weight reduction except: Medically Necessary intestinal or stomach by-pass surgery; or medically related services provided as part of a weight loss program when weight loss of a Participant is required by the surgeon prior to performing a Medically Necessary surgical procedure. (Petitioner's Ex. 7, pgs. 38, 41.) Xenical and Section 627.65745, Florida Statutes Subsection 627.65745(1), Florida Statutes, states: A health insurance policy or group health insurance policy sold in this state, including a health benefit plan issued pursuant to 727.6699, must provide coverage for all medically appropriate and necessary equipment, supplies and diabetes outpatient self management training and educational services used to treat diabetes, if the patient's treating physician or a physician who specializes in the treatment of diabetes certifies such services are necessary. Xenical, a drug, is obviously not "equipment." Nor would it fall under the category of "self management training and educational services used to treat diabetes." It does not fall under the category of "supplies" either. Under the coding system developed by the Health Care Financing Administration of the United States Department of Health and Human Services, the standard coding system for the payment of health claims, drugs are not supplies. Examples of supplies include prosthetics, testing supplies, artificial limbs, ventilators, needles, and insulin pumps. Update of the Basis for the Prescription In a letter dated June 13, 2000, Dr. Croom more fully explained the basis for the prescription. Xenical is medically necessary for the treatment of diabetes and is not for cosmetic purposes. Xenical is a part of Mr. Magee's outpatient management program which consists of other medications and education. Despite these medications, his most recent hemoglobin A1C is 9.1 significantly higher than the recommended target of 7.0. The use of Xenical would be instrumental in reducing this parameter. In my opinion, Xenical is medically appropriate and necessary. (Petitioner's Ex. 3). The appeals committee did not have the benefit of Dr. Croom's June 13, 2000, letter in which Dr. Croom opined that in the case of Mr. Magee, "Xenical is medically necessary for the treatment of diabetes and is not being used for cosmetic purposes." Other Purpose for the Prescription That a drug's effectiveness is primarily for the treatment of an excluded purpose may not necessarily exclude it from coverage if it were prescribed for some other purpose. This point was elicited during testimony of the Division's witness, C. Merrill Moody, the Division's Assistant Director: (Tr. 81). MR. MOODY: If [Xenical] was being prescribed for obesity, it would be excluded; if it was not, it would not. And I'll give you an example. We have a direct exclusion for contraceptives for contraceptive use . . . [b]ut contraceptives can be used for other purposes. . . . [P]articipants are required to provide us with a letter from the doctor describing what the contraceptive is being used for. We then cover that contraceptive. Mr. Moody went on to explain that oral contraceptives, because of certain properties, are used also in the management of conditions not related to prevention of contraception. For example, oral contraceptives are prescribed in the treatment of menopause because of their ability to maintain the levels of certain hormones. If prescribed for that purpose, then, despite the fact that they are oral contraceptives and normally excluded from coverage, they are covered because of the non-contraceptive basis for the prescription. The Division's position with regard to oral contraceptives is consistent with the exclusion contained in Section W.5. of the Plan Booklet and Benefits Document. There the "Exclusions List" states "(a) Oral contraceptives for contraception." Petitioner's Ex. 6, p. 59. In other words, it is not some policy of the Division that provides coverage for oral contraceptives when the prescription is for a purpose other than contraception. The coverage is provided by the Plan Booklet and Benefits Document, itself. If oral contraceptives are prescribed "for contraception" then they are excluded from coverage. If prescribed for some other medical purpose, then the exclusion contained in Section W, 5(a) does not prevent coverage of oral contraceptives.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is recommended that: the Division of State Group Insurance in the Department of Management Services enter a final order denying coverage of Dennis J. Magee's prescription for Xenical; and, the Division present to the Legislature the Plan Booklet and Benefits Document amended so as to allow coverage of anti-obesity drugs for diabetics if such drugs are prescribed as medically necessary for management of the subscriber's diabetes. DONE AND ENTERED this 28th day of July, 2000, 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 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of July, 2000. COPIES FURNISHED: Dennis J. Magee Post Office Box 636 Safety Harbor, Florida 34695 Cindy Horne, Esquire Department of Management Services 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399-0950 Thomas D. McGurk, Secretary Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950 J. Bruce Hoffmann, General Counsel Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950
The Issue The issue in the case is whether the Petitioner’s application for renewal of nursing home licensure should be approved.
Findings Of Fact The Petitioner is a licensed nursing home facility located at 8104 North Tuttle Avenue, Sarasota, Florida. AHCA is the state agency charged with responsibility for licensure and regulation of nursing home facilities in Florida. By application dated January 30, 2001, the Petitioner applied for renewal of the license for Life Care Center of Sarasota. According to the application, Life Care Center of Sarasota is a leased facility. Although the cover letter accompanying the application indicates that a surety bond was enclosed, the Petitioner did not include a surety bond. Florida law requires that an applicant for licensure of a nursing home operating in a leased facility must meet a bonding requirement. The law provides that the requirement may be met through other arrangements acceptable to AHCA. Currently, AHCA is requiring that operators of leased facilities must comply with the bond requirement. In an attempt to comply with the bond requirement, the Petitioner submitted an “Unconditional Guarantee of Payment” executed by the owner of the Petitioner’s parent company, Life Care Centers of America, Inc. By Notice of Intent dated April 6, 2001, AHCA informed the Petitioner that the licensure application would be denied. As grounds for the denial, the notice states that the denial is based on the failure to provide a “Leased Nursing Home Surety Bond for 30 months of coverage” pursuant to Section 400.179(5)(d) 3., Florida Statutes. The evidence supports the cited grounds for denial of the application. There is no evidence that the Petitioner is unable to obtain the surety bond. The Petitioner asserts that AHCA accepts Unconditional Guarantees of Payment from operators of nursing home facilities that are owned by the guarantor, and that such guarantees should be accepted from operators of nursing home facilities that are leased by the guarantor. The evidence fails to support the assertion. There is no credible evidence that AHCA has accepted Unconditional Guarantees of Payment from operators or nursing home facilities that are leased from a third party by the operator. The Petitioner asserts that some leases are actually financing mechanisms and that such leaseholders should be permitted to supply Unconditional Guarantees of Payment in lieu of complying with the bond requirement. The evidence in this case fails to establish that an Unconditional Guarantee of Payment should be accepted in lieu of complying with the bond requirement.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Agency for Health Care Administration enter a Final Order denying the application for licensure of Life Care Center of Sarasota based on the Petitioner’s failure to provide a lease bond as required by statute. DONE AND ENTERED this 28th day of September, 2001, in Tallahassee, Leon County, Florida. WILLIAM F. QUATTLEBAUM 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 28th day of September, 2001. COPIES FURNISHED: R. Bruce McKibben, Jr., Esquire R. Bruce McKibben, P.A. 1301 Miccosukee Road Post Office Box 1798 Tallahassee, Florida 32308 Richard A. Patterson, Esquire Agency for Health Care Administration 2727 Mahan Drive Building Three, Suite 3431 Tallahassee, Florida 32308-5403 William Roberts, Acting General Counsel Agency for Health Care Administration 2727 Mahan Drive Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Diane Grubbs, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Building Three, Suite 3431 Tallahassee, Florida 32308-5403
The Issue Whether respondent is obligated to remit to petitioner, administrator of the State of Florida Employees Group Health Self-Insurance Program, an alleged underpayment of insurance premiums in the amount of $435.81, covering the period from October, 978,through June, 1983.
Recommendation Based on the foregoing, it is RECOMMENDED: That the Department enter a Final Order requiring respondent to remit $435.81, for total insurance premium underpayments, within 90 days, failing which respondent's insurance coverage under the State Employees Insurance Program should be cancelled and the underpayment obtained through certified payroll deductions from any salary due the respondent. DONE and ENTERED this 13th day of March, 1984, in Tallahassee, Florida. R. L. CALEEN, JR. 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 13th day of March, 1984. COPIES FURNISHED: Daniel C. Brown, General Counsel Department of Administration 435 Carlton Building Tallahassee, Florida 32301 Wyatt Wyatt Department of English University of Central Florida Post Office Box 25000 Orlando, Florida 32816 Nevin G. Smith, Secretary Department of Administration 435 Carlton Building Tallahassee, Florida 32301
Findings Of Fact The Applicants And Their Applications Petitioner, Medical Personnel Pool of Southwest Florida, Inc. (Medical Personnel Pool), is a wholly-owned subsidiary of Medical Personnel Pool, Inc., an operating division of Personnel Pool of America, Inc., a wholly-owned subsidiary of H & R Block, Inc. Personnel Pool of America, Inc., operates 215 home health agency offices in 42 states and in Canada, 145 of which are Medicare-certified. In Florida, Medical Personnel Pool, Inc., operates 27 offices, 5 of which are Medicare-certified. Medical Personnel Pool's corporate headquarters are in Fort Lauderdale, Florida. Medical Personnel Pool has applied for a Certificate of Need for Medicare-certified home health services in Lee, Collier and Charlotte counties in HRS District VIII. The services are proposed to be provided out of Personnel Pool's existing Fort Myers office which has been in operation over ten years. Medical Personnel Pool's existing operations out of Fort Myers are not Medicare-certified and do not serve Medicare patients. Medical Personnel Pool has represented in its application that it will commit 2% of its total visits to Medicaid patients and one hour of uncompensated visits to indigent patients for every 20 hours of visits to Medicare patients for which it is reimbursed. The indigent commitment would be recorded and accumulated until the commitment reaches the approximately 10 to 20 visits necessary to start and finish a case for an indigent patient. Medical Personnel Pool also represents that it will operate all of its home health services out of the same corporate entity out of which it operates Medicare-certified home health services. In this way, Medical Personnel Pool is committing to charge its Medicare-certified patients no more than it charges its private pay patients. Petitioner, DeSoto Memorial Hospital (DeSoto Memorial), is a private, not-for-profit acute care community hospital located in HRS District VIII in Arcadia, DeSoto County, Florida. DeSoto Memorial has provided health care services to DeSoto County since 1968. It is the only acute care general hospital located in DeSoto County. It provides services to patients regardless of ability to pay and commits in its application to provide 10% of its home health services to Medicaid patients and 8% to indigent patients. DeSoto Memorial has applied for a Certificate of Need to provide home health services in DeSoto County. Its proposed home health agency would be located at the existing hospital facility. Criterion Section 381.494(6)(c)1. (The need for the health care facilities and services and hospices being proposed in relation to the applicable district plan and state health plan adopted pursuant to Title XV of the Public Health Service Act, except in emergency circumstances which pose a threat to the public health.) 1985-87 State Health Plan. The 1985-87 State Health Plan states in part: "Policy makers are increasingly concerned about providers' willingness to serve Medicaid recipients and medically indigent Floridians." The State Health Plan references efforts by the Medicaid program since 1981 to increase Medicaid reimbursement for home health services and to increase medically indigent access to home health services. However, the State Health Plan concludes: "Rather than attempt to establish unrealistic performance expectations for private providers, the Legislature will either have to increase resources available to reimburse those providers for home health services to the indigent or provide support to the county health units." The State Health Plan also cites as an objective: "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." It recommends: "Develop a need methodology based on historic cost data for Florida home health agencies." However, the evidence in this case was that additional Medicare-certified home health agencies will not significantly contribute to price competition. To the contrary, the evidence was that additional Medicare-certified home health agencies actually will cause a relatively small increase in the cost of Medicare-certified home health services. This cost increase will be small because home health services are not capital intensive, and duplication of services and under-utilization of home health services will not require as much of a price increase to cover costs as would duplication of services and under-utilization of capital intensive hospital services.(Only 2% of a home health agency's costs are capital costs while 15 to 20% of a hospital's costs are capital costs.) In addition, the price for Medicare- certified home health services is subject to a cap which most home health services already are close to. Additional numbers of home health agencies would foster competition in the quality of services and responsiveness of services to the needs and wants of the patients in an area. Additional Medicare-certified home health agencies that serve a significant percentage of Medicaid recipients and medically-indigent patients would have a competitive advantage in getting referrals over Medicare-certified home health agencies that do not serve Medicaid recipients and the medically-indigent. To compete, existing Medicare-certified home health agencies probably would initiate comparable service for Medicaid and medically-indigent patients. This desirable effect of competition would help alleviate the policy makers' concerns referred to in Finding Of Fact 7 above. But see Conclusion Of Law 1 below. (ii.) District VIII Local Health Council Health Plan. The 1985 District VIII Local Health Council Health Plan adopted August 21, 1985 states: "Home health care services are generally available to all residents within District Eight." However, this conclusion drawn by the local health council is based upon an application of HRS proposed rule 10-5.11(14), Florida Administrative Code. This rule has been held invalid. See, Final Order, Home Health Services and Staffing Association, et al. v. Department of Health and Rehabilitative Services, Case No. 85-1377R, March 12, 1986. In addition, based upon the evidence in this case, the proposed rule does not accurately assess the need for the home health agencies proposed by Medical Personnel Pool and DeSoto Memorial. See Findings Of Fact 27 through 70 below. The District Health Plan also establishes sub- districts. Pertinent to this case, Charlotte County, Collier County, DeSoto County and Lee County are established as separate sub-districts. Sarasota County also is established as a separate sub-district. Glades and Hendry counties are combined as the last sub-district. The District Health Plan's sub-district designations were established on the basis that they: (1) have a geographic size which meets reasonable travel distances and travel times; (2) have a population size adequate to support at least one agency; (3) are geo-politically consistent; and (4) have available population, socio-economic and health statistics to document use rates and projections. The District Health Plan also recommends: "Sub- districts without a home health agency office in one or more of its principle [sic] communities should be identified as a priority area for the expansion or new establishment of a home health agency." In addition, the District Health Plan establishes the policy: "Continuity of patient care should be assured through the establishment of formal coordination arrangements between home health agencies, and physicians, hospitals, nursing homes, and community social service agencies and organizations." Finally, as another policy, the District Health Plan states: "Home health care should be accessible to all persons in need, regardless of ability to pay or source of payment." But see Conclusions Of Law 1 below. Criterion Section 381.494(6)(c)2. (The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services and hospices in the service district of the applicant.) There are 19 existing licensed Medicare-certified home health agencies (sometimes referred to simply as home health agencies) with home offices in District VIII. This number excludes Home Care Services of Hendry County which ceased operations as of March 22, 1985. In addition, one home health agency in District VIII has been approved, but is not yet licensed and operating. (Homecare of Glades and Hendry Counties, approved in a later batching cycle is now on administrative appeal in Division of Administrative Hearings Case No. 85-4308, should not be counted as available for purposes of assessing the need for the Medical Personnel Pool or DeSoto Memorial proposals.) In addition, three home health agencies with home offices outside District VIII in Manatee County hold licenses enabling them to operate within District VIII. But one of them Visiting Nurses Association of Hardee County ceased operations in District VIII (DeSoto County) approximately six months before the final hearing in this case. These home health agencies are referred to in HRS proposed rule 10-5.11(14) as multi-district agencies. They also are commonly referred to as cross-over agencies. The total number of available home health agencies in District VIII is 22. This total excludes Home Care Services of Hendry County, Visiting Nurses Association of Hardee County and Home Care of Glades and Hendry Counties. Medical Personnel Pool and DeSoto Memorial did not prove that any other of the licensed and approved home health agencies in District VIII should be excluded from the total number of available home health agencies. Five of the 22 available home health agencies are in Lee County. Four of the available home health agencies are in Charlotte County. Three additional home health agencies have home offices in other counties, but are licensed to operate in Charlotte County. Three of the 22 available home health agencies have home offices in Collier County. In addition, three have home offices in other counties, but are licensed to operate in Collier County. One of the 22 available home health agencies has a home office in Arcadia in DeSoto County. In addition, another home health agency is licensed to operate in DeSoto County, but has its home office in another county. Neither Medical Personnel Pool nor DeSoto Memorial proved or disproved the quality of care, efficiency, appropriateness or extent of utilization of the 22 available home health agencies in District VIII. The accessibility and adequacy of the 22 available home health agencies in District VIII actually is addressed by an analysis of the need for the Medical Personnel Pool and DeSoto Memorial proposals. See Findings Of Fact 27 through 70 below. Analysis of Need for the Proposed Home Health Agencies. (i) HRS proposed Rule 10-5.11(14), Florida Administrative Code. The basic approach of the invalid HRS proposed Rule 10- 5.11(14) was to apply historical use rates for specific age cohorts of the population to the projected population within those age cohorts in a given district in a future year, or "planning horizon." This widely-accepted type of approach to projecting need is referred to by health planners as a "utilization-based methodology." There were five steps included in the methodology of the proposed rule. The first step was to project the number of elderly Medicare recipients who would utilize home health services. This number is denoted by the letter "A". To calculate "A", one multiplied the projected population aged 65 and over in the district by a constant which was intended to represent a percentage of the elderly who have historically used home health services. The proposed rule included a number, or a constant, to be used for this purpose. The value of the constant presented in the proposed rule, .0496, purportedly represented the percentage of elderly Medicare enrollees who actually used home health services in Florida in 1982. This percentage for'.. 1982 was misstated in the proposed rule and should have been 5.06% (.0506), rather than 4.96% (.0496). HRS has now acknowledged this error and agrees that .0506 (5.06%) was the appropriate 1982 age 65-and-over utilization rate. According to the proposed rule, then, to calculate the number of elderly people projected to need home health services, the population aged 65 years-and-over two years in the future was to be multiplied by the 1982 use rate for this group, .0506 (5.06%). The second step in the methodology of the proposed rule was to project the number of disabled under-65 Medicare recipients ("B") who will utilize home health services. To calculate "B", one first multiplied the projected district population two years in the future under the age of 65 by the percentage of that population estimated to be disabled. In the proposed rule, HRS used constants for both the proportion of the population under 65 years of age which was projected to be disabled (.01755), and the portion of those disabled persons who would be expected to use home health services (.0297). As in the first step, these values were taken from 1982 Medicare utilization data for Florida. Thus, in the second step of the formula under the proposed rule, the number of under-65 disabled persons who were projected to need Medicare home health services equaled the number of persons in the district under the age of 65 two years in the future, multiplied by .017555, the result of which was then multiplied by .0297. The third step of the proposed rule's formula projected the number of Medicare home health visits (as opposed to persons) needed in the district two years in the future, by multiplying the total projected number of people needing Medicare home health services by the historical number of average visits per person for Florida in 1982. The average number of visits per person in 1982 was 31.5, also derived from 1982 Medicare data. The total number of home health visits was projected as being equal to "A" plus "B", or the sum of the first two steps, multiplied by 31.5. The fourth step of the formula of the proposed rule calculated the number of needed Medicare home health agencies, given the number of projected Medicare visits calculated in the third step. The gross number of Medicare agencies projected as needed in the planning horizon ("G") was calculated by dividing the number of projected total Medicare visits per agency per year ("S"). "S" was determined through another calculation, and varied, depending upon the total number of projected Medicare visits in the district and the calendar year in which a CON application was filed. "S" was obtained by adding to a presumed base agency size of 9,000 Medicare visits per year, an additional adjusted number of visits (the so-called "additive factor"). This adjusted number of visits equaled the total projected number of Medicare visits divided by 9,000, then multiplied by what was called the "C" factor. The "C" factor varied with the calendar year in which an application was filed. For applications which were filed in 1984 and 1985, "C" was equal to 270. For applications to be filed in 1986 and 1987, "C" was equal to 225. For applications to be filed in 1988 or later, "C" was equal to 180. If the calculation of "S" resulted in a number which was larger than 21,000, then "S" was to be assigned a value equal to 21,000. This meant that the divisor "S", or the number of visits an agency was expected to provide, would range from 9,000 visits to 21,000 visits. Thus, districts would have different values for "S", and even within a district, the value of "S" would vary from year to year. The fifth and last step of the formula was to calculate the net number of Medicare-certified home health agencies needed ("N"). "N" was calculated by subtracting the number of "licensed and approved" agencies currently located in a district from the gross number of agencies projected as needed in the planning horizon, "G". The number of "licensed and approved" agencies, denoted as "L" in the proposed rule, included a count of all licensed agencies located within a district and all approved agencies that are not yet licensed. As of the date of the final hearing in this case, HRS was applying proposed Rule 10-5.11(14) to its review of home health agency CON applications, as though the rule were in full force and effect, with several significant modifications to the express language of the proposed rule. First, as noted above, HRS had agreed that its use of the value .0496 in Factor "A" of the published proposed rule was the result of an erroneous reading of the published 1982 Health Care Financing Administration ("HCFA") home health utilization rates for over-65 persons in Florida, and that the correct 1982 value was .0506. Second, HRS had abandoned the requirement of the published version of the proposed rule that decimal values of "G" always be rounded down to the next lower whole number and had modified its application of the proposed rule to conventional rounding of value "G", i.e., decimal values of .5 or greater were rounded up to the next larger whole number, and decimal values less than .5 were rounded down to the next lower whole number. In applying proposed Rule 10-5.11(14) in its review of Medical Personnel Pool's CON application, HRS included in the inventory of licensed and approved agencies ("L") three (3) agencies located in other districts, which although licensed to serve individual counties in District VIII, were not licensed to serve any of the counties in Medical Personnel Pool's proposed service area, and which had not yet applied for nor been approved to set up new agencies or sub-units in District XI under the now defunct paragraph (e) of the former proposed rule. The "additive factor" is the term which has been used to refer to everything appearing to the right of the first appearance of the figure 9,000 in the definition of the divisor, factor "S," of the methodology found in paragraph (a) of the former proposed rule. As previously discussed, the purpose of the divisor in the formula of paragraph (a) of the former proposed rule was to convert the expected number of Medicare visits needed in the appropriate planning horizon to a gross number of Medicare home health agencies needed. In order to accomplish this, an agency size of some sort had to be used, defined by number of visits, for the denominator in the formula. One intent of the value in the denominator in the methodology of the former proposed rule was to represent an optimal minimum efficient economic operating size. The premise for this concept of optimal minimum efficient economic operating size was a health planning concept that below a certain minimum range of agency size in number of visits, fixed start-up costs result in a relatively high cost per visit ratio for new small agencies. All of the available data indicates that there is a range of "economies of scale" in costs per visit for new start-up home health agencies, breaking somewhere between 6,000 and 9,000 or 10,000 visits. Once this breaking point is reached, the relatively small level of fixed costs in home health level off, and the data do not show any further significant points of economies of scale. Specifically, a distinction must be drawn between the theoretical economies of scale argument and what the actual available reported data show to be the experience of the home health industry in Florida. Using a sample of over 85% of the home health agencies in Florida (all of the agencies cost reporting through the State's Medicare fiscal intermediary), and plotting their actual reported 1984 number of visits and cost per visit, it is clearly seen that there is no predictable relationship between actual reported agency size in visits and actual reported cost per visit. A statistical regression analysis performed on this same data for three years experience, i.e., 1982, 1983 and 1984, confirms this absolute lack of any significant relationship between reported agency size and reported agency cost per visit in Florida's existing Medicare home health agencies. For example, in the most recent reporting year, the largest agency in Hillsborough County also reported the highest cost per visit in Hillsborough County. Further, whatever argument these may be as to economies of scale and start-up costs for a new home health agency, the undisputed evidence is that an existing, fully-staffed, fully- equipped home health agency has all of its necessary patient referral sources in place and functioning. Thus, the economies of scale argument relating to start-up costs of new home health agencies is not applicable to existing agencies. Nevertheless, to accomplish the goals of translating gross number of visits projected as needed in the appropriate planning horizon to gross number of Medicare agencies needed, HRS proposed in the methodology of its former proposed rule to use a denominator of 9,000 visits, inflated by the so-called additive factor in two ways, i.e., (1) by incorporating an additive factor of total Medicare visits in the district, divided by 9,000, and (2) by then multiplying this ratio by the so-called "C" factor, which consists of three different arbitrary values, 3% of 9,000 (270), 2 1/2% of 9,000 (225), and 2% of 9,000 (180), depending on the filing year of the application being reviewed. This entire value was then added to 9,000 visits. The effect of including "MV" divided by 9,000 in the additive factor was to yield a final value for this factor, with or without the "C" multiplier, which varied in size from one HRS Local Health Planning District to any other. This occurred because "MV" would differ from district to district, driven as it was by district population in the given planning horizon. For the same reason, this ratio within the additive factor would also vary from year to year. Absolutely no rationale or purpose has been offered for thus varying the "target agency size" from district to district and year to year. This result of including MV/9,000 in the additive factor is, therefore, totally arbitrary in its own right. As previously noted, the "additive factor" contained its own internal additive factor; a multiplier referred to as "C". The arbitrary values which were substituted for "C" are set forth above. In its first value, "C" caused the methodology of the proposed rule to yield a statewide average district net need under the formula as proposed of only two (2) new agencies, the closest whole value possible to the existing number of Medicare home health agencies as of the date of the proposed rule's publication. The only evidence tending to explain the derivation of "C" is testimony that HRS files contained several computer "runs," each with a different value and showing different net need results, and that the value chosen by HRS for the first two years (270) yielded the overall statewide average district net need which closest approximated the status quo. No evidence was introduced to show how either the values attributed to "C" or the existence of "C" itself were empirically justified or served a valid health planning purpose. Proposed Rule 10-5.11(14) provided for annual updating of the projected population data to be used therein, but froze as "standards" the 1982 Medicare Florida home health agency utilization rates which appeared in factors "A," "B," and "C". More recent use rates, i.e., 1983 values for each of these use rates, are, and have been, readily available. This data, published by HCFA, is released at least annually, and is readily available to anyone requesting it, with a minimum of effort. It is unreasonable not to update these utilization rates to the most recent available data. In addition, there are several specific health planning reasons why refusal to consider the readily available updated 1983 use rates would be unreasonable in this case. First, since at least 1978, when such records became available, HCFA data has shown a steady and consistent trend of increases in all three of these utilization rates, both in Florida and in the nation as a whole. There are several reasons explaining this trend: there have been ever-increasing pressures in the health care delivery system to "deinstitutionalize" patient services, with an emphasis on outpatient and home health services a major part of the reason for this emphasis is budgetary restraints home health services are far less expensive than comparable inpatient services; there has been an increase in the need for home health services for younger populations for things such as post-surgical care; there have been innovative technological developments in home health care, including the so-called hi-tech services which in the recent past, if available at all, were only available in inpatient settings; there has been a demonstrated increased awareness of home health services and their advantages, both in the physician community and among the public at large; and there have also been significant changes and expansions in Medicare reimbursement of home health services which have encouraged increased utilization. The 1982 Medicare utilization reporting period pre- dated the October, 1983, implementation of the Medicare prospective payment system for hospitals, which has been identified as a specific cause of increased home utilization. Furthermore, most of the previously discussed innovative hi-tech home health services were not in use in home health in 1982, and that reporting year's data ignores their effect on home health utilization. The proposed rule, in paragraph (e), provided that home health agencies shall be restricted to providing services within a single departmental district. The proposed rule further provided that any multi-district or cross-over agency should be included in the inventory of the home health agencies in the district into which it crosses over. As reflected in Findings Of Fact 19 and 20 above, multi-district or cross-over agencies should logically be taken into account in determining the adequacy of existing home health agencies to serve the needs of a particular district. Multi-district or cross-over agencies are licensed to operate in some of District VIII and must be presumed to be operating in parts of the district absent a showing that they are not. In this case, the evidence was that one of the three multi-district or cross-over agencies Visiting Nurses Association of Hardee County is not operating in District VIII, but there was no similar evidence as to the other two multi- district or cross-over agencies. Those two should be counted in District VIII's inventory of home health agencies. HRS did not prove by the evidence in this case that proposed Rule 10-5.11(14), if proposed as non-rule policy, is reasonable. (ii.) Quantification of Need. As mentioned, the utilization method of quantifying need for Medicare-certified home health agencies is a reasonable approach. As also mentioned, it is most reasonable and accurate to use the most recent available utilization data for 1983 in quantifying need for Medicare-certified home health agencies. According to the 1983 data: (1) 5.78% of elderly Medicare enrollees receive home health services; (2) 0.058% of the population under 65 receive Medicare home health services and (3) recipients average 33.3 home health visits each. The next element of quantifying need is determining the planning horizon on which the need is to be projected. The evidence in this case was persuasive that it is reasonable to project need two years into the future from the date of the final hearing. The date of the final hearing itself would roughly coincide with a planning horizon two years from the date the applications were deemed complete. This would leave no lead time for start-up. While the evidence was that start-up time is relatively minimal in home health, it cannot be assumed that start-up would begin at or near the time of the final hearing. The Recommended Order has just now been entered, and an additional period of time can be expected to elapse before final agency action. Finally, placing the planning horizon two years from the date of the final hearing is consistent with past agency policy before the decision in Gulf Court Nursing Center v. Department of Health and Rehabilitative Services, 10 FLW 1983 (Fla. 1st DCA, August 20, 1985); clarified on rehearing, 11 FLW 437 (February 14, 1986). Using the 1983 utilization data, the gross number of visits projected for 1988 can be obtained by multiplying the projected district population of persons 65 years of age or older times the 5.78% utilization rate and adding that number to the product of the projected district population of persons aged O to times 0.058%, the percentage of persons 0 to 64 estimated to be using Medicare home health services. Using this method, the total number of visits projected in District VIII for 1988 is 449,483. Having determined the estimated number of total visits, this number must then be translated into number of home health agencies by dividing the total by a number of visits per home health agency. Because of economies of scale, this number must be at least in the range between 6,000 and 10,000 visits per agency. The evidence is that, beyond the minimum size for a home health agency, there is no causal and predictable relationship between number of visits per agency and the cost; efficiency of a home health agency. Some of the evidence has suggested that total number of visits in a district should therefore be divided by the minimum agency size. But this would change the analysis from the analysis of the need for an additional home health agency to an analysis whether the market could bear an additional home health agency. Whether certificate of need regulation in the area of home health makes sense on the evidence of this case, the rationality of the law in effect must be presumed. Under the law in effect, the analysis must measure the need for an additional home health agency, not the ability of the market to absorb an additional home health agency. See Conclusion Of Law 3 below. Throughout the state, the number of Medicare visits per home health agency varies broadly from the minimum size agency to almost 80,000 visits per year. In District VIII, Redi-care operated in 1984 at 34,641 visits, while another agency in the district operated at only approximately a tenth of those visits. The District VIII average in 1984 was 19,206 per year. Since there are no apparent economies of scale above six to ten thousand visits per year, there is no general optimum size for a home health agency. The volume at which a home health agency can efficiently operate is instead a function of demographics. The size of a home health agency will vary in relationship to the size and composition of the population within reach of the agency and the number of other agencies actively competing for the same market. For this reason, the most appropriate available number to use as the visits per agency per year for planning purposes is the number of visits per year agencies are now making. The only evidence of this nature in the record is the average size of home health agencies in District VIII in 198419,206 visits per year or, approximately, 19,000 visits per year. 449,483 visits divided by 19,000 visits per year results in 23.7 or, rounding, 24 Medicare-certified home health agencies needed in District VIII. As previously discussed, there are for planning purposes 22 licensed and approved Medicare-certified home health agencies in District VIII, resulting in a net need in District VIII in 1988 for 24 minus 22, or 2 Medicare-certified home health agencies. However, the evidence in this case is that Medicare- certified home health agencies are limited by federal regulations and practical considerations to a range of approximately 50 miles and by HRS to the counties of their licensure. (HRS proposed Rule 10-5.11(14), Florida Administrative Code, would have expanded licensees' authority to operate throughout the district, but it has been held invalid and is not in effect.) Therefore, it is not rational for planning purposes to end a home health need analysis at the district level. If, for example, the two agencies needed in District VIII are needed in the southern part of the district, it would serve no health planning purpose to authorize two additional agencies in the northern part of the district. There are two ways of analyzing home health need on a sub-district basis: First, using the utilization method, and secondly, allocating district-wide need by percentage of the elderly population in each sub-district. Under the utilization method, Lee County is projected to require 147,686 Medicare home health visits in 1988. Dividing the total visits by the district average-sized agency (their being no evidence of the average size per agency on a county basis), Lee County would need 7.8 or, rounding, 8 Medicare- certified home health agencies. Since Lee County only has five existing or approved Medicare-certified home health agencies at this time, it has a net need of three agencies. On the other hand, using the same analysis, the Charlotte, Collier and DeSoto Counties have no need projected for 1988. For Charlotte County: 64,735 visits divided by 19,000 per agency per year equals 3.4 or, roughly, three Medicare-certified agencies needed in 1988. Charlotte County now has four Medicare- certified home health agencies with home offices in Charlotte County, and three others are licensed to operate in Charlotte County. Collier County is projected to have 57,909 visits divided by 19,000 visits per agency per year equals a need for three agencies projected for 1988. Collier now has three agencies based in Collier County and three others licensed to operate there. In DeSoto County, only 7,659 visits are projected for 1988. This is less than the average-sized agency in District VIII, but it is assumed that there is a need for one home health agency in DeSoto County in 1988. There is one based in DeSoto County now, and another is authorized to operate there. Multiplying the total district-wide need of 22 Medicare-certified home health agencies projected for 1988 by the pertinent county's percentage of the elderly population of District VIII results in the following allocation: Lee County 32.785% x 22 = 7.2 Collier County 12.77% x 22 = 2.8 Charlotte County 14.54% x 22 = 3.2 DeSoto County 1.67% x 22 = .4 As a result of this sub-district analysis, it becomes apparent that there is a need for at least two additional Medicare-certified home health agencies in Lee County, but there is no quantifiable need elsewhere in District VIII projected for 1988. (iii.) Other Need Considerations. Since 1978, utilization of home health services in Florida has consistently increased in all categories for which utilization rates are kept the number of persons over the age of using home health services, the number and percent of disabled persons under the age of 65 using home health services, and the average number of visits provided per patient per spell of illness. In recent years, there also have been significant innovations and reimbursement changes in health care, both in home health and elsewhere in the health care industry, which have significantly increased the utilization of home health services. In October, 1983, hospitals came under the new Medicare prospective payment system whereby they no longer are reimbursed for services to Medicare patients on a reported cost basis, but rather are reimbursed on a fixed-fee-for-service basis, known as Diagnostic Related Groupings, or "DRGs". Hospitals are now reimbursed a fixed amount for each defined DRG service or procedure, regardless of the costs incurred by the hospitals in delivering that service. The effect of this new reimbursement methodology has been to encourage hospitals to find ways to deliver services at lower costs, and thus maximize reimbursement. One obvious way to accomplish this is to shorten the length of the patient's stay in the hospital. Another is to defer several services, previously performed in an inpatient setting, to home health providers for provision in the patient's home, or on an outpatient basis with subsequent follow-up care in the patient's home. In either event, the experience of the industry has been that since the implementation of DRGs, many patients are being discharged by hospitals sooner, in a sicker or more acute condition, and in greater need of home health services. At the same time, the industry has experienced the recent development of several so-called hi-tech home health services more advanced treatment and care procedures now being widely provided in the home, which a very short time ago were only provided in inpatient settings. These services include such procedures as chemotherapy, hyper-alimentation, and various other forms of indirect tube feeding. In addition, the industry has seen the development of new modernized equipment which has enabled many of these and other advanced procedures to be provided more inexpensively in the home. Complicating matters further, Florida's nursing homes have, for some time now, been operating at very full levels. Often the physician is left with only two choices - very expensive hospitalization or home health care. Some of these other need considerations already have been taken into account in the quantification of need just analyzed. The analysis does not, however, take into account continued increases in utilization after 1983 which, while not exactly speculative, are not certain and are not quantifiable. DeSoto Memorial's proposal for a hospital-based home health agency affords some advantages in enabling DeSoto Memorial to utilize currently under-utilized hospital facilities and services. It also increases the likelihood that patients will benefit from better continuity of care. However, the evidence did not prove or disprove the extent of continuity of care which can now be achieved without the DeSoto Memorial proposal as a result of efforts to coordinate care of patients among the hospital, the existing home health agencies and the physicians. In other words, while continuity of care using existing home health providers may take more effort, there is no evidence that it cannot be provided. Criterion Section 381.494(6)(c)3. (The ability of the applicant to provide quality of care.) The parties have stipulated to the ability of both Medical Personnel Pool and DeSoto Memorial to provide quality care. Both applicants have the ability to provide socalled "hi-tech" home health services such as chemotherapy and indirect tube feeding. As previously mentioned, the DeSoto Memorial proposal will facilitate continuity of care. Criterion Section 381.494(6)(c)8. (The availability of resources, including health manpower, management of personnel, and funds for capital and operating expenditures, for project accomplishment and operation; the effects the project will have on clinical needs of health professional training programs in the service district the extent to which the services will be accessible to schools for health professions in the service district for training purposes if such services are available in a limited number of facilities the availability of alternative uses of such resources for the provision of other health services and the extent to which the proposed services will be accessible to all residents of the service district.) Both Medical Personnel Pool and DeSoto Memorial have available the resources, including health manpower, management personnel, and funds for capital and operating expenditures necessary to accomplish and operate the project. There was no evidence of the effects of either project on clinical needs of health professional training programs. There was no evidence that the services proposed by either Medical Personnel Pool or DeSoto Memorial will be available to schools for health professions in the service district for training purposes, or that such services are available in a limited number of facilities. As proposed home health agencies, both the Medical Personnel Pool and the DeSoto Memorial applications will use resources largely only to extent necessary. Capital investment is relatively minimal, and nurses and other personnel providing home health services to patients can be hired on an hourly basis as needed. To the extent not needed, those resources would be available for the provision of other health services that might be needed. The DeSoto Memorial proposal for a hospital-based home health agency would be particularly capable of using such resources for alternative uses. The Medicare-certified home health services proposed by both Medical Personnel Pool and DeSoto Memorial will be accessible to all residents of the service district within approximately 50 miles of the proposed agencies. As previously mentioned, there is a geographic limit to the economic delivery of home health services from any one agency. However, except for Lee County, all residents of District VIII will have access to Medicare-certified home health services without either of the proposals. There is a demonstrated lack of access to Medicaid reimbursable home health services and to home health services for the indigent. However, those services are not the subject of this proceeding. See Conclusions Of Law 1. Criterion Section 381.494(6)(c)9. (The immediate and long- term financial feasibility of the proposal.) The parties have stipulated to the immediate and long- term financial feasibility of both the Medical Personnel Pool and the DeSoto Memorial proposal. Criterion Section 381.494(6)(c)12. (The probable impact of the proposed project on the costs of providing health services proposed by the applicant, upon consideration of factors including, but not limited to, the effects of competition on the supply of health services being proposed and the improvements or innovations in the financing and delivery of health services, which foster competition and service to promote quality assurance and cost-effectiveness.) As previously mentioned, additional competition in Medicare-certified home health services probably would tend to improve the quality of the services provided, give providers incentive to meet the needs and desires of the patients in the service area and foster innovations in the home health area. As to price competition, there was no evidence that competition in Medicare-certified home health services will have any positive effect on the cost of home health services in the service district. Actually, the evidence was that additional home health agencies would be likely to increase slightly the charges for home health services. These increases would be subject to the Medicare cap which most agencies' charges already are approaching. I. Balanced Consideration of the Criteria. Balancing all the criteria that have been considered as applicable in light of the parties' stipulations, it is found that there is need and sufficient justification to grant the Medical Personnel Pool application, but only as to Lee County. There is no need for or sufficient justification to authorize Medical Personnel Pool to operate in Charlotte or Collier Counties or to grant the DeSoto Memorial application. (If need for Medicare-certified home health agencies could be based upon the needs of Medicaid and indigent patients, the evidence would support the need for both proposals as applied for.)
Recommendation Based on the foregoing Findings Of Fact and Conclusions of Law, it is recommended that Respondent, Department of Health and Rehabilitative Services, enter a final order: (a) granting the application of Petitioner, Personnel Pool of Southwest Florida, Inc., for a certificate of need for Medicare home health services but only for Lee County and only on the conditions (1) that Personnel Pool provide 2% of its total visits to Medicaid patients and one hour of uncompensated visits to indigent patients for every 20 hours of visits to Medicare patients for which it is reimbursed and (2) that it will operate all of its home health services out of the same corporate entity out of which it operates Medicare-certified home health services: (b) denying the Personnel Pool application as to Collier and Charlotte counties; and (c) denying the application of Petitioner, DeSoto Memorial Hospital. RECOMMENDED this 7th day of May, 1986 in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of May, 1986.
