The Issue Whether any or all of the applications for certificates of need to establish medicare-certified home health agencies in Broward County (AHCA District 10) by Petitioners Allstar Care, Inc.; Medicorp Home Health Care Services; and Medshares of Florida, Inc., should be approved by the Agency for Health Care Administration.
Findings Of Fact The Parties Allstar Allstar Care, Inc., with its offices in Miami, is a Florida corporation that operates a licensed Medicare-certified home health care agency in Dade County. It serves, principally, patients aged 65 and over who are Medicare- and Medicaid-eligible by providing them at home: skilled nursing; physical therapy; occupational therapy; speech therapy; and the services of home health aides, when provided physician's order to do so. It also serves at-home indigents with like services when provided appropriate physician's orders. In 1996, Allstar provided a total of 122,000 visits. Fifty percent of them were by home health aides providing assistance with the patients' daily living needs, such as bathing, oral care, dressing, and assistance with meals. Forty- five percent of the visits were by skilled nurses. In addition, licensed social workers employed by Allstar provided social and emotional support for the patient and the patient's family. From 1994 to date, Allstar has provided Medicare- certified home health services in Dade County. It is reasonable to expect that Allstar will provide the same range of services that are described in its application for Broward County that Allstar currently provides in Dade. Medicorp A sister home health agency to Medcorp Home Health Services, Medicorp Home Health Services is a home health agency that serves patients in Wilton Manors and Oakland Park in Broward County, Florida. Although not Medicare-certified, it is Medicaid-certified. Medicorp was founded primarily to bring services to unserved and underserved areas, particularly "the projects," (Tr. 13,) in Broward County, that is areas of low-income housing the building of which was financed by the federal government's Department of Housing and Urban Development. Commencing operations in 1991 with an initial investment of $8,000 and as its only employee, current owner and administrator Beverly Cardozo, LPN and certified respiratory therapist, Medicorp has experienced rapid growth. Last year it grossed $1.8 million. Medshares Medshares of Florida, Inc., is a member of the family of Medshares companies commonly referred to as "Medshares." Medshares provides various home health services, such as Medicare-certified home health services; private nursing services; management services for home health agencies; infusion services; and consulting services. Medshares began in Tennessee in 1985 and since that time has expanded to operation in nine states with 52 locations. In 1996, Medshares provided approximately one million visits through its Medicare-certified home health agencies and approximately 1.7 million visits through its non-Medicare-certified and managed home health agencies. Medshares' long-range plan includes development of Medicare-certified agencies through the southeast. Development of such an agency is a logical step for Medshares, since Medshares currently operates in several other southeastern states. Medshares experiences a low-employee turnover rate of approximately 50 percent, which is less than half of the national average for home health operations. Medshares attribute this low turnover rate to its participatory management style as well as its employee benefits packages. For example, Medshares offers educational packages to any of its employees who wish to further his or her education. For its nurses, Medshares funds the cost of nursing certification by the American Nurses Association. AHCA The Agency for Health Care Administration is the "single state agency [designated by statute] to issue, revoke or deny certificates of need . . . in accordance with the district plans, the statewide health plan, and present and future federal and state statutes." Section 408.034(1), Florida Statutes. Petitioners: Non-competitors The Petitioners each claimed in the hearing that there is sufficient need in the District to support the granting of all three applications. They do not, therefore, view each other as competitors in this proceeding. Filing of the Applications and Preliminary Action by AHCA All three petitioners, Allstar, Medicorp, and Medshares, submitted timely applications for certificates of need to establish Medicare-certified home health agencies in Broward County, AHCA District 10: CON 8448 (Allstar), CON 8418 (Medicorp), and CON 8419 (Medshares). The applications were deemed complete by AHCA. Following preliminary review, however, the agency denied the applications. The State Agency Action Report ("SAAR") sets forth AHCA's findings of fact and determinations upon which the decisions were based. Allstar, Medicorp, and Medshares each filed a timely petition for hearing. The District AHCA District 10 is composed of Broward County, alone and in its entirety. The service area for review of CON applications for Medicare-certified home health agencies is the district. In this case, therefore, the service area is Broward County. In Broward County, there are roughly 190 home health agencies. Of these, however, only 35 are licensed Medicare- certified home health agencies (34 providers hold the 35 licenses). Three are approved Medicare-certified home health agencies, and another three are exempt Medicare-certified home health agencies. Need for Additional Medicare-certified home health agencies in District 10 No AHCA Methodology AHCA did not publish a fixed need pool for Medicare certified home health agencies for the July 1997 planning horizon in Florida because, at the time the Letters of Intent were filed (and when the Formal Hearing was conducted, as well), AHCA did not have any methodology pursuant to rule for projecting need for additional Medicare-certified home health agencies. Reasonable Methodologies of the Petitioners In the absence of AHCA methodology, expert health planners for each of the three petitioners developed reasonable methodologies which, when applied to data relevant in time by demographics to the case, show a need for at least a number in excess of three. Changes in the Health Care Marketplace The methodologies developed by the petitioners recognize ongoing changes in the health care marketplace that began with the implementation of the Medicare prospective payment system. The changes have progressively encouraged the use of less intensive, less costly settings for the provision of health care services. The least intensive and least costly health care service is home health care service. The tremendous demand for non-Medicare and Medicare-certified home health services beyond what would be expected due to simple population growth is the result. Use rates, therefore, are escalating beyond escalation due to population growth alone. AHCA recognizes that there has been a significant trend toward increased use of home health services. Not surprisingly, therefore, AHCA did not criticize the use of compound rates of increase to compute use rates in the need methodologies developed by any of the three petitioners. Allstar's Methodology and Determination of Numeric Need Allstar's health planner determined a need for at least six additional Medicare-certified home health agencies in Broward County for the appropriate planning horizon. The methodology used by Allstar in its application was conceptually identical to that approved in the Recommended and Final Orders in Shands Teaching Hospital and Clinics, Inc. v. AHCA, DOAH Case No. 96-4075 (Recommended Order issued 3/20/97, Final Order 5/12/97). The source of the data used by Allstar to develop its need methodology was the Medicare cost reports that existing providers file with the Federal Health Care Financing Administration, ("HCFA"). Data from 1995 was not available in the spring of 1996 when Allstar's application was filed, so Allstar used a 1994 data base period. The 1994 base period used by Allstar is the last for which data on visits was available from AHCA before the deadline for filing applications in this case. Allstar selected 1997 as the planning horizon because it usually takes one year from the date the application is submitted to get a home health care service in place. The planning horizon selected by Allstar is reasonable. Allstar relied on population estimates published by AHCA in January 1996, the most currently available populations statistics when the application was filed. Allstar received February 1996 population data from AHCA after the application was filed, but before the omissions response was due. When Allstar's methodology is replicated using the February 1996 population data, it does not substantially alter the projected numeric need. Allstar calculated a 1994 District 10 use rate by dividing the total patient visits in 1994 by the 1994 District 10 population 65 years of age and older. Use of the 65-and-older cohort is reasonable since Medicare eligibility begins at age 65 and, historically, 98 percent of all Medicare-certified home health care visits are delivered to that age group. The calculation yields a historic use rate of 6.83 visits per capita. Most use rates developed by health care planners for acute care services are constant. They assume conditions that are found in the base period will remain unchanged. Constant use rates are inappropriate in the instance of Medicare-certified home health care agencies. District 10 historical data from Medicare cost reports for the period 1989 through 1994 show use rates, ranging from 2.82 per capita in 1989 to 6.83 per capita in 1994. This dramatic increase is consistent with the increase in use rates in other AHCA districts. The combination of managed care and Medicare's prospective pay system is producing care for patients in less costly non-institutional settings like the home of the patient. Hence, home health care use rates have increased. The historical use rate trend line developed by Allstar, when extrapolated to 1997, yields 10.47 visits per capita in 1997. Consistent with conservative planning, and in an attempt to avoid either overstating or understating the horizon year use rate, Allstar averaged the trended and constant use rates for 1997, yielding a use rate of 8.65. Since a use rate of 8.65 represents the result of averaging two numbers, the 1997 projected rate is both a median and a mean. It is also both conservative and reasonable. When AHCA's population projection for 1997 is multiplied by the 8.65 use rate, the result is a projection of 2,365,443 Medicare-certified visits in July 1997. The mean agency size in 1994, measured by number of visits, was 54,101. The median number of visits in 1994 was 54,803. Dividing the average agency size of 54,101 visits into the number of projected visits in 1997 yields a gross need for 44 Medicare-certified home health care agencies in 1997. Allstar then subtracted the number 35 (representing the licensed Medicare-certified home health agencies) and another 3 (representing the approved agencies) from 44, yielding the need for 6 new Medicare-certified home health agencies. AHCA criticized Allstar's methodology on two bases. First, Allstar used population estimates published in January 1996, instead of more recent population estimates for February 1996, estimates available to Allstar at the time it filed its omissions response. Second, Allstar calculated its average or mean number of visits by using the total number of licensed Medicare-certified home health agencies in District 10, as opposed to only those licensed agencies which actually reported visits. As to the first criticism, Allstar's health planner explained on rebuttal that the January 1996 population estimates were all that were available when it prepared the application. It is true that the February 1996 population estimates became available prior to the filing of the omissions response and although "there was no . . . formal notification," (Tr. 650), Allstar became aware of their availability before it filed the response. Allstar's health planning expert examined the February 1996 data and concluded that "while different, [the data] . . . weren't significantly different." (Tr. 651). In light of the lack of any significant difference, Allstar's expert summed up the company's analysis of the problem and its approach at that moment in time this way: We had already invested a lot of energy in running the need [with the January 1996 data] and simply made the decision not to go back and redo all of that work based on the February document. (Tr. 650-651.) Since there was no "significant difference," between the January and February data, it does not seem appropriate to require the effort needed to project need based on a calculation employing the more up-to-date data, an effort that would not alter the result of Allstar's projected numeric need. In point of fact, after filing the omissions response, Allstar's expert did the analysis with the more current data and determined that the February population estimates, "had no affect on the conclusion of how many net agencies were needed." (Tr. 652.) As for the second criticism, Allstar's health planner appreciated that there was a choice to be made in its methodology between visits as to total number of licensed Medicare-certified home health agencies in District 10 and the subset of that group consisting of only like agencies which reported visits. Allstar rejected the use of only those who reported visits. By doing so, it assumed that non-reporters did not provide any visits. To do otherwise, that is, to exclude non- reporters, results in the assumption, when using an average number of visits as a component in the methodology, that the non- reporting agencies, on average, had just as many visits as the reporting agencies. Such an assumption is much more likely to be incorrect than the assumption that Allstar made. The law requires Medicare-certified home health agencies to report. In all likelihood, therefore, the non-reporting agencies did not report precisely because, being new agencies, they had no visits to report. Allstar's approach is thus the more valid approach. In short, AHCA's criticism of Allstar's methodology in this regard does nothing to alter the conclusion that Allstar's methodology is reasonable. Medshares' Methodology and Determination Although Medshares used a somewhat different methodology to determine projected need, its methodology was also reasonable. Medshares’ methodology, too, yielded projected need in 1997 for Medicare-certified home health agencies in AHCA District 10 in a number greater than three, the number of applicants involved in this proceeding. Medicorp's Methodology Medicorp's application did not contain a need methodology. At hearing, over AHCA's objection, Medicorp's expert in health planning testified as to the reasonableness of its methodology which also yielded a numeric need in excess of three. The objection of AHCA was treated as a Motion to Strike, and the testimony was allowed. As explained in the Conclusions of Law, the objection is now moot since AHCA did not provide a methodology of its own when it presented its case in chief, and since reasonable methodologies yielding numeric need in excess of the number of petitioners were proven by both Allstar and Medshares. Aside from numeric need, in the case of Medicorp, there is a special need. Special Need for Medicorp Medicorp presented evidence in its application showing the need for an agency, like Medicorp, located among and willing to focus on serving the needs of the District's underserved and, in some cases, unserved, minority and low-income residents. Medicorp's primary service area includes zip code 33311, a federally-designated area of restricted health care. As one might expect from this designation, residents of this zip code have the lowest income per capita, the highest rate of unemployment, and highest rate of Medicaid eligibility in Broward County. A large proportion of the residents of zip code 33311 live in HUD housing. And, the zip code has the highest concentration of HIV/AIDS sufferers in the county. Medicorp's Administrator, Beverly Cardozo, testified that her existing, non-certified agency, Medicorp Home Health Services, currently is providing substantially free care to up to 400 Medicare-eligible patients living in government-subsidized housing within Medicorp's primary service area. Ms. Cardozo and Medicorp have been providing this care since approximately 1994, when Medicorp instituted its "Slice of Life" program consisting of the establishment of health fairs at these housing projects. Since 1994, Ms. Cardozo has been attempting to make arrangements with a Medicare-certified agency to provide the necessary care to Medicare-eligible residents in the projects to provide care, in some cases, desperately necessary. Only one agency agreed to go into the projects. Eventually, it ceased conducting business, leaving Medicorp to provide free health care. In addition to providing this care, Ms. Cardozo has recruited other local providers and business people to donate time and goods for the care of these Medicare-eligible patients. She also has arranged for the provision of care by a wound specialist. Ms. Cardozo's testimony, together with Medicorp's Exhibits 3 and 4, show that a significant portion of the District 10 Medicare-eligible population is underserved. In particular, many of the low-income residents of Wilton Manor and Oakland Park, areas targeted for care by Medicorp's application, are not receiving much-needed care. This care would be made available on a continuous basis by Medicorp's trained and dedicated staff. Notwithstanding numeric need, therefore, there is a special need in District 10 for the Medicorp proposal. Local Health Plan "The District 10, August 1994 CON Allocation Factors Report [used by AHCA in the SAAR for these three applicants] provides [six] . . . preferences in the review of applications pertaining to Medicare certified home health agencies." AHCA No. 5, p. 5. The First Preference AHCA maintains that "Medicorp-[sic] and Medshares do not meet preference one of the [local plan] due to their lack of demonstration that there are identifiable subgroups who are Medicare-eligible and are currently being denied access to Medicare-certified home health agency services." AHCA PRO, p. 5. There is, however, no requirement expressed in the preference that denial of access be shown in order to meet the preference. With regard to Allstar, AHCA makes the same argument related to access denial in relationship to the Hispanic population identified by Allstar as an identifiable subgroup of the District's population to which it will provide service. Again, the preference does not expressly require a showing of denial of access. Allstar demonstrated that Broward County is 8.26 percent Hispanic; that Allstar has bilingual, indeed, multilingual capabilities in Dade County available for use in Broward should the CON be granted; and that it will locate its offices close to south central Broward near the largest Hispanic population. Allstar meets the express requirements of the preference. As explained above, Medicorp proposes to provide care concentrated in the most severely depressed area of District 10, geographically centered in zip codes 33311 and 33312. The proposed agency will provide care to the subgroup of predominantly black residents of the inner city HUD housing projects. It is true that this area may have "the highest concentration and number of Medicaid eligibles as well as the highest percentage of HIV and AIDS cases in the District . . .," and that "this population [is] . . . predominantly 'Medicaid eligibles,' and finally, that these patients could be served through a non-Medicare certified home health agency," AHCA No. 5, p. 6, (e.s.). But these factors do nothing to defeat Medicorp's satisfaction of the preference. Medicorp has demonstrated that it will provide service to an identifiable subgroup of District 10 Medicare-eligible patients based on "ethnicity" and "geographic location." It clearly meets the preference. Medshares meets the priority as well. Based upon geographic analyses contained in its application, Medshares identified lower-income Hispanics and African-Americans, including lower-income females, and persons afflicted with HIV/AIDS as groups in District 10 that it would serve. Medshares’ patient material will be provided in both English and Spanish. It plans to provide a full range of home health care services to these groups with special emphasis on low-income females who typically receive little or no prenatal care, and low-income families in need of pediatric services. And, it will locate in Fort Lauderdale, the urban area in Broward County with the highest number of AIDS cases. Medshares meets the preference. Preference Two All three of the applicants have committed to serve Medicaid and indigents, promoted by Preference Two, as follows: Allstar: 1 percent Medicaid, 0.5 percent indigent; Medicorp 10 percent Medicaid, 2 percent indigent; and Medshares 1.4 percent Medicaid, 2 percent indigent. Preference Three All three of the applicants state they will provide for the provision of maintenance services, as called for by Preference Three of the Local Plan, to Medicaid and indigent patients. Preference Four AHCA agrees that Medicorp and Medshares meet preference four which gives priority to those applications that show reasonable expectations for reaching a patient load of at least 21,000 visits by the end of the first year of operation. As to Allstar, it reasonably projected only 13,265 visits in its first operational year. Allstar's projection, however, includes a rate of 2,000 visits per month by the end of the first year, a monthly rate that leads to 21,000 per year when annualized. None of the Medicare-certified home health agencies opening in Broward County since 1992 have met the 21,000 "priority" threshold. In light of this reality and the reasonableness, in Allstar's view, of interpreting the preference as requiring only a demonstration of capacity to reach 21,000 visits rather than a projection that it actually reach 21,000, Allstar argues that it meets Preference Four of the Local Plan. There may be some room in the wording of the preference to interpret it as allowing a demonstration of capacity by the end of the first year to have achieved 21,000 visits rather than actually reaching the 21,000 visits, but there was no evidence that AHCA has ever made such an interpretation. For its part, AHCA flatly asserts, "Allstar does not meet this preference." AHCA PRO, p. 6. In the absence of an authoritative interpretation in Allstar's favor, Allstar must be considered as not meeting the preference. Preference Five There is no question that all three applicants meet Preference Five. The application of each demonstrates the development of patient transfer and referral services with other health provider agencies as a means of ensuring continuity of care. Preference Six The applications of Medicorp and Medshares demonstrate that they will participate in the data collection activities of the local health council. Allstar has agreed to report data to the regional health planning council but not to the local health council. Medicorp and Medshares meet preference six; Allstar does not. State Health Plan Preference Just as the District 10 Health Plan, the Florida State Health Plan establishes certain preferences for applicants for Medicare-certified home health services certificates of need. The State Health Plan, too, contains six preferences. Preference One Among the three applicants, only Medicorp demonstrated a willingness to commit a specific percentage of total annual visits to AIDS/HIV patients. The State Health Plan in its first allocation factor, however, does not contain a "percentage" requirement in order for preference to be given. All that is required is that the applicant "propos[e] to serve AIDS patients." AHCA Exhibit 10. Consistent with this requirement, all three applicants propose to serve AIDS patients; Medshares proposes to condition its application on such service and Medicorp, additionally, has in place policies and procedures for quality assurance and safety precautions in caring for the HIV/AIDS patient. All three applicants, therefore, meet the preference. Preference Two Although there does not appear to be a universally accepted definition of what "high technology services" means in the home health arena, and although AHCA does not define them, all three applicants have reasonably identified them in their application and have proved sufficient intent to provide them. For example, Medshares proposes to provide a full range of nursing and therapy services, including cardiac care; continuous IV therapy; diabetes care; oncology services; pediatrics; rehabilitation; pain therapy; total parenteral nutrition; speech therapy; physical therapy; occupational therapy; enterostomal therapy; respiratory therapy; audiology therapy; and infusion therapy. Several of these services are unquestionably "high tech." AHCA answers that none of the three showed that the full range of services, including those that are "high tech," were not sufficiently available and accessible in the same service area. Neither, of course, did AHCA. In the context of a litigated case, the wording of the preference is awkward for achievement of the result AHCA seeks: Preference shall be given to an applicant proposing to provide a full range of ser- vices, including high technology services, unless these services are sufficiently avail- able and accessible in the same service area. AHCA No. 5, p., 10. All three applicants receive preference under this part of the State Health Plan. Preference Three There is no definition of "disproportionate share" of Medicaid and indigent patients in AHCA. Nor was there any evidence of such a definition provided in this proceeding by AHCA by way of testimony or in any other way. The term, as used in acute services, contemplates and necessitates the use of Medicaid utilization data of the type that AHCA has never collected for Medicare-certified home health agencies. Nonetheless, both Medicorp and Medshares are entitled to the benefit of this preference. Medicorp's principals have demonstrated a commitment to serving what would constitute a disproportionate share of Medicaid and indigent patients by any common understanding of the term "disproportionate share." Medicorp, as a new entity, is entitled to the benefit that flows from the history of service of its principals and predecessors. Medshares, too, has a history of providing home health services to Medicaid eligible persons and indigents, and Medshares plans to serve all patients in need regardless of ability to pay. Allstar is excused from complying with this preference given the absence of a meaningful definition. Preference Four The preference is not applicable in this case, since it can only apply to multi-county districts. It is worth noting, however, that home health care has been cited as an area of critical need in Broward County by the Broward Regional Health Planning Council. It is also worth re-iterating that several zip code areas within Medicorp's primary service area have been designated by the Federal government as currently and historically medically underserved. Medicorp can fill the needs of the underserved in the Broward County HUD housing projects as a Medicare-certified home health agency should its application be granted. Preference Five Medshares has made an unqualified commitment to provide consumer survey data measuring patient satisfaction to AHCA. Without doubt, it fully meets the preference. Allstar currently collects patient satisfaction data, as well as family and physician satisfaction data. Allstar further stated in its application that, "though there is currently no systematic effort by the department to collect such data, [Allstar] will make this data available to the department, or its designated representative, upon development and implementation of an appropriate data collection and reporting system." AHCA No. 5, p. 13. Likewise, Medicorp indicated willingness to participate in an HRS consumer satisfaction data collection effort "upon the State's development and implementation of an appropriate system." Id., at 12, (e.s.) Medicorp, moreover, is willing to make survey results available to the AHCA, HCFA, the District 10 local planning council, and the Office of Comprehensive Health Planning. Allstar and Medicorp, at least, are entitled to partial credit under this preference. Preference Six Each of the three applicants is entitled to this preference; each proposes a quality-assurance program and JCAHO accreditation. Increase in Availability and Access; Improvement in Quality of Care, Efficiency, Appropriateness, and Adequacy of the Service Assuming existing providers are available, efficient, appropriate, accessible, giving quality care, and are adequately utilized, adding three new Medicare-certified home health agencies is still justified when cost-effective agency size is taken into consideration. The cost-effective size of an agency can be determined using Medicare cost reports. In Florida, the cost-effective size of an Medicare-certified home health agency ranges from 30,000 visits to 95,000 visits annually. Allstar's regression analysis of a cost-effective Medicare-certified home health agency size, measured in terms of visits, took into consideration the type of visits performed, AHCA's geographic price index, and the affects of population density on costs. Adding new Medicare-certified home health agencies is appropriate when the mix of services is taken into account, and when as in this case, adding three such agencies into the marketplace will not reduce the cost-effective size of existing agencies below 30,000 annual visits. Medicorp, moreover, has proven the restricted access to services experienced by Medicare patients residing in inner city HUD housing projects in North Broward County and has established that all payer groups in these areas, including Medicare and Medicaid, are underserved. It was established by Medicorp that the predominantly minority residents of Fort Lauderdale's public housing and surrounding areas of Wilton Manors and Oakland Park are woefully underserved. The already-established role of Medicorp as the accepted and known provider in these areas demonstrates how access to these home health services will improve by Medicorp entering areas that other providers will not serve. Financial Feasibility Short Term It was stipulated that Medshares’ application is financially feasible in the short term, that is, able to obtain the capital for start-up (including any construction costs, if necessary) as well as sufficient working capital to sustain a business until it becomes self-sufficient. While Medicorp's financial feasibility remained an issue going into hearing, it appears from AHCA's proposed recommended order that it continues to challenge only Allstar's short-term financial feasibility. See AHCA PRO, p. 8. In any event, Medicorp proved that adequate funding is available from outside sources to fund the start-up costs and early operations. Its project is therefore financially feasible in the short term. The total project costs for Allstar's proposed project is $102,903, based on reasonable historical data typical of the start-up equipment and expenses for similar Medicare-certified home health agencies in the same geographic area. Allstar's projected start-up costs of $24,956 are reasonable. To fund the proposed project, Allstar has established and maintains an escrow account with Republic Bank in the amount of $150,000 (almost $50,000 more that the projected total project cost). Allstar has adequately demonstrated its ability to fund the project; the project is financially feasible in the short term. b. Long term AHCA maintains that none of the applicants demonstrated long-term financial feasibility for one reason alone: lack of need for the proposals. Contrary to this assertion, there will remain need in Broward County for Medicare-certified home health agencies even if these three applicants receive the applied-for CONs. The projects of all three applicants are financially feasible in the long term. Allstar's and Medicorp's Reliance Solely on Independent Contractors AHCA contends the HCFA interpretation of the federal condition of participation found in 42 CFR s.484.14(a) requires full-time salaried employees to staff at least one qualifying service. Even if the interpretation is correct, it is no impediment to either the Allstar or the Medicorp application. Medical social work is a qualifying service under the federal regulation. Allstar presently staffs its medical social worker in its Dade County office exclusively with a full-time salaried employee for whom an Internal Revenue Service W-2 form must be maintained. Allstar intends to staff its Broward County office in the same manner. (Even if the social medical worker position were staffed with a part-time employee, Allstar would comply with the federal regulation so long as the part-time employee were salaried and received a W-2 form.) Up until hearing, AHCA legitimately maintained that Medicorp violates the federal regulation because of Assumption 11 to the pro forma in its application which stated that, "[i]t is assumed that all caregiving nurses are independent contractors." At hearing, however, Medicorp witnesses testified that nursing staff and CNA staff will be employed. Ms. Cardozo testified that she currently employs these staff and, if awarded a CON, would continue to do so. Similarly, the application repeatedly refers to Medicorp's staff consisting of the same employees working for Medicorp's sister agency, Medcorp. Any inconsistency between the testimony elicited by Medicorp at hearing and the assumption in its pro forma is of no moment in this case. With regard to financial feasibility, the assumption, even if incorrect in part, is not necessarily fatal to the application. (AHCA's finding of financial infeasibility, in the case of Medicorp was not based on the incorrectness of Assumption 11. Moreover, while one would usually expect full- time employees to cost more than less-than full-time independent contractors as to total cost, the direct hourly rate cost of independent contractors is usually higher than the direct hourly rate cost of employees.) Probable Impact on the Cost of Services Only Medshares demonstrated that it would foster competition which would promote quality assurance and cost effectiveness. In the case of Medicorp, eliminating the subcontract arrangements through which it, Medicorp, now provides services to Medicare patients will eliminate an unnecessary level of administrative costs. Other benefits flow from eliminating the need for Medicorp to subcontract with an authorized entity. For example, AHCA discourages such arrangements because removal of direct control of patient care from the authorized entity raises not just quality assurance issues but also the potential for fraud. In any event, granting all three applications should not reduce the cost effectiveness of any providers of Medicare- certified home health care services in Broward County in the future. Past and Proposed Provision of Services to Medicaid and Indigent Patients As detailed above, Allstar is committed to provide home health care services to Medicaid eligible and indigent patients. This commitment, in the absence of any data to the contrary, is an adequate one. That Allstar will make good on this commitment is supported by indicia aside from the express commitment contained in the application. Allstar has a relationship with Jackson Memorial to increase the number of indigent patients Allstar serves. Its brochures and business cards state that it accepts Medicaid patients. This acceptance is confirmed by Allstar at its public presentations and in conversations with referring physicians. Finally, the majority of Allstar's staff is bilingual, and it has nurses who speak as many as five languages. It has the capacity and intent to make a multilingual staff available in Broward County. Medicorp clearly has a history of providing health services to Medicaid patients and the medically indigent. This commitment has been demonstrated through operation of Medicorp's sister agency by Medicorp's principals. If anything, as discussed above, Medicorp's principals have shown a singular dedication to the medically indigent population through operation of health fairs and other charities. Consistent with this dedication, Medicorp has conditioned its application on provision of at least 10 percent of its total visits to Medicaid patients and at least 2 percent of its visits to the medically indigent. Medshares, too, has a history of providing services to Medicaid patients and the medically indigent. In 1995, it provided over $650,000 in uncompensated care. It participates in Medicaid waiver programs in two states which have them. Its application describes its indigent care plan. The pro forma projections of revenue and expense in the application describe the levels of indigent and Medicaid eligible persons that Medshares expects to serve. Medshares offers a CON condition that 1.4 percent of total patients will be Medicaid patients and 2 percent of total patients will be indigent patients.
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 granting CON Nos. 8418, 8419, and 8448 to Medicorp Home Health Care Services, Medshares of Florida, Inc., and Allstar Care, Inc., respectively. DONE AND ENTERED this 3rd day of September, 1997, 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 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of September, 1997. COPIES FURNISHED: Robert J. Newell, Jr., Esquire Newell & Stahl, P.A. 817 North Gadsden Street Tallahassee, Florida 32303 Michael Manthei, Esquire Broad & Cassell Broward Financial Centre, Suite 1130 500 East Broward Boulevard Fort Lauderdale, Florida 33394 Alfred J. Clark, Esquire Suite 201 117 South Gadsden Street Tallahassee, Florida 32301 Richard Patterson, Esquire Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Jerome W. Hoffman, General Counsel Agency for Health Care Administration Fort Knox Building 3 2727 Mahan Drive Tallahassee, Florida 32308-5403 Sam Power, Agency Clerk Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: The letter of intent and authorizing board resolution to establish a new Medicare certified home health agency filed by ABC for District Four for the September, 1989 batching cycle was timely filed with HRS and the Health Planning Council for Northeast Florida, Inc., and met all statutory and rule requirements for filing. The CON application to establish a new Medicare certified home health agency filed by ABC for District Four for the September, 1989 batching cycle was timely filed with HRS and the Health Planning Council for Northeast Florida, Inc. The CON application to establish a new Medicare certified home health agency for District Four for the September, 1989 batching cycle was deemed complete and accepted for review by HRS, effective November 13, 1989. There is a numeric need for one additional Medicare certified home health agency in District Four as determined by HRS and published pursuant to Rule 10-5.011(1)(d), Florida Administrative Code. Local Health Plan The 1989-90 CON Allocation Factors Report for HRS District Four (Health Plan) is the applicable health plan with regards to this proceeding. In its application ABC addressed the recommendations found in the Health Plan. The Health Plan recognizes that under the new methodology for determining numeric need, a licensed home health agency within an HRS district could serve any and all counties within the district. However, the Health Plan contains recommendations for allocating home health agencies. The Health Plan makes the following recommendations: Geographic Preference Home health agencies should be allocated to counties on the following basis: Preference should go to applicants who will establish their program in a county which does not have any CON approved agencies or subunits based in the county. Consideration should be given to counties with a low number of Medicare visits per 1,000 persons 65 years and older. Competing Applications In the case of competing applications for the same or similar geographic area, preference should be given to those applicants which demonstrate: They will meet identified needs in the most cost-effective manner. They are addressing a current or potential geographic access problem in the district. They will serve the widest spectrum of the population, including the medically indigent. They have written agreements with a broad spectrum of local hospitals, nursing homes, mental health resources and/or other service providers in order to help ensure continuity of care. They demonstrate in their CON application how they will comply with any conditions placed on the CONs. They will serve AIDS patients. ABC proposes to locate its agency office in Duval County because it contains medical centers, hospitals with discharge planners and physician staff for referrals, and because of enhanced recruiting and retaining of appropriate staff. However, it proposes to serve all patients referred to it in all counties located throughout District Four, including Baker County. Baker County has no CON approved home health agency based within the county. However, it is presently being served by home health agencies based in Duval County. Because of its small population, with a relatively low percentage of the population being 65 years old or older, its distance from hospitals and the recruiting and staffing problems it would engender, it is doubtful that Baker County could support a main office for a home health care agency. In fact, the 1988 Local Health Plan indicated that Baker County should probably not have a home health agency physically located within the county. Baker County has the lowest number of citizens 65 years of age or older and the lowest usage rate for home health agencies. There is no data or documentation to show why the usage of home health services in Baker County is low. However, HRS makes the assumption from the usage rate only that Baker County is underserved. Duval County is not considered as being underserved in terms of Medicare units. By locating in Duval County, ABC does not specifically comply with preference 1A or 1B. However, ABC has proposed to serve all patients within District Four referred to it regardless of where the patient is located, and regardless of the patient's payor class. (Medicare, Medicaid, private pay or indigent) While 1A and 1B of the Health Plan's recommendation is concerned with geographic preferences, 2A through 2F of the Health Plan's recommendations are preferences that relate mainly to situations involving competing applications in the same batch. ABC meets a majority of those preferences, including: 1A. ABC will be among the lowest in cost of the existing providers in District Four. 1B. ABC goes to the patient and has stated it will serve all of the patients within District Four referred to it. 1C. ABC proposed to serve all patients referred to it, including the medically indigent and medicaid. Because of the situation with Medicaid patients, ABC did not project any Medicaid patients. However, ABC proposed to serve all patients on which it has referrals including Medicaid patients. 1D. ABC did not have written referrals with hospital, nursing homes and other resources for patient referrals. However, ABC stated that this was its standard operating procedure and if granted a CON they would establish written referrals. 1E. ABC does not specifically address how they would comply with any condition placed on the CON. 1F. Again, ABC proposed to serve all patients within District Four referred to it, including AIDS and HIV patients. Since ABC has no control over which patients are referred to it, then its payor mix is just a projection. Whether an AIDS or HIV patient is on Medicare, Medicaid, private pay or medically indigent ABC has proposed to served them. In fact, it has a corporate policy to train and educate its employees in this area of service. ABC has shown that it intends to serve AIDS and HIV patients on which it has referrals. State Health Plan The 1989 Florida State Health Plan is the applicable health plan in this proceeding. The State Health Plan is a comprehensive three-volume document which describes Florida's health system and the services available to Florida residents. Specifically, the State Health Plan addresses certain preferences which HRS uses in reviewing home health CON applicants. They are as follows: Preference shall be given to an applicant proposing to serve AIDS patients. Preference shall be given to an applicant proposing to provide a full range of services, including high technology services, unless these services are sufficiently available and accessible in the same service area. Preference shall be given to an applicant with a history of serving a disproportionate share of Medicaid and indigent patients in comparison with other providers within the same HRS service district and proposing to serve such patients within its market area. Preference shall be given to an applicant proposing to serve counties which are underserved by existing home health agencies. Preference shall be given to an applicant who makes a commitment to provide the department with consumer survey data measuring patient satisfaction. Preference shall be given to an applicant proposing a comprehensive quality assurance program and proposing to be accredited by the Joint Commission on Accreditation of Healthcare Organizations. As to 16A, ABC has proposed to serve all patients in District Four that are referred to it by referring agencies, including AIDS and HIV patients regardless of their of payor class. ABC has a stated commitment to serving AIDS and HIV patients. The evidence establishes that of all AIDS cases reported in District Four, Duval County has approximately 69 percent. District-wide 52 percent of all reported AIDS cases have ended in death whereas in Duval County the percentage is 56. Very few AIDS patients are medicare eligible. A higher percentage of AIDS patients in Duval County are served as indigents or under Medicaid, notwithstanding HRS' Medicaid Project AIDS Care. As to 16B, ABC proposes to provide the full range of services, including high technology services. ABC included in it application excerpts from its high tech policy manual. There was no data available from local health council on what high tech services are available from existing providers. As to 16C, while ABC's payor mix does not indicate that they would be serving a disproportionate share of Medicaid and indigent patients there is no data indicating what access problem, if any, exists for Medicaid and indigent case patients needing home health care services. ABC proposes service to all patients within District Four that are referred to it be referring agencies. As to 16D, while there is no data available that any county within District Four is in fact underserved, ABC has stated that it will serve all counties in District Four and there is no evidence to show that ABC will not serve all counties in District Four. As to 16E, ABC has indicated it will comply with this requirement and there is no evidence to show that ABC will not furnish the data in terms of consumer survey response. As to 16F, ABC has a quality assurance program in place and HRS agreed that ABC could provide quality of care to its patients. Statutory Criteria Section 381.705(1)(a), Florida Statutes - Availability and Access to Services District Four has 20 Medicare certified home health agencies, with five located in Duval County and, one approved but not yet established Medicare certified home health agency. However, as stated in the State Agency Action Report (SAAR) there is a market for another home health agency in District Four as determined by the fixed need pool. ABC's stated commitment to serve all counties in District Four and to serve all patients in those counties referred to it by referring agencies regardless of whether the patient's payor class should enhance the convenience and accessibility to patients. Section 381.705(1)(b), Florida Statutes - Quality of Care, Efficiency and Adequacy of Existing Area Providers There is no specific data available from HRS concerning the quality of care, efficiency and adequacy of services being provided by existing care providers in District Four. ABC did not conduct a survey to assess the existence of quality care problems in District Four. However, the existence of quality care problems in District Four would be difficult to gauge since the in- home provision of services makes them largely beyond public or professional scrutiny. In fact, generally, with few exceptions, application for home health agencies do not address this criterion. The parties stipulated that the provisions of Section 381.705(1)(c) through (g), Florida Statutes were deemed to have been met or otherwise not applicable. Section 381.705(1)(h), Florida Statutes - Availability of Resources and Funds and Accessibility of Service to all Residents of Service District The evidence establishes that ABC has sufficient resources and funds to accomplish what it proposes. HRS has no data suggesting significant access problems for Medicaid patients to home health care nor was there sufficient evidence that AIDS or HIV patients suffer an access problem for home health care. However, due to improvements in terms of Medicaid reimbursement any access problem that may exist should be reduced. ABC has a stated commitment to serving all patients in District Four regardless of the patient's payor class. This commitment should improve the accessibility of home health care to underserved patients if, in fact, there is an access problem for the Medicaid, AIDS, HIV or indigent patients. Section 389.705(1)(i), Florida Statutes - Financial Feasibility ABC projects it will do 12,000 home visits in year one and 14,000 home visits in year two. These projections are based on ABC's experiences in other districts, particularly District Three. These projections also represent approximately 25 and 29 percent of the new visit pool market for each year, respectively. However, ABC clients would not necessarily all come from the new visit pool. ABC's projected home care visits are reasonable based on its experience in other Florida districts and its experience in other states, notwithstanding its lack of an established referral network in District Four and being a new entrant into the District Four market. ABC's financials displayed in its application are reasonable and consistent with its Florida experience. ABC's payor mix and visit each correlate to its actual Florida experience. ABC's pro forma expenses for year one and year two are reasonable. ABC projects a first year profit of $3,914 and a second year profit of $5,010 and after the second year, ABC should continue to show a profit. ABC's proposed project will benefit ABC by allowing it to meet its long term goals. ABC's existing Florida agencies are operating in financially sound manner and there is no reason to believe that ABC's proposed agency will not operate in the same manner. ABC's liquidity ratio is 0.7 to one which means that ABC has excess current liabilities over current assets and is one factor used for determining the general health of a company. ABC has an accumulated deficit of $651,836. From all of the above, ABC's proposed agency is feasible in both the short term and the long term. It was stipulated that Section 381.705(1)(j) and (k), Florida Statutes were deemed to have been met or otherwise inapplicable. Section 381.705(1)(l), Florida Statute - Impact on Competition Since ABC has a stated commitment to serve all patients in all counties in District Four referred to it regardless of the payor class and is offering a full range of services, including high tech, its proposal should only serve to enhance competition within District Four, notwithstanding that the proposal is primarily a Medicare home health care provider which would not provide any financial competition. The parties stipulated that Section 381.705(1)(m), Florida Statutes was deemed to have been met or otherwise inapplicable. Section 381.705(1)(n), Florida Statutes - Medicaid and Indigent Care Very few medicaid and indigent patients are served by the existing agencies in District Four. Most of these patients are served by the Visiting Nurses Association (VNA) which is subsidized by United Way, local governments and other sources. There is no data or documentation that Medicaid patients do not in fact have a significant access problem. Medicare is the predominant payor source in Florida and is ABC's primary payor source even though ABC has a stated commitment to serve all patients regardless of payor class. A high percentage of Florida's Medicaid budget for home health services is used for co-insurance for medicare. Therefore, Medicaid patients that are "dually eligible" are receiving home health care under Medicare. Florida's Medicaid program does not reimburse for physical therapy, speech therapy or occupational therapy for adults. In a Medicare certificate home health agency there is only a certain pool of profit available to serve Medicaid and indigent patients. Therefore, if the percentages of Medicaid service goes up then indigent or charity cases must suffer or the agency cannot operate in the "black". While HRS usually places a condition on the CON concerning Medicaid services, a majority of the recently issued CONs for home health care had no such condition placed on them. The parties stipulated that Section 381.705(2) and (3), Florida Statutes were deemed to have been met or otherwise inapplicable. State Agency Action Report (SAAR) HRS up to and including, the home health care agency batching cycle immediately preceding the instant September 1989 batch, used not applicable (N/A) on those criteria that were not typically addressed by applicants or were not considered to be applicable to an applicant. HRS now enters a "no" in those situations but a "no" in this situation has no adverse or negative impact on HRS' decision. Typically, approved applicants do not meet all the statutory criteria. Some of the criteria may be only partially met and some may not be met at all.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That a final order be entered granting ABC's application for a certificate of need (CON No. 6015). DONE and ENTERED this 26th day of October, 1990, in Tallahassee, Florida. WILLIAM R. CAVE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 26th day of October, 1990. APPENDIX TO THE RECOMMENDED ORDER The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted by the parties in this case. Specific Rulings on Proposed Findings of Fact Submitted by Petitioner, ABC 1. Each of the following proposed findings of fact are adopted in substance as modified in the Recommended Order. The number in parentheses is the finding of fact which so adopts the proposed finding of fact: 6(2,3); 7(8); 8(7,8,11); 9(8,10); 11(7,14); 15(4); 16(16,17,18,19); 17(16,18); 18(16,21); 19(16,22); 20- 21(23,24); 23(25); 25(4,25); 28-29(25-27); 31-38(29); 40-42(29); 45(32); 48- 52(33,34,35,36); 54-58(32,37,38,41); 61-64(43); 68-70(45,46,47); 72- 77(47,48,49); 79-81(47,49,50); 83(51); 85-87(53); 89(53); 90(54). 2. Proposed findings of fact 1-5, 10, 12-14, 22, 24, 26, 27, 30, 39, 43, 44, 46, 47, 53, 59, 60, 65-67, 71, 78, 82, 84, 88, 91 and 92 are unnecessary. Specific Rulings of Proposed Findings of Fact Submitted by Respondent, HRS Each of the following proposed findings of fact are adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 3-9(5,6,7,9,12,13,14); 12- 26(14,18,19); 28-29(15,16); 44-46(32) 48-51(39,40). Findings of fact 1 and 2 are covered in the preliminary statement. Proposed findings of fact 10, 11 as to the last 2 sentences, 27, 30, 31, 32 other than last sentence, 33, 35, 36 other than last sentence, 37, 38, 39, 41, 42, 47 and 52 are not supported by substantial competent evidence in the record. The last two sentences of finding of fact 34 are adopted in finding of fact 25, otherwise not supported by substantial competent evidence in the record. Proposed finding of fact 43 is unnecessary. The first two sentences of proposed finding of fact 53 are adopted in finding of fact 36, otherwise not supported by substantial competent evidence in the record. Copies furnished to: R. Terry Rigsby, Esq. F. Philip Bank, P.A. 204-B South Monroe Street Tallahassee, FL 32301 Edward Labrador, Esq. Assistant General Counsel 2727 Mahan Drive, Suite 103 Tallahassee, FL 32308 Sam Power, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700 Linda Harris, General Counsel Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: Gulf Coast Home Health Service of Florida, Inc. is an existing licensed provider of Medicare-certified home health services in Pinellas County. The parties have stipulated that Gulf Coast has standing to participate as a party in this proceeding. Metro Home Health Care, Inc. is a proprietary agency owned by Ann Durham, Robert Carver and John Timp, a Certified Public Accountant. Metro was incorporated in November of 1984 and has been operating as a home health agency since June of 1985. It currently provides facility staffing with nurses, nurses' aides and mental health workers, and also takes private duty calls from hospitals. Due to the fact that so many patients who are in need of home health care are elderly and eligible for Medicare, referring hospitals and physicians attempt to utilize those home health agencies which are Medicare-certified. Metro proposes to expand its services to provide treatment to Medicare patients, and thus filed an application for a Certificate of Need in December of 1985. A home health agency in Florida must obtain a Certificate of Need from HRS before it can be licensed and become eligible to receive Medicare reimbursement. As the agency is already operational, there is no cost associated with this project. Metro realizes that there is a lag time between the provision of services to Medicare patients and Medicare reimbursement for such services. In order to avoid interest costs, Metro proposes to utilize the profits from its current staffing services to support its home health care program, in lieu of using a commercial line-of credit. Metro believes, however, that lines of credit with banking institutions can be acquired if operational funds are needed in the future. Metro has encouraged and supported the training and continuous education of its staff by providing information and funds for courses offered in the community. It intends to continue this practice. Metro proposes to provide skilled nursing services, physical therapy services, occupational therapy services, speech therapy services, IV therapy, rehabilitative services, social services and home health aid services. Some of these services will be obtained on a contractual basis, as opposed to in-house staffing, depending upon the need for and utilization of such services. Metro proposes to provide two percent of its services to Medicaid patients and two percent of its services to indigent patients during the first year after obtaining a Certificate of Need. During its first year as a Medicare-certified provider, it is anticipated that Metro will provide approximately 75 percent of its services to Medicare patients, 10.5 percent to private pay patients, 10.5 percent to third-party payor patients and 4 percent to Medicaid and indigent patients. In its second year, Metro proposes an aggregate of five percent of its services to be offered to Medicaid and indigent patients. By the end of its first decade, the intent is to have incrementally increased the level of service to indigent and Medicaid patients to ten percent. Metro's current charges for skilled nursing care are in the median range of charges by other home health agencies in the area. Charges for this service range between $40.00 and $60.00, and Metro charges $47.00 per visit. While Metro's Director, a registered nurse, did not have intimate knowledge of the bookkeeping, interim payment reports, cost reports, record keeping or computerization required by Medicare, one of the owners of Metro is a Certified Public Accountant. Since the filing of the Certificate of Need application, the owners of Metro have met with an assigned intermediary for the Medicare program, and they have discussed the completion of forms, patient claims and annual reports, as well as the Medicare reimbursement system. The Medicare program reimburses providers at a rate which represents the lowest of either costs, charges or the Medicare cap for the service provided. Thus, there is little or no profit element in the provision of Medicare services. However, Metro will realize a positive net income through the provision of services to Medicare, private, third party payor, Medicaid and indigent mix of patients proposed for the first year of operation. This is true even with a tripling of the amount of calculated contractual allowances set forth in Metro's application. The figures and projections contained in the pro forma statement of revenues and expenses included in Metro's Certificate of Need application are outdated and some of the utilization estimates may be exaggerated. However, Metro is of the opinion that its existing profits which have greatly increased since the date of its application, will enable it to operate in a financially feasible manner on both an immediate and long-term basis. Metro desires to offer Medicare services so that it will be competitive with other agencies which do so and can receive a fair share of referrals. Hopefully, more referrals will include more private pay and insurance covered patients, which will produce greater profits. The reimbursement rate for services to Medicaid patients is even lower than for Medicare patients, though it has recently been raised. The per visit reimbursement rate for Medicare purposes can be negatively affected by increasing the number of Medicaid and indigent patients served. It would not be financially feasible for a home health agency which served only Medicare patients to provide Medicaid and indigent services. When HRS initially reviewed Metro's application, it utilized an invalid methodology to determine the need for additional home health services in Pinellas County. HRS no longer utilizes this methodology and did not attempt to do so during the final administrative hearing. HRS does not presently have any methodology pursuant to rule or policy for projecting numeric need for new home health agencies. Instead, it looks at the general statutory criteria applicable to Certificate of Need review for all health care services. There were no numeric need methodologies for home health care services offered at the final hearing. While neither the State Health Plan nor the local District Health Plan specifically address or identify the need for home health agencies, both plans emphasize the improvement of access to the medically underserved. There are approximately 29 licensed and approved Medicare-certifed home health agencies in District 5, which includes Pinellas County.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED THAT Metro Home Health Care, Inc. be GRANTED a Certificate of Need to operate a home health agency in Pinellas County, with the condition that a minimum of two percent of total visits be provided to Medicaid patients and two percent of total visits be provided to indigent patients. Respectfully submitted and entered this 5th day of November, 1987, in Tallahassee, Florida. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of November, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-3556 The proposed findings of fact submitted by the parties have been accepted and/or incorporated in this Recommended Order, except as noted below: Petitioner Gulf Coast: 9. Rejected as contrary to the evidence. 10, 11. Rejected as irrelevant and immaterial. 13-15. Rejected as irrelevant and immaterial. 17. Rejected as irrelevant and immaterial. 22. Rejected as hearsay. 23-27. Rejected as irrelevant and immaterial. 29-30. Rejected as irrelevant and immaterial. 31. Partially rejected. It must be assumed that goals in the State and District Plans reflect need. 36. Rejected as contrary to the evidence. Last sentence accepted. 38. Rejected as contrary to the evidence. 39 & 41. Rejected as too broad a conclusion to be drawn from the evidence. 45. Second sentence rejected as hearsay. 50, 51, & 53. Rejected, not supported by sufficient evidence. Last sentence accepted only if private pay or insurance-covered patients are not considered. Last sentence accepted only if private pay or insurance-covered patients are not considered. 60. Accepted only-if it is assumed that the percentage of care rendered to private pay or insurance-covered patients decreases. 62 & 63. These factual findings are accepted, but are incomplete in that they fail to recognize the importance of becoming a Medicare-certified provider in order to also obtain referrals of non-Medicare patients. 64-73. These "findings of fact" are addressed in the Conclusions of Law. Respondent HRS: p. 3, last full sentence Accepted only if it is assumed the agency serves only Medicare patients. p. 4, last sentence of first full paragraph Rejected as not supported by competent evidence. Respondent Metro: The "proposed recommended order" submitted on Metro's behalf does not contain proposed findings of fact, and is more in the nature of closing argument. Consequently, it is not possible to render specific rulings upon Metro's proposed findings of fact. COPIES FURNISHED: Leonard A. Carson, Esquire Carson & Linn, P.A. 1711-D Mahan Drive Tallahassee, Florida 32308 John Rodriguez, Esquire Assistant General Counsel 1323 Winewood Boulevard Building One, Suite 407 Tallahassee, Florida 32399-0700 Ann Durham, Director Metro Home Health Care, Inc. 10707 66th Street North Pinellas Park, Florida 33565 R. S. Powers, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
The Issue These consolidated cases involve a Certificate of Need for Medicare- Certified Home Health Agency in Agency for Health Care Administration (AHCA) Service District 6 for the July 1994 planning horizon. DOAH Case No. 93-1636 is a challenge by St. Johns to AHCA's determination of a fixed need pool of zero for Medicare Certified Home Health Agencies in District 6 for the applicable 1994 planning horizon. DOAH Case No. 93-4876 is a challenge by St. Johns to AHCA's preliminary denial of St. Johns' application for Certificate of Need No. 7209 seeking approval to establish a Medicare Certified Home Health Agency in District 6.
Findings Of Fact St. Johns Home Health Agency, Inc. (St. Johns) is a Florida not-for- profit corporation. It operates medicare certified home health agencies in Agency for Health Care Administration (AHCA) planning district 11 (Dade and Monroe counties) and in district 10 (Broward County); and it recently was approved for and opened an agency in district 3, with an office in Hernando County. St. Johns' application for CON proposes a fourth agency, in district 6, located in, and primarily serving Polk County. This, like St. Johns' other agencies, would be free-standing; that is, it would not be hospital-based or attached to another institutional health care facility. As the name implies, Medicare certified home health agencies primarily serve elderly Medicare patients and Medicare is the payor of first resort for those patients. Other home health agencies, for which CON's are not required, serve Medicaid and some other patients, but are not permitted to accept Medicare patients. The Fixed Need Pool The fixed need pool published by AHCA on February 5, 1993 was calculated based on the formula in rule 59C-1.031(3), F.A.C. That rule was challenged by Principal Nursing Services, Inc. and during the proceeding in this case, the rule was invalidated in a final order by Hearing Officer, Diane Cleavinger, in Principal Nursing v. Agency for Health Care Administration, DOAH Case #93-5711RX (Final Order entered January 26, 1994). Application of the formula in rule 59C-1.031(3), F.A.C. resulted in a fixed need of zero for the July 1994 planning horizon in district 6. This was not the only basis for AHCA's proposed denial of St. Johns' CON. St. Johns' expert witness, Gene Nelson, conceded that the data which were input to the fixed need pool calculations were correctly applied without calculation errors or other errors. Mr. Nelson also agreed that the agency's reliance on population data from the Executive Office of the Governor was neither inappropriate nor inaccurate. St. Johns' challenge to the published fixed need pool is based on substantive criticism of the rule, itself, the same challenge that was presented successfully in the Principal Nursing case described above. Gene Nelson calculated a need for 3.28, rather than zero agencies; and after subtracting the two agencies already approved for district 6, came up with a net need of 1.28 agencies. The only variation from rule 59C-1.031(3), F.A.C. in Gene Nelson's calculation was that he derived a cost-effective agency size of 19,000 by restricting the universe of home health agencies to non-hospital home health agencies in district 6, rather than statewide. If statewide data are employed, as called for in the rule, the cost-effective agency size is 88,000 visits, which when applied to a projected visit growth in district 6 of 62,349 visits, results in no net need for an additional agency. Gene Nelson also criticized the rule's under-projection of visits and pointed out that actual visits in 1992 vastly exceeded the projected number of visits for 1994 in district 6, according to a later version of the report which underlies the agency's calculation of need. The difficulty in projecting need for additional home health agencies is that any agency theoretically has an unlimited capacity. That is, simply by adding staff, an agency can expand to serve more and more patients. While there are no studies which support a certain ideal number of visits, AHCA has generally found that smaller agencies, with fewer visits, have a higher average cost per visit than those with more visits. However, the attempt to limit the number of agencies, thereby preserving the existing agencies' ability to expand to meet expanding need, is deemed anti-competitive by health planners. At the time of hearing, Medicare certified home health agencies were scheduled by statute to be deregulated, with no further CON review required, effective July 1, 1995. Non-rule Analysis of Need St. Johns presented the deposition testimony of Ralph J. Nobo, M.D., an obstetrician and gynecologist from Bartow, Florida, who practices mostly in Polk and Hardee counties. Dr. Nobo recounted some anecdotes of his own difficulty from time to time in placing pregnant and postpartum patients in home health care agencies. He also related some second-hand and non-specific stories of similar difficulties experienced by a pediatrician colleague. Dr. Nobo has little knowledge of the actual availability of home health agency services in his area, or of the location of those agencies' staff, as he relies on the hospital social worker to assist with referrals. It is unlikely that Dr. Nobo's or his colleague's patients would be eligible for Medicare (for ages 65 and over), the primary focus of St. Johns' proposed services. There are twenty-three licensed, and two approved, Medicare certified home health agencies in district 6. The twenty-one agencies reporting in fiscal year 1991 reported a low of approximately 4500 visits, to a high of approximately 75,000 visits, for a total of 740,821 visits. There are four agencies based in Polk County, the proposed location for St. Johns. Any agency approved in district 6 is permitted to serve any county in that district. Eight of the twenty-one reporting agencies had less than the 19,000 visits determined by Gene Nelson to be a cost-effective size for agencies in district 6. St. Johns proposes to serve HIV-infected persons, and its statement to that effect complies with the preferences in the district health plan and the state health plan. The evidence at hearing and in the application, however, does not specify that there is an unmet need for services to that population in the district. There are no specifics in the application as to the number or percentage of HIV patients that will be served by St. Johns, and whether other agencies are currently serving these patients. The tables and the pro forma in St. Johns' application do not specify the type of high technology services usually required by HIV-infected persons. Medicaid and indigent patients comprise a relatively small percentage of patients served by Medicare-certified home health agencies. These patients are commonly served by agencies which do not require a CON, and even though St. Johns is willing to commit to 1.5 percent Medicaid and 1 percent indigent care visits, that commitment is not shown to be a disproportionate share of Medicaid and indigent patients as compared with other Medicare-certified agencies. There is no evidence that these patients are underserved in district 6, or if they are, that St. Johns will pick up a disproportionate share. High technology services are also given a preference in the district and state health plans. St. Johns has made blanket assurances that those services will be provided, but fails to describe the specifics. That is, ventilator services, IV therapy, chemotherapy, and like services are generally considered "high tech". They are not found in the pro forma nor tables of the application, and the special staff required to administer these services are not described in the staffing pattern in the application. Moreover, there is no discussion nor evidence that existing agencies are not already providing the same services proposed by St. Johns. In summary, St. Johns has failed to affirmatively demonstrate that a new Medicare-certified home health agency is needed in district 6, either through a reasonable numerical analysis or through an analysis of the unmet needs of any targeted population. Quality of Care St. Johns has adopted and implements a detailed quality assurance program which includes audits, random sampling, extensive reporting procedures, chart and procedure reviews, continuing education for staff, and discipline of staff who violate the standards of care or the appropriate agency procedures. AHCA's concern with regard to the quality of care to be provided by St. Johns is based on CON staff review of Medicare survey documents from AHCA's Office of Licensure and Certification. Federally-trained staff of AHCA perform the surveys of service providers pursuant to contract with, and on behalf of, the federal Health Care Financing Administration (HCFA). The survey files related to St. Johns' existing agencies in south Florida reflect a series of deficiencies and plans of correction in 1992 and 1993. In February 1993, St. Johns' Broward county agency was recommended for certification termination. Out of the state's approximate 300 home health agencies only three or four are recommended for termination each year; thus, standing alone, St. Johns' survey record was appropriate cause for concern by the CON review staff. However, at hearing St. Johns presented competent evidence that its deficiencies were in, most cases, promptly corrected and both parties' witnesses agreed that a May 1993 resurvey by AHCA found all deficiencies were corrected. The recently approved St. Johns agency in Hernando County had no deficiencies found in its initial survey. It is not unusual for a home health agency to be cited for regulatory deficiencies during a survey. The survey documents alone are not evidence of poor quality of care. The two agencies operated by St. Johns in South Florida provide over a million visits a year. Occasional glitches in recordkeeping and even occasional staff errors in judgement can reasonably be expected with that high volume. There is no evidence that in its ten years of operation St. Johns has been the subject of license discipline for any reason. In spite of AHCA's justified "concern", the gravity of the survey deficiencies was not so great as to result in a moratorium on new patients or other administrative action. St. Johns effectively, with competent evidence, countered AHCA's quality of care concerns and has demonstrated it meets CON criteria related to the quality of care. Financial Feasibility As required, St. Johns' application for CON includes its two most recent audited financial statements. These are styled "Statement of Financial Condition", and are dated June 30, 1991, and June 30, 1992. These documents were prepared by Warren Silverman, a certified public accountant (CPA) with over 30 years' experience in health care finance, including specialized experience in Medicare reimbursement. Mr. Silverman testified as an expert on behalf of St. Johns at the hearing in this proceeding. The above-referenced financial statements reflect significant operating losses and negative fund balances for both fiscal years 1991 and 1992. Audited financial statements for large home health agencies do not generally reflect year end losses. The fund balance in 1991 was (458,753); the excess of expenses over revenues that year was 554,603 (reflecting a loss). The fund balance in 1992, was (3,617,784), and excess of expenses over revenues was 610,706 (an even greater loss than the prior year). Most of the expenses relate to salaries and contract services for health care professionals. There are some very small "paper" expenses; for example, depreciation in 1991 and 1992 accounted for only $15,850 and $35,688, respectively. Also significant is the decline in the asset, "cash in bank", from $553,458 in 1991, to $148,618 in 1992. To the extent that most expenses have to be paid from somewhere, the "cash in bank" was a likely source. There is no evidence or other explanation of how St. Johns managed to keep operating with its losses through fiscal year 1992. The financial statements, prepared by Mr. Silverman, and in his opinion representing an accurate statement of the financial status of St. Johns, belie his testimony at hearing that the Polk County project is financially feasible in the long and short term. Mr. Silverman based that conclusion on what he considers to be a good probability that in the future outstanding claims by St. Johns for additional Medicare reimbursement related to past years will be resolved in St. Johns' favor. In Mr. Silverman's experience as St. Johns' CPA, St. Johns has historically received 92 percent to 98 percent of its past claims for additional reimbursement. The elaborate Medicare reimbursement scheme requires after-the- fact adjustments of reimbursements, which reimbursements are made by HCFA's fiscal intermediary based on anticipated costs. The reimbursement scheme does not allow for a "profit", or payments in excess of detailed allowable costs. For any given fiscal year the provider agency and Medicare payor may have conflicting claims for reimbursement for under-compensation or for repayments of over-compensation. St. Johns has both; on one hand, it claims entitlement to additional reimbursement; on the other hand, there are claims against it for repayment of funds it has already received. To the extent that St. Johns is ultimately able to prevail, it will be in good financial shape. If, however, some or all of the outstanding settlement issues are decided against St. Johns, it would suffer a reduction in cash flow; its pension plan and ability to provide quality care could be adversely affected. As a highly competent CPA, Mr. Silverman could have reflected a positive outcome of the Medicare settlement negotiations or litigation on the financial statements if he could have determined that positive outcome with reasonable certainty. He could not make that requisite determination, and therefore did not "book" those possible revenues. The financial statements are his best judgement of the financial status of this client. St. Johns has failed to demonstrate the availability of financial resources to support the proposed project, and its immediate and long term financial feasibility.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That a final order be entered denying St. Johns' petition regarding fixed need pool invalidity, and denying St. Johns' application for CON #7209. DONE AND RECOMMENDED this 28th day of April, 1994, in Tallahassee, Leon County, Florida. MARY CLARK 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 28th day of April, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NOS. 93-1636 AND 93-4876 The following constitute specific rulings on the findings of fact proposed by the parties. Petitioner's Proposed Findings 1.-9. Addressed in preliminary statement. Adopted in paragraph 3. Adopted as a statement of St. Johns' position only in paragraph 5. Rejected as argument, except for the proposition that, without the rule, St. Johns must still demonstrate need. 13.-15. Rejected as unnecessary. 16. Rejected as contrary to the weight of evidence. 17.-18. Rejected as description of testimony rather than findings of fact. 19. Rejected as unsupported by the greater weight of evidence. 20.-29. Rejected as unnecessary. 30. Adopted in substance in paragraph 16. 31.-32. Rejected as unnecessary. Adopted in substance in paragraph 11. Rejected as unnecessary. 35.-37. Rejected as description of testimony. Rejected as a conclusion unsupported by the weight of competent evidence. Adopted in summary in paragraph 20. Adopted in paragraph 16. Rejected as unnecessary. 42.-51. Adopted in substance in paragraphs 18.-21. Adopted in paragraph 22. Adopted in substance in paragraph 24, as a statement of Silverman's opinion. Rejected as unnecessary. Adopted in part in paragraph 25; otherwise rejected as unnecessary. Rejected as unnecessary. 57.-58. Adopted as a statement of Silverman's testimony in paragraph 25. 59.-62. Rejected as unnecessary. Rejected as unsupported by the weight of evidence. Respondent's Proposed Findings Addressed in preliminary statement. 2.-5. Rejected as unnecessary. 6.-9. Adopted in paragraph 5. 10. Adopted in paragraph 3. 11.-13. Rejected as unnecessary. Adopted in substance in paragraph 12. Adopted in substance in paragraph 14. Adopted in substance in paragraph 13. 17.-18. Rejected as unnecessary. Adopted in substance in paragraph 14. Adopted in substance in paragraph 15. Adopted in substance in paragraph 10. Rejected as unnecessary. Adopted in substance in paragraph 17. 24.-25. Rejected as unnecessary. 26. Adopted in paragraph 18. 27.-30. Rejected as unnecessary, except as adopted in paragraph 17 as a statement of AHCA's concern. 31. Adopted in summary in paragraph 11. 32.-33. Rejected as unnecessary. Adopted in paragraphs 23.-28. Rejected as unnecessary. Adopted in paragraph 13. Adopted in conclusion of law #37. COPIES FURNISHED: R. Terry Rigsby, Esquire Geoffrey Smith, Esquire Blank, Rigsby, & Meenan 204 South Monroe Street Tallahassee, Florida 32301 J. Robert Griffin, Esquire Agency for Health Care Administration Suite 301 - The Atrium Building 325 John Knox Road Tallahassee, Florida 32303 Sam Power, Agency Clerk Agency for Health Care Administration Suite 301 - The Atrium Building 325 John Knox Road Tallahassee, Florida 32303 Harold D. Lewis, Esquire Agency for Health Care Administration Suite 301 - The Atrium Building 325 John Knox Road Tallahassee, Florida 32303
Findings Of Fact This proceeding involves certificate of need (CON) application No. 4912 by Home Health Care of Bay to establish a Medicare-certified home health agency to serve Bay County Florida. Home Health Care of Bay's CON application was timely filed on December 15, 1986. Home Health Care of Bay's application was deemed complete on March 2, 1987. On April 30, 1987, DHRS preliminarily denied Home Health Care of Bay's CON application based on a determination that: There was no need demonstrated by Home Health Care of Bay for an additional home health agency in Bay County. Home Health Care of Bay is owned by Mark Ehrman, M.D. Dr. Ehrman is a board-certified internist, hematologist, and oncologist. Dr. Ehrman has been in private practice in Fort Walton Beach, Florida, since November, 1984. Prior to 1984, Dr. Ehrman was involved in the organization and delivery of medical services, the teaching of medicine, and the practice of medicine in Canada. Home Health Care of Bay will serve all patients regardless of race, income, sex, ethnic background, religion, or physical handicap. Home Health Care of Bay will provide 3 percent Medicaid and 3 percent indigent home health visits. Dr. Ehrman, both in his office and in his durable medical equipment (DME) company, goes to great lengths to ensure that indigent persons receive medical services. Dr. Ehrman, in his office practice, provides medical services to all persons regardless of their ability to pay. He is a participating physician in Medicare, Medicaid, and other insurance programs. Dr. Ehrman's participation in these programs and his determination not to screen patients financially has increase access to medically underserved patients. Dr. Ehrman's private practice includes approximately 5 percent Medicaid patients. In the past, home health agencies have tended to focus on acute medical problems. The traditional model for home health care has been to shorten an acute hospital stay for a discrete problem. Even chronically ill patients still came to the hospital when they had an acute episode. There has been little focus on avoiding hospitalization. There is now a shift in home health care which attempts to avoid hospitalization in appropriate cases. Dr. Ehrman, in treating patients at home, has become involved with sophisticated triage procedures, home pain management, and other procedures which maximize a patient's time outside the hospital. Such procedures allow patients to remain safely and comfortably in their homes. Procedures which can be safely done in the home include the starting of I/V morphine drips or I/V antibiotics. These procedures have traditionally not been done in the home. Nationally, and in Bay County, several factors are causing a shift to home health use. First, pressure is being applied in the form of reimbursement mechanisms to reduce the expense of institutional care. Patients are discharged from the hospital sooner and there is more pressure to use home health services. Second, an increased incidence of chronic illnesses, such as AIDS, will increase the use of home health services. The incidence of AIDS and AIDS related diseases will continue to increase and has obvious implications for increased home health usage. Home health care will make "hospital-like" care more available and less expensive for AIDS patients. Third, health consumers want to maintain the quality of their lives and remain at home as long as possible. HOME HEALTH CARE OF BAY'S PROPOSAL Home Health Care of Bay will provide medical personnel services in the disciplines of registered nursing, certified home health aides, occupational therapy, speech therapy, physical therapy, and medical/social work. These services will be provided to Medicare, private insurance, and indigent patients. Home Health Care of Bay will provide traditional home health services and many "high-tech" services which currently are not available at all or are not routinely done in Bay County. Such services include the transfusion of blood and blood products, professional pain management, the drawing of arterial blood gases, the care of Groshong and Hickman catheters, and the care of subcutaneous pumps and subcutaneous venous access devices. Home Health Care of Bay's proposed services will be utilized by many different types of patients, including renal patients, chronic pulmonary patients, chronic heart disease patients, and cancer patients. Home Health Care of Bay will provide health care services to AIDS patients. Petitioner's Exhibit 5 contains a complete list of services which Home Health Care of Bay will provide. Home Health Care of Bay's services will be available 24 hours a day, 7 days a week. This is an important commitment because home health care patients need services regardless of the time of day or day of the week. Even more important than the discrete list of services that Home Health Care of Bay will provide is the integration of all these services into one agency. In that way, patients are not shuttled from place to place; their care can be organized and integrated for maximum benefit. This integration will be accomplished by formulation of a plan of therapy which will include evaluation by a social worker and a physician in order to deal with the patient's total needs. Home Health Care of Bay's commitment to a total integration of patient services is evidenced by its plan to provide 4 percent of its visits in the medical/social work category. Such services are important in providing comprehensive care. The provision of medical/social work services will help patients and their families identify both medical and non- medical needs. Once such needs are identified, the patients and families can be channeled to the appropriate services, agencies and resources. Home Health Care of Bay will provide the physician with direct and timely communication about the patient. This will include daily delivery of complete medical records. Such a service is crucial in order to provide home care to patients with complicated problems. Home Health Care of Bay has a budget line item for marketing of $21,000 in the first year and $18,000 in the second year of operation. This money will be used to change the perception and pattern of home health use. Patients and doctors will be made aware of the availability of new home health services and the integration of those services with existing services. Home Health Care of Bay's marketing effort will overcome the reluctance of some physicians to utilize home health services. The demographics of the subdistrict of Bay County were analyzed and compared to the demographics of District II. The analysis shows that from 1986 to 1989, 3,076 persons 65 and over will be added to the population of Bay County. This represents a growth rate of 21.5 percent in Bay County compared to a district growth rate of 12.4 percent. Of the elderly growth in District II of 7,355, approximately 40 percent of such growth is occurring in Bay County. Forty percent (40 percent) is a high percentage in a 14 county district and indicates that the elderly population in Bay County is growing at a very rapid rate. Elderly persons are the most frequent users of home health services. Thus, rapid population growth is occurring in the segment of the population most in need of home health services. STATUTORY CRITERIA 1/ Consistency With State Health Plan Home Health Care of Bay`s proposal was reviewed for conformity with the State Health Plan and is consistent with that plan. The 1985-1987 Florida State Health Plan states: Home health agencies provide nursing, health aid, therapy and other kinds of services to patients in their homes. This allows individuals to remain at home rather than use more expensive institutional care to recover from acute illness or to manage chronic conditions. The State Health Plan further states: Home health services can be a cost effective form of long term care for the elderly and the infirm. The provision of home health services proposed by Home Health Care of Bay will provide residents of Bay County with a lower cost alternative to institutionalized long term care as referenced in the above State Health Plan excerpts. The State Health Plan also addresses the unwillingness of many providers to serve the medically needy: Medicare is the largest payor for home health care to the elderly, though some private insurers and Medicaid both cover home health services. Policy makers are increasingly concerned about providers' willingness to serve Medicaid recipients and medically indigent Floridians. Home Health Care of Bay has committed to provide at least 3 percent Medicaid and 3 percent indigent visits. Such a commitment will greatly increase access of medically underserved groups. Approval of a provider who accepts a significant portion of Medicaid patients will encourage current providers to accept such patients in order to retain their Medicare and private referrals. Physicians and discharge planners are much more willing to refer to an agency that will care for all their patients. The State Health Plan contains the following objective: OBJECTIVE 1.5.: To assure that the number of home health agencies in each service area promote the greatest extent of competition consistent with reasonable economies of scale by 1987. The methodology utilized by Home Health Care of Bay to project need maximizes competition consistent with economies of scale by allowing additional providers to enter the market while maintaining existing agencies at a size at which they can operate efficiently. Consistency With Local Health Plan Home Health Care of Bay's proposal was reviewed in relation to the 1986 District Two Health Plan and is consistent with that plan. The local health plan contains a section on long-term care services, including home health services. This section contains a numerical methodology to determine need. That methodology indicates a need for an additional agency in Bay County. The local health plan also contains priorities for home health services. Priority C states that: Priority will be given to home health services applications who have a history of providing, or will commit to provide, services to Medicare, Medicaid and medically indigent patients. Dr. Ehrman, the owner of Home Health Care of Bay, has a record in his practice of providing services to all payor groups. He has committed to continue to do so in his home health agency. Priority D of the Local Health Plan states: Priority will be given to home health services applicants who have a history of providing, or will commit to provide, a public marketing program for their services which includes pamphlets, public service announcement and various other community awareness activities. Home Health Care of Bay has budgeted for and committed to an extensive marketing program. A marketing priority is unusual in a local health plan and indicates an awareness of the need to educate the public about home health services. Determination Of Need DHRS currently has no rule governing the need for home health agencies. A historical summary of the regulation of home health agencies in Florida is described in a memorandum prepared by Ms. Marta V. Hardy. Ms. Hardy was the Deputy Assistant Secretary for Regulation and Health Facilities, DHRS, from September 1984 through June 1987. Ms. Hardy was responsible for all CON decisions and was the ultimate decision-maker in regard to the preliminary denial of Home Health Care of Bay's CON. In the fall of 1984, DHRS attempted to promulgate a rule to replace the invalidated Rule of 300. This proposed rule was based on a use rate methodology, but was invalidated in a rule challenged proceeding in 1985. After the invalidation of the proposed rule, DHRS implemented an interim policy which it used to review home health agencies. This interim policy is reflected in the "Bob Sharpe memo," dated May 15, 1986. The interim policy was applied to home health agency application beginning with the first batching cycle in 1986. The interim policy utilized a variation of the previously invalidated rule and attempted to correct the problems which caused the proposed rule to be found invalid. The interim policy is a use rate/population methodology which projects the number of Medicare enrollees using home health services in the future. This number is multiplied by the average number of visits per Medicare home health user. The total number of visits is divided by an agency size of 9,000 visits to yield the gross number of agencies needed. The total number of licensed and approved agencies is subtracted from the gross need number to yield the net number of agencies needs. The interim policy phased in the needed agencies over a three year period. DHRS defended the interim policy in circuit court when the Florida Association of Home Health Agencies (FAHHA) sought to stop DHRS from using the policy. DHRS defended the interim policy in December, 1986, before the First District Court of Appeal. Use of the interim policy resulted in the approval of 23 home health agencies. DHRS abandoned its interim policy sometime in the fall of 1986. No notice was given to the public or to interested parties that a change in DHRS policy had occurred. DHRS published no document rescinding the Sharpe memo. Only after applications were filed in the second batching cycle of 1986, were applicants informed that DHRS had changed its interim policy. Applicants in the December, 1986, batching cycle, including Home Health Care of Bay, were asked for an unlimited extension of time within which DHRS could render a decision. Applicants who refused to agree to an extension were evaluated on the basis of the "statutory need criteria." Applicants who did not agree to an extension were denied. In only one instance was a CON granted after abandonment of the interim policy. This occurred in Franklin County, where no home health agency existed at the time of that approval. DHRS' new "policy" was not developed by DHRS health planners. The "policy" put the burden of proof on the applicant to demonstrate an unmet need. Such a demonstration would be difficult to make. The Office of Community Medical Facilities, the office within DHRS responsible for preliminary CON review, reviewed Home Health Care of Bay's application using the "policy" based on "the thirteen statutory criteria." Such a review required Home Health Care of Bay to prove need by demonstrating an unmet need. However, as evidenced by the Office of Community Medical Facilities' review of Home Health Care of Bay's application, a policy requiring an applicant to meet a negative burden of proof is unreasonable. It imposes a standard which is virtually impossible for an applicant to meet. Ms. Joyce Farr was the DHRS employee responsible for the review of Home Health Care of Bay's application and for the development of the related State Agency Action Report (SAAR). The SAAR was the only work product Ms. Farr prepared in regard to Home Health Care of Bay's application. Ms. Farr has never been qualified as an expert witness in the home health area. Ms. Farr has no formal education in health planning and is unfamiliar with Medicare reimbursement. Ms. Farr does not consider herself to be an expert in financial feasibility projections, staffing, or quality of care. Ms. Farr is not in a policy-making position at DHRS. Ms. Farr was given no instructions by her superiors as to how to review Home Health Care of Bay's application. DHRS presented the testimony of Ms. Farr to attempt to explain how Home Health Care of Bay's application was reviewed. Ms. Farr was tendered and accepted, not as an expert health planner, but as an expert in "CON review." Ms. Farr articulated the standard she used to determine need: [I]f an applicant or residents of a county or community resources of a county or just about any organization basically says that there is an unmet need, meaning that there is no home health services available or there is an accessibility problem where certain groups are not being served -- certain services are not being offered -- I become aware of it by their simply documenting, "I cannot get home health services," like CAPS [Capitol Area Community Aging Agency] that said, "They aren't serving these people. We need somebody in here to serve these people." That would show that there was an unmet need. Unless an applicant, or community resource, could demonstrate an accessibility problem, no need existed according to Ms. Farr. Ms. Farr did not review the Medicare cost reports of current providers to determine the services they provided prior to recommending denial of Home Health Care of Bay's application. Ms. Farr reviewed utilization data of current providers for only one year. Ms. Farr did no analysis of the types of visits provided by existing providers. Ms. Farr looked only at the total number of visits. The only information Ms. Farr utilized in regard to the type of visits being provided was information given to her by existing providers. In determining that no need existed for medical/social work services, Ms. Farr relied on the list of social service agencies included in the local health plan, but did no analysis as to what services such agencies offered. Ms. Farr determined that no Medicaid access problem existed in Bay County based on information current providers gave her. She did not verify these representations with the Medicaid office. Ms. Farr did no charge comparison in her review. At the time of her review, Ms. Farr did not know when a new competitor last entered the market in Bay County. Ms. Farr did not address Objective 1.5 of the State Health Plan in her review. She was unaware of Objective 1.5 until it was pointed out to her in deposition. Ms. Farr utilized no planning horizon in determining need, though she admitted that one of the purposes of CON review is to plan for future health needs. Ms. Farr's review of Home Health Care of Bay's application was deficient for several reasons. First, Ms. Farr's review did not look at a projection of future need. It did not analyze demographics or utilize a planning horizon. It contains no elements of a needs analysis. A mere review of what currently exists misses the point of health planning. Second, in making a determination of no need, Ms. Farr relied solely on comments of existing providers who told her that there was no need for a competing agency. Dr. Deborah Kolb, vice-president of Jennings, Ryan, Federa & Co., participated in the preparation of Home Health Care of Bay's CON application. In preparing the needs assessment portion of the application, Dr. Kolb reviewed the State Health Plan, the Local Health Plan, utilization data, home health CON decisions, and services offered by current providers. The need methodology which appears in Home Health Care of Bay's application is contained in Dr. Kolb's expert report. The methodology appearing in her report and the application was the interim policy in use by DHRS at the time the application was filed. This was the methodology in the Bob Sharpe memo. Home Health Care of Bay will provide home health services to the residents of Bay County. Bay County is in DHRS Service District II. According to the 1986 District II Health Plan, District II is composed of 14 separate subdistricts. Each subdistrict is composed of one county. Bay County is a reasonable service area for Home Health Care of Bay. Dr. Kolb utilized a two-year planning horizon to project the need for home health agencies. This is a reasonable planning horizon. Table 3 of Dr. Kolb's report analyzes need on a district-wide basis. Two time frames, July, 1988, and January, 1989, are shown because Home Health Care of Bay's application was filed in December, 1986. Two years from that date would be December 1988. The official population projections from the Governor's Office focus on July and January of each year. Use of the two project dates straddles the December, 1988, planning horizon. The population numbers of District II for 65 and over are 62,546 for January, 1988, and 63,558 for January, 1989. The 1984 Medicare use rate, which is an estimate of the number of Medicare home health visits per elderly person in Florida for 1984, is multiplied by the projected elderly population to arrive at a projected number of visits. The number of projected visits in Table 3 of 118,565 in July, 1988, and 120,483 in January, 1989, is a result of multiplying the use rate by the projected population. To determine the number of agencies needed, the projected number of visits is divided by optimal agency size. This calculation yields a gross agency need of 13 agencies in the district in July, 1988, and January, 1989. The number of licensed and approved agencies, 12, is subtracted from gross need, 13, to yield net need of one (1) agency in July, 1988, and January, 1989. Dr. Kolb utilized 9,000 for the optimal agency size figure. This is consistent with the interim policy and with data which suggests that is where economies of scale occur. An optimal agency size of 9,000 appears in the Local Health Plan methodology. Table 4 of Dr. Kolb's report presents the same analysis as Table 3, described above, on a subdistrict basis to determine where the one agency found to be needed in District II should be located. Use of the same methodology results in a gross agency need of three. The two existing agencies are subtracted from the gross need of three to yield a net need for one agency in July, 1988, and January, 1989, in Bay County. The methodology described above is a reasonable one for determining need. The methodology utilizes a common health planning approach. It is the same methodology used by DHRS as an interim policy. It is the same type of methodology used by DHRS in planning for other types of health services. Beyond the numerical analysis discussed above, other factors indicate the need for an additional home health agency in Bay County. Bay County has a very low home health use rate and a very high nursing home use rate. The Bay County home health use rate is 1.5 visits per person 65 years and older. The Bay County use rate is significantly lower than the state use rate of 1.89. This disparity indicates a gap between real need and historical utilization. At the same time, Bay County has a nursing home use rate of 41 beds per thousand elderly compared to a state rate of 23 beds per thousand. Additionally, the occupied nursing home beds per thousand elderly is much greater in Bay County than in the state. In the state there are 21.3 occupied beds per thousand elderly. The utilization of Bay County's nursing home beds is approximately 75 percent greater than utilization in the state as a whole. These statistics suggest an inappropriate allocation of resources between home health care services and more expensive institutional nursing home services. Nursing home utilization would decrease with more sophisticated home health care. Many people are inappropriately institutionalized in nursing homes and could be cared for at home. From a medical perspective, Dr. Ehrman was of the opinion that an additional home health agency was needed. Availability, Quality Of Care, Efficiency, Appropriateness, Accessibility, Extent Of Utilization, And Adequacy Of Like And Existing Services There are currently two Medicare-certified home health care agencies serving Bay County. One way to evaluate agency performance is to analyze the mix of services and the number and types of visits being provided. Current providers have concentrated heavily on providing nursing and aide visits. Of approximately 18,000 visits provided each year, approximately 16,000 visits comprised the nursing and aide categories. Neither provider did any specifically medical/social work visits in 1985 or 1986. Additionally, the total number of visits delivered to the residents of Bay County has remained constant in 1985 and 1986. Bay County's constant use rate illustrates the need for more education in regard to home health services. While current providers do certain high tech procedures if directed to by a doctor, current providers are not committed to consistently doing high tech procedures. High tech services are not the most profitable. Their margins are often low and it is more economically beneficial for current providers to provide aide services. Transfusions, initiation of I/V antibiotics, continuous infusion of morphine, pain nursing, and catheter care are all services which existing agencies have rarely done or do with great difficulty. Without doing such procedures as a regular basis, competency is difficult to maintain. Bay Home Health Care Agency d/b/a Home Health of Panama City (Home Health of Panama City) is a free-standing home health agency and has been in business for 11 1/2 years. Home Health of Panama City does no Medicaid visits. Bay Medical Center Home Health receives referrals from Home Health of Panama City because Home Health of Panama City does not take Medicaid or indigent patients. Home Health of Panama City does no medical/social work visits. Home Health of Panama City has no money budgeted for marketing. Bay Medical Center Home Health is a hospital based home health agency. It functions as a department of Bay Medical Center, an acute care hospital located in Panama City, Florida. In the past two years, Bay Medical Center Home Health has provided no medical/social work visits though some of those services were provided by nurses during nursing visits or by other departments of Bay Medical Center. Bay Medical Center Home Health does not currently provide care of certain high tech devices such as the Denver pleuroperitoneal pump or the subclavian pump. Its staff would have to be trained to provide such care. Bay Medical Center Home Health has never given blood transfusions or cared for a Denver shunt. Bay Medical Center Home Health has a very low number of average visits per patient (6.8) when compared to the state average of 30 visits per patient. Bay Medical Center Home Health does a low percentage of Medicaid visits. In 1986, Bay Medical Center Home Health was reimbursed for 120 Medicaid visits out of a total of 3,280 Medicaid-reimbursed visits provided in District II. A comparison of reimbursed Medicaid visits provided by Bay Medical Center Home Health to District II as a whole demonstrates a Medicaid access problem. In 1986, Bay County had 25 percent of the district's population and 16 1/2 percent of the district's Medicaid eligible. Yet only 3.7 percent of the district's Medicaid-reimbursed home health visits were provided in Bay County. If services were Medicaid accessible, the number of Medicaid visits would be closer to the Medicaid percent of the population. Bay Medical Center Home Health Care's Medicaid visits represented only 1 percent of their total visits for 1986. When Home Health of Panama City's zero (0) Medicaid visits is considered, out of all home health visits provided in Bay County only 0.7 percent were Medicaid visits. Approximately 25 percent of Dr. Ehrman's patients from the Panama City area are Medicaid or indigent. This evidences a need for more Medicaid services. Bay Medical Center Home Health has no line item for marketing and advertising. Ability of the Applicant To Provide Quality of Care Dr. Ehrman is a highly trained and experienced physician. While in Canada, Dr. Ehrman established a hematology and oncology health care delivery system in Montreal. This system is still in existence and working well. Dr. Ehrman has been instrumental in improving the delivery of health care in his practice area. He has established tumor boards at local hospitals and provided many new procedures and devices in the home. Dr. Ehrman has raised the level of awareness on the part of other practitioners in his area as to a team approach to the delivery of services. This has increased the type of home services now available. Dr. Ehrman has responded to the needs of his patients for a multi- disciplinary approach to oncology by associating a clinical psychologist. This person deals with the psychological needs of the cancer patients seen by Dr. Ehrman. Dr. Ehrman has been instrumental in beginning many new and innovative practices in his office. For instance, he administers chemotherapy to Medicare patients in his office. He accomplished this by arranging with local pharmacists to mix and supply chemotherapy drugs. Dr. Ehrman will work with these same pharmacists in Home Health Care of Bay. Dr. Ehrman is involved in a durable medical equipment company. Many new devices and treatments were first used in the area by Dr. Ehrman's company. Dr. Ehrman has been a leader in the community in keeping up with new home health care developments. Home Health Care of Bay will have adequate staff on a full-time basis and add staff as utilization increases. Dr. Ehrman currently contracts with two nurses who are well trained and have over 1,000 hours of in-service training. Home Health Care of Bay is committed to keeping up with state-of-the- art home health care services and will add new services as they are developed. Availability and Adequacy of Alternatives There are no realistic alternatives to the establishment of a new home health agency. The alternative of nursing home care is not satisfactory. Most persons would prefer home care to nursing home care when at all possible. The alternative to home care which is currently being used is to shuttle the patient from the emergency room to the hospital to the doctor's office. Eventually the patient drops out of the system or settles for a lower level of services. Availability of Resources, Including Health Manpower, Management Personnel and Funds for Capital and Operating Expenditures . . . Extent to Which the Proposed Services Will Be Accessible to All Residents The staffing requirements for Home Health Care of Bay are shown on Table 11 of the application. That staffing plan is reasonable. Home Health Care of Bay will have a full-time administrator at a salary of $27,000. A capable administrator can be recruited at that salary. Home Health Care of Bay will employ a full-time nurse supervisor at a salary of $21,000. A nurse supervisor can be hired at that salary. Home Health Care of Bay will employ a full-time clerical person at an annual salary of $16,000. A clerical person can be hired at that salary. The above salaries and Home Health Care of Bay's ability to recruit such persons is reasonable based on Dr. Ehrman's experience employing similar personnel in his office. Home Health Care of Bay will hire contract staff to provide skilled nursing services, physical therapy services, speech therapy services, occupational therapy services, medical/social work services, and home health aide services. Such persons can be contracted with to provide the type of services Home Health Care of Bay proposes based on discussions with such persons. Dr. Ehrman currently contracts with two nurses in Ft. Walton Beach to provide nursing services similar to those proposed by Home Health Care of Bay. Such services are provided mainly to non-Medicare patients and the arrangement has worked very well. Funds for Capital and Operating Expenditures Project costs are depicted on Table 25 of the application. The costs are reasonable. Home Health Care of Bay can be started for $22,600. Immediate and Long-Term Financial Feasibility of the Proposal At hearing, DHRS admitted the short-term financial feasibility of Home Health Care of Bay's proposal. The statement of projected income and expense in Figure 7 of the application and on page 14 of Dr. Kolb's report was prepared under Dr. Kolb's supervision. The majority of assumptions on which the pro forma is based have been stipulated to by DHRS as reasonable assumptions on which to base a financial projection. The only assumptions not admitted by DHRS relate to utilization and payor mix. DHRS, however, introduced no evidence that refuted the reasonableness of these assumptions. The utilization projection used to calculate gross revenue in the pro forma was 3,800 visits in 1988 and 8,500 visits in 1989. The utilization projections are reasonable based on the agency's demographic base and Dr. Ehrman's commitment to education and marketing. The projection of costs and charges depicted on page 45 of the application is reasonable based on Dr. Ehrman's current office experience. The number of visits is multiplied by the charge per visit type to calculate gross revenue. This calculation yields a gross revenue of approximately $200,000 in year 1 and $462,000 in year 2. The payor mix for Home Health Care of Bay is found on Table 7 of the application. Home Health Care of Bay predicts 3 percent Medicaid visits, 80 percent Medicare visits, 14 percent private pay and insurance visits, and 3 percent indigent visits. The pay mix projections are reasonable based on the mix of patients Dr. Ehrman currently sees. Ms. Farr admitted that the projections were reasonable. The difference between Medicare and Medicaid reimbursement and full charges results in the contractual allowances figure. Bad debt and charity deductions were calculated based on 3 percent indigent and 3 percent Medicaid visits. Deductions from gross revenue, which are funds not received because of contractual allowances, bad debts, or charity, are subtracted to yield net revenue. Deductions from revenue are approximately $38,000 in year 1 and $135,000 in year 2. Net revenue is approximately $162,000 in year 1 and $327,000 in year 2. The second portion of the pro forma lists expenses. This list contains all the expenses expected for a new home health agency. All the expenses listed are reasonable. The pro forma shows a loss of $28,505 in the first year and a profit of $13,207 in the second year. Home Health Care of Bay has the equity to sustain a loss in the first year. In the second year of operation, based on the above assumptions, expenses are $314,000 and net revenue is $327,000 for a net income of $13,000. These projections indicate that the project is financially feasible in the long term. Table 26 on page 41 of the application presents the project timetable anticipated when the application was filed. Any delay in this timetable due to this litigation will not materially change the projections or commitments contained in the application. Impact of the Proposal on Costs of Providing Health Services, Including Effects of Competition and Improvements in Financing and Delivery of Health Services Which Foster Competition and Services To Promote Quality Assurance and Cost Effectiveness The introduction of a new home health agency into the Bay County market will stimulate competition. Such competition will stimulate growth in competitors and increase the overall level of services. Approval of a new competitor where there has been no new competition for nine to ten years will put pressure on providers to provide a wider range of services as well as higher quality services. Ms. Young, administrator of Bay Medical Center Home Health, admitted that if Home Health Care of Bay's CON is approved, her agency might begin educating physicians in regard to available services, rather than waiting for physicians to request a service. As the current providers testified, as agency visits go up or down, the number of staff required can be adjusted without incurring unreasonable costs. Current providers have control over their costs and staffing. Home Health Care of Bay's charges are competitive. In some areas, such as skilled nursing and home health aide, Home Health Care of Bay's charges are lower than current providers' charges. Price competition allows competition for private pay patients. Impact The addition of Home Health Care of Bay to the home health market will not significantly affect current providers. Studies have indicated that new entrants into the home health market do not significantly affect existing providers. The elderly population of Bay County is growing rapidly. When the 1984 home health use rate is applied to elderly population growth between 1986 and 1989, approximately 5,800 new visits are attributable to population growth alone. Home Health Care of Bay projects it will deliver 3,800 visits in its first year of operation and 8,500 visits in its second year. Thus, a large percentage of those visits are attributable to population growth alone. Home Health Care of Bay's marketing and education programs will raise the local use rate and generate more visits. Dr. Kolb analyzed the financial impact of Home Health Care of Bay's project on current providers. Her analysis considers a worst case scenario and assumes that current providers' visit levels will be affected by the introduction of a new provider. The analysis then calculates the financial impact on current provider. In order to do this, Table 11 calculates the average cost per visit from existing agencies' 1985 Medicare cost reports. Home Health Care of Panama City's average cost per visit is $37.18. Bay Medical Center Home Health's average cost per visit is $41.76. The Medicare program pays agencies the lower of Medicare cost caps or actual costs. The current providers in Bay County are well below the Medicare cost caps and so will be paid their actual costs. Table 11 calculates the difference between actual agency costs and Medicare cost caps. Home Health of Panama City was 18 percent below its cost caps. Bay Medical Center Home Health was 24 percent below its cost caps. Thus, Home Health Care of Bay could provide the number of visits it projects and even if all those visits came from existing providers, the current providers could still operate at a level of cost that would be Medicare reimbursable. The approval of Home Health Care of Bay's application will not have a significant adverse impact on existing providers.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Health and Rehabilitative Services enter a Final Order granting CON No. 4912 to Home Health Care of Bay County, Florida, Inc., to establish a Medicare-certified home health agency in Bay County, Florida. DONE AND ENTERED this 17th day of December, 1987, in Tallahassee, Florida. DIANE K. KIESLING Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 17th day of December, 1987. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 87-2151 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted by the parties in this case. Specific Rulings on Proposed Findings of Fact Submitted by Petitioner, Home Health Care of Bay County, Florida, Inc. Each of the following proposed findings of fact are adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 1-3(1-3); 5(4); 7-10(5-8); 12-16(48- 52); 18(53); 19 & 20 (54); 21(55); 24-27(56-59); 28- 31(59-62); 37-52(9-24); 54-57(25-28); 58-77(28-47); 78-89(63-74); 91-102 (75- 86); 104-114(87-97); 116-129(97-110); 130(110); 131(111); 133-135(112); 136- 139(113); 140 & 141(114); 142-153(115-126); 154-163(126-135); 165-175(136-146); 179-182(147-150); 183(150); 184 & 185(151); 186(152); 187 & 188(153); 189- 191(154); 192 & 193(155); 194 & 195(156); 196(157); 197(158); 200-203(159-162); 207(163); 209(164); 210(165); 212-218(166-172); and 219-225(172-178). 2. Proposed findings of fact 17, 32-36, 53, 90, 103, 115, 132, 164, 176- 178, 198, 199, 204-206 and 211 are subordinate to the facts actually found in this Recommended Order. Proposed findings of fact 22, 23 and 208 are rejected as being unsupported by the competent, substantial evidence. Proposed findings of fact 4 and 11 are rejected as being unnecessary and/or irrelevant. Specific Rulings on Proposed Findings of Fact Submitted by Respondent, Department of Health and Rehabilitative Services Each of the following proposed findings of fact are adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 1(1 & 2); 2(3); 6(Footnote 1); 7(148) and 13(4). Proposed findings of fact 3-5, 8-12, 14-40, 43-45 and 47-53 are subordinate to the facts actually found in this Recommended Order. Proposed finding of fact 42 is rejected as being unsupported by the competent, substantial evidence. Proposed findings of fact 4 and 46 are rejected as being unnecessary and/or irrelevant. COPIES FURNISHED: Byron B. Mathews, Jr., Esquire Vicki Gordon Kaufman, Esquire McDermott, Will and Emory 101 N. Monroe Street Tallahassee, Florida 32301 Theodore E. Mack, Esquire Assistant General Counsel Department of Health and Rehabilitative Services Regulation & Health Facilities Ft. Knox Executive Center 2727 Mahan Drive Tallahassee, Florida 32308 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 =================================================================
Findings Of Fact MPP presently provides home health services to residents of Hillsborough and Polk Counties from its offices located in Tampa and Lakeland. Without these certificates of need herein requested MPP is not authorized to provide home health services to Medicare and Medicaid eligible persons. MPP is qualified to provide the proposed services. Walker is a non-profit 122-bed acute care community hospital located in Avon Park, Highlands County, Florida. Walker has provided health care services to residents of Highlands County since 1947. Although Walker does not currently provide home health services in Highlands County, it is fully qualified to provide the proposed services. Home health agencies (HHA) differ significantly from other health care providers chiefly in the fact that they are labor intensive and not capital intensive services. Most home health agencies contract with nurses, therapists, and other personnel to provide the services on an as-needed basis. Once an office is established with the necessary communications and accounting facilities, expansion of the agency is accomplished merely by signing up as many nurses, therapists, etc., as is needed to provide home health services as required. Theoretically, one home health agency could provide all of the services required in a district, subject only to the travel time needed for the in-home provider to reach the patient and the accessibility of the agency office to the hospital or doctor prescribed in the home health treatment. A proposed rule prevents this from occurring by the rule formula which limits the divisor in the formula (number of expected medical care visits per agency per year) to 21,000 expected visits per agency, which is then multiplied by a constant. Thus, if there were only one home health agency in a district and it was providing 65,000 home Medicare visits per year, use of the proposed rule methodology would show a need for additional HHAs. Although both Petitioners challenged DHRS' non-rule policy in determining the need for HHAs in District VI, all of the need calculations they submitted are predicated upon the need methodology as contained in proposed Rule 10-5.11(14), F.A.C., modified by the Petitioners using 1983 use rates and disregarding the "crossover" agencies. No need calculations based on any other methodology were presented. The methodology in the proposed rule provides [N]eed equals the [G]ross number of HHAs to be allocated in the district less the number of [L]icensed and approved HHAs in the district, or N = G - L. "G" is itself expressed by the formula MV x (A+B)/S where: MV = The 1982 statewide mean number of visits per Medicare home health care service user across age groups (31.5) A = The projected district population of persons 65 years or older times the Medicare home health services utilization rate standard for that population group [POPA x .0506]; B = The projected district population of persons less than 65 years of age who are estimated to be disabled times the Florida home health services utilization rate standard for disabled medical beneficiaries [POPB x .01755 x .0297]; S = The number of expected Medicare visits per agency per year. This number is obtained by adding to the base agency size of 9,000 visits per year an additional number of visits equal to the total number of Medicare visits in the projected year, divided by the base agency size, multiplied by a factor denoted as C. C is a standard which is set at 270 for applications timely filed in calendar years 1984 and 1985; 225 for applications timely filed in calendar years 1986 and 1987 and 180 for applications timely filed in calendar year 1988 or beyond. However, if the result of the calculation of S exceeds 21,000 visits projected, S shall be assigned a value of 21,000. The methodology employed in need calculation is based on a number of factors. MV (31.5) is a standard which is based on information obtained from the Health Care Finance Administration (HCFA) for Florida in 1982. If this standard is recomputed using 1983 HCFA data, MV is 33.3. The second, the Medicare home health care utilization rate standard (.0506), is also based on information reported by HCFA for Florida for 1982. The estimate for the proportion of the Florida population which is disabled (.01755) was also derived from the 1982 data for Florida, as was the factor which specifies the home health services utilization standard for disabled Medicare beneficiaries (.0297). The base agency size (9,000 visits annually), which is used in determining "S", the number of expected Medicare visits per agency per year, was developed by the HRS Office of Comprehensive Health Planning, based on a statistical analysis of data related to agency size, relative efficiency in terms of cost, and economies of scale. That analysis revealed that, in the range of about 9,000 visits, the first reasonable economies of scale begin to accrue in the operation of a home health agency. Therefore, this level of service provision was selected as the agency standard. The maximum level "S" can reach (21,000 visits annually) was found to be the point at which the major economies of scale appear to have been achieved. Thus, this level was selected as the maximum for the agency standard. The values as selected for "C" represent 3.0 percent, 2.5 percent, and 2.0 percent of the base agency size standard (9,000 visits annually). This factor is used to adjust "S" over time, its effect is that of increasing the number of home health agencies, which are projected as needed, gradually over a three-year period. It was selected as a standard based upon HRS' policy to encourage the development of health care markets in an orderly manner and to avoid the disruptive impact of a flood of new service providers immediately. The "C" factor changes over a time, which means that "S" will grow smaller and thus the gross number of agencies will increase. Thus, even MPP's expert witness agrees that the rule is not frozen. Rather, it is dynamic, though conservative, in effect. In fact, the result of the calculations of "G" (gross number of agencies) approximates the current, existing inventory of home health care agencies in Florida. The Local Health Plan for District VI makes no provision for establishing subdivisions within the district. Accordingly, an HHA located in any county in District VI can serve the entire district subject only to geographical limitations. There are 16 HHAs domiciled in District VI and six HHAs domiciled in adjacent districts but licensed to serve a contiguous county in District VI. These so-called crossover agencies presently serve or are licensed to serve Medicare patients in District VI. Counting these crossover agencies and the number of existing agencies, there are 22 licensed and approved HHAs in District VI. Using the proposed rule methodology and applying the estimated population for 1987 (two years from date of hearing) gives a calculated gross need of 19. Under the proposed rule methodology, there is presently a surplus of three HHAs in District VI. Under the proposed rule, these crossover agencies would have to apply for expedited review of an application to establish an office in the county in which they are licensed but not domiciled. Exactly what this review will consist of is subject to some dispute. However, until the proposed rule goes into effect, there is no occasion for these crossover agencies to seek a certificate to do that for which they are currently licensed. If the 1983 data from HCFA, which was the latest usage data available at the time of the hearing, is substituted for the 1982 data prescribed by the proposed methodology, and the overall district need is recomputed, an overall need of 21.63 is arrived at for District VI in 1987. This rounds off to 22 and is the same as the present number of licensed and approved HHAs in District VI. Both Petitioners contend that the six crossover agencies should not be counted in the total number of licensed and approved HHAs in District VI because there is no guarantee they now serve or will ever serve patients in District VI. If these agencies are excluded, there is a clear need under the proposed rule methodology for the three HHAs here being applied for. Under the proposed rule, each of these crossover agencies must apply within a time certain (60 days) following the effective date of the proposed rule for certificates of need to open an office in the county for which they are licensed. These crossover agencies may have grandfather rights to serve Medicare patients in those counties in which they are licensed and, if so, these rights cannot arbitrarily be abrogated. Petitioners especially contest counting the three Gulf Coast Home Health Services corporations as three crossover agencies because each of them is licensed to serve only Hillsborough County in District VI; because they have the same directors, corporate officers and owners; and because all of them would be unlikely to open additional offices in Hillsborough County. Nevertheless, each is a separate and distinct entity with its own corporate identity. As such, each has the same right to serve Medicare patients in Hillsborough County as does Total Professional Care, Inc., another crossover agency so licensed. The services provided by these crossover agencies, insofar as they provided services to Medicare patients in the counties in District VI in which they are licensed, are included in the usage data obtained from HCFA. This usage data, mean number of visits (MV), is a principal factor in the numerator of the methodology formula above discussed. Thus, the district usage includes those services provided by these crossover agencies. No evidence was presented regarding the actual number of visits provided to District VI patients by these crossover agencies. Accordingly, it is inconsistent to accept the proposed rule methodology and exclude the crossover agencies in the count of existing agencies to determine the gross number of HHAs needed. Respondent's contention that these crossover agencies are akin to health care providers who have been issued a CON but are not yet licensed and in operation is not fully concurred with. Those providers issued a CON are counted in the number of authorized and licensed beds before their facilities commence operations those facilities are usually capital intensive rather than labor intensive as are HHAs and a longer delay in commencing operations is required for those types of facilities than for an HHA due simply to the time needed to construct those facilities. In other respects, those approved but not yet licensed facilities are similar to these crossover agencies in that some of these crossover agencies may have grandfather rights to open an office in the county in District VI in which they are presently licensed. In this respect they are like the applicant who has been issued a CON to operate a nursing home but subsequently decides to forego construction because of unexpected costs or other reasons. Each would lose its right to operate the health care facility by reason of failure to timely comply with rule requirements. However, until such time as those rights are forfeited they should be counted in determining the number of beds or other health care facilities that are needed in, the district in the year those facilities are programmed to be in operation. Changes in Medicare reimbursement to health care providers, principally hospitals, by the advent of the DRG (Diagnostic Related Group) has led to an increase in demand for the services provided by home health agencies. This is especially true for surgery patients who can be released from a hospital sooner if dressing changes and nursing care can be provided at the patient's home. Under the DRG method of reimbursement, the hospital is paid a Flat fee for Medicare patients for a specific diagnosis and treatment. The sooner the patient can be released from the hospital, the less will be the cost to the hospital for providing treatment. If, for example, the cost for a hospital bed is $400 per day and the DRG for the patient's ailment is $2,000, if the patient is kept in the hospital for five days, the total payment received will exactly cover the cost of the room. If the patient is kept in the hospital more than five days the hospital will lose money, while if he is discharged before the five days the hospital will make a profit Walker's primary contention is that it should be allowed to operate an HHA so it can discharge surgical patients sooner and provide the needed care at the patient's home by persons supervised by the hospital doctors. This would allow Walker to make more profit and thereby have more funds available to take care of indigent patients. Walker presented several witnesses who averred that a hospital-associated HHA provides better care than does a free- standing HHA. All these witnesses are employees of Walker and this self-serving testimony is given little weight. Both the hospital-run HHA and the free-standing HHA will employ part-time workers to provide the home health care prescribed. There is no logical reason to assume the hospital-affiliated HHA will employ better qualified nurses, etc. to provide the home health services needed than will the free-standing HHA. Medicare reimburses hospital-based home health agencies at a higher level than free- standing HHAs. This is an add-on of approximately 13 percent over the reimbursement received by free-standing HHAs. This is based on the cost of providing services which is generally higher for hospital-based HHAs. Walker also raised the issue of availability of occupational therapy, respiratory therapy, and medical-social workers. One of the two agencies operating in Highlands County, Highlands County HHA, does not provide these services. The other, Upjohn, is newly authorized to provide home health services in Highlands County. In other counties in Florida in which Upjohn is authorized to provide home health services it provides a broad range of services to home health patients including occupational therapy, respiratory therapy, and medical, social workers. Respondent's expert witness opined that such services were now available in Highlands County. This opinion was based in part on hearsay evidence that the witness received from an Upjohn representative that such services are provided. No direct testimony was presented that Upjohn did, or did not, provide the services not presently provided by Highlands County HHA. Accordingly, there was no credible evidence to rebut the opinion of HRS witnesses that these services are available in Highlands County. MPP's offices are currently available on a 24-hour per day basis and this will continue if the application is granted. Walker is also available 24 hours per day and access to home health personnel will also be available. MPP has committed to allocate 2 percent of its gross annual visits from each office to Medicare patients. In addition, one totally uncompensated visit will be provided to an indigent for every 20 Medicare visits. MMP presented no evidence that it is currently providing uncompensated services. Walker, which is a church owned and backed non-profit hospital, projects that 7.5 percent of its home health agency visits will be to indigent persons. This mirrors the current hospital-provided services to Medicaid patients. Walker's primary contention, that because hospital- based HHAs provide better care or better supervised care doctors will be more willing to release patients sooner than they.: otherwise would if there is no hospital-based HHA available, is not supported by credible evidence. It is simply not credible that a nurse employed by a hospital-based HHA is more competent, trustworthy, or capable than is the same nurse when employed by free-standing HHA. The chance of losing hospital records when a patient is transferred to a free-standing HHA would appear no greater than when the patient is transferred to a hospital-based released from the hospital whether home health services is thereafter provided or not. In view of the confidentiality of patient records, it would be expected that these records be retained in the hospital files. Absent a rule or policy to provide a methodology to determine need for additional HHAs, new applicants for certificates have a nearly impossible task of proving need if there are existing HHAs which oppose the application. This is so because of the nature of HHAs that they can expand to cover all needs simply by engaging more part-time personnel to provide the home health services needed in the community, county, or even district.
The Issue Whether the Department of Health and Rehabilitative Services should grant petitioners' applications for certificates of need for the establishment of Medicare certified home health agencies in Hillsborough and Polk Counties, Florida.
Findings Of Fact HRS thereby adopts and incorporates by reference the findings of fact set forth in the recommended order except for the last sentence of paragraph 32 and paragraph 33. See discussion in ruling on exceptions.
Recommendation Based upon the foregoing findings of fact and conclusions of laws, it is RECOMMENDED that the Department of Health and Rehabilitative Services enter a final order granting and issuing CON Nos. 3605 and 3606 to Medical Personnel Pool. DONE and ENTERED this 25th day of April, 1986, in Tallahassee, Leon County, Florida. DIANE A. GRUBBS, 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 25th day of April, 1986.
The Issue Whether the applications for certificates of need to establish Medicare-certified home health agencies filed by Aaction Home Health Care, Inc. (Aaction) and Nursing Unlimited 2000, Inc. (Nursing Unlimited), on balance, satisfy the applicable review criteria so as to entitle either or both to award of a certificate of need.
Findings Of Fact The Applicants Nursing Unlimited 2000, Inc., was formed for the purpose of obtaining a certificate of need for a Medicare certified home health agency, and to serve as the entity into which would be merged certain existing licensed non-Medicare certified home health agencies in Dade County. Aida Salazar-Rebull is a co- founder, director, officer, and shareholder of Nursing Unlimited, and she currently owns, operates, and serves as the administrator of LTC Professional Consultants, Inc. (LTC), a licensed non- Medicare certified home health agency in Dade County. Ms. Salazar will serve as Nursing Unlimited’s administrator, and after CON approval will merge LTC into Nursing Unlimited and continue its current operations. Elia Murias is also a co- founder, director, and shareholder of Nursing Unlimited, and she currently owns and operates Nursing Love & Care, a licensed non- Medicare certified home health agency in Dade County. Upon CON approval, Ms. Murias, a registered nurse, will serve as Nursing Unlimited’s director of nursing, and will merge the operations of Nursing Love & Care into Nursing Unlimited. For the past 12 years LTC has provided home health care services directly to Medicaid and private pay patients, and to Medicare patients through contracts with Medicare certified agencies. LTC is accredited by the Joint Commission on Accreditation of Health Care Organizations (JCAHO), which accreditation will be transferred to Nursing Unlimited. Since its inception, the number of patients served by LTC has increased every year. LTC enjoys an excellent reputation among local health care providers and patients. LTC’s continual growth over the past ten years, coupled with the letters of support in the application, demonstrate a record of providing high quality care to underserved communities and population subgroups. LTC currently provides home health services in northwest, west central, central, and east central Dade County, and as Nursing Unlimited will serve the same geographic area. LTC places particular emphasis on its service to underserved population subgroups such as Hispanics, Haitians, Blacks, low-income clients, and HIV-positive patients. Nursing Unlimited will continue to serve those population subgroups. Although approximately 53 percent of the Dade County population is Latin, only two of the over 30 existing Medicare certified home health agencies are Latin owned and operated. LTC and Nursing Love & Care are Latin owned and operated, as would be Nursing Unlimited. The entire staff of LTC is bilingual, and some staff are multi-lingual, as would be the staff of Nursing Unlimited. Approval of Nursing Unlimited's application would enhance the availability and accessibility of services to the Latin community. Aaction Home Health Care, Inc. (Aaction), is an existing home health care agency providing services in Dade County since approximately 1988. Like Nursing Unlimited, Aaction's target population is the Hispanic community of Miami and Hialeah. The geographical area which Aaction now serves and will continue to serve at an enhanced level, if approved, is a low- income, high crime and low education area. Aaction's success in those difficult areas is based on its ability to recruit and retain indigenous staff who know the problems. Over 30 letters of recommendation and support, mostly from Hispanic physicians, are attached to Aactions's application and attest to the agency's past and anticipated future service in the community. Aaction has applied for JCAHO accreditation. Need Analysis The review of CON applications must be in context with the criteria set forth in Section 408.035(1), Florida Statutes. Pursuant to the parties’ prehearing stipulation, both applicants satisfy all of the applicable review criteria, except this: The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing home health care services in District 11. Section 408.035(1)(b), Florida Statutes. Aaction and Nursing Unlimited both contend there is a need in District 11 for at least two new or additional Medicare certified home health agencies. Each asserts that both CON applications can and should be approved; their respective applications are not mutually exclusive, and accordingly, they need not be comparatively reviewed with one another. The focus of the sole remaining criterion at issue, Subsection 408.035(1)(b), is on existing home health care providers. As acknowledged by AHCA in its State Agency Action Report (SAAR), in pure numbers the instant CON application proposals would increase availability and access in District 11. There is no AHCA rule formula or methodology to determine a numeric need, nor is there a fixed need pool applicable to this proceeding. In the absence of an Agency numeric need rule, the applicants each proposed reasonable need methodologies within their applications. AHCA did not propose any need methodology at hearing. AHCA's former home health agency numeric need methodology rule was invalidated because it was anti-competitive, understated potential actual need, and failed to consider health care economics, efficiency and cost containment. Principal Nursing v. AHCA, DOAH No. 93-5711RX (Final Order January 26, 1994); AHCA v. Principal Nursing Services, Inc., 650 So. 2d 1113 (Fla. 1st DCA 1995) (Affirmed the Final Order as to the need methodology, but reversed as to other portions of the rule unrelated to the issues here). Nursing Unlimited, through Michael Schwartz, applied the invalidated need methodology to demonstrate that even under that excessively conservative approach, at least 2 additional home health agencies are needed in District 11. When the applications were filed the most current home health visit utilization data was for calendar year 1994. The number of visits in 1994 was divided by the age 65+ population to determine a use rate, i.e., the number of home health visits per 100,000 population. The 1994 use rate was applied to the projected age 65+ population growth for the three horizon years of 1995-1997, a projection of 102,039 more patient visits in 1997 than there were in 1994, based on population growth alone. Next, Mr. Schwartz determined a cost-efficient agency size (CEAS) by determining from a review of District 11 existing home health agencies the point at which the average cost per home health visit was less than the statewide average cost per visit. In this case, the result was a CEAS of 34,973, which was divided into the number of projected new visits in the horizon year 1997 resulting from population growth alone, which calculation shows a numeric need for three new home health agencies in District 11. At the time the CON application was filed there was one approved, but not yet licensed home health agency, which was subtracted by the applicant from the net need figure, thus resulting in a net need for two new agencies. The recent historical data shows that home health care visits have been on the increase, both in terms of visits per 100,000 population and in terms of visits per patient. The amount of time spent by patients in the hospital is decreasing, which translates into increased need by patients for visits from home health agencies. The need for home health will continue to increase because it is a cost-effective alternative to nursing home placement and hospital care. Home health care services are less costly than care received in hospitals, in nursing homes, or on an outpatient basis. Thus, allowing greater access to home health services should reduce the overall cost of health care to payors, including Medicare. To address this trend Michael Schwartz offered a realistic, yet still conservative, numeric need projection which assumes an increased use rate beyond that which is based on population increase alone. Mr. Schwartz considered the cumulative increase in visits that occurred over the three-year period 1991-1994 and projected this forward to the horizon year of 1997. Although federal Health Care Finance Agency (HCFA) data suggests that visits will grow nationally at seven percent per year. Mr. Schwartz assumed only a seven percent increase over three years, which resulted in a growth of approximately 180,124 visits by 1997, and which divided by the CEAS yields a need for 5.2 new agencies. In hindsight, the conservative nature of this projection is apparent from a review of utilization data which has become available since the filing of the CON application. For example, rather than a growth in visits of 180,000 over the period 1995-1997, there was an actual increase of over 410,000 visits in 1995 and 1996 alone. Utilization data for 1997 is not yet available. Aaction presented three separate need methodologies in its application prepared by Mark Richardson. The first two methodologies applied a static use rate based on visits in 1994 to the projected population to determine total visits at the planning horizon. Recognizing that cost efficiencies maximize at an approximate range between 30,000 and 90,000 visits per year, Aaction divided the total projected visits by a conservative CEAS of 50,000. These methodologies yielded a need in District 11 for two additional home health agencies at the planning horizon. Using a CEAS of 30,000 visits would yield a need for three agencies instead of two. AHCA has recently determined that static use rates are inappropriate. (Allstar Care, Inc., etc. vs. AHCA, DOAH No. 96-4064, Final Order November 4, 1997). Nonetheless, application of over-conservative methodologies in this case can help counter the agency's unsubstantiated assertion that many visits are fraudulent or unnecessary. In its third methodology, Aaction assumed more realistically that home health use rates would continue to increase as suggested by historic data. In order not to overstate the potential growth rate, Aaction used a rate equal to one-half of the 1993-94 actual growth rate. Utilizing a 50,000 visit CEAS, this methodology yields a need of 7 to 9 new home health agencies in District 11 at the planning horizon. Using a 30,000 visit CEAS yields a net need for over 15 new home health agencies. Recalculating the need formulas by application of the now available 1995 and 1996 data, using a growth rate at 50 percent of the actual rate, and a CEAS of 50,000 visits, results in a need for 7 to 8 new agencies. If the static use rate were applied, the need would be 5 to 6 new agencies. Application of Aaction’s initial need methodologies with a static use rate based on 1996 utilization data yields a need for over 5 new agencies when a 50,000 visit CEAS is used. If a 30,000 visit CEAS is utilized, these methodologies yield a net need for 9 new home health agencies. Applying Aaction’s third methodology (i.e., utilization projected to increase at 50 percent of the actual increase between 1995 and 1996) yields a net need for over 7 or over 12 new agencies, depending on whether a 50,000 visit or 30,000 visit CEAS is applied. There are other indications of need for additional home health agencies in District 11. For example, a review of 1996 utilization data reveals that District 11 has only 1.7 home health agencies per 100,000 population, which is the lowest ratio of any district in the state. The average of all districts is 2.4 home health agencies per 100,000 population. Both applicants proposed fair and reasonable need methodologies which demonstrate a need in District 11 for at least 2 additional home health agencies, and potentially more. There is, therefore, a need for at least 2 more Medicare- certified home health agencies in District 11. Approval of both applications will increase the availability and accessibility of home health services in the proposed service areas within Dade County. Home health services are typically delivered in close proximity to the location of the agency and providers. Nursing Unlimited’s agency location is in the center of a large Latin and Haitian population, with the nearest Medicare certified home health agency approximately 15 miles away. Aaction's commitment is to a population that is difficult to serve. Local population accessibility to the proposed home health services would be increased by approval of both applications. Medicare-certified agencies apply their own admission criteria and decide whether to accept patients, leaving some patients in need and without access to services in the applicants' service area. An informal survey directed by Michael Schwartz suggests there are existing agencies which refuse to treat AIDS patients, that do not provide services at night and on weekends, and that refuse to treat people in poverty areas. The targeted Medicare-eligible population would enjoy enhanced accessibility and availability of home health services by both applicants, if approved. The addition to the district of a Medicare-certified home health agency (Nursing Unlimited) which utilizes a JCAHO- approved centralized case management system would also tend to enhance the availability, accessibility, and adequacy of services provided in the district. When non-Medicare-certified agencies receive a request to care for Medicare patients, the request must be forwarded to a Medicare-certified entity, which in turn will contact the patient. The non-Medicare agency may then be authorized under subcontract to contact and serve the patient and to bill the Medicare-certified agency for its services. In turn, the Medicare-certified agency will add on its overhead and forward a higher bill to Medicare. This process also results in delays in patient treatment. Approval of these applications would likely result in better patient care, without delays, and at lower costs. AHCA has determined that eliminating such subcontract arrangements will eliminate an unnecessary level of administrative costs. AHCA also discourages subcontract arrangements which remove direct control of patient care from the Medicare certified entity. See Allstar Care, supra. District 11 home health visits increased by 410,000 visits in 1995 and 1996. A projection of 600,000 new visits during 1995 through 1997 is reasonable. Nursing Unlimited and Aaction each project approximately 25,000 visits during their second year of operation. Approval of these applicants would not adversely impact the utilization of existing home health providers in the district. Both applicants here will specifically enhance access by the needy Hispanic population. AHCA offered no competent evidence to contradict the conclusions of the applicants' experts, nor did it effectively challenge the accuracy, validity, or reliability of the methodologies they employed. AHCA's expert and sole witness, James McLemore, is an application review specialist who candidly admitted he has no experience in the development of need methodologies but relies instead on the expertise of health care planners such as Mr. Schwartz or Mr. Richardson. Mr. McLemore's anecdotal testimony regarding fraudulent or phantom visits, and AHCA's concern that both state and federal agencies are investigating fraud in the home health care business, raise compelling licensing issues but are insufficient to defeat otherwise convincing evidence in favor of these certificates of need.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Agency for Health Care Administration enter its final order granting CON No. 8428 to Nursing Unlimited 2000, Inc. and CON No. 8432 to Aaction Home Health Care, Inc. DONE AND ORDERED this 22nd day of December, 1997, in Tallahassee, Leon County, Florida. MARY CLARK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of December, 1997. COPIES FURNISHED: Michael Manthei Broad and Cassel 1130 Broward Financial Center 500 East Broward Boulevard Fort Lauderdale, Florida 33394 Moses E. Williams Office of the General Counsel Agency for Health Care Administration Fort Knox Building 3, Suite 3400 2727 Mahan Drive Tallahassee, Florida 32308-5403 R. David Prescott Ruthledge Ecenia Underwood Purnell and Hoffman, P.A. Post Office Box 551 Tallahassee, Florida 32302-0551 Jerome W. Hoffman, General Counsel Agency for Health Care Administration Fort Knox Building 3 2727 Mahan Drive Tallahassee, Florida 32308-5403 Sam Power, Agency Clerk Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403
