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
The Issue The parties have agreed that the following issues are to be determined: Whether Section 246.215, Florida Statutes, requires Petitioners and similarly situated home health agencies to first obtain a license or authorization from the State Board of Independent Postsecondary Vocational, Technical, Trade, and Business Schools before offering a program of training. Whether Petitioner, Compassionate Care Health Services, Inc., and similarly situated home health agencies are exempt from the licensure requirement in Section 246.215, Florida Statutes, by application of the provision of Section 246.201, Florida Statutes, which states: ny school or business, regulated by the state or approved, certified, or regulated by the Federal Aviation Administration is hereby expressly exempt from ss. 246.201-246.231. . . . Whether Petitioner, Compassionate Care Health Services, Inc., and similarly situated home health agencies are exempt from the licensure requirement in Section 246.215, Florida Statutes, because they are excluded from the definition of "school" in Section 246.203(1), Florida Statutes, by application of the following underlined language within that definition: [S]chools offering only examination preparation courses for which they do not award a diploma as defined in subsection (6) do not fall under the authority granted in ss. 246.201-246.231; nor does a nonprofit class provided and operated entirely by an employer, a group of employers in related business or industry, or a labor union solely for its employees or prospective employees or members.
Findings Of Fact The parties stipulated that they desired a determination of the issues set forth in the Statement of the Issues to three sets of factual scenarios: Set A, Set B, and Set C. Each set of the factual scenarios has additional facts or presumptions which are common to that set. The facts set forth in paragraphs 2-8 below, are common to all the factual scenarios. Compassionate Care Health Services, Inc., (Compassionate Care) is a Florida corporation, whose principal place of business is located at 1600 Sarno Road, Suite 214, Melbourne, Florida 32935. Compassionate Care holds a license, issued pursuant to Chapter 400, Part IV, Florida Statutes, as a "home health agency," as defined in Section 400.462(4), Florida Statutes. The home health services provided by Compassionate Care include, but are not limited to, "home health aide" services. Compassionate Care offers a program of training which teaches the knowledge and skills needed for an individual to meet the qualifications and training requirements to be employed as a home health aide in accordance with the rules adopted by the Agency for Health Care Administration (AHCA), pursuant to Section 400.497(2), Florida Statutes. Compassionate Care selects individuals for enrollment in its training program from among those who apply. Compassionate Care charges and receives a monetary fee from each individual enrolled in the training program. Compassionate Care provides to each individual who completes the training program a transcript reflecting the individual's performance within the training program. The parties stipulated that for the purposes of Set A of the factual scenarios that it is presumed that the training program meets all requirements to be a "nonprofit class" within the meaning of Section 246.203(1), Florida Statutes. Further, the parties stipulated that at or prior to the time of enrollment in the training program and payment of the fee, each trainee is hired by Compassionate Care with a designated status of employee- trainee. Set A is divided into three factual scenarios: A-1, A- 2, and A-3. Factual scenario A-1 consists of the common facts set forth in paragraphs 2-9, supra, and the facts set forth in paragraphs 12-14, below. Prior to being hired as an employee-trainee, the applicant is determined by Compassionate Care to have passed the statutory background check. Upon being hired as an employee-trainee, the employee trainee receives a salary and benefits which comply with at least the minimum requirements under applicable labor laws. At the time an applicant is hired as an employee- trainee, there is established as an express term and condition of employment that if the employee-trainee successfully completes the training program, the employee-trainee will be reassigned to the employment status of home health aide and will have the same employment security and will receive assignments, salary, and benefits which are the same for all other home health aides employed by Compassionate Care, subject only to pay classifications and seniority rules that apply equally to all home health aides employed by Compassionate Care. Factual scenario A-2 is the same as factual scenario A-1, except the background check is not done until the employee- trainee has successfully completed the training program; and the terms and conditions of employment under which the employee- trainee will be reassigned to a home health aide position includes passing the statutory background check as well as successfully completing the training program. Factual scenario A-3 is the same as factual scenario A-1 except that the employee-trainee status is nominal, in that the employee-trainee receives no salary or benefits until reassigned to a home health aide position. The parties stipulated that for the purposes of Set B it is presumed that the training program meets all requirements to be a "nonprofit class" within the meaning of Section 246.203(1), Florida Statutes. Further for the purposes of Set B, the parties stipulated that no trainee has any employment status with Compassionate Care prior to or during the training program. Set B is divided into four factual scenarios: B-1, B-2, B-3, and B-4. Factual scenario B-1 consists of the facts set forth in paragraphs 2-8 and 17, supra, and the facts set forth in paragraphs 20 and 21, below. As a part of the written enrollment agreement or as a separate writing at or prior to the time of enrollment, Compassionate Care covenants that it will offer employment with Compassionate Care as a home health aide to each trainee who successfully completes the training program and passes the statutory background check. Each trainee who successfully completes the training program and who passes the statutory background check is, in fact, offered employment with Compassionate Care as a home health aide with rights to assignments, salary, and benefits which are the same for all other home health aides employed by Compassionate Care, subject only to pay classifications and seniority rules that apply equally to all home health aides employed by Compassionate Care. Factual scenario B-2 is the same as factual scenario B-1, except Compassionate Care offers employment as a home health aide to some, but not all, trainees who successfully complete the training program and pass the statutory background check. Compassionate Care asserts that its decision to not offer employment to all of the trainees who successfully complete the training program and pass the statutory background check is based on business circumstances which result in a need for fewer home health aides than had been anticipated or a determination that the trainees who are not offered employment are unsuitable because of personality, or temperament, or personal circumstances of the trainee other than specific instances of serious misconduct. Factual scenario B-3 consists of the facts set forth in paragraphs 2-8 and 17, supra, and the facts set forth in paragraphs 24 and 25, below. At or prior to the time of enrollment, each trainee is told in writing that "employment opportunities are available" to those who successfully complete the training program and pass the statutory background check and each trainee is given the opportunity to complete an employment application. Each trainee who successfully completes the training program, passes the statutory background check, and has completed an employment application, in fact, is offered employment with Compassionate Care as a home health aide. Factual scenario B-4 is the same as B-3, except that Compassionate Care offers employment as a home health aide to some, but not all, of the trainees who successfully complete the training program, pass the statutory background check, and complete an employment application. The parties stipulated that for the purposes of Set C, it is presumed that each trainee would be an "employee" or "prospective employee" within the meaning of Section 240.203(1), Florida Statutes. Further, the parties stipulated that the activities of the training program take place in Compassionate Care's principal place of business at 1600 Sarno Road, Suite 214, Melbourne, Florida. Set C is divided into four factual scenarios: C-1, C-2, C-3 , and C-4. Factual scenario C-1 consists of the facts set forth in paragraphs 2-8 and 27, supra, and the facts set forth in paragraphs 30 and 31, below. The activities of the training program take place during the normal business day while Compassionate Care is otherwise engaging in the business of being a licensed home health agency. The amount of the fee paid to Compassionate Care by trainees is calculated as the sum of the following factors: the actual cost to Compassionate Care of the books, workbooks, disposable medical supplies, and paper supplies provided to each trainee; each trainee's pro rata share of the salaries of training program instructors and of medical equipment rented exclusively for purposes or the training program; each trainee's pro rata share, based on hourly salary rate and hours spent teaching. Factual scenario C-2 is the same as C-1 except that additional cost factors are included in computing the amount of the fee paid by trainees. The additional factors include a portion of Compassionate Care's costs for rent and utilities. Factual scenario C-3 is the same as C-2, except that the training activities take place after the close of normal business hours of Compassionate Care's place of business at 1600 Sarno Road, Suite 214, Melbourne, Florida. Factual scenario C-4 is the same as C-2, except that the amount of the fee paid by the trainees represents a profit for Compassionate Care because it exceeds the sum of the cost factors addressed in factual scenarios C-1 and C-2.
The Issue The issues presented in this case concern the entitlement of Vari-Care, Inc., d/b/a Hospitality Home Health, Inc.(Vari-Care) and A All Care Home Health Agency (A All Care) to be granted a certificate of need to provide home health services in HRS Service District IX. In this regard there are two basic issues. The first issue concerns the question of whether there is a need for the provision of additional home health services through the recognition of the contending applicants for certificate. The second issue concerns the matter of the comparative or competitive review of the credentials of the two applicants who vie for this recognition. These matters are considered in keeping with Section 381.494, Florida Statutes, and the related provisions of Section 10- 5.11, Florida Administrative Code. The recognition would be as envisioned in the definition of home health care agency as set forth in Section 400.462(2) Florida Statutes. EXHIBITS In furtherance of its presentation Petitioner, Vari-Care, presented twelve exhibits which were received. A All Care, as Petitioner, presented eight exhibits which were received. HRS offered one exhibit and it was received. Intervenor, Palm Beach Regional Visiting Nurse Association, Inc. (Visiting Nurse) offered five exhibits and they were received. Intervenor A Associated Home Health Agency, Inc. (A Associated), offered two exhibits and they were received.
Findings Of Fact Vari-Care and A All Care made application to the Department of Health and Rehabilitative Services (HRS) for the grant of certificates of need to establish home health care agencies in Palm Beach County, Florida, to serve residents in that locale. Following review of these applications, the department noticed the applicants of the intent to deny the applications. In the face of this rejection, the applicants made timely request for an administrative hearing to resolve the question of their entitlement to the grant of certificates of need. In view of the fact that the applications had been reviewed and considered by the department in the same "batch", the hearing had as its purpose the question of the need for additional home health care delivery through the efforts of these applicants and the matter of comparison of Petitioners' relative merits as would-be home health care providers. Several entities requested intervention, among them Florida Association of Home Health Agencies. That agency was denied intervention. Intervention was afforded to Palm Beach Regional Visiting Nurse Association Inc., and A Associated Home Health Agency, Inc., both of whom are holders of certificates to provide home health care services in Palm Beach County, Florida. In furtherance of its request, Vari-Care has established a separate corporation in the state of Florida to operate its intended home health agency. This corporation is known as Vari-Care, Inc., d/b/a Hospitality Home Health. At present Vari-Care offers health care through three nursing homes in the state of Florida, all of which are located in Palm Beach County. In addition, Vari-Care is a home health care provider in Alabama and Arizona. If recognized to provide home health care services through the certification process, Vari-Care proposes to offer services primarily for the benefit of those patients who are being discharged from its three nursing homes located in Palm Beach County. The nursing homes in question carry a superior rating. At the point of hearing, five to ten patients a week were discharged from the several nursing homes operated by Vari-Care. Those patients are presently receiving home health care services from other home health care providers and the administration of Vari- Care has not experienced difficulty in arranging for the delivery of that care for the benefit of the patients discharged from the Vari-Care facilities. Vari- Care contends that if it were allowed to follow-up the care of the patients discharged from the nursing homes it would promote a "continuum of care" tending to improve the quality of care and relieve patient anxiety. In this regard Vari-Care would hope to use some of the professional staff in the nursing homes to offer to deal with the needs of the patient who was homebound following discharge. The testimony tended to establish that this facet of continuity of care is tenuous at best. It is more likely that separate health care professionals would be involved with the patient in the nursing home and home setting. It would appear that the idea of "continuum of care" will only transpire to the extent of the affiliation between the nursing homes and the home health care arm of Vari-Care. Initially Vari-Care had indicated that it would have its base of operation in the nursing home facility. That position was amended and at the point of hearing the Vari-Care application contemplated the establishment of a separate operating facility for the benefit of the home health care business. Out of that facility Vari-Care would provide skilled nursing, physical therapy, occupational therapy, social services, meals on wheels and transportation services. Finally, Vari-Care in its operation does not preclude the possibility of attracting other patients who are not being discharged from its nursing homes, in marketing its home health care delivery. A All Care is a corporation in which Julie Monahann is the sole stockholder. At present Ms. Monahann is sole stockholder of A All Care Nursing, of Boynton Beach, Florida, which operates a private-duty nurse registry in the southern part of Palm Beach County. That registry has available approximately 200 nurses. Ms. Monahann contemplates the establishment of a certified home health care operation as an outgrowth of her present business. Not being the holder of a certificate of need, Ms. Monahann has been unable to serve patients who are the recipients of Medicare and wishes to have that opportunity. Provision of this care would be through some of the same nurses who are listed in the registry for Ms. Monahann's private duty nursing business. In pursuing the application of certificate of need, Monahann has been influenced by the erroneous perception that no other certified home health care provider was directing its efforts to serving homebound patients in south Palm Beach County. As stated, presently there are a number of licensed and certified home health care providers operating in Palm Beach County. Those agencies offer a comprehensive range of home health services. Visiting Nurse operates throughout Palm Beach County with its parent office in West Palm Beach and satellite offices in Jupiter, Boynton Beach and Belle Glade. In addition to serving Medicare and Medicaid patients, this home health care provider offers services to the indigent. It is the intention of the Visiting Nurse to move their Boynton Beach operation to Boca Raton. Should either of the applicants be recognized by the grant of a certificate of need, Visiting Nurse would be substantially affected. In the recent past, Visiting Nurse has experienced the introduction of additional home health care service by other home health care providers operating in Palm Beach County and it has tended to decrease the number of patient visits provided by Visiting Nurse and to negatively impact cost, by requiring an increase in cost of the provision of a home health care visit. The effect of a drop in the number of home visits and increase in cost impacts the quality control of Visiting Nurse in such matters as the ability to provide in-service education and provide the services of home care coordinators. Home care coordinators assist in the provision of continuity of care between the referring sources and the patient in the home. Finally, a diminution in home visits and increase in cost would adversely affect the treatment of indigent patients in the home, in that Visiting Nurse is a significant provider of indigent care to those patients in that category and pressures upon the financial standing of the provider would decrease the care available to indigent patients. A Associated, intervenor, serves Palm Beach County from two offices, one in Jupiter and the other in Lake Worth. This organization utilizes employee teams who live in a particular area of Palm Beach County where the patients are found. This would include the area of Boca Raton and Delray Beach which is found in south Palm Beach County, areas where both petitioners would place emphasis. With the advent of a new home health care agency in 1983, which is known as Coastal, A Associated experienced a decrease in patient referrals and an increase in the cost per visit, due to the need to fund the same amount of overhead in the face of a lesser number of visits. Given the previous experience with Coastal, the introduction of the two applicants into the marketplace in south Palm Beach County would substantially affect the rights and opportunities of A Associated and as a consequence patient rights. All told, there are nine licensed home health agencies serving Palm Beach County and approximately thirteen licensed home health agencies operating within District IX, which includes Palm Beach County and counties adjacent to Palm Beach County. Some agencies in Palm Beach County maintain multiple offices to facilitate the delivery of the health care. Those agencies include Visiting Nurse with its four offices, A Associated with its two offices, Community Home Health with two offices, A Visiting Redi Nurse with three offices, and Home Care of the Palm Beaches with two offices. Mederi Home Health Services has one office in Palm Beach County. A recent addition, Salhaven Home Health Care, licensed to operate as a home health agency will operate in the Jupiter area of Palm Beach County. Its services were to be provided within a month of the date of final hearing in this cause. Gold Coast Home Health Services provides home health service in south Palm Beach County from its Broward county office which is near the Broward County/Palm Beach County line and has operated in Palm Beach county since 1970. Coastal Home Health Services also referred to as Associated Home Health Services is presently operating in Palm Beach County, though it has its office in Broward County. Of these agencies, only Salhaven and Gold Coast decline to operate in the entire Palm Beach County area. Gold Coast operates from the southern boundary of the County to a central area. The aforementioned home health agencies are duly licensed and certified to provide home health care to Medicare recipients and as such, present alternatives to the services which the applicants would offer to Medicare patients within the Palm Beach county community. The home health care providers who service HRS District IX and in particular Palm Beach County, have the capacity to meet need for home health services in the questioned service area. In addition, those home health care agencies are capable of meeting foreseeable increases in the need for additional home health services either within their present resources or through expansion of resources. Neither adjustment would reduce their effectiveness or negatively impact cost considerations and quality of care. A number of patient referral agencies, i.e., nursing homes and hospitals, in the person of officials, provided testimony in the course of the hearing and did not indicate that placement of Medicare patients in need of home health care presented a problem in Palm Beach County. There is an ongoing liaison between the placement agencies such as hospitals and nursing homes and the several home health care providers serving Palm Peach County who offer assistance to homebound Medicare patients. In that context, there is a vigorous competition between the home health care providers to serve Medicare patients in need of home health care delivery. The vigor of the competition is evidenced by the experience of MederiInc., which has operated out of its Delray Beach office since September 1983, and has been disappointed in the number of patient referrals. This is attributable to the active competition between the home health care providers. As a consequence, Mederi has a high percentage of unused capacity without increasing administrative overhead, approaching the ability to accommodate fifty percent more patients. In fact, Mederi could provide twenty percent more home health care visits without increasing its direct patient care staff. The proposal for the applicants related to patient costs are not advantageous when compared to those costs related to the present home health care providers. The present Medicare home health providers in Palm Beach County are well within the "cost caps" established by the Medicare program. On the subject of patient cost for Medicare patients, there is a wide variety of cost per visit depending upon the given home health care provider; however, none of those costs are as high as those proposed by the applicants in this case. The Medicare reimbursement program is required to reimburse the home health care provider who holds a certificate of need and license on the basis of reasonable operating costs, provided those reasonable operating costs are less than the charges made by the agency for the services and provided the Medicare reimbursement cost implementations, "cost caps", are not exceeded. Vari-Care by its proposal would exceed the present "cost caps" and adversely affect the medicare program by the imposition of such costs. The applicants do not afford any unique services in the home health care setting. In fact, the applicants' provision of care does not rival the level of sophistication of some of the ongoing providers. Presently Community Home Health is receiving patient referrals from the three nursing homes of Vari-Care and is providing the Medicare home visits to those patients at a cost per visit much less than contemplated by Vari-Care. Actually, those costs per visit by Community are the lowest rates mentioned by any provider of home health care for Medicare patients in Palm Beach County. In the course of the hearing, one of the attempts to measure the question of the need for additional home health care delivery for Medicare patients was described in the terms of "unmet need". There being no established methodology by the department to measure the entitlement of the applicants to the grant of a certificate of need, the concept of "unmet need" provides a valuable insight in deciding the application question on this occasion. Using this measurement, no indication has been given which would tend to identify patients within Palm Beach County or in the overall HRS District IX, who are not receiving needed home health care services. Moreover, there is sufficient capacity within the present home health care providers to meet the need for home health care delivery for Medicare patients within the planning horizon contemplated by the applications under consideration. In a related vein, there does not appear to be a body of Medicare recipients whom the home health care providers have neglected, based upon a belief that the patients were inaccessible to the home health care professionals who deliver the services. The present home health care providers have located their central and satellite offices to cover Palm Beach County completely and in particular south Palm Beach County where the two applicants would establish their offices. The hours of operation of the present home health care providers are satisfactory and the applicants would not offer hours of operation which are significantly different. In addition, there is no indication that there is a lack of awareness on the part of the patients on the topic of availability of home health care services, quite the contrary, an intricate mechanism is in place which promotes the necessary referrals of those patients to home health care providers to assist the patient in the home setting. An example of this mechanism is seen in the broad-based referral arrangements between a number of hospitals and the home health providers in Palm Beach county or in some instances specific agreements between hospitals and a given provider. This is based upon the information presented at the hearing as to arrangements between Delray Community Hospital, St. Mary's, Humanna, Good Samaritan, Belle Glade Community, and Bethesda Hospitals, and the various providers. On the associated question of quality of care, as in the instance of availability of care there is no indication that the quality of care received by the patients in the home setting is lacking. If this problem existed, one would expect a hue and cry by the public or agencies charged with the function of monitoring quality of care. Such an upheaval has not been shown to exist in Palm Beach County related to the delivery of home health care to the Medicare patients. The only actual research in this regard was done by Delray Community Hospital and its informal survey did not indicate displeasure with the quality of home health care being received by its patients who were Medicare recipients. All home health care providers operating in Palm Beach County seem to have an awareness of the need to deliver quality care and have involved themselves in programs related to in-service training and quality assurance. Vari-Care in its nursing home experience in referring patients for home health care delivery has not experienced complaints from its patients related to the quality of home health care. The present home health care providers are mindful of the need for fiscal restraint given the breadth of competition and have instituted policies to promote efficiency, to include the utilization of contract professionals who are not full time employees of those providers. In carrying out the administration of its operations, the home health care providers in Palm Beach County are aware of the "cost caps" established by Medicare and do not exceed them. Neither has there been any indication that those providers have run afoul of other regulatory provisions of the Medicare program in efforts to deliver the Medicare services in the home. By contrast, the present applicants do not seem well apprised of the requirements of Medicare. At present, there are a number of demonstration projects by health maintenance organizations operating in Palm Beach County. Those projects include the delivery of home health care. It has been shown that patients within the health maintenance organization receive home health services, who ordinarily would be entitled to Medicare reimbursement. The effect of this arrangement is to decrease home visits by the home health care providers in Palm Beach County. On the other hand, some of the health care agencies have experienced problems where services were delivered to patients who were members of health maintenance organizations and the health maintenance organization refused to reimburse the home health agency for services rendered to members of the health maintenance organization. It is not certain what the future holds for delivery of home health care through health maintenance organizations, but at present the development tends to diminish the patient pool from which the home health care providers draw their clientele. While both applicants have sufficient financial ability to begin operation as a home health care provider, the short and long-term financial feasibility of the projects is not sound. Vari-Care has overestimated the amount of reimbursement that it hopes to receive from Medicaid by projecting a return of $55 per visit when it would only be entitled to $16, promoting a deficit of some $40,000. It also projects a charge for Medicare visits at $55 when the Medicare "cost cap" is $50 to $52, promoting a deficiency of at least $3 per visit and a total deficiency of some $24,000. A All Care has no established referral base such as the nursing homes referrals contemplated by Vari-Care, and its financial feasibility is questionable given that circumstance. Finally, both applicants face a competitive environment in which their survival and that of the on-going home health care providers, is jeopardized should the applicants be recognized by the issuance of certificates of need. Dr. Donald Davis, an expert in health care planning, testified in behalf of A All Care. He correctly identifies the fact that home health care services are labor intensive as opposed to an undertaking which requires extensive capital expenditure. Consequently, from his point of view, when competition is great in the home health care setting, patient cost will be lower and a more efficient system will evolve forming a basis for the recognition of additional home health agencies. Dr. Davis was also impressed with the fact that a lower number of home health care providers per capita were found in Palm Beach County as contrasted with Dade and Broward counties, in Florida, when the number of home health care providers are compared to the overall population in those counties, which by his observation might be an indication of the need for additional home health care providers. Here he did not contend that there is some optimum number of patients or visits which can be offered by a given home health care provider. Davis had misunderstood the number of home health agencies serving Palm Beach County in advancing his remarks. His belief was to the effect that only six Medicare home health agencies operated in Palm Beach County, instead of the nine that wore actually there. By comparison, Daniel Sullivan, who testified as a health planning expert, called as a witness by Visiting Nurse, felt that in the present environment, increased competition would result in increased costs to patients. He believes that the present providers can serve additional patients at a lower cost than the applicants could with the advent of the recognition of the two applicants. Sullivan stated that if the number of visits to patients were sufficiently reduced, as would occur when the applicants were recognized, the cost per visit would increase. Having considered the opinions of Davis and Sullivan, Sullivan is found to be the more compelling witness arid his opinions as set forth are accepted. In summary, if the applicants introduced their operations into the Palm Beach County and HRS District IX service area, health care costs would escalate and the quality of delivery of health care services through the present home health care providers would be adversely affected. Vari-Care presented the testimony of the health planning expert Mary Ellen Early. She presented a methodology for ascertaining the need for additional home health care service, there being no established methodology by rule. Early looked at the increase in population within Palm Beach County between 1970 and 1980, which is in the neighborhood of 65.3% compared to 43.5% in Florida. She noted that Palm Beach County had increased in population since 1983 on the order of 13.1% and was the fifth most populated county in the state. Of the five most populated counties, Palm Beach County has experienced the largest percentage of growth in the decade 1970 through 1980. She noted that Palm Beach County ranks third nationally in the percentage of elderly and that the percentage of elderly sixty five and older doubled between the years 1970 and 1980. She noted that 13,220 individuals fall into the age categories of seventy five years and older, a high risk population. Statistics by the local health planning agency, as discovered by Early, indicated a continuing increase in the sixty five and older population, projected to be 29.3% by 1990. With this background, in her needs formula Early used three variables. Her formula assumes that 6% of medical/surgical hospital discharges, 8% of individuals sixty five and older, and 50% of nursing home discharges would need home health care services showing a demand of 18,129 people that could require home health service. The calculations were made based upon 1982 statistics about the sixty five and older age group. Ms. Early was not mindful of, nor has any other party to this cause, indicated the exact number of individuals presently receiving home health services in Palm Beach County. Without that knowledge the projection is not useful because it can not be shown that additional services need to be provided. From the projection of the number of persons who would demand home health care and adding to that methodology the idea, in Early's mind, that the effect of discharges from hospitals and nursing homes as it pertains to diagnostic-related groupings, and the high occupancy rates in nursing homes in Palm Beach county, and the increase in Medicaid patient days and Medicare patient days in the period 1980 through 1983, together with the limited number of home health agencies within Palm Beach County compared to the other six most populace counties in Florida, a need exists for recognition of Vari-Care's application to serve homebound patients. In analyzing her remarks, the information provided in the course of the hearing does not tend to be firm enough to conclude that the referrals from hospitals and nursing homes, as a result of diagnostic related groupings, will significantly increase the number of home health care visits. Therefore, that element of the opinion of Early is discarded. Also, the needs methodology used by Early, overstates that need for Medicare home health care services in that it includes in its definition home health services not reimbursed by Medicare. It includes duplication of numbers of persons in need of home health care services by counting 65 year old and older persons discharged from the hospitals and then recounting those persons in a calculation related to the fact that 8% of individuals sixty five and older would need the home health care delivery. This was further brought to question in that contrary to the 8% estimate of sixty five population and over needing Medicare home health services, effective 1983, 5 1/2% of that age cohort population was in need of those services. Returning to the topic of the formula selected by Ms. Early, it can also be assumed that some of the patients being discharged from the nursing homes into the home health setting, will be sixty five years and older and the risk of double counting exists in that calculation. As with the circumstance of observations by Dr. Davis, there has been no showing of the ultimate number of services that may be provided by home health care provider. Therefore the ratio of the number of home health care providers to population in Palm Beach County, as one of the six most populated counties in contrasting this ratio with the counties with the high population groups, is meaningless. The evidence tends to reveal that the real question is whether all patients who wish to be afforded the home health care delivery, are being provided quality care at a reasonable cost, and this is occurring at present in Palm Beach County and throughout District IX. On balance, the needs formula and the other projections by Ms. Early as to the need for additional home health care services provided by Vari-Care are not accepted. Vari-Care places emphasis on the fact that it would offer services to Medicaid patients, who are primarily being served at present by Visiting Nurse. The inquiry in this cause has to do with services for the benefit of Medicare recipients. To the extent that the Medicaid recipients are involved in any way in this question, there is a suspicion that Vari-Care would not be willing to go forward with the provision of the amount of Medicaid service that it has proposed in its application given its misunderstanding of the reimbursement entitlement, the difference between the $16 allowed and the $55 which Vari-Care feels it is entitled to. Even if those costs were reduced and Medicaid services were provided at the level contemplated by Vari-Care, this would not be sufficient reason to afford a certificate of need to Vari-Care. The introduction of Vari-Care into the market place would also have an adverse impact on Visiting Nurse and as described would be brought to bear on the Medicaid patients who receive services from that organization. In view of the fact that no proof has been established tending to show the need for the recognition of either applicant for certificate of need, it is not necessary to comment on the relative qualifications of the applicants, beyond whet has already been established in these facts.
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 Pursuant to the Stipulation, the factual issues to be determined are: Whether DHRS' initial agency action in denying CON #4912 to Home Care was substantially justified; Whether special circumstances existed which would make an award of fees and costs unjust. Whether this action was initiated by a state agency within the meaning of Section 57.111(3)(b)3, Florida Statutes. The ultimate issue for determination is whether Petitioner is entitled to attorney's fees and costs under Section 57.111, Florida Statutes, the Florida Equal Access to Justice Act (FEAJA), for fees and costs incurred in DOAH Case No. 87-2150.
Findings Of Fact Pursuant to a Stipulation entered into by the parties, filed on November 10, 1988, the parties have admitted and/or stipulated that: DHRS' initial agency action was to deny CON #4911 to Home Care for the establishment of a Medicare home health agency to serve patients in Walton and Okaloosa Counties, Florida. After preliminarily denying Home Care's CON application, DHRS was required by statute or rule to provide Home Care with a clear point of entry to a formal administrative hearing pursuant to Section 120.57, Florida Statutes. Home Care's Petition for Attorney's Fees was timely filed after Respondent, DHRS, filed a Final Order in this case on July 26, 1988, sustaining Home Care's position that it should be awarded CON #4911. Home Care is a "small business party" within the meaning of Section 57.111(3)(d)1.b., Florida Statutes. Home Care is a "prevailing party" within the meaning of section 57.111(3)(c)1., Florida Statutes. Home Care incurred reasonable attorneys' fees and costs in Case No. 87- 2150, at least in the amount of $15,000. The following findings are based upon the record presented: Home Care filed its timely petition in this fee case after Respondent, Department of Health and Rehabilitative Services ("DHRS") entered a final Order on July 26, 1988, in Case No. 87-2150 granting Home Care a certificate of need ("CON") to operate a home health agency. DHRS' Final Order was a reversal of its original position on Home Care's application which was initially denied by DHRS. A formal administrative hearing was held before the undersigned on the issue of whether Home Care was entitled to a CON. The pleadings, transcripts, and exhibits in that proceeding, Case No. 87-2150, have been duly considered in regard to whether DHRS' actions were substantially justified in initially denying Home Care's application. The parties have stipulated that those documents shall constitute part of the record in this proceeding. The following findings are based upon the record in Case 87-2150 and the findings made in the Recommended Order entered in that case and adopted by the agency's final order. DHRS is the state agency responsible for administering the State Health Planning Act pursuant to Sections 381.701 through 381.715, Florida Statutes. (a) At the time DHRS denied this application, it did not have any published rule or policy on the methodology for determining need. Its original rule was successfully challenged and in 1984 DHRS attempted to promulgate a new rule. This proposed rule was invalidated in 1985 because it was based upon a use rate methodology and contained arbitrary criteria. Subsequently, DHRS published an interim policy which it used to assess home health care CON applications. The interim policy was applied to the first batch of applications in 1986 and used a rate population methodology which projected the number of Medicare enrollees using home health care services. The projected number of users was multiplied by the average number of visits per medicare home health care user. See Paragraph 15 of Recommended Order, Case No. 88-4763F. This interim policy was defended by DHRS in the First DCA in December 1986. In the summer of 1986, representatives of the Florida Association of Home Heath Agencies complained to the governor's office about the interim policy. After meetings between the staff of DHRS and the Governor's office, the Department abandoned the interim policy. No change occurred in the medical or financial factors which would warrant a change in policy. Additional applications had to be approved by Ms. Hardy's superiors. Home Care filed a Letter of Intent on October 8, 1986, and a CON application for a Medicare-certified home health agency in Okaloosa and Walton Counties on December 15, 1986. This was application CON Action No. 4911. DHRS published its notice of denial of CON Action No. 4911 in a letter to counsel for Home Care dated April 30, 1987. No specifics were given regarding the grounds for denial. Applicants at that time had been asked to give DHRS an unlimited extension of time within which to render a decision on their applications. Those who refused had their applications denied and were required, similar to Home Care, to demonstrate an unmet need based upon the broad statutory criteria found in Chapter 381, Florida Statutes. DHRS characterizes the procedure above as a free form action utilizing the statutory criteria found in Section 381.705, Florida Statutes. DHRS argued in Case No. 87-2150 that its incipient policy looks at the actual need by applying the 13 statutory criteria and bases its conclusion upon information collected from local home health service providers and the local health council. The denial of Home Care's application by DHRS does not state how DHRS applied the statutes to Home Care's application in order that Home Care or others could ascertain a developing standard. DHRS admitted that it did not have any rule upon which to adjudicate the application and DHRS did not present any credible evidence in support of its denial in Case No. 87-2150. DHRS did not adduce evidence supporting its denial because it was DHRS' policy to place the burden of proving both the facts and the methodology on the applicant. The deposition of Joseph Mitchell was introduced and made a part of this record. Mitchell's testimony is clear that, although there is a possibility Home Care could recoup some portion of the costs of litigation in medicare reimbursement as a cost of organizing and establishing the business, it is not certain that Home Care would be compensated because there is a cap on all reimbursable costs above which Medicare will not reimburse a provider and such legal expenses might not be allowed. See Deposition of Mitchell, page 76-78. Intervenors Choctaw Valley Home Health Agency and Northwest Florida Home Health Agency submitted a proposed order in this action seeking a dismissal of Home Care's petition for attorneys' fee and costs as to any relief from the Intervenors.
The Issue At issue in this proceeding is whether Respondent committed the offense set forth in the Administrative Complaint and, if so, what penalty should be imposed.
Findings Of Fact The parties Petitioner, Department of Health, Division of Medical Quality Assurance, Board of Medicine (Department), is a state agency charged with the duty and responsibility for regulating the practice of medicine pursuant to Section 20.43 and Chapters 455 and 458, Florida Statutes. Respondent, Pedro Rene Benitez, M.D., is, and was at all times material hereto, a licensed physician in the State of Florida, having been issued license number ME 53453. On or about November 12, 1997, a true bill was returned by a grand jury in the United States District Court, Southern District of Florida, Case Number 97-574-Cr-LENARD, which charged Respondent, as well as numerous co-defendants, with, inter alia, conspiracy to defraud the United States by making false claims to the United States Department of Health and Human Services in its administration of the Medicare program, contrary to the provisions of 18 U.S.C. § 371.1 Pertinent to this case, Count I of the Superseding Indictment charged Respondent, together with eighteen other persons or organizations, as follows: COUNT I (CONSPIRACY: 18 U.S.C. § 371) From in or about January 1991, the exact date being unknown to the Grand Jury, and continuing through in or about October 1993, in Dade County, in the Southern District of Florida and elsewhere, the defendants . . . did knowingly and willfully combine, conspire, confederate, agree, and reach a tacit understanding with each other and with persons known and unknown to the Grand Jury, to commit offenses against the United States, as follows: (a) to defraud the United States by impeding, impairing, obstructing, and defeating, through deceitful and dishonest means, the lawful government functions of the United States Department of Health and Human Services (HHS) in its administration of the Medicare program, in violation of Title 18, Unites States Code, Section 371. . . . GENERAL ALLEGATIONS At all times material to this Indictment: THE MEDICARE PART A PROGRAM AND REGULATIONS The Medicare program was a Federal program that helped pay for health care for the aged, blind and disabled. The Medicare program was administered by HHS, through its agency, the Health Care Financing Administration ("HCFA"). Medicare, through the Medicare "Part A" program, covered certain eligible home health care costs for medical services provided by "home health agencies", commonly referred to as "providers", to persons who qualified for Medicare and who required home health services because of an illness or disability that caused them to be homebound. . . . HCFA contracted with private insurance companies to administer the Medicare Part A program throughout the United States. In the State of Florida, HCFA contracted with Aetna Medicare Administration of Clearwater ("AETNA"). As administrator, AETNA was to receive, adjudicate and pay claims submitted by home health agencies and providers under the Part A program. * * * Under the Medicare Part A program, home health agencies possessing the required CON were reimbursed for reasonable costs and overhead expenses incurred for direct patient care. The Medicare Part A program reimbursed 100% of the allowable charges for participating agencies providing home health care services only if the patient: (a) was confined to the home; (b) was under the care of a physician who determined the need for home health care and set up a written home health plan, known as a Home Health Certification and Plan of Treatment; and (c) was in need of skilled nursing care on an intermittent basis, required physical or speech therapy, or had a continuing need for occupational therapy. Medicare Part A regulations further required home health agencies providing services to Medicare patients to maintain complete and accurate medical records reflecting the medical assessment and diagnoses of their patients, as well as records documenting actual treatment of the patients to whom services were provided and for whom claims for reimbursement were submitted by the home health agency. These medical records were required to be sufficiently complete to permit Medicare, through AETNA, to review the appropriateness of Medicare payments made to the home health agency under the Part A program. Among the written records necessary to document the appropriateness of home health care claims submitted under Part A of Medicare was a Home Health Certification and Plan of Treatment (HCFA Form 485) (hereinafter referred to as "POT"), signed by an attending physician certifying that the patient was confined to his or her home and was in need of the planned home health services. Moreover, any substantial changes to the POT, or the provision of any home health services beyond a two-month (62 days) period from the date of the original certification, required a re-certification by the attending physician of the need for these changed or additional home health services. Additionally, Medicare Part A regulations required home health agencies to maintain medical records of each visit made by a nurse or home health aide to a patient. The record of a nurse's visit was required to describe, among other things, any observed significant signs or symptoms, any treatment and drugs administered, any reactions by the patient, and any changes in the patient's physical or emotional condition. These written medical records generally were created and maintained in the form of "skilled nursing notes" and "home health aide observations." * * * HOME HEALTH AGENCIES INVOLVED Defendant MEDERI OF DADE COUNTY, INC. ("MEDERI DADE COUNTY") was a home health care provider, incorporated in the State of Florida ("Florida") and certified by the Florida Agency for Health Care Administration (AHCA). Defendant MEDERI DADE COUNTY was located in Coral Gables, Florida and possessed Medicare Provider Number 10-7087. Mederi of Miami Lakes, Inc. ("Mederi Miami Lakes") was a home health care provider, certified by the Florida Division of Health and Quality Assurance. Mederi Miami Lakes, which was a branch of defendant MEDERI DADE COUNTY, was located in the Miami Lakes area of Dade County, Florida and possessed Medicare Provider Number 10-7380. THE DEFENDANTS * * * * * * 43. Defendant PEDRO RENE BENITEZ was a resident of Dade County, Florida and a licensed physician. * * * PURPOSE OF THE CONSPIRACY 53. It was the purpose and object of the conspiracy for the defendants to enrich themselves by fraudulently inducing HHS to pay defendant MEDERI DADE COUNTY and Mederi Miami Lakes millions of dollars in Medicare Part A reimbursements for purportedly legitimate home health care claims and expenses, which claims and expenses the defendants knew to be false, fictitious, fraudulent and otherwise non-reimbursable in that, as the defendants well knew, the services were not actually provided or were provided to persons who the defendants knew were not qualified to receive Medicare home health care benefits. MANNER AND MEANS OF THE CONSPIRACY The manner and means by which the defendants sought to accomplish the purpose and object of the conspiracy included the following: * * * . . . defendants SUSAN REGUEIRO, LEOPOLDO PEREZ, JORGE PEREZ, MANUEL DIAZ, NORA COSTA, JESUS RODRIGUEZ, ERNESTO MONTANER, NILDA MIRANDA and RAUL CABRERA participated in the recruitment of licensed physicians, including defendants EDUARDO CUNI, PEDRO RENE BENITEZ, AGUSTIN GRANDA, JESUS OLIVA and JORGE MORENO, to sign fabricated and fictitious POT forms in exchange for cash and other financial benefits. In addition to directing the fabrication of POT forms, defendants SUSAN REGUEIRO and LEOPOLDO PEREZ, with the knowledge and concurrence of defendants JORGE PEREZ, MANUEL DIAZ, NORA COSTA, JESUS RODRIGUEZ, ERNESTO MONTANER, EDUARDO CUINI, PEDRO RENE BENITEZ, AGUSTIN GRANDA, JESUS OLIVA and JORGE MORENO, used employees of defendant MEDERI DADE COUNTY and Mederi Miami Lakes to generate the following fictitious supporting documentation, including: (a) records necessary to support the payments made to the nursing groups by defendant MEDERI DADE COUNTY and Mederi Miami Lakes for the claimed visits, including billing sheets, final matched itinerary/bill reports, and group batch worksheets; and (b) records necessary to support defendant MEDERI DADE COUNTY's and Mederi Miami Lakes' billing of those visits to Medicare. * * * 68. Defendants SUSAN REGUEIRO and LEOPOLDO PEREZ, with the knowledge and concurrence of defendants JORGE PEREZ, MANUEL DIAZ, NORA COSTA, JESUS RODRIGUEZ, ERNESTO MONTANER, EDUARDO CUNI, PEDRO RENE BENITEZ, AGUSTIN GRANDA, JESUS OLIVA, JORGE MORENO, JESUS PUNALES, ELISA GAVILLA, LYDIA GUADALUPE, JULIA GARCIA and NILDA MIRANDA, used employees of defendant MEDERI DADE COUNTY and Mederi Miami Lakes to process and submit to Medicare the false claims for home health visits originating from the nursing groups. * * * OVERT ACTS In furtherance of the conspiracy, and to accomplish its objects, at least one of the co-conspirators committed or caused to be committed, in the Southern District of Florida, and elsewhere, at least one of the following overt acts, among others: * * * CREATION OF FALSE DOCUMENTATION BY MEDERI EMPLOYEES * * * 48. On or about June 4, 1992, defendant PEDRO RENE BENITEZ caused his signature to be affixed on a POT form for a patient identified by the initials N.J. * * * On or about December 14, 1992, defendants SUSAN REGUEIRO, LEOPOLDO PEREZ, JESUS RODRIGUEZ and PEDRO RENE BENITEZ caused an employee of Mederi Miami Lakes to create a POT for a patient identified by the initials F.D. On or about December 14, 1992, defendants SUSAN REGUEIRO, LEOPOLDO PEREZ, JESUS RODRIGUEZ and PEDRO RENE BENITEZ, caused the signature of a licensed physician, defendant PEDRO RENE BENITEZ, to be affixed to a POT form for F.D. On or about December 14, 1992, defendants SUSAN REGUEIRO, LEOPOLDO PEREZ, JESUS RODRIGUEZ and PEDRO RENE BENITEZ caused employees of Mederi Miami Lakes to complete nineteen (19) false "skilled nursing notes" pertaining to F.D. * * * SUBMISSION OF FALSE CLAIMS * * * 93. On or about October 14, 1992, defendants SUSAN REGUEIRO, LEOPOLDO PEREZ, PEDRO RENE BENITEZ and LYDIA GUADALUPE caused an employee of Mederi Miami Lakes to submit a false home health claim in the amount of $2,700.00 to Medicare, through Aetna, pertaining to a patient identified by the initials M.G. (Emphasis added.) The false documentation Respondent made, presented and filed, or caused to be made, presented and filed, with the United States Department of Health and Human Services, through AETNA, for Medicare reimbursement for home health care visits resulted in a loss to the government with regard to patient N. J. of $500.00, with regard to patient F. D. of $4,600.00, and with regard to patient M. G. of $2,700.00, for a total loss of $7,800.00. For the creation of such false documentation, Respondent averred, at hearing, that he was paid "75.00 per beneficiary." (Transcript, page 22.) On April 27, 1998, consistent with a plea agreement Respondent had entered into with the United States Attorney for the Southern District of Florida (Petitioner's Exhibit 3), Respondent entered a plea of guilty to Count I of the Superseding Indictment ("Conspiracy to Defraud the United States, by making false claims to the [United States Department of] Health and Human Services in its administration of the Medicare program," contrary to 18 U.S.C. § 371), and on April 19, 1999, Respondent was adjudicated guilty of such offense. (Petitioner's Exhibit 4.) For such offense, given his cooperation with the United States attorney, discussed infra, Respondent was given a split sentence of 14 months, consisting of a term of imprisonment of 7 months, followed by 7 months of participation in the Home Detention Electronic Monitoring Program. Upon release from imprisonment, Respondent was to serve a term of 2 years on supervised release. Special conditions of supervision imposed by the judgement of conviction included the following: Effective immediately, the defendant shall surrender his medical license to the U.S. Probation Office. The U.S. Probation Office shall submit the license to the appropriate regulatory agency. The defendant shall not serve as a doctor or be employed or act in any capacity at any type of medical services, whether it be as a doctor, physician assistant or an administrator. The defendant shall not have any interest, directly or indirectly, in any medical businesses, whether it be medical services or medical supplies. The defendant shall notify the State Board of Medicine of his conviction and sentence in this case, and of the fact that his medical license has been taken by this Court. The defendant shall not participate in any Medicare/Medicaid billing procedures for any medical facility or program. Respondent was also ordered to pay, individually, restitution in the amount of $150,000.00 to the Palmetto Government Benefits Administration.2 The remaining charges (counts) against Respondent were dismissed (consistent with the plea agreement) on motion of the United States Attorney. On May 17, 1999, Respondent surrendered to the United States Marshal for the Southern District of Florida for commitment to the United States Bureau of Prisons to be imprisoned for a term of 7 months. Respondent apparently completed that term in or about December 1999, and as of the date of hearing (February 8, 2000) was serving his 7-month period of participation in the Home Detention Electronic Monitoring Program. According to Respondent, his term of supervised release (probation) is scheduled to end December 12, 2001. Circumstances related to aggravation or mitigation of any penalty Respondent has been actively engaged in the practice of medicine in the State of Florida from his initial licensure on June 22, 1988, until the Department suspended his license (on an emergency basis, as a consequence of the pending federal charges) on April 6, 1999.3 During such period, in addition to his active practice, Respondent volunteered his services (from 1998 until his license was suspended) two or three days a month to the Dade County Chapter of the American Red Cross; volunteered his services for 5 or 6 years as a member of the medical staff of "Camilla's House," an organization serving the homeless; and volunteered his services to the American Red Cross for treatment of the victims of Hurricane Andrew. Respondent has never previously been disciplined by the Board of Medicine, and notwithstanding his conviction, continues to enjoy the support of former patients and colleagues. With regard to the Mederi case, Respondent cooperated with the United States attorney and the Federal Bureau of Investigation, albeit not until investigators discovered (3 years after the events) his participation in the conspiracy, and confronted him with their findings; it appeared in his best interest to cooperate. Notwithstanding, consistent with the terms of his plea agreement, Respondent provided truthful information, testified on behalf of the government at trial, and proved to be a key witness in resolving the case favorably for the government. With regard to the strictures placed on his conduct under the terms of conviction, the proof demonstrates Respondent has complied with the Special Conditions of Supervision. Indeed, during the term of his imprisonment, Respondent was formally excluded from eligibility to participate in the Medicare, Medicaid, and all Federal health care programs; was barred from receiving payment, directly or indirectly, from the Federal Employees Health Benefit Program; and, surrendered his controlled substances privileges (Drug Enforcement Administration Certificate of Registration). As for restitution, there is no proof of record that Respondent has made any payment toward satisfaction of such obligation; however, it is also noted that Respondent was imprisoned from May 17, 1999, to on or about December 12, 1999, and, consequently, unemployed. As for his future plans, Respondent, given his training and experience, desires to resume the practice of medicine upon completion of his term of supervised release (December 12, 2001), provided the Department does not further restrict his licensure status.4 Such practice will, according to Respondent, allow him an opportunity to properly support his family,5 and it would also appear likely that such employment would accord Respondent an opportunity to satisfy, in whole or part, his obligation to pay restitution for his criminal offense.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be rendered adopting the foregoing Findings of Fact and Conclusions of Law, and which, for the violation found, imposes an administrative fine of $10,000.00; orders compliance with all terms of the judgment of conviction; and continues the suspension of Respondent's license for a term of 2 years following successful completion of his term of supervised release, followed by a 2-year period of probation on such terms and conditions as the Board may deem appropriate. DONE AND ENTERED this 25th day of May, 2000, in Tallahassee, Leon County, Florida. WILLIAM J. KENDRICK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 25th day of May, 2000.
Findings Of Fact Petitioner is the licensee for Palm Beach Regional Hospital. Respondent is the state agency charged with responsibility for issuing certificates of need ("CONs") for both hospital and nursing home beds pursuant to Chapter 381, Florida Statutes. A letter of intent is a statutory prerequisite for filing CON applications under Chapter 381. Petitioner filed a letter of intent dated February 21, 1991, with Respondent. The letter of intent notified Respondent of Petitioner's intent to file an application for a certificate of need ("CON") to convert 12 acute care beds in Palm Beach Regional Hospital to skilled nursing beds. Petitioner requested that its application for CON be reviewed in the first 1991 batching cycle for hospital projects. Respondent rejected Petitioner's letter of intent by letter dated March 7, 1991. Petitioner's letter of intent was rejected for the reason that it was ". . . for a project which is reviewable in the nursing home cycle, rather than the hospital review cycle." Petitioner timely filed a petition for formal hearing to contest Respondent's proposed agency action. Respondent has a long standing policy of requiring applications for hospital-based skilled nursing units ("SNU") to be filed in the nursing home batching cycle, on nursing home application forms, and in competition with applications by other nursing homes. Respondent reviews such applications to determine need under the nursing home bed methodology. Respondent unsuccessfully attempted to promulgate its policy of requiring SNUs to be considered in nursing home batching cycles through formal rulemaking procedures in Proposed Rules 10-5.002(13) 7/ and 10-5.008(2)(d). 8/ Both proposed rules were determined in Venice Hospital, Inc. v. Department of Health and Rehabilitative Services, 12 F.A.L.R. 3320 (HRS 1990) to be invalid exercises of delegated legislative authority. Hearing Officer Diane K. Kiesling found that the proposed rules were not reasonable or rational and would lead to an illogical result. The policy Respondent attempted to codify in Proposed Rules 10- 5.002(13) and 10-5.008(2)(d) is no less unreasonable and irrational when applied on a case-by-case basis in this proceeding. 9/ Hospital-based skilled nursing units and free-standing community based nursing home beds are not comparable. Comparing the two types of beds in the same batching cycle creates an unfair comparison and fails to address an existing and expanding gap in the need for medical care needs for health planning purposes. Changes in health care reimbursement since 1985 and 1986 have created a gap in the need for medical care provided by acute care hospitals and that provided by most nursing homes. The level of medical care in the gap is referred to as subacute care. Patients who no longer need the acute care provided by hospitals but who need a higher level of medical services than that available in most nursing homes can be properly treated in a distinct part of a hospital known as a hospital-based skilled nursing unit or SNU. 10/ Hospital-based skilled nursing units provide a higher level of service than that provided by free-standing community nursing homes. An SNU provides 24-hour nursing by an RN nurse, skilled nursing multi-disciplinary treatments, and therapy services and equipment. Patients who do not meet acute care standards but who have more complex diagnoses or who require specialized equipment are difficult to place in free standing community nursing homes due to the level of services and types of equipment required for proper treatment. Some free-standing community nursing homes do provide some of the services available in a hospital-based SNU. However, the complex medical services required for subacute care is not available in most nursing homes. It is therefore difficult to place patients with subacute medical care needs in nursing homes. Petitioner, for example, has been unable to place patients in free standing community based nursing homes if a patient requires: therapy three or four times a day; ventilator assistance; dressings three or four times a day for decubitus ulcers; heart monitors; or respirators. The unavailability of staff, high cost of care, and lower Medicare rates paid to nursing homes 11/ preclude most free-standing community nursing homes from delivering the level of services required for subacute care in hospital-based skilled nursing units. The types of patients served by a hospital-based skilled nursing unit are different from those served by a free- standing community nursing home. The average length of stay in a hospital-based skilled nursing unit is approximately 15 to 20 days. While the average length of stay in a free-standing community nursing home is less than 90 days, many patients in such facilities have lengths of stay in excess of one year. 12/ Hospital-based skilled nursing units are predominantly Medicare patients whereas patients in free-standing community nursing homes are predominantly Medicaid patients. Medicaid does not reimburse for subacute care provided in hospital-based skilled nursing units. Finally, patients in hospital-based skilled nursing units have more complex and difficult diagnoses and require more specialized equipment. Hospital-based skilled nursing units cannot compete equally with free- standing community nursing homes. The cost of subacute care provided by SNUs is two or three times more than the cost of medical care provided by free-standing community nursing homes. The higher cost for SNUs is a result of the higher level of medical services provided in SNUs. Federally funded Medicare reimbursement is a principal payor source for both hospital-based skilled nursing units and free-standing community nursing homes. 13/ The conditions of participation in Medicare are the same for both types of facilities, but a higher rate of Medicare reimbursement is allowed for hospital-based skilled nursing units. Hospital-based skilled nursing units are certified under federal guidelines to care for patients who no longer meet "acute" care criteria. Acute care is determined under federal guidelines on the basis of standards that include "intensity of service" and "severity of illness." Hospitals and physicians may face sanctions under federal guidelines if patients who do not meet the acute care criteria are kept in acute care beds. Hospitals are the primary source of patients admitted to nursing homes. Petitioner is put in a difficult position when it cannot place subacute patients in community nursing homes, due to the level of medical care required for such patients, but cannot keep such patients in acute care beds in the hospital without facing sanctions under federal guidelines. Respondent's policy of requiring SNUs to be reviewed in the nursing home batching cycle is based in part upon Respondent's concern over the potential for increased costs in the delivery of medical care. Although hospital-based skilled nursing units are reimbursed by Medicare at a higher rate than that received by nursing homes, SNUs are not prohibited under federal guidelines from treating patients who require medical care that is below the standards for either acute care or subacute care. There are no restrictions under federal guidelines on the patients each type of facility can admit. Patients in both types of facilities must meet the same admission standards for treatment, and both types of facilities can treat patients who are neither acute care patients nor subacute care patients. 14/ As a practical matter, however, the unavailability of staff, high cost of care, and low Medicare reimbursement rates preclude most free-standing community nursing homes from delivering the level of services required for subacute care in hospital-based skilled nursing units. Respondent has the ability to place conditions on certificates of need and regularly does so. If Respondent imposes conditions of certification that preclude a provider from treating patients who meet Medicare guidelines, however, the state may be decertified for federal Medicare funds. Similarly, if a provider voluntarily refuses to treat such patients, the provider may be decertified for Medicare reimbursement. It is uncontroverted that it would be inappropriate for a hospital- based skilled nursing unit to treat patients who require levels of medical care that are available in a free- standing community nursing home and receive a higher rate of reimbursement from Medicare. Such treatment would be inappropriate for purposes of both health care planning and the cost effective delivery of medical services. The potential for inappropriate treatment does not establish that Petitioner does or would provide such treatment if its application for CON is reviewed in the hospital batching cycle. The evidence failed to establish that reviewing Petitioner's application in the hospital batching cycle would preclude Respondent from adequately addressing Respondent's concerns, including the actual need for hospital-based subacute care. CON applications for hospital-based skilled nursing units must be reviewed in either the nursing home batching cycle or the hospital batching cycle. There is no specialty bed need methodology for reviewing CON applications for SNUs. Hospital beds and nursing home beds are licensed respectively under Chapters 395 and 400, Florida Statutes. Beds in hospital-based skilled nursing units are in fact "hospital" beds under Chapter 395 and not nursing home beds under Chapter 400. SNUs are licensed by Respondent as general hospital beds pursuant to Chapter 395. 15/ The two types of beds are in different planning cycles, and the application form used for nursing home beds is not suitable for SNUs. Respondent's policy, however, requires SNU beds to be carried as part of the inventory of nursing home beds for purposes of projecting need under pool projections utilized by Respondent for the purpose of evaluating the need for new beds. The standards for licensing nursing home beds under Chapter 400 are different from the standards applied to hospital beds in Chapter 395. It is difficult to prove need for an SNU under the standards applied for purposes of licensing nursing home beds. As Hearing Officer Kiesling found in Venice Hospital: A hospital desiring to establish . . . [an SNU] . . . will likely find itself having either to challenge the fixed need pool for nursing home beds or litigate the almost inevitable denial of its application for lack of need. Either course of action would in- volve time and expense over and above those usually encountered in the CON process, par- ticularly because such an application would likely draw the opposition of existing nursing homes, even though their services are not really comparable. . . . The proposed rule amendments do not comport with the basic health planning policy of reducing over-bedding by encouraging conver- sion to other services. It is unlikely a hospital could get a skilled nursing unit by showing a numeric need under the nursing home need methodology, and any attempt to show excep- tional circumstances would be hampered by the lack of utilization data. Such beneficial conversions will probably also be chilled by the difficulty in converting a skilled nursing unit back to general acute care use, should it not be successful. Given the extreme acute care over-bedding which exists throughout the state, it is not anticipated that there will be any need for additional acute care beds for the foreseeable future. Since a skilled nursing unit would not be counted in the acute care bed inventory, the reconversion to acute care use would have to undergo CON review and would almost certainly be denied.
Recommendation Based upon the foregoing Findings of Facts and Conclusions of Law, it is recommended that Respondent should enter a final order accepting Petitioner's letter of intent to file a CON application for a hospital-based skilled nursing unit to be reviewed in the appropriate hospital batching cycle. RECOMMENDED this 21st day of November, 1991, in Tallahassee, Leon County, Florida. DANIEL MANRY 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 21st day of November, 1991.
The Issue The issue for determination is whether Petitioner must reimburse Respondent for payments totaling $29,701.19 that Petitioner admittedly received from the Medicaid Program between May 1, 1996, and March 31, 1998, in compensation for the provision of home health services. Respondent contends that Petitioner is not entitled to retain the payments in question, primarily on the allegations that the compensated services were not medically necessary, were improperly documented, or both.
Findings Of Fact The evidence presented at final hearing established the facts that follow. The Agency is responsible for administering the Florida Medicaid Program. As one of its duties, the Agency must recover "overpayments . . . as appropriate," the term "overpayment" being statutorily defined to mean "any amount that is not authorized to be paid by the Medicaid program whether paid as a result of inaccurate or improper cost reporting, improper claiming, unacceptable practices, fraud, abuse, or mistake." See Section 409.913(1)(d), Florida Statutes. This case arises out of the Agency's attempt to recover alleged overpayments from Monef, a Florida-licensed home health agency. As an enrolled Medicaid provider, Monef is authorized, under a Medicaid Provider Agreement with the Agency, to provide home health services to Medicaid recipients. Under the Medicaid Provider Agreement, Monef assented to comply with “all local, state and federal laws, rules, regulations, licensure laws, Medicaid bulletins, manuals, handbooks and Statements of Policy as they may be amended from time to time.” The home health services at issue consisted of skilled nursing care rendered either by a registered nurse (“RN”) or a licensed practical nurse (“LPN”), as the needs of the recipient required, together with personal care provided by a home health aide. The "audit period" that is the subject of the Agency's recoupment effort is May 1, 1996 to March 31, 1998. During this audit period, the Medicaid Program reimbursed Monef for all of the skilled nursing and home health aide services that are the subject of this dispute. Largely (though not entirely) on the allegation that the home health services in question were not medically necessary, the Agency contends that Monef collected overpayments totaling $29,701.19 in compensation for services rendered to nine separate patients. The following table summarizes the Agency's allegations. PATIENT NAME GROUND(S) FOR DENIAL ALLEGED OVERPAYMENT Louisiana S. No medical necessity $8,498.17 Robert M. No medical necessity $3,615.54 Mario P. No medical necessity $2,403.33 Angel S. No medical necessity $2,089.12 Ana G. No medical necessity $2,015.94 Joann N. No medical necessity $1,705.12 C. Watson No medical necessity $1,268.76 Yvette F. Service refused $122.16 Rosa P. Multiple $7,983.05 Medical Necessity The proof was in conflict concerning the medical necessity of the challenged home health services that Monef provided to the foregoing patients. There were three categories of expert opinion evidence on this issue, described below. The attending physicians' opinions. To be Medicaid compensable, home health services must be provided pursuant to a written treatment plan that is prepared individually for each recipient and approved by his or her attending physician. The treatment plan——called a "plan of care" or "plan of treatment"—— must be reviewed and updated periodically (about every two months) and also as the patient's condition changes. A required component of all plans of care is the attending physician's certification that the services specified in the plan are medically necessary.1 The fact that a treating doctor, by prescribing, recommending, or approving a medical service, has attested to its medical necessity is not sufficient, in itself, to support a finding that the resulting care was medically necessary. See Rule 59G-1.010(166)(c), Florida Administrative Code. Nevertheless, the attending physician's opinion regarding medical necessity is relevant evidence, even if it is not inherently dispositive. In this case, all of the services that the Agency contends were not medically necessary had been determined to be medically necessary by the respective patients' treating physicians. The peer-review organizations' opinions. During the audit period, the Medicaid Program would not reimburse a home health agency for any home visits in excess of 60 visits per recipient per fiscal year unless the provider had obtained authorization to provide such care, in advance, from the Agency or its designee. Such "prior authorization" was required to be based on medical necessity. At times during the audit period the Agency was under contract with a company called Keystone Peer Review Organization ("KePRO"), which acted as the Agency's designee in regard to pre-approving services above the 60-visit limit. At other times this function was performed by Florida Medical Quality Assurance, Inc. ("FMQAI"). In a couple of instances, the Agency itself gave Monef prior authorization to perform services that it now contends were not medically necessary. By statute, a peer-review organization's written findings are admissible in an administrative proceeding as evidence of medical necessity or lack thereof. See Section 409.913(5), Florida Statutes. Monef had obtained prior authorization based on medical necessity for most of the services that the Agency has challenged as medically unnecessary. The opinions of the Agency's designees, KePRO and FMQAI, are relevant evidence of medical necessity. Dr. Sullenburger's opinion. Dr. John Sullenburger is the Agency's Medicaid physician. He would have testified at the final hearing as an expert witness for the Agency, but the parties stipulated that Dr. Sullenburger's ultimate opinion, based on the medical records, was that each of the claims that the Agency alleges was not medically necessary was, in fact, unnecessary. By entering into this stipulation, Monef effectively waived its right to cross-examine Dr. Sullenburger and thereby expose the particular facts upon which his opinion was based. For its part, the Agency relinquished the opportunity to have the doctor explain the reasons why he had concluded that the patients' attending physicians——and also, in many instances, the Agency's designated peer-review organizations——had erred in making their respective determinations that the subject services were medically necessary. As a result of the parties' stipulation concerning Dr. Sullenburger's testimony, the factfinder was left with a naked expert opinion that merely instructed him to decide the ultimate factual issue of medical necessity in the Agency's favor. In making findings regarding medical necessity, the factfinder settled on the following rules of thumb. Greatest weight was accorded the opinions of KePRO and FMQAI. These were deemed to have the highest probative value because the peer- review organizations' determinations of medical necessity were made before the services in question were provided, and neither of the Agency's designees had any discernable motive to stretch the truth one way or the other. Certainly, the peer-review organizations more closely resemble a disinterested, neutral decision-maker than either the patient’s treating physician or the Agency's expert witness (whose opinions were formed after the services had been rendered and the claims paid); indeed, if anything, KePRO and FMQAI might be expected to tilt in the Agency's direction (although there was no evidence of such bias in this case).2 The hearsay opinions of the treating physicians, on the one hand, and Dr. Sullenburger, on the other, were considered to be about equally persuasive——and none was particularly compelling.3 It should be stated that the attending physicians' certifications of medical necessity, each of which lacked analysis that might have connected the facts concerning a patient's medical condition with the need for services, were as conclusory as Dr. Sullenburger's ultimate opinion. Consequently, in those instances where a peer-review organization gave Monef a mandatory prior authorization to render services that the attending physician had certified as being medically necessary, it has been found that, more likely than not, the services in question were medically necessary. In contrast, a closer question arose in those instances where there was no evidence of prior authorization when such was required. The expert opinions——the attending physician's on one side, Dr. Sullenburger's on the other—— essentially canceled each other out. While ordinarily in an evidential tie the party without the burden of proof (here, Monef) would get the nod, in this case the Agency had the slightest edge, on the strength of Rule 59G-1.010(166)(c), Florida Administrative Code. Under this Rule, an attending physician's approval of a service is not, "in itself," sufficient to support a finding of medical necessity.4 Because of the Rule, Monef needed to introduce some additional, persuasive evidence (e.g. the attending doctor's testimony regarding the need for the service) to overcome Dr. Sullenburger's opinion.5 Louisiana S. At the time that the services in question were provided, from May 7, 1997, until December 20, 1997, this patient, an obese woman in her late 60s, was being treated for diabetes, hypertension, and coronary artery disease. She was not able to self-administer the insulin shots that were needed to prevent complications from diabetes. For the period from May 5, 1997, through June 30, 1997, KePRO gave prior authorization to 53 skilled nursing visits and 23 home health aide visits.6 Monef was reimbursed for 42 skilled nursing visits and 23 home health aide visits conducted in this period. From July 1, 1997, until September 1, 1997, Monef provided a total of 66 combined skilled nursing and home health aide visits to Louisiana S. The Medicaid Program paid for 60 of them. Because these were the first 60 visits of the fiscal year, which began on July 1, 1997, prior authorization was neither needed nor obtained. During the period between September 1, 1997, and November 1, 1997, Monef made 96 skilled nursing visits, out of 124 that KePRO had pre-approved, and 20 of 27 authorized home health aide visits. KePRO gave prior authorization for 124 skilled nursing and 27 home health aide visits for the period from November 1, 1997 to January 1, 1998, of which 54 and 18, respectively, were made. Based on the levels of service that KePRO had approved before July 1, 1997, and then after September 1, 1997, it is reasonable to infer, and so found, that the first 60 combined visits to this patient in fiscal year 1997-98 would have been pre-approved had Monef been required to obtain prior authorization. The home health care services that Monef provided to Louisiana S. between May 9, 1997, and December 30, 1997, for which the Medicaid Program paid $8,498.17, were medically necessary. Robert M. Robert M., a man in his mid-40s who received home health care from Monef from November 26, 1997, through March 27, 1998, suffered from arteriosclerosis, hypertension, acute bronchitis, and schizophrenia. His residence was an assisted living facility ("ALF").7 FMQAI gave prior authorization for 61 skilled nursing and 61 home health aide visits to occur between November 26, 1997, and January 26, 1998. Monef provided 55 nursing and 59 home health aide visits during this period. Monef requested prior approval for 25 skilled nursing and 63 home health aide visits for the period from January 26, 1998, and March 26, 1998. Although prior authorization was needed for these services, which exceeded the limit for fiscal year 1997-98, there is no evidence in the record that FMQAI granted Monef's request for approval. FMQAI authorized 23 skilled nursing visits and 30 home health aide visits for the period from March 26, 1998, to May 28, 1998. However, Monef provided just one skilled nursing visit during this time, on March 27, 1998. The home health care services that Monef provided to Robert M. between November 26, 1997, and January 26, 1998, and on March 27, 1998, were medically necessary. Lack of medical necessity was established, however, for the services provided between January 26, 1998, and March 26, 1998. The Medicaid Program paid the following claims, totaling $1,442.49, for this period: One RN visit, $34.04; 21 LPN visits, $549.99; and 51 home health aide visits (35 at $17.46 apiece and 16 at $15.46 each), $858.46. Mario P. From November 25, 1997, through March 28, 1998, Mario P., a septuagenarian who was being treated for acute gastritis, an enlarged prostate, and mental illness, received home health visits at the ALF where he lived, the services provided by Monef. FMQAI approved 43 skilled nursing and 61 home health aide visits for the period from November 26, 1997, through January 26, 1998; 11 skilled nursing and 62 home health aide visits for January 26, 1998, until March 26, 1998; and 25 skilled nursing visits for March 1, 1998, through May 1, 1998 (overlapping the immediately preceding period by about three- and-a-half weeks). The actual number of skilled nursing and home health aide visits for which the Medicaid Program reimbursed Monef was within the pre-approved service levels for each period. The home health care services that Monef provided to Mario P. between November 26, 1997, and March 28, 1998, for which the Medicaid Program paid $2,403.33, were medically necessary. Angel S. Angel S. was a man in his middle 50s who had been diagnosed with gastroduodenitis (an inflammation of the stomach and duodenum) and mental illness. Monef obtained prior authorization from KePRO to provide Angel S. with 34 skilled nursing and 62 home health aide visits between November 25, 1997, and January 25, 1998. During this time, the Medicaid Program reimbursed Monef for 32 skilled nursing and 44 home health aide visits. FMQAI pre-approved 26 skilled nursing and 27 home health aid visits for January 25, 1998, through March 25, 1998. Monef was reimbursed for 20 and 21 such visits, respectively. The home health care services that Monef provided to Angel S. between November 25, 1997, and March 25, 1998, for which the Medicaid Program paid $2,089.12, were medically necessary. Ana G. When she was a client of Monef, Ana G., a woman in her 60s, was suffering from acute gastritis and major depression. She lived in an ALF. FMQAI pre-approved 50 skilled nursing visits and 40 home health aide visits for the period from November 25, 1997, through January 25, 1998. In that time, Monef rendered 28 skilled nursing visits and 42 home health aide visits for which it received compensation from the Medicaid Program. For the period from January 25, 1998, through March 25, 1998, FMQAI gave prior authorization for 9 skilled nursing and no home health aide visits. During this time, Monef provided 15 skilled nursing visits and 15 home health aide visits for which Medicaid paid. The services that Monef rendered to patient A. Garcia between November 25, 1997, and March 23, 1998, were medically necessary except for 17 home health aide visits (at $17.46 apiece) and 6 skilled nursing visits (at $24.19 each), making a total of $441.96 in overpayments. Joann N. In her late 30s at the time of the services in question, Joann N.'s principal diagnosis was major depression. She also suffered from hypertension and a type of diabetes. Because Joann N.'s primary diagnosis was a mental illness, the home health services provided to her may not have been Medicaid-compensable due to an exclusion that bars coverage for mental health and psychiatric services.8 The Agency, however, did not disallow Monef's claims on this basis, relying instead exclusively on the allegation that the services were not medically necessary. None of the skilled nursing and home health aide visits that Monef provide Joann N. between February 16, 1997, and September 1, 1997, was pre-approved. There is evidence that Monef sought KePRO's prior authorization of 26 skilled nursing and ten or 12 home health aide visits for the period from April 16, 1997, to June 16, 1997, but no proof was adduced showing that approval was granted. Based on the number of combined visits that Monef provided both before and after July 1, 1997 (the start of fiscal year 1997-98), it does not appear that prior authorization was required. There are no grounds in the record, however, from which to infer that prior authorization(s) would have been given if needed. Accordingly, lack of medical necessity was established for all of the home health services that Monef provided Joann N, for which the Medicaid Program paid a total of $1,705.12. C. Watson C. Watson was a teenager with cerebral palsy and quadriplegia who received care in her home between May 12, 1997, and March 31, 1998. The Agency alleges that all of the skilled nursing services that Monef provide C. Watson were medically unnecessary but acknowledges that the home health aide visits were appropriate and covered. The Agency itself pre-approved the home health care visits that Monef had requested for the period from May 12, 1997, through June 30, 1997, namely, 24 skilled nursing and 40 home health aide visits. The Medicaid Program reimbursed Monef for 12 skilled nursing and 38 home health aide visits made during this period. The Agency gave prior authorization for home health care to be provided between July 1, 1997, and September 1, 1997. FMQAI also pre-approved the following services for the same period: five skilled nursing visits and 43 home health aide visits. Monef was reimbursed for 17 skilled nursing visits made during this time. For the periods of September 1, 1997 to November 1, 1997; November 1, 1997 until January 1, 1998; and January 1, 1998 through March 1, 1998, KePRO pre-approved levels of skilled nursing services (nine, four, and nine visits, respectively) that were not exceeded by Medicaid-paid claims for these services rendered by Monef during the subject timeframes. FMQAI gave prior authorization for four skilled nursing visits to occur between March 1, 1998 and May 1, 1998, but Monef did not submit any claims for such services rendered during this period. Lack of medical necessity was established for 12 skilled nursing visits made during the period from July 1, 1997 through September 1, 1997. The Medicaid Program paid a total of $319.13 for these visits (One RN visit at $31.04 and 11 LPN visits at $26.19), and this sum constitutes an overpayment subject to recoupment. The rest of the skilled nursing visits that Monef furnished to C. Watson were medically necessary. Yvette F. Yvette F. was a patient in her 30s suffering from complications relating to HIV infection. On Christmas Day, 1997, Yvette F. refused most of the skilled nursing services that had been scheduled, to spend time with her family. The Agency has sought to recoup the $122.16 that the Medicaid Program paid for an RN's visit to Yvette F.'s home on December 25, 1997. This sum reflects four hours of service. The medical records in evidence establish that the patient's refusal of treatment occurred after the RN had arrived at her residence, and that, despite the patient's refusal of service, the RN did perform an assessment on Yvette F. that day. The Agency failed to establish that, under these circumstances, Monef is entitled to no reimbursement. Yet, common sense instructs that the covered claim should not encompass four hours of services when clearly that much time was not spent on this particular visit. Unfortunately, nothing in the record, including the parties' legal arguments, provides guidance for resolving this particular problem. In the absence both of controlling authority and evidence of the actual time spent, the factfinder has determined that the claim should be equitably apportioned to do rough justice, with Monef being compensated for one hour of service and the balance returned to the Medicaid Program. On this basis, then, lack of medical necessity has been shown for three hours of skilled nursing services, making an overpayment of $91.62. Rosa P. Rosa P. was a woman in her late 30s with multiple health problems, including uncontrolled diabetes, recurring infections, renal failure, respiratory insufficiency, and mental illness. Monef rendered home health care to Rosa P. from November 22, 1996, until February 1, 1998, for which the Medicaid Program paid $24,543.27 on 1,012 separate claims. The Agency seeks to recoup a little more than one- third of the amount previously paid to Monef for this patient's home health care, alleging a number of grounds to disallow a number of claims. The following table summarizes the Agency's contentions regarding the challenged claims. ("Doc." is an abbreviation for "documentation." "PC" is an acronym for plan of care. The alphanumeric claim identifiers in the left-hand column were assigned by the Administrative Law Judge for ease of reference.) CLAIM ID DATE(S) SERVICE(S) GROUND(S) FOR DENIAL ALLEGED OVERPAYMENT RP-1 11-22-96 Nursing No doc. $29.04 RP-2 12-9-96, 12- 10-96, 12- 14-96 Aide No doc./POT not followed (x3) $52.38 RP-3 12-25-96 to 1-5-97 Aide No PC rendered (x11) $192.06 RP-4 1-6-97, 1-7- 97, 1-9-97, 1-10-97, 1- 11-97, 1-12- 97 Aide POT not followed (x6) $104.76 RP-5 1-22-97 to 3-22-97 All POT not signed by MD or RN $4,009.37 RP-6 3-24-97 to 5-2-97 Aide No PC rendered (x40) $698.40 RP-7 5-2-97 Nursing No doc. $29.04 RP-8 5-3-97 to 7- 4-97 Aide No PC rendered (x62) $1,032.52 RP-9 7-21-97 to 7-26-97 Aide POT not followed (x6) $87.309 RP-10 8-4-97 to 8- 10-97 Aide PC not rendered (x7) $122.22 RP-11 10-29-97 Nursing Documented only 1 of 2 billed visits $31.04 RP-12 11-3-97 Aide No doc. $17.46 RP-13 11-4-97 Aide No doc. $17.46 RP-14 11-14-97 Aide No doc. $17.46 RP-15 11-15-97 Aide No doc. $17.46 RP-16 11-16-97 Aide No doc. $17.46 RP-17 11-22-97 to 11-26-97 Aide No doc. (x10) (2 billed visits per day) $52.3810 RP-18 12-1-97 Aide No doc. $17.46 RP-19 12-2-97 Aide No doc. $17.4611 RP-20 12-3-97 Aide No doc. $17.46 RP-21 12-28-97 to 2-28-98 Nursing POT not signed by MD or RN $1,724.37 The total of these alleged overpayments, without adjustment for the several minor arithmetic or typographical errors in the Agency’s papers, see endnotes 9 - 11, is $7,983.05. Each claim or claim set will be addressed in turn below. RP-1. The medical records contain a "Time Record Nursing Progress Note" dated November 22, 1997, that documents a skilled nursing visit to the patient on that day. Therefore, the Agency failed to prove its allegation of overpayment regarding RP-1. RP-2. Included in the patient's records is a "Weekly Activity Report and Time Slip" for the week beginning Monday, December 9, 1996, that was filled out by the home health aide who cared for Rosa P. during that seven-day period. To keep track of tasks performed, the form instructed the aide to check boxes in a table that cross-referenced particular duties (e.g. oral hygiene, change linens, turn & position), which are described in the left-hand column, with the days of the week, which are listed, Monday through Sunday, in the top row. For the days in question (December 9, 10, and 14, 1996), the aide checked boxes showing that, among other things, she had given the patient a shower and assisted her in a wheelchair, both of which are Medicaid-covered services. See Paragraphs 133, 137, infra. Handwritten notes inscribed on the Agency's work papers next to each of the three dates at issue state: "only p/c [personal care] [is a] shower —— not following POT [plan of treatment]." The first of these points is incorrect: assistance with a wheelchair, like showering a patient, is a covered home health aide service. The plan of care that covered the subject dates disproves the second assertion. The written treatment plan explains that the home health aide will "provide personal care, asst [assist] [with] ADL's [activities of daily living] including bath, skin/foot care." The aide was following this course of action on December 9, 10, and 14, 1996. The Agency did not prove an overpayment in connection with RP-2. RP-3. The Agency seeks to recoup payments of $17.46 apiece for 11 home health aide visits made between December 25, 1996 and January 5, 1997, on the ground that the aide did not perform any covered personal services. Although a dozen such visits were made during this particular period, the Agency's work papers reveal that the claim for services rendered on December 29, 1996, was approved. The aide's time sheets for the relevant period substantiate the Agency's allegation, with one exception. The aide's entry on December 26, 1996, is identical to that of December 29, 1996, the latter which the Agency correctly deemed sufficient to make Medicaid financially responsible. On both days, the aide helped the patient with a tub bath and shampoo, which are covered personal services. For the other ten days, review of the aide's time sheets reveals that many services were rendered in the category of "light housekeeping" and "meal preparation." These fall within the exclusion for "housekeeping, homemaker, and chore services, including shopping" and hence are not covered services. Handbook, at p. 2-6; see also Rule 59G-4.130(8)(a)2., Florida Administrative Code (1996).12 (Curiously, the Agency did not specifically rely upon this exclusion.) In its Proposed Recommended Order, Monef points out that the aide made a written notation each day concerning the patient's voiding of bowel and bladder. Because the non- exclusive list of covered home health aide services included "toileting and elimination," see Rule 59G-4.130(5)(b)3.b., Florida Administrative Code (1996), it is possible that the aide was providing a compensable service during the period in question. The trouble is, it cannot be determined from the evidence whether the aide actually assisted the patient——or whether the aide merely wrote down on the time sheet what had been observed regarding the patient's use of the bathroom facilities. Although the question is close, it is determined that simply observing and commenting daily about the patient's elimination of bodily wastes is not enough, without more, to constitute a Medicaid-compensable home health aide service.13 Being unable on the present record to find that the aide did more than watch and write, it is determined that covered services in the area of "toileting and elimination" were not persuasively shown to have occurred. Consequently, lack of medical necessity has been established as to 10 home health aide visits. The total overpayment on RP-3 is $174.60. RP-4. For the week from Monday, January 6 through Sunday, January 12, 1997, the Agency alleges that six home health aide visits are not covered because the aide failed to follow the plan of treatment. Notations on the Agency's work papers suggest another basis: "only shower - incomplete," meaning, presumably, that the only covered personal care provided was assistance in the shower. See discussion regarding RP-2, supra. The aide's time sheet for the relevant period contradicts the Agency's contention. First, bathing assistance was not the only covered personal care rendered on the days in question. The aide also helped the patient with her wheelchair, which is a service covered under the rubric of "transfer and ambulation." Rule 59G-4.130(5)(b)3.e., Florida Administrative Code (1996). Second, the aide's entry for January 8, 1997——for which claim the Agency is not seeking to recover——is substantially the same as those for the challenged days. The only material difference is that on January 8 the aide checked the box indicating that she had shampooed the patient's hair. Nothing in the Rule or the Handbook, however, provides that a shower with shampoo is covered but a shower without shampoo is excluded from coverage, and the Agency failed to prove a factual basis, or advance a logical one, for drawing such distinction. Consequently, the Agency did not establish an overpayment with regard to RP-4. RP-5. The medical records in evidence contain a "Home Health Certification and Plan of Care" for Rosa P. that was signed and dated, on January 22, 1997, by the RN and by the patient's attending physician, Dr. John Prior. This plan of care covers the period from January 22, 1997 through March 22, 1997. The Agency did not present any evidence that either the doctor's or the nurse's signature appearing on this form are inauthentic or that either or both failed to sign on January 22, 1997, as recorded. Therefore, the Agency's allegation that the plan of treatment for the period in question is invalid was not proved. RP-6. This claim set encompasses five full weeks plus five days of home health aide service, or 40 visits in all. The Agency alleges that no covered personal care was provided during these visits. The time sheets demonstrate that the aide provided a covered service, namely assistance in the shower, on all days between March 24, 1997 and April 6, 1997, and also on the five days from April 28 through May 2, 1997. The Agency therefore failed to prove its allegation as to these 19 visits. The Agency made its case, however, in connection with the remaining 21 visits from April 7 to April 27, 1997, inclusive. The time sheets for these dates do not adequately document the provision of a covered service.14 Accordingly, lack of medical necessity was established for 21 home health aide visits at $17.46 each, making a total overpayment on RP-6 of $366.66. RP-7. The Agency has sought to recover payment of $29.04 for an RN visit to the patient on May 2, 1997, alleging lack of documentation. The medical records show that on this particular date, an LPN treated the patient from 8:00 a.m. to 8:45 a.m. Later that same day, at 5:00 p.m., an RN arrived to provide care, which she did, afterwards leaving the patient’s residence at 5:45 p.m. These two visits are documented in separate "Time Record Nursing Progress Note" forms. The Agency did not establish that the nursing notes are inauthentic or incredible.15 Thus, the allegation regarding RP-7 was not proved. RP-8. The Agency contends that 62 home health aide visits between May 3, 1997, and July 4, 1997, were not compensable because no covered personal care was provided. The aide's time sheets establish that a covered personal care (assistance in the shower) was given on May 3 through May 17, inclusive (15 visits at $17.46 apiece), and also on June 20 through 22, 1997 (three visits at $17.46 each). Shower assistance was also provided on May 26 through June 1, 1997 (seven visits at $15.46 each). Skin care, a covered service, was provided on June 7, 1997 (one visit, $15.46). And ambulation assistance, a covered personal care service, was rendered on seven visits from June 9, 1997, through June 15, 1997, at $15.46 per visit. For the remaining 29 visits, however, the aide's time sheets fail adequately to document the provision of a covered service. Ten of these visits were billed at $15.46, the others at $17.46 apiece. Thus, with respect to RP-8, the Agency established an overpayment of $486.34. RP-9. This claim set involves six home health aide visits on the dates of July 21 through July 26, 1997, inclusive, during which, the Agency alleges, the plan of treatment was not obeyed. (The Agency did not seek to recoup the payment made for aide services rendered on Sunday, July 27, 1997, even though that date’s visit is included within the same time sheet as the Monday through Saturday visits, and the services rendered on July 27 were identical to those performed earlier in the week.) According to the pertinent time sheet, covered personal care services (bathing and assistance with ambulation) were provided in connection with the challenged claims. Further, the plan of treatment in effect at that time stated that the aide would "assist with personal care, ambulation, prepare meals, grocery shop, wash clothes, [and] straighten bedside unit." The time sheet establishes that the aide complied with these instructions. Accordingly, the Agency failed to prove its allegation regarding RP-9. RP-10. The Agency alleges that none of the home health aide visits from August 4 through August 10, 1997, entailed covered personal care services. The aide's time sheet for that week, however, documents that bathing care, specifically showering, was provided. Because showering the patient is clearly a covered item, the Agency failed to carry its burden of proof in respect of RP-10. The patient's medical records contain two "Time Record Nursing Progress Note" forms dated October 29, 1997, which document separate RN visits on that date, one lasting from 4:30 p.m. to 5:15 p.m., the other from 6:00 p.m. until 7:40 p.m. The Agency therefore did not establish, by a preponderance of evidence, its allegation that Monef had provided documentary support for only of one of two nursing visits on October 29, 1997. RP-12, -13, -14, -15, and -16. The Agency alleges that these five home health aide visits, occurring over a two- week period from November 3, 1997 to November 16, 1997, are not adequately documented. The visits of Monday, November 3, and Tuesday, November 4, 1997, which the Agency challenges, are reported on the same time sheet as those of November 5 through 9, 1997, which the Agency accepts. The duties performed on each of these days, both challenged and unchallenged, were identical, except that on November 4 and 8 the aide shampooed the patient. Numerous covered personal care services were rendered each day during the week, including bathing, oral hygiene, skin care, and assistance with ambulation. The duty descriptions on the aide's time sheet for the week beginning Monday, November 10, 1997——a week that included three challenged visits (November 14 through 16)——are substantially similar to one another (though the Agency accepted claims for November 10 through 13) and nearly identical to those given for the preceding week. Once again, covered personal care services rendered consistently throughout the week of November 10 to 16, 1997, included bathing, oral hygiene, skin care, and ambulation assistance. The evidence, therefore, does not support the Agency's allegation that the services in question were not adequately documented. RP-17. The Agency alleges that home health aide visits made from November 22 through November 26, 1997, were not documented. The medical records demonstrate that one such visit per day was provided, for a total of five. The records show further, however, that Monef was reimbursed for two visits for each of the days in question, receiving double the amount to which it was entitled based on the documented number of visits. The Agency, therefore, has proved an overpayment of $87.30 (five visits at $17.46 apiece). RP-18, -19, and -20. The Agency contends that there is insufficient documentation for home health visits on December 1 through 3, 1997. But the aide's time sheet for the week beginning Monday, December 1, 1997, adequately establishes that such visits actually occurred——and that covered personal care services (bathing, oral hygiene, skin care, and ambulation assistance) were provided during each of them. However, as with RP-17, the records show that Monef was reimbursed for two visits for each of the days in question, receiving double the amount to which it was entitled based on the documented number of visits. The Agency, therefore, has proved an overpayment of $50.38 (two visits at $17.45 apiece and one billed at $15.46) with regard to RP-18, RP-19, and RP-20. RP-21. The Agency seeks to recover payments for all nursing services rendered from December 28, 1997 through February 28, 1998, on the ground that the plan of treatment for the subject period was not signed and dated by the attending physician, as required. In fact, the pertinent treatment plan was signed by a Dr. Roxana Lopez, and by the RN. Neither signature, however, was dated. Thus, the Agency is correct in its assertion that the plan of treatment is deficient. But, the record also contains a letter from KePRO dated December 29, 1997, which grants prior authorization for 124 skilled nursing and 61 home health aide visits for the period from December 28, 1997 through February 28, 1998. According to this letter, Monef's request for pre-approval was made on December 22, 1997. One of the items that must be submitted to the peer- review organization with a request for prior authorization is the written plan of treatment. Thus, it is reasonable to infer, and so found, that KePRO had in its possession the deficient plan of treatment and, in granting prior authorization, overlooked the fact that the doctor had not dated her signature. Monef did not urge that KePRO's pre-approval of the services in question effected a waiver of the Agency's right to disallow the ensuing claims based on what is, in these circumstances, clearly a technicality,16 or that the Agency should be estopped from raising this particular objection, although little imagination is required to perceive the potential merit in either argument. It is not necessary to reach waiver or estoppel issues, however, for KePRO's approval letter establishes persuasively that the doctor and the nurse signed the plan of treatment before December 29, 1997——and hence at or before the start of care and services thereunder. Plainly, in other words, the attending physician timely approved the plan of treatment, even though she failed to date her signature. Under the particular facts of this case, therefore, where the treatment plan is in substantial compliance with the requirements, and neither the Medicaid Program nor the patient suffered any conceivable prejudice as a result of a demonstrably harmless (on these facts) and unintentional deficiency, it is determined that the Agency has failed to prove a sufficient basis to recoup payments totaling $1,724.37 for pre-approved, medically necessary services that were actually provided to an eligible patient. The following table summarizes the foregoing findings relating to claims for services to Rosa P. CLAIM ID DATE(S) SERVICE(S) GROUND(S) FOR DENIAL ACTUAL OVERPAYMENT RP-1 11-22-96 Nursing No doc. $0 RP-2 12-9-96, 12- 10-96, 12- 14-96 Aide No doc./POT not followed (x3) $0 RP-3 12-25-96 to 1-5-97 Aide No PC rendered (x11) $174.60 RP-4 1-6-97, 1-7- 97, 1-9-97, 1-10-97, 1- 11-97, 1-12- 97 Aide POT not followed (x6) $0 RP-5 1-22-97 to 3-22-97 All POT not signed by MD or RN $0 RP-6 3-24-97 to 5-2-97 Aide No PC rendered (x40) $366.66 RP-7 5-2-97 Nursing No doc. $0 RP-8 5-3-97 to 7- 4-97 Aide No PC rendered (x62) $486.34 RP-9 7-21-97 to 7-26-97 Aide POT not followed (x6) $0 RP-10 8-4-97 to 8- 10-97 Aide PC not rendered (x7) $0 RP-11 10-29-97 Nursing Documented only 1 of 2 billed visits $0 RP-12 11-3-97 Aide No doc. $0 RP-13 11-4-97 Aide No doc. $0 RP-14 11-14-97 Aide No doc. $0 RP-15 11-15-97 Aide No doc. $0 RP-16 11-16-97 Aide No doc. $0 RP-17 11-22-97 to 11-26-97 Aide No doc. (x10) (2 billed visits per day) $87.30 RP-18 12-1-97 Aide No doc. $17.46 RP-19 12-2-97 Aide No doc. $15.46 RP-20 12-3-97 Aide No doc. $17.46 RP-21 12-28-97 to 2-28-98 Nursing POT not signed by MD or RN $0 The Agency, in sum, proved overpayments totaling $1,165.28 in relation to Rosa P. The Bottom Line The Agency established that Monef received overpayments in connection with six patients. The following table summarizes these overpayments. PATIENT NAME GROUND(S) FOR DENIAL OVERPAYMENT Robert M. No medical necessity $1,442.49 Ana G. No medical necessity $441.96 Joann N. No medical necessity $1,705.12 C. Watson No medical necessity $319.13 Yvette F. Service refused $91.62 Rosa P. Multiple $1,165.28 Accordingly, the Agency is entitled to recover from Monef the principal sum of $5,165.60.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency enter a final order requiring Monef to repay the Agency the principal amount of $5,165.60. DONE AND ENTERED this 14th day of November, 2001, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of November, 2001.
Findings Of Fact On September 13, 1984, Santa Fe Healthcare Systems, Inc. (Santa Fe), d/b/a Alachua General Hospital, applied for a certificate of need (CON) to establish a Medicare-certified home health agency in Alachua, Levy and Bradford Counties. This application was identified by HRS as CON Action No. 3452. On March 29, 1985, Upjohn Healthcare Services, Inc. (UHCS), timely petitioned for a formal administrative hearing to challenge the granting of any portion of the CON application of Santa Fe to establish home health agencies in Alachua, Levy and Bradford Counties. Petitioner, Personnel Pool of North Central Florida, Inc. (Personnel Pool), was initially a party to this proceeding. Personnel Pool applied for a CON to establish a Medicare certified home health agency to serve Lake, Alachua, Citrus, Levy, Marion, and Sumter Counties in District III. Personnel Pool's application was identified by HRS as CON Action No. 3450, and was reviewed in the same batching cycle as Santa Fe's application. That proceeding was designated DOAH Case No. 85-1455 and consolidated with these cases. On October 23, 1985, however, Personnel Pool filed a Notice of Voluntary Dismissal by which it voluntarily dismissed its petition in DOAH Case No. 85- 1455. APPLICATION Santa Fe Healthcare Systems is a parent corporation with three divisions. The first division, called Genesis Hospital System, operates four affiliated hospitals: Leach General Hospital (AGH), Bradford Hospital (BH), Williston Memorial Hospital (WMH), and Calhoun Hospital (CH). The second division, Santa Fe Management Services, provides a variety of services, including financial, design and construction, risk management, and other related services to affiliates. The third division is called Wellness, Inc., operating a variety of properties including a personnel registry, urgent care centers, physicians' office buildings, and Shared Services, Inc., a for profit corporation, which comprises a pharmacy, a collection service bureau, a delicatessen, a laundry, a microfilming service, and several other support services. Santa Fe proposes to receive Medicare certification for its existing operational hospital-based home health delivery system, which is not now certified to receive Medicare reimbursements. This home health delivery system has one office which is located on campus at AGH in Gainesville. Santa Fe proposes to provide all types of home health services on a 24- hour a day, 7 days a week basis. If the home health agency obtains Medicare certification, it will become a department of AGH for Medicare cost reporting purposes. Santa Fe intends to staff its home health agency with dedicated employees of its affiliated hospitals and, as necessary, by part-time employees of the hospitals who are under- utilized as hospital staff, under principles of "variable staffing." Santa Fe proposes to serve the following mix of patients by payor class: 80%-Medicare 6%-Medicaid; 6% -Indigent and Bad Debt and 8%-Private Pay. Santa Fe proposes to serve patients regardless of their ability to pay for home health services. Santa Fe intends to subsidize the provision of home health services to indigent patients through the reimbursements it receives from providing home health services to Medicare patients, and through a transfer of funds from its affiliated hospitals to Santa Fe's home health agency. See paragraphs 17 through 21 below. At the present time, Santa Fe is providing home health care to patients eligible for Medicare reimbursement free of charge without seeking reimbursement from Medicare. There was no evidence of the losses incurred by Santa Fe in this endeavor. Santa Fe does not anticipate that it will be able to bill or get later reimbursement for the care provided to these Medicare eligible patients, even if it becomes Medicare certified. MEDICARE/MEDICAID REIMBURSABLE HOME HEALTH Medicare is a federally-funded health program for the elderly and for certain disabled persons only. In order for a provider of Medicare home health services to be reimbursed, the provider must serve Medicare eligibles who: (a) are referred by order of a physician (b) are home bound (c) require skilled care (skilled nursing, physical therapy, occupational therapy, and speech therapy) and (d) require skilled services only on a part- time, intermittent basis. Medicare does not reimburse for custodial care (such as provided by a nursing home or adult congregate living facility) or for acute care services (such as services to the acutely ill usually provided by a hospital). Medicare provides reimbursement only for skilled nursing, physical therapy, speech therapy, home health aide, and medical social services. Medicare presently reimburses home health agencies, whether hospital-based or free-standing, on a cost reimbursement basis, subject to an aggregate cost reimbursement limitation or cap. As long as the Medicare home health agency does not exceed the cap it gets paid all of its costs for allowable expenditures. If it exceeds the cap, then it only gets paid at the cap. A cap is figured for each service (skilled nursing, home health aide, physical therapy, speech therapy, occupational therapy, and medical social services). Previously, all of the costs incurred for providing these services were added together and compared against an aggregate reimbursement limit or cap. If aggregated costs were below the aggregate cap, the provider was paid its costs, and was only penalized for the amount by which it exceeded the aggregate cap. However, starting with fiscal years beginning after July 1, 1985, the Medicare program has eliminated the aggregate cap and will apply only the cap for each type of home health services. If a provider's cost exceeds the cap for each service the provider will only receive the cap for such service. The Medicare program recognizes that the cost of providing home health services through a hospital-based home health agency generally is higher because overhead of the hospital is allocated to the home health agency. (In fact, AGH's allocation of overhead to Santa Fe's home health delivery system will he less than the allocation of overhead from UHCS' national and regional offices to its home health agencies in Alachua, Bradford, and Levy Counties.) Medicare thus could reimburse Santa Fe's home health agency at a ten percent increment above the cost caps established for non-hospital home health providers. In contrast to Medicare, the Medicaid program provides reimbursement to providers only for skilled nursing services and home health aide services to patients who meet strict income and asset limitations. No reimbursement is provided for physical therapy, medical supplies or ancillary costs of providing reimbursable services. Instead of the cap system applicable to Medicare reimbursement, only a fixed fee determined in advance is provided for Medicaid services. Accordingly, a provider can expend costs in excess of reimbursement to serve Medicaid eligible patients. Recent changes in the Medicare reimbursement for hospital care have resulted in a prospective payment system. This system is commonly referred to as the diagnostic related grouping system (DRG). Under that system a hospital is not reimbursed for its costs. Rather the hospital receives for in- patients a predetermined reimbursement covering all costs related to providing patient care for the diagnosis of the patient, based on the historical costs for serving such a patient in the geographic area where the hospital is located. If the length of stay of the patient is such that the cost of providing care exceeds the Medicare reimbursement provided under the applicable DRG system, the hospital experiences a loss for its service to that patient. If the patient's stay is shorter than the average duration for that DRG, however, the hospital's costs usually are less than the Medicare reimbursement for the patient, and the hospital experiences a windfall gain. DRG reimbursements are fixed amounts regardless of length of stay. COST CONSIDERATIONS Santa Fe's home health delivery system operates as a cost and revenue center within the Santa Fe system separate from the centers mentioned in paragraph 3 above. If certified under the Medicare program, it will be a separate revenue center for Medicare reimbursements. In its amended application, Santa Fe projects a loss in its first twelve months of operation amounting to $20,267. Santa Fe projects a loss of $30,409 for the second twelve months of operation. However, these losses will be more than offset by savings to the affiliated hospitals from discharging its Medicaid and indigent patients from the hospitals at an earlier date because home health services can be provided at a lower cost. In any event, with more than $7 million of earnings from its combined operations for the year ending September 30, 1985, Santa Fe can easily cover any reasonable losses that the proposed home health agency might incur during the first two years of operation. In addition, Santa Fe will shift a portion of its administration, supervisory, dietary, maintenance, and housekeeping costs from AGH to the new home health agency. These items are commonly identified overhead expenses. Santa Fe will shift some of the existing costs of AGH's administrator and assistant administrator's salary and fringe benefits to the home health agency. Santa Fe will also shift some of the costs of salaries for supervisory health care personnel to the home health agency to the extent that these supervisors provide guidance to the staff of the home health agency. AGH will hire additional staff to handle home health billing. This cost will also be borne by the home health agency. Approximately 95% of the overhead of AGH which Santa Fe intends to shift to its Medicare home health agency does not represent new or additional costs. Rather, that portion will represent costs which Santa Fe is presently incurring in the operation of AGH. In the first twelve months of operation AGH will allocate approximately $150,000 of its existing overhead to the home health agency. In the second twelve months of operation AGH will allocate $175,000 of its existing overhead to the Santa Fe home health agency. Santa Fe's hospitals will have to subsidize the Santa Fe home health agency between $75,000 and $90,000 for provision of services to indigents and for additional costs associated with treating Medicaid patients. Santa Fe will ask Medicare to reimburse the overhead allocated from AGH to the Santa Fe home health agency up to the cap. See paragraph 12 above. Because of the reimbursement of the portion of the overhead allocation from the affiliated hospitals to the proposed home health agency, approval of any portion of Santa Fe's proposal probably will increase the cost to Medicare for Medicare reimbursable home health services in Alachua, Bradford and Levy Counties. NEED CONSIDERATIONS UHCS is the only existing provider of home health services licensed by HRS to provide Medicare home health services in Alachua, Bradford and Levy Counties within HRS District III. UHCS is also licensed to provide home health services in Dixie, Gilchrist, Marion, Lafayette, Putnam, Union and Suwannee Counties in District III. UHCS operates a parent agency office located in Alachua County (Gainesville), with licensed subunit offices in Bradford (Starke), Levy (Chiefland), and Putnam (Palatka) Counties. UHCS operates a separate licensed and Medicare certified parent home health agency in Marion County. UHCS operates a private-sector home health business without a CON, which is separate from its licensed home health agencies and subunits. UHCS provides skilled nursing, physical therapy, speech therapy, occupational therapy, home health aide and medical social services to patients in their homes. UHCS also provides intermittent skilled care to private pay patients through its licensed home health agency; and provides homemaker, live-in companions, and one-time RN visits through a separate private sector business. UHCS provides services twenty-four hours a day, seven days a week. Its offices are open from 7:30 a.m. to 6:00 p.m. It provides an answering service whenever the office is closed. The administrator, director of professional services, and supervisors are always on call. UHCS provides quality assurance programs to exceed the Medicare, Medicaid and licensure standards for home health care. These programs include: quarterly utilization review of medical records corporate quarterly quality assurance: ongoing client record audit supervisory visits employee evaluations; and consultations from UHCS' advisory council. UHCS has a field staff of seven registered nurses at its Gainesville office to provide skilled nursing visits in the homes of patients who reside in Alachua County. The staff presently contains two fewer RN's than it contained twelve months prior to the final hearing. As of September 1, 1985, UHCS also had eliminated one occupational therapist from its direct patient care staff. UHCS has not replaced the two RN's or occupational therapist because UHCS has experienced a decline in the number of visits and patients served during the twelve month period preceding the final hearing. Without increasing its present RN field staff and direct-patient care staff, UHCS could increase its delivery of home health services in Alachua County by between twenty and twenty-five percent. By adding one additional clinical supervisor UHCS could increase its delivery of home health services in Alachua by an additional fifty percent, over and above the twenty to twenty-five percent excess capacity mentioned above. UHCS actively seeks to find patients in need of the types of home health services which it delivers. UHCS utilizes patient coordinators, all of whom are RN's, to make its services known in Alachua, Bradford and Levy Counties. The coordinators visit each of the hospitals in these counties to distribute Medicare home health guidelines and to ascertain whether there will be discharges from these hospitals who will need home health services. UHCS receives referrals from hospitals, physicians and other health care providers. Approximately thirty-five percent of its referrals from Alachua County come from hospitals. Alachua General Hospital provides nineteen percent of those referrals. The number of referrals to UHCS for home health services for patients residing in Alachua County has decreased during the past twelve months prior to the final hearing. The quality of home health services delivered by UHCS in Alachua, Bradford and Levy Counties was not questioned in this proceeding. In terms of quality of care, Santa Fe and AGH readily refer patients who are eligible for Medicaid and Medicare home health services to UHCS. UHCS has the same access to information about patients referred to it by AGH as Santa Fe's home health delivery system, to the extent that AGH permits UHCS access. UHCS takes advantage of the access provided by AGH in preparing patients referred to it for home care. At all times relevant to this proceeding, no patients residing in Alachua, Bradford and Levy Counties who were qualified to receive Medicare or Medicaid reimbursable home health services have been unable to receive services from UHCS. AGH's social services department (which performs discharge planning functions for the hospital) has had no problem placing patients in need of Medicare and Medicaid reimbursable home health services. Santa Fe hospitals having been able to obtain these services from UHCS for all patients residing in Alachua, Bradford and Levy Counties. Santa Fe does not propose to meet any need for Medicare and Medicaid reimbursable home health services which is not already being met by UHCS in Alachua, Bradford or Levy Counties. Santa Fe only proposes to serve patients of physicians that are members of the medical staff of its hospitals (AGH, BH and WMH). Since April 5, 1985, HRS has employed a uniform methodology contained in proposed Rule 10-5.11(14), Florida Administrative Code, for determining the need for additional home health agencies in Florida. Although that rule has been challenged in another proceeding, HRS has adopted the need methodology as a matter of department policy. HRS now utilizes that need methodology as its policy without exception in reviewing all applications for certificates of need to establish home health agencies in Florida. The methodology in the HRS proposed rule projects a need for sixteen home health agencies in HRS District III for the relevant planning horizon (1987). Because of dated factors in the methodology, the need projected under the methodology is incorrect and actually should be 17. Although HRS listed in its State Agency Action Report only sixteen licensed home health agencies and one CON approved home health agency for District III, the following agencies are also licensed to provide Medicare home health services in District III: (a) UHCS is licensed to operate a subunit in Palatka, Putnam County, District III (b) UHCS is licensed to operate a subunit in Starke, Bradford County, District III; and (c) Central Florida Home Health Services, Inc. Volusia/Seminole/Lake is licensed to provide home health services in Lake County, District III. The Leon County subunit was added in early 1984 the Putnam County subunit in November 1984 and the Bradford County subunit in March 1985. The evidence was not clear whether these three subunits apparently underwent certificate of need review. UHCS opened at least the most recent of these three subunits in a conscious effort to keep out competition. The subunits added a clinical supervisor and a clerical person to staff the new subunit offices the same nurses and home health aides previously based in Levy, Bradford and Putnam Counties continued to work there but out of the subunit offices. Under present uniform policy of HRS, each of these offices sensibly is counted against the gross need for additional Medicare licensed home health agencies in District III in order to determine if there is a net need or surplus. As defined in Rule lOD-68.02(19), Florida Administrative Code, a subunit of a home health agency is a semi-autonomous agency. It is incapable of sharing administration, supervision and services on a daily basis with the parent home health agency. Rule lOD-68.04(2), Florida Administrative Code, requires that subunits be separately licensed whenever the subunits "are operated outside of the county of the parent agency or operate as autonomous subdivisions." Since 1977 HRS has required that subunits of home health agencies must receive a CON before they can be separately licensed. Rule 10-5.04(7), Florida Administrative Code, provides that a CON must be obtained, not only for the establishment of a new home health agency, but also for the establishment of a new subunit of an agency. It was not proved that any of the subunits in District III are not meeting the need in the counties where they are located to the contrary, the evidence suggests that the subunits are meeting the existing need with excess capacity to spare. Accordingly, the inventory of licensed and CON approved Medicare home health agencies in HRS District III exceeds the need projected for licensed home health agencies in that district for 1987, the relevant planning horizon, by four agencies. Although the HRS' uniform need policy and the need methodology employed by the Local Health Council for District III project approximately the same number of persons in need of home health services, these methodologies differ as to how they would allocate agencies to meet the projected need. The HRS' home health methodology does not permit a subdistrict determination of need, while the District III methodology defines each county within District III as a subdistrict for home health services, and then assesses a need for one agency for each multiple of 800 persons in need, up to a maximum of four agencies. In comparison with the HRS methodology, the District III methodology allows more Medicare home health agencies to serve the same number of patients identified as needing Medicare home health services. The District III methodology would assess the need for an additional agency in Alachua County but no need for additional agencies in Bradford or Levy County. The HRS methodology assumes that agencies will it compete across county lines and that a methodology like the District III methodology can and will result in "false competition." The rationality of this aspect of the HRS methodology as a general rule was not persuasively established in this case. As a general rule, it would seem more rational to foster some type of competition at some level of activity in order to help depress Medicare costs (especially under the new reimbursement system described in paragraphs 15 and 16 above) and improve quality of services rather than allow certain providers to gain a monopolistic-type hold on parts or all of the service area. Such an approach seems even more appealing in light of the evidence in this case that UHCS recently placed at least one subunit in the service district in a conscious effort to keep out competition. But Santa Fe did not prove on the facts of this case that it is time to place a new agency in Alachua to compete with UHCS despite the HRS methodology and the facts in evidence that UHCS can more than adequately meet the need for home health services in Alachua County within the relevant planning horizon. ACCESS CONSIDERATIONS Through UHCS' parent agency and subunit offices the residents of Alachua, Bradford, and Levy Counties have geographic access to all Medicare and Medicaid reimbursable home health agencies. The Local Health Council for District III determined that, in those cases where the area for proposed service is one where residents do not have access to home health care due to financial barriers, the council would recommend approval of an additional home health agency if its need methodology shows no need for an additional Medicare agency. The Local Health Council for District III also recommended that county government assume responsibility for paying for home health services for indigent clients. In addition, the council recommended that volunteer organizations provide funding for home health services to medically indigent patients. The council established that home health agencies should provide an amount of uncompensated charitable home health care equivalent to at least one percent of the preceding fiscal years' gross revenue for any given home health agency. UHCS does not accept patients who cannot pay all of their bills for home health services either in cash, by Medicare or by a combination of cash and Medicaid (or, presumably, Medicare if applicable.) Therefore, no Medicare certified home health agency serves the medically indigent in Alachua, Levy or Bradford County.
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 denying in its entirety the application of Petitioner in Case No. 85-1501, Santa Fe Healthcare Systems, Inc., for a certificate of need for a home health agency to serve Alachua, Levy and Bradford Counties, CON Action No. 3452. RECOMMENDED this 23rd day of January, 1986, in Tallahassee, Florida. J. Lawrence Johnston 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 23rd day of January, 1986. APPENDIX Rulings on UHCS' Proposed Findings of Fact. Accepted in part rejected in part as unnecessary. See Finding 1. Accepted. See Finding 1. Rejected as conclusion of law. Accepted in part; rejected in part as unnecessary. See Finding 2. 5 and 6. Rejected as unnecessary. Accepted. See Finding 3. Accepted, except the existing home health delivery system is not a home health agency as defined by statute. See Conclusions of Law. See Finding 4. Covered by Finding 5. Covered by Finding 6. Covered by Finding 6. 12-38. Covered by Findings 7-33, respectively. 39. Rejected as contrary to the greater weight of the evidence. 40-42. Covered by Findings 34-36. 43-46. Rejected in part as cumulative and in part as subordinate. 47-51. Covered by Findings 37-41. Covered by Finding 42. Covered by Finding 43. Rejected as contrary to the greater weight of the evidence. 55-56. Covered by Finding 44 and 45. 57. Rejected in part as immaterial (HRS can condition the CON by its Final Order in this case), in part as being legally incorrect (HRS can enjoin violations of representations upon which a CON is granted) and in part as unnecessary and cumulative (that Santa Fe is now operating a hospital based home health delivery system). 58-59. Rejected as immaterial and unnecessary. HRS determinations to date are preliminary and subject to change based on the evidence. 60-62. Rejected in part as cumulative and in part as conclusions of law. Petitioner's Proposed Findings of Fact. (Petitioner's proposed findings of fact are unnumbered. For purposes of these rulings, they have been assigned consecutive numbers for each paragraph). The first sentence is rejected as unsupported by the evidence; the balance is covered by Finding 3. Covered by Findings 4 and 6. Covered by Finding 17. Covered by Finding 17. Covered by Findings 24 and 46. Covered by Findings 4 and 6 (partly cumulative). Rejected as cumulative. Covered by Findings 3738. Covered by Finding 39. (Rejected in part as contrary to the greater weight of the evidence.) Rejected as cumulative. Covered by Finding 44. HRS' Proposed Findings of Fact. There were none. COPIES FURNISHED: William C. Andrews, Esquire, Scruggs & Carmichael P. O. Drawer C One Southeast First Avenue Gainesville, Florida 32601 Robert P. Daniti, Esquire Carson & Linn, P.A. 253 East Virginia Street Tallahassee, Florida 32301 Harden King, Esquire Assistant General Counsel Department of Health and. Rehabilitative Services 1317 Winewood Boulevard Tallahassee, Florida 32301 David Pingree, Secretary Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32301
