The Issue Which of two applications for a Certificate of Need (CON) to operate a hospice in Service Area 8B, Collier County, Florida, should be granted: CON 9967 filed by Hope Hospice and Community Services, Inc., or CON 9969 filed by VITAS Healthcare Corporation of Florida?
Findings Of Fact The Parties AHCA The Agency for Health Care Administration is responsible for the administration of the Certificate of Need (CON) Program in Florida and for carrying out Florida's CON Law. See § 408.031, Fla. Stat., et seq. The Agency is designated both "as the state health planning agency for purposes of federal law . . . [and as] the single state agency to issue, revoke, or deny certificates of need . . . in accordance with present and future federal and state statutes." § 408.034(1), Fla. Stat. HON Hospice of Naples, Inc. (HON), a not-for-profit corporation qualified as a "501(c)(3)" charitable organization under the Internal Revenue Service Code, is a community-based full service hospice. Founded in 1983 by a group of volunteers who wanted to improve care for those suffering terminal illnesses in Collier County, HON is governed today by community representatives that comprise a 19-member board of directors. HON is the only hospice currently licensed to provide hospice services in Service Area 8B, Collier County. It is licensed to provide hospice program services and to operate a freestanding general inpatient program facility in the county. Since 1988, HON has been continuously Medicare and Medicaid certified. It has been accredited by the Joint Commission for Accreditation of Health Care Organizations since 2001. HON accepts all Collier County patients, regardless of religious beliefs, sexual orientation, and circumstances, including how the patient may be challenged physically or mentally. HON provides its services wherever the Collier County patient resides: in their own homes (approximately 50%); in skilled nursing facilities and assisted living facilities (45%); in jails, shelters and the Georgeson Hospice House (5%); and in a small fraction of cases in hospitals. Patients are also accepted regardless of ability to pay. In 2006, HON provided $344,000 in charity care to those who did not have the resources to pay for hospice care. HON's principal office is located on the same campus with the Frances Georgeson Hospice House (the "Georgeson House"), HON's 16-bed freestanding hospice general inpatient facility. The main office and Georgeson House are centrally located and geographically accessible in relation to the most populated portions of the county. HON has four branch offices placed where the greatest number of hospice patients reside in the county. The offices are in Marco Island, Immokalee, North Naples (near the Collier-Lee County line), and South Naples. HON consistently relies on donations from the community to cover shortfalls from operations. From 2002-2006, HON lost between $1.5 million and $4.5 million annually on operations, before contributions were considered. Contributions over the same period ranged from $1.5 million to $4.4 million. HON relies on contributions to allow it to continue to provide a wide array of enhanced core, non-core and community services beyond what reimbursement covers. Collier County has been well served by HON, an available, accessible, high quality, not-for-profit community-based hospice. VITAS VITAS is a for-profit Florida corporation licensed to provide hospice services in Florida. It is a wholly-owned subsidiary of VITAS Healthcare Corporation ("VITAS Healthcare") which operates more than 40 hospice programs in the nation and is the largest hospice provider in the country. VITAS has a sister corporation, VITAS of Central Florida, Inc. The two operate hospice programs in Hospice Service Areas 4B, 7A, 7B, 7C, 9C, 10, and 11 that include Orange, Osceola, Seminole, Brevard, Volusia, Flagler, Miami-Dade, Monroe, Broward, and Palm Beach Counties. VITAS and its predecessor entities have provided comprehensive hospice services throughout South Florida in excess of 28 years. It has a storied history that commenced in the mid-seventies with the organization of a group of hospice volunteers by Hugh Westbrook, an ordained United Methodist minister, and Esther Colliflower. These initial efforts led to the incorporation of Hospice Care, Inc., in Miami as one of the nation's first hospice programs. Reverend Westbrook and Ms. Colliflower continued their pioneering endeavors in hospice as leaders in the successful effort to create a federal payment system for hospice. In the early 1990's Hospice Care, Inc., was converted into a for-profit entity. The term VITAS, derived from the Latin word for "lives," was incorporated into the name of the corporation to symbolize the mission of VITAS Healthcare: the preservation of the quality of life for those who have a limited time to live. VITAS Healthcare is a wholly owned subsidiary of Chem-Ed, a for-profit corporation. Chem-Ed has had an interest in VITAS Healthcare at least since 1991 when it was an owner of 25% of VITAS Healthcare stock and one of its executives, Tim O'Toole took a seat on the VITAS Healthcare board of directors. In 2004, the majority ownership of VITAS Healthcare was sold to Chem-Ed and Tim O'Toole became VITAS Healthcare's Chief Executive Officer. Most of the senior management stayed intact after the acquisition by Chem-Ed. Among the reasons for retaining senior management was to continue VITAS Healthcare's values in the wake of the acquisition. The main value is "putting patients and their families first." Hope Hope Hospice and Community Services, Inc. (Hope), is a not-for-profit community-based hospice organization incorporated as a 501(c)(3) charitable corporation under the Internal Revenue Code. Hope is governed by a board of directors, all of whom are residents of Hope's service area. As business and community leaders in Southwest Florida, Hope's Board members know the Hope service area well. Their in depth knowledge of the community enhances their sensitivities to the needs of the communities served by Hope. Founded in 1979 by a group of clergy, nurses, and other volunteers in Lee County, Hope became a Medicare certified hospice in 1984. Since 1991, Samira Beckwith has served as Hope's President and CEO. Ms. Beckwith has been actively involved in hospice since 1976, and has received numerous state and national awards for her work in hospice and end-of-life issues. Originally licensed to serve Service Area 8C (Lee, Hendry, and Glades Counties), Hope has been licensed since 2006 to serve Service Area 6B (Polk, Hardee, and Highlands Counties) as well. Hospice Care Hospice care may be provided in any location where a patient has lived or is temporarily residing such as a private home, family member's home, assisted living facility (ALF), nursing home, hospital or other institution. There are four levels of hospice care: routine home care, general inpatient care (GIP), continuous care and respite care. The majority of hospice patients receive routine home care. This level of care may be provided in the patient's home, a family member's home, a nursing home or an ALF. Routine care comprises the bulk of hospice patient days. Continuous care is also provided in the patient's home. Unlike routine home care, continuous care is nursing assistance at a time of crisis for the patient. Typically, it is for control of acute care pain or symptom management on a short-term basis. Continuous care is usually intermittent. The use of the term "continuous" as a descriptive adjective to describe this type of hospice care, therefore, makes "continuous care" a misnomer. Continuous care requires a minimum of 8 hours of one-on-one care in a 24-hour period with at least 50% of the care provided by a nurse. The other half of the care may be provided by personal care assistants or nurses' aids. General inpatient care or GIP refers to the care a hospice patient receives in an inpatient setting such as a hospital, a Medicare-certified nursing home or in a freestanding hospice unit. This type of care involves increased nursing and physician care for patients with symptoms temporarily out of control and in need of round- the-clock nursing to manage complications. The least used level of hospice care, respite care is provided to patients in an institutional setting such as a nursing home, ALF or freestanding hospice unit in order to allow care givers at home, such as family members, a short break or "respite" from the demands of caring for a terminally ill patient. Penetration Rates An objective measure of accessibility of a hospice program is the penetration rate ("P-rate") in the hospice's service area. P-rate is the ratio of hospice admissions to total deaths in a service area. It is a basis for planning for hospice programs in the state of Florida. Hope touts its P-rate in Service Area 8C as a basis for its superiority over VITAS. Its P-rate in Service Area 8C has always exceeded the state-wide average. For the June 2006 reporting period, its P-rate was 62% when the statewide average was 56%. Hope has continually increased its P-rate at a rate higher than the rate of increase of the statewide average. The Fixed Need Pool and the SAAR On October 6, 2006, AHCA published a fixed need pool for one new hospice program in Service Area 8A for the second batching cycle of 2006. On October 27, 2006, HON filed a challenge to the fixed need pool. The challenge was denied by final order. HON appealed. The appeal was dismissed. In the meantime, five hospice organizations submitted letters of intent and CON applications for a new hospice in Service Area 8A: VITAS, Hope, HCR Manor Care Services of Florida (HCR), Evercare Hospice of Collier County (Evercare), and Odyssey Healthcare of Collier County, Inc. AHCA issued its State Agency Action Report (SAAR) on February 23, 2007. The SAAR approved VITAS' application and denied the others. Notice of AHCA's decision was published in the March 9, 2007, edition of the Florida Administrative Weekly. Between March 12, 2007 and March 29, 2007, HON and three of the denied applicants (Hope, Odyssey, and HCR) filed petitions challenging the approval of VITAS' application. The petitions of Hope, Odyssey, and HCR also challenged the denials of their respective applications. Evercare did not challenge any of the Agency's decision. On March 23, 2007, VITAS filed a petition supporting the decisions of the Agency and requesting comparative review of its application with the applications of the other applicants that had challenged AHCA's decision. In their applications, VITAS and Hope aspire to meet the need published for a single new hospice in Service Area 8A. They also contend in their applications that "special circumstances" demonstrate need for an additional hospice program in Collier County. The need formula in Florida Administrative Code Rule 59C-1.0355 (the "Hospice Programs Rule"), produces a fixed need pool for "1" or "0." The Agency's position is that the formula can never generate a fixed need pool in excess of 1. See Fla. Admin. Code R. 59C-1.0355(4)(a): Numeric Need for a New Hospice Program. Numeric need for an additional hospice program is demonstrated if the projected number of unserved patients who would elect a hospice program is 350 or greater. The net need for a new hospice program in a service area is calculated as follows . . . . (Emphasis supplied). The existence of a fixed need pool of "1," alone, does not prove there are gaps in service if there is an existing hospice provider in the service area. HON's expert, Mr. Davidson elaborated on this point at hearing: The purpose of the rule is not to identify service areas where existing providers are not getting the job done now . . . it's a temptation to interpret a fixed-need pool that way but it's an incorrect temptation. [T]he rule . . . identifies service areas where the growth in hospice admissions is projected to be sufficiently large to enable a new program to be approved without digging into the level of service of the existing provider. Tr. 3708-3709. In this case, the fixed need pool of 1 was attributable more to projection of service area deaths than the use of penetration values used in the formula for calculating fixed need. When a fixed need pool of "1" has been published, and an applicant responds to the numeric need and also alleges that special circumstances exist to justify approval of a new hospice, the Agency views the special circumstance allegation, even if proved, to be a potential preference for the applicant in the context of comparative review. The existence of a special circumstance is not a basis for the approval of more than one applicant in a batching cycle. The Hospice Programs Rule is interpreted by AHCA to permit the approval of only one hospice program in any one batching cycle. This interpretation stands so that only the superior application may be approved even in cases where: a.) there are two hospice organizations qualified to meet numeric need and b.) coincidentally there are special circumstances that would otherwise justify the inferior application's approval. Adverse Impact to HON if Two Programs Approved If the applications of both VITAS and Hope were to be simultaneously approved, HON would experience a significant reduction in average daily census (ADC). By 2009, it is reasonably projected that its census would be reduced to 180 patients, a decrease from 2007 of about 61 patients in the second year of operation for the two new programs. Net income (including donations) for HON in the second year of operation for two new programs, if ADC were decreased by 61 patients, would likely be reduced by approximately $1.2 million. Historically, HON has a net operating loss before contributions ranging from $1.5 million to $4.5 million. The likely reduction in net income would be significant. Reduction in HON's programs would be necessary to make up for the lost revenue. A number of community programs would have to be eliminated. Core and non-core services would have to be reduced. It is possible that there would an indirect adverse impact to HON as well: a breach of trust perceived by the community and donors when community services which have come to be expected are reduced or withdrawn. Service Area 8B: Collier County Service Area 8B, located in Southwest Florida along the coast of the Gulf of Mexico, consists of one county. Collier County is relatively large in area. Its population of around 360,000 is most dense along the coast in the county's westerly parts. Service Area 8A borders Service Area 8C to the north and Service Area 10 and 11. The more populated communities in Collier County are more congruent with communities in adjacent Service Area 8C, where Hope operates. Service Areas 10 and 11, where VITAS operates, on the other hand, are separated from the densely populated areas of Collier County by wide expanses of relatively unpopulated borderlands. Service Areas 8A and 8C have some similar demographics. For example, both are less densely populated than the state as a whole. Both service areas are growing at a rate that is faster than the rate of growth of the state as a whole. The percentage of the two service areas in the 65+ age cohort is the same and is higher than the statewide average for that age cohort. The two have a similarity in the percentage of Hispanic population. The median household net worth in both service areas is higher than the statewide average, considerably so in the case of Collier County. The two service areas have similar mortality rates and a similar array of causes of death for their residents. Proximity of Hope to Collier County Health Care Facilities Collier County has four hospitals, two within each local health care system. NCH Health System (NCH) operates Naples Community Hospital and, less than 10 miles from the Lee County line, North Naples Hospital. Health Management Associates (HMA) operates Physicians' Regional Hospital at Pine Ridge Road and at Collier Boulevard. The two NCH hospitals have 681 beds, while the HMA hospitals have approximately 180 beds. Collier County has many skilled nursing facilities. Collier County hospitals serve some residents of Service Area 8C. The import of the proximity of Hope's current operations in Lee County and Service Area 8C to Service Area 8A was summed up at hearing by Hope's expert planner, Jay Cushman: Because of Hope's proximity to the proposed service area, it has relationships that already exist between important providers of health services in service area 8B including hospitals. From time to time, residents of Hope's service area are hospitalized in Collier County, and Hope's staff visits them if they are going to be referred back to Lee County or other counties in service area 8C as hospice patients. Hope Hospice also operates a long-term care diversion program ["LTCD Program"] which includes services to residents of Collier County. So Hope Hospice is already engaged in providing social and health services to service area 8B in a way that puts them in a natural position to identify patients who are in need of hospice care and to see that their admission to hospice care is accessible and a matter of continuity of care between their participation in the [LTCD Program] and potential admission to hospice. Tr. 2899-2900. Furthermore, of Collier County residents requiring hospitalization, six percent are admitted to hospitals in Lee County. In contrast, the relationship between Collier County residents and admissions to Miami- Dade or Broward County hospitals is insignificant. Having a presence in an adjacent service area does not guarantee success for Hope. When Hope sought to expand to Service Area 6B (Polk, Highland, and Hardee Counties), it made arguments of "contiguous" communities and "established referral networks." Yet, Hope only achieved approximately one-third of its projected first year admissions in Service Area 6B. If Hope is approved as a result of this proceeding and Hope continues its management of the LTCD program in Collier, moreover, it is likely to have an adverse impact on HON with regard to certain referrals. If VITAS is approved, the potential for a hospice operated LTCD program to facilitate referral advantages will not exist. VITAS will not start an LTCD program if its application is approved. The differing impact that co-batched applicants might have on an existing provider is considered by AHCA to be relevant to comparative review. COMPARATIVE REVIEW Relative Impact on HON; Donations Unlike VITAS, which has an affiliated foundation that accepts memorials, bequests and unsolicited donations, Hope and HON actively solicit and depend on donations to cover operating losses annually. HON's only source of revenues are Medicare, Medicaid, and Insurance (combined 82%); Contributions and fundraising (16%); and thrift shop revenue (2%). From 2002-2006 inclusive, HON lost between $1.5 million and $4.5 million on operations, before contributions were considered. Contributions over the same period ranged from $1.5 million to $4.4 million. HON relies heavily on contributions to make up annual shortfalls in revenue and to allow it to continue providing a wide array of core, non-core and community services beyond what reimbursement covers. HON's operational expenses annually exceed revenue, because of HON expenses incurred to ensure quality and accessible care. For example, HON employs highly trained clinicians and deploys them on specialty teams. In addition to its regular home care teams, HON has a Float Team, to ensure there are no service gaps. It also has a Central Facilities Team, comprised of RNs and Aides, experienced with the unique needs of nursing home based hospice patients who exclusively serve HON's patients in nursing homes and assisted living facilities. It also has an On-Call/After Hours Team, a special Weekend Home Care Team, an Admissions and Intake Team, and complementary therapies. Besides the RNs assigned to direct patient care, HON also employs RNs for all key managerial positions. At HON the CEO, Director of Compliance, Clinical Services Directory, Quality Manager, Clinical Education Director, General Inpatient Care (GIP) Clinical Manager and all team managers are all experienced RNs. This depth in personnel allows more clinicians to spend more time with patients and families and to deliver high quality specialized care. It is expensive. It involves hiring and retaining the most experienced, specialized and certified clinicians available. HON has one of the lowest nurse to patient ratios in Collier County: 1 nurse to every 11 patients in home care and 1 nurse to every 4 patients in GIP. These lower ratios mean more care at the bedside and more support for the patient and family. HON uses certified home health aides and nurses assistants rather than homemakers to perform homemaker services for patients. HON has placed certified RNs in all of its key management and care giver positions, with high concentrations of certified RNs on the specialty teams. The certification of hospice and palliative care nurses and home health aides signifies the highest level of competency and specialization in the end of life clinical care. Charitable contributions received by HON, to offset operational losses are broadly categorized as "solicited" and "unsolicited." Solicited funds are monies that HON raises through newsletters, direct solicitation, special events, and individual and corporate underwriting. Unsolicited money comes from memorial gifts and bequests, primarily from patients and patient families. Although Naples may be the one of the wealthiest communities in Florida in terms of disposable wealth, it does not mean there is an inexhaustible pool of money for charitable contributions. The window of opportunity to sponsor a well attended charitable fundraising event in Collier County is January through April. A Naples Charity Register is published annually, to confirm for the donors and event sponsors how the limited space on the calendar of charitable events has been allocated. Each year, there are over 300 not-for-profit organizations in Collier County competing for a weekend, between January and April, to schedule their fundraiser. Solicited funds received from special events are the result of relationship HON nurtures with other organizations in the community. Special event funding is not limited to HON; the market for fundraising in Collier County is highly competitive. Each new fundraising season requires that HON renew relationships, which can be preempted at any time by another charity. HON's historical relationships simply do not guarantee that a community organization will in the future choose to give charitable dollars to HON. HON's ability to maintain these relationships with donors is enhanced by the fact that it is currently the only not-for-profit hospice in Collier County. Like HON, Hope is also heavily dependent on donations and charitable contributions to cover Hope's annual operating losses, which historically range from $1 million to $5.1 million annually. As in the case of HON, Hope is a 501(c)(3) charitable organization, authorized to solicit donations from the general public and to provide receipts for those donations, so that donors can take tax deductions for their donations. The amount of contributions Hope solicits is impressive. In 2006, when all contributions and net assets released from restrictions/satisfaction of donor requirements were considered, Hope raised $4.3 million in charitable contributions. Hope is more successful than the average hospice at raising charitable donations for its hospice program. It has a track record of being committed to raising substantial amounts of money in its own service area through special events. Hope solicits its larger donations from the same sort of activities (tennis and golf charity events) as does HON. Hope's enthusiasm for special event soliciting is exemplified by Hope's decision to include a notice of the "Hope Gala" in the 2006-2007 Naples Charity Register, to directly solicit funds from the Naples area in which Hope is not licensed as a hospice, to fund a Hospice House that Hope had already built in its own service area. It is reasonable to expect that if awarded a CON, Hope would solicit contributions by sponsoring special events in Collier that would directly compete with HON for a seasonally limited pool of solicited special event and corporate donations. It is also reasonable to expect that corporate and individual donors with a history of giving to HON would instead split hospice donations between Hope and HON. In CY/FY 2006, 71% of the charitable contributions received by HON were from solicited sources. Solicited sources can be divided into three broad categories. Special events accounted for 18% of charitable contributions, solicited corporate underwriting 19%, and direct mail and newsletters 34%. Unsolicited bequests and memorials accounted for the remaining 29% of charitable contributions. Solicited contributions from special events and corporate donations exceeded $750,000. If Hope is awarded a CON, HON's fundraising expert project Hope will reduce solicited donations from special events and corporations, which HON would have otherwise received, by at least one half the first year and potentially more than one half in successive years. While the projection may overstate the immediate reduction in HON's share of solicited donations, it is reasonable to project that HON's share of all solicited donations will be reduced roughly by half at some point not long after Hope received a CON were it to do so. It is logical also to conclude that Hope would compete for and reduce HON's receipts from direct mail and newsletter solicitations. VITAS is a for-profit corporation. It is not likely to compete with Hospice of Naples for charitable contributions from the community. Nor does VITAS' charitable Foundation receive contributions on the scale of Hope. VITAS raises approximately $1 to 1.5 million per year nationwide from its hospice programs, most of which is the result of memorial gifts, rather than community fundraising. It is virtually certain that VITAS' entry into the community will have minimal impact on HON's fundraising efforts. VITAS has committed to working collaboratively with HON to limit the impact VITAS would have on HON's donations. VITAS has agreed, as a condition subsequent to approval of its CON, to provide HON's charitable donation solicitation materials and brochures to VITAS patients and families. VITAS' charitable foundation primarily helps fund and support end of life research, such as the Duke Institute for End-of-Life Care, which benefits all hospices. It is reasonable to expect that if VITAS was awarded a CON, HON would continue to receive much needed solicited donations from direct mail, newsletters, corporations, and special events, in an amount approximating HON's historical solicitations. In sum, an approved VITAS program will have significantly less adverse impact on donations to HON than will an approved Hope program. VITAS' offer to accept as a condition on its CON a requirement that VITAS make HON donation solicitation literature available to VITAS' patients is significant. It confirms a collaborative approach to informing the community. It also gives potential donors a choice: donate to a hospice that uses its donated dollars locally or to one that funds end of life care research and improvement. Different Models of Care VITAS offers a model of care different than that provided by HON or that would be provided in Collier County by Hope. The difference flows from the nature of VITAS' organization as a business. It is a wholly-owned subsidiary of a large, for-profit corporation with national resources, VITAS Healthcare Corporation. VITAS Healthcare Corporation, in turn, is a wholly-owned subsidiary of Chem-Ed, a for-profit corporation that is publicly traded and that engages in business unrelated to hospice with nation-wide scope. Chem-Ed, operates under a business model that seeks to maximize shareholder value and returns. Publicly traded companies often make strategic decisions based upon the stock's performance rather than the business' viability or services provided. Chem-Ed provides its executives at VITAS with performance-based compensation incentives that reward them with bonuses premised upon performance. Chem-Ed monitors the financial performance of its hospice programs with respect to the Medicare spending limit (the "Medicare Cap"). The Medicare Cap is a limit on the total annual payments Medicare makes to a hospice based on the number of first time hospice beneficiaries served by the hospice. The Medicare Cap is intended to ensure that Medicare does not spend more for hospice patients, on average, than for conventional medical care patients at the end-of-life. From Chem-Ed's perspective, hospice programs that operate just below or just above the Medicare Cap optimize profitability. A Medicare provider that exceeds its Medicare Cap must pay back to the government the money it was paid by the government above the cap. In the event that VITAS Healthcare determines that one of its subsidiary programs is going to exceed its cap, there is incentive, especially under a business model of delivering hospice care, to take corrective action. Corrective action could be directed at patient mix and patient admissions. This potential was described at hearing by Hope's expert health planner as: [M]anaging patient mix and admissions from the highest levels of the company for a local program in order to protect the bottom line. And this is without regard . . . to whether or not the needs of the community are being met; whether or not changing the patient mix would enhance or deny access to groups of patients; whether the admission discharge rate and length of stay are appropriate or not. It's all regard to whether the [hospice] program is exposing the [parent] company to a financial risk. Tr. 3034. The business organization context within which VITAS Healthcare operates will provide VITAS with the benefits of economies of scale in a number of its activities. In stark contrast, HON and Hope are two local, not-for-profit, community-based hospice providers. Hope employs a model of care called the Open Access Model because it emphasizes the elimination of barriers to access to hospice care. These barriers may include costliness and the difficulty posed for a patient having to choose between parenteral nutrition and hospice care as described in Hope Ex. 27. The exhibit is an article described by Mr. Cushman as: [S]uggest[ing] that the financial exposure that a hospice assumes when it adopts an open access model of care may be too great to bear for hospice programs that are less than an average daily census of 200. [The article] also discusses some of the issues facing patient and physician who want to refer patients to hospice, as they transition between curative and palliative care, and how open access programs, by providing an easier transition . . . assume a greater cost . . . provide more access to hospice services and lengthen the hospice stay. Tr. 3005-3006. Other barriers include a primary language of the patient other than English, cultural traditions, remote location of the patient's home, lack of access to basic social and health services, lack of information about hospice care, and the reluctance of the attending physician to deal with end-of-life issues. An example of Hope's use of the Open Access Model is its willingness to pay for necessary palliative chemotherapy and radiation therapy when there are no other resources available to a hospice patient to cover such care. Hope's related social and health services such as the Long Term Care Diversion Program enhance access to hospice services in Hope's service area. Employment of the model is reflected in Hope's higher than average hospice penetration rates for Service Area 8C. There are other differences between the approaches to hospice care taken by VITAS and Hope. For example, Hope favors Freestanding Hospice Houses for inpatient care whereas VITAS favors Hospital Dedicated Inpatient Units. Freestanding Hospice Houses vs. Hospital Dedicated Inpatient Units Both freestanding hospice houses and hospital dedicated inpatient units have advantages and disadvantages. See VITAS Ex. 57, Ch. 2, p. 35. VITAS sees Hospital Dedicated Inpatient Units as superior particularly from the viewpoint of doctors and ancillary services. VITAS frequently contracts for dedicated hospital inpatient units. It has never built a freestanding hospice house and does not intend to build one in Collier County. VITAS proposes, instead, to begin providing care in scatter beds in hospitals and then would seek to establish dedicated units when the census justified it. Two Collier County hospitals have indicated intention to enter contracts with VITAS if its application is approved. Naples Community Hospital has done the same. Hope prefers freestanding hospice houses because with a homelike environment they provide a secure and comfortable place for those who prefer not to die at home or who may not have a caregiver at home. Furthermore, consistent with the nature of Hope as a community-based hospice, freestanding hospice houses provide community identity and visibility. Hope operates three freestanding hospice houses to provide GIP and residential hospice services. They are HealthPark (16 GIP beds), Cape Coral (24 GIP beds and 12 residential beds) and Joanne's House/Bonita Springs (16 GIP and 8 residential beds). They are staffed by on-site nurses social workers, aides, therapists, and physicians. Medications and other supplies are available on site. Hospice houses are Hope's primary mechanism for providing inpatient care but it also provides GIP services in a dedicated unit at Shell Point, a SNF/CCRC located in Lee County. Hope developed the polices and procedures in place in the unit and is responsible for managing patient care. The unit is jointly staffed by Hope and Shell Point employees with Shell Point providing the routine nursing care. Even though the unit is dedicated for use by Hope, Hope pays a per diem only for the beds actually occupied by its hospice patients. No costs were incurred by Hope to renovate the space for use as a hospice unit. Hope also provides GIP through a "scatter bed" arrangement with other nursing homes and hospitals within Service Areas 8C and 6B. Hope staff provide daily visits to Hope patients in the hospital setting and regular visits in the nursing homes. Hope staff attend team meetings in nursing homes and ALFs for purposes of reviewing care plans and participating in joint care planning with facility staff. Hope staff also regularly meet with the facility administrators and nurses to obtain feedback on the quality of services provided by Hope. For Collier County, Hope's CON application proposed a mixture of scatter beds in hospitals and nursing homes and to use Joanne's house in Bonita Springs. Just as VITAS intends to resort to its primary mechanism for the delivery of inpatient services once its census in Collier County justifies it, Hope intends to build a freestanding hospice house in Collier County when its census reaches 100 patients. It projects that it will reach such a census in Year 4 of operation. HON operates a freestanding hospice house in Collier County. While it has some scatter beds, most of HON's inpatient care is provided in its hospice house. Hope, in its current operations, builds and utilizes hospice houses as its main mechanism for providing inpatient service. VITAS does not. VITAS provides inpatient service in dedicated units in hospitals. The criteria for a patient to receive GIP are substantially the same as the criteria for continuous care: emergency care or control of acute pain or symptom management. The big difference between the two is where GIP is provided. Inpatient care, for the most part, is provided by VITAS in the hospital. The patient's home is generally the site of where the hospice patient receives continuous care. Aside from the different models of care and approaches to GIP care, there are other differences between Hope and Vitas. VITAS CON Conditions In its application, VITAS offered to condition its CON in the following ways: Conditions of the Application Core Services Provide palliative radiation, chemotherapy and transfusions as appropriate for treating symptoms: It is VITAS Healthcare Corporation's position that these services are a core service as appropriately provided palliative care is a requirement of Medicare conditions of participation. This will be measured via a signed declaratory statement by VHCF which may be supported via review of patient medical records. Provision of hospice services 24 hours a day, seven days a week as indicated by the patient's medical condition: It is VHCF's position this is a requirement of Medicare conditions of participation. This will be measured by VHCF's continued Medicare certification. VHCF will admit all eligible patients without regard to their ability to pay: It is VHCF's position this is a requirement of Medicare conditions of participation. This will be measured by VHCF's continued Medicare certification. Non-Core Services Commit to having every patient being assessed by a physician upon admission to the hospice: This will be measured via a signed declaratory statement by VHCF which may be supported via review of patient medical records. A physician will serve as a member on every care team and provide patient visits as required: This will be measured via a signed declaratory statement by VHCF which may be supported via review of patient medical records. On the first day of hospice care responsive patients will be asked to rate their pain on the 1-10 World Health Organization pain scale (severe pain to worst pain imaginable). A pain history will be created for each patient. These measures will be recorded in Vx via a telephone call using the telephone keypad for data entry. These outcome measures will include greater than 60 percent of patients who report severe pain on a 7-10 scale will report a reduction to 5 or less within 48 hours. Implement a Pet Therapy program to begin immediately: This will be measured via a signed declaratory statement by VHCF. Operational/Programmatic Conditions Establish satellite hospice offices in Immokalee and Marco Island during the first year of operation: This will be measured via submission of the office address and location to AHCA and publication of such addresses in the provider's collateral material. Implement a TeleCare Program to begin immediately: This will be measured via publication of the relevant collateral materials for the provider and patient community. Establish a Local Ethics Committee to begin upon certification: This will be measured via publication of the names and relevant information of the Ethics Committee members and the related scheduled of meetings. Implementation of CarePlanIT, a handheld bedside clinical information system, by the end second year of operation: This is measured by identification of the CarePlanIT budget on Schedule 2 of this application and will be measured at the time of implementation via a signed declaratory statement by VHCF. See VITAS Ex. 1, Tab 5, Summary of Conditions attached to Schedule C of CON 9969. In its PRO, the Agency lists five other conditions1 provided by VITAS: Offer VHCF educational programs to Hospice of Naples staff, physicians and patients. Provide Hospice of Naples Foundation information to VHCF patients and their families seeking to donate funds to hospice services. Upon certification of VHCF Collier, its parent entity - VITAS Healthcare Corporation - will make a $20,000 charitable contribution to Hospice of Naples. 65% Non-Cancer patients. Establish a Clinical Pastoral Education program to begin immediately. Core services are required to be offered by hospice programs. The three conditions in VITAS' application related to "Core Services," therefore, cover services that are not typically subject to conditions since they must be provided whether the application is conditioned upon them or not. The advantage to making them subject to a condition, however, is that the CON holder can be fined for not meeting the condition. The Agency approved the VITAS application and denied the others because in its estimation the VITAS application was clearly superior. See VITAS Ex. 274, Deposition of Jeffrey Gregg, at 16. The decision was described as an "easy call," id., at 17 because no other applicant proposed conditions that were close to the significance of the conditions proposed by VITAS. In its PRO, the Agency continues to maintain that the VITAS' conditions are far superior to those offered by Hope: Hope's conditions, by contrast [to those offered by VITAS], were less impressive: Hope Hospice will open an office in Naples and an office in Immokalee during the first year of operation. Hope Hospice will conduct education and outreach programs in Collier County aimed at enhancing access to the population under 65 and to cancer patients who require palliative therapies. Hope Hospice will implement an emergency preparedness plan capable of maintaining the hospice admissions function during hurricane emergencies. To show conformance with the condition related to office locations, Hope Hospice will forward to the Agency copies of the business licenses and/or certificates of occupancy that who that Hope Hospice has occupied office space in Naples and in Immokalee in Service Area 8B during the first year of operation. Hope Hospice will also forward to the Agency copies of educational and outreach programs and attendance sheets that document efforts to enhance access to the population under 65 and to cancer patients who require palliative therapies. Hope Hospice will also forward to the Agency copies of its emergency preparedness plan for Service Area 8B. Recommended Order Proposed by the Agency for Health Care Administration, at 8, paragraph 26. Experienced Staff/Industry Leaders Many VITAS employees have 15-20 years of hospice experience, including employees in positions of leadership. VITAS' management team consists of recognized leaders in the hospice industry. Its founders were founding members of the National Hospice and Palliative Care Organization (NHPCO). VITAS has maintained an active leadership within the organization. VITAS' employees serve on a number of significant NHPCO committees. They have actively participated in shaping NHPCO's guidelines on a multitude of topics and are frequent lecturers at NHPCO conferences. The size of VITAS allows it to attract and recruit high caliber physicians, RNs, social workers and chaplains. Ability to grow within the company allows VITAS to retain its best employees. Extensive Education and Training Resources VITAS' economies of scale have allowed it to amass extensive hospice internal and external education materials. VITAS has developed unique training materials for staff. It has also developed specific physician and easy to understand community educational materials for patients and families. Many educational materials are translated into other languages including Spanish. All of VITAS materials are easily accessible on VITAS Intranet Service. VITAS, because of size, is able to dedicate significantly more resources to staff education and training than most hospices. VITAS has a significant distance learning program, as well as ongoing dedicated corporate personnel that visit local programs for training. It also maintains teaching affiliates with universities and community colleges for residency and fellowship training of RNs, physicians, and other healthcare professions. Among its training and education efforts is the coordination of specialized training. For example, Dr. Kinzbrunner has dedicated substantial time to writing the Jewish Hospice Manual and traveling to various programs to help educate them to become certified by the National Institute for Jewish Hospices. Similarly, Colonel Jaracz's full-time responsibility is to formulate VITAS' Choices for Veterans initiatives and visit local programs to ensure they are carrying out these initiatives. VITAS places a great deal of emphasis on educational materials for the patient and family. Hope has a different philosophy, at least at the time of admission. On some occasions Hope might provide brochures related to specific therapies if the patient will be receiving them at home. Usually, however, Hope limits the educational materials it provides at admission to a single brochure about Hope Hospice in general. As Toni Granchi, Professional Relations Coordinator for Hope Hospice, explained in her deposition: "I don't want to inundate them with a bunch of brochures . . . . I don't want to give them everything on the first visit. It's very overwhelming." Hope Ex. 152, at 9-10. In contrast to Hope's approach at the difficult moment of admission to hospice, VITAS sees "reinvesting in the materials that will improve [VITAS'] care and educate the family [as] critical." Tr. 116. Whichever approach is superior, the extent of VITAS' educational materials that would be available in Service Area 8 if VITAS is approved will add a new dimension to hospice education in Collier County. Dedicated New Start Team VITAS has had a dedicated start up team since 2002. This group is headed by Executive Vice President Deirdre Law, an RN with more than 20 years of hospice experience. The team includes several RNs with extensive hospice experience. They train clinical managers, ride with new hire nurses and provide patient care until the new nurses demonstrate competency. An example of the work of the VITAS start up team was offered at hearing by Kathy Laporte, VITAS' Senior General Manager for the Brevard and Volusia County programs. When VITAS' program started in Brevard County, a patient care administrator helped Ms. Laporte learn VITAS' policies, procedures and support tools. Support was offered to the business manager and in managing continuous care. The start-up team stayed with the Brevard Program until the program could be sustained without them, for "about a year." Tr. 1224. The success of the VITAS start- up team is demonstrated by VITAS' growth in five years to become the largest provider in the Brevard market despite competition from three exiting providers, two affiliated with hospitals. In addition to the full-time dedicated start-up team, VITAS uses specialized personnel who are active in new start programs. Among them are Sarah McKinnon who provides start-up services in general staff education, Dr. Kinzbrunner in Jewish hospice training and certification and medical directorship, Colonel Jaracz in Veteran training and outreach, Robin Fiorelli in bereavement and volunteer services and Mike Hansen in IT services. VITAS start up teams and specialized start-up services have had significant new start experience in opening hospices in a number of competitive environments. It has opened 20 programs in the last five years, three in Florida. VITAS has never had a start-up program fail. As a community-based hospice much smaller relative to VITAS, Hope has not had start-up experience comparable to that of VITAS. Its one new start is in Service Area 6B. In its CON application, Hope had projected 321 admissions in Year 1. In its first year of operation, Hope achieved 92 admissions. Service Area 6B is Hope's only experience in a competitive market because it is the only provider of hospice services in Service Area 6C. Advanced Information Technology Because of the strength of its financial resources, VITAS has been able to invest $10 million into its customer computer system called Vx or "VITAS Exchange." The system allows it to perform patient analysis and research studies that improve hospice care. After testing in the Fall of 2007, VITAS will begin to roll out VxNext to make Vx more user friendly allow the gathering of more detailed patient information. A technology refresher to Vx, VxNext requires an investment of $13 million. The latest VITAS Information Technology (IT) project is CarePlanIT, a customized care planning system and electronic medical record. Currently 14 hospice programs, about one in three VITAS programs, are operational on CarePlanIT. The rollout of CarePlanIT has been going on for about three years. Increase in the percentage of VITAS hospice programs over those years has been slowed by the addition of so many new VITAS programs in the past five years. VITAS reasonably conditioned its CON on having CarePlanIT operational in Collier County by Year 2. Hope uses an "off-the-shelf" system, Misys, for its medical records. Unlike CarePlanIT customized for VITAS, Misys was not customized for Hope; nor is it specifically designed for hospice. Put simply, Hope's system is not "leading edge" information technology like CarePlanIT. Customized, leading edge, information technology is too expensive for Hope, as one would expect for a community-based hospice. Telecare VITAS' Telecare system is a centralized call center that answers the telephone calls for VITAS' programs after hours. There are several advantages to Telecare. Clinicians are available to answer questions immediately. The system uses defined criteria to determine if an after hours visit should be made. It divides responsibility between the decision-maker as to whether an after hours visit is needed and the RN who actually makes the visit. This division is advantageous because after hours care occurs at a time that is regarded by many as inconvenient. When the decision is made to undertake a visit, the local on-call RN is dispatched immediately. Many of VITAS' clinicians at the call center are fluent in Spanish and other languages minimizing the barrier that language can be at a moment of stress. Disaster Capability VITAS' IT systems have built-in redundancy. The main site is in a bunker in Miami above the 100 year floodplain in a facility that had been an AT&T switching center. The walls are three feet thick concrete. In addition, VITAS is running concurrent dual systems in Chicago and has 100% redundancy for all systems in a bunker in Phoenix, Arizona. The Miami site has generator capacity to run for two weeks without power but could be switched to Phoenix with little to no down time in the event of a disaster. VITAS' size gives it the advantage of the ability to bring in clinical personnel from other parts of the country should there be a disaster that displaces some staff. Outreach Programs There are no existing hospice outreach programs for the Jewish population in Collier County, but the special needs of Collier County Jewish hospice patients are being served by HON. Dr. Kinzbrunner championed the Jewish hospice initiative for VITAS. At hearing, he offered reasons why some Jewish people might be less likely to utilize hospice service than non-Jewish people. Through its educational and training programs, VITAS teaches staff to be sensitive to Jewish cultural and religious issues including understanding specific Jewish customs and traditions. VITAS also makes an effort to reach the Hispanic populations in the areas it serves. It has a significant number of Spanish speaking staff. Its experience in South Florida and Texas consists of work with highly concentrated Hispanic populations. Furthermore, VITAS offers all of its standard hospice forms and much of its educational materials in Spanish. The African American population in Collier County is not as high as other parts of the state; it constitutes 20,000, just less than 7% of the population. VITAS' efforts to educate and reach into minority communities is significant. Its staff is recognized in the industry as providing substantial resources to increase minority access to hospice. Collier County has a significant population of Veterans. The Department of Veteran Affairs has determined that in recent years the number of Veterans' deaths in the county has been approximately 1550 annually. Veterans have special needs at the end of life. These include unique psychosocial needs related to military service, retrieval and obtaining military awards and medals and coordination of military benefits to which patients and families may be entitled. VITAS has a well-developed, detailed program targeted to meet the special needs of veterans. Hope makes an effort to recognize and serve the special needs of Veterans as well. Its psychosocial staff must participate in a special training program designed to educate the staff on the needs of Veterans. Its "Wounded Warrior" program sensitizes Hope staff to the special needs of combat veterans as opposed to those who did not experience combat, the psychosocial needs of veterans of different wars, the special needs of women veterans and special needs of veterans suffering from post-traumatic stress disorder. Hope staff and volunteers, many of them veterans themselves, are trained to build a rapport with Veterans and to help them deal with guilt, anger and anxiety when associated with the Veteran patient's service. Hope regularly reaches out to the Veteran population through local veterans organizations such as the Veterans of Foreign Wars. The special needs of its patients who are Veterans are provided for in a number of other ways as well by Hope. HOPE Required Services Hope provides all of the required Medicare core services directly through its employees, including physicians. It also provides all of the required Medicare non-core services. Unlike some hospices, Hope provides home health aide services and homemaker services directly through its employees in order to better assist its patients and their families. Complementary Therapies Hope offers complementary therapies that enhance the quality of care and the quality of life for hospice patients. Hope offers music therapy through its six licensed music therapists. Other complementary therapies offered by Hope are art therapy, pet therapy and aromatherapy. Hope also offers massage therapy as part of its holistic approach to the care of its patients. Massage therapy can reduce the amount of pain medication that a patient requires and can help alleviate other symptoms as well. Non-required Services In addition to the required core and non-core services, Hope provides non-required services to its patients. They include residential care, a caregiver program for patients who do not have a caregiver at home or whose caregiver at home is not able to provide necessary home care services, and grief services beyond the scope of hospice bereavement services. Other non-required services offered by Hope include the "Dream a Dream" Program. Through this program, Hope patients with a final wish are assisted in making it a reality. Examples include fishing in a private fishing pond, providing plane tickets for far away loved ones to visit the hospice patient, and holding a wedding in the hospice house chapel to enable the Hope patient to attend. Hope has also provided funds for home improvements to make a patient's home more comfortable, providing memorial services conducted by a Hope chaplain at a Hope chapel free of charge to the family of a Hope patient. Hope exceeds the Medicare COP requirement that volunteers provide 5% of patient care. It has done so through special volunteer programs that include "vigil volunteers" sitting at the bedside of the patient, "video volunteers" who make video and audio remembrances for the family and "personal treasure volunteers" who make keepsake items for the family from an article of the patients clothing. Hope offers classes in Continuing Education (CEUs) to all nurses and social workers in the community. It has conducted workshops on coping with grief and loss during the holidays and presentations by Rabbi Kushner on loss and issues related to death and dying. Since 1990 Hope has offered an annual bereavement camp for children aged 6 to 16. The weekend camp is attended by about 70 children from across southwest Florida. Hope sponsors numerous programs designed to educate the physician community about hospice and special programs to help the community deal with specific tragedies or life events. These have included programs for families of service men and women deployed to the Middle East, a 9/11 support group and programs for persons dealing with stress and loss caused by hurricanes. Community Services and Programs Hope provides other community services not required for Medicare certification that are also not provided by HON or VITAS. Hope Life Care is a long term care diversion Medicaid-waiver program Hope provides together with AHCA and the Florida Department of Elder Affairs. PACC is a program for all-inclusive care for children who have a life-limiting illness but may not be eligible yet for hospice. Located in central Lee County, the HOPE Adult Day Health Center is available for elders who cannot be at home by themselves during the day and require a setting with limited supervision. Funded through the Area Agency on Aging, HOPE Connections is a continuing care for the elderly program designed to help frail elderly continue to live in their homes and avoid being admitted to a nursing home or hospital. These community-based non-hospice programs are consistent with Hope's mission of assisting all in need, especially the frail and the elderly who may not qualify for hospice services, across different levels of care that best meet their needs. They also enhance continuity of care for the those who ultimately qualify for hospice care and receive it from Hope. Hope's Clinical Services Hope has received numerous awards in recognition of the excellent quality of care it provides. There are other outward signs of the excellence of its quality of care. For example, it completed its most recent Medicare/Medicaid certification survey with no deficiencies. Hope is accredited by the Community Health Accreditation Program (CHAP) although not by JCAHO. CMS relies upon CHAP certification for participation in Medicare and Medicaid programs. Hope chose to seek accreditation through CHAP rather than JCAHO because of its view that CHAP's accreditation process is more stringent and comprehensive. Hope exceeds the voluntary standards established by NHPCO. It is also a participant in the NHPCO Quality Initiative, which requires a self-assessment as well as other activities related to quality assurance. Hope places emphasis on an individualized approach to every patient and family members over making printed materials available. Hope staff spends time with patients and family in order to establish an individualized plan of care. Hope's Admission Process Hope's Care Resources Department has a staff of 16 who handle the intake of patient referrals to hospice. The Department handles initial inquiries and coordinates the collection of medical records and the physician's order that certifies the patient's condition as terminal. This admission process ensures that the patient meets Medicare eligibility guidelines. All calls pertaining to patient referrals are taken by Hope immediately. Staff typically responds to a referral within 24 hours of request for services. After normal working hours and on weekends and holidays, the After Hours Triage Staff of local registered nurses responds to a referral as well as answering questions of families and dispatching staff, including on-call physicians, as needed. The referred patient is assigned to an inter- disciplinary care team (the "IDT Team") that will provide care for the admission visits, development of the patient's plan of care, and care thereafter. Having the IDT Team conduct admission visits provides the advantage of continuity of care. It fosters early development of a relationship between the IDT and the patient and family and promotes arrangements for the unique and special needs that a patient and family may have. Hope's Medical Team Hope's Medical Director, Mary Stegman, M.D., is board-certified in Hospice and Palliative Medicine, Pain Management and Internal Medicine. She is board-eligible in Hematology-Oncology. Hope employs five physicians other than Dr. Stegman including Dr.Guercio who is board- certified in internal medicine. Dr. Guercio is also board- eligible in pulmonary medicine and serves as the medical director of Joanne's House and the physician on one of Hope's IDT teams. Hope employs ten part-time physicians, including a surgical and pediatric specialist. Dr. Lipschutz is board certified in Hospice and Palliative Care Medicine. A liaison as needed to facilitate patient care discussions between Hope staff and community physicians, Dr. Lipschutz has been involved with Hope since 1992. Hope provides several different types of therapies not provided by other hospices. It has developed evidence-based algorithms for the care of its patients. They include specific clinical pathways or protocols for dealing with specific diseases or symptoms. Veteran Care All of Hope's psychosocial staff must participate in a special training program designed to educate them on the special needs of veterans. The "Wounded Warrior" program sensitizes Hope staff to the special needs of combat vs. non-combat veterans, the psychosocial needs of veterans of the different wars, women veterans, and veterans suffering the effects of post- traumatic stress disorder ("PTSD"). Hope staff and volunteers (many of whom are themselves Veterans) are trained to build a rapport with these veterans and to help them address the feelings of guilt, anger, and anxiety they may have. In addition, Hope nurses are trained to recognize the physical symptoms of patients with PTSD (such as terminal restlessness) and in effective methods to treat such symptoms. All of Hope's veteran patients are presented with a personalized certificate of appreciation and "Thank You letter" from Hope's CEO in a formal ceremony honoring their service to our country. Hope regularly reaches out to local veterans organizations such as the VFW and Knights of Columbus, and provides speakers to educate their members about hospice. Hope is successful in providing for the special needs of its veteran patients. Hope's Pastoral Counseling/Chaplaincy Program Hope employs 15 chaplains who provide spiritual support and counseling to patients and their families. As members of the IDT, Hope chaplains participate in the team meetings, provide resources to patients and families, and serve as an advocate for the patient. Team chaplains regularly consult with other members of the IDT as spiritual issues arise with individual patients or family members. When requested, Hope chaplains also perform memorial or funeral services for Hope patients. Hope chaplains serve as liaisons with community clergy and community leaders, and attend ministerial association meetings. Finally, Hope chaplains provide in-service training for other Hope staff, as well as for community clergy interested in learning about hospice care. All of Hope's chaplains have Masters of Divinity or masters degrees in religious training. All are ordained and certified by their faith group, and all must complete Hope's orientation, clinical training, and mentoring programs. In addition, many of Hope's chaplains have undergone CPE training. Following admission, every patient and the patient's family are visited by the IDT chaplain unless they decline such a visit. The chaplain assesses the spiritual care needs of the patient and family. Hope chaplains do not approach spiritual care in a "cookie cutter" fashion, since even persons of the same faith may have different spiritual needs. Rather, Hope addresses each patient's needs on an individual basis, and strives to meet those specific needs. For example, depending on the patient, Hope chaplains may provide active or passive counseling, life reviews, facilitate the resolution of problems among family members, join in prayer or read scripture. Spiritual care is available to Hope patients on a 24-hour/7-day per week. If a patient requests clergy of a particular faith, the IDT chaplain serves as a liaison to community clergy to ensure that the appropriate clergy visits the patient. Hope's interdenominational chaplains have successfully met the spiritual care needs of patients of a variety of faiths including Buddhism. All of Hope's chaplains are educated and trained in different faiths, including the Jewish faith. When a Hope patient wishes to be attended by a rabbi, those arrangements are made by Hope. Hope has a good relationship with all of the rabbis in its service area and provides excellent care to its Jewish patients. Many local rabbis serve on Hope committees, and some have provided training to Hope staff. Local rabbis also have participated in educational programs which Hope has presented or sponsored which touch upon grieving and mourning in a Jewish context, including lectures by authorities like Rabbi Grolman and Rabbi Kushner. Although Hope at one time sponsored a CPE Program, Hope now sponsors and participates in programs leading to certification by the Association of Death Educators and Counselors ("ADEC"). Persons completing the ADEC program are certified in thanatology (the study of death, dying, grief, and bereavement). Unlike CPE, ADEC certification is not restricted to chaplains, but rather is open to other IDT members, social workers, private therapists, school counselors and other professionals. For these reasons the ADEC curriculum is preferred by Hope over CPE. Hope's Bereavement Services Hope provides a comprehensive array of bereavement and grief counseling services. Each of Hope's IDT's includes a master's level social worker or bereavement counselor trained to assist the patient and family in addressing issues of grief and providing bereavement support. Volunteers who have received special training in helping persons cope with grief and loss are also involved in providing bereavement support. All patients receive a psychosocial assessment at the time of admission, which includes a bereavement assessment. That information is then provided to the IDT, and a determination made as to whether an "anticipatory grief referral" requiring immediate attention is necessary. If so, a counselor will visit with the patient and family within 24 hours to begin assisting the patient and family. Once the patient dies, another assessment is done of the patient's family and loved ones to determine whether early bereavement counseling is required, or whether the normal bereavement process will be followed. Ordinarily, three weeks following death, Hope counselors will contact all persons who have been identified by the IDT as significant in the patient's life to determine whether they would like to receive bereavement counseling, on either an individual or group basis. Letters are sent to family and significant others at 3 weeks, 3 months, 6 months, 12 months, and 15 months following the patient's death. Each of the letters includes an invitation to attend one of the many support group meetings offered by Hope, or to arrange for individual counseling if desired. About 800 persons attend one or more of the Hope-sponsored group sessions each month. Although Medicare guidelines require that bereavement support be provided for up to 13 months following the patient's death, Hope provides bereavement counseling for a minimum of 15 months and for as long as an individual chooses. Hope offers bereavement counseling and grief support to the community at large. This includes the Rainbow Trails Program, a camp for children ages 6 to 16 who have suffered a loss. Hope also offers a Healing Hearts Program which is specifically geared to persons whose loss is the result of a suicide, and another program for persons who have lost a same-sex partner, among others. Hope also offers special crisis response counseling for persons dealing with deaths in school or the workplace. If approved, Hope will provide excellent quality chaplaincy and bereavement programs for its patients in Collier County. Hope's Success in Staff Recruitment and Retention Hope has in its management several people who have obtained certification as Senior Professionals in Human Resources ("SPHR"). SPHR certification assures that these individuals have demonstrated expertise in the core principals of human resource practices such as staff training, development, performance management and assessing current as well as future workforce needs. Hope provides a benefits package which actually attracts new staff to seek employment with Hope. Hope provides quality education to its staff and has supervisory staff certified to assist new staff in achieving accreditation and certification, including certified hospice and palliative care nurses (CHPN). Hope provides cross-training, assistance, and management to avoid burn- out. Hope has considerable experience in recruitment in Southwest Florida. Hope recruits staff through advertising, job fairs and on-site recruiting at local schools. Hope has partnerships with Hi-Tech, Lorenzo Walker, Edison College and Florida Gulf Coast University (FGCU) for developing new nurses and social workers. Hope serves as a clinical site for student interns, who participate in rotations at Hope. These are primarily nursing students, but health care administration, social work and music therapy students also participate. Both Edison and FGCU have campuses in Lee and Collier Counties. HON and Hope currently compete for staff. Healthcare providers in Lee and Collier advertise and compete in both counties to recruit new staff. Hope has some staff living in Collier County. Numbers of staff members have worked for one of the two at one time and the other hospice at another time. The competition would intensify and the overlap increase if Hope's application is approved. Hope also has many employees living in the Bonita Springs area, close to Collier County. One is Dr. Guercio, the IDT physician for Team 100, which would help serve Collier County. He lives in Bonita Springs. Before joining Hope he practiced medicine in Collier County for over 20 years. Hope has not had any difficulties maintaining staff. Hope's salaries are in-line with other local healthcare providers, and Hope could successfully recruit the staff needed for its Collier County program. Hope's Proposed Program for SA 8B Hope will use contract facilities in Collier County for most of the GIP and respite services required by its patients in Service Area 8B. Hope plans to open at least one dedicated GIP unit in a nursing home within Collier County soon after approval of its application. Hope will also be able to enter into contracts for GIP with all four local hospitals. Hope's three hospice houses, moreover, will be available to meet some of the needs of the residents of Service Area 8B for GIP, respite and residential services. Hope has commitments in writing from two hospitals and two SNFs. These contracts will provide for coordinated care whenever a hospice patient is also a nursing home resident or a hospital patient. Hope has inpatient, nursing facility, and ambulatory care service contracts in areas accessible to patients in both Service Areas 8B and 8C. Hope's proposed Service Area 8B hospice program will provide a comprehensive range of hospice services, including physician services, nursing services, home health aide services, social services, and all other services required by state and federal law. Hope will provide services that are not reimbursed by Medicare or other insurance, such as bereavement and chaplain services, massage, music, art, and pet therapies. If approved, Hope will provide the required core and non-core services in its Collier County program as well as the non-required services it now offers in 8C and 6B. Hope currently operates in conformance with Medicare COPs and will do so should its Collier County program be approved. If approved, Hope will establish team offices in Bonita Springs, South Naples, and Immokalee. These locations will provide visibility for Hope's program and increase access to hospice services throughout Collier county. Joanne's House is located in Bonita Springs, less than two miles from the Lee/Collier County line. This new facility will be available and convenient to most northern Collier County patients requiring GIP, residential, and respite care. The IDT assigned to Hope's Immokalee office will serve the entire eastern region of Collier County. This office will be approximately 25 miles from Hope's Lehigh office and therefore convenient if staff are needed to travel between those offices. In addition to servicing the IDT, the Immokalee location will also be available for volunteer training, bereavement support meetings and providing information about hospice. Like Service Area 8C, Service Area 8B is also culturally diverse. As with its Service Area 8C program, Hope will also be successful in addressing the special needs of the culturally diverse communities of Service Area 8B. Hope's startup experience in Collier County will differ from the startup of its Service Area 6B program, where Hope served the more rural areas first. As noted, Lee and Collier counties are contiguous and continuous and Hope already has a substantial presence in Collier County, including its long term care diversion program, staff and volunteers who live there, and the numerous existing relationships with physicians, hospitals, nursing homes, and ALFs. Hope will be even more successful in expanding its hospice program into Collier County. Since they are frequently in Collier County on a regular basis, Hope's key leadership staff are familiar with Collier County and will be available to assist with Hope's Collier startup. If approved, Hope will be successful in implementing its proposed hospice program. Hope has the manpower, expertise and know-how to successfully implement a quality program in Collier County. Community Support for Hope Hope's application is supported by at least 133 local letters of support submitted to AHCA. A number of the letter writers testified by deposition in support of the application. They include hospital CEOs; the CEOs of SNFs, ALFs and other elder services; heads of regional businesses; and other involved in Collier County community organizations. The Lee and Collier County communities are related. The business and residential corridor is continuous between the two counties and there is no visible demarcation between them. Many businesses that operate in Lee also operate in Collier. Over the years, Hope has developed relationships with community leaders whose business serve both counties. Hope has volunteers who live in Collier County and has identified others who would volunteer for Hope if its application is approved. There are several physician group practices with offices and hospital practices in both Lee and Collier County. Hope has relationships with physicians located in Bonita Springs and northern Collier County whose practices include residents of both Lee and Collier counties. These physicians include oncologists, cardiologists, pulmonologists, gerontologists, and family practitioners, many of whom refer patients to Hope. Hope staff are familiar with Collier County health care providers and it enjoys a good reputation in Collier County. Through the Hope Life Care Program, Hope has contracts with two SNFs and seven ALFs in Collier County. A number of Collier County SNFs have transferred patients to Joanne's House. Naples Community Hospital and two HMA hospitals in Collier County have indicated intention to enter contracts for GIP with Hope if its application is approved. Underserved Groups? In its CON Application, Hope identified four groups in Service Area 8B it claims to be underserved. One of the groups is "patients under the age of 65." Hope's proof that the group is underserved consists of a comparison between historical deaths for the group to projected admissions for the group. Although the Hospice Program Rule uses this approach in its formula for calculating the Fixed Need Pool, the approach does not support the conclusion that existing providers have not historically been accessible to a particular demographic cohort or that the group suffers due to a gap in service. As Mr. Davidson opined at hearing, the approach: could suggest that there is [a gap in service]. But the data [relied on by Hope]. . . do not provide any kind of a reliable basis for . . . substantial levels of underservice . . . with rare exceptions. And this case is not one of those exceptions. (Tr. 3698). In order to establish the existence of a service gap using a penetration rate as the measure, it is necessary to compare historical deaths to historical admissions. Hope did not do so. Its comparison of historical deaths to projected admissions renders unpersuasive its claim that patients under the age of 65 are underserved in Collier County. Hope claims there are other underserved groups: (1) cancer patients in need of palliative chemotherapy and/or palliative radiation (PC/PR); (2) residents of the Immokalee area, and (3) patients needing access to hospice services during periods before and after hurricanes. Patients in Need of PC/PR The claim that there is an underserved group of patients in need of PC/PR in Collier County is problematic. The Agency does not have a standard for evaluating the appropriateness of PC/PR; nor is there a standard universally accepted in the hospice industry. In the absence of a standard, the propriety of using PC/PR in any one case, therefore, is up to the clinician. Whether it goes forward, too, is additionally dependent on patient choice. Patient choice requires adequate information and understanding on the part of the patient and family, in other words, "fully informed choice." Hope relies on its level of spending on PC/PR compared to levels of spending elsewhere to support its claim that there is a gap in PC/PR service in Collier County. Hope has spending on PC/PR that is high compared to other hospice programs. Hope attributes the high levels to its Open Access Model of Care, a model that reveals, in its view, need for PC/PR that might not be discovered in service areas without a provider that follows the Open Access Model. Comparing PC/PR delivered in different service areas on the basis of dollars spent or volume of patients receiving PC/PR, however, is not sufficient to show that PC/PR is required more often in service areas in which less is spent on PC/PR. The record in this proceeding does not show that Hope patients were inappropriately provided PC/PR. Nonetheless, it does not support the level of PC/PR service provided to Hope patients either. Hope did not provide case-by-case clinical evidence that its PC/PR service were required. Furthermore, and most significantly, Hope did not submit clinical evidence that patients in need of PC/PR in Collier County did not receive it. Both applicants indicate they will provide PC/PR to patients in need of such service. Only VITAS, however, agreed to a condition of its CON to have patient records audited to determine that receipt of the service was supported by fully informed choice. Immokalee The Immokalee area is a low income migrant community. Predominantly Hispanic, Immokalee also has a Haitian Creole community. Much of the population lacks education. Hope proposes to establish an office in the Immokalee area. It would serve the entire eastern Collier County area and will be a center where people can come for volunteer training, for bereavement support meetings, and for getting information about hospice care. Hope plans to locate an IDT in Immokalee. The IDT will serve the county's eastern region. From a service perspective, HON views Immokalee as part of North Collier County. North Collier County includes north Naples, portions of Bonita Springs located in Collier County, Immokalee, Golden Gate, and adjacent rural areas. North Collier County is served by HON's Central and North Teams. The Central team is a specialty team that sees only patients residing in nursing homes or ALFs. The North Team sees patients receiving home care and who are residing in their homes, halfway houses or anywhere else their home may be. HON has two offices to serve North Collier County; the North Branch Office located about 1/2 miles from the Collier/Lee County line, and an office located in Immokalee. HON's presence in Immokalee, however, has not been constant since it was first initiated. The office had been opened and then closed before being opened again. HON opened the North Branch Office in 2003. It accommodates the North Interdisciplinary Team. The office has two suites, appropriate signage, and ample space to accommodate the IDT and various groups who meet there for bereavement and other events. The geographic location of the North Branch Office is appropriate to allow the team members to reach Immokalee. But it would be a service improvement for an IDT to be located in Immokalee as proposed by Hope. HON's office in Immokalee is located in the Career and Service Center, also known as the "One Stop." The One Stop consists of approximately nine different social service organizations located in one building. The One Stop is considered a key location in Immokalee. Immokalee residents can access the services of the Department of Children and Families, as well as food stamps, Medicaid, employment and vocational-rehabilitation services. By having its office located in the One Stop, people are easily able to access information on end-of-life care services. As a tenant of the One Stop, HON's hospice office has use of the One Stop conferences rooms, which have capacity for over 200 people. HON uses the conferences rooms to hold different functions, such as volunteer training or seminars on coping with the holidays. HON's ADC for the north Collier area is 50-60 patients, and of those, the Immokalee area has an ADC of approximately 6-7 patients. The North Team is staffed and organized to deliver direct hands-on hospice care to Immokalee and adjacent rural areas, especially to the Hispanic population. The North Team includes 5 RNs, two social workers, a chaplain, four home health aides, a volunteer coordinator, a physician, a bereavement counselor, an RN clinical manager, and a clinical assistant. Staffing ratios are 10 patients per RN, which is a more intense level of staffing and patient care than the prevailing NHPCO guidelines of 12 patients per RN. The Team includes an additional RN who is a pediatric nurse specialist and who speaks Creole and Spanish. Seven of the IDT members of the North Team are bilingual. Fluency in Spanish, French, and Creole allows North Team clinicians serving this area to directly communicate with patients, a better alternative than resort to non-clinician employees or telephonic language services. When not deployed in the field visiting patients, the Team uses the north branch office and the Immokalee branch office. Three of the nurses and two of the certified home health aides on the North Team are certified in Hospice and Palliative Care. The sparse populations in large portions of the North Team's service area has not justified in HON's view the addition of a third branch office in North Collier County. All HON patients and families receive a Caregivers Guide, either in a Spanish or English version. In addition to general patient care information, which is reviewed and re-reviewed with the patients and families by IDT members, the Guide includes a number where hospice clinicians can be reached 24 hours a day, 7 days a week. HON's Immokalee office is staffed with a full time community resource coordinator, whose primary function is to support the communities in Immokalee. HON's resource coordinator is the contact person for education, referrals and access to HON's services in Immokalee. She speaks English and Spanish. Another role of the resource coordinator is to provide bereavement support to the community. The resource coordinator facilities a monthly bereavement community support group for grief and loss in Immokalee. She also recruits volunteers from Immokalee. Immokalee residents primarily get their information by word of mouth. HON has been successfully involved in Immokalee social service events, not only to support the community, but also to provide education and information to the different social service organizations and the participants of the programs. HON's presence in Immokalee has made it easier for people to develop a rapport and dialogue regarding the end-of-life care issue. HON's community resource coordinator in Immokalee is an active member of the Immokalee Interagency Council, the Weed and Seed initiative, and the HIV and AIDS Network Coalition for Collier County. The Immokalee Interagency Council consists of over 90 different agencies, which provide services in the Immokalee Community. The Council meets monthly. Their general purpose is to inform the community and the other organizations of their individual services. The Immokalee Weed and Seed initiative is a federal government, juvenile justice initiative that was provided to the Immokalee community to better establish relations between community residents and law enforcement. It is in its fifth and final year. The HIV and AIDS Network Coalition for Collier County is a committee comprised of individuals that come together from different medical and social service organizations to better understand and meet the needs of the Immokalee community. The involvement by HON's community resource coordinator in these important organizations promotes awareness of hospice services. When an emergency such as a hurricane is declared in Immokalee, HON's community resource coordinator reports to the hurricane shelter in Immokalee. Seventy-two hours before a hurricane, she is provided with a list of HON patients. Her role is to maintain contact with HON home care staff, and if they are unable to make contact with a hospice patient during that time, she will physically check on the patient and report back to the main office. All services provided by HON are available to the residents of Immokalee. HON provides information on hospice services to the library, for distribution to the public, on a regular basis. The Immokalee Friendship House is a temporary emergency homeless shelter in Immokalee that serves as a referral source for the community. Annually it assists approximately 1,000 homeless families and individuals. Friendship House has 8 to 15 residents per year who are HON hospice patients. HON has never declined to see a hospice patient at Friendship House or declined to deliver care there. Immokalee Friendship House is completely satisfied with Hospice of Naples. Their clients are well taken care of by HON. From Friendship House's perspective, HON is one of the stronger agencies in Immokalee. HON's community resource coordinator comes to the Immokalee Friendship House for individual and group bereavement counseling. She has also provides bereavement training to the Friendship House staff. Despite HON's efforts toward serving residents of the Immokalee area, they have less access to hospice than do residents of the more urban portions of Collier County. Hope would be able to serve Immokalee through its new local office, through the use of contracted inpatient beds in Lehigh and their planned new hospice house. These locations would provide a real option to hospice patients from Immokalee as evidenced, for example, by travel patterns from the Immokalee area. They trend toward Lehigh and Fort Myers rather than to Naples. Collier Health Services is a not-for-profit primary care provider with multiple locations throughout Collier County. It operates a primary care clinic in Immokalee, provides about half of all services provided AIDS/HIV patients in the county and is part of a program to bring Florida State University medical students to Immokalee for training in rural family medicine. Collier Health Services has indicated a willingness to coordinate care with Hope in the Immokalee community and believes it would be a good relationship based upon past experience with Hope. Hope criticizes HON's commitment to Immokalee because of the lack of a continuous presence there as shown by the opening, closing and the re-opening of its office. But a continuous presence by Hope is not guaranteed either. It conditioned its application on opening "an office in the first year of operation." Hope Ex. 1, Schedule C. To show conformance with the condition, as a special feature of the condition, Hope promised to forward to the Agency copies of the business license and/or certificate of occupancy that show occupation of office space in Immokalee during the first year of operation. Neither the condition nor the special feature of the condition guarantees that Hope's office in Immokalee will be present after the first year of operation. Nonetheless, Hope's presence if continuous, would aid and enhance effective service of the Immokalee community's hospice needs. Hope conditioned its application on having an office in Immokalee but so did VITAS. Unlike VITAS, Hope has a history of serving rural areas in Florida. However much Hope's presence would enhance service to the Immokalee area, the evidence is unpersuasive that the Immokalee area is underserved. HON efforts to serve the Immokalee area are effective. Patients in Need of Service When Disaster Strikes Hope's claim that there have been underserved patients in Collier County in times of disaster is based on events associated with Hurricane Wilma. The eye of Hurricane Wilma made landfall just south of Naples in Collier County on October 24, 2005. The impact of the storm was greater in Collier County than it was in Lee County. More services were interrupted and more people were without power and transportation in Collier County than in Lee County. In Collier County, "all of the government services and most community agencies, physicians' offices, . . . were shut down and . . . went into lockdown mode." Tr. 3462. During the hurricane and in its wake, HON continuously operated the Georgeson House. It accommodated the needs of 23 patients who were relocated to the House right before the arrival of the storm. The Georgeson House is rated to withstand a Category 4 hurricane and can accommodate up to 32 patients with all the equipment, supplies and staff to support those patients in an emergency. In the event of evacuation, HON has an agreement with Physicians Regional Hospital, about 1/8th of a mile from Georgeson House to relocate the patients to hospital beds. For a five-day period, two days before the arrival of the hurricane, the day of the storm and the two days after, HON received no referrals. Consequently, it admitted no patients from October 22 through October 26, 2005. Had it received referrals during the five days, HON was accessible and had the ability to admit patients. On the day the hurricane made landfall and for the two days afterward, in addition to the service provided at the Georgeson House, HON contacted its patients by telephone. As soon as the authorities allowed road travel, HON was able to visit its patients. It visited the majority within 48 hours of the storm event. Hope admitted approximately 20 patients during the same five-day period. In Lee County, there was only a short time that Hope was not able to admit or visit patients. It ended shortly after Hurricane Wilma made landfall when the emergency operations center announced that road travel was safe. Hope has a detailed Disaster Management Plan. See Hope Ex. 1, CON 9967 Vol. 2, Supplementary Appendices, Tab 22. In the event of a Disaster Watch, the plan dictates, "Admissions to Hope Hospice and Hospice Houses will be discontinued." Id., I. Disaster Watch, 1. e. iii. There is no persuasive evidence that had Lee County suffered the same impact that Collier County did from Hurricane Wilma that it would have been able to respond any better than HON did in October of 2005. There is, in short, no evidence that there has been unmet need for hospice services by disaster victims in Collier County. Utilization Projections and Financial Feasibility Each Applicant's projected utilization appears reasonable and achievable. Each applicant demonstrated short-term and long- term financial feasibility. Medicaid Patients and the Medically Indigent Both Hope and VITAS have documented a history of service to Medicaid and medically indigent patients. Hope will serve Medicaid patients and the medically indigent if its application is approved. So will VITAS.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Agency for Health Care Administration approve CON 9969, an application for a new hospice program in Service Area 8B filed by VITAS Healthcare Corporation of Florida, and deny CON 9967, an application for a similar program filed by Hope Hospice and Community Services, Inc. DONE AND ENTERED this 3rd day of March, 2008, in Tallahassee, Leon County, Florida. S DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of March, 2008
The Issue Whether a need exists for an additional hospice in Agency for Health Care Administration service area 1. Whether the certificate of need application of Bay Medical Center to establish the hospice, on balance, meets the criteria for approval.
Findings Of Fact The Agency For Health Care Administration (“AHCA”) is the state agency which administers the certificate of need (“CON”) program for health care facilities and services in the state. AHCA published a need for one additional hospice program in service area 1, in Volume 22, Number 5 of the Florida Administrative Weekly (February 2, 1996). Bay Medical Center (“BMC”), which currently operates a hospice in service area 2A, is the applicant for CON 8377 to establish the additional hospice program in service area 1. Hospice of Northwest Florida, Inc. (“HNWF”) is an existing provider of hospice services in both service areas 1 and 2A. Service area 1 encompasses Escambia, Santa Rosa, Okaloosa, and Walton Counties. Adjacent service area 2A includes Bay, Holmes, Washington, Jackson, Calhoun and Gulf Counties. Hospice care is provided to terminally ill persons, defined as those with a life expectancy of six months or less if their disease runs its normal course. It is palliative and comfort-oriented, rather than curative. Clinical, pschosocial, and spiritual services are provided by an interdisciplinary team, which includes a physician, nurses, social workers, home health aides, chaplains, and bereavement counselors. In addition to paid staff, hospices also use volunteers. Social workers, chaplains, and bereavement counselors work with patients' families for up to a year following death. Services are provided in patients' homes, nursing homes, or acute care hospitals. Hospice care is less expensive than aggressive acute care for the terminally ill. It is estimated that every dollar of hospice care saves a dollar and a half in Florida. Hospice services began in the United States in the 1970’s and were approved for government reimbursement in the 1980’s. Routine home hospice care is reimbursed at a per diem rate, for which the hospice provides care, and pharmaceutical drugs and supplies. Hospices also receive financial support from fund raising activities, and typically provide substantial community services which are otherwise unfunded and not reimbursed. These include community outreach programs in churches and schools, and services to families in which a death was accidental. In 1985, the national hospice penetration rate or P Factor (the percentage of total deaths in which patients received hospice care) was approximately 8 percent. By 1995, the P Factor had increased to 17 percent, with the greatest rate of growth in the most recent five years. In Florida, approximately 29.6 percent of all deaths occur after a person has been admitted to a hospice program. In service area 1, the P Factor is 21 percent. Bay Medical Center BMC is a legislatively - created independent special governmental district, authorized initially to provide health care services to Bay County, but now also to surrounding areas. It operates a 353-bed public, not-for-profit full service hospital in Panama City, Florida, but does not receive tax support. Over 190 physicians staff BMC’s hospital with every specialty, except rheumatology, endocrinology, and neonatology. BMC’s tertiary services include an open heart surgery program. BMC also provides ambulatory or outpatient services. Since 1992, BMC has operated a hospice program in service area 2A, with offices in Panama City (on the campus of the BMC hospital) and in Marianna. The Marianna office opened in February 1997, as a result of the Florida Legislature's 1995 amendment to the enabling legislation allowing BMC to offer services beyond Bay County. The 1995 legislation also expressly authorizes BMC to provide hospice services and to create other organizations to further its mission. The Board of Directors of BMC created the Bay Medical Center Hospice (BMCH). BMCH is governed by a board of directors which is separate and distinct from the board of BMC, although BMC is the entity licensed to operate the hospice program in service area 2A. The BMCH board members live and work in each of the six counties of service area 2A. BMC, which holds the existing license, is the applicant in this proceeding. The board of BMC met on the day that the letter of intent was due, February 19, 1996. A few days prior to the meeting the Chairman of the Board executed the letter of intent, and sent it to a health planning consultant in Tallahassee. After the Board met and passed the resolution authorizing the filing of the letter of intent, the consultant filed the letter of intent with AHCA in Tallahassee. In service area 2A, BMCH has an average daily census of 58-64 patients. BMC projected and HNWF stipulated that BMC can reasonably attain 250 admissions for a total of 12,471 patient days in year one, and 300 admissions for 18,706 patient days in year two of operation in service area 1. BMCH currently advertises its hospice services on television and radio stations, and in newspapers with coverage extending into service area 1. Fund-raising events, including the holiday tree lighting program, are used to market hospice services. Hospice services are also explained in newsletters which reach 27,000 households and all physicians in the area. BMC purchased over 100 sixty-second radio spots, which aired on three stations over a two month period in 1996. The hospice radio spots reached an estimated 87,000 people an average of five times each. BMC estimates a total project cost of $129,591, if CON 8377 is approved, to extend hospice services into service area 1. BMC proposes to condition CON 8377 on the provision of a minimum of 12.8 percent Medicaid and 3.65 percent charity care by the end of the second year of operation, and the care of 7 AIDS patients (with a minimum of 350 total visits) each year. Hospice of Northwest Florida HNWF is an existing provider of hospice services in AHCA service areas 1 and 2A. It is the only licensed hospice in service area 1 and competes with only BMC in 2A. HNWF, organized by hospitals in Pensacola, was issued a CON in December 1982 and a license in 1983, to operate a hospice in Escambia, Santa Rosa, Okaloosa, Walton, Holmes, Washington and Jackson Counties. The home office of HNWF is located in Pensacola. HNWF admitted its first patients and families in January 1984. In 1987, HNWF opened a branch office in Fort Walton Beach, later apparently consolidated with a Niceville office, to serve Okaloosa and Walton Counties. An additional branch office was opened in Marianna in 1991. An adjunct medical director for the Marianna and Niceville offices was hired in 1996. In December 1995, HNWF received a CON waiver and its license was amended to allow it to operate in the remainder of service area 2A, in Bay, Gulf, and Calhoun Counties. HNWF then opened a branch office in Panama City, in August 1996. HNWF also operates, and is expanding from six to eight beds, a residential facility in Pensacola, to house hospice patients without homes or without at-home caregivers. Prior to opening the Panama City office, HNWF historically served Holmes, Washington, and Jackson Counties, while BMCH served patients in Bay, Gulf, Washington, and Calhoun Counties. From 1993 to the present time, HNWF has increased its contracts or agreements from the Pensacola hospital to all of the hospitals in the service areas, including two military hospitals, from none to virtually all assisted living facilities, and from five to all except two or three nursing homes. HNWF operates an extensive outreach and educational effort, including a monthly half-hour television show, which is estimated to reach over 200,000 people in Escambia and Santa Rosa Counties. Other efforts include radio talk show appearances, speaking engagements reaching over 5,000 people in 1996, and extensive direct physician contact. HNWF also relies on it chaplaincy and bereavement programs to extend information about hospice care, particularly to culturally diverse groups of people. Despite these efforts, the number of hospice patients in service area 1 has remained relatively constant. HNWF served 969 patients in calendar year (CY) 1995, and 963 in CY1996. HNWF contends that its lack of growth is due, in part, to declining referrals from nursing homes despite increased referrals from other sources. HNWF attributes the nursing home decline to government investigations of suspected excessive nursing home reimbursements. There is no waiting list for HNWF's services, and its goal is to admit patients within 24 hours of referral. HNWF criticized BMCH’s outreach efforts as inadequate and misdirected, attracting only “easy” patients, those easily diagnosed as qualified for hospice care by well-informed referral sources. On this basis, HNWF expects BMC to take hospice patients from HNWF and not from any growth in hospice patients. HNWF also expects competition from BMC to adversely affect its ability to provide enhanced and unfunded services, including bereavement services in schools, on military bases, and in work- places, and its ability to operate satellite offices and the residential facility. Revenues from patient care are supplemented by donations and grants. In 1992, HNWF established a foundation to coordinate fund raising efforts. The approval of the BMC application, according to HNWF, will also affect the types of hospice services available in the area. In general, more sophisticated hospice services can be provided by larger hospices, including palliative chemotherapy and radiation. BMC’s expert testified that HNWF will continue to be a large hospice with or without the approval of a CON for BMC, and that the additional program will create additional demand for the service. The parties stipulated that subsections 408.035(1)(m) and (3), Florida Statutes, and Rule 59C-1.0355(7) and (8), Florida Administrative Code, are not applicable to this proceeding. At hearing, the parties also stipulated that BMC's list of capital projects meets the requirements of subsection 408.037(2)(a). Rule 59C-1.0355(4)(a) - Numeric Need; Subsections 408.035(1)(b) - like and existing services; (d) - available alternatives Rule 59C-1.0355, the hospice rule, includes the formula for calculating the numeric need for hospice programs. Numeric need exists if the projected total number of hospice patients in service area one for the planning horizon (1400 for July 1997) minus the actual number of hospice patients in the base year (969 in calendar year 1995) is equal to or greater than 350 (in this case, 431). The statewide P Factor, 29.6 percent, is used in the formula to calculate the ratio of projected hospice patients to projected total deaths. The statewide rate represents the normative minimum applied to each service area by operation of the formula in the rule. In service area 1, the P Factor in the base year was 21 percent. The statewide P Factor is an average of rates for various disease categories and ages. Those rates range from a high of hospice care for 70.9 percent of deaths due to cancer in people 65 and over, to a low of 14.1 percent for people under 65 with all other diseases. BMC cites HNWF's relatively low hospice penetration rate as proof of the need for an additional hospice program to create and accommodate additional potential demand. HNWF asserts, however, that certain local circumstances cause the deviation from the statewide P Factor. HNWF also contends that more people received hospice services than the number used in the formula for the base year. The result, according to HNWF is an excess projected demand for hospice services by the July 1997 planning horizon. The extenuating local circumstances cited by HNWF, are the sizable active duty military population, the strong Medicaid AIDs program, the aggressiveness of home health agencies, the prevalence of cancer centers, and the established practice parameters of medical doctors in the service area. The number of active duty military in service area 1 is 23,162. The number of those who die from terminal illnesses is statistically insignificant, because it is military policy to retire personnel who are diagnosed with terminal illnesses, which enhances death benefits to survivors. BMC's expert confirmed that policy and the improbability of serving military patients, although HNWF has served military base families after active duty casualties. Military families represent some of those served by HNWF in the base year, who are not included in the numeric need formula as hospice admissions. In the numeric need formula, according to BMC's expert, military personnel are included in projected deaths to younger age cohorts from causes other than cancer. Of the 431 projected additional hospice admissions, BMC’s expert calculated that, at most, 3 projected hospice deaths of those result from including the active duty military population. By contrast, HNWF's expert testified that the military population of 23,162 multiplied by the statewide death rate of .008 results in an estimated 186 deaths, or approximately 62 hospice patients. The background information in support of the fixed need pool, prepared by AHCA, shows that AHCA calculates projected hospice patients by age and disease. The actual base year service area non-cancer deaths under 65 (1010) divided by the actual service area total deaths (4562), times total projected deaths (4816) gives the total projected deaths non-cancer under 65 (1066). Of the 1066 deaths, 150 are expected to be hospice patients. It is not reasonable to assume that 186 deaths will occur among active duty military, or that 62 of the 150 non- cancer hospice patients under 65 will be in that group. It is more reasonable to assume, as BMC's expert did and as the state numeric need methodology does, that the age cohort of that group has and will continue to have a significantly lower death rate and lower hospice admissions than the 65 and over population. HNWF's expert health planner was unable to distinguish service area 1 from the rest of the state in terms of the strength of the Medicaid AIDs waiver program, the presence of prisons, the existence of home health agencies, the presence of cancer centers, or physicians' practice patterns. Similarly, BMC's expert found no statistical relationship between home health agency visits and hospice utilization. BMC's expert also noted that some hospices provide services to prisoners. HNWF's expert agreed that there is no prohibition to providing hospice services to prisoners. In some areas of the state, such as Gainesville and Tampa, cancer centers co-exist with high levels of hospice utilization. There was no evidence to distinguish physicians' practice patterns in service area 1 from the areas of the state. The argument that HNWF served more than the reported 969 in the base year, through it AIDs support groups, in schools, and for families in which deaths were accidental also does not distinguish HNWF. The evidence shows that hospices typically provide services to persons other than patients and their families, and benefit in terms of marketing and fund-raising. The incidence of AIDS in service area 1 is below that of the state. That could affect the gap between 21 percent and 29 percent, by approximately 3 or 4 percent. Late referrals to hospice services can adversely affect utilization rates. The federal government program, Restore Trust, initiated a HCFA Inspector General's investigation into charges of waste, fraud, and abuse in nursing homes and home health agencies. The decline in referrals to hospice programs coincided with the investigation, while hospice referrals and admissions in non-nursing home settings increased. There is no evidence, however, that service area 1 nursing homes were subject to more intense scrutiny than any others in the state. In fact, the Executive Director of HNWF testified that the effects of Restore Trust were national. The active duty military population difference of 3 fewer projected hospice deaths, and the 3 or 4 percent gap in the P Factor due to the lower incidence of AIDs are insufficient to explain the gap between P Factors of 21 and 29 percent. BMC's expert's estimate that ninety percent of the gap results from the lower than average P Factor is, at most, reduced to eighty-six percent. From 1994 to 1996, as the hospice utilization statewide reached 27.7 percent, the rate increased from 22 to 27 percent in service area 2A. By contrast, the rate increased from 17 to 22 percent in service area 1. For the six months ending December 31, 1996, the rate in service area 1 declined to 18 percent, while that in service area 2A increased to 24 percent. One of the highest rates in service area 2A is in relatively rural Washington County, in which BMC and HNWF have the greatest overlap in services. HNWF has approximately 60 percent and BMC has 40 percent of the hospice market in Washington County. In western Washington County, hospice rates range from 27 to 100 percent, with the remainder of the county in the 18 to 27 percent range. In service area 2A, there has been a steady increase in hospice admissions for HNWF and BMC, except for a decline at BMC immediately after HNWF opened an office in Panama City. Subsection 408.035(1)(a) - need in relation to district and state health plans; Rule 59C- 1.0355(5) and (4)(e) District health plan allocation factor one favors applicants having hospice services available seven days a week, district-wide for 24 hours a day as needed, regardless of a client’s ability to pay. BMCH currently complies with the requirement in service area 2A and can do so in service area 1. By carefully selecting patients, hiring staff in appropriate locations to serve the patients, and expanding slowly geographically, as HNWF has done, BMC can meet the requirements. Initially, BMC will focus on adjacent Okaloosa and Walton Counties. District allocation factor two, for proposals to add beds or use existing inpatient facilities rather than construct new facilities, is met by BMC. By proposing to contract with existing hospitals and nursing homes, BMC also meets the preference in Rule 59C-1.0355(4)(e)2. State health plan preference one, for applicants who seek Medicare certification, is consistent with BMC’s current and proposed operations. State health plan preference two favors members of the National Hospice Organization ("NHO") and applicants accredited by the Joint Commission on Accreditation of Health Care Organizations ("JCAHO"). BMCH is a member of the NHO. BMC is JCAHO-accredited, after receiving a rating of ninety-six of a possible one hundred in the scoring system in December 1996. Recently, BMCH was separately surveyed by the JCAHO, and received favorable exit comments. BMCH is also annually surveyed by AHCA, which identified no deficiencies in its January 1996 report. BMCH and HNWF each had one complaint regarding practices and procedures in 1996. A BMCH nurse disposed of controlled drugs when no longer needed in the patient's home, without the required signature of the patient's family representative on the disposal record. HNWF received a complaint and disciplined the responsible admitting nurse who failed to convene the appropriate staff to timely prepare an Interdisciplinary Care Plan. Neither incident indicates that the hospices are not providing a high quality of care. It is reasonable to expect BMC hospice to meet the requirements of the preference and to provide appropriate hospice care. See, also, subsection 408.035(1)(b) and (c), on the quality of care of the existing hospice and the applicant’s ability to provide quality of care. In proposing to establish a physical presence in rural, underserved Walton County, BMC meets state preference three and the preference in Rule 59C-1.0355(4)(e)4. State health plan preference four for applicants proposing to meet unmet needs of specific groups, such as children, is consistent with BMC's current and proposed operations. The same preference is also a requirement of Rule 59C-1.0355(4)(e)1. State health plan preference five favors applicants proposing residential services to patients without at-home assistance. BMC proposes to provide caregivers or to use existing inpatient facilities to provide residential services. The proposal is, therefore, also consistent with Rule 59C- 1.0355(4)(e)3 as it relates to those who are without primary caregivers at home or who are homeless. The sixth and final state health plan preference, for hospices proposing to use additional beds in existing facilities rather than new construction, is not applicable to the BMC proposal. On balance, the BMC application meets the preferences in the rule, and in state and district health plans. Subsection 408.035(1)(b) and (1)(d) - availability and quality of like and existing services; other alternatives Alternatives to hospice care include home health, acute, and nursing home care, all of which are available. The state policy, as reflected in numeric need methodology, encourages the use of hospice services until every service area achieves the state norm. Consistent with that policy, theoretically, HNWF could be even more aggressive in marketing and outreach than it has been. Historically, for BMC and HNWF, however, hospice services are more available, more accessible, better utilized, and higher in quality of care in areas in which they compete. Subsection 408.035(1)(c) - economics and improvements of joint, cooperative or shared resources Because BMC operates an existing hospice, it is reasonable to expect economics of scale and improvements based on its experience, if it establishes a second hospice. BMC expects to use existing human resources and billing departments. Subsection 408.035(1)(f) - need for special equipment or services not available in adjoining areas The statutory criterion is inapplicable to the case. Subsection 408.035(1)(g) and (h) - need for research, educational, health professional training BMC's is not a proposal which is intended to assist a research or educational program. In-service and volunteer training programs are proposed for the benefit of its staff and to assure the quality of its own services. Subsection 408.035(1)(h) - available manpower, management personnel; (1)(i) - immediate and long-term financial feasibility of the proposal BMC has over $21 million in cash, and revenues and gains in excess of $4 million for the year ending September 30, 1995. BMC has and continues to generate sufficient funds to provide over $24 million for planned capital projects over the next two years, including $129,591 in costs for the additional hospice program. BMC’s proposal is financially feasible in the short term. HNWF claims that the BMC proposal is not financially feasible in the long term, based on understated salaries, wages, and benefits, travel expenses, depreciation, and interest. Salaries, wages, and benefits are based on the staffing ratios at BMCH, which, according to HNWF, serves a more concentrated population in Panama City. Initially, BMC plans to serve Okaloosa and Walton Counties from a Destin office, with staff appropriately located throughout the areas to timely and efficiently serve patients. BMC plans to hire 6.6 full time equivalent (FTEs) administrative staff and 11.4 FTEs patient care staff. HNWF asserts that BMC will need an additional 1.7 FTEs for nurses, 2.6 for home health aides, and 1 FTE for a social worker. HNWF also questioned the ability of BMC to implement its proposed children's programs without a registered nurse with pediatric experience. HNWF asserted that .4 FTE for a chaplain was inadequate, as is reliance primarily on volunteer chaplains. The adequacy of the proposed staffing is supported by calculating the 50 day average length of stay times the annual volume of 250 patients, times 1.6 (the projected worked hours per patient day), which equals 10.85 FTEs for patient care. BMC's 11.4 FTEs for patient care in year one is a reasonable, conservative complement of staff. In addition, HNWF received 19 percent of its 1996 hours worked from volunteers, and has a history of hiring specialized staff and establishing specialized programs and departments when justified by the demand for those services. For its first seven or eight years, HNWF was well- served by a volunteer medical director. The bereavement coordinator was hired in 1990. The children's bereavement specialist was hired in 1993, when bereavement and social services became separate departments. Travel expenses, projected by BMC, were also criticized by HNWF. HNWF would increase miles for each visit from 13.9, as estimated in BMC’s CON application, to 18.3 miles per visit as experienced by HNWF. One assumption, which invalidates HNWF’s projection of travel distances, is that each separate visit will originate and end at the Destin office, not that BMC staff would make some visits going directly from their residences to the patient's home, or that they would arrange schedules to make several visits without returning to the office between each visit. In addition, BMCH will initially cover two counties rather than the entire service area. As a result of a mathematical error in the BMC CON application, the depreciation expense for year one of operations is $25,578, not $21,962. HNWF's expert's adjustments to interest expenses assumed that any additional expenses would require additional borrowing. BMC, however, has not materially underestimated expenses, considering the $3,616 difference in depreciation. The pro forma is conservatively based on revenues and expenses without reliance on charitable donations, although hospices typically depend on donations to break-even financially. In 1996, HNWF received a total of $339,780 in contributions. To estimate what BMC might expect in District 1, it is reasonable to exclude from HNWF's experience, approximately $80,000 in interest on reserve invested income (used by HNWF in 1996) and $90,000 in grants, since BMC has not applied for any grants. The balance, representing memorials and fund-raising of $240,000 reasonably indicates the level of contributions which a new BMC hospice might expect in service area 1. That level, for BMC, is proportionately half that projected by BMC, or $60,000 to $80,000 in year one, and $130,00 to $185,000 in year two of operations. With a projected loss in income of $28,091 in year one, a projected profit of $74,054 in year two, and considering historical hospice fund-raising, BMC's operation of a hospice in service area 1 is reasonably expected to be financially feasible in the long term. Adverse Impact Subsection 408.035(1)(l) - probable impact on costs, effects of competition. Using BMC's experts' utilization projections for service area 1, HNWF projects that its net operating income will decline from a negative $408,070 to a negative $655,712 in year one, and from a negative $355,404 to a negative $612,696 in year two. Approximately $420,000 in total contributions to HNWF is expected each year, although that number has increased annually since 1993, from 183,750, to $224,415 in 1994, to $282,368 in 1995, and $339,780 in 1996. BMC suggests that the adverse impact analysis should consider HNWF's total operations in service areas 1 and 2A to determine financial feasibility. Health planning experts for both BMC and HNWF acknowledge that there are up to 431 more people available for hospice admissions than are currently receiving hospice services. They also agree that number will increase by approximately 100 a year as the population increases, and that the presence of a new hospice provider will increase hospice penetration rates. In addition, as HNWF's witnesses emphasized, nursing home hospice admissions were depressed temporarily due to a government investigation. BMC’s expert also noted that, as long as available admissions exist, increasing hospice utilization is largely a function of how the hospice delivers its services. For example, the historic requirement that patients have a caregiver at home has adversely affected HNWF’s penetration rate. As recently as November 1996, at least one referral source, Sacred Heart Hospital, in Pensacola was distributing an HNWF brochure which specifically required an eligible hospice patient to have “[a] capable caregiver in the home to meet the patient’s day-to-day basic needs." Essentially, the same requirement is included in a list of admissions criteria on page 49 of BMC's CON application. HNWF and BMC have both changed their policies and now admit patients without caregivers, which is reasonably expected to increase admissions of patients. With competition to identify and alleviate access barriers, HNWF and BMC are better able to increase hospice utilization rates by eliminating self-imposed constraints. Based on the rapid increase in hospice utilization in service area 2A after HNWF began to compete with BMC, it is reasonable to assume the same effect of competition in service area 1. By the year 2000, BMC's expert reasonably projects hospice penetration rates of 29 percent in service area 1, equaling the current statewide average. As the late entrant into a limited geographical area within the market, BMC is projected to capture approximately one-third of that market by the years 2000 to 2001, leaving two thirds for HNWF. At the same time BMC and HNWF are reasonably expected to divide in half the market in service area 2A. At those levels, HNWF will range, in total projected admissions for both service areas, from 1,186 to 1,400, from 1997 to 2001. The evidence that a BMC hospice in service area 1 will not adversely impact HNWF is more persuasive. The suggestion that health care providers or the public will be confused by the presence of BMCH in service area 1 is rejected. Subsection 408.035(1)(n) - The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent. BMC is a disproportionate share Medicaid provider, having historically provided over 97 percent of all indigent care in Bay County. In 1995, the charity care write-off was over $8.5 million. The effect of approving BMC’s CON is increased hospice penetration in service area 1, caused by an expanding market for hospice services. As a disproportionate share provider of inpatient acute care services, BMC is uniquely capable of identifying and referring low income patients for hospice care. Subsection 408.035(1)(0) - The applicant’s past and proposed provision of services which promote a continuum of care in a multilevel health care system, which may include, but is not limited to, acute care, skilled nursing care, home health care, and assisted living facilities. BMCH is a part of a multilevel system with levels of care ranging from a 353-bed acute care tertiary hospital to a home health agency. Because of 1995 legislation, these services are available to persons beyond the boundaries of Bay County. Consistent with this statutory criterion, hospice services should also be extended.
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 issuing CON 8377 to Bay Medical Center to establish a hospice program in service area 1, conditioned on providing annually a minimum of 12.8 percent Medicaid care, 3.65 percent charity care, and service to a minimum of 7 AIDs patients with a minimum of 350 visits. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 19th day of May, 1997. ELEANOR M. HUNTER 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 19th day of May, 1997. COPIES FURNISHED: Richard Ellis, Senior Attorney Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Darrell White, Esquire William B. Wiley, Esquire McFarlain, Wiley, Cassedy & Jones, P.A. Post Office Box 2174 Tallahassee, Florida 32315-2174 J. Robert Griffin, Esquire J. Robert Griffin & Associates, P.A. 2559 Shiloh Way Tallahassee, Florida 32308 Sam Power, Agency Clerk Agency For Health Care Administration 2727 Mahan Drive Fort Knox Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Jerome W. Hoffman, General Counsel Agency For Health Care Administration 2727 Mahan Drive Fort Knox Building 3, Suite 3431 Tallahassee, Florida 32308-5403
The Issue The issues in this case are whether the Agency for Health Care Administration (AHCA) should grant Hospice Integrated’s Certificate of Need (CON) Application No. 8406 to establish a hospice program in AHCA Service Area 7B, CON Application No. 9407 filed by Wuesthoff, both applications, or neither application.
Findings Of Fact Hospice Hospice is a special way of caring for patients who are facing a terminal illness, generally with a prognosis of less than six months. Hospice provides a range of services available to the terminally ill and their families that includes physical, emotional, and spiritual support. Hospice is unique in that it serves both the patient and family as a unit of care, with care available 24 hours a day, seven days a week, for persons who are dying. Hospice provides palliative rather than curative or life- prolonging care. To be eligible for hospice care, a patient must have a prognosis of less than six months to live. When Medicare first recognized hospice care in 1983, more than 90% of hospice cases were oncology patients. At that time, there was more information available to establish a prognosis of six months or less for these patients. Since that time, the National Hospice Organization (“NHO”) has established medical guidelines which determine the prognosis for many non-cancer diseases. This tool may now be used by physicians and hospice staff to better predict which non- cancer patients are eligible for hospice care. There is no substitute for hospice. Nothing else does all that hospice does for the terminally ill patient and the patient’s family. Nothing else can be reimbursed by Medicare or Medicaid for all hospice services. However, hospice must be chosen by the patient, the patient’s family and the patient’s physician. Hospice is not chosen for all hospice-eligible patients. Palliative care may be rejected, at least for a time, in favor of aggressive curative treatment. Even when palliative care is accepted, hospice may be rejected in favor of home health agency or nursing home care, both of which do and get reimbursed for some but not all of what hospice does. Sometimes the choice of a home health agency or nursing home care represents the patient’s choice to continue with the same caregivers instead of switching to a new set of caregivers through a hospice program unrelated to the patient’s current caregivers. There also is evidence that sometimes the patient’s nursing home or home health agency caregivers are reluctant, unfortunately sometimes for financial reasons, to facilitate the initiation of hospice services provided by a program unrelated to the patient’s current caregivers. Existing Hospice in Service Area 7B There are two existing hospice providers in Service Area 7B, which covers Orange County and Osceola County: Vitas Healthcare Corporation of Central Florida (Vitas); and Hospice of the Comforter (Comforter). Vitas Vitas began providing services in Service Area 7B when it acquired substantially all of the assets of Hospice of Central Florida (HCF). HCF was founded in 1976 as a not-for-profit organization and became Medicare-certified in 1983. It remained not-for-profit until the acquisition by Vitas. In a prior batching cycle, HCF submitted an application for a CON for an additional hospice program in Service Area 7B under the name Tricare. While HCF also had other reasons for filing, the Tricare application recognized the desirability, if not need, to package hospice care for and make it more palatable and accessible to AIDS patients, the homeless and prisoners with AIDS. HCF later withdrew the Tricare application, but it continued to see the need to better address the needs of AIDS patients in Service Area 7B. In 1994, HCF began looking for a “partner” to help position it for future success. The process led to Vitas. Vitas is the largest provider of hospice in the United States. Nationwide, it serves approximately 4500 patients a day in 28 different locations. Vitas is a for-profit corporation. Under a statute grandfathering for-profit hospices in existence on or before July 1, 1978, Vitas is the only for-profit corporation authorized to provide hospice care in Florida. See Section 400.602(5), Fla. Stat. (1995). HCF evaluated Vitas for compatibility with HCF’s mission to provide quality hospice services to medically appropriate patients regardless of payor status, age, gender, national origin, religious affiliation, diagnosis or sexual orientation. Acquisition by Vitas also would benefit the community in ways desired by HCF. Acquisition by Vitas did not result in changes in policy or procedure that limit or delay access to hospice care. Vitas was able to implement staffing adjustments already contemplated by HCF to promote efficiencies while maintaining quality. Both HCF and Vitas have consistently received 97% satisfaction ratings from patients’ families, and 97% good-to- excellent ratings from physicians. Initially, Vitas’ volunteer relations were worse than the excellent volunteer relations that prevailed at HCF. Many volunteers were disappointed that Vitas was a for-profit organization, protested the proposed Vitas acquisition, and quit after the acquisition. Most of those who quit were not involved in direct patient care, and some have returned after seeing how Vitas operates. Vitas had approximately 1183 hospice admissions in Service Area 7B in 1994, and 1392 in 1995. Total admissions in Service Areas 7B and 7C (Seminole County) for 1995 were 1788. Comforter Hospice of the Comforter began providing hospice care in 1990. Comforter is not-for-profit. Like Vitas, it admits patients regardless of payor status. Comforter admitted approximately 100 patients from Service Area 7B in 1994, and 164 in 1995. Total admissions in Service Areas 7B and 7C for 1995 were 241. For 1996, Comforter was expected to approach 300 total admissions (in 7B and 7C), and total admissions may reach 350 admissions in the next year or two. As Comforter has grown, it has developed the ability to provide a broader spectrum of services and has improved programs. Comforter provides outreach and community education as actively as possible for a smaller hospice. Comforter does not have the financial strength of Vitas. It maintains only about a two-month fiscal reserve. Fixed Need Pool On February 2, 1996, AHCA published a fixed need pool (FNP) for hospice programs in the July 1997 planning horizon. Using the need methodology for hospice programs in Florida found in F.A.C. Rule 59C-1.0355 (“the FNP rule”), the AHCA determined that there was a net need for one additional hospice program in Service Area 7B. As a result of the dismissal of Vitas’ FNP challenge, there is no dispute as to the validity of the FNP determination. Other Need Considerations Despite the AHCA fixed need determination, Vitas continues to maintain that there is no need for an additional hospice program in Service Area 7B and that the addition of a hospice program would adversely impact the existing providers. Essentially, the FNP rule compares the projected need for hospice services in a district using district use rates with the projected need using statewide utilization rates. Using this rule method, it is expected that there will be a service “gap” of 470 hospice admissions for the applicable planning horizon (July, 1997, through June, 1988). That is, 470 more hospice admissions would be expected in Service Area 7B for the planning horizon using statewide utilization rates. The rule fixes the need for an additional hospice program when the service “gap” is 350 or above. It is not clear why 350 was chosen as the “gap” at which the need for a new hospice program would be fixed. The number was negotiated among AHCA and existing providers. However, the evidence was that 350 is more than enough admissions to allow a hospice program to benefit from the efficiencies of economy of scale enough to finance the provision for enhanced hospice services. These benefits begin to accrue at approximately 200 admissions. Due to population growth and the aging of the population in Service Area 7B, this “gap” is increasing; it already had grown to 624 when the FNP was applied to the next succeeding batching cycle. Vitas’ argument ignores the conservative nature of several aspects of the FNP rule. It uses a static death rate, whereas death rates in Service Area 7B actually are increasing. It also uses a static age mix, whereas the population actually is aging in Florida, especially in the 75+ age category. It does not take into account expected increases in the use of hospice as a result of an environment of increasing managed health care. It uses statewide conversion rates (percentage of dying patients who access hospice care), whereas conversion rates are higher in nearby Service Area 7A. Finally, the statewide conversions rates used in the rule are static, whereas conversion rates actually are increasing statewide. Vitas’ argument also glosses over the applicants’ evidence that the addition of a hospice program, by its mere presence, will increase awareness of the hospice option in 7B (regardless whether the new entrant improves upon the marketing efforts of the existing providers), and that increased awareness will result in higher conversion rates. It is not clear why utilization in Service Area 7B is below statewide utilization. Vitas argued that it shows the opposite of what the rule says it shows—i.e., that there is no need for another hospice program since the existing providers are servicing all patients who are choosing hospice in 7B. Besides being a thinly-veiled (and, in this proceeding, illegal) challenge to the validity of the FNP rule, Vitas’ argument serves to demonstrate the reality that, due to the nature of hospice, existing providers usually will be able to expand their programs as patients increasingly seek hospice so that, if consideration of the ability of existing providers to fill growing need for hospice could be used to overcome the determination of a FNP under the FNP rule, there may never be “need” for an additional program. Opting against such an anti-competitive rule, the Legislature has required and AHCA has crafted a rule that allows for the controlled addition of new entrants into the competitive arena. Vitas’ argument was based in part on the provision of “hospice-like” services by VNA Respite Care, Inc. (VNA), through its home health agency. Vitas argued that Service Area 7B patients who are eligible for hospice are choosing VNA’s Hope and Recovery Program. VNA’s program does not offer a choice from, or alternative to, hospice. Home health agencies do not provide the same services as hospice programs. Hospice care can be offered as the patient’s needs surface. A home health agency must bill on a cost per visit basis. If they exceed a projected number of visits, they must explain that deviation to Medicare. A home health agency, such as VNA, offers no grief or bereavement services to the family of a patient. In addition to direct care of the patient, hospice benefits are meant to extend to the care of the family. Hospice is specifically reimbursed for offering this important care. Hospice also receives reimbursement to provide medications relevant to terminal illnesses and durable medical equipment needed. Home health agencies do not get paid for, and therefore do not offer, these services. It is possible that VNA’s Hope and Recovery Program may be operating as a hospice program without a license. The marketing materials used by VNA inaccurately compare and contrast the medical benefits available for home health agencies to those available under a hospice program. The marketing material of VNA also inappropriately identify which patients are appropriate for hospice care. VNA’s Hope and Recovery Program may help explain lower hospice utilization in Service Area 7B. Indeed, the provision of hospice-like services by a non-hospice licensed provider can indicate an unmet need in Service Area 7B. The rule does not calculate an inventory of non-hospice care offered by non-hospice care providers. Instead, the rule only examines actual hospice care delivered by hospice programs. The fact that patients who would benefit from hospice services are instead receiving home health agency services may demonstrate that existing hospice providers are inadequately educating the public of the advantages of hospice care. Rather than detract from the fixed need pool, VNA’s provision of “hospice-like” services without a hospice license may be an indication that a new hospice provider is needed in Service Area 7B. Although a home-health agency cannot function as a hospice provider, the two can work in conjunction. They may serve as a referral base for one another. This works most effectively when both programs are operated by the same owner who understands the very different services each offers and who has no disincentive to refer a patient once their prognosis is appropriate for hospice. The Hospice Integrated Application Integrated Health Services, Inc. (IHS), was founded in the mid-1980’s to establish an alternative to expensive hospital care. Since that time it has grown to offer more than 200 long term care facilities throughout the country including home health agencies, rehabilitative agencies, pharmacy companies, durable medical equipment companies, respiratory therapy companies and skilled nursing facilities. To complete its continuum of care, IHS began to add hospice to offer appropriate care to patients who no longer have the ability to recover. IHS is committed to offering hospice care in all markets where it already has an established long-term care network. IHS entered the hospice arena by acquiring Samaritan Care, an established program in Illinois, in late 1994. Within a few months, IHS acquired an additional hospice program in Michigan. Each of these hospice programs had a census in the thirties at the time of the final hearing. In May of 1996, IHS acquired Hospice of the Great Lakes. Located in Chicago, this hospice program has a census range from 150 to 180. In combination, IHS served approximately 350 hospice patients in 1995. In Service Area 7B, IHS has three long-term care facilities: Central Park Village; IHS of Winter Park; and IHS of Central Park at Orlando. Together, they have 443 skilled nursing beds. One of these—Central Park Village—has established an HIV spectrum program, one of the only comprehensive HIV care programs in Florida. When the state determined that there was a need for an additional hospice program in Service Area 7B, IHS decided to seek to add hospice care to the nursing home and home health companies it already had in the area. Since Florida Statutes require all new hospice programs in Florida to be established by not-for-profit corporations (with Vitas being the only exception), IHS formed Hospice Integrated Health Services of District VII-B (Hospice Integrated), a not- for-profit corporation, to apply for a hospice certificate of need. IHS would be the management company for the hospice program and charge a 4% management fee to Hospice Integrated, although the industry standard is 6%-7%. Although a for-profit corporation, IHS plans for the 4% fee to just cover the costs of the providing management services. IHS believes that the benefits to its health care delivery system in Service Area 7B will justify not making a profit on the hospice operation. However, the management agreement will be reevaluated and possibly adjusted if costs exceed the management fee. In return for this management fee, IHS would offer Hospice Integrated its policy and procedure manuals, its programs for bereavement, volunteer programs, marketing tools, community and educational tools and record keeping. IHS would also provide accounting, billing, and human resource services. Perhaps the most crucial part of the management fee is the offer of the services of Regional Administrator, Marsha Norman. She oversees IHS’ programs in Illinois and Missouri. Ms. Norman took the hospice program at Hospice of the Great Lakes from a census of 40 to 140. This growth occurred in competition with 70 other hospices in the same marketplace. While at Hospice of the North Shore, Ms. Norman improved census from 12 to 65 in only eight months. Ms. Norman helped the Lincolnwood hospice program grow from start up to a census of 150. Ms. Norman has indicated her willingness and availability to serve in Florida if Hospice Integrated’s proposal is approved. IHS and Ms. Norman are experienced in establishing interdisciplinary teams, quality assurance programs, and on-going education necessary to provide state of the art hospice care. Ms. Norman also has experience establishing specialized programs such as drumming therapy, music therapy for Alzheimer patients and children’s bereavement groups. Ms. Norman has worked in pediatric care and understands the special needs of these patients. Ms. Norman’s previous experience also includes Alzheimer’s care research conducted in conjunction with the University of Chicago regarding the proper time to place an Alzheimer patient in hospice care. Through its skilled nursing facilities in Service Area 7B, IHS has an existing working relationship with a core group of physicians who are expected to refer patients to the proposed Hospice Integrated hospice. Although its skilled nursing homes account for only six percent of the total beds in Service Area 7B, marketing and community outreach efforts are planned to expand the existing referral sources if the application is approved. IHS’ hospices are members of the NHO. They are not accredited by the Joint Commission on the Accreditation of Health Care Organizations (JCAHO). Hospice Integrated would serve pediatric patients. However, IHS’ experience in this area is limited to a pilot program to offer pediatric hospice care in the Dallas/Ft. Worth area, and there is little reason to believe that Hospice Integrated would place a great deal of emphasis on this aspect of hospice care. The Hospice Integrated application proposes to provide required grief support but does not include any details for the provision of grief support groups, resocialization groups, grief support volunteers, or community grief support or education activities. In its application, Hospice Integrated has committed to five percent of its care for HIV patients, 40% for non-cancer patients, ten percent for Medicaid patients, and five percent indigent admissions. These commitments also are reflected in Hospice Integrated’s utilization projections. At the same time, it is only fair to note that IHS does not provide any charity care at any of its Service Area 7B nursing home facilities. The Hospice Integrated application includes provision for all four levels of hospice care—home care (the most common), continuous care, respite care and general inpatient. The latter would be provided in one of the IHS skilled nursing home facilities when possible. It would be necessary to contract with an inpatient facility for acute care inpatient services. The federal government requires that five percent of hospice care in a program be offered by volunteers. With a projected year one census of 30, Hospice Integrated would only require 3-4 volunteers to meet federal requirements, and its year one pro forma reflects this level of use of volunteers. However, Hospice Integrated hopes to exceed federally mandated minimum numbers of volunteers. The IHS hospice programs employ volunteers from all aspects of the community, including family of deceased former hospice patients. Contrary to possible implications in the wording of materials included in the Hospice Integrated application, IHS does not approach the latter potential volunteers until after their bereavement has ended. The Wuesthoff Application Wuesthoff Health Services, Inc. (Wuesthoff) is a not- for profit corporation whose sole corporate member is Wuesthoff Health Systems, Inc. (Wuesthoff Systems). Wuesthoff Systems also is the sole corporate member of Wuesthoff’s two sister corporations, Wuesthoff Memorial Hospital, Inc. (Wuesthoff Hospital) and Wuesthoff Health Systems Foundation, Inc. (Wuesthoff Foundation). Wuesthoff Hospital operates a 303-bed acute care hospital in Brevard County. Brevard County comprises AHCA Service Area 7A, and it is adjacent and to the east of Service Area 7B. Wuesthoff Hospital provides a full range of health care services including open heart surgical services, a Level II neonatal intensive care unit and two Medicare-certified home health agencies, one located in Brevard and the other in Indian River County, the county immediate to the south of Brevard. Wuesthoff Foundation serves as the fundraising entity for Wuesthoff Systems and its components. Wuesthoff currently operates a 114-bed skilled nursing facility which includes both long-term and short-term sub-acute beds, as well as a home medical equipment service. Wuesthoff also operates a hospice program, Brevard Hospice, which has served Brevard County residents since 1984. Over the years, it has grown to serve over 500 patients during 1995. Essentially, Wuesthoff’s application reflects an intention to duplicate its Brevard Hospice operation in Service Area 7B. It would utilize the expertise of seven Brevard Hospice personnel currently involved in the day-to-day provision of hospice services, including its Executive Director, Cynthia Harris Panning, to help establish its proposed new hospice in 7B. Wuesthoff has been a member of the NHO since the inception of its hospice program. It also had its Brevard Hospice accredited by JCAHO in 1987, in 1990 and in March, 1996. As a not-for-profit hospice, Wuesthoff has a tradition of engaging in non-compensated hospice services that benefit the Brevard community. Wuesthoff’s In-Touch Program provides uncompensated emotional support through telephone and in-person contacts for patients with a life-threatening illness who, for whatever reason, are not ready for hospice. (Of course, Wuesthoff is prepared to receive compensation for these patients when and if they choose hospice.) Wuesthoff’s Supportive Care program provides uncompensated nursing and psychosocial services by hospice personnel for patients with life-threatening illnesses with life expectancies of between six months and two years. (These services are rendered in conjunction with home health care, which may be compensated, and Wuesthoff is prepared to receive compensation for the provision of hospice services for these patients when they become eligible for and choose hospice.) Wuesthoff’s Companion Aid benefits hospice patients who lack a primary caregiver and are indigent, Medicaid-eligible or unable to pay privately for additional help in the home. If approved in Service Area 7B, Wuesthoff would hope to duplicate these kinds of outreach programs. For the Supportive Care program, that would require its new hospice program to enter into agreements with home health agencies operating in Service Area 7B. While more difficult an undertaking than the current all-Wuesthoff Supportive Care program, Wuesthoff probably will be able to persuade at least some Service Area 7B home health agencies to cooperate, since there would be benefits to them, too. Wuesthoff proposes to use 38 volunteers during its first year in operation. As a not-for-profit organization, Wuesthoff has had good success recruiting, training, using and retaining volunteers in Brevard County. Its experience and status as a not-for-profit organization will help it meet its goals in Service Area 7B; however, it probably will be more difficult to establish a volunteer base in Service Area 7B than in its home county of Brevard. Wuesthoff’s proposed affiliation with Florida Hospital will improve its chances of success in this area. Key to the overall success of Wuesthoff’s proposed hospice is its vision of an affiliation with Florida Hospital. With no existing presence in Service Area 7B, Wuesthoff has no existing relationship with community physicians and no existing inpatient facilities. Wuesthoff plans to fill these voids through a proposed affiliation with Florida Hospital. In existence and growing for decades, Florida Hospital now is a fully integrated health care system with multiple inpatient sites, including more than 1,450 hospital beds, in Service Area 7B. It provides a full range of pre-acute care through post-acute care services, including primary through tertiary services. Approximately 1,200 physicians are affiliated with Florida Hospital, which has a significant physician-hospital organization. Wuesthoff is relying on these physicians to refer patients to its proposed hospice. Florida Hospital and Wuesthoff have signed a letter of intent. The letter of intent only agreed to a forum for discussions; there was no definite agreement concerning admissions, and Florida Hospital has not committed to sending any particular number of hospice patients to Wuesthoff. However, there is no reason to think that Wuesthoff could not achieve a viable affiliation with Florida Hospital. Wuesthoff has recent experience successfully cooperating with other health care providers. It has entered into cooperative arrangements with Jess Parrish Hospital in Brevard County, with Sebastian River Medical Center in Indian River County, and with St. Joseph’s Hospital in Hillsborough County. Wuesthoff’s existing hospice provides support to children who are patients of its hospice, whose parents are in hospice or whose relatives are in hospice, as well as to other children in the community who are in need of bereavement support services. Wuesthoff employs a full-time experienced children’s specialist. Wuesthoff also provides crisis response services for Brevard County Schools System when there is a death at a school or if a student dies or if there is a death that affects the school community. Camp Hope is a bereavement camp for children which is operated by Wuesthoff annually for approximately 50 Brevard children who have been affected by death. Wuesthoff operates extensive grief support programs as part of its Brevard Hospice. At a minimum, Wuesthoff provides 13 months of grief support services following the death of a patient, and more as needed. It employs an experienced, full- time grief support coordinator to oversee two grief support specialists (each having Masters degree level training), as well as 40 grief support volunteers, who function in Wuesthoff’s many grief support groups. These include: Safe Place, an open grief support group which meets four times a month and usually is the first group attended by a grieving person; Pathways, a closed six-week grief workshop offered twice a year primarily for grieving persons three to four months following a death; Bridges, a group for widows under age 50, which is like Pathways but also includes sessions on helping grieving children and on resocialization; Just Us Guys and Gals, which concentrates on resocialization and is attended by 40 to 80 people a month; Family Night Out, an informal social opportunity for families with children aged six to twelve; Growing Through Grief, a closed six-week children’s grief group offered to the Brevard County School System. Wuesthoff also publishes a newsletter for families of deceased hospice patients for a minimum of 13 months following the death. Wuesthoff also participates in extensive speaking engagements and provides seminars on grief issues featuring nationally renowned speakers. Wuesthoff intends to use the expertise developed in its Brevard Hospice grief support program to establish a similar program in Service Area 7B. The Brevard Hospice coordinator will assist in implementing the Service Area 7B programs. In its utilization projections, Wuesthoff committed to seven percent of hospice patient days provided to indigent/charity patients and seven percent to Medicaid patients. Wuesthoff also committed to provide hospice services to AIDS patients, pediatric patients, patients in long-term care facilities and patients without a primary caregiver; however, no specific percentage committments were made. In its pro formas, Wuesthoff projects four percent hospice services to HIV/AIDS patients and approximately 40% to non-cancer patients. The narrative portions of its application, together with the testimony of its chief executive officer, confirm Wuesthoff’s willingness to condition its CON on those percentages. In recent years, the provision of Medicaid at Brevard Hospice has declined. However, during the same years, charity care provided by Brevard Hospice has increased. In the hospice arena, Medicaid hospice is essentially fully reimbursed. Likewise, the provision of hospice services to AIDS/HIV patients by Brevard Hospice has declined in recent years—from 4.9% in 1993 to 1.4% in 1995. However, this decline was influenced by the migration of many AIDS patients to another county, where a significant number of infectious disease physicians are located, and by the opening of Kashy Ranch, another not-for-profit organization that provides housing and services especially for HIV clients. Financial Feasibility Both applications are financially feasible in the immediate and long term. Immediate Financial Feasibility Free-standing hospice proposals like those of Hospice Integrated and Wuesthoff, which intend to contract for needed inpatient care, require relatively small amounts of capital, and both applications are financially feasible in the immediate term. Hospice Integrated is backed by a $100,000 donation and a commitment from IHS to donate the additional $300,000 needed to open the new hospice. IHS has hundreds of millions of dollars in lines of credit available meet this commitment. Wuesthoff questioned the short-term financial feasibility of the Hospice Integrated proposal in light of recent acquisitions of troubled organizations by IHS. It recently acquired an organization known as Coram at a cost of $655 million. Coram recently incurred heavy losses and was involved in litigation in which $1.5 billion was sought. IHS also recently acquired a home health care organization known as First American, whose founder is currently in prison for the conduct of affairs at First American. But none of these factors seriously jeopardize the short-term financial feasibility of the Hospice Integrated proposal. Wuesthoff also noted that the IHS commitment letter is conditioned on several “approvals” and that there is no written commitment from IHS to enter into a management contract with Hospice Integrated at a four percent fee. But these omissions do not seriously undermine the short-term financial feasibility of the Hospice Integrated proposal. Hospice Integrated, for its part, and AHCA question the short-term financial feasibility of the Wuesthoff proposal, essentially because the application does not include a commitment letter from with Wuesthoff Systems or Wuesthoff Hospital to fund the project costs. The omission of a commitment letter is comparable to the similar omissions from the Hospice Integrated application. It does not undermine the short-term financial feasibility of the proposal. Notwithstanding the absence of a commitment letter, the evidence is clear that the financial strength of Wuesthoff Systems and Wuesthoff Hospital support Wuesthoff’s hospice proposal. This financial strength includes the $38 to $40 million in cash and marketable securities reflected in the September 30, 1995, financial statements of Wuesthoff Systems, in addition to the resources of Wuesthoff Hospital. Hospice Integrated also questions the ability of Wuesthoff Systems to fund the hospice proposal in addition to other planned capital projects. The Wuesthoff application indicates an intention to fund $1.6 million of the needed capital from operations and states that $1.4 million of needed capital in “assured but not in hand.” But some of the projects listed have not and will not go forward. In addition, it is clear from the evidence that Wuesthoff Systems and Wuesthoff Hospital have enough cash on hand to fund all of the capital projects that will go forward, including the $290,000 needed to start up its hospice proposal. Long-Term Financial Feasibility Wuesthoff’s utilization projections are more aggressive than Hospice Integrated’s. Wuesthoff projects 186 admissions in year one and 380 in year two; Hospice Integrated projects 124 admissions in year one and 250 in year two. But both projections are reasonably achievable. Projected patient days, revenue and expenses also are reasonable for both proposals. Both applicants project an excess of revenues over expenses in year two of operation. Vitas criticized Hospice Integrated’s nursing salary expenses, durable medical equipment, continuous and inpatient care expenses, and other patient care expenses as being too low. But Vitas’ criticism was based on misapprehension of the facts. The testimony of Vitas’ expert that nursing salaries were too low was based on the misapprehension that Hospice Integrated’s nursing staffing reflected in the expenses for year two of operation was intended to care for the patient census projected at year end. Instead, it actually reflected the expenses of average staffing for the average patient census for the second year of operation. Vitas’ expert contended that Hospice Integrated’s projected expenses for durable medical equipment for year two of operation were understated by $27,975. But there is approximately enough overallocated in the line items “medical supplies” and “pharmacy” to cover the needs for durable medical equipment. Vitas’ expert contended that Hospice Integrated’s projected expenses for continuous and inpatient care were understated by $23,298. This criticism made the erroneous assumption that Hospice Integrated derived these expenses by taking 75% of its projected gross revenues from continuous and inpatient care. In fact, Hospice Integrated appropriately used 75% of projected collections (after deducting contractual allowances). In addition, as far as inpatient care is concerned, Hospice Integrated has contracts with the IHS nursing homes in Service Area 7B to provide inpatient care for Hospice Integrated’s patients at a cost below that reflected in Hospice Integrated’s Schedule 8A. Vitas’ expert contended that Hospice Integrated’s projected expenses for “other patient care” were understated by $19,250. This criticism assumed that fully half of Hospice Integrated’s patients would reside in nursing homes that would have to be paid room and board by the hospice out of federal reimbursement “passed through” the hospice program. However, most hospices have far fewer than half of their patients residing in nursing homes (only 17% of Comforter’s are nursing home residents), and Hospice Integrated made no such assumption in preparing its Schedule 8A projections. In addition, Hospice Integrated’s projections assumed that five percent of applicants for Medicaid pass-through reimbursement would be rejected and that two percent of total revenue would be lost to bad debt write-offs. Notwithstanding Vitas’ attempts to criticize individual line items of Hospice Integrated’s Schedule 8A projections, Hospice Integrated’s total average costs per patient day were approximately the same as Wuesthoff’s--$19 per patient day. Vitas did not criticize Wuesthoff’s projections. On the revenue side, Hospice Integrated’s projections were conservative in several respects. Projected patients days (6,800 in year one, and 16,368 in year two) were well within service volumes already achieved in hospices IHS recently has started in other states (which themselves exceeded their projections). Medicaid and Medicare reimbursement rates used in Hospice Integrated’s projections were low. Hospice Integrated projects that 85% of its patients will be Medicare patients and that ten percent will be Medicaid. Using more realistic and reasonable reimbursement for these patients would add up to an additional $74,000 to projected excess of revenue over expenses in year two. Wuesthoff also raised its own additional questions regarding the long-term financial feasibility of the Hospice Integrated proposal. Mostly, Wuesthoff questioned the inexperience of the Hospice Integrated entity, as well as IHS’ short track record. It is true that the hospices started by IHS were in operation for only 12-14 months at the time of the final hearing and that, on a consolidated basis, IHS’ hospices lost money in 1995. But financial problems in one hospice inherited when IHS acquired it skewed the aggregate performance of the hospices in 1995. Two of them did have revenues in excess of expenses for the year. In addition, Hospice of the Great Lakes, which was not acquired until 1996, also is making money. On the whole, IHS’ experience in the hospice arena does not undermine the financial feasibility of the Hospice Integrated application. Wuesthoff also questioned Hospice Integrated’s assumption that the average length of stay (ALOS) of its hospice patients will increase from 55 to 65 days from year one to year two of operation. Wuesthoff contended that this assumption is counter to the recent trend of decreasing ALOS’s, and that assuming a flat ALOS would decrease projected revenues by $262,000. But increasing ALOS from year one to year two is consistent with IHS’ recent experience starting up new hospices. In part, it is reasonably explained by the way in which patient census “ramps up” in the start up phase of a new hospice. As a program starts up, often more than average numbers of patients are admitted near the end of the disease process and die before the ALOS; also, as patient census continues to ramp up, often more than average numbers of patients who still are in the program at the end of year one will have been admitted close to the end of the year and will have been in the program for less than the ALOS. Finally, while pointing to possible revenue shortfalls of $262,000, Wuesthoff overlooked the corresponding expense reductions that would result from lower average daily patient census. It is found that both proposals also are financially feasible in the long term. State and Local Plan Preferences Local Health Plan Preference Number One Preference shall be given to applicants which provide a comprehensive assessment of the impact of their proposed new service on existing hospice providers in the proposed service areas. Such assessment shall include but not be limited to: A projection of the number of Medicare/Medicaid patients to be drawn away from existing hospice providers versus the projected number of new patients in the service area. A projection of area hospice costs increases/decreases to occur due to the addition of another hospice provider. A projection of the ratio of administrative expenses to patient care expenses. Identification of sources, private donations, and fund-raising activities and their affect on current providers. Projection of the number of volunteers to be drawn away from the available pool for existing hospice providers. Both applicants provided an assessment of the impact of their proposed new service on existing hospice providers in the proposed service areas (although both applicants could have provided an assessment that better met the intent of the Local Health Plan Preference One.) There was no testimony that, and it is not clear from the evidence that, one assessment is markedly superior to the other. There also was no evidence as to how the assessments are supposed to be used to compare competing applicants. Both applicants essentially stated that they would not have an adverse impact on the existing providers. The basis for this assessment was that there is enough underserved need in Service Area 7B to support an additional hospice with no adverse impact on the existing providers. Vitas disputed the applicants’ assessment. Vitas presented evidence that it and Comforter have been unable, despite diligent marketing efforts, to achieve statewide average hospice use rates in Service Area 7B, especially for non-cancer and under 65 hospice eligible patients, that the existing hospices can meet the needs of the hospice-eligible patients who are choosing hospice, and that other health care alternatives are available to meet the needs of hospice-eligible patients who are not choosing hospice. Vitas also contended that the applicants will not be able to improve much on the marketing and community outreach efforts of the existing providers. In so doing, Vitas glossed over considerable evidence in the record that the addition of a hospice program, by its mere presence, will increase awareness of the hospice option in 7B regardless whether the new entrant improves upon the marketing efforts of the existing providers, and that increased awareness will result in higher conversion rates. Vitas’ counter-assessment also made several other invalid assumptions. First, it is clear from the application of the FNP rule that, regardless of the conversion rate in Service Area 7B, the size of the pool of potential hospice patients clearly is increasing. Second, it is clear that the FNP rule is inherently conservative, at least in some respects. See Finding 24, supra. The Vitas assessment also made the assumption that the existing providers are entitled to their current market share (87% for Vitas and 13% for Comforter) of anticipated increases in hospice use in Service Area 7B and that the impact of a new provider should be measured against this entitlement. But to the extent that anticipated increased hospice use in Service Area 7B accommodates the new entrant, there will be no impact on the current finances or operations of Vitas and Comforter. Finally, in attempting to quantify the alleged financial impact of an additional hospice program, Vitas failed to reduce variable expenses in proportion to the projected reduction in patient census. Since most hospice expenses are variable, this was an error that greatly increased the perceived financial impact on the existing providers. While approval of either hospice program probably will not cause an existing provider to suffer a significant adverse impact, it seems clear that the impact of Wuesthoff’s proposal would be greater than that of Hospice Integrated. Wuesthoff seeks essentially to duplicate its Brevard Hospice operation in Service Area 7B. Wuesthoff projects higher utilization (186 admissions in year one and 380 admissions in year two, as compared to the 124 and 250 projected by Hospice Integrated). In addition, Wuesthoff’s primary referral source for hospice patients—Florida Hospital—also is the primary referral source of Vitas, which gets 38% of its referrals from Florida Hospital. In contrast, while also marketing in competition with the existing providers, Hospice Integrated will rely primarily on the physicians in Orange and Osceola Counties with whom IHS already has working relationships through its home health agencies and skilled nursing facilities. Hospice Integrated’s conservative utilization projections (124 admissions in year one and 250 in year two) will not nearly approach the service gap identified by the rule (407 admissions). In total, Hospice Integrated only projected obtaining 6% of the total market share in year one and 12% in year two, leaving considerable room for continued growth of the existing providers in the district. The hospice industry has estimated that 10% of patients in long-term care facilities are appropriate for hospice care. IHS regularly uses an estimate of five percent. Common ownership of skilled nursing facilities and hospice programs allows better identification of persons with proper prognosis for hospice. These patients would not be drawn away from existing hospice providers. In addition to the difference in overall utilization projections between the applicants, there also is a difference in focus as to the kinds of patients targeted by the two applicants. The Hospice Integrated proposal focuses more on and made a greater commitment to non-cancer admissions. In addition, IHS has a good record of increasing hospice use by non-cancer patients. In contrast, Wuesthoff’s proposal focuses more on cancer admissions (projecting service to more cancer patients than represented by the underserved need for hospice for those patients, according to the FNP rule) and did not commit to a percentage of non-cancer use in its application. For these reasons, Wuesthoff’s proposal would be expected to have a greater impact and be more detrimental to existing providers than Hospice Integrated. Hospice Integrated also is uniquely positioned to increase hospice use by AIDS/HIV patients in Service Area 7B due to its HIV spectrum program at Central Park Village. It focused more on and made a greater commitment to this service in its application that Wuesthoff did it its application. To the extent that Hospice Integrated does a better job of increasing hospice use by AIDS/HIV patients, it is more likely to draw patients from currently underutilized segments of the pool of hospice-eligible patients in Service Area 7B and have less impact on existing providers than Wuesthoff. Vitas makes a better case that its pediatric hospice program will be impacted by the applicants, especially Wuesthoff. Vitas’ census of pediatric hospice patients ranges between seven and 14. A reduction in Vitas’ already small number of pediatric hospice patients could reduce the effectiveness of its pediatric team and impair its viability. Wuesthoff proposes to duplicate the Brevard Hospice pediatric program, creating a pediatric program with a specialized pediatric team and extensive pediatric programs, similar to Vitas’ program. On the other hand, Hospice Integrated proposes a pediatric program but not a specialized team, and it would not be expected to compete as vigorously as Wuesthoff for pediatric hospice patients. The evidence was not clear as to whether area hospice costs would increase or decrease as a result of the addition of either applicant in Service Area 7B. Vitas, in its case-in- chief, provided an analysis of projected impacts from the addition of either hospice provider. As already indicated, Vitas’ analysis incorporated certain invalid assumptions regarding the fixed/variable nature of hospice costs. However, Vitas’ analysis supported the view that Wuesthoff’s impact would be greater. Wuesthoff’s ratio of administrative expenses to patient care expenses (24% to 76% in year one, dropping to 22% to 78% in year two) is lower than Hospice Integrated’s (26% to 71%). Wuesthoff also appears more likely to compete more directly and more vigorously with the existing providers than Hospice Integrated for private donations, in fund-raising activities, and for volunteers. Local Health Plan Preference Number Two Preference shall be given to an applicant who will serve an area where hospice care is not available or where patients must wait more than 48 hours for admission, following physician approval, for a hospice program. Documentation shall include the number of patients who have been identified by providers of medical care and the reasons resulting in their delay of obtaining hospice care. There was no direct evidence of patients who were referred for hospice services but failed to receive them. Local Health Plan Preference Number Three Preference shall be given to an applicant who will serve in addition to the normal hospice population, an additional population not currently serviced by an existing hospice (i.e., pediatrics, AIDS patients, minorities, nursing home residents, and persons without primary caregivers.) State Health Plan Factor Four Preference shall be given to applicants which propose to serve specific populations with unmet needs, such as children. State Health Plan Preference Number Five Preference shall be given to an applicant who proposes a residential component to serve patients with no at- home support. When Medicare first recognized hospice care in 1983, more than 90% of hospice cases were oncology patients. Although use of hospice by non-cancer patients has increased to 40% statewide, it lags behind in Service Area 7B, at only 27%. Both applicants will serve non-cancer patients. But Hospice Integrated has made a formal commitment to 40% non-cancer patient days and has placed greater emphasis on expanding the provision of hospice services for non-cancer patients. The clinical background of employees of IHS and Hospice Integrated can effectively employ NHO guidelines to identify the needs of AIDS patients and other populations. In its other hospice programs, IHS has succeeded in achieving percentages of non-cancer hospice use of 60% and higher. Wuesthoff projects over 40% non-cancer patient days, and is willing to accept a CON condition of 40% non-cancer patient days, but it did not commit to a percentage in its application. In Service Area 7B, there are 1,200 people living with AIDS and 10,000 who are HIV positive. Both applicants would serve AIDS/HIV patients, but Hospice Integrated has demonstrated a greater commitment to this service. Not only does IHS have its HIV spectrum program at Central Park Village, it also has committed to five percent of its care for HIV patients. Wuesthoff has agreed to serve AIDS/HIV patients, projects that about four percent of its patient days will be provided to AIDS/HIV patients, and would be willing to condition its CON on the provision of four percent of its care to AIDS/HIV patients. But Wuesthoff did not commit to a percentage in its application. Both applicants will serve children, but Wuesthoff has demonstrated greater commitment and ability to provide these services. Ironically, Wuesthoff’s advantage in the area of pediatric hospice carries with it the disadvantage of causing a greater impact on Vitas than Hospice Integrated’s proposal. See Findings 101-102, supra. While neither applicant specifically addressed the provision of services to minorities, both made commitments to provide services for Medicaid patients and the indigent. Hospice Integrated’s commitment to Medicaid patients is higher (ten percent as compared to seven percent for Wuesthoff). But the commitment to Medicaid patients is less significant in the hospice arena because Medicaid essentially fully reimburses hospice care. Meanwhile, Wuesthoff committed seven percent to indigent/charity patients, as compared a five percent commitment to the indigent for Hospice Integrated. But there was some question as to whether Wuesthoff was including bad debt in the seven percent. Both applicants will provide care for patients without primary caregivers. Earlier in its short history of providing hospice, IHS required patients to have a primary caregiver. However, that policy has been changed, and IHS now accepts such patients. Wuesthoff has long provided care for patients without primary caregivers. Local Health Plan Preference Number Four Preference shall be given to an applicant who will commit to contracting for existing inpatient acute care beds rather than build a free-standing facility. State Health Plan Preference Number Six Preference shall be given to applicants proposing additional hospice beds in existing facilities rather than the construction of freestanding facilities. Neither applicant plans to build a free-standing facility for the provision of inpatient care. Both plan to contract for needed inpatient acute care beds, to the extent necessary. IHS’ common ownership of existing skilled nursing facilities in Service Area 7B allows Hospice Integrated access to subacute care at any time. However, not all physicians will be willing to admit all hospice patients to skilled nursing facilities for inpatient care, and Hospice Integrated also will have to contract with acute care facilities to cover those instances. Wuesthoff relies on its proposed affiliation with Florida Hospital for needed inpatient care for its proposed Service Area 7B hospice. State Health Plan Preference Number Two Preference shall be given to an applicant who provides assurances in its application that it will adhere to the standards and become a member of the National Hospice Organization or will seek accreditation by the JCAHO. Both applicants meet this preference. Wuesthoff’s Brevard Hospice has JCAHO as well as membership in the National Hospice Organization (NHO). IHS’s hospices are NHO members, and Hospice Integrated’s application states that it will become a member of the NHO. Wuesthoff’s JCAHO accreditation does not give it an advantage under this preference. Other Points of Comparison In addition to the facts directly pertinent to the State and Local Health Plan Preference, other points of comparison are worthy of consideration. General Hospice Experience Wuesthoff went to great lengths to make the case that its experience in the hospice field is superior to that of Hospice Integrated and IHS. Wuesthoff criticized the experience of its opponent as being short in length and allegedly long on failures. It is true that IHS was new to the field of hospice when it acquired its first hospice in December, 1994, and that it has had to deal with difficulties in venturing into a new field and starting up new programs. Immediately after IHS acquired Samaritan Care of Illinois, Martha Nickel assumed the role of Vice-President of Hospice Services for IHS. After several weeks in charge of the new acquisition, and pending the closing of the purchase of Samaritan Care of Michigan from the same owner set for later in 1995, Nickel uncovered billing improprieties not discovered during IHS’ due diligence investigations. As a result, IHS was required to reimburse the Health Care Financing Administration (HCFA) approximately $3.5 million, and the purchase price for Samaritan Care of Michigan was adjusted. After this rocky start, IHS’ hospice operation settled down. Hospice Integrated’s teams have completed five to seven start up operations and understand what it takes to enter a new market, increase community awareness, and achieve hospice market penetration. Personnel who would implement Hospice Integrated’s approved hospice program have significant experience establishing new hospice programs, having them licensed and receiving accreditation. Without question, IHS’ Marsha Norman has the ability to start up a new hospice program. In contrast, Wuesthoff has operated its hospice in Brevard County since 1984. It is true that Wuesthoff’s Brevard Hospice appears to have been highly successful and, compared to the IHS experience, relatively stable in recent years. But, at the same time, Wuesthoff personnel have not had recent experience starting up a new hospice operation in a new market. Policies and Procedures A related point of comparison is the status of the policies and procedures to be followed by the proposed hospices. Wuesthoff essentially proposes to duplicate its Brevard Hospice in Service Area 7B and simply proposes to use the same policies and procedures. In contrast, IHS still is developing its policies and procedures and is adapting them to new regulatory and market settings as it enters new markets. As a result, the policies and procedures included in the Hospice Integrated application serve as guidelines for the new hospice and more of them are subject to modification than Wuesthoff’s. Regulatory Compliance A related point of comparison is compliance with regulations. Wuesthoff contends that it will be better able to comply with Florida’s hospice regulations since it already operates a hospice in Florida. In some respects, IHS’ staffing projections were slightly out of compliance with NHO staffing guidelines. However, Ms. Norman persuasively gave her assurance that Hospice Integrated would be operated so as to meet all NHO guidelines. One of IHS’ hospice programs was found to have deficiencies in a recent Medicare certification survey, but those deficiencies were “paper documentation” problems that were quickly remedied, and the program timely received Medicare certification. In several respects, the policies and procedures included in Hospice Integrated’s application are out of compliance with Florida regulations and will have to be changed. For example, the provision in Hospice Integrated’s policies and procedures for coordination of patient/family care by a social worker will have to be changed since Florida requires a registered nurse to fill this role. Similarly, allowance in the policies and procedures for hiring a lay person in the job of pastoral care professional (said to be there to accommodate the use of shamans or medicine men for Native American patients) is counter to Florida’s requirement that the pastoral care professional hold a bachelor’s degree in pastoral care, counseling or psychology. Likewise, the job description of social worker in the policies and procedures falls below Florida’s standards by requiring only a bachelor’s degree (whereas Florida requires a master’s degree). Although IHS does not yet operate a hospice in Florida, it has three long-term care facilities and two home health agencies in Service Area 7B, as well as 25 other skilled nursing facilities and several other new home health care acquisitions in Florida. Nationwide, IHS has nursing homes in 41 different states, home health care in 31 different states, and approximately 120 different rehabilitation service sites. Through its experiences facing the difficulties of entering the hospice field through acquisitions, IHS well knows federal regulatory requirements and is quite capable of complying with them. IHS also has had experience with the hospice regulations of several other states. There is no reason to think that Hospice Integrated will not comply with all federal and state requirements. Wuesthoff now knows how to operate a hospice in compliance with federal and state regulatory requirements. But, while Wuesthoff’s intent was to simply duplicate its Brevard Hospice in Service Area 7B, that intention leads to the problem that its board of directors does not have the requisite number of residents of Service Area 7B. Measures will have to be taken to insure appropriate composition of its board of directors. 140. On balance, these items of non-compliance are relatively minor and relatively easily cured. There is no reason to think that either applicant will refuse or be unable to comply with regulatory requirements. Not-for-Profit Experience Wuesthoff clearly has more experience as a not-for- profit entity. This includes extensive experience in fund- raising and in activities which benefit the community. It also gives Wuesthoff an edge in the ability to recruit volunteers. See Findings 56-58, supra. Ironically, Wuesthoff’s advantages over Hospice Integrated in these areas probably would increase its impact on the existing providers. See Finding 105, supra. Presence and Linkages in Service Area 7B Presently, Wuesthoff has no presence in Service Area 7B. As one relatively minor but telling indication of this, Wuesthoff’s lack of familiarity with local salary levels caused it to underestimate its Schedule 8A projected salaries for its administrator, patient coordinator, nursing aides and office manager. IHS has an established presence in Service Area 7B. This gives Hospice Integrated an advantage over Wuesthoff. For example, its projected salary levels were accurate. Besides learning from experience, Wuesthoff proposes to counter Hospice Integrated’s advantage through its proposed affiliation with Florida Hospital. While IHS’ presence and linkages in Service Area 7B is not insignificant, it pales in comparison to Florida Hospital’s. To the extent that Wuesthoff can developed the proposed affiliation, Wuesthoff would be able to overcome its disadvantage in this area. Wuesthoff also enjoys a linkage with the Service Area 7B market through its affiliate membership in the Central Florida Health Care Coalition (CFHCC). The CFHCC includes large and small businesses, as well as Central Florida health care providers. Its goal is to promote the provision of quality health care services. Quality Hospice Services Both applicants deliver quality hospice services through their existing hospices and can be expected to do so in their proposed hospices. As an established and larger hospice than most of IHS’ hospices, Brevard Hospice can provide more enhanced services than most of IHS’. On the other hand, IHS has been impressive in its abilty to expand services to non-cancer patients, and it also is in a better position to provide services to AIDS/HIV patients, whereas Wuesthoff is better able to provide quality pediatric services. Wuesthoff attempted to distinguish itself in quality of services through its JCAHO accreditation. Although Hospice Integrated’s application states that it will get JCAHO accreditation, it actually does not intend to seek JCAHO accreditation until problems with the program are overcome and cured. Not a great deal of significance can be attached to JCAHO hospice accreditation. The JCAHO hospice accreditation program was suspended from 1990 until 1996 due to problems with the program. Standards were vague, and it was not clear that they complied with NHO requirements. Most hospices consider NHO membership to be more significant. None of IHS’s new hospices are even eligible for JCAHO accreditation because they have not been in existence long enough. Bereavement Programs Wuesthoff’s bereavement programs appear to be superior to IHS’. Cf. Findings 44, and 63-64, supra. To some extent, Wuesthoff’s apparent superiority in this area (as in some others) may be a function of the size of Brevard Hospice and the 14-year length of its existence. The provisions in the policies and procedures included in the Hospice Integrated application relating to bereavement are cursory and sparse. IHS relies on individual programs to develop their own bereavement policies and procedures. The provisions in the policies and procedures included in the Hospice Integrated application relating to bereavement include a statement that a visit with the patient’s family would be conducted “if desired by the family and as indicated by the needs of the family.” In fact, as Hospice Integrated concedes, such a visit should occur unless the family expresses a desire not to have one. Continuum of Care One of IHS’ purposes in forming Hospice Integrated to apply for a hospice CON is to improve the continuum of care it provides in Service Area 7B. The goal of providing a continuum of care is to enable case managers to learn a patient’s needs and refer them to the appropriate care and services as the patient’s needs change. While IHS already has an integrated delivery system in Service Area 7B, it lacks hospice. Adding hospice will promote the IHS continuum of care. Since it lacks any existing presence in Service Area 7B, granting the Wuesthoff application will not improve on an existing delivery system in the service area. I. Continuous and Respite Care Though small components of the total hospice program, continuous or respite hospice care should be offered by every quality provider of hospice and will be available in IHS’ program. Wuesthoff’s application failed to provide for continuous or respite hospice care. However, Wuesthoff clearly is capable of remedying this omission. Result of Comparison Both applicants have made worthy proposals for hospice in Service Area 7B. Each has advantages over the other. Balancing all of the statutory and rule criteria, and considering the State and Local Health Plan preferences, as well as the other pertinent points of comparison, it is found that the Hospice Integrated application is superior in this case. Primary advantages of the Hospice Integrated proposal include: IHS’ presence in Service Area 7B, especially its HIV spectrum program at Central Park Village; its recent experience and success in starting up new hospice programs; its success in expanding hospice to non-cancer patients elsewhere; Hospice Integrated’s greater commitment to extend services to the underserved non- cancer and AIDS/HIV segments of the hospice-eligible population; and IHS’ ability to complete its continuum of care in Service Area 7B through the addition of hospice. These and other advantages are enough to overcome Wuesthoff’s strengths. Ironically, some of Wuesthoff’s strengths, including its strong pediatric program and its ability (in part by virtue of its not- for-profit status) and intention generally to compete more vigorously with the existing providers on all fronts, do not serve it so well in this case, as they lead to greater impacts on the existing providers.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the AHCA enter a final order approving CON application number 8406 so that Hospice Integrated may establish a hospice program in the AHCA Service Service Area 7B but denying CON application number 8407 filed by Wuesthoff. RECOMMENDED this 6th day of May, 1997, at Tallahassee, Florida. J. LAWRENCE JOHNSTON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SUNCOM 278-9675 Fax FILING (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 6th day of May, 1997. COPIES FURNISHED: J. Robert Griffin, Esquire 2559 Shiloh Way Tallahassee, Florida 32308 Thomas F. Panza, Esquire Seann M. Frazier, Esquire Panza, Maurer, Maynard & Neel, P.A. NationsBank Building, Third Floor 3600 North Federal Highway Fort Lauderdale, Florida 33308 David C. Ashburn, Esquire Gunster, Yoakley, Valdes-Fauli & Stewart, P.A. 215 South Monroe Street, Suite 830 Tallahassee, Florida 32301 Richard Patterson Senior Attorney Agency for Health Care Administration Fort Knox Building 3, Suite 3431 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 Jerome W. Hoffman General Counsel Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308-5403
The Issue The issue in the case is whether the Agency for Health Care Administration should approve the application of Hernando-Pasco Hospice, Inc., for Certificate of Need No. 9311 to provide hospice services in Hillsborough County, Florida.
Findings Of Fact Hospice services are intended to provide palliative care for persons who have "terminal" illnesses. The purpose of hospice care is to relieve pain and provide an appropriate quality of life for dying patients. Hospice services include physical, psychological, and spiritual services. Physician-directed medical care, nursing care, social services, and bereavement counseling are core hospice services. Hospice services are primarily funded by Medicare. Hospices can also provide community education outreach services related to terminal illness. Some hospice service providers participate in various research programs. There are various "models" for the provision of hospice services to terminally ill patients. Such models include "community" hospices, "comprehensive" hospices, and "corporate" hospices. The evidence fails to establish that any hospice model provides services more appropriately than does any other hospice model. Hospices have different means of providing similar services. For example, some hospices operate residential facilities to provide for patients without available primary caregivers while other hospices may provide caregiver services within the patient's residence or another location. The evidence fails to establish that the differing methods of service provision correlate to the quality of service provided, or that any method is inherently superior to another. HPH is the sole provider of hospice services in Hernando County (Service Area 3D) and is one of two hospice service providers in Pasco County (Service Area 5A). HPH serves approximately 500 patients on a daily basis with an average length of stay of about 50 days. HPH operates three residential facilities with a total of 23 beds, in addition to 35 beds in units located at nursing homes. HPH provides a range of core hospice services. HPH also provides services beyond core hospice services, including specialized HIV/AIDS outreach program, projects related to persons with chronic obstructive pulmonary disease and congestive heart failure, and children's programs. HPH provides home health services to clients. HPH also is involved with the organization of a model program for hospice services in Thailand. HPH operates a subsidiary providing pharmacy services and durable medical equipment to clients. Lifepath is the sole hospice service provider in Hillsborough County (Service Area 6A). Lifepath also provides hospice services in Polk, Highlands, and Hardee Counties (Service Area 6B) Lifepath serves approximately 1,200 Service Area 6A patients on a daily basis with an average length of stay of approximately 70 days. The longer length of stay by Lifepath patients indicates that on average, Lifepath patients access hospice services at an earlier point in the progression of terminal illness and receive services for more time than do HPH patients. Lifepath is in the process of establishing residential facilities. As with HPH, Lifepath provides a full range of hospice services and other programs. The evidence fails to establish that, as to services and programs commonly provided, either HPH or Lifepath is markedly superior to the other. Hillsborough County has a population in excess of one million residents and is the fourth largest county in Florida. It is the largest hospice Service Area in Florida served by a single licensed hospice. There are five Service Areas with populations in excess of Hillsborough County, all of which are served by more than one hospice. In 2000, there were 8,649 resident deaths and 9,582 recorded deaths in Hillsborough County. The difference between resident deaths and recorded deaths is largely the result of the fact that Tampa General Hospital and the Moffitt Cancer Center are located in Hillsborough County and draw patients from outside the county. A CON for hospice services may be awarded to an appropriate applicant when the fixed need calculation pursuant to Rule 59C-1.0355(4)(a), Florida Administrative Code, indicates that numeric need exists for another provider. The numeric need formula accounts for whether a licensed hospice is achieving an appropriate penetration rate. Penetration rates, both statewide and on a service area basis, are calculated by dividing the number of hospice admissions by the number of resident deaths. The formula is applied to relevant statistical data every six months to generate a report of "numeric need." The application of the numeric need calculation formula accounts for the population of a service area and historical and projected rates of death in a service area. The formula also accounts for gaps between the projected penetration rate and the actual penetration rate. A gap in excess of 350 admissions triggers an automatic determination of numeric need. In this case, the fixed need pool calculation for the applicable batching cycle is zero. There is no numeric need for an additional licensed hospice provider in Service Area 6A. The HPH CON application is based on HPH's assertion that "special circumstances" exist that outweigh the lack of numeric need and therefore the CON should be granted. The special circumstances identified by HPH are that Service Area 6A is the largest single hospice Service Area in the state, and that the location of large medical centers drawing terminally ill patients into the county results in a substantial gap between "resident" deaths (which are reflected in the numeric need calculation) and "recorded" deaths (which are not). HPH asserts that the "failure" of the numeric need formula to consider "recorded" deaths rather than "resident" deaths results in the Service Area 6A penetration rate indicating that a significantly higher level of service is being provided than is actually the case. HPH also asserts that, according to an application by Lifepath of inpatient hospice beds, Lifepath experienced a level of hospice admissions substantially in excess of the projected penetration rate for the time period, and that the increased admissions indicates that the numeric need methodology under- predicted the actual need for hospice services in Service Area 6A. Subsequent data indicates that the gap between projected and actual admissions in Service Area 6A has declined since the HPH application was filed. At the time of the hearing, the most recent data indicated that the penetration rate in Service Area 6A exceeds the state average. Since the HPH application was filed, Lifepath aggressively increased its penetration rate, either in response to the HPH application at issue in this proceeding (as HPH asserts) or accordingly to previously developed (but undisclosed) reorganization and marketing plans (as Lifepath suggests). The fact that just over one-third of terminally ill patients in Florida access hospice services suggests that other hospices could achieve similar increases in penetration rates. In any event, the evidence fails to establish that the increased Lifepath admissions indicate that the numeric need calculation failed to adequately predict the need for hospice services in the Service Area. In the CON application, HPH also asserts that the level of service provided by Lifepath, the sole hospice in Service Area 6A, is lower than it would be were Lifepath faced with a competitor. HPH asserts that under the circumstances, the lack of competition constitutes a "special circumstance" under which HPH should receive the CON. Section 408.043(2), Florida Statutes (1999), provides in part that the "formula on which the certificate of need is based shall discourage regional monopolies and promote competition." The formula referenced in Section 408.043(2), Florida Statutes, is the numeric need calculation set forth in Rule 59C- 1.0355(4)(a), Florida Administrative Code. HPH asserts that Lifepath is a "regional monopoly," that the rule has not functioned properly, and that its CON application should be approved to promote competition. The HPH position essentially constitutes an improper challenge to the Rule 59C-1.0355(4)(a), Florida Administrative Code, and is rejected. Evidence related to the "market power" allegedly exercised by Lifepath in order to block entry of a competing hospice was unpersuasive and is rejected. As previously stated, the general level of service provided by a hospice in a particular Service Area is measured, in part, by calculation of a "penetration rate." Penetration rates are calculated by dividing hospice admissions in a service area by resident deaths in a service area. Penetration rates are a component of the fixed need pool calculation performed by AHCA. AHCA calculates penetration rates to determine a statewide average and also calculates penetration rates for each service area. Lifepath's penetration rate during the period prior to the filing of the HPH application was somewhat less than the state average penetration rate and Lifepath's admissions declined by 66 patients from 1998 levels. The decline in penetration rate was not sufficient to result in numeric need for another hospice provider under the fixed need pool calculation and does not constitute a special circumstance supporting approval of the CON at issue in this case. By statute, in the absence of numeric need, an application for a hospice CON shall not be approved unless other criteria in Rule 59C-1.0355, Florida Administrative Code, and in Sections 408.035 and 408.043(2), Florida Statutes, outweigh the lack of numeric need. Rule 59C-1.0355(4)(d), Florida Administrative Code, provides as follows: Approval Under Special Circumstances. In the absence of numeric need identified in paragraph (4)(a), the applicant must demonstrate that circumstances exist to justify the approval of a new hospice. Evidence submitted by the applicant must document one or more of the following: That a specific terminally ill population is not being served. That a county or counties within the service area of a licensed hospice program are not being served. That there are persons referred to hospice programs who are not being admitted within 48 hours (excluding cases where a later admission date has been requested). The applicant shall indicate the number of such persons. Documentation that a specific terminally ill population is not being served The HPH application fails to document that a specific terminally ill population is not being served. The State Agency Action Report prepared by AHCA prior to the agency's proposed award of the CON to HPH acknowledges the lack of documentation contained within the application. At the hearing, HPH identified allegedly underserved populations. HPH asserts that elderly persons are underserved in Service Area 6A. The numeric need calculation specifically accounts for elderly patients with terminal cancer diagnoses and non-cancer illnesses. The evidence fails to support the assertion. Service Area 6A penetration rates for terminally ill elderly patients, both cancer and non-cancer, are within reasonable ranges to statewide averages. HPH asserts that children are underserved in Service Area 6A. The evidence fails to support the assertion. HPH cited Lifepath's closure of the "Beacon Center" children's bereavement program prior to the filing of the HPH application. There is no evidence that the closing of the center resulted in an underservice to children. The closing was based on a determination that services being provided were unfocused and not directly related to the mission of hospice. Lifepath decentralized their children's services, and the bereavement program was continued under the auspices of Lifepath's psychosocial services unit. Lifepath continues to provide children's services through a variety of programs. HPH asserts that nursing home residents are underserved in Service Area 6A. The evidence fails to support the assertion. Lifepath has contracts with every nursing home in the Service Area. Lifepath actively markets services to nursing homes and provides appropriate services to and admissions of nursing home residents. At the time of the 1999 HPH application, Lifepath nursing home admissions had declined. The decline was based on Lifepath's concern related to apparent Federal regulatory action related to hospice nursing home admissions in an adjacent service area by an unrelated hospice. Lifepath chose to limit admissions pending resolution of the Federal action. The evidence fails to establish that Lifepath's concern was unwarranted or that Lifepath's response to the situation was unreasonable. HPH asserts that AIDS patients are underserved in Service Area 6A. There is no evidence that Lifepath underserves AIDS patients. Lifepath works with AIDS patients and case managers from various service organizations, and provides an appropriate level of hospice services to them. While HPH provides AIDS services and education in a manner different from Lifepath, the evidence does not establish that HPH's AIDS-related services are superior to Lifepath or that the difference reflects a lack of service to AIDS patients in Service Area 6A. HPH asserts that terminally ill patients without primary caregivers are underserved in Service Area 6A. The evidence fails to support the assertion. Lifepath has a caregiver program that provides for funding staff to provide primary caregiver services where such is required. Such services are provided without charge to those patients who have no ability to pay for caregiver services. HPH asserts that the Lifepath's lack of residential facilities at the time the application was filed results in underservice to persons without primary caregivers. The lack of residential facilities does not inhibit service where, as is the case here, funding is available to provide residential care of persons without primary caregivers. Documentation that a county or counties within the service area of a licensed hospice program are not being served The HPH application fails to document that a county or counties are not being served. The evidence establishes that at the time of the HPH application for CON, Lifepath's penetration rate was below the statewide average but not sufficiently below the statewide average to trigger a determination of numeric need. Subsequent to the HPH application, Lifepath's penetration rate has increased and at the time of hearing exceeds the statewide average. Because a statewide average penetration rate is used in the numeric need formula, it is logical to expect that half of the service areas will report penetration rates below the state average. The fact that a service area penetration rate is less than the state average does not establish a special circumstance justifying award of a CON for new hospice service. There is no credible evidence that geographic barriers exist within Hillsborough County which result in a lack of availability of and access to hospice services in any part of the county. HPH proposes to initially serve the northern ten ZIP code areas of Hillsborough County. There is no evidence that terminally ill persons in the northern ten ZIP code areas of Hillsborough County suffer from a lack of availability or access to hospice services. The evidence fails to establish that hospice penetration rates for the northern ten ZIP code areas of Hillsborough County are different from penetration rates throughout the county. The evidence fails to establish that the northern ten ZIP code areas of Hillsborough County is demographically different than the county as a whole. HPH offered to open its initial office within the northern ten ZIP code areas of Hillsborough County. Although Lifepath does not have administrative offices located within the northern ten ZIP code areas of Hillsborough County, there is no credible evidence that the lack of administrative offices results in a lack of availability or access to hospice services. Lifepath provides hospice services at the residence of the patient and/or family. Hospice staff members are geographically assigned to provide direct patient care. Lifepath has staff members residing in northern ZIP code areas of Hillsborough County. Documentation that there are persons referred to hospice programs who are not being admitted within 48 hours (excluding cases where a later admission date has been requested), including identification of the number of such persons The HPH application does not suggest that there are persons referred for hospice services who are not being admitted with the required 48-hour period. Section 408.035, Florida Statutes, sets forth the criteria for review of a CON application. The following findings of fact are directed towards consideration of the review criteria that the parties have stipulated are applicable to this proceeding. The need for the health care facilities and health services being proposed in relation to the applicable district plan, except in emergency circumstances that pose a threat to the public health. Section 408.035(1)(a), Florida Statutes. The local health plan requires that an applicant must document an existing need and identify how the need is not being met. As set forth herein, the HPH application fails to establish that a need exists for the services being proposed. The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care facilities and health services in the service district of the applicant. Section 408.035(1)(b), Florida Statutes. The evidence establishes that a full range of hospice services is currently available and accessible in Service Area 6A. Lifepath hospice care addresses the physical, spiritual and psychosocial needs of terminally ill persons. Services are available 24 hours a day seven days a week. Available services include various forms of palliative care including palliative chemotherapy and radiation treatment, intensive care, mechanical ventilation, nutritional services, pharmaceutical services, hydration, and dialysis. Bereavement services are available to families, survivors and caregivers during the terminal process and for up to one year after the death of a patient. Direct physician care is available wherever a patient resides. Outpatient physician care is available via an outpatient clinic which patients may utilize if they desire. Lifepath and the University of South Florida medical school participate in various research efforts that result in Lifepath patients having access to medical school students and physicians. Lifepath also participates with the University in a research program at the "Center for Hospice, Palliative Care, and End-of-Life Studies." Lifepath utilizes various advisory review committees, including medical and spiritual personnel, as well as representatives of specific ethnic populations, to monitor performance and permit improvements in service provision. Lifepath also utilizes volunteers to assist in providing patient care as well as to raise funds and increase awareness of hospice services. There are no barriers interfering with access to hospice services in Service Area 6A. Lifepath provides services to anyone who desires hospice care. Patients may choose the types of services they receive from Lifepath. Such treatment includes radiation and chemotherapies that are palliative in nature. Lifepath provides a substantial amount of unreimbursed care. Hospice services provided by Lifepath are appropriate and adequate. Staffing patterns are acceptable. A newly developed staffing model ("Pathways") will permit increased flexibility in staffing. The evidence establishes that HPH and Lifepath differ in how staff is deployed. The evidence fails to establish that either method of staffing is superior to the other. Utilization as measured by penetration rates is acceptable. As discussed herein, the 1999 Service Area 6A penetration rate lagged the state average by an amount insufficient to trigger a numeric need determination. Significantly, the penetration rate has improved in Service Area 6A for reasons that are, at best, identified as speculative. At the time of the hearing, the penetration rate in Service Area 6A is the ninth highest in the state. The evidence fails to establish that the addition of another hospice provider in Service Area 6A will necessarily result in increased penetration. Hospice services in Service Area 6A are provided efficiently. Ancillary services, including drugs and medical equipment are provided through Lifepath subsidiaries, similar to HPH's operations. New staffing models deployed by Lifepath reduced management staffing requirements and increased available resources for patient care. The ability of the applicant to provide quality of care and the applicant's record of providing quality of care. Section 408.035(1)(c), Florida Statutes. The evidence establishes that HPH has the ability to provide an appropriate quality of care, and has a record of doing so within its licensed Service Areas. Lifepath asserts that the quality of care is superior to HPH. The evidence fails to support the assertion. Evidence related to accreditation of Lifepath by the Joint Commission for the Accreditation of Healthcare Organizations is not relevant to this issue and has not been considered. The availability and adequacy of other health care facilities and health services in the service district of the applicant, such as outpatient care and ambulatory or home care services, which may serve as alternatives for the health care facilities and health services to be provided by the applicant. Section 408.035(1)(d), Florida Statutes. Hospice services are currently available and adequate in Service Area 6A. In addition to Lifepath services, other end-of-life care identified herein is available to terminally ill persons residing in the county. Probable economies and improvements in service which may be derived from operation of joint, cooperative, or shared health care resources. Section 408.035(1)(e), Florida Statutes. There are no economies or efficiencies proposed from the operation of joint, cooperative or shared health care resources. The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation; the effects the project will have on clinical needs of health professional training programs in the service district; the extent to which the services will be accessible to schools for health professions in the service district for training purposes if such services are available in a limited number of facilities; the availability of alternative uses of such resources for the provision of other health services; and the extent to which the proposed services will be accessible to all residents of the service district. Section 408.035(1)(h), Florida Statutes. The evidence fails to establish that health personnel will be available to staff the proposed HPH program. The labor pool for home health and nursing personnel in the Service Area is limited, as it is elsewhere in the nation. Staffing shortages are expected to increase. HPH proposed salaries are significantly beneath those required to employ qualified staff in the Hillsborough County, and the proposed recruitment budget for initial staffing is inadequate. HPH also lacks sufficient budgeted funds for continued recruitment and training. The evidence establishes that HPH's proposal will not provide access to patients who require palliative radiation or chemotherapy. Palliative radiation or chemotherapy is used to provide pain relief, such as to shrink a pain-causing tumor. HPH provides little chemotherapy services to patients and rarely, if ever, pays for the treatment. Lifepath provides such services and funds them. Approximately five percent of Lifepath patients receive palliative radiation or intravenous chemotherapy services. An additional five percent receive oral chemotherapy services. The evidence also establishes that HPH's proposal will not provide access to patients who have a prognosis of more than six months but less than one year to live. HPH does not admit patients with life expectancies of greater than six months. Lifepath admits patients with life expectancies of up to one year. The immediate and long-term financial feasibility of the proposal. Section 408.035(1)(i), Florida Statutes. The HPH proposal is not financially feasible. HPH projects admissions of 230 by the end of year one and 455 by the end of year two. The HPH projections exceed the experience of any other Florida licensed hospice provider, including those expanding into neighboring counties as is proposed here. Based on a reasonable projection of market share, HPH will likely experience an admission level of 130 patients in year one and 245 patients in year two. HPH projected salaries are low by approximately $263,000 in year two. Nursing salaries are insufficient by approximately 20 percent, based on actual Lifepath salaries, which are accepted as reasonable. Correction of the underestimated expenses indicates that HPH will not generate a surplus of revenue over expenses. Further, the HPH pro forma fails to account for costs related to proposed special services including services to AIDS patients, children and persons without caregivers. HPH asserts that such programs are extensions of existing programs and will not generate additional costs. The assertion is not supported by credible evidence. The needs and circumstances of those entities that provide a substantial portion of their services or resources, or both, to individuals not residing in the service district in which the entities are located or in adjacent service districts. Such entities may include medical and other health professions, schools, multidisciplinary clinics, and specialty services such as open-heart surgery, radiation therapy, and renal transplantation. Section 408.035(1)(k), Florida Statutes. Approval of the HPH application will permit HPH to provide hospice services to terminally ill Hernando and Pasco residents who travel into Hillsborough County to seek care. The probable impact of the proposed project on the costs of providing health services proposed by the applicant, upon consideration of factors including, but not limited to, the effects of competition on the supply of health services being proposed and the improvements or innovations in the financing and delivery of health services which foster competition and service to promote quality assurance and cost- effectiveness. Section 408.035(1)(l), Florida Statutes. HPH asserts that increased competition in Service Area 6A will result in increased penetration rates. The evidence establishes that competition for end-of-life services currently exists in the Service Area. The addition of a second hospice provider will not necessarily result in increased penetration. Terminally ill patients in Hillsborough County have access to end-of-life care though a variety of health care resources. Home health agencies and nursing homes (through the "Evercare" program) provide end-of-life care. In addition, several hospitals in the county have palliative care programs for terminally ill patients. There is no evidence that persons seeking end-of-life care in Service Area 6A are unable to obtain it. Lifepath asserts that the type of services provided by HPH and Lifepath differ so significantly as to foster confusion in the hospice market. While there are differences in levels of service provided, the evidence fails to establish that potential hospice patients would be unable to determine which services met their individual needs. Lifepath fears that as differences in treatment options become apparent to the medical community, persons seeking more intensive and higher cost care (including radiation and chemotherapy) will be directed towards Lifepath, leaving other, lower-cost patients to HPH. Lifepath asserts that it could be forced to reduce currently provided services to the allegedly lower level of services provided by HPH. Lifepath suggests that programs funded from surplus revenues could be cut as it dealt with a drain of lower-cost patients to HPH. Given that most hospice service is Medicare-funded, price competition is not an issue. Competition on the basis of level of service would potentially reward the hospice offering more comprehensive services, such as those Lifepath claims to offer; accordingly, the assertion is rejected. Lifepath asserts that approval of the HPH application would result in reduced charitable contributions and reduced volunteers as both hospices sought donors and volunteers from the same "pool." The evidence fails to establish that the availability of charitable contributions and volunteers in Service Area 6A is, or has been, exhausted. Lifepath asserts that approval of the HPH application will have an adverse impact on its ability to recruit staff. Given that the HPH projected salary levels are significantly below those being offered by Lifepath, it is unlikely that such an adverse impact would result from HPH operations in the county. The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent. Section 408.035(1)(n), Florida Statutes. HPH proposes to provide less Medicaid and indigent care in Hillsborough County than it has provided historically. As of 2001, 13.2 percent of HPH patients were Medicaid patients, yet HPH proposes to provide only 5 percent Medicaid care in Hillsborough County. Likewise, the HPH projection of indigent care provision in Hillsborough County is less than currently provided. The applicant's past and proposed provision of services that promote a continuum of care in a multilevel health care system, which may include, but are not limited to, acute care, skilled nursing care, home health care, and assisted living facilities. Section 408.035(1)(o), Florida Statutes. HPH has a history of integrating its services into the local continuum of care in the counties where it is currently licensed and would likely do the same in Hillsborough County. Section 408.043(2), Florida Statutes (1999), provides that "[w]hen an application is made for a certificate of need to establish or to expand a hospice, the need for such hospice shall be determined on the basis of the need for and availability of hospice services in the community." The evidence establishes that hospice services are appropriately available in Hillsborough County and that there is currently no need for licensure of an additional hospice. The section further provides that "[t]he formula on which the certificate of need is based shall discourage regional monopolies and promote competition." Issues related to competition are addressed elsewhere herein. The issue of whether Lifepath constitutes a regional monopoly is related to DOAH Case No. 02-2703RU and is addressed by separate order. Rule 59C-1.0355, Florida Administrative Code, sets forth "preferences" given to an applicant meeting certain specified criteria. None of the preferences outweigh the lack of numeric need in this case. The HPH application fails to meet the preference given to an applicant who has a commitment to serve populations with unmet needs. The evidence fails to establish that such populations exist in Service Area 6A. The HPH application meets the preference to provide inpatient care through contractual arrangements with existing healthcare providers. HPH has previously utilized such contracts where it is licensed to operate and would enter into arrangements with Hillsborough County providers. The HPH application fails to meet the preference given to an applicant committed to serve patients without primary caregivers, homeless patients, and patients with AIDS. The HPH application does not set forth budgeted funds to provide such services. The evidence fails to establish that such patients are currently underserved in the Service Area. The HPH application fails to meet the preference given to applicants proposing to provide services which are not specifically covered by private insurance, Medicaid or Medicare because HPH does not provide for palliative radiation or chemotherapy treatments. Rule 59C-1.0355(5), Florida Administrative Code, requires that letters of support be included with the application. HPH submitted approximately 180 letters of support less that half of which were from Hillsborough County and many of which are form letters. Rule 59C-1.030, Florida Administrative Code, sets forth additional criteria used in the evaluation of CON applications. Rule 59C-1.030(2)(a), Florida Administrative Code, requires that the review consider the need for the proposed services by underserved populations. The evidence in this case fails to establish that there is an underserved population in Service Area 6A.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Agency for Health Care Administration enter a Final Order denying the application of Hernando-Pasco Hospice, Inc., for Certificate of Need No. 9311 to provide hospice services in Service Area 6A. DONE AND ENTERED this 17th day of March, 2003, in Tallahassee, Leon County, Florida. WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 17th day of March, 2003. COPIES FURNISHED: Michael O. Mathis, Esquire Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Robert D. Newell, Jr., Esquire Newell & Terry, P.A. 817 North Gadsden Street Tallahassee, Florida 32303-6313 Frank P. Rainer, Esquire Sternstein, Rainer & Clarke, P.A. 101 North Gadsden Street Tallahassee, Florida 32301-7606 H. Darrell White, Esquire McFarlain & Cassedy, P.A. 305 South Gadsden Street Post Office Box 2174 Tallahassee, Florida 32316-2174 Lealand McCharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3431 Tallahassee, Florida 32308 Rhonda M. Medows, M.D., Secretary Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3116 Tallahassee, Florida 32308
The Issue Whether there is “an error in the Fixed Need Pool numbers” for hospice as calculated by the Agency for Health Care Administration (“AHCA”) pursuant to Florida Administrative Code Rule 59C-1.0355(4)(a), and as published by AHCA on February 5, 2021, pursuant to rule 59C-1.008(2)(a).
Findings Of Fact Based upon the credibility of the witnesses and evidence presented at the final hearing and on the entire record of this proceeding, the following Findings of Fact are made: The Parties AHCA is designated as the single state agency for the issuance, denial and revocation of certificates of need (“CONs”), including exemptions and exceptions in accordance with present and future federal and state statutes. Suncoast is a licensed hospice program serving HSA 5B, which is comprised entirely of Pinellas County. As an existing hospice provider in HSA 5B, Suncoast is substantially affected by the publication of the FNP at issue in this proceeding and has standing to challenge “an error in the Fixed Need Pool numbers” as set forth in rule 59C-1.008(2)(a)2. Seasons is also a licensed hospice program serving HSA 5B. As an existing hospice provider in HSA 5B, Seasons is substantially affected by the publication of the FNP at issue in this proceeding and has standing to challenge “an error in the Fixed Need Pool numbers” as set forth in rule 59C- 1.008(2)(a)2. Cornerstone is an applicant for a CON for a new hospice program in HSA 5B predicated, at least in part, on the publication of the FNP under challenge in this proceeding. Cornerstone is substantially and adversely affected by the potential change of the FNP from a determination of need for a new hospice program to no need for a new hospice program in HSA 5B, and therefore has standing to intervene in this proceeding. HPH is an applicant for a CON for a new hospice program in HSA 5B predicated, at least in part, on the publication of the FNP under challenge in this proceeding. HPH is substantially and adversely affected by the potential change of the FNP from a determination of need for a new hospice program to no need for a new hospice program in HSA 5B, and therefore has standing to intervene in this proceeding. VITAS is an applicant for a CON for a new hospice program in HSA 5B predicated, at least in part, on the publication of the FNP under challenge in this proceeding. VITAS is substantially and adversely affected by the potential change of the FNP from a determination of need for a new hospice program to no need for a new hospice program in HSA 5B, and therefore has standing to intervene in this proceeding. AHCA’s Calculation and Publication of the Fixed Need Pool As part of its responsibilities under the CON laws, AHCA is required to establish, by rule, uniform need methodologies for CON-regulated health facilities and services. Those need methodologies must take into account “the demographic characteristics of the population, the health status of the population, service use patterns, standards and trends, geographic accessibility, and market economics.” § 408.034(3), Fla. Stat. Rule 59C-1.0355 codifies the uniform need methodology that applies to hospice programs. The rule defines twenty-seven (27) service areas, and AHCA uses the need methodology in rule 59C-1.0355(4)(a) to calculate numeric need for hospice programs for each of the 27 HSAs. The results of those calculations determine whether there is an FNP of one, or zero, in each of the 27 HSAs. Typically, AHCA publishes need projections for hospice programs twice per year in “batching cycles.” See Fla. Admin. Code R. 59C-1.008(1)(g), (2)(a).1,2 Rule 59C-1.008(2)(a) allows parties to identify purported “errors” in the FNP numbers published by AHCA: Any person who identifies an error in the Fixed Need Pool numbers must advise the Agency of the error within 10 days of the date the Fixed Need 1 As explained below, AHCA cancelled the CON Hospital Facilities and Hospice 2nd Batching Cycle for 2020. 2 Although AHCA typically publishes need projections for hospice programs twice per year, Florida law requires only one FNP publication per year. See § 408.039(1), Fla. Stat. (“The agency by rule shall provide for applications to be submitted on a timetable or cycle basis; provide for review on a timely basis; and provide for all completed applications pertaining to similar types of services or facilities affecting the same service district to be considered in relation to each other no less often than annually.”). (emphasis added). Pool was published in the Florida Administrative Register. If the Agency concurs in the error, the Fixed Need Pool number will be adjusted and re- published in the first available edition of the Florida Administrative Register. Failure to notify the Agency of the error during this time period will result in no adjustment to the Fixed Need Pool number for that batching cycle. Except as provided in subparagraph 2. above, the batching cycle specific Fixed Need Pools shall not be changed or adjusted in the future regardless of any future changes in need methodologies, population estimates, bed inventories, or other factors which would lead to different projections of need, if retroactively applied. Fla. Admin. Code R. 59C-1.008(2)(a)2. and 3. It is undisputed that AHCA’s rules do not define “error” as that term is used in rule 59C-1.008(2)(a)2. Although there is no definition of the word “error,” AHCA limits its interpretation of the word to only “mathematical” errors or late-filed hospice admissions by Florida licensed hospice programs pursuant to rule 59C-1.0355(8). Petitioners’ Fixed Need Pool Challenge On February 5, 2021, AHCA published an FNP for one new hospice program in HSA 5B. Suncoast timely advised AHCA in writing of two purported errors it had identified in the FNP. Specifically, Suncoast asserted that: (1) AHCA’s calculations incorrectly predict future need based upon a spike in admissions caused by the COVID-19 pandemic that will not exist when the planning horizon arrives3; and (2) AHCA has not accounted for actual hospice admissions by VA hospitals that provide hospice care in Pinellas County. 3 Even before AHCA’s publication on February 5, 2021, Suncoast requested that AHCA suspend the Hospital Facilities and Hospice 1st Batching Cycle for 2021, citing the COVID-19 pandemic. Seasons Pinellas also timely advised AHCA in writing of the same two purported errors in the FNP. On February 17, 2021, AHCA issued separate but identical responses to Suncoast and Seasons Pinellas, stating that “the published need is correct and a revision to the fixed need pool is not warranted.” The Hospice Need Methodology Under AHCA’s hospice need methodology, numeric need for an additional hospice program is demonstrated if the projected number of unserved patients who would elect a hospice program is 350 or greater. The net need for a new hospice program in an HSA is calculated as follows: Numeric Need for a New Hospice Program. Numeric need for an additional Hospice program is demonstrated if the projected number of unserved patients who would elect a Hospice program is 350 or greater. The net need for a new Hospice program in a service area is calculated as follows: (HPH) -- (HP) = 350 where: (HPH) is the projected number of patients electing a Hospice program in the service area during the 12-month period beginning at the planning horizon. (HPH) is the sum of (U65C x P1) + (65C x P2) + (U65NC x P3) + (65NC x P4) where: U65C is the projected number of service area resident cancer deaths under age 65, and P1 is the projected proportion of U65C electing a Hospice program. 65C is the projected number of service area resident cancer deaths age 65 and over, and P2 is the projected proportion of 65C electing a Hospice program. U65NC is the projected number of service area resident deaths under age 65 from all causes except cancer, and P3 is the projected proportion of U65NC electing a Hospice program. 65NC is the projected number of service area resident deaths age 65 and over from all causes except cancer, and P4 is the projected proportion of 65NC electing a Hospice program. The projections of U65C, 65C, U65NC, and 65NC for a service area are calculated as follows: U65C = (u65c/CT) x PT 65C = (65c/CT) x PT U65NC = (u65nc/CT) x PT 65NC = (65nc/CT) x PT where: u65c, 65c, u65nc, and 65nc are the service area's current number of resident cancer deaths under age 65, cancer deaths age 65 and over, deaths under age 65 from all causes except cancer, and deaths age 65 and over from all causes except cancer. CT is the service area's current total of resident deaths, excluding deaths with age unknown, and is the sum of u65c, 65c, u65nc, and 65nc. PT is the service area's projected total of resident deaths for the 12-month period beginning at the planning horizon. “Current” deaths means the number of deaths during the most recent calendar year for which data are available from the Department of Health, Office of Vital Statistics at least 3 months prior to publication of the Fixed Need Pool. “Projected” deaths means the number derived by first calculating a 3-year average resident death rate, which is the sum of the service area resident deaths for the three most recent calendar years available from the Department of Health, Office of Vital Statistics at least 3 months prior to publication of the Fixed Need Pool, divided by the sum of the July 1 estimates of the service area population for the same 3 years. The resulting average death rate is then multiplied by the projected total population for the service area at the mid-point of the 12-month period which begins with the applicable planning horizon. Population estimates for each year will be the most recent population estimates from the Office of the Governor at least 3 months prior to publication of the Fixed Need Pool. The projected values of P1, P2, P3, and P4 are equal to current statewide proportions calculated as follows: P1 = (Hu65c/Tu65c) P2 = (H65c/T65c) P3 = (Hu65nc/Tu65nc) P4 = (H65nc/T65nc) where: Hu65c, H65c, Hu65nc, and H65nc are the current 12-month statewide total admissions of Hospice cancer patients under age 65, Hospice cancer patients age 65 and over, Hospice patients under age 65 admitted with all other diagnoses, and Hospice patients age 65 and over admitted with all other diagnoses. The current totals are derived from reports submitted under subsection (8) of this rule. Tu65c, T65c, Tu65nc, and T65nc are the current 12-month statewide total resident deaths for the four categories used above. (HP) is the number of patients admitted to Hospice programs serving an area during the most recent 12-month period ending on June 30 or December 31. The number is derived from reports submitted under subsection (8) of this rule. 350 is the targeted minimum 12-month total of patients admitted to a Hospice program. (Fla. Admin. Code R. 59C-1.0355(4)(a)). While daunting in its length and complexity, the methodology can succinctly be summarized as follows: AHCA makes a projection of future hospice need in an HSA which is abbreviated as “(HPH)”; AHCA then subtracts from that projection the actual number of hospice admissions in the HSA, which is abbreviated “(HP).” If the result of that subtraction is 350 or greater, AHCA publishes an FNP for an additional program for that HSA. (HPH) is calculated by determining the projected number of deaths in four categories—(1) cancer, 65 and older; (2) cancer, under 65; (3) non-cancer, 65 and older; and (4) non-cancer, under 65. The methodology then projects the percentage of people within those four categories that would elect hospice care, which is calculated by employing the statewide penetration rate for those four categories to a service area’s community. These penetration rates or, P-values, are calculated by using the entire state’s admissions in each of the four categories divided by the entire state’s deaths in each of those four categories. In calculating the number of deaths for (HPH), the rule calls for AHCA to use data from the most recent calendar year for which data are available from the Department of Health, Office of Vital Statistics, at least three months prior to publication of the FNP. (HP) is calculated by using semi-annual utilization reports that are required to be completed by each licensed hospice program in the state on or before July 20 of each year and January 20 of the following year. “The July report shall indicate the number of new patients admitted during the 6-month period composed of the first and second quarters of the current year” and the “January report shall indicate the number of new patients admitted during the 6-month period composed of the third and fourth quarters of the prior year.” Using this need methodology, the net need for HSA 5B for the July 2022 hospice planning horizon was 414, resulting in a need of one (1) new hospice program in the service area. Because the rule requires death data from the most recent calendar year that was available at least three months prior to the publication of the FNP, AHCA used the final death reports from 2019 in calculating need for the July 2022 hospice planning horizon. However, because the rule requires admissions data from the most recent 12-month period ending on June 30 or December 31, AHCA used admissions from 2020 in calculating need for the July 2022 hospice planning horizon. As pointed out by Petitioners, just 65 more hospice admissions in HSA 5B in 2020 would have resulted in a net need of zero (0) new hospice programs in that HSA for the July 2022 planning horizon. Legal Presumption Created by FNP Determination A positive FNP determination will establish a rebuttable presumption of need. Balsam v. Dep’t of HRS, 486 So. 2d 1341, 1349 (Fla. 1st DCA 1986); VITAS Healthcare Corp. of Cent. Fla., Inc. v. Ag. for Health Care Admin., Case No. 04-3858CON (Fla. DOAH June 14, 2005; Fla. AHCA July 7, 2005). The converse is also true that “[a] lack of numeric need under the rule formula establishes a rebuttable presumption of no need.” Beverly Enter.- Fla., Inc. v. Ag. for Health Care Admin., Case Nos. 92-6656, 92-6659-6662, 92-6669 (Fla. DOAH July 24, 1994; Fla. AHCA Oct. 17, 1994). In a hospice CON case, the absence of numeric need prohibits the approval of a new hospice program unless special circumstances found in the hospice need rule are present, or applicable criteria outweigh the lack of need. See Fla. Admin. Code R. 59C-1.0355(3)(b), (4)(d); Compassionate Care Hospice of the Gulf Coast, Inc. v. State, Ag. for Health Care Admin., 247 So. 3d 99, 101-02 (Fla. 1st DCA 2018). In most cases, the establishment of a positive FNP nearly always results in the approval of a new hospice program, and the determination of zero need results in a denial of all applications. Thus, AHCA’s calculation of hospice need as reflected in its FNP determination will substantially affect each of the parties in this case. Suncoast and Seasons Pinellas have identified two purported errors in AHCA’s need determination: (1) the challenged FNP is based on data that was skewed by the COVID-19 pandemic; and (2) the FNP numbers fail to account for hospice admissions to Bay Pines. Petitioners contend that, in light of these factors, AHCA’s calculation of a net need for one new hospice program in HSA 5B for the July 2022 planning horizon is not accurate. While both of these arguments are cognizable within an FNP challenge, neither is persuasive in this instance, as explained below. Does the Impact of the Pandemic Warrant Use of Updated Deaths Data? In March 2020, a worldwide pandemic erupted due to the outbreak of the novel coronavirus (“COVID-19”). (Office of the Governor, Executive Order No. 20-52 (“E.O. 20-52”)). COVID-19 is “a severe acute respiratory illness that can spread among humans through respiratory transmission and presents with symptoms similar to those of influenza.” E.O. 20-52. On March 9, 2020, Florida Governor Ron DeSantis declared a state of emergency due to the outbreak of COVID-19. E.O. 20-52. The Governor noted that, as of March 9, 2020, “eight counties in Florida have positive cases for COVID-19, and COVID-19 poses a risk to the entire state of Florida.” Id. Upon the Governor’s direction, on March 1, 2020, the State Surgeon General “declared a Public Health Emergency exists in the State of Florida as a result of COVID-19.” E.O. 20-52. The World Health Organization also “declared COVID-19 a Public Health Emergency of International Concern.” Id. On March 15, 2020, the Florida Division of Emergency Management issued an Emergency Order “prohibiting all individuals from visiting facilities within the State of Florida,” including nursing homes, long-term care hospitals, and assisted living facilities. (Div. of Emerg. Mgmt., In Re: Suspension of Statutes, Rules, and Orders, Pursuant to Executive Order Number 20-52, Made Necessary By the COVID-19 Public Health Emergency, DEM Order. No. 20-006 (Mar. 15, 2020)). The CON Hospital Facilities and Hospice 2nd Batching Cycle was scheduled to begin on the third Friday in July 2020. (Fla. Admin. Code R. 59C-1.008(1)(g) (2019).4 However, due to the outbreak of the COVID-19 pandemic, and under the authority of the Governor’s Executive Order, AHCA issued an Emergency Order cancelling the Hospital Facilities and Hospice 2nd Batching Cycle. (AHCA, In Re: Temporary Suspension of Certificate of Need Batching Cycle, AHCA 20-004 (July 17, 2020)). In that Emergency Order, AHCA noted that “all counties in Florida have confirmed cases of COVID-19 that are growing in number daily and straining virtually every health care resource available within the State.” Id. AHCA also considered cancelling the Hospital Facilities and Hospice 1st Batching Cycle – 2021 (the batching cycle at issue here). Although the 4 In December 2020, the Agency issued a new Final Rule changing the dates of the hospice batching cycles. (See Fla. Admin. Code R. 59C-1.008(1)(g) (2020). Under the new Rule, the Hospital Facilities and Hospice 2nd Batching Cycle will begin on the first Friday in August. State of Florida was still under a state of emergency when AHCA announced need for an additional hospice program in HSA 5B, AHCA decided to move forward with the batch because, according to AHCA’s representative, James McLemore, it was “trying to get to a normal.” In deciding not to change or adjust the FNP at issue, AHCA did not compare hospice penetration rates from this batch with any other batch. In other words, AHCA did not compare previous hospice penetration rates to see if the need predictions made in this batching cycle were unusual in any way. Suncoast’s health planning expert, Armand Balsano, testified that if AHCA had examined the hospice penetration rates for this batching cycle with previous batching cycles, it would have noticed a significant anomaly in the FNP numbers used to calculate hospice need for the July 2022 planning horizon for HSA 5B. According to Mr. Balsano, typically, overall hospice penetration rates are very consistent year over year, hovering around .67 or .68 (meaning that 67% - 68% of recorded deaths received hospice care before passing). However, for the February 2021 batching cycle, AHCA calculated that the overall penetration rate had dramatically increased to .727, which Mr. Balsano considered to have a “profound” effect on the FNP calculation. According to Petitioners, because AHCA’s need projections relied on 2020 hospice admissions, which included COVID-19-related hospice admissions, and 2019 deaths, which necessarily excluded COVID-19-related deaths, the data showed a larger spike in hospice admissions than deaths, which caused the overall penetration rate to increase dramatically from prior years. To illustrate the effect caused by using hospice admissions during a year in which Florida (and the rest of the world) was battling a highly contagious virus (2020) and deaths from a year in which the world was not (2019), Mr. Balsano recast the overall penetration rates using 2020 hospice admissions and 2020 deaths. According to Mr. Balsano, when using 2020 hospice admissions and 2020 hospice deaths, the penetration rate actually decreases from AHCA’s overall penetration rate of .727 to .629. When 2020 deaths were substituted for 2019 deaths, and AHCA’s calculated penetration rate of .727 was substituted with the recast penetration rate of .629, the rule need methodology would result in a negative numeric need, and thus, no need for an additional hospice program, according to Mr. Balsano. Mr. Balsano acknowledged that AHCA’s use of deaths from one year and hospice admissions from another year to predict need is not inherently unreliable in projecting future need. Petitioners also conceded that AHCA complied with its rules when it used 2019 death data to calculate the FNP numbers at issue. The parties stipulated that when performing its FNP calculation at issue, AHCA used the number of “current deaths” as defined in, and required by, rule 59C-1.0355(4)(a). The parties further stipulated that when performing the FNP calculation, AHCA used the number of patients admitted to hospice programs serving HSA 5B during the most recent 12-month period ending December 31, 2020, as derived from the reports submitted under rule 59C-1.0355(8), as required by rule 59C-1.0355(4)(a). Petitioners’ alternative FNP calculation is not permitted by rule 59C- 1.0355(4). Rather, it is uncontroverted that when performing its FNP calculations, AHCA used the number of “current deaths” as defined in and required by rule 59C-1.0355(4)(a). Likewise, AHCA used the number of patients admitted to Hospice Programs serving HSA 5B during the most recent 12-month period ending December 31, 2020, as derived from the reports submitted under rule 59C-1.0355(8), as required by rule 59C- 1.0355(4)(a). Moreover, Petitioners’ alternative need calculation is based on provisional death data for calendar year 2020 from the Office of Vital Statistics as of April 3, 2021. This data could not have been available three months prior to the February 5, 2021, publication of the FNP numbers, since calendar year 2020 did not conclude three months prior to February 5, 2021. Despite advocating for the use of 2020 death data, Suncoast’s expert witness did not know whether any 2020 death data, even provisional data, were available from the Office of Vital Statistics by February 5, 2021. Additionally, Mr. Balsano conceded that he did not know if the provisional data he used for his alternative FNP calculation were different from any death data available from the Office of Vital Statistics as of the date of the final hearing. Had AHCA used the provisional death data used by Suncoast’s expert witness in creating Suncoast Exhibits 11 through 20, then AHCA would have violated rule 59C-1.0355(4), and its calculation of the FNP numbers would have been erroneous. While the impacts of the COVID-19 pandemic have been profound and devastating, particularly in the number of individuals who have succumbed to the disease, the effects of the pandemic will, fortunately, be transitory. As of the time of the final hearing, a number of vaccines had become available to protect individuals from COVID-19. AHCA’s witness acknowledged that vaccines developed by Pfizer and Moderna (as well as Johnson and Johnson) have been reported to be very effective in reducing the number of deaths among individuals who have been vaccinated. AHCA further acknowledged that, in part, due to the availability of these vaccines, Florida has seen a significant decline in COVID-19 deaths. Inclusion of VA Hospital Hospice Admissions in the FNP Calculation? Petitioners further argue that AHCA’s failure to consider hospice admissions to VA hospitals has led to an incorrect projection of need under the rule formula. In making FNP calculations for hospice, AHCA only considers admissions to hospice programs licensed by AHCA. Thus, VA admissions are not considered because AHCA does not license VA facilities or programs. However, all deaths are factored into the FNP calculation, including deaths in a VA facility. Petitioners argue that this is an additional error, and created a flawed and unreliable calculation of need in HSA 5B, where there is a significant population of veterans. There are multiple VA hospitals in Florida that operate inpatient hospice units, including Bay Pines. The main facility of the Bay Pines VA system is the C.W. Bill Young Department of Veterans Affairs Medical Center (“CWBY VA Medical Center”) located in Bay Pines, Pinellas County, Florida. The CWBY VA Medical Center is part of the Department of Veterans Affairs, a federal agency. The CWBY VA Medical Center holds no type of health care facility or health services license issued by the State of Florida. The CWBY VA Medical Center is not a “Hospice Program” as that term is defined in rule 59C-1.0355(2)(f). The CWBY VA Medical Center does not report utilization information to AHCA pursuant to rule 59C-1.0355(8). Nor is it required to do so. At hearing, AHCA’s representative confirmed that AHCA lacks jurisdiction over the CWBY VA Medical Center to require it to submit any report to AHCA. It was not clear from the testimony at final hearing what hospice services the CWBY VA Medical Center provides. At most, the facility only provides inpatient end of life services. For example, Suncoast’s Exhibit 6 purported to depict Suncoast discharges to CWBY VA Medical Center during 2020. But Suncoast’s Care Navigator was asked whether she knew “what services specifically any of these patients received while they were at the VA” and she admitted, “I do not.” For “outpatient” or “community” hospice services, the CWBY VA Medical Center refers veterans to a local hospice for admission for hospice services. Although Suncoast tracks patient referrals from the CWBY VA Medical Center, Suncoast did not present any evidence demonstrating that those patients received hospice care at the VA. Suncoast’s expert witness conceded that AHCA followed the requirements of rule 59C-1.0355, by not including VA patient data, and that including such data would be contrary to the rule. Suncoast’s expert witness stated that Suncoast’s argument that AHCA should include any patients receiving hospice services at the VA in the FNP calculation was simply a “conceptual issue,” and that he could not obtain useable data from other VA centers in Florida to create an exhibit that could be introduced into evidence. This “conceptual issue,” which forms a significant part of Suncoast’s allegation that there is an error in the FNP numbers, is essentially the claim that hospice admissions at VA facilities were not counted, while deaths of patients in VA facilities under the VA’s inpatient hospice care were being counted as Florida resident deaths. Suncoast’s expert conceded that he did not know whether these patients had been reported to AHCA as hospice admissions as a result of care they may have received at a state-licensed hospice program, or whether the patients admitted to VA facilities actually died, much less whether they were counted as Florida resident deaths. Indeed, Suncoast’s evidence made clear that it admits patients referred from the CWBY VA Medical Center, and that those patients are included in utilization reports submitted to AHCA under rule 59C-1.0355(8). Suncoast also presented evidence that its hospice patients are frequently discharged for acute care services at the CWBY VA Medical Center, and that Suncoast reports such patients as separate admissions if the patient returns to Suncoast. Suncoast’s witness acknowledged that this results in a single patient being counted as multiple admissions in its utilization reports. Suncoast’s witnesses acknowledged that this discharge and re- admission pattern only occurred with VA patients and would not be the case for patients who were placed on inpatient hospice care in a Suncoast hospice house, or in a hospital or skilled nursing facility. Suncoast’s expert acknowledged that accounting for any VA admissions would change the penetration rate statewide, and as a result, any VA admissions identified in HSA 5B could not simply be subtracted from the total number of projected hospice admissions to recalculate the FNP for HSA 5B. Ultimately, Mr. Balsano could not opine on what the correct need number would have been, and had no idea what the calculated result would have been if the purported VA admissions were counted. Absent reliable data in this regard, there is no basis to deviate from the data source utilized by AHCA in its FNP calculation, even if such deviation was permissible by rule. The existence of potential alternatives to the FNP calculation in rule 59C-1.0355, and in particular the use of different death and admissions data than that used by AHCA, as advocated by Petitioners, is not warranted for the reasons discussed above. Petitioners have failed to carry their burden to establish that the FNP calculations that AHCA made using the rule- required data was in error.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered determining that there is no error in the Fixed Need Pool numbers for Hospice Service Area 5B and that there is a calculated net need for one additional hospice program in Hospice Service Area 5B as published by AHCA on February 5, 2021. DONE AND ENTERED this 16th day of June, 2021, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS Administrative Law Judge 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 16th day of June, 2021. COPIES FURNISHED: Stephen C. Emmanuel, Esquire Ausley & McMullen 123 South Calhoun Street Tallahassee, Florida 32301 D. Ty Jackson, Esquire GrayRobinson, P.A. 301 South Bronough Street, Suite 600 Post Office Box 11189 Tallahassee, Florida 32302 Julia Elizabeth Smith, Esquire Agency for Health Care Administration Mail Stop 3 2727 Mahan Drive Tallahassee, Florida 32308 Eugene Dylan Rivers, Esquire Ausley & McMullen, P.A. 123 South Calhoun Street Tallahassee, Florida 32301 Gabriel F.V. Warren, Esquire Rutledge Ecenia, P.A. 119 South Monroe Street, Suite 202 Post Office Box 551 Tallahassee, Florida 32301 David C. Ashburn, Esquire Greenberg Traurig, P.A. 101 East College Avenue Post Office Drawer 1838 Tallahassee, Florida 32301 Kristen Bond Dobson, Esquire Parker, Hudson, Rainer & Dobbs, LLP Suite 750 215 South Monroe Street Tallahassee, Florida 32301 Karl David Acuff, Esquire Law Offices of Karl David Acuff, P.A. Suite 2 1615 Village Square Boulevard Tallahassee, Florida 32309-2770 Amanda Marci Hessein, Esquire Rutledge Ecenia, P.A. Suite 202 119 South Monroe Street Tallahassee, Florida 32301 Simone Marstiller, Secretary Agency for Health Care Administration 2727 Mahan Drive, Building 3 Tallahassee, Florida 32308-5407 Shena L. Grantham, Esquire Agency for Health Care Administration Building 3, Room 3407B 2727 Mahan Drive Tallahassee, Florida 32308 Michael J. Cherniga, Esquire Greenberg Traurig, P.A. 101 East College Avenue Post Office Drawer 1838 Tallahassee, Florida 32301 Marc Ito, Esquire Law Office of Marc Ito, PLLC 411 Wilson Ave. Tallahassee, Florida 32303 Seann M. Frazier, Esquire Parker, Hudson, Rainer & Dobbs, LLP Suite 750 215 South Monroe Street Tallahassee, Florida 32301 Christoper E. Gottfried, Esquire Greenberg Traurig 101 East College Avenue Tallahassee, Florida 32301 Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Stephen A. Ecenia, Esquire Rutledge Ecenia, P.A. 119 South Monroe Street, Suite 202 Post Office Box 551 Tallahassee, Florida 32301 James D. Varnado, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Thomas M. Hoeler, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308
The Issue Whether the Certificate of Need (CON) applications filed by Regency Hospice of Northwest Florida, Inc. (Regency), Odyssey Healthcare of Northwest Florida, Inc. (Odyssey), and United Hospice of West Florida, Inc. (United) for a new hospice program in Agency for Health Care Administration (AHCA or the Agency) Service Area (Service Area) 1, satisfy, on balance, the applicable statutory and rule review criteria sufficiently to warrant approval and, if so, which of the three applications best meets the applicable criteria for approval.
Findings Of Fact The Parties AHCA The Agency for Health Care Administration is the state agency authorized to evaluate and render final determinations on CON applications pursuant to Section 408.034(1) Florida Statutes.1 Regency Regency Hospice of Northwest Florida, Inc. (Regency) is a for-profit, wholly-owned subsidiary of Regency Healthcare Group, LLC (RHG). Regency is a start-up corporation formed for the purpose of owning and operating a new hospice program in Service Area 1. (Findings relating to the creation of Regency and Regency Hospice of Northwest Florida, LLC (Regency LLC) are set forth in section III.) RHG was formed in 2005 for the purpose of acquiring and then owning and operating hospice operations in the southeastern United States. The company's sole business is providing hospice services. In February 2006, RHG acquired the hospice operations of Regency Hospice with locations in Georgia and South Carolina. In June 2006, RHG acquired New Beacon Hospice with multiple locations in Alabama. In addition to these acquisitions, RHG opened a new Medicare licensed hospice program in Augusta, Georgia, and also opened two additional satellite offices in Gainesville, Georgia, and Gadsden, Alabama. RHG operates under the "Regency" brand name in Georgia and South Carolina (seven hospice offices) through its wholly- owned subsidiary Regency Hospice of Georgia, LLC, and operates under the "New Beacon" brand name in Alabama (eights hospice offices) through its wholly-owned subsidiary New Beacon Healthcare Group, LLC. Presently, RHG owns and operates ten Medicare certified hospice programs at 15 office locations: eight in Alabama, four in Georgia, and three in South Carolina. The offices are located in urban and rural settings. If approved in Florida, RHG would operate the hospice through the wholly-owned subsidiary Regency Hospice of Northwest Florida, Inc. There is no separate corporate management of Regency at the subsidiary level. The supervision, management, and control of all of the RHG hospice operations, whether operating under the Regency or New Beacon brand name, are centralized in the senior management team of RHG located in Birmingham, Alabama. The mission, core values, service standards, operating practices, protocols and policies are uniform throughout the company regardless whether a hospice program is operated under the New Beacon or Regency brand name. RHG senior management team has demonstrated a history of developing successful hospice operations. The origin of Regency's New Beacon hospice operations in Alabama dates back approximately 25 years when the hospice was first established in Birmingham, Alabama. The Birmingham hospice was initially owned by the Baptist Health System as a department of Montclair Hospital. Over time, the Baptist Hospice expanded its operations through acquisitions and opening of new programs in locations outside of Birmingham. Eventually, Baptist-owned hospice operations merged with the hospice operations of the Catholic health system in 1997. The joint Baptist/Catholic venture was operated under the name of Unity Health Services changing its name to New Beacon in 2001. In 2006, the Baptist and Catholic health systems decided to sell their hospice operations in Alabama. Both Odyssey and Regency submitted bids to purchase the New Beacon operations. Although Odyssey was the highest bidder, the hospice program was sold to Regency, apparently because RHG shared New Beacon's philosophy regarding providing hospice care. The Baptist and Catholic health systems continue to have a minority ownership in Regency and share a seat on the seven-member board of directors. RHG's hospice operations have grown in terms of patient admissions and average daily census since the acquisition of Regency and New Beacon. RHG plans to focus efforts in the southeast and expand into southern Alabama and the Florida panhandle. RHG's present plans are to open from three to ten new hospice locations in 2008 including the three Florida panhandle locations at issue in this case if approved. New Beacon is a recognized provider of choice in Alabama for some health care providers and its operations have been successful. RHG's operations in Georgia and South Carolina have also been successful. Under RHG's management and prior to its acquisition, New Beacon has afforded high quality of care to the patients its served. There are numerous examples of highly complex, difficult, and costly patients that New Beacon has accepted both before and after the acquisition. There have been no apparent changes in New Beacon's direction or philosophy since acquisition by RHG. Some witnesses who testified on behalf of Regency, expressed a preference for New Beacon over Odyssey based on ease of referrals and complexity of care of patients New Beacon accepts. Odyssey Odyssey Healthcare of Northwest Florida, Inc. (Odyssey) is a for-profit, wholly-owned subsidiary of Odyssey Healthcare, Inc. (Odyssey Healthcare). Odyssey is a start-up corporation formed for the purpose of filing a CON application at issue in this proceeding and owning and operating a new hospice program in Service Area 1. Odyssey Healthcare is a publicly-traded company founded in 1996 and focuses on caring for patients at end-of-life care. Odyssey Healthcare's sole line of business is hospice services. Since 1996, Odyssey Healthcare has started up and acquired more than 80 hospice programs in 30 states. Odyssey Healthcare presently operates approximately 76 Medicare certified hospice programs, including the operation of two hospice programs in Florida. Odyssey Healthcare has approximately 5,000 employees through affiliated programs and serves approximately 8,000 patients per day across its 76 hospice programs and serves has approximately 34,000 admissions in a 12-month period. Last year, Odyssey Healthcare started five or six new hospice programs. Odyssey is the only one of the three co-batched applicants with start-up and operational hospice experience in Florida - in AHCA Service Areas 4 and 11. Since 2003, Odyssey Healthcare has started up approximately 40 new hospice programs, but over the past several years, Odyssey Healthcare has closed or sold seven programs as underperforming or, in some cases, in light of unfavorable market conditions. Odyssey Healthcare has not sold or closed other hospice programs, such as those located in New Orleans and Baton Rouge, Louisiana, following the hurricane, or in Boston, Massachusetts, notwithstanding the loss of money in those markets or other market conditions. Odyssey Healthcare's patient population consists of approximately 68 percent non-cancer and 32 percent cancer patients. Odyssey Healthcare was the subject of an investigation by the United States Department of Justice (DOJ) that ultimately resulted in a settlement and the payment of $13 million to the federal government in July 2006. The settlement did not involve the admission of liability or acknowledgement of wrongdoing. As part of the settlement with the United States Department of Health and Human Services, Office of Inspector General, Odyssey Healthcare entered into a corporate integrity agreement (CIA) for five years. Ody 4 at 32. According to Odyssey Healthcare, the federal investigation allowed Odyssey Healthcare to self- audit to ensure compliance with the Medicare conditions for participation followed by an outside verification agency. The federal investigation was not related to quality of care issues. Medicare CAP problems result from longer patient stays that are not balanced by shorter patient stays, thus leading to increased overall revenue per patient. Medicare CAP limitations have been a problem for the hospice industry at large because they place a ceiling on the overall Medicare revenue per patient that a hospice may receive. Odyssey Healthcare's Medicare CAP liability increased from approximately 2 million dollars in 2004 to approximately 12 million dollars in 2005 to approximately 16 million dollars in 2006, but lower in 2007. Odyssey Healthcare has plans in place to reduce its Medicare CAP exposure that may have negative short-term affects. Odyssey Healthcare's net income declined significantly from 2004 to 2006. The decline is due in part to Medicare CAP limitations. Regency has had one cap repayment ($670,000, T 201) and United has had none. United United Hospice of West Florida, Inc. (United) is a wholly-owned subsidiary of United Hospice, Inc. (UH), which, in turn, is a wholly-owned subsidiary of United Health Services, Inc. (UHS) commonly known as UHS-Pruitt. UH is an existing provider of hospice services in Georgia, South Carolina, and North Carolina. UHS has also established a not-for-profit foundation, which offers the public and professional community information and assistance regarding end of life care and planning. UHS-Pruitt was founded in 1969 as a nursing home company and has expanded to become a comprehensive long-term care provider in Georgia, South Carolina, North Carolina, and Florida. UHS-Pruitt provides several services including nursing homes, hospices, assisted living facilities, pharmacy services, medical supplies, durable medical equipment, outpatient rehabilitation, adult day care, and home health services. UHS-Pruitt currently has a 120-bed skilled nursing facility (Santa Rosa Heritage, operated by United Hospice, Inc.), pharmacy services, rehabilitation office (including therapy programs), durable medical equipment, located in Milton, Santa Rosa County, Florida. UHS-Pruitt has approximately 8,000 employees in all of its programs. The main focus of United Hospice, Inc. and UHS-Pruitt has been the nursing home business, with additional product lines developed as an adjunct to the delivery of nursing home services as noted herein. United Hospice Foundation was established to educate individuals about hospice services and end-of-life decision making. The foundation provides training and educational programs to both the professional and the lay community regarding these subjects. The foundation is operated independently from the for-profit portions of UHS-Pruitt. UHS-Pruitt by and through United Hospice, Inc. for the most began providing hospice services in 1993 and offers hospice programs in approximately 13 to 20 locations in Georgia, North Carolina, and South Carolina, with the vast majority of the programs in Georgia. The hospice programs were start-up programs, not acquisitions. There is evidence that approximately 40 to 42 percent of United Hospice, Inc.'s hospice patients reside in company owned nursing homes. United Hospice, Inc. opened one or more new hospice program each year during the past several years and is internally discussing three new hospices "[t]hrough pure development, as opposed to acquisition." Overview of Hospice Services In Florida, a hospice program is required to provide a continuum of palliative and supportive care for terminally ill patients and their family. A terminally ill patient has a medical prognosis that his or her life expectancy is one year or less if the illness runs its normal course. §§ 400.601(3) and (8), Fla. Stat. Under the Medicare program administered by the federal government, a terminally ill patient is a person who has a life expectancy of six months or less. Hospice services must be available 24 hours a day, 7 days a week, and must include certain core services, such as nursing services, social work services, pastoral or counseling services, dietary counseling, and bereavement counseling services. Physician services may be provided by the hospice directly or through contract. § 400.609(1)(a), Fla. Stat. Hospice care and services provided in a private home shall be the primary form of care. Hospice care and services may be provided by the hospice to a patient living in an assisted living facility, adult family-care home, nursing home, hospice residential unit or facility, or other non-domestic place of permanent or temporary residence. The inpatient component of care is a short-term adjunct to hospice home care and hospice residential care and shall be used only for pain control, symptom management, or respite care. The hospice bereavement program must be a comprehensive program, under professional supervision, that provides a continuum of formal and informal support of services to the family for a minimum of one year after the patient's death. §§ 400.609(1)- (5), Fla. Stat. The goal of hospice is to provide physical, emotional, psychological, and spiritual comfort and support to a dying patient and their family. Hospice care provides palliative care as opposed to curative care, with the focus of treatment centering on palliative care and comfort measures. Hospice care is provided pursuant to a plan of care that is developed by an interdisciplinary team consisting of, e.g., physicians, nurses, social workers, counselors, including chaplains. There are four levels of service of hospice care: routine home care, continuous care, general inpatient care, and respite care. Generally, hospice routine home care is the vast majority of patient days and respite care is typically a very minor percentage of days. Continuous care is basically emergency room type or crisis care that can be provided in a home care setting or in any setting where the patient resides. Continuous care is provided for short amounts of time usually when symptoms become severe and skilled and individual interventions are needed for pain and symptom management. The inpatient level of care provides the intensive level of care within a hospital setting, a skilled nursing unit, or in a free-standing hospice inpatient unit. Respite care is generally designed for caregiver relief. Medicare reimburses different levels of care at different rates. Approximately 85 to 90 percent of hospice care is Medicare related. There are certain services required by specific patients that are not necessarily covered by Medicare and/or private or commercial insurance. These services may include music therapy, pet therapy, art therapy, massage therapy, and aromatherapy. There are other more complicated and expensive non-covered services such as palliative chemotherapy and radiation that may be indicated for severe pain control and symptom control. Each applicant proposes to provide hospice patients with the all of the core services and many of the other services mentioned above. However, there are several distinctions among the applicants which are discussed later. Regency's LOI and CON Application Prior to the final hearing, Odyssey and United filed separate motions requesting entry of an order dismissing Regency's petition and CON application. Odyssey and United argue that Regency Hospice of Northwest Florida, LLC's initial LOI and shell CON application were defective because only a corporation, not a limited liability company, authorized to do business in Florida on the date these documents were filed, can be a viable applicant to provide hospice services in Florida. As a result, the Agency should have rejected the LOI and shell CON application because Regency LLC was not an existing corporation on the date the LOI and shell CON application were filed contrary to Florida law. The following findings of fact relate to this issue. On November 2, 2006, Regency Hospice of Northwest Florida, LLC was formed as a Delaware limited liability company for the purpose of pursuing approval of a CON to provide for a new hospice program in Florida. (Regency LLC was 100 percent owned by RHG and did not differ in structure from Regency, except for the difference in entity status.) On November 3, 2006, the Florida Secretary of State certified that Regency LLC was properly registered to conduct business in Florida on November 3, 2006. In October 2006, Odyssey and United filed separate LOIs. By Agency rule, these filings created a grace period for filing additional LOIs. During the grace period, on November 7, 2006, Regency LLC filed a LOI to establish a new hospice program in Service Area 1. On November 9, 2006, the Agency issued a letter to Regency LLC, accepting the LOI. On November 22, 2006, Regency LLC filed its initial shell application with the Agency. The initial CON application consisted of two pages. Reg 7; T 118. Thereafter, Odyssey advised the Agency that Regency LLC's CON application should be withdrawn from further consideration because the applicant entity, Regency LLC, was not a corporation under Florida law, but was instead a limited liability company. On November 28, 2006, the Agency notified Regency LLC that it was withdrawing Regency LLC's CON application for consideration on the basis that Regency LLC was a limited liability company, rather than a corporation. On November 29, 2006, a certificate of incorporation was filed on behalf of Regency Hospice of Northwest Florida, Inc., with the State of Delaware. A certificate of conversion was filed converting the limited liability company to a corporation, i.e., Regency Hospice of Northwest Florida, LLC to Regency Hospice of Northwest Florida, Inc. On December 5, 2006, a certificate of conversion and articles of incorporation were filed on behalf of Regency Hospice of Northwest Florida, Inc. with the Florida Secretary of State. The Florida Secretary of State issued a document stating in part: "The Certificate of Conversion and Articles of Incorporation were filed December 5, 2006, with an organizational date deemed effective November 2, 2006, for REGENCY HOSPICE OF NORTHWEST FLORIDA, INC., the resulting Florida corporation." On October 24, 2007, the Florida Secretary of State certified that Regency Hospice of Northwest Florida, Inc. "is a corporation organized under the laws of the State of Florida, filed on December 5, 2006, effective November 2, 2006." (emphasis added). On December 11, 2006, Regency Hospice of Northwest Florida, Inc., filed a formal petition (by letter) requesting a hearing in connection with the Agency's prior notice indicating withdrawal of the CON application. On or about December 21, 2006, a settlement agreement was reached among representatives of the Agency and Regency Hospice of Northwest Florida, LLC and "now known as" Regency Hospice of Northwest Florida, Inc. The Agency agreed to accept a timely filed and complete CON application by Regency Hospice of Northwest Florida, Inc. The Agency was persuaded that Regency was a proper applicant in light of its conversion from Regency LLC to Regency. On or before December 27, 2006, Regency, Odyssey, and United timely filed their completed CON applications, also known as the omissions responses. In particular, the president and CEO of Regency executed the "certification by the applicant," Schedule D-1, which stated in part: "I certify that the applicant for this project will license and operate the health services, programs, or beds described in this application." Reg 7 at Schedule D-1, p. 9. On January 9, 2007, the Agency adopted and approved the settlement agreement by entry of a Final Order. On January 12, 2007, the Agency published its decision in the Florida Administrative Weekly to accept the Regency Hospice of Northwest Florida, Inc., CON application. On January 16, 2007, the Agency advised Odyssey of the final Agency's decision to accept Regency's CON application. On February 5, 2007, Odyssey filed a petition to challenge the Agency's decision to accept Regency's CON application. On April 19, 2007, the Agency partially granted the Agency's own motion to dismiss "to the extent that the Petition is dismissed as moot and due to the fact that the Petitioner did not have standing to file the Petition at the time it was filed." In essence, the Agency decided that because Odyssey had already filed a petition to challenge the Agency's preliminary decision to deny its CON application and the Agency approval of Regency's application, that the filing of that petition rendered the original petition to challenge the agency's decision to allow Regency of Northwest Florida, Inc. to submit a CON application moot.2 There is no evidence that Odyssey sought appellate review of the Agency's April 19, 2007, Final Order. On November 8, 2007, Odyssey filed a Motion for Summary Recommended Order seeking dismissal of Regency's CON application. A similar motion was filed by United on November 9, 2007. Regency, joined by the Agency, filed a response. On November 26, 2007, a hearing was held regarding the motions and all counsel were heard. After hearing argument of counsel, the motions were denied without prejudice. As a matter of fact, Regency Hospice of Northwest Florida, Inc. did not exist at the time the LOI and shell CON application were filed with the Agency. The LOI and the shell CON application were filed on behalf of Regency Hospice of Northwest Florida, LLC that was not a corporation authorized to do business in the State of Florida and not eligible at that time to file a LOI or CON application to provide a new hospice program. Whether Regency Hospice of Northwest Florida, Inc., formed after the LOI and shell CON application were filed, is a viable applicant turns on whether the "conversion" statutes apply, or if not, whether the 'forgiveness clause,' Section 408.039(5)(d), Florida Statutes, applies. For the reasons stated in the Conclusions of Law, the issues regarding Regency's corporate status, while novel, are resolved in Regency's favor. Fixed need pool Pursuant to its numeric need methodology, the Agency published a fixed need pool or a numeric need for one new hospice program in Service Area 1 for the second batching cycle of 2006. In forecasting need under the rule methodology, the Agency uses the historical average three-year death rate. It applies it against the forecasted population two years out or for a two-year planning horizon, in this case January 2008. The projected first year of operation for a new provider in this case is 2008. Then, the Agency uses the statewide penetration rate, which is the number of hospice admissions divided by hospice deaths. The penetration rate is also considered a use rate in other health care arenas, but in hospice it is generally referred to as a penetration rate. The statewide average penetration rate is subdivided into four categories: cancer over age 65; cancer under age 65; non-cancer over age 65; and non-cancer under age 65. The projected hospice admissions in each category are then compared to the most recent published actual admissions to determine the number of projected un-met admissions in each category. If the total un-met admissions in all categories exceeds 350, the need for a new hospice is shown, unless there is a recently approved hospice in the service area or a new hospice provider has not been operational for less than two years. According to the Agency's fixed need pool methodology, the net un-met need for hospice's admissions in Service Area 1 is 450 additional hospice admissions in 2008. Among the four categories, there is a higher need projected among non-cancer patients. The percentage of non- cancer patients can vary from community to community and a hospice patient's admissions will likely reflect that local decedent population. (Historically, for RHG hospice operations, approximately 62 percent of the admissions were non-cancer diagnoses and 38 percent were cancer diagnoses, whereas Odyssey Healthcare's overall hospice experience is approximately 68 percent non-cancer and 32 percent cancer and UHS's experience is approximately 64 percent non-cancer and 36 percent cancer.) Demographics of Service Area 1 AHCA Service Area 1 consists of four counties: Escambia, Santa Rosa, Okaloosa, and Walton Counties, located in the northwest portion of the Florida panhandle. Geographically, the service area is large. It spans from the Florida-Alabama border on the west in Escambia County to the eastern border of Walton County over 100 miles away. The July 2006 population estimates for Service Area 1 indicate that the total population was approximately 700,000 with the four counties having the following population: Escambia (303,578); Santa Rosa County (140,988); Okaloosa County (193,298); and Walton County (56,900). In the most recent calendar year, there were 5,800 deaths in the service area and 6,400 deaths per year projected in the two-year planning horizon. The largest population center is Escambia County (and the city of Pensacola) followed by Okaloosa, Santa Rosa, and Walton Counties. Walton County is the fastest growing county, which experienced 40 percent growth in the last six years followed by Santa Rosa with approximately 20 percent growth. Overall, the service area grew approximately 11 to 12 percent. When Escambia County is excluded, the service area grew approximately 19-20 percent for the three eastern counties. Between 2006 and 2011, Santa Rosa County is projected to grow by approximately 16 percent and Walton County by approximately 20 percent. Service Area 1 has two major east-west arteries, with the I-10 corridor cross the central and more northern portion of the service area, and U.S. Highway 98 running along the coastal beach communities. There are 13 hospitals, 27 nursing homes, and two existing hospice providers in Service Area 1. The two existing hospice providers are Covenant Hospice and Hospice of the Emerald Coast. Covenant Hospice currently has its headquarters in Pensacola, Escambia County, and satellite offices in Milton, Santa Rosa County and Crestview and Niceville in Okaloosa County. It appears that Emerald Coast has its headquarters in Pensacola and a satellite office in Crestview. The existing hospice providers do not have offices in Walton County and neither has an office in Fort Walton Beach along the coast in Okaloosa County. Currently, Covenant Hospice provides approximately 86 percent of the hospice care in Service Area 1 followed by Emerald Coast providing approximately 14 percent of the hospice services. Emerald Coast does not serve hospice patients without primary caregivers. Based upon the 2,000 U.S. Census, the population of the State of Florida is 65.4 percent White; 14.6 percent African-American; 16.8 percent Hispanic; and 3.2 percent in the other category. With respect to Escambia, Santa Rosa, Okaloosa, and Walton Counties, the percentages of African-Americans, Hispanics, and others are as follows: Escambia (21.4 percent African-American, 2.7 percent Hispanic, and 5.0 percent other; Santa Rosa (4.2 percent African-American, 2.5 percent Hispanic, and 4.2 percent other; Okaloosa (9.1 percent African-American, 4.3 percent Hispanic, and 5.6 percent other); and Walton County (7.0 percent African-American, 2.2 percent Hispanic, and 3.5 percent other). The Hispanic population in Service Area 1 is low relative to the State of Florida, although it is projected to grow. On a percentage basis by county, the African-American population is lower than the statewide percentage, except Escambia County, which also has the largest population of the four counties in Service Area 1. The proposals Regency's proposal Regency proposes to establish its new hospice program with the immediate opening of three offices at commencement of operations in Pensacola, Escambia County; along the coast in Fort Walton Beach, Okaloosa County; and along the I-10 corridor in De Funiak Springs, Walton County. In its CON application, Regency projected the number of admissions in years one and two, 2008 and 2009, 242 and 496, respectively. With the projected average length of stay (ALOS) 60 days in year one and 80 days in year two, the overall projected patient days were 14,543 in year one and 39,686 in year two. The ALOS projections were demonstrated to be consistent with other Florida hospice start-up operations. The resulting total average daily census (ADC) from the proposed three office locations is 40 in year one growing to 108 in year two, with continuing growth thereafter. The Regency projections appear to be reasonable and achievable. Regency projects that it can open all three offices for $195,745. Odyssey suggests that Regency has impermissibly amended its CON application by describing proposed programs and services in great detail during the final hearing that were minimally, at best, discussed in Regency's CON application, including the omissions responses. See Odyssey's PRO at 44-52. In its CON application, Regency notes that it is a subsidiary Regency Healthcare Group, LLC, which offers hospice services in three states, Alabama, Georgia, and South Carolina. Regency described the corporate structure, including the entities operating in these states. Regency is also affiliated with two non-profit foundations, which accept donations and provide support to their hospice programs. Regency places heavy reliance on the experience of the existing hospice programs in Alabama, Georgia, and South Carolina. In its CON application, Regency lists several types of programs currently offered. For example, the Regency Hospice/New Beacon programs have a full-time pharmacist (Pharm. D.) on staff to assist their teams. Regency lists the services that its staff will directly provide and provide through contractual arrangements. Reg 7 at 33-34. (Regency [and United] mention providing dietary services through contractual arrangements, but the service is required to be provide by staff. AHCA 1 at 17.) Regency mentions that it will sponsor community education programs. Id. at 16. Regency also lists several non-reimburseable services provided by its affiliated hospice programs such as bereavement (for at last 12 months (13 months according to hearing testimony) following death of the patient) and chaplain services, the recruitment, training, and supervision of volunteers, hospice care for the medically indigent, flower and music ministries, and assistance with utility bills, food, clothing, and other necessities for needy patients. See Reg 7 at 2, 25, and 26. On page 12 of its CON application, Regency notes that for the year ending October 31, 2006, Regency affiliated hospice programs rendered 18.4 percent of total days of care to African- Americans and that "Regency will focus on this population as an outreach group since it is a significant part of the population of Service Area 1. This is particularly the case in Escambia County, which has the largest population, and African-Americans may be an underserved group." Regency mentions a potentially unmet need in Walton County and commits to opening an office in De Funiak Springs to serve the rural areas of the county. Id. at 23-25. Regency commits to providing care to persons without caregivers. Id. In several places in its CON application, Regency references continuous care generically, id. at 5-6, and based on the experience of Regency's affiliated hospice programs in other markets and expectations for the start-up of a new program, Regency projects patient days for continuous home care, routine home care, inpatient respite care, and general inpatient care. Id. at 32. On Schedule 7A, Regency has a line dedicated for continuous care as part of its revenue projections and also Schedule 8A provides for an expense for continuous care for years one and two. Id. at 27-28, 30, and 32. (Regency proposes 1.46 percent of continuous case; Odyssey, 1.33 percent; and United, a negligible amount.) During the final hearing, Regency expounded on these services. For example, there was testimony that as part of the "flower ministry," Regency expects to offer a Christmas tree program. It appears that the flower ministry and Christmas tree programs are local programs within the Birmingham, Alabama, area, spearheaded by a volunteer. It does not appear that Regency presently provides this service on a corporate-wide basis, although there is some intent to do so - it would depend on the leadership of their volunteers. See T 125-126, 142, 368, 537; Reg 83. In its CON application, Regency notes at page 32 that "[t]rained volunteers will provide important services by helping families and loved ones care for patients, by raising funds to support hospice services, and by performing administrative report functions." One witness, Ms. Acton, testified that her testimony was limited to the volunteer program in Jefferson County. Regency included letters of support in the deposition testimony of Richard Mason, Reg 79, indicating that Regency would be able to establish inpatient programs at the three Sea Crest nursing homes in Service Area 1 in Pensacola, Destin, and Crestview. (There is no affiliation between Sea Crest and RHG or its subsidiaries, except for two minority investors in Sea Crest who are also investors in RHG.) Overall, Regency's CON application mentions, although not in elaborate detail, the programmatic aspects of its proposal that were discussed in much more detail during the final hearing. United's proposal United proposes to establish a new hospice program in Service Area 1 with the headquarters in Milton, Santa Rosa County, Florida. It intends to open its first satellite office in Walton County when market forces indicate that it would be more efficient to have another office. United plans to have a dedicated hospice team located in Walton County to ensure access to services to the Walton County residences. United also proposes to have inpatient arrangements at its sister-facility in Milton as well as at nursing homes in Okaloosa and Walton Counties. United included letters of support from all three nursing homes indicating that it would be able to establish the proposed inpatient sites. In its CON application and during the final hearing, United provided a detailed discussion of hospice services it will offer. United is projecting project costs of $336,467. United Hospice of West Florida, Inc.'s parent is UHS- Pruitt, whose principle business appears to be the nursing home business. UHS-Pruitt also has a number of operating subsidiaries that appear to supply or enhance those nursing homes with physical therapy or pharmacy services. In its CON application, United focuses on minority outreach to the Hispanic population in the service area. As noted herein, the population of Hispanics in the service area is quite low compared to the statewide average. In its CON application, United projected that it would achieve 264 admissions in year one and 454 admissions in year two. United applied a median length of stay of 27 days to arrive at its projection of 7,185 patient days in year one and 12,061 patient days in year two. United's admissions and average daily census ramp up through the end of year one and then remain flat showing no growth throughout the second year of operation. United's projections appear to be reasonable and achievable. Odyssey's proposal Odyssey proposes to initiate hospice services by opening an office in Pensacola, Escambia County. In the final quarter of year two, Odyssey proposes to open a second office in Okaloosa County, and an office in Walton County in year three. Within six months following the opening of the Walton County office, Odyssey plans to open a fourth office in Santa Rosa County. Odyssey projected 270 admissions in year one and 411 admissions in year two. Odyssey projected in its CON application that it would have an ALOS of 25 in year one and 50 in year two, resulting in total patient days of 6,750 in year one and 20,550 in year two. Odyssey's projections for routine care for year two are similar to the percentages proposed by United and Regency. Odyssey proposes less cancer, but more respite and non-cancer care than United and Regency. United proposes more inpatient care than Regency and Odyssey. Odyssey's projections appear to be reasonable and achievable. Odyssey anticipates that it will cost $464,720 to start its Escambia office. Odyssey Healthcare, through its not-for-profit affiliate, Hospice of the Palm Coast, currently operates two start-up hospice programs in Florida, Volusia County, with a satellite office in Flagler County, Florida, and one in Dade County, Florida, with a satellite office in Monroe County. Both programs are licensed and Medicare/Medicaid certified. Odyssey will benefit from the clinical experience, expertise, management resources, and financial strength of Odyssey Healthcare in implementing its program within Service Area 1. Odyssey start-up team has a group of experts located in Odyssey's Dallas support center. The team consists of designated experts from several departments including billing, human resources, clinical compliance, and IT. The team meets weekly and is responsible to support the start-up hospice programs. For Odyssey Healthcare, hospice care is delivered via an interdisciplinary team of caregivers who specialize in end- death-of-life care, including nurse care managers, physician, nurses, spiritual advises, bereavement coordinators, social workers, home health aides, and members of the patient's family. The manager of the team is an RN who addresses the needs of the patient and family and develops a specific plan of care with the physician. The RN case managers coordinate care with other team members while the patient's physician works with the Odyssey medical director and other team members to assure that all symptoms are controlled, pain managed, and the patient and family informed. Other members of the interdisciplinary team include a chaplain, home healthcare aide, social worker, trained volunteers, bereavement coordinator, on-call nursing team, and other specialists. The interdisciplinary team delivers these services in a context of Odyssey Healthcare's 14 service standards by focusing on admissions within three hours of a physician admission order. Odyssey Healthcare offers certain educational tools which will be implemented by Odyssey to furnish healthcare providers with information about non-cancer and cancer diagnoses of all types. Odyssey commits to spending $25,000 in its first year of operation for community outreach and marketing. Odyssey identified the African-American community as an underserved population in Service Area 1. Odyssey Healthcare operates in numerous locales where there are culturally diverse areas such as Miami/Dade County and El Paso, Texas, with high percentages of Hispanic population. Other Odyssey Healthcare hospice programs have also reached out to African-American communities in Memphis, Tennessee, and Charleston, North Carolina. Odyssey's interdisciplinary teams are often made up of Hispanic or African-American medical directors, home health aides, social workers, priest, ministers, and nurses. Odyssey Healthcare has recreated a developmental model called community education representatives (CERs) to educate the community as to the benefits of hospice services and the services that are provided by Odyssey. These CERs are used to establish and develop referral sources in part. Odyssey Healthcare programs offer extensive bereavement programs (for 13 months after the death of the patient) as part of the core Medicare services it provides. Odyssey Healthcare operates hospice programs in Birmingham, Montgomery, and Mobile, Alabama. The Mobile program is in Baldwin County, which is contiguous to the Pensacola, Escambia County, an area Odyssey proposes to serve. Odyssey Healthcare's Mobile, Alabama, hospice program has an inpatient agreement with Providence Hospital in Mobile, Alabama, which has a related facility, Sacred Heart Hospital, in Pensacola, Florida, which has the same parent organization. Odyssey will benefit from Odyssey Healthcare's resources and experience with respect to start-ups as well as centralized services such as accounting, centralized billing, and training. All other benefits include the size of Odyssey Healthcare, comprehensive scope of hospice services, service standards, staff education including palliative care center vocation, commitment to education, and investment and technology. Odyssey Healthcare has internally developed an in- house pharmaceutical system called Hospice Pharmaceutical Services (HPS). HPS is a separate company and not a wholly- owned subsidiary of Odyssey Healthcare. HPS provides services 24 hours a day, 7 days a week, including pre-admission consultations on referrals. HPS hotline is housed in the Dallas Odyssey Healthcare corporate office and is staffed by a Pharm. D., a pharmacist, and seven hospice certified RNs and at least two on-call nurses who cover the pharmacy system 24/7. The HPS staff is available to the attending physician and to the local hospice nursing staff when needed. Odyssey included several letters of support in its CON Application. Statutory and Rule Review Criteria Rule Preferences The Agency is required to give preference to an applicant meeting one or more of the criteria specified in Florida Administrative Code Rule 59C-1.0355(4)(e)1.-5. The first preference is for an applicant who has a commitment to service populations with unmet needs. Each of the applicants identified population groups they believe to have unmet needs. Hospice patients can be viewed as consisting of four basic categories: cancer patients under age 65; cancer patients age 65 and older; non-cancer patients under age 65; and non- cancer patients age 65 and older. (This is the breakdown of hospice patients used by the Agency in its need methodology.) It appears that the largest underserved group of these four is the under age 65 non-cancer patients, followed by the non-cancer patients age 65 and older and cancer patients age 65 and older. The only over-served group was the cancer patients under the age 65. All applicants stated a commitment to serve non-cancer patients. However, only Odyssey and United identified this group as an underserved group and provided evidence concerning how they would meet the needs of this group. Historically, RHG hospice programs have provided approximately 62 percent of its patient care to non-cancer patients; whereas UHS has provided approximately 64 percent, followed by Odyssey Healthcare at approximately 68 percent. One witness suggested that a range of 35 to 50 percent was reasonable, although there are factors that affect the range such as age of the program. Regency and Odyssey identified African-Americans as a traditionally underserved group. However, while it is possible to extract the percent of the population by race group in the service area, neither applicant presented any concrete data to show that existing providers in the service area are failing to meet the demands of the African-American population or that this population group is underserved by the existing providers. The percentage of African-Americans in Escambia County according to 2000 Census information was 21.4 percent; 4.2 percent in Santa Rosa County; 9.1 percent in Okaloosa County; and 7.0 percent in Walton County. Regency stated that it "will focus on this population as an outreach group since it is a significant part of the population of Service Area 1." Reg 7 at Odyssey stated that African-Americans in the service area would benefit from Odyssey's experience. See Ody 1 at (bates stamp) 46, 59 and 74. United does not discriminate against individuals based upon ethnicity or for any other reason and it historically provides care to minorities. Both of the existing providers have offices in Escambia County and Regency and Odyssey both propose offices in this county. Odyssey presented data claiming that RHG hospice programs did a below average job in outreach and service to the African-American communities in areas served by RHG. The analysis was flawed in part because it compares the statewide experiences of RHG and Odyssey Healthcare based upon the operations in different local communities (e.g. rural versus urban) that can have different demographic compositions. Overall, the evidence indicates that RHG and Odyssey Healthcare have demonstrated a record of doing a credible job of outreach and service to the African-American community. All applicants agreed that providing continuous care services is an important level of service for hospice patients. In Service Area 1, continuous care accounts for only 0.6 percent of patient days; whereas the national and Florida averages are four and two percent, respectively. As noted herein, Regency and Odyssey propose a specific percent of continuous care, 1.46 and 1.33 percent, respectively, and United projects a negligible amount, see United 1 at Schedule 7A, although United proposes to provide the service. United identified patients without caregivers as an underserved population because Hospice of the Emerald Coast does not accept these patients. All three applicants will serve this population. United identified Hispanics as a population with unmet needs. Service Area 1 has the lowest percent of total population that is Hispanic of all of AHCA's service areas, although there is projected growth. In calendar year 2006, there were 59 Hispanic deaths out of 5,821 deaths in Service Area 1 or approximately one percent. In Santa Rosa County, where United plans to initially open its sole office, there were approximately seven Hispanic deaths in 2006. It was estimated that a little more than 20 Hispanics would use hospice services in the service area per year. Regency and Odyssey deserve preference under this subsection and United to a lesser degree. The second preference shall be given to an applicant who proposes to provide the inpatient care component of the hospice program through contractual arrangements with existing health care facilities, unless the applicant demonstrates a more cost-effective alternative. Each of the applicants proposes to serve inpatients through contractual arrangements. No applicant is proposing a freestanding inpatient unit. Through its related skilled nursing facility in Santa Rosa County, United has an existing relationship with a health care facility that will be used to provide inpatient care. United did not include all of the room and board expenses for Medicaid nursing home patients in its financial projections. United provided unauthenticated letters of support to demonstrate that it will be able to offer inpatient services in Santa Rosa, Okaloosa, and Walton Counties. United expects to offer only one office (primary headquarters) in Santa Rosa County that would serve the four- county service area. United expects to establish working teams in the other counties. Regency does not have any directly affiliated inpatient providers. However, Regency has commitments to enter inpatient contracts with, among other facilities, three nursing homes operated by Sea Crest Management through mutual investors. These nursing homes are located in Destin and Crestview in Okaloosa County, and Pensacola in Escambia County. Regency also has a commitment from Healthmark Hospital in De Funiak Springs, Walton County. Although Odyssey did not include any letters of support from any potential inpatient service locations in its original CON application, it stated that it will contract with acute care providers and skilled nursing home facilities in the service area. (Odyssey's CON applications have general letters of support of its application.) At hearing, Odyssey provided letters of support from area nursing homes, including a memorandum of understanding from the administrator of Southern Oaks Nursing Home in Pensacola, a 210-bed facility, indicating a willingness to provide inpatient services for Odyssey patients. Each applicant can be expected to contract for inpatient services and satisfy this preference. The third preference shall be given to an applicant who has a commitment to service patients who do not have primary caregivers at home; the homeless; and patients with AIDS. Each of the applicants presented evidence demonstrating a history and commitment to serve such patients and have in place programs and policies to ensure that such services are provided. The fourth preference provides: "In the case of proposals for a hospice service area comprised of three or more counties, preference shall be given to an applicant who has a commitment to establish a physical presence in an underserved county or counties." The two Service Area 1 existing hospice providers have their headquarter offices in Escambia County and there are currently satellite offices in Santa Rosa and Okaloosa Counties. There are no offices in Walton County, which is the smallest county of the four by population, 56,900 or approximately eight percent in 2006, but with the highest projected growth, 16,299, by percent, approximately 40 percent. Regency plans to open an office in Escambia and Walton Counties and an additional office in Fort Walton Beach along the Okaloosa County coastal area where neither existing providers have a current office location. Regency proposes the widest geographic coverage of offices of the three applicants, although the Escambia County office would add little. Its Walton County office would make it the only service provider with an office in that county. Odyssey plans to initially open an office in Escambia County and open an additional office in Okaloosa County starting toward the end of the second year of operation. Odyssey plans to open an office in Walton County in its third year of operation and a fourth office in Santa Rosa County six months thereafter. United proposes to open an office initially in Milton, Santa Rosa County. United proposes to have a dedicated hospice team in Walton County. No persuasive evidence was presented that residents of Walton County (or any other county in the service area) do not have access to hospice services or are actually underserved. The fifth and final preference provides: "Preference shall be given to an applicant who proposes to provide services that are not specifically covered by private insurance, Medicaid, or Medicare." All of the applicants meet this preference. Odyssey identifies several proposed services such as bereavement, pet, message, aroma, and music therapy, dialysis, palliative radiation, and palliative chemotherapy. United identifies similar services, although United provides bereavement coordination through either a social worker or chaplains. United does not allocate a specific position exclusively for bereavement. Regency identifies similar services such as bereavement following death, chaplain services, recruitment and training of volunteers, flower and music ministries, and assistance with utility bills, food, clothing, and other necessities. (The bereavement services offered, as well as policies and procedures used by RHG's hospice programs, are similar.) Bereavement and volunteer services are not specifically reimbursed by Medicare, but they are conditions of participation. The State of Florida requires all hospice providers to serve indigent patients and the applicants agree to provide hospice services to all regardless of their ability to pay. § 400.6095(1), Fla. Stat. The applicants have established charitable foundations to provide assistance to the medically needy for services that Medicare does not reimburse. Consistency with Plans; Letters of Support Florida Administrative Code Rule 59C-1.0355(5) requires consideration of the applications in light of the local and state health plans. The local health council plans are no longer a factor in this proceeding. Each applicant provided letters of support ranging from three for Regency; approximately 20 for Odyssey; and 161 for United. Statutory Review Criteria Section 408.035(2), Florida Statutes - availability, quality of care, accessibility, and extent of Utilization The Agency published a fixed need for one additional hospice in the service area. See § 408.035(1), Fla. Stat. There is no persuasive evidence to rebut the presumption of need and all parties concur there is a need for one new hospice. The service area is served by two hospice providers: Hospice of the Emerald Coast with a market share of 14 percent and Covenant Hospice with a market share of 86 percent. The extent of utilization of the two providers results in the projection for unmet need of 450 hospice admissions in 2008 growing to an unmet need of 507 admissions in 2009. Regency, United, and Odyssey projected the following admissions for their respective second year or operation (2009): 496, 454, and 411. Each applicant can reasonably meet the projected need in conjunction with the existing providers. Neither of the current providers has offices located in Walton County or in the Fort Walton Beach coastal communities. Regency plans to locate offices in these areas, which may improve accessibility. Odyssey proposes to serve Walton County from its Pensacola office until it opens a Walton County office. United proposes to meet the needs in Walton County by establishing a dedicated hospice team there and by establishing an inpatient treatment center at an existing nursing home. Aside from the numeric need projections, there is no persuasive evidence that any geographic portion of the service area or any discreet population category, such as African- Americans, Hispanic, or by age and cancer versus non-cancer groups, needing hospice services are truly underserved, although there is evidence that there are some gaps in services for the existing hospice providers when compared to statewide numbers of hospice use. Section 408.035(3), Florida Statutes - ability to provide quality of care and record of providing quality of care Each applicant has a history of providing quality hospice services. Each applicant has reported overall good responses on patient and family satisfaction surveys. Each applicant proposes to provide a broad array of hospice services to all persons regardless of their ability to pay. It is expected that each applicant will continue to provide quality of hospice services as they have in their existing programs. Each applicant will staff its hospice programs according to national guidelines. Regency proposes to staff its program with nurses on a ratio of one nurse for every ten patients as opposed to the ratio of one nurse for every 12 patients (the National Hospice and Palliative Care Organization [NHPCO] standard) proposed by Odyssey and United. Regency proposes more home visits per week (five-to- six hours per week) and more direct care hours as a percent of total staff hours than Odyssey and United. (The national average is four visits per week.) Regency and Odyssey have developed service standards. All of the applicants propose to offer similar hospice services that are discussed herein. There is evidence that Regency, in its Birmingham program, accepts medically complex patients when other providers may not. There is no evidence that any Regency or United hospice program has been cited for conditional level deficiencies, whereas Odyssey has been cited in approximately three programs, although the specifics and severity of each deficiency is unclear. It appears the deficiencies have been cleared. T 1244-1252. Odyssey also operates under a CIA, unrelated to any quality of care concerns. RHG has a Doctor of Pharmacy (Pharm. D.) on staff who is experienced in hospice and palliative care pharmacy issues. Dr. Blodgett makes regular visits to the offices in Alabama and at least quarterly visits to each of RHG hospice programs in Georgia and South Carolina; participates in IDT meetings, quarterly in South Carolina and Georgia and on a regular basis in Alabama; and is available for consultations on a regular basis. Dr. Blodgett averages between four to five home visits while working for New Beacon in Alabama. She has not made house calls yet in Georgia and South Carolina, although she consults with nurses in those areas and provides training for the hospice staff. Having a Pharm. D. on staff is advantageous for a hospice program. Dr. Blodgett recounted several representative events when she was able to directly assist a patient in dire straits. Dr. Blodgett currently oversees all of Regency's local hospice operations in Alabama, Georgia, and South Carolina with a combined average daily census of 900 to 1,000 patients, roughly 600 at New Beacon and 350 at Regency Hospice. RHG contracts for pharmacy services when Dr. Blodgett is unavailable. Odyssey provides pharmacy services through a consulting contract arrangement with a specialized pharmacy that is co-located with odyssey at its Dallas, Texas, headquarters. The consulting pharmacy has a Pharm. D. and a pharmacist on staff to provide consulting services to Odyssey's programs. The Pharm D. does not provide home visits. UHS-Pruitt has a subsidiary company, United Pharmacy Services, headed by a Pharm. D., which provides pharmacy services to the company's long term nursing home facilities, including its affiliated nursing home in Santa Rosa County. Fifty percent of United Pharmacy Services business is unrelated to UHS. The Pharm. D. is not responsible for oversight of the hospice operations. There are two licensed pharmacists who are not Pharm. D.'s within United Pharmacy Services who provide training for hospice staff and provide consulting services as needed 24/7. As a normal practice, they do not provide medications for hospice patients who at home. They consult on every hospice admission. Odyssey Healthcare has operational experience in Florida with two hospice programs, beginning in 2004. No confirmed complaints have been reported by the Agency. (Regency and United do not operate hospice programs in Florida.) Odyssey also has contiguous hospice program across Perdido Bay in Alabama. Odyssey Healthcare operates 76 Medicare certified hospice programs (or seeking certification) in 30 states. Odyssey will adopt Odyssey Healthcare's quality and improvement plans and its operational policies and procedures. United has an existing relationships with related party providers, particularly its Milton nursing home in Service Area 1. The United family of health companies located there includes a skilled nursing home, pharmacy, durable medical equipment provider, and a therapy provider. These shared resources may increase efficiency for United's hospice program. It also provides United with local contacts with physicians, hospitals, and nursing homes. Of course, in time, it is reasonable that Regency and Odyssey would develop similar relationships, although having existing relationships is a plus for United. An issue was raised regarding the applicant's commitment to provide continuous care. For the second year of operation, Regency proposes 1.46 percent; Odyssey, 1.33 percent; and United, a negligible amount, although United expects to provide continuous care days as needed by its patients. Given its existing nursing home as a component of its corporate family, United naturally provides more services to patients in its nursing homes and nursing homes owned by others. Section 408.035(4), Florida Statutes - availability of resources, including health personnel, management personnel, and funds for project accomplishment and operation Each of the applicants is a start-up company, relying on its parent organizations for financial and management strength. Each applicant has demonstrated sufficient resources to fund the start-up of a new hospice program. Controversies arose regarding when Regency and Odyssey would actually start-up operations following issuance of a CON and the amount each applicant allocated for start-up costs. Odyssey provided a start-up timeline in its application. The timeline assumes approximately six months from CON approval until Medicare certification. The timeline provides for approximately 60 days between licensure and Medicare certification. The timing of licensure and Medicare certification is imprecise at best. A provider is not entitled to reimbursement from Medicare until after certification. Operational expenses for treatment of patients between state licensure and Medicare certification would generally fall under start-up costs. Approximately three months prior to state licensure, Odyssey intends to hires a general manager who begins interviewing and hiring key staff. Other staff including the admission coordinator, RN, home health aide, dietician, social worker, and chaplain are hired in the third month. Odyssey projected its total project cost of $464,720 and total start-up costs of $350,000, with $240,000 allocated for salaries/benefits/taxes, over the six-month period from licensure approval until Medicare certification. (Odyssey exhibit 39 projects start-up expenses of $343,191.) Regency projected on Schedule 1 that its total project costs would be $195,745, with pre-opening staffing and recruitment costs of $36,500. Total start-up costs are projected at $60,000 for three offices. Mr. Morris joined RHG in February 2006. He is currently CEO for RHG and has experience with hospice programs. Subsequent to RHG's acquisitions, RHG started three hospice programs, one of which is a Medicare certified program in Augusta, Georgia, and two satellite offices. T 47, 50, 59-60, 62, 95-96. United projected on Schedule 1 that its total project costs would be $336,467, with total start-up costs at $57,257. According to Dr. Luke, if Odyssey's start-up model and time line is applied to Regency, i.e., month one is actual Medicare certification rather than licensure, Regency would need $543,408 in pre-opening expenses for the three offices it plans to open instead of $60,000 listed by Regency on Schedule 1. Odyssey also criticized United's projected start-up costs as too low based on Odyssey's six month start-up time line. United proposed it would hire most of its staff 30 days prior to licensure. United's vice president in charge of development who has started 15 to 20 hospice operations stated that it is a reasonable approach to hire, orient, and train staff one month prior to licensure. According to Dr. Luke, if Odyssey's start-up model and time line is applied to United, United would need $201,482 rather than $57,257 projected by United on Schedule 1. If month one is the month when United achieves licensure, then the start- up expenses would be $115,846 according to Dr. Luke. The persuasive evidence shows that Regency and United do not use the Odyssey start-up model and time line. Regency's pre-opening costs on Schedule 1 include only the pre-opening salaries prior to initial state licensure of the hospice rather than Odyssey's approach. The salary and wage expenses for Regency after initial licensure are included on its Schedule 8A projection of expenses, whereas it appears Odyssey started its Schedule 8A expenses on the date of Medicare certification. Dr. Luke agreed that this difference in approach would reduce his estimate of pre-opening expenses from $543,408 to $297,792. In other words, if Regency's month one, year one is licensure not certification, according to Dr. Luke, Regency's start-up expenses would be $297,792. Unlike Odyssey, Regency proposes to hire its local executive director one month prior to licensure. All of the additional patient care staff necessary to care for the low initial patient census in the first month of operation would also be hired and undergo training 30 days prior to licensure. Additional staff would be hired and start on day one of licensure and undergo training during the first month of operation while the patient census is in the ramp up stage. While Odyssey and Regency propose differing start-up models and time lines with differing hiring schedules and Regency's time line appears to be quite concentrated, both applicants have sophisticated parent company's who have experience with hospice operations, albeit that Odyssey has more experience than Regency or United with start-up hospice programs, especially in Florida where Regency and United have no experience and Odyssey has experience with two start-up hospice programs. (Regency has not done any start-up hospice programs in a state where either Regency or New Beacon had no presence, although it was noted by a witness that the markets were similar except for the CON process in Florida.) Like, Odyssey, United has start-up experience and given its time-line, its projected start-up costs are reasonable. The start-up costs and expenses projected by the applicants are reasonable, although it would appear the Regency's projected start-up costs may be overly optimistic. In any event, the parent organizations have sufficient funds to cover projected start-up costs and expenses. All of the applicants demonstrated they can recruit staff to adequately provide hospice services. Section 408.035(5), Florida Statutes - extent to which proposed services will enhance access to health care for residents of the service district There is a projected need for one additional hospice program in the service area. Approval of any of the applicants would enhance access to some degree and it is difficult to predict which applicant would enhance access the best. Regency proposes to open three offices immediately in Escambia, Okaloosa, and Walton Counties. Regency would have the only office offering hospice services located in Walton County. Covenant has an office in Niceville in Okaloosa County and not far from Fort Walton Beach, also a site proposed for a Regency office. The existing providers have their headquarters in Escambia County, also the location of Odyssey's headquarters and initial office. Thereafter, Odyssey plans to open offices in Okaloosa, Walton, and Santa Rosa Counties in this order. United plans to open its initial office in Santa Rosa County where its related nursing home is located. United plans to have dedicated hospice team in Walton County and perhaps a second office located there in the future. Of the three applicants, United would enhance access the least. The proposed office locations for Regency and to a lesser extent Odyssey would probably favor Regency rather than Odyssey, although it is one of degree. Some of the factors that favor Regency and Odyssey over United are: Regency and Odyssey expect to provide a specific percent of continuous care, 1.46 and 1.33, respectively; both project to serve more patients (by patient census) than United; both will focus efforts more on a service area wide basis than related nursing home patients in the case of United; and both will devote more FTEs for community hospice/education representatives and information materials than United. Section 408.035(6), Florida Statutes - immediate and long-term financial feasibility Short-term financial feasibility is considered to be the ability of an applicant to finance the start-up of operations. Each of the parent entities of the applicants has sufficient funds to finance the start-up of operations and, as a result, each applicant demonstrated immediate or short-term financial feasibility. Each of the financial projections relating to long- term financial feasibility submitted by the applicants has problems. There is no rule or statute that expressly defines long-term financial feasibility, notwithstanding the requirement that an applicant provide the Agency with detailed financial projections, including a statement of the projected revenues and expenses for the first two years of operation after completion of the proposed project. § 408.037(1)(b)3., Fla. Stat. The applicants provided financial projections for two years of operation. Thus, as identified by the applicants, long-term financial feasibility relates to whether an applicant has the ability to break even or show a profit by the end of the second year of operations. See generally T 1412, 1533. Regency's errors including typographical errors, admittedly small (the inclusion of Medicare revenue that would not be received for the first 45 days to two months of operation while the hospice program would not yet have Medicare certification), would not affect the projected long-term financial feasibility of its project. The errors affect the year one projections only and resulted in a projected write-off of approximately $31,000 or an increase to the projected loss of approximately $31,000. Regency shows a profit in year two. Also, regardless of whether Regency's projection of pre-opening expenses is reasonable or not, which it appears to be, Regency has adequate cash on hand to open its three proposed offices and the pre-opening expense if greater than projected is not likely to affect long-term financial feasibility. United's financial schedules contained an error by omitting the room and board expenses for Medicaid nursing home residents who receive hospice care. This failure to include the full cost of inpatient care would result in a shortfall in the pro forma of between $50,000 to $150,000 and potentially $373,000 in year two of operation. United also explained that it used a conservative number of patient days on its financial schedules. It is likely that if United had used a mean average length of stay rather than a median length of stay, the projected revenues would likely have increased although offset by increasing expenses. In other words, it would have increased the average daily census and thereby increased the revenues. Mr. Shull testified that he expected that the United proposal would be financially feasible in the long-term based on the experience in its other hospice programs. Odyssey's financial projections were the subject of focus by the applicants. See, e.g., Odyssey's PRO at paragraphs 53-55; Regency's PRO at paragraphs 203-210; and United's PRO at 43-45. On Schedule 6, an applicant sets forth its projected staffing for the project. When reporting full time equivalents (FTEs) for staffing, the Agency does not proscribe the specific format to be used. On its original Schedule 6 contained in the application, Odyssey set forth the number of year-end FTEs as opposed to using a weighted average of FTEs for the year. Regency suggested that, as a result of Odyssey's portrayal of staffing information, there was no link between Odyssey's Schedule 6A FTEs and salaries and the expense for staff's salaries and wages on Schedule 8A. Regency also contended that Odyssey did not account for staffing expenses associated with the provision of respite care and continuous care. Further, although Odyssey proposes to spend $25,000 in community outreach and marketing programs in its first two years of operation, that expense was not included in its pro forma projections. Odyssey prepared numerous exhibits, including revisions, that deal with these areas and various witnesses explained and offered rebuttal in response. Regarding the continuous care/respite issue, if appropriate revisions are made to Odyssey's pro forma, on paper, there is likely to be a projected net loss in year two of approximately $100,000. Odyssey proposes changing the 13.5 percent management fee that was included in the application to a seven percent management fee. Odyssey Healthcare's two not-for-profit Florida hospice entities are charged a seven percent management fee, similar to the fee it charges to other not-for-profit subsidiaries. Odyssey's proposed seven percent management fee is in line with the management fees proposed by Regency (7.2 percent) and United (6.3 percent). It appears reasonable to charge not-for-profit entities a lower fee because these entities would not be charged with the home office costs associated with various regulatory filings associated with being a publicly traded company. On the other hand, other than perhaps being a mistake, Odyssey's rationale for charging a different management fee for the applicant, a for-profit entity, T 1039, than other related for- profit entities is a departure from the norm. Changing the management fee and accounting for all of the adjustments to its financial schedules would result in Odyssey showing a year two profit of approximately $80,000. Section 408.035(7), Florida Statutes - extent to which proposal will foster competition that promotes quality and cost- effectiveness Approval of any of the applicants is likely to foster competition, thereby improving quality and cost-effectiveness in the service area, although there is no evidence that the current providers do not provide quality of care or are not cost- effective. Hospice services are not price competitive because Medicare pays a flat per diem rate to all providers in a given area and the vast majority of hospice patients are Medicare patients. Each provider has the ability to increase community awareness of available hospice services thus increasing the opportunity for increasing market penetration of all providers. United has existing linkages in the community that it serves through its related nursing home and other related companies. United's prospects of achieving cost-efficiencies and economies of scale are increased because of these relationships. Regency and Odyssey can also achieve similar efficiencies through their existing relationships with related entities. Having an office in a particular county such as Walton County, would most likely establish and promote a presence in the area that would be beneficial given its rural setting. However, it was not persuasively proven that opening more versus fewer offices in the short-term is more beneficial to the potential hospice patient pool from the standpoint of actually promoting cost-effectiveness and quality of care, although it does increase the physical presence of a hospice provider and give potential patients more choices. Section 408.035(8), Florida Statutes - costs and methods of construction, etc. None of the applicants are proposing construction as part of their hospice programs, thus, this criterion is not applicable. (Section 408.035(10), Florida Statutes, is also not applicable.) Section 408.035(9), Florida Statutes - the applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent All of the applicants propose to serve all eligible patients without regard to ability to pay and have a history of providing patient care to the medically indigent. All of the applicants have allocated patient days to serving, e.g., Medicaid patients. Regency offered to provide 2.5 percent of patient days to the medically indigent as a condition on the CON. Odyssey and United did not offer a similar condition. However, the Agency states in the SAAR that "[b]ecause hospice programs are required to provide services to anyone seeking them, CON conditions are not necessary to ensure such care is given." AHCA 1 at 6. Ultimate findings of fact The Agency determined that there is a numeric need for one additional hospice program in the service area. On balance, each of the applicants satisfies the applicable statutory and rule criteria, although the projected long-term financial feasibility by year two on paper of United's proposal was not proven. This proceeding involves a close question. The Agency preliminarily approved Regency's application. The only evidence of the Agency's rationale for its position is stated in the SAAR, which does not include consideration of the facts presented in this de novo hearing. Each of the applicant's related entities has experience starting-up, owning, and operating hospice programs with Odyssey related entities operating two programs in Florida unlike Regency and United. Each applicant's related hospice entities provide a broad array of hospice services to all persons regardless of their ability to pay, race, severity of illness, or setting where hospice services need to be provided. Each applicant demonstrated a history of service, by related entities, to Medicaid and medically indigent patients. The residents of the service area would benefit regardless of which applicant is approved. The applicants are committed to community outreach and can be expected to heavily market their services. All of the applicants demonstrated that they will actively recruit needed personnel. United's presence in the service area may give United an edge with regard to recruitment, but if so, the edge is slight. Consistent with NHPCO standards, Odyssey and United propose a ratio of one nurse for every twelve patients. Regency proposes a better ratio: one nurse for every ten patients. Regency's Pharm. D., although spread thin given the number of hospice programs served by Regency's related entities in three states, is a positive feature. Despite correcting errors in its financial projections, Regency demonstrated financial feasibility in year two of operations and should receive a comparative advantage. Odyssey and United had problems with proving long-term financial feasibility. Odyssey, after revisions to its financial schedules and reducing the proposed management fee, demonstrated financial feasibility by year two. United can expect to have a loss in year 2, but like Odyssey, its parent organization has a strong financial position and is committed to the project such that it is likely to be financially feasible beyond year two. Regency expects to initially open three offices and, in particular, one in rural Walton County. Odyssey plans to open an office in each county within the service area, although staggered. United plans to open one office initially and takes a wait and see approach regarding opening other offices. The approach of United and to a much lesser extent Odyssey, require less overhead expense but is not necessarily appropriate given the need for an additional hospice services over a four-county area, although the need projection does not indicate which portion or portions of the service area need the additional program the most or where underserved persons may be located, although there are gaps in service. Regency should receive a slight advantage for proposing to offer slightly more continuous care than Odyssey and a greater advantage over United, which expects to provide the service, but did not allocate a specific percentage of care. United receives an edge given its established relationships in the service area by and through its related service providers. The United family includes a nursing home, pharmacy, durable medical equipment provider, and a therapy provider. It gives United the opportunity to share resources among programs to increase efficiency. Odyssey receives a plus given current operations in Florida and contiguous operations across Perdido Bay in Alabama. Odyssey Healthcare's prior problems with the federal government, Medicare cap issues, and unfavorable surveys detract from the overall positive features of Odyssey's proposal. Regency has had one Medicare cap issue. United does not share these problems. Overall, and in a tight comparative review hearing, the persuasive evidence favors Regency followed by Odyssey with United closely behind Odyssey.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered approving of Regency's CON No. 9971 and denying United's CON No. 9955 and Odyssey's CON No. 9954. DONE AND ENTERED this 30th day of April, 2008, in Tallahassee, Leon County, Florida. S CHARLES A. STAMPELOS 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 30th day of April, 2008.
The Issue The issues in this case are: Whether Petitioner, Agency for Health Care Administration (“Petitioner” or “AHCA”), is entitled to recover Medicaid funds paid to Respondent, HCR Manor Services of Florida, LLC, d/b/a Heartland Home Health Care and Hospice (“Respondent” or “Heartland”), for hospice services Respondent provided during the audit period between July 1, 2011, through December 31, 2014; Whether Heartland should be required to pay an administrative fine, pursuant to Florida Administrative Code Rule 59G-9.070(7)(e); and The amount of any investigative, legal, and expert witness costs that AHCA is entitled to recover, if any.
Findings Of Fact Based on the evidence presented at the final hearing, the prehearing statement, and the record in this matter, the following Findings of Fact are made: Parties AHCA is the state agency responsible for administering the Florida Medicaid program. Medicaid is a joint federal/state program to provide health care and related services to qualified individuals. Heartland is a provider of hospice and end-of-life services in Florida. During the Audit Period, Heartland maintained a hospice program headquartered in Jacksonville, Florida. The program is enrolled as a Medicaid provider and has a valid Medicaid provider agreement with AHCA. As a hospice care provider, Heartland has an inter- disciplinary team ("IDT"), which includes persons with medical, psychosocial, and spiritual backgrounds to provide comfort, symptom management, and support to patients and their families. Each patient is reviewed in a meeting of the IDT every two weeks. A Medicaid provider is a person or entity that has voluntarily chosen to provide and be reimbursed for goods or services provided to Medicaid recipients. As an enrolled Medicaid provider, Heartland is subject to statutes, rules, and Medicaid handbooks incorporated by reference into rule, which were in effect during the Audit Period. See, e.g., Florida Medicaid Hospice Services Coverage and Limitations Handbook, 2007 (“Handbook”), adopted by Fla. Admin. Code R. 59G- 4.140(2)(2007). Audit Process The Handbook contains six bullet points for a physician to consider when making a determination regarding a patient’s initial certification for hospice eligibility. While those six bullet points provide factors for consideration by the certifying physician, each recipient is not required to meet each bullet point to be eligible for hospice care. The six bullet points are as follows: Terminal diagnosis with life expectancy of six months or less if the terminal illness progresses at its normal course; Serial physician assessments, laboratory, radiological, or other studies; Clinical progression of the terminal disease; Recent impaired nutritional status related to the terminal process; Recent decline in functional status; and Specific documentation that indicates that the recipient has entered an end-stage of a chronic disease. The initial certification for hospice applies for a 90-day period. The patient can then be recertified for a second 90-day period. Thereafter, all subsequent recertifications apply for a 60-day period so long as the patient meets the requirements to receive hospice benefits. To determine eligibility, the Handbook provides: The first 90 days of hospice care is considered the initial hospice election period. For the initial period, the hospice must obtain written certification statements from a hospice physician and the recipient’s attending physician, if the recipient has an attending physician, no later than two calendar days after the period begins. An exception is if the hospice is unable to obtain written certification, the hospice must obtain verbal certification within two days following initiation of hospice care, with a written certification obtained before billing for hospice care. If these requirements are not met, Medicaid will not reimburse for the days prior to the certification. Instead, reimbursement will begin with the date verbal certification is obtained. * * * For the subsequent election periods, written certification from the hospice medical director or physician member of the interdisciplinary group is required. If written certification is not obtained before the new election period begins, the hospice must obtain a verbal certification statement no later than two calendar days after the first day of each period from the hospice medical director or physician member of the hospice’s interdisciplinary group. A written certification must be on file in the recipient’s record prior to billing hospice services. Supporting medical documentation must be maintained by the hospice in the recipient’s medical record. The U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services (“CMS”), contracted with HI, a private vendor, to perform an audit of Heartland. HI retained Advanced Medical Reviews (“AMR”) to provide physician reviews of claims during the audit process in order to determine whether the patients met the criteria for Medicaid Services. HI notified Heartland of the audit on or about June 30, 2016. The audit was conducted between August 25, 2016, and December 20, 2016. The scope of the audit was limited to Medicaid recipients that received hospice services from Heartland during the period of July 1, 2011, through December 31, 2014, the Audit Period. The files were identified for review using the following criteria: The recipient was not dually eligible (eligible for both Medicaid and Medicare); Heartland provided hospice services for 182 days or longer, based on the recipient’s first and last day of service within the Audit Period; and HI excluded recipients who had at least one malignancy (cancer) primary diagnosis and had a date of death less than one year from the first date of service with Heartland. Thus, the objective of the audit was to determine whether certain Medicaid patients were, in fact, and pursuant to applicable law, eligible for hospice benefits provided by Heartland. When HI applied the audit criteria to the Medicaid claims paid by AHCA to Heartland, HI determined that Heartland had provided hospice services to five Medicaid recipients for 182 days or longer during the Audit Period. To qualify for the Medicaid hospice program, all recipients must, among other things: a) be certified by a physician as terminally ill with a life expectancy of six months or less if the disease runs its normal course; and b) voluntarily elect hospice care for the terminal illness. HI employed claims analysts who performed an initial review of Heartland’s patient records to determine if the recipients were eligible for Medicaid hospice benefits. All HI claims analysts are registered nurses. If the HI claims analyst was able to assess that the patient’s file contained sufficient documentation to justify eligibility for hospice benefits for the entire length of stay under review in the audit, there was no imposition of an overpayment for that file pursuant to the audit process and, thus, the claim was not evaluated further. If the HI claims analyst was unable to assess whether the patient’s file contained sufficient documentation to determine eligibility for hospice benefits, or if only a portion of the patient’s stay could be justified by the HI claims analyst, the file was forwarded to an peer review physician to make the ultimate determination as to eligibility for Medicaid hospice benefits and whether an overpayment was due the Florida Medicaid program. HI contracts with peer review organizations that provide physicians to perform the peer review. One of those organizations was AMR, which provided peer review services for the Heartland audit. Heartland Audit Regarding the Heartland audit, HI staff members identified the physicians who provided care to the recipients at Heartland. The physicians at Heartland had an active specialty in family medicine. Because HI did not have any family physicians on staff at the time of the audit, HI identified physicians specializing in internal medicine. Internal medicine was selected because the nature of the practice involves treatment of various medical conditions. The peer reviewers selected to review recipient records to determine eligibility for hospice were, to the maximum extent possible, of the same specialty as the Heartland physicians. The HI claims analysts reviewed Heartland’s patient records for five recipients and determined that no further action was warranted with respect to two recipients. The claims analysts were registered nurses. As a result, three files were referred for physician peer review by AMR. AMR maintains a secure portal (“AMR Portal”) that HI personnel access to transmit all received provider files to AMR. AMR’s peer review physicians use the AMR Portal to review the totality of the provider’s submitted documentation, including all patient records, and provided their comments. Initially, AHCA selected Ankush Bansal, M.D., to review the patient files identified for physician review. Dr. Bansal determined that all three recipients were ineligible for hospice services. HI prepared a Draft Audit Report (“DAR”), which identified overpayments of Medicaid claims totaling $127,015.43, relating to three recipients. On March 7, 2017, HI presented the DAR to Heartland for comment and response. The alleged overpayments for the three recipients were for the time periods as follows1/: Patient P.C., for service dates 03/13/2012 – 9/11/2012. Patient S.L., for service dates 03/02/2013 – 9/22/2013; and Patient V.P, for service dates 11/13/2012 – 2/28/2014; During the pendency of the audit, but after the DAR was provided to Heartland, Dr. Bansal became unavailable for further work on the audit. Thus, AMR retained two new physicians (Ibrahim Saad, M.D., and Patrick Weston, M.D.) to perform the re-reviews of the patient records. After Heartland responded to the DAR, Heartland’s response was provided to the two new AMR peer review physicians, who, after reviewing Heartland’s response to the audit, reevaluated the medical documentation in light of the additional information and argument provided by Heartland. The new peer reviewers, Drs. Saad and Weston, agreed with the original peer reviewer, Dr. Bansal, that the three recipients were not eligible for hospice services. As a result of that comment and review process, no claims were adjusted. Once approved by CMS and AHCA, the DAR became the FAR. The FAR set forth an overpayment amount of $127,015.43 in Medicaid overpayments owed to AHCA based upon the three Medicaid recipients serviced by Heartland during the Audit Period. HI submitted the FAR to CMS. CMS provided the FAR to AHCA with instructions that AHCA furnish the FAR to Heartland and initiate the state recovery process. The FAR contains the determinations made by the AMR peer review physicians finding that each of the three patients identified therein were ineligible for hospice coverage as the documentation did not support the eligibility requirement of having a terminal illness with a life expectancy of six months or less if the illness ran its normal course. AHCA sent the FAR to Heartland. In the Notice letter, AHCA explained that a fine of $25,403.09 had been applied and costs were assessed in the amount of $75.55. The total amount due for the alleged overpayment, fines, and costs was $152,494.07. Experts Due to the nature of the review and re-review process, the final hearing primarily focused on the testimony of each parties' experts regarding whether particular recipients met the criteria of Medicaid hospice benefit eligibility. The undersigned notes that Heartland did not offer testimony regarding the patients’ eligibility from the physician who actually evaluated the recipients in dispute or certified any of the recipients as terminally ill during the Audit Period. Dr. Stevens, the certifying physician for at least two of the three patients, testified but did not offer specific testimony about the respective patients’ Medicaid hospice eligibility. The experts presented by AHCA and Heartland in this matter did not examine the recipients. For each patient, an AHCA and the Heartland expert reviewed the patient records and provided an opinion as to whether the six bullet points of the Handbook were satisfied to determine whether the recipient was "terminally ill with a life expectancy of six months or less if the disease runs its normal course." In performing their respective peer reviews, the peer review physicians were instructed to use their clinical experience and the Handbook. As set forth above, the Handbook, adopted by Florida Administrative Code Rule 59G-4.140, requires a recipient to have a terminal diagnosis with a life expectancy of six months or less if, the terminal disease follows its normal course in order to be eligible for Medicaid hospice services. It also requires that the hospice maintain documentation supporting that prognosis at initial certification and for every recertification. AHCA’s Experts Dr. Ibrahim Saad Dr. Saad, board-certified in internal medicine, was actively practicing in Florida at the time of the audit. Dr. Saad regularly sees and treats patients with liver disease and congestive heart failure as part of his practice. Dr. Saad reviewed and rendered his opinion as to the hospice eligibility of two recipients in the FAR, patients P.C. and V.P. Dr. Saad is a physician licensed under chapter 458, Florida Statutes, who has been regularly providing medical care and treatment within the past two years and within the two years prior to the audit as explained above. Dr. Saad began practicing medicine in Florida in August of 2015. Prior to practicing in Florida, he completed a three-year residency in Michigan, during which he actively treated patients. He was the chief resident his last year of the residency. The last two years of his medical school consisted of clinical rotations, during which he actively treated patients. In its PRO, Heartland argued that Dr. Saad did not have “five years full-time equivalent experience providing direct clinical care to patients.” However, there is no statutory requirement for a peer reviewer to have five years of experience. Although attesting to the statement is a requirement established by AMR, it has no bearing on whether Dr. Saad met the criteria for a peer reviewer under Florida law. Dr. Saad qualifies as a peer reviewer under the Florida Statutes. When weighing the testimony of Dr. Saad, the undersigned considered material factors regarding Dr. Saad’s qualifications. Dr. Saad has not certified a patient as being terminally ill. However, Dr. Saad regularly sees and treats hospice patients and patients with end-stage diseases. Based upon his experience, Dr. Saad understands what factors are properly considered when estimating a patient’s life expectancy. Dr. Saad also routinely makes life expectancy prognostications for his patients. Based on the factors above, Dr. Saad was accepted as an expert in internal medicine. Dr. Patrick Weston Dr. Weston has been actively practicing as a physician since 2009, meaning he had been in practice for 10 years at the time of the hearing. Prior to 2009, Dr. Weston completed a three-year cardiovascular fellowship, and prior to that, he completed a two-year residency in internal medicine. Dr. Weston often sees and treats patients with cancer. Dr. Weston has referred patients to hospice. Dr. Weston reviewed and rendered his opinion as to the hospice eligibility of one recipient in the FAR, patient S.L. Dr. Weston was board-certified in internal medicine in 2007. He was also board-certified in cardiology in 2010 and nuclear cardiology in 2011. Cardiology is a subspecialty of internal medicine. Dr. Weston’s internal medicine certification expired on December 31, 2017. However, he anticipates obtaining the certification again, and at the time of the hearing, was planning to take the test in a few months. Although his certification lapsed, Dr. Weston continued to actively treat patients, spending approximately 50 percent of his time practicing internal medicine. More importantly, the certification was active when he performed the audit. Dr. Weston treats hospice patients and refers patients to hospice on a regular basis. Based upon his experience, Dr. Weston understands what factors are properly considered when estimating a patient’s life expectancy. Dr. Weston routinely makes life expectancy prognostications for his patients. Based on the factors above, Dr. Weston was accepted as an expert in internal medicine. When weighing the testimony of Dr. Weston, the undersigned considered material factors regarding Dr. Weston’s qualifications. Dr. Weston has not certified a patient as being terminally ill. Dr. Weston is not board-certified in hospice or palliative care. After the audit, but before the hearing, Dr. Weston moved to a new practice, in which he has a flexible schedule, sometimes working no hours per week and sometimes working 60 hours per week. However, he testified that on average, he works about 100 hours per month. Heartland’s Expert Dr. Michael Shapiro Dr. Shapiro attended the Ross University School of Medicine, performed his residency at the Medical Center of Central Georgia and Mercer University, and performed a fellowship at the University of South Florida in hospice and palliative medicine. Dr. Shapiro was first exposed to hospice medicine during his residency, where there was both a palliative care service and a hospice service. After his residency, Dr. Shapiro spent a year as a junior faculty member at Mercer University where he performed palliative rounds on a weekly basis, in addition to practicing both general inpatient and outpatient medicine. Dr. Shapiro’s fellowship provided training on both the clinical and significant administrative aspects of hospice and palliative medicine, as well as hospice benefits. As part of this training, Dr. Shapiro learned how to appropriately evaluate patients to determine if they are eligible for the Medicaid hospice benefit. After completing his fellowship, Dr. Shapiro began working full time in hospice with Cornerstone Hospice (“Cornerstone”) as a team physician. In that role, Dr. Shapiro performed patient visits, held admission phone calls for new patient certifications, and performed other tasks as the physician member of the IDT. Dr. Shapiro also assessed patients to determine whether they were eligible for the Medicaid hospice benefits and executed written certifications for patients who were terminally ill and eligible for hospice benefits. Dr. Shapiro is currently the hospice medical director and chief medical officer of Cornerstone. In that role, he oversees all the physicians and hospice clinical practitioners, and actively participates in training. Dr. Shapiro also provides hospice physician training to new Cornerstone employees regarding the hospice benefit beyond the organization’s educational requirements. Dr. Shapiro estimates that, during his time at Cornerstone, he has assessed well over 1,000 patients to determine whether they have a terminal illness of six months or less if, the illness runs its normal course. He has determined eligibility by taking the history and performing a physical examination of patients, as well as by evaluating a patient based strictly on the medical records. Dr. Shapiro is board-certified in family medicine, hospice and palliative medicine, and as a hospice medical director. He also serves as the chair of the National Partnership for Hospice Innovation Medical Affairs Forum, which is a collaborative group of larger, not-for-profit hospices who focus on improving the clinical aspects of hospice. Based on the findings set forth above, Dr. Shapiro was accepted as an expert in hospice medicine, family medicine, and as a hospice medical director. When weighing the testimony of Dr. Shapiro, the undersigned took note of several factors regarding Dr. Shapiro’s qualifications. Dr. Shapiro testified that during his time at Cornerstone, he assessed more than 1,000 patients. He also acknowledged that Cornerstone underwent an audit in 2016, similar to the one at issue in this case, while he was medical director of the facility. The outcome of that audit resulted in Cornerstone being required to pay AHCA more than $700,000 in overpayments. While this factor does not disqualify Dr. Shapiro as an expert, the significant overpayment is a factor when weighing his testimony regarding the eligibility of recipients for Medicaid hospice services. Patient Review Patient P.C. Patient P.C. was a 54-year-old female who was admitted to hospice with a terminal diagnosis of end-stage congestive heart failure on March 13, 2012. P.C. presented with a secondary history of chronic obstructive pulmonary disease (asthma), GERD, and back pain. She had been hospitalized in the prior three years and was dependent regarding six of six activities of daily living (ADLs), including ambulating, toileting, transferring, dressing, feeding, and bathing. The claim period in question is March 13, 2012, through September 11, 2012. At the time of admission, P.C.’s most recent hospitalization, on March 7, 2012, was for a primary diagnosis of acute renal injury, lower extremity pain, and headache with a noted history of cardiomyopathy. During the admission, tests were conducted to rule out an acute kidney injury versus chronic kidney disease. The records noted that cardiology was only following her for her cardiomyopathy condition. Thus, the hospital admission was not related to her hospice-admitting diagnosis of congestive heart failure. Prior to admission, the most recent report from her primary cardiologist was dated December 9, 2011. At that time, the doctor noted that she was “doing generally well from a cardiac standpoint” and that she “appears to be stable from a heart failure standpoint.” Moreover, in the most recent record from her primary electrophysiologist, dated November 11, 2011, it was noted that she had New York Heart Association (“NYHA”) Class II symptoms. Her initial nursing assessment on March 15, 2012, showed that P.C. was able to ambulate 30 feet, she had no complaints of chest pain, no edema noted, she did not need oxygen, and she was independent with activities of daily living. Her ejection fraction was 20 percent at the time, her PPS was 50 percent, and her level of consciousness was not altered. The initial nursing assessment also indicated that P.C. was independent in all six ADLs. The follow-up assessment five days later on March 20, 2012, noted “none” for the ADL dependent category. NYHA’s functional classification is incorporated into the Heartland guidelines for determining prognosis for heart disease. The criteria for Class IV (terminally ill) patients with heart disease include “patients with cardiac disease resulting in inability to carry on physical activity without discomfort. Symptoms of heart failure or of the anginal syndrome may be present even at rest. If any physical activity is undertaken, discomfort is increased. Dr. Saad testified that the NYHA classifications are based primarily on the level of ambulation and whether the patient has significant chest pain at rest. Dr. Saad testified that a patient classified as being in Class II is someone with mild symptoms with ambulation. There may be some shortness of breath or chest pain. P.C.’s records reflect that she was able to ambulate 30 feet, she did not require oxygen, and she did not have chest pain. Based on P.C.’s records, she should have been classified as a Class II cardiac patient. Although the heart disease guideline form in her records indicated she was initially designated as NYHA Class IV, both Drs. Shapiro and Saad agreed that P.C. did not meet the criteria for NYHA Class IV, but rather, she met the criteria for Class II. In addition, patient P.C. was not using any oxygen when she was admitted to hospice and she was on room air. Dr. Saad credibly testified that a patient with end-stage heart failure would need to be on oxygen. During her stay in hospice, P.C.’s PPS was 50 percent and it increased to 60 percent in the second period. Her weight fluctuated between 160 and 170 pounds. Dr. Shapiro’s testimony that P.C.’s weight fluctuation could be attributed to fluid retention was not supported by the patient records. Based on P.C.’s patient records, there was not sufficient evidence to demonstrate that she had six months or less to live. Between the visit at which her cardiologist found her to be stable and her entry into hospice, there was no evidence of any additional complications with her heart disease. Moreover, there was no evidence of functional decline, impaired nutritional status, or overall progression of her heart disease during the recertification periods. Respondent’s expert noted that the patient experienced chronic leg and back pain and had chronic opioid dependency. However, this factor is not sufficient to support hospice eligibility. Dr. Shapiro pointed to several factors to support his contention that P.C.’s condition had progressed and her functionality had declined. During the recertification period with dates of March 13, 2012, through June 10, 2012, P.C. developed symptoms and progression of her underlying condition, including, shortness of breath with ambulation, tiring easily, and experiencing confusion about her medications. She was hospitalized on May 15, 2012, where she presented with oxygen saturations in the low 80s and a chest x-ray finding pulmonary congestion and opacities. During the hospital stay, P.C. was found to have anemia, with a hemoglobin measurement of 9.7. Dr. Shapiro testified that the lowered hemoglobin increased mortality by about 32 percent, and when coupled with untreated arrhythmias and underlying stage II heart disease, P.C.’s mortality at one year was almost 70 percent. During the certified period June 11, 2012, through September 8, 2012, P.C. began using supplemental oxygen for shortness of breath and fatigue and was suffering from orthopnea. The records reflect that P.C. was using a cane to ambulate upon admission to hospice due to vertigo. There was insufficient evidence of her nutritional decline; her weight fluctuated between 160 to 170 pounds; and her eating ranged from 25 to 75 percent. She was also independent regarding six of six ADLs. During the period September 9, 2012, through November 7, 2012, P.C. elected to revoke hospice on September 11, 2012, only three days into the final benefit period at issue. The patient records do not support a finding that P.C. met the Medicaid hospice eligibility standard during the disputed period of March 13, 2012, through September 11, 2012. The greater weight of the evidence supports a finding that P.C. was not eligible for Medicaid services and, thus, AHCA is entitled to recover an overpayment of $28,866.27. Patient S.L. Patient S.L. was a 56-year-old female, admitted to hospice on March 2, 2013, with a terminal diagnosis of squamous cell head and neck cancer. The claim periods at issue are March 2, 2013, through September 22, 2013. Based on her patient records, it is noted that S.L. had a history of cancer in the neck and upper lip. She had a wide local resection of her upper lip to remove the cancer on July 28, 2011. In May 2012, a CT scan of her neck showed evidence concerning cervical metastases. She then had a left neck dissection on May 10, 2012. The patient records did not show any recurrence of cancer after the dissection. In January 2013, her patient records showed that she had complaints of neck and jaw pain. However, her appearance was noted as “[o]therwise healthy looking, well nourished, in mild distress.” Upon discharge, the recommendation was that she continues medications as prescribed by the primary care physician and follow up in three months. On March 1, 2013, the day before she entered hospice, she visited Shands complaining of pain in the neck on the left side. The record noted that she is a “poor historian and emotionally unstable.” The record also noted that she was “sitting comfortably in the chair in no pain or distress” and her vital signs were within normal limits. The report found no evidence of the source of pain on the clinical exam so she was referred for a CT scan for further imaging. There was no referral for hospice services. In fact, there is no referral for hospice treatment by a physician in S.L.’s records. S.L. self-reported a 20-pound weight loss at the time of admission, in addition to increased symptoms of fatigue and shortness of breath. Dr. Shapiro testified that these symptoms, in conjunction with metastatic cancer, demonstrated a clinical need and appropriateness for hospice. However, there were no records to support a current diagnosis of cancer or a 20-pound weight loss. The information in the records that was used to admit S.L. for hospice services was unreliable and at times, inaccurate. There is no evidence to support that S.L. had a current diagnosis of cancer at the time of her admission. Her records reflect a history but no recurrence. There is no evidence to support S.L.’s self-reported 20-pound weight loss at the time of admission. The record demonstrates that within the prior year, S.L.’s weight had a range between 120 to 130 pounds. In addition, in the initial certification assessment, the hospice physician stated in his narrative that the cancer had metastasized to the lungs. However, there is no evidence that demonstrates that cancer was in S.L.’s lungs and, thus, the record does not support this statement. Further, there is a note on the recertification document that “MD visit Mar 2013 pt informed cancer has grown.” However, as stated above, S.L. was referred for a CT scan during her March 1, 2013, visit, but there is no mention of her cancer growing. Based on the foregoing, S.L.’s patient records do not support a finding that S.L. met the Medicaid eligibility standards for hospice services. During the recertification period of March 3, 2013, through May 30, 2013, S.L. was hospitalized for a possible overdose attempt. After this hospitalization, it was found that S.L. was experiencing lower extremity neuropathy, in addition to continued complaints of back and neck pain. However, none of these factors relate to her initial admitting diagnosis of cancer. Further, neither of the factors is noted as comorbidities that would warrant hospice services. A CT scan revealed nodal involvement, which Dr. Shapiro testified that literature suggests results in a 50-percent decrease in the rate of survival. However, follow-up testing was ordered to confirm the nature of the nodal mass, which is not sufficient documentation to demonstrate progression of cancer. S.L. experienced anxiety and she was becoming easily tearful, frustrated, and paranoid. A visit to her maxillofacial surgeon on August 20, 2013, revealed a palpable neck mass, which required further investigation. More importantly, however, the treating physician noted that “[s]he has referred herself to hospice . . . it is not at all clear that she should be a hospice patient at all.” Both a positron emission tomography (“PET”) scan conducted on August 30, 2013, and a biopsy performed by S.L.’s maxillofacial surgeon returned negative. The medical records contained in S.L.’s file do not support a finding that the Medicaid hospice eligibility standard was met during the disputed period. Based upon the greater weight of evidence, it is determined that S.L. was not eligible for Medicaid hospice services at the initial assessment or for the recertification periods. As a result, AHCA is entitled to recover an overpayment of $29,601.95. Patient V.P. Patient V.P. was a 45-year-old male with a history of end stage liver disease with comorbidities of alcoholic cirrhosis and Hepatitis C. His other comorbidities included esophageal varices grade III, hypertension, portal tension, anemia, anxiety, and polysubstance abuse. The claim period at issue is November 13, 2012, through February 28, 2014. V.P. had been admitted to the hospital seven times in the year prior to being admitted into hospice, the most recent of which was six weeks prior to his hospice admission. V.P. was admitted at that time for acute gastrointestinal hemorrhage and anemia due to the hemorrhage. He also had noted cirrhosis, very low blood counts, varices, and portal hypertension. Dr. Shapiro testified that these were significant clinical indicators of decompensated liver cirrhosis and findings suggestive of progressed liver disease. Based on this information, Dr. Shapiro opined that V.P. was appropriately admitted to hospice. Over a month before entering hospice, V.P. had an endoscopy, which showed grade III varices, but no bleeding, which meant that the disease was not active. Dr. Saad testified that this was significant because when looking at a terminal diagnosis, you are looking at a disease that is not responsive to treatment. Dr. Saad testified that the two main factors that are considered in determining the function of the liver are the INR and the albumin levels. V.P. had an international normalised ratio (“INR”) of 1.3 on October 3, 2012, and at admission, which is elevated and shows that he has liver disease, but it had not progressed to become end stage. Similarly, a normal albumin level is 3.5 and his was 3.0, which shows it is slightly decreased. The lower albumin level of 3.0 suggests that V.P. had liver disease, but that the level had not decreased to the point of end stage. More importantly, the patient records reflect that V.P.’s albumin level was 3.5 on September 27, 2012, and it decreased to 3.0 on September 28, 2012. According to the Heartland guidelines, an INR of greater than 1.5 and an albumin level of less than 2.5 coupled with other indicators of progression support a diagnosis of end- stage liver disease. During the recertification period of November 12, 2012, through February 10, 2013, V.P. suffered from increased abdominal pain requiring medication management changes, shortness of breath on walking, dizziness with associated elevated blood pressure, and muscle atrophy, all signs of the severity of his underlying liver disease. V.P. also experienced a fall on November 15, 2012. Due to these factors, Dr. Shapiro opined that V.P. continued to be appropriate for hospice. V.P. experienced abdominal pain during the recertification period of February 11, 2013, through May 11, 2013, which resulted in another medication regimen modification. V.P. was also transferred to a skilled nursing facility due to increased daily care needs. During this period, V.P. also began experiencing increased anxiety and depression. V.P.’s laboratory findings demonstrated an elevated INR of 1.5 from the previous month (of 1.3), which could lead to spontaneous bleeding. Dr. Shapiro also testified that V.P. experienced another fall, demonstrating his general weakness and continued functional decline. During the recertification period of May 12, 2013, through July 10, 2013, the records show increased drowsiness and lethargy, which were found to not be related to his medication but rather to his disease. V.P. experienced increased pain and ineffective control near the end of May, resulting in yet another medication modification. V.P. also had swelling and fluid retention in his lower extremities, which Dr. Shapiro opined illustrated muscle mass wasting in advancing liver disease. V.P.’s alkaline phosphatase increased from 136 to 178, and an ultrasound showed ascites in his abdomen, hepatomegaly, and a renal stone. V.P. also exhibited non-verbal signs of pain, as well as a significant and sharp increase in shortness of breath. The shortness of breath occurred while V.P. was speaking and led to the presence of intermittent orthopnea, which is commonly found in terminal liver patients and demonstrates disease progression. V.P. had documented pancytopenia, when combined with swelling and fluid retention, shows an advancing disease state where a patient is more susceptible to infection. V.P. experienced such an infection during this period, and he was treated with antibiotics for cellulitis. V.P. also suffered an additional fall in September and had continued decline in appetite, consuming only 25 percent to 50 percent of his meals. On December 17, 2013, V.P. was examined by a team physician who noted that V.P. exhibited confusion, forgetfulness, slurred speech, muscle atrophy, frailty, depressed mood, anxiousness, ascites, and moderate dependence in his activities. Other hospice team members also witnessed V.P.’s progressive symptoms, including confusion and repetitive speech. V.P. experienced another fall that resulted in a head injury, followed by slurred speech and lethargy. Despite another change in his medication, V.P.’s clinical symptoms progressed. He started suffering from hypoxia, abdominal tenderness, and ascites. A chest x-ray showed congestive heart failure. V.P. also developed a urinary tract infection requiring antibiotic treatment. Dr. Shapiro testified that these were clear findings that demonstrated V.P. was appropriate for hospice. During the recertification period of January 7, 2014, through February 28, 2014, V.P. required additional nursing needs and visits. V.P. developed crackles (persistent fluid and congestion) in his lungs and had increased abdominal girth, at one point measured as a 1.5-inch increase over a two-week period. In addition, V.P. experienced two separate falls, suffered from increased fatigue and weakness, and had recurrent cellulitis (bacterial infection). A chest x-ray dated February 5, 2014, showed that V.P. developed pneumonia. In the radiology report, it is noted that the exam was overall worse compared to the January 1, 2014, exam. V.P. died on February 11, 2016. Dr. Saad testified that individuals can have good days and bad days and that they can wax and wane, but you look at whether they return to their baseline. While, there were some exacerbations, or infections, each issue may have ultimately resolved. However, V.P.’s records, including his lab results, x-rays which showed development of pneumonia within slightly more than a month, multiple reoccurring falls, a number of infections, increasing ADL dependence, and worsening confusion support a finding that V.P. was eligible for hospice services. The evidence does not support by a preponderance of evidence that V.P. was not entitled to hospice services and as a result, AHCA is not entitled to recover overpayment for patient V.P. Overpayment Calculation Based on the Findings of Fact above, AHCA is entitled to recover overpayment for hospice services to P.C. and S.L. in the amount of $58,468.22. Fine Calculation When calculating the appropriate fine to impose against a provider, MPI uses a formula based on the number of claims that are in violation of rule 59G-9.070(7)(e). The formula involves multiplying the number of claims in violation of the rule by $1,000 to calculate the total fine. The final total may not exceed 20 percent of the total overpayment of $58,468.22, which results in a fine of $11,693.64.
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 directing Heartland to pay $58,468.22 for the claims found to be overpayments and a fine of $11,693.64. The undersigned reserves jurisdiction to award investigative, legal, and expert witness costs. DONE AND ENTERED this 7th day of March, 2019, in Tallahassee, Leon County, Florida. S YOLONDA Y. GREEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 7th day of March, 2019.
The Issue Whether the numeric need for hospice programs in health planning subdistrict 6A for the March 2000, batching cycle should be one, as originally published by the Agency for Health Care Administration, or zero, as published in a revision of the original publication?
Findings Of Fact The Parties Petitioner, Hernando-Pasco Hospice, Inc., was formed in 1982 and commenced service in 1984. It is licensed to provide hospice services in Service Areas 3D and 5A, Hernando and Pasco Counties, respectively. On average, it serves 500 patients per day. Hernando-Pasco has three offices for the delivery of care in its service areas. It operates three hospice residential houses with a total of 23 beds. The houses are in Hudson, Dade City, and Spring Hill. Hernando-Pasco also operates an inpatient unit at a nursing home in Brooksville serving Hernando County. LifePath Hospice is a not-for-profit community organization founded in 1983. It is licensed to provide hospice services in two service areas, 6A and 6B. Service Area 6A is Hillsborough County. Service Area 6B is comprised of three counties: Polk, Highlands, and Hardee. LifePath serves 820 patients on an average daily basis. In calendar year 2000, it served 4,002 patients. LifePath provides hospice service without regard to the patient's ability to pay. The services are provided, moreover, regardless of the circumstances in which the patient is found so long as the patient is in Service Area 6A or 6B. For example, services are provided to the patient whether at home, in another residential setting, in an inpatient facility such as a hospital or even if homeless. In other words, LifePath provides hospice service to patients wherever the patient might be within LifePath's two service areas. Similarly, Hernando-Pasco Hospice provides its hospice services to hospice patients at home, in residential settings, and in in-patient settings. It does not matter in what setting the hospice patient is found at the time of the request for hospice services as long as the patient is located within the service areas where Hernando-Pasco Hospice is authorized to provide its services. Hernando-Pasco delivers services within its authorized service areas "wherever the patient may be." (Tr. 64). Hospice services are also delivered by Hernando-Pasco Hospice to the homeless, although requests by the homeless for hospice services tend to be few. As Mr. Taylor, CEO of Hernando- Pasco Hospice explained at hearing: Fortunately, the few of them [the "homeless"] are able to go to an adequate facility, but some of them prefer to live in cardboard boxes . . . things of that nature. We go where they are. * * * [I]f they want to be living in a cardboard box, we will take service to that cardboard box for them. (Tr. 248, 249). The Agency for Health Care Administration is the single state agency responsible for the administration of certificate of need laws in Florida. In conjunction with these duties, it determines semi-annually the net numeric need for new hospice programs pursuant to Rule 59C-1.0355, Florida Administrative Code ("the Rule.") Numeric Need Under The Rule Rule 59C-1.0355, Florida Administrative Code, entitled "Hospice Programs" was adopted on April 17, 1995. Its purpose is to ensure "the availability of hospice programs as defined in this rule to all persons requesting and eligible for hospice services, regardless of ability to pay." Rule 59C-1.033(1), Hernando-Pasco Ex. 9. The Rule establishes criteria and standards for assessing the need for new hospice programs. For determining whether a new hospice is needed in a service area, the Rule includes a numeric need formula. The numeric need formula contains two terms: "HPH" and "HP." "HPH" is defined as "the projected number of patients electing a hospice program in the service area during the 12- month period beginning at the planning horizon." (Hernando Ex. 9). "HP" is defined as "the number of patients admitted to hospice programs serving a service area during the most recent 12-month period ending on June 30 or December 31. (Id.) If the number of patients denoted as HPH exceeds the number denoted by HP by 350 or more, then a numeric need is indicated for the service area. The formula is expressed as: HPH - HP > 350 [Rule 59C-1.0355(4)(a), Hernando-Pasco Ex. 9]. The "350" figure in the Rule's numeric need formula "is a threshold value to determine whether any difference that may exist between HPH and HP rises to a significant level. It represents a minimum volume that would be associated with a hospice that would be large enough to be financially viable and still offer comprehensive services to the patients who request hospice care." (Tr. 782). AHCA's Calculation and First Fixed Need Pool Publication On July 12, 1999, LifePath submitted the first of two "Semi-annual Reports of Hospice Utilization" for calendar year 1999 to the Agency. The report showed a total of 1,406 new patients admitted by LifePath for the period January 1, 1999, through June 30, 1999. The first half of the year total was broken down for LifePath's two service areas; the number of admissions in Service Area 6A totaled 1,282, and the number of admissions in Service Area 6B totaled 124. The report is signed in a space for the administrator of LifePath to show that it had been reviewed and approved. On January 7, 2000, LifePath filed its second utilization report for calendar year 1999. The second semi- annual report, covering the period from July 1, 1999, through December 31, 1999, showed a total of 1,368 patients admitted for the second half of 1999. Also broken down into admissions by service area, the report indicated that 1,228 of the admissions were in Service Area 6A and 140 of the admissions were in Service Area 6B for the second half of 1999. This report also shows review and approval by a LifePath Administrator, in this second case, by Kathy L. Fernandez, LifePath's CEO. With the two utilization reports in hand, AHCA calculated numeric need for the two service areas served by LifePath pursuant to the Rule's formula. With regard to Service Area 6A, Hillsborough County, AHCA determined HPH to be 2,871. (The HPH figure for Hillsborough County is not in dispute in this proceeding.) Based on LifePath's utilization reports, AHCA determined HP for Service Area 6A, Hillsborough County, to be 2,510. Inserting these two figures into the appropriate places in the formula yielded a resulting difference of 360. Since the result was a positive difference of 350 or more, the result indicated a numeric need for one more hospice in Service Area 6A. Different Information The Agency prepared to publish a hospice fixed need pool of "one" for Service Area 6A on January 28, 2000. While preparation was underway, LifePath's CEO Ms. Fernandez was informed of what the publication would show. Surprised, she asked her staff to investigate the utilization data LifePath had submitted to AHCA. The investigation conducted, the results were reported to Ms. Fernandez. In Ms. Fernandez' words, she realized: there was an error. When [staff] ran a simple computer report for the admissions that were admitted in 6A and 6B, they came back and told me the numbers that they had run on the computer were different than the numbers that we turned into AHCA. (Tr. 609) According to the new computer-run numbers, LifePath had admitted 32 more patients during Calendar Year 1999 in Service Area 6A than it had reported. The difference in the new numbers and the ones reported to AHCA concerned hospice patients who had been admitted to LifePath while patients of hospitals located in Hillsborough County but whose permanent residences were outside Hillsborough County and, conversely, patients who had been reflected as 6A admissions but had been admitted while outside Hillsborough County. The new numbers reflected where patients were located at the time of admission as opposed to where the patients permanently resided. Forty patients were involved. Thirty-six of them had been admitted to LifePath while physically present in Service Area 6A, that is, at the time of admission, they were patients in Hillsborough County hospitals. Another four patients had been reported to have been admitted in Service Area 6A, but had actually been admitted while physically present in Service Area 6B. In consideration of location at time of admission rather than permanent residence or home as the patient's place of admission, the new numbers, therefore, showed a net change of 32 patients that in LifePath's view should have been regarded as Service Area 6A admissions above the reported number of Service Area 6A admissions. The utilization reports submitted to the Agency, unlike the new numbers, did not show admissions by location of the patient at the time of admission because the reports had determined admissions by which LifePath team had cared for the patients. The 36 patients admitted while in Hillsborough County hospitals but omitted from the utilization reports as 6A admissions had been cared for by LifePath's Rose Team, a team "geographically placed in 6B." (Tr. 610). They were counted in the reports, therefore, as 6B admissions without regard to the fact that the admissions had occurred at a moment when the patients were actually located in Service Area 6A as Hillsborough County hospital patients. The same was true of the four patients reported to have been 6A admissions. They were all physically located in Service Area 6B at the time of their admission. In each of these cases, the teams were assigned on the basis of the patient's home address at the time of admission rather than the patient's actual location at the time of admission. In light of the new numbers that reflected a different approach and an understanding of the difference between those numbers and the ones LifePath had submitted by way of the reports, LifePath concluded that its utilization reports had underreported 6A admissions for calendar year 1999 by 32 patients. Armed with this new information and what it viewed as a sounder approach to the reporting of admissions, LifePath set out to correct what it hoped AHCA would see as an error. On January 26, 2000, two days in advance of the scheduled publication of the fixed need pool for hospice programs in the State, LifePath caused to be hand-delivered to the Agency, a letter from its attorney. In pertinent part, the letter reads as follows: Enclosed . . . is correspondence and a packet of information . . . which notifies the Agency of mistakes . . . made in LifePath's last two [reports]. This information included Patient Data Sheets from LifePath's information system for 36 patients who were admitted and cared for in Service Area 6A (Hillsborough County), but who were mistakenly counted as Service Area 6B patients. Also, enclosed are Data Sheets for 4 patients who were admitted and cared for in Service Area 6B (Polk County), but who were mistakenly counted as Service Area 6A patients . . . . The error occurred when patients were mistakenly counted by nursing team (e.g., the Rose and Yellow teams), rather than strictly by geographic location of where the patient received his/her care. The net result will be an addition of 32 patients to Service Area 6A and a reduction of 32 patients from Service Area 6B. It is respectfully requested that, based upon this new information, your office correct the upcoming fixed need pool projection for Hospice Service Area 6A, scheduled to be published on January 28, 2000 and, instead of publishing a need for one (1) new hospice program in Service Area 6A, publish a need for zero (0) new hospice programs in Service Area 6A for the upcoming CON batching cycle. (Hernando-Pasco Ex. No. 15). The forty Patient Data Sheets attached to the letter bear the title "Patient Referral Data." Below the title is the time that the data was generated by the computer. All forty sheets were generated between 10 a.m. and 11 a.m., the morning of January 26, 2000. As current location, 36 of the sheets list one of a number of hospitals in Hillsborough County. The majority of the sheets show the Moffitt Cancer Center as the patient's current location. Some data sheets of these 36 list other hospitals in Hillsborough County as the patient's current location: Tampa General Hospital, St. Joseph's Hospital, Brandon Regional Hospital, and South Florida Baptist Hospital. The other four data sheets list as "current location" either Lakeland Regional Medical Center in Polk County or Winter Haven Hospital in Polk County. The forty referral data sheets generated by LifePath's information system on January 26, 2000, were not produced in the customary format used by LifePath. They were reformatted to show the patient's location at the time of admission (termed "current location") and to omit the patient's permanent residence or home address. At hearing, LifePath's CEO candidly stated that the "Patient Referral Data" sheets were "altered . . . to show the [patient's] location at the time of admission." (Tr. 612). Some of the information remained the same on the sheets produced on January 26 as was customary. Just as Ms. Fernandez testified, for example, the 36 sheets that show a hospital in Hillsborough County as the current location list under "Team Code" the Rose Team, LifePath's team that serves Service Area 6B. The four that show Polk County as "current location" list the Yellow Team, the LifePath team that serves Hillsborough County or Service Area 6A, under "Team Code." The January 26 data sheets' use of the word "current" to describe the patient's location is a misnomer if applied to the date the information was generated. The 36 patients with Hillsborough County locations had passed away by January 26, 2000. On the other hand, the use of the word "current" is accurate if understood to mean the location at the time of the referral and admission, a use consistent with the title of the document as reflecting "referral" data. Response by the Agency The January 28, 2000, publication proceeded as planned without change. But, after receiving the information submitted by LifePath, AHCA published a second "Notice of Hospice Program Fixed Need Pool." This second publication appeared in Volume 26, Number 6 of the Florida Administrative Weekly on February 11, 2000. It indicated a revised net need for zero (0) hospice programs for Service Area 6A. As reflected by the revised publication, AHCA believed that the second publication correctly determined the net need for the service area to be zero. The determination is based upon the Agency's interpretation of Rule 59C-1.0355. As Mr. Gregg, Chief of the Bureau of Health Facility Regulation, for the Agency explained at hearing: [T]he rule . . . directs us to consider the place where the patient was prior to admission. * * * For people who have been . . . nursing home residents, or ALF residents, or in and out of hospitals prior to being admitted to a hospice, their actual residence may not be quite so clear. And so the interpretation is that it is the place from which they are referred. (Tr. 932, 933). With regard to the 36 patients originally reported as Service Area 6B admissions but who had been admitted while in a hospital in 6A, LifePath continued to provide hospice services to the patients after they returned to a location in Service Area 6B. LifePath's ability to admit in one service area and provide treatment later in a different service area makes this case somewhat unusual. There are few hospices in Florida that provide service in more than one service area. For that reason, the issues presented in this case have not surfaced in the past. The more common situation for when a patient is admitted in a hospital in one service area and provided hospice services there and then returns to a permanent residence in another service area would call for the patient to be admitted to two different hospices at two different times. In such a case, for the sake of consistency, the Agency "would want to see . . . an admission to the program in [the service area in which the hospital was located]" (Tr. 934) and then a second admission to the hospice in the service area in which the patient had permanent residence when the patient moved back home or to a location in the second service area. This expectation of the Agency, however, is not required by rule. It is one that apparently has emerged in the context of this case. LifePath's Transmission of Data to Hernando-Pasco On February 18, 2000, LifePath transmitted to Mr. Rodney Taylor, the Administrator of Hernando-Pasco Hospice, referral records for the same forty patients whose referral data sheets generated on the previous January 26 had been submitted to the Agency. In its cover letter to Mr. Taylor, Ms. Fernandez wrote on behalf of LifePath: I'm enclosing the referral records for the patients who were inadvertently mis- classified as to county of admission by LifePath in 1999. We found a few original referral records were not filed appropriately in the medical record, or in error, reflected the home address versus the hospital in which they were admitted. In those instances, I am attaching a portion of the Admission Assessment or Patient Information Sheet to which show the actual point of admission. As you know, if I run a current referral record, HPMS will show the patient's current address rather than the point of admission. (Hernando-Pasco Ex. 16). Unlike the Patient Referral Data generated January 26, the Patient Referral Data sheets sent to Mr. Taylor show that they were generated earlier, on various dates in 1999. Also dissimilar from the sheets produced on January 26 that had omitted "home address" and had shown only the location at the time of admission, moreover, the sheets provided Mr. Taylor show not only a "current location" or a location at the time of admission but also the patient's home address. No attempt was made by LifePath to hide the fact that the Patient Referral Data Sheets submitted to AHCA on January 26, 2000, had been generated on that same date rather than any earlier date as in the case of the information transmitted later to Mr. Taylor and Hernando-Pasco Hospice. The other main difference between the two sets of data submitted to the Agency and to Mr. Taylor, that is, the omission from the data submitted to AHCA of the patient's home address, was explained by Ms. Fernandez as an act done for the State's benefit, "so as not to confuse them." (Tr. 622.) Other Provisions of the Rule Rule 59C-1.0355 is an extensive rule. The Rule consists of ten subsections that cover an array of topics related to hospice programs. In addition to the provisions setting forth criteria for determination of numeric need, the rule contains a "definition" section, general provisions related to quality of care and conformance with statutory criteria, consistency with plans, required description of the program, construction and changes in licensed capacities of freestanding hospice facilities, and grandfathering provisions. Also included in the Rule is a statement of intent and pertinent to this proceeding, Subsection (9), which governs semi-annual utilization reports. Subsection (9) of the Rule states: Each hospice program shall report utilization information to the agency or its designee on or before July 20 of each year and January 20 of the following year. The July report shall indicate the number of new patients admitted during the 6-month period composed of the first and second quarters of the current year, the census on the first day of each month included in the report, and the number of patient days of care provided during the reported period. The January report shall indicate the number of new patients admitted during the 6-month period composed of the third and fourth quarters of the prior year, the census on the first day of each month included in the report, and the number of patient days of care provided during the reporting period. The following detail shall also be provided: For the number of new patients admitted: The 6-month total of admissions under age 65 and age 65 and over by type of diagnosis (e.g., cancer; AIDS). The number of admissions during each of the 6 months covered by the report, by service area of residence. For the patient census on April 1 or October 1, as applicable, the number of patients receiving hospice care in: A private home. An adult congregate living facility. A hospice residential unit. A nursing home. A hospital. (Hernando-Pasco Ex. 9, emphasis supplied). There is no definition of "service area of residence." The term "service area resident" is used extensively in the descriptions of the factors that make up HPH, "the projected number of patients electing a hospice program in the service area during the 12 month period beginning at the planning horizon." See Subsection (4)(a) of the Rule. HPH, however, is not in dispute in this proceeding. It is the other term in the formula that is in dispute: "HP." The Rule's definition of "HP" does not use the term "service area of residence." But the definition cross-references to Subsection reporting requirements: "(HP) is the number of patients admitted to hospice programs serving an area during the most recent 12-month period ending on June 30 or December 31. The number is derived from reports submitted under subsection (9) of the rule." Section (4)(a) of the Rule. The Agency interprets "service area of residence" not to mean the service area where the patient has a "permanent residence," but the service area which is the patient's "location at the time of admission." There are good reasons in support of the AHCA's interpretation. Hospitalized hospice patients come from a population that has been mobile. Some have permanent residences in foreign countries, other states (so-called "snowbirds") or in other counties in the state or different health planning service areas than the one in which they are hospitalized. Some hospice patients may have no permanent residence at all, as in the case of the homeless. To report as admissions only those who reside permanently in a service area in Florida by that service area and to not report the patient as an admission when admitted in the service area in which the patient is hospitalized or located at the time of admission would omit many admissions. As Mr. Gregg testified on behalf of the Agency, the numeric need formula produces the "most accurate projection of need by having the best data and the most complete data; therefore you would want every possible admission to be reported." (Tr. 958). An Additional Contention In addition to contending that the numbers originally reported by LifePath were correct for calculation of HP and that the later reported numbers may not be used for calculation of HP, Hernando-Pasco raises a second, fundamental issue. Hernando- Pasco contends that the 36 patients did not achieve the status of admission while in the hospital. According to Hernando-Pasco's line of thinking, if the patients were ever admitted to LifePath, it was not until after their return to Service Area 6B. To address these contentions, it is necessary to examine the admissions process used by LifePath, whether that process was applied to the 36 patients, and, ultimately, whether that process meets the legal requirements for hospice admission. LifePath's Admissions Process for the Hospitalized Patient Whether hospitalized or not, admission of a patient to LifePath commences with a physician order or a request from the patient or family of the patient. A pre-admission visit is conducted to determine if the patient is eligible for hospice services. During the visit, a representative of LifePath speaks with the patient and family to ensure that services have been requested. In the case of a hospitalized patient, death is often imminent and occurs in the hospital. LifePath, therefore, does not wait for the patient to return home or to a residential setting to commence admission. The formal admission process is initiated at the hospital by the admissions nurse, a professional who has received training on how to conduct initial psychosocial, spiritual and financial assessments to be undertaken during the admissions process together with the physical assessment. The admitting nurse goes to the location of the patient where the admissions process takes between two and one-half and three hours. Because of the length of time required, LifePath's "admission nurses do [only] two admissions a day." (Tr. 641). If the patient's location is a hospital, the nurse does a physical assessment and an initial psychosocial, financial, and spiritual assessment of the patient. Forms for consent of care, medical exchange of information, and authorization of payment forms as well as a patient information sheet are completed. Advance directives are discussed. Prognostic indicators, criteria set by the state, are reviewed to determine whether the patient meets admission criteria. Emergency planning is discussed. A teaching record is prepared. A physician's referral and plan of treatment are completed and confirmed with the physician. An interdisciplinary plan of care is initiated. Referrals of patients, if necessary, are facilitated. For the hospitalized patient for whom end of life is not imminent and who will have the opportunity to return home, LifePath's objective is to facilitate that return. Planning for the discharge of a patient from a hospital is an important hospice service. Often it involves the ordering of medications and equipment in anticipation of the patient's return home, two functions that require admission to the hospice. In such cases, physician's orders are necessary and a physician will not give a hospice orders to care for a patient unless the patient is admitted to the hospice program. For the hospitalized patient for whom death is imminent, one of the important reasons for admission to hospice is to qualify the patient's family for the 13 months of bereavement services hospices are required to provide survivors under the Medicare hospice benefit. Hospices also admit patients near death so that they may be provided care as quickly as possible. A hospitalized patient is considered by LifePath to be admitted when the physical assessment and at least the initial psychosocial, spiritual, and financial assessments are conducted by the admitting nurse, all consent forms are complete and the hospice takes over the care of the patient in coordination with the hospital. LifePath's Administrative/Operational Manual with regard to the subject of "Admission Process" (see Hernando-Pasco Exhibit 25) requires more in the way of procedure for an admission than is done for the typical hospitalized patient. The manual describes procedure for the admissions process as consisting of 35 categories of items (Procedures A - Z, and AA through II), some of which have numerous sub-parts. The process leads to a Plan of Care. The procedure includes: W. In conjunction with one additional IDT member develop the "Plan of Care". Identify foci and document on the IDT Plan of Care. Complete a "Hospice Interdisciplinary Plan of Care Evaluation/Summary" form. (Id., emphasis supplied.) Normally, it is the social worker member of LifePath's interdisciplinary care team, together with the admissions nurse, who develops the plan of care. According to the "Position Description" of LifePath's "Hospital Team Patient/Family Counselor", it is the social worker also who "[w]orks closely with the LH Hospital Team RN to assure timely admissions." (Hernando-Pasco Exhibit 26, Li-He 974). In the case of a hospitalized patient for whom admission is requested, however, the social worker may not participate in LifePath's admission process at all. To complete a full psychosocial assessment and history takes up to three hours. To do so on the day of admission following the two and one-half hour to three-hour admissions process conducted by the nurse frequently "would be cumbersome and overburdening to a patient and family." (Tr. 644). This is especially true in the case of the patient for whom death is imminent. In the case of the patient who will have the chance to return home, the full follow-up psychosocial and spiritual assessments conducted by social workers and chaplains are often deferred by patient and family request. Understandably, conducting the full assessment can be too much for the hospitalized patient who has just received a prognosis of terminal illness and the patient's family in the midst of arrangements for transfer of the patient home and initiation of the care to be delivered. The family frequently chooses to defer "to a time when they can sit down and comfortably speak about what they need to, at a different time, when things are calmer." (Tr. 647). There may be other complications with a hospitalized patient, as opposed to a patient admitted at home or in another setting. Sometimes hospitals do not permit patients to elect the Medicare hospice benefit while they are inpatients. Nonetheless, they can still be admitted to the hospice and be provided hospice services. If the hospital allows the patient to elect hospital benefits, LifePath is eligible for reimbursement for services provided on the day of a patient's admission. Once LifePath admits a hospitalized patient, the LifePath hospital team is notified. The team consists of hospice nurses, social workers, and a chaplain. The team continues to see the patient while in the hospital and helps coordinate the care and, frequently, the discharge of the patient. The 36 Patients Hospitalized in 6A The 36 patients originally reported by LifePath as admissions in Service Area 6B were all eligible for admission to hospice at the time LifePath undertook to admit them to hospice care. All 36 were admitted while physically located in Service Area 6A. The admission process for the 36 patients included a professional initial assessment by the admitting nurse of the social, psychological, spiritual and financial needs of the patient as well as a physical assessment. LifePath was not reimbursed by Medicare for 34 of the patients in question for hospice care in the hospital. Nor did LifePath seek compensation from Medicare for the care in the hospital provided these patients. As to those patients who returned home or were transferred to another residential setting in Service Area 6B, LifePath received Medicare reimbursement for the hospice care provided in the residential setting. LifePath explained that it did not receive Medicare reimbursement for the care provided during the time the 34 spent in the hospital because the hospitals would not allow the patients to elect hospice Medicare benefits while in the hospital. Hospitalized patients, moreover, LifePath explained, can be admitted as patients who pay privately without the involvement of a third party payer.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Agency for Health Care Administration determining the fixed need pool for health planning subdistrict 6A for the March 2000 batching cycle to be zero. DONE AND ENTERED this 18th day of May, 2001, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of May, 2001. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Julie Gallagher, General Counsel Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Richard A. Patterson, Esquire Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Gerald B. Sternstein, Esquire Frank P. Rainer, Esquire Sternstein, Rainer & Clarke, P.A. 101 North Gadsden Street Tallahassee, Florida 32301 H. Darrell White, Esquire McFarlain, Wiley, Cassedy & Jones, P.A. 215 South Monroe Street, Suite 600 Post Office Box 2174 Tallahassee, Florida 32316-2174
The Issue The issues are whether Petitioner, Agency for Health Care Administration (“Petitioner” or “AHCA”) is entitled to recover Medicaid funds paid to Respondent, Covenant Hospice, Inc. (“Respondent” or “Covenant”), pursuant to section 409.913(1), Florida Statutes, for hospice services Respondent provided during the audit period between January 1, 2011, through December 31, 2012; and the amount of sanctions, if any, that should be imposed pursuant to section 409.913(15) and (17).
Findings Of Fact Based on the evidence presented at the final hearing and the record in this matter, the following Findings of Fact are made. Parties Covenant is a provider of hospice and end-of-life services and at all times relevant to this matter, the program was an authorized provider of Medicaid services pursuant to a valid Medicaid provider agreement with AHCA. AHCA is the state agency responsible for administering the Florida Medicaid Program. Medicaid is a joint federal/state program to provide health care and related services to qualified individuals, including hospice services. AHCA is authorized to recover Medicaid overpayments, as deemed appropriate. § 409.913, Fla. Stat. Medicaid Audit Process The U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services (“CMS”), contracted with Health Integrity, a private vendor, to perform an audit of Covenant. Health Integrity retained a company called Advanced Medical Reviews (“AMR”) to provide peer physician reviews of claims to determine whether an overpayment occurred. On or about December 3, 2013, Health Integrity commenced the audit of Covenant. The scope of the audit was limited to Medicaid recipients that received hospice services from Covenant during the period of January 1, 2011, through December 31, 2012. Generally speaking, the files were identified for review using the following criteria: a) the recipient was not dually eligible (eligible for both Medicaid and Medicare); and b) Covenant provided hospice services for 182 days or longer, based on the recipient’s first and last day of service within the Audit Period. Thus, the objective of the audit was to determine whether certain Medicaid patients were eligible for hospice benefits provided by Covenant. When Health Integrity applied the audit criteria to the Medicaid claims paid by AHCA to Covenant, Health Integrity determined that Covenant had provided hospice services to 62 Medicaid recipients for 182 days or longer during the Audit Period. Covenant provided Health Integrity with medical and related financial records (“Covenant’s Records”) in order to support the eligibility of these 62 patients for Medicaid benefits paid by AHCA. To qualify for the Medicaid hospice program, all recipients must, among other things: a) be certified by a physician as terminally ill with a life expectancy of six months or less if the disease runs its normal course; and b) voluntarily elect hospice care for the terminal illness. See Florida Medicaid Hospice Services Coverage and Limitations Handbook, January 2007 ed. (“Handbook”) at page 2-3, as adopted by Fla. Admin. Code R. 59G-4.140 (effective Dec. 24, 2007); see also § 400.6095(2), Fla. Stat. (2010-2012). Health Integrity employs claims analysts who performed an initial review of Covenant’s medical records to determine if the recipients were eligible for Medicaid hospice benefits. All Health Integrity claims analysts are registered nurses. If the Health Integrity claims analyst is able to assess that the patient’s file contains sufficient documentation to justify eligibility for hospice benefits for the entire length of stay under review in the audit, there was no imposition of an overpayment for that file and, thus, the claim is not evaluated further. If the Health Integrity claims analyst is unable to assess whether the patient’s file contains sufficient documentation to determine eligibility for hospice benefits, or if only a portion of the patient’s stay could be justified by the Health Integrity claims analyst, the file is then forwarded to an AMR physician to make the ultimate determination as to eligibility for Medicaid hospice benefits and whether an overpayment is due the Florida Medicaid program. With respect to the Covenant audit, the Health Integrity claims analysts reviewed Covenant’s medical files for the 62 initially identified recipients and determined that no further action was warranted with respect to 10 recipients. As a result, 52 files were referred for physician peer review by AMR. AMR maintains a secure portal (“AMR Portal”) that Health Integrity personnel access to transmit all received provider files to AMR. AMR’s peer review physicians, in turn, use the AMR Portal to review the totality of the provider’s submitted documentation, including all medical case records, and provide their comments. As required by section 409.9131, AHCA referred Petitioner’s records for peer review to determine whether there was a medical necessity for a hospice program. Section 409.9131(2) sets forth the following definitions: “Medical necessity” or “medically necessary” means any goods or services necessary to palliate the effects of a terminal condition or to prevent, diagnose, correct, cure, alleviate, or preclude deterioration of a condition that threatens life, causes pain or suffering, or results in illness or infirmity, which goods or services are provided in accordance with generally accepted standards of medical practice. For purposes of determining Medicaid reimbursement, the agency is the final arbiter of medical necessity. In making determinations of medical necessity, the agency must, to the maximum extent possible, use a physician in active practice, either employed by or under contract with the agency, of the same specialty or subspecialty as the physician under review. Such determination must be based upon the information available at the time the goods or services were provided. “Peer” means a Florida licensed physician who is, to the maximum extent possible, of the same specialty or subspecialty, licensed under the same chapter, and in active practice. “Peer review” means an evaluation of the professional practices of a Medicaid physician provider by a peer or peers in order to assess the medical necessity, appropriateness, and quality of care provided, as such care is compared to that customarily furnished by the physician’s peers and to recognized health care standards, and, in cases involving determination of medical necessity, to determine whether the documentation in the physician’s records is adequate. Peer Review Each AMR peer reviewer retained to review the respective recipient’s patient records prepared a written report, which was based on the reviewer’s opinion regarding whether the patient had a terminal diagnosis, with a life expectancy of six months or less to live if the recipient’s terminal illness followed its natural course. The peer reviewers formulated their opinions based on their own training, experience, and the generally accepted standards in the medical community within the respective specialty. After the AMR peer review physicians reviewed the 52 Covenant recipient files loaded into the AMR Portal, the AMR physicians determined that 25 recipients were eligible for Medicaid hospice services and 29 patients were ineligible. The peer review physicians determined that 29 patients were ineligible for Medicaid hospice services. On February 12, 2016, Health Integrity presented the Draft Audit Report (“DAR”) to Covenant for comment and response. Covenant provided a response to the DAR and contested the overpayments for each of the 29 recipients. Covenant’s response was provided to the AMR peer physicians, who, after reviewing the response, revised their opinions for four recipients. Therefore, the number of recipients in dispute was reduced to 25 patients. Health Integrity then prepared a Revised Draft Audit Report (“RDAR”), which assessed an overpayment amount of $714,518.14, relating to 25 recipients. Health Integrity presented the RDAR to CMS and AHCA for approval. Once the RDAR was approved by CMS and AHCA, Health Integrity then prepared and issued the Final Audit Report (“FAR”), upholding the overpayments identified in the RDAR and submitted it to CMS. CMS provided the FAR to AHCA with instructions for AHCA to initiate the state recovery process and to furnish the FAR to Covenant. The FAR determined that Petitioner was overpaid $714,518.14 for services provided to the 25 recipients during the Audit Period. The FAR also imposed a fine of $142,903.63 and assessed costs of $131.38. Prior to the final hearing, the parties reduced the number of ineligible patients from 29 to 17 patients. As a result, AHCA is seeking a revised amount of overpayment in the total amount of $677,023.44, with a corresponding revised fine amount of $135,404.68, for the remaining patients in dispute. To be eligible for Florida Medicaid hospice services, a recipient must be certified by a physician as terminally ill with a life expectancy of six months or less, if the disease runs its normal course. The Handbook also requires: Documentation to support the terminal prognosis must accompany the initial certification of terminal illness. This documentation must be on file in the recipient’s hospice record. The documentation must include, where applicable, the following: Terminal diagnosis with life expect- ancy of six months or less if the terminal illness progresses at its normal course; Serial physician assessments, laboratory, radiological, or other studies; Clinical progression of the terminal disease; Recent impaired nutritional status related to the terminal process; Recent decline in functional status; and Specific documentation that indicates that the recipient has entered an endstage of a chronic disease. Experts AHCA Peer Reviewers The four peer review physicians assigned to review claims in this matter were Florida-licensed physicians, who were matched by specialty or subspecialty to the claims they were reviewing. Each physician testified as to his or her medical education, background, and training. Petitioner offered each physician as an expert, and the undersigned accepted each expert in their field of specialty. Todd Eisner, M.D., is an expert in Internal Medicine and Gastroenterology. He is a physician licensed in Florida and maintains an active practice. He has been actively practicing in Florida for more than 22 years and treats patients with liver disease daily as part of his practice. He has seen thousands of patients with liver disease over his career and, based upon his experience, Dr. Eisner understands what factors are properly considered when estimating a patient’s life expectancy. Dr. Eisner reviewed and rendered his opinion as to the hospice eligibility of two patients remaining at issue. Charles Talakkottur, M.D., practices in the area of internal medicine. He is a physician licensed in Florida, who is board-certified in Internal Medicine, and maintains an active practice in internal medicine. Dr. Talakkottur has more than 13 years of practice, where he evaluates and treats patients with a variety of illnesses including: leukemia, cancer, heart disease, lung disease, chronic liver disease, and respiratory disease. In addition, Dr. Talakkottur routinely makes prognoses related to whether a patient has a terminal disease. Dr. Talakkottur rendered his opinion as to the hospice eligibility of 11 patients remaining at issue. Nada Boskovic, M.D., is an expert in internal medicine and hospice and palliative care. She is licensed in Florida and maintains an active practice. She is currently a hospice medical director for VITAS, a large hospice provider in Florida. Dr. Boskovic has certified or recertified approximately 1,000 patients in a hospice setting throughout her career. Dr. Boskovic reviewed and rendered her opinion regarding three of the patients remaining at issue. Finally, Kelly Komatz, M.D., is an expert in hospice and palliative care. She is a physician licensed in Florida and maintains an active practice. Dr. Komatz has been an associate medical director of a Florida hospice and has evaluated patients for hospice initial certification and recertification. Dr. Komatz reviewed one patient’s claim in dispute. The AHCA peer reviewers used their clinical experience, generally accepted medical standards, and the eligibility standards set forth in the Handbook. Covenant Expert Covenant offered one expert at hearing, David McGrew, M.D. Dr. McGrew reviewed the medical records and provided reports for each of the 17 patients at issue. Like the AHCA peer reviewers, Dr. McGrew did not examine or provide certification for the 17 patients at issue. Dr. McGrew has been a hospice medical director since 1985. Dr. McGrew has practiced in the hospice and palliative medicine for approximately 23 years and has experience with overseeing over 5,000 hospice certifications. Dr. McGrew is a certified hospice medical director who trains other physicians in hospice care. Dr. McGrew’s distinguished career in palliative medicine is highlighted by his membership on the board for the American Academy of Hospice and Palliative Physicians for 12 years, where he served as president in 2013. Specific Patient Review At the time of the hearing, the hospice service claims related to 17 patients remained at issue. The Findings of Fact regarding eligibility of each patient for hospice services are set forth below in the following order: 1, 2, 3, 5, 7, 8, 9, 10, 12, 13, 14, 15, 16, 17, 20, 22, and 23.1/ Patient 1 (C.S.) Patient C.S., a then 53-year-old female, was admitted with a terminal diagnosis of lung cancer with suspected metastasis to the liver. The audit period dates reviewed were January 1, 2011, through August 29, 2011. The dates in dispute are January 1, 2011, through April 5, 2011. Patient C.S. had an abnormal palliative performance scale (“PPS”) score of 30 percent, had severe ascites, experienced significant fatigue, required oxygen, had possible low levels of encephalopathy, had a significant edema, low appetite, and shortness of breath. Dr. McGrew opined that the Patient C.S. had a life expectancy of six months or less, if the disease ran its normal course based on his determination that the symptoms did not show improvement, stability, or a reason for discharge. However, there was no evidence of decline in her condition. The preponderance of evidence demonstrates that Patient C.S. was not eligible for hospice services for the period of January 1, 2011, through April 5, 2011. Thus, Petitioner is entitled to recover an overpayment of $12,692.00 for hospice services rendered during the disputed period. Patient 2 (J.R.) Patient J.R., a 55-year-old female at the time she was admitted to hospice on September 14, 2011, had a terminal diagnosis of end-stage leukemia and pulmonary hypertension. The disputed period for Patient J.R. is September 14, 2011, through December 12, 2011. Dr. McGrew opined that Patient J.R. had both a terminal illness and a terminal prognosis based on records showing a gastrointestinal bleed, an anemia from the leukemia, a very low white blood cell count, a depressed platelet count, ongoing chest pain, and need for substantial oxygen during her hospitalization. Dr. Talakkottur, on the other hand, focused on the combination of pulmonary hypertension and leukemia and noted that the condition of the combination of leukemia and pulmonary hypertension demonstrated improvement of her condition. The undersigned finds Dr. McGrew more persuasive and finds that the preponderance of the evidence supports that Patient J.R. was eligible for hospice during the disputed period of September 14, 2011, through December 12, 2011. Thus, AHCA is not entitled to repayment of $12,206.50 for hospice services rendered to Patient J.R. Patient 3 (D.M.) Patient D.M., a 45-year-old female, was admitted to Covenant on December 20, 2011. Patient D.M. was admitted to hospice with a diagnosis of HIV/AIDS with Kaposi's sarcoma, coupled with complications of psychosocial issues and addiction problems. The disputed period for D.M. is June 17, 2012, through December 31, 2012. Dr. McGrew opined that Patient D.M. had a low CD4 cell count, was suffering from Kaposi's sarcoma, and was experiencing continued infections. Dr. Fitzgerald, the referring oncologist for Patient D.M., noted that she was appropriate for hospice based on her condition. While there was no documented confirmation of the Kaposi’s sarcoma in the record by lab results, such as a biopsy, the patient’s records reflect that Dr. Fitzgerald, an oncologist, confirmed the diagnosis. Furthermore, Patient D.M.’s treating nurse at Covenant noted that the patient had multiple lesions on her face and extremities. While Kaposi’s sarcoma is more common in certain aged males, it is a common condition for patients who suffer from HIV/AIDS. Dr. Talakkottur testified that a simple biopsy could have been completed to confirm the diagnosis, but the patient did not submit to the biopsy. Although the diagnosis of Kaposi’s sarcoma was not confirmed by a biopsy, a preponderance of the evidence supports a finding that the patient suffered from the condition. The HIV/AIDS terminal diagnosis, coupled with Kaposi’s sarcoma, supports a finding that Patient D.M. had a documented terminal illness with a life expectancy of six months or less, if the disease ran its normal course during the disputed period. Thus, the undersigned finds that AHCA is not entitled to repayment of $26,843.84 for hospice services rendered to Patient D.M. during the disputed period of June 17, 2012, through December 31, 2012. Patient 5 (P.W.) Patient P.W., a 54-year-old male upon admission to Covenant, was admitted on October 24, 2011. The patient presented to hospice with a diagnosis of metastatic squamous cell cancer of the pharynx. The disputed period for Patient P.W. is October 24, 2011, through January 21, 2012. Dr. McGrew opined that if a patient was diagnosed with squamous cell cancer of the pharynx and was not being treated, hospice would be appropriate for that patient. Dr. Talakkottur testified as follows: (a) the patient was highly functional, ambulatory, and not using any assistive devices; (b) the patient only used oxygen as needed, and not continuous; and (c) the patient had no nutritional impairment. The more telling picture of the patient’s condition was that the patient had no reported or demonstrated mass presence or growth, and there were no medical records to support the patient’s claim that his cancer had metastasized. The preponderance of the evidence demonstrates that Patient P.W. was not eligible for hospice services during the disputed period of October 24, 2011, through January 21, 2012. Thus, AHCA is entitled to repayment of $12,249.00 for hospice services rendered to Patient P.W. Patient 7 (J.B.) Patient J.B., a 62-year-old male at the time of his admission to hospice, was admitted with a diagnosis of end-stage liver disease with a medical history of hepatitis C and ascites. The disputed recertification period is January 1, 2011, through June 3, 2011. Based on the records, the patient had stabilized during the recertification period. He was independent with self-care and activities of daily living. One of the physician assessments reflected that the patient had shown slow, steady improvement to the point of riding his bicycle. In addition, the records reflect that during the disputed period, nursing documentation indicated that the patient was able to ambulate independently, without shortness of breath, and had no residual apparent ascites. While Dr. McGrew noted that Patient J.B. experienced multiple urinary tract infections, reported dizziness and fatigue, and had very poorly controlled blood sugars during the disputed period, the records consistently reflect that Patient J.B.’s condition had improved during the disputed period. The records presented at hearing did not support a finding that Patient J.B. was eligible for hospice services during the disputed period of January 1, 2011, through June 3, 2011. Thus, AHCA is entitled to repayment of $20,574.40 for hospice services rendered to Patient J.B. Patient 8 (E.H.) Patient E.H., a 59-year-old male at the time of his admission, was admitted to Covenant on January 27, 2011. Patient E.H. was admitted to hospice with a diagnosis of adult failure to thrive and a medical history of schizophrenia and bipolar disorder. The disputed period for E.H. is January 22, 2012, through March 21, 2012. Dr. McGrew opined that Patient E.H. was eligible for hospice services on the basis that the patient presented to Covenant with history of significant weight loss and a PPS score of 30 percent, which was complicated by underlying conditions, including schizophrenia and bipolar disorder. Dr. Talakkottur opined that the patient gained weight, was ambulatory, was oriented to self, had no recurrent or retractable infections, and had normal vital signs. In addition, the patient had gained 18 pounds since his original admission in hospice and had a body mass index (“BMI”) of 21. The greater weight of the evidence demonstrates that Patient E.H. was not eligible for hospice services during the disputed period of January 22, 2012, through March 21, 2012. Thus, AHCA is entitled to repayment of $6,029.66 for hospice services rendered to Patient E.H. Patient 9 (K.W.) K.W., a 53-year-old male at the time of his admission to hospice, was admitted with a terminal diagnosis of heart disease. The disputed period for K.W. is October 31, 2011, through June 26, 2012. The patient records reflect that Patient K.W. was still smoking, taking drugs, breathing room air, only had shortness of breath with exertion, was highly functional and ambulatory, could perform most of his activities of daily living, and traveled regularly. K.W. reported nine previous myocardial infarctions in the past 11 months; ejection fractions measured at six percent on one occasion and under 20 percent on a separate occasion, was hypotensive, short of breath, had a low heart rate and sodium level, and had elevated liver function tests consistent with hepatic stasis. Dr. Talakkotur noted that the patient’s nine alleged heart attacks were self-reported by the patient. Based on the evidence presented at hearing, Dr. Talakkotur credibly opined that Patient K.W. was not eligible for hospice treatment during the disputed period of October 31, 2011, through June 26, 2012. Thus, AHCA is entitled to repayment of $32,664.00 for hospice services rendered to Patient K.W. during the disputed period. Patient 10 (K.H.) Patient K.H. was a 58-year-old male when he was admitted to Covenant on October 15, 2010, with a terminal diagnosis of chronic airway pulmonary obstruction disease (“COPD.”) The disputed period is August 11, 2011, through December 9, 2011. The patient was involved in a car accident in 2008, which caused significant injuries. He also suffered a closed-brain injury and COPD. Dr. Talakkottur opined that the records contained no evidence of progression of the diagnosed terminal condition. Dr. Talakkottur testified that the medical records reflected that Patient K.H. was improving during the disputed period. Additionally, the patient was receiving physical therapy and occupational therapy. Dr. Talakkottur credibly testified that Patient K.H. was not eligible for hospice services during the disputed period of August 11, 2011, through December 9, 2011. Thus, AHCA is entitled to recover overpayment of $16,240.60 for the hospice services rendered to Patient K.H. during the disputed period. Patient 12 (T.O.) Patient T.O., a 57-year-old male, was admitted to hospice on September 9, 2011, with a terminal diagnosis of end- stage chronic heart failure. The patient’s diagnosis was based on two separate echocardiograms reflecting a 53-percent and 55-percent ejection fraction. Dr. Talakkottur opined that the echocardiogram readings would be considered normal. At one point during the disputed period, Edward Fletcher, M.D., a Covenant physician, changed Patient T.O.’s hospice diagnosis from end-stage chronic heart failure to debility. In addition, Dr. Fletcher noted that the patient had no heart palpitations or chest pain and had a good appetite and normal respiratory exam. The greater weight of the evidence demonstrates that Patient T.O. was not eligible for hospice during the disputed period of September 9, 2011, through November 14, 2011. Thus, AHCA is entitled to recover overpayment of $9,063.70 for the hospice services rendered to Patient T.O. during the disputed period. Patient 13 (M.L.) Patient M.L., a then 39-year-old female, had a diagnosis of end-stage liver disease. The patient also had a medical history of esophageal varices, ascites, and paracentesis. However, Dr. Talakkottur credibly testified that Patient M.L. was not eligible for hospice services. Patient M.L. had no recurrent or intractable infections nor any encephalopathy or peritonitis, and showed no progression of her disease. Patient M.L. was also highly functioning and ambulatory. The greater weight of the evidence demonstrates that Patient M.L. was not eligible for hospice services during the disputed period of January 1, 2011, through January 11, 2011. Thus, AHCA is entitled to recover an overpayment of $1,469.60 for the hospice services rendered to Patient M.L. during the disputed period. Patient 14 (D.K.) Patient D.K. was a 59-year-old man when admitted to Covenant with a terminal diagnosis of end-stage liver disease on August 6, 2010. The disputed period is January 1, 2011, through April 2, 2011. The patient had a fair to good appetite, exhibited no real pain or discomfort, and showed no signs of a significant decline. Dr. Boskovic further indicated that although the patient had some ascites, the condition was being well managed, and the patient showed no signs of encephalopathy because he remained alert and oriented. Finally, Dr. Boskovic opined, and the records support, the patient generally had a good nutritional status with no sign of the patient’s disease progressing. Respondent contends that Dr. Boskovic's testimony supported Covenant's position because she admitted that the hospice physician could reasonably disagree with her conclusion regarding D.K. and neither physician would be wrong. Here, however, the undersigned finds that Dr. Boskovic’s opinion is more persuasive and demonstrates that Patient D.K. was not eligible for hospice services during the disputed period of January 1, 2011, through April 2, 2011. Thus, AHCA is entitled to recover an overpayment of $12,291.20 for hospice services rendered during the disputed period. Patient 15 (S.S.) Patient S.S. was a 52-year-old female at the time of her readmission to Covenant. On December 26, 2009, Patient S.S. was admitted with a terminal diagnosis of COPD. Dr. Komatz opined that Patient S.S. was not eligible for hospice services during the denied period on the basis that the patient’s illness was not progressing, she was stable and did not demonstrate decline, and she had experienced weight gain over the period in dispute. She also noted that the patient remained ambulatory and took outings with her family. To the contrary, Dr. McGrew contended that the patient was eligible for hospice due to the progression of her illness that led to hospitalization during her hospice admission. The most telling of the patient’s condition was that the physician who treated the patient during a hospital admission noted that Patient S.S. did not suffer from end-stage COPD. Based on the foregoing, the greater weight of the evidence demonstrates that Patient S.S. was not eligible for hospice services during the disputed period of February 19, 2011, through December 15, 2011. Thus, AHCA is entitled to recover an overpayment of $40,270.00 for hospice services rendered during the disputed period. Patient 16 (R.W.) Patient R.W., a 53-year-old male at the time of his admission to Covenant Hospice, had an initial terminal diagnosis of adult failure to thrive. The patient’s diagnosis was changed to HIV/AIDS in May 2012. The disputed period for R.W. is April 29, 2012, through June 27, 2012. Dr. Talakkottur opined that Patient R.W. was not eligible for hospice and relied upon medical records that showed the patient was not losing weight, he was ambulatory, had adequate nutrition, and did not show any infections that would demonstrate terminal progression of his disease. Dr. McGrew noted that the patient suffered from an episode of toxoplasmosis, and experienced weight loss and lack of appetite. However, he also noted that, during the disputed period, the patient was getting better and gaining weight. The preponderance of the evidence supports a finding that Patient R.W. was not eligible for hospice services during the disputed period. Thus, AHCA is entitled to recover an overpayment of $8,166.00 for hospice services rendered during the disputed period. Patient 17 (E.M.) Patient E.M. was a 60-year-old female at the time of her admission to Covenant on April 28, 2010, with a terminal diagnosis of debility. The disputed period was January 1, 2011, through February 21, 2011. Dr. Boskovic opined that the patient did not have refractory edema, her chest pain was well managed, there was no evidence of impaired nutritional status (no weight loss or low BMI), her albumin level was good, she ambulated with a walker or wheelchair, and her overall condition was stable. Dr. McGrew opined that the patient was eligible for hospice services and noted that the patient was taking a high daily dosage of Lasix. The undersigned finds Dr. Boskovic’s testimony more persuasive regarding whether Patient E.M. was eligible for hospice services during the disputed period. Dr. Boskovic credibly testified that Patient E.M. was not eligible for hospice services during the disputed period. Thus, AHCA is entitled to recover an overpayment of $6,947.20 for hospice services rendered during the disputed period. Patient 20 (P.G.) Patient P.G. was a 53-year-old female at the time of her admission to Covenant on June 8, 2010. Patient P.G. had a terminal diagnosis of end-stage liver disease. The denied dates at issue are January 1, 2011, through February 2, 2011. Dr. Eisner, a gastroenterologist for more than 20 years, testified that Patient P.G. had measured albumin and INR scores within the normal range for liver function. During the denied period, the patient also maintained a stable weight and her ascites were controlled. Dr. Eisner also noted that the patient’s nutritional status remained stable. The greater weight of the evidence establishes that the patient was not eligible for hospice services during the disputed period. Thus, AHCA is entitled to recover an overpayment of $4,408.80 for hospice services rendered during the disputed period. Patient 22 (C.D.) Patient C.D. was an 8-year-old male when he was admitted to hospice following a hospitalization for respiratory distress with an underlying diagnosis of spina bifida. The disputed period of hospice services was April 25, 2011, through November 25, 2011. Dr. Talakkottur, who is board-certified in pediatrics, opined that Patient C.D. had a chronic condition but was not terminal. He noted that the patient’s weight had increased, his PPS was 50 percent, and he was playing ball with his siblings. In addition, the patient was receiving physical therapy and active rehabilitation, both of which are inconsistent with hospice palliative care. The patient did not show any signs of being at the end-stage of his chronic disease. Finally, Patient C.D. remained oriented to self and had no recurrent or intractable infections. Although Patient C.D. was at risk for pneumonia or sepsis as noted by Dr. McGrew, he did not show any symptoms of the two conditions. The greater weight of the evidence establishes that Patient C.D. was not eligible or hospice treatment during the disputed period of April 25, 2011, through November 25, 2011. Thus, AHCA is entitled to recover an overpayment of $30,827.69 for hospice services rendered during the disputed period. Patient 23 (C.M.) Patient C.M., a 59-year-old female, was admitted to Covenant on November 15, 2010. The patient was admitted with a terminal diagnosis of malignant neoplasm of the liver. The period in dispute is January 1, 2011, through April 1, 2011. Dr. Talakkottur opined that Patient C.M. was not eligible for hospice service because there was no progression of her disease. Dr. Talakkottur noted that the patient had cancer, but she was functioning well, was ambulatory, and stable enough to take a long-distance trip with her family. Dr. Talakkottur also noted that the patient had a PPS of 60-70 percent at times, and her vital signs remained stable. The greater weight of the evidence establishes that the patient was not eligible for hospice services during the disputed period. Thus, AHCA is entitled to recover an overpayment of $12,157.60 for hospice services rendered during the disputed period. Summary of Findings of Fact Regarding Overpayment At the time of the hearing, the parties had stipulated that AHCA was entitled to overpayment of $411,571.65. The Findings of Fact above upheld AHCA's entitlement to additional overpayment of hospice services as indicated. Respondent rebutted the evidence regarding eligibility of Patients 2 and 3. Therefore, in addition to the amount the parties agreed upon, AHCA is entitled to recover an additional overpayment of $226,060.50 for services rendered to patients who were not eligible for hospice services during the Audit Period. Thus, AHCA is entitled to recover a total overpayment of $637,632.15. As indicated in the Findings of Fact above, each expert provided the requisite support to both the RDAR and FAR for the patients where there was a finding of ineligibility for hospice services. Fine Calculation When calculating the appropriate fine to impose against a provider, MPI uses a formula based on the number of claims that are in violation of Florida Administrative Code Rule 59G-9.070(7)(e). The formula involves multiplying the number of claims in violation of the rule by $1,000 to calculate the total fine.2/ The final total may not exceed 20 percent of the total overpayment, which results in a fine of $127,526.43.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that that the Agency for Health Care Administration enter a final order directing Covenant to pay $637,632.15 for the claims found to be overpayments and a fine of $127,526.43. The undersigned reserves jurisdiction to award costs to the prevailing party. DONE AND ENTERED this 15th day of August, 2018, in Tallahassee, Leon County, Florida. S YOLONDA Y. GREEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of August, 2018.
