The Issue The issues are whether Petitioner has overpaid Respondent for medical services for which he has obtained reimbursement under the Medicaid program and, if so, by how much.
Findings Of Fact Respondent is a licensed physician engaged in the practice of medicine in Florida. From January through November 1997, Respondent worked a couple of hours each morning at the Summit Clinic in Miami before seeing patients at his own office. At the Summit Clinic, Respondent administered intravenous immunoglobulin (IVIG) to adult Medicaid patients who were infected with human immunodeficiency virus (HIV). Petitioner paid the Summit Clinic, which was using Respondent's Medicaid provider number, for these and other medical services. Petitioner now claims that these IVIG services were not medically necessary, and, pursuant to its "pay-and-chase" policy, Petitioner seeks repayment from Respondent. In general, the administration of IVIG transfers antibodies contained in globulin to protect the recipient from various infectious microorganisms. The United States Food and Drug Administration (FDA) has approved the marketing of IVIG for the treatment of persons with certain clinical conditions, such as idiopathic thrombocytopenic purpura, Kawasaki disease, and pediatric HIV infection. However, the FDA has not approved the marketing of IVIG for the treatment of adult HIV infection. The use of a drug to treat conditions for which the FDA has not issued its approval is known as an off-label use. Some off-label uses are medically effective and prevalent, but remain unapproved by the FDA because the drug manufacturer cannot feasibly conduct expensive clinical trials generally necessary to obtain FDA marketing approval. Despite the absence of such clinical trials, not all off-label uses are experimental. In the 20 years that IVIG has been commercially available in the United States, medical researchers and practitioners have uncovered evidence in support of important off-label uses of IVIG. For instance, a common and effective off-label use of IVIG is for the treatment of Guillain-Barré syndrome. According to the University HealthSystem Consortium, the FDA estimates that 50-70 percent of IVIG use is off-label, but as much as half of the off-label use finds little, if any, support by clinical studies. This case raises the question of the medical necessity of the off-label use of IVIG for the treatment of HIV-infected adults. Unlike adult-onset HIV infections, pediatric HIV infections result in systemic immune deficiencies because the children's immune systems never develop normally. In HIV- infected children, IVIG relieves the effects of these systemic immune deficiencies by preventing serious bacterial infections. For these reasons, the FDA has approved the use of IVIG for HIV- infected children. By letter dated July 31, 2001, Petitioner advised Respondent that it had reviewed various Medicaid claims submitted under his provider number. As relevant to this case, the July 31 letter disallows Medicaid reimbursement for the use of IVIG on HIV-infected adults. Stating that this use of IVIG is not "indicated" and is "investigational," the letter adds: "Medicaid policy prohibits payment for experimental procedures or non-FDA approved drugs and requires that all services rendered to Medicaid recipients be medically necessary." Chapter 1 of the Physician Coverage and Limitations Handbook (Handbook) states: "Medicaid reimburses for services that are determined medically necessary . . .. In addition, the services must meet the following criteria: the services must be individualized, specific, consistent with symptoms or confirmed diagnosis of the illness or injury under treatment, and not in excess of the recipient's needs; the services cannot be experimental or investigational; the services must reflect the level of services that can be safely furnished, and for which no equally effective and more conservative or less costly treatment is available statewide; and the services must be furnished in a manner not primarily intended for the convenience of the recipient, the recipient's caretaker, or the provider. The Handbook also provides: "Medicaid does not reimburse for non-FDA approved medications. Medicaid does not reimburse procedures that are experimental or when non-FDA approved medications are included in the procedures." The Medicaid Provider Reimbursement Handbook (Reimbursement Handbook) defines "experimental or clinically unproven procedures" as: "Those newly developed procedures undergoing systematic investigation to establish their role in treatment or procedure that are not yet scientifically established to provide beneficial results for the condition for which they are being used." Although not directly applicable to the Medicaid program, Section 2049.4 of Chapter II, Part 3, Health Care Financing Administration Carriers Manual (HCFA Manual) states, in part: Use of the drug or biological must be safe and effective and otherwise reasonable and necessary. . . . Drugs or biologicals approved for marketing by the [FDA] are considered safe and effective for purposes of this requirement when used for indications specified on the labeling. Therefore, you may pay for the use of an FDA approved drug or biological if: It was injected on or after the date of the FDA's approval; It is reasonable and necessary for the individual patient; and All other applicable coverage requirements are met. * * * An unlabeled use of a drug is a use that is not included as an indication on the drug's label as approved by the FDA. FDA approved drugs used for indications other than what is indicated on the official label may be covered under Medicare if the carrier determines the use to be medically accepted, taking into consideration the major drug compendia, authoritative medical literature and/or accepted standards of medical practice. . . . Accordingly, the Florida Medicare Local Medical Review Policy manual recognizes the use of IVIG for pediatric HIV infections, but warns: "IVIG is not indicated for use in adult HIV patients " Except for the administration of IVIG, Respondent provided state-of-the-art services to HIV-infected adults. The present record contains scant medical evidence of the effectiveness of IVIG in treating HIV-infected adults. Against considerable evidence questioning the medical necessity of IVIG in treating HIV-infected adults, Respondent offered undocumented anecdotal evidence of successful use of IVIG among his adult patients and two synopses of undisclosed preliminary data suggesting effectiveness of IVIG in HIV-infected adults. Respondent did not effectively oppose Petitioner's explanation for the differences in IVIG's effectiveness in treating adults and children, nor did Respondent offer any rationale for his claim of IVIG's effectiveness in HIV-infected adults. On this record, Petitioner has demonstrated that the use of IVIG to treat HIV-infected adults is not effective and, thus, not medically necessary.
Recommendation It is RECOMMENDED that the Agency for Health Care Administration enter a final order ordering Respondent to reimburse the Medicaid program $74,100.04 in overpayments for services that were not medically necessary. DONE AND ENTERED this 19th day of April, 2002, in Tallahassee, Leon County, Florida. ROBERT E. MEALE 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 19th day of April, 2002. COPIES FURNISHED: Virginia A. Daire, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3431 Tallahassee, Florida 32308 William Roberts, Acting General Counsel Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3431 Tallahassee, Florida 32308 Anthony L. Conticello, Senior Attorney Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Fort Knox Building III Tallahassee, Florida 32308 Louise T. Jeroslow Law Offices of Louise T. Jeroslow 6075 Sunset Drive, Suite 201 Miami, Florida 33143
Findings Of Fact Petitioner GLADES HEALTH PLAN, INC., (GLADES) is a for-profit corporation with offices in Belle Glade, Florida. GLADES was formed for the purpose of applying for and obtaining a contract with the State of Florida for a Medicaid Prepaid Health Plan. Respondent, AGENCY FOR HEALTH CARE ADMINISTRATION, (AHCA), is the agency of the State of Florida statutorily responsible for the administration of the Florida Medicaid prepaid health plan program. On October 5, 1994, GLADES filed a Medicaid prepaid health plan contract application with AHCA. In December of 1994, a series of newspaper articles were published which raised concerns regarding the quality of health care and service provided by Medicaid prepaid health plans in Florida. In response to these concerns, AHCA, beginning in the latter part of December of 1994, implemented a number of administrative changes, and also undertook a comprehensive review to assess the quality of health care and service provided by existing Medicaid prepaid health plans. In order to accomplish this comprehensive review, AHCA redirected all of the agency's managed care staff to conduct a survey of the assessment of the quality of health care and services provided by the existing Medicaid prepaid health plans. Because AHCA's managed care staff was redirected to conduct this comprehensive review of the existing Medicaid prepaid health plans, there were insufficient staff available to review Medicaid prepaid health plan contract applications. AHCA was also concerned with contracting with additional health plans until the assessment of the existing plans was completed. AHCA accordingly placed a temporary moratorium on the consideration of applications for Medicaid prepaid health plan contracts until the completion of the comprehensive review. The purpose of the agency's comprehensive review of existing health plans and imposition of a temporary moratorium on pending contract applications for new health plans was to assess the quality of care and service of the existing Florida Medicaid prepaid health plan program, and to develop in-house agency policies to address problems identified by agency staff conducting the comprehensive review. On December 30, 1994, James M. Barclay, vice-president of GLADES, received a letter from AHCA relating to another organization with which he is affiliated, Heartland Healthcare, Inc., which like GLADES, had filed a Medicaid prepaid health plan contract application that was pending with AHCA. The December 30, 1994 letter from AHCA to Barclay recited AHCA's concern with the quality of health care and service provided by existing Medicaid prepaid health plans. The letter further stated that due to the implementation of administrative changes, and the need for agency staff to be committed to the comprehensive review of existing Medicaid prepaid health plans, AHCA had imposed a moratorium on the consideration of Medicaid Prepaid Health Plan contract applications to last approximately sixty to ninety days. GLADES did not receive a letter, or other communication from AHCA notifying GLADES of AHCA's imposition of a temporary moratorium on the consideration of its Medicaid prepaid health plan contract application, and no action was taken by AHCA with regard to the GLADES' contract application during this period. Upon completion of the agency's comprehensive review of existing Medicaid prepaid health plans, AHCA, in the spring of 1995, discontinued the moratorium on consideration of Medicaid prepaid health plan contract applications. In processing Medicaid prepaid health plan contract applications subsequent to the discontinuation of the moratorium, AHCA determined not to contract with any prepaid health plan unless the plan was a public entity, or commercially #licensed under the provisions of Chapter 641, Florida Statutes. The basis for AHCA's decision in this regard was that the agency's comprehensive review of Medicaid prepaid health plans indicated that the existing commercially licensed Medicaid prepaid health plans provided a better quality of care to Medicaid recipients than the health plans that were not commerically licensed. On September 13, 1995, AHCA filed with the Department of State, Bureau of Administrative Code, proposed rules amending Rule 59G-8.100, Florida Administrative Code. The proposed rule amendments set out criteria for AHCA's consideration of Medicaid prepaid health plan contract applications. The criteria include commercial licensure under Chapter 641, Florida Statutes, managed care accreditation, prior health care experience, and need for managed care services. Under the proposed rule amendments, failure to meet such criteria, including commercial licensure, is grounds for denial of a Medicaid prepaid health plan contract application. AHCA has not promulgated or instituted proceedings to promulgate rules regarding the temporary moratorum imposed in this case. GLADES is not commercially licensed under the provisions of Chapter 641, Florida Statutes. Subsequent to the discontinuation of the moratorium, AHCA has taken no action with regard to GLADES' Medicaid prepaid health plan contract application. Because GLADES is not commercially licensed, AHCA presently considers the GLADES' Medicaid prepaid health plan contract application inactive. AHCA has not written, published or otherwise made a formal statement of agency policy to the effect that Medicaid prepaid health plan contracts are not licenses as that term is defined in Section 120.52(9), Florida Statutes. AHCA has not promulgated or instituted proceedings to promulgate rules to the effect that Medicaid prepaid health plan contracts are not licenses.
The Issue The issue for determination is whether Petitioner was overpaid by the Medicaid program as indicated in Respondent's Final Agency Audit Report dated June 20, 2001.
Findings Of Fact Dr. Henson was an authorized Medicaid provider during the audit period of January 1, 1998 through September 30, 2000.1 During the audit period, Dr. Henson had been issued Medicaid provider number 0467243-00.2 No dispute exists that, during the audit period, Dr. Henson had a valid Medicaid Provider Agreement(s) with AHCA.3 During the audit period, Dr. Henson was employed by Latin Quarter Medical Center, located at 855 Southwest 8th Street, Miami, Florida, at which he treated Medicaid recipients. Dr. Henson had been a surgeon but had suffered a stroke in December 1997, which caused him to be incapable of continuing to practice as a surgeon. He agreed to become employed with Latin Quarter Medical Center to work at its new clinic and to receive compensation for his services every two weeks. Latin Quarter Medical Center's patients were suffering from AIDS. Dr. Henson agreed to several terms and conditions in executing a Medicaid Provider Agreement (Agreement) with AHCA. Those terms and conditions included the following: Quality of Service. The provider agrees to provide medically necessary services or goods . . . agrees that services and goods billed to the Medicaid program must be medically necessary . . . The services and goods must have been actually provided to eligible Medicaid recipients by the provider prior to submitting the claim. Compliance. The provider agrees to comply with all local, state and federal laws, rules, regulation, licensure laws, Medicaid bulletins, manuals, handbooks and Statements of Policy as they may be amended from time to time. Term and signatures This provider agreement . . . shall remain in effect until July 1, 1999, unless otherwise terminated. . . . Provider Responsibilities. The Medical provider shall: * * * (b) Keep and maintain . . . all medical and Medicaid related records as the Agency may require and as it determines necessary; make available for state and federal audits for five years, complete and accurate medical . . . records that fully justify and disclose the extent of the goods and services rendered and billings made under the Medicaid. . . . The Agreement was signed by Dr. Henson in 1996. In a Noninstitutional Professional and Technical Medicaid Provider Agreement, Dr. Henson agreed to terms and conditions including the following: The provider agrees to keep complete and accurate medical . . . records that fully justify and disclose the extent of the services rendered and billings made under the Medicaid program . . . . The provider agrees that services or goods billed to the Medicaid program must be medically necessary . . . and the services and goods must have been actually provided to eligible Medicaid recipients by the provider prior to submitting a claim. The provider agrees to submit Medicaid claims in accordance with program policies and that payment by the program for services rendered will be based on the payment methodology in the applicable Florida Administrative Rule. . . . * * * 8. The provider and the Department [Department of Health and Rehabilitative Services] agree to abide by the provisions of the Florida Administrative Code, Florida Statutes, policies, procedures, manuals of the Florida Medicaid Program and Federal laws and regulations. The Agreement was signed by Dr. Henson in 1988. AHCA audited certain of Dr. Henson's Medicaid claims pertaining to services rendered between January 1, 1998 and September 30, 2000. By Preliminary Agency Audit Report (PAAR) dated April 12, 2001, AHCA notified Dr. Henson that, after a physician consultant with a specialty in infectious disease reviewed the Medical claims and medical records provided by Dr. Henson, a preliminary determination was made that certain claims in the amount of $124,556.83 were not covered by Medicaid. After the issuance of the PAAR, no further documentation was submitted by Dr. Henson to AHCA. As a result, AHCA issued a FAAR dated June 20, 2001, upholding the overpayment of $124,556.83. The FAAR indicated, among other things, that the documentation provided by Dr. Henson supported a lower level of office visit than the one billed and for which payment was received and, therefore, the difference between the payment for the appropriate level of service and the amount actually paid was an overpayment; that some of Dr. Henson's medical records failed to contain documentation for services which were billed and for which payment was made and, therefore, the payments for the inappropriate documentation was an overpayment; that some of the services rendered were inappropriately coded and the difference between payment for the proper code and the inappropriate code was an overpayment; and that some of the services for which billing was made and payment received were not medically necessary and those services were disallowed and were, therefore, an overpayment. The FAAR further provided how the overpayment was calculated, indicating, among other things, that a sample of 30 recipients of the 2936 claims submitted by Dr. Henson were reviewed for the period from January 1, 1998 through September 30, 2000; that a statistical formula for cluster sampling, with the formula being presented, was used; that the statistical formula was generally accepted; and that the statistical formula showed an overpayment in the amount of $124,556.83, with a 95 percent probability of correctness. The majority of the overpayment was due to denied claims for intravenous infusions of multi-vitamins, epogen and nupogen to adult HIV/AIDS patients. AHCA's representative primarily responsible for handling the audit of Dr. Henson was Sharon Dewey, a registered nurse employed in the Medicaid Program Integrity (MPI) division of AHCA. Nurse Dewey conducted an audit of Medicaid payments only under Dr. Henson's Medicaid Provider number. An on-site visit of Dr. Henson's office was made by Nurse Dewey. During the on-site visit, she provided Dr. Henson with a questionnaire, which was completed by her and signed by Dr. Henson, and which indicated that Dr. Henson was the only Medicaid Provider at the office at which he was located, Latin Quarter Medical Center, 855 Southwest 8th Street, Miami, Florida. At the on-site visit, Dr. Henson provided all of the medical documentation and medical recipient records for the audit period involved. All the Medicaid claims for the medical recipients were paid Medicaid claims originating only from Dr. Henson's Medical Provider number. Dr. Henson made available and provided to AHCA or AHCA's representatives any and all required Medicaid-related records and information pertaining to the audit that he had in his possession.4 He never refused to allow access to the records or information. Having received the medical recipient records from Dr. Henson, Nurse Dewey organized the records by patient names and dates of service and provided them to Dr. Joseph W. Shands, Jr., along with a worksheet for the audited claims for each patient. Dr. Shands is an expert in infectious diseases and the treatment and management of AIDS and HIV. Dr. Shands retired in 2002, and his practice was basically the same as Dr. Henson. No objection was made at hearing that Dr. Shands met the statutory definition of "peer." § 409.9131(1)(c), Florida Statutes (1999).5 The undersigned finds Dr. Shands' testimony persuasive. Dr. Shands reviewed the medical documentation provided by Dr. Henson to AHCA. The medical documentation that he reviewed indicated that the patients were "all HIV AIDS patients." Dr. Shands reviewed the particular medications given the patients; reviewed the reasons why the medications were given; considered and made a determination as to whether a justification existed for the administration of the medication; and, based on his determination, either allowed or disallowed the claim. He made no determinations as to the actual dollar amount of services provided. After reviewing the medical records, Dr. Shands made notations on the worksheets, signed the worksheets, and returned the worksheets to Nurse Dewey. Specific instances of acute attention involved the administration of intravenous (IV) multi-vitamins, epogen, nupogen, and Intravenous Immunoglobulin (IVIG). As to the IV of multi-vitamins, Dr. Henson prescribed this administration for almost all of his patients. Dr. Shands found that the patients were coming into the facility two to three times a week for the treatment, but he found no documented medical information to justify the use of IV multi-vitamins and determined these services were not medically necessary. In Dr. Shands' opinion an oral multi-vitamin would have been more appropriate and achieved the same result. An oral multi-vitamin is not recommended, according to Dr. Shands, where the patient is unable to digest the oral multi-vitamin. Notably, for one patient a notation was made that the patient refused pills, but a further notation indicated that Dr. Henson had prescribed the same patient pill-based medications for treatment, which negated the basis for the intravenous use. Furthermore, IV administration to an HIV/AIDS patient places the patient at an unnecessary risk of infection, which is not present with oral multi-vitamins. Dr. Henson testified that he was continuing the treatment of another physician, but he failed to make an independent medical judgment based upon his own medical findings. Further, no justification was in the medical records for the former physician's administration of IV multi-vitamins. Additionally, IV multi-vitamins were more costly than oral administration. And, with patients returning to the facility two to three times a week, the cost increased even more. Regarding epogen, Dr. Shands opined that certain administration was not medically necessary for the HIV/AIDS' patients. As to nupogen, Dr. Shands opined that certain administration was not medically necessary for the HIV/AIDS' patients. Regarding the administration of IVIG, Dr. Shands opined that the administration was not medically necessary for the HIV/AIDS' patients. As to certain office visits for the administration of IV multi-vitamins, epogen, nupogen, and IVIG, Dr. Shands opined that the office visits were unnecessary. Using the worksheets, with Dr. Shands' notations on them, together with Dr. Shands denials or reductions, Nurse Dewey calculated the overpayment associated with each of Dr. Henson's patients. Subsequently, a statistical calculation was applied by AHCA to extend the audit sample's total overall payment to all of Dr. Henson's Medicaid claims during the audit period, which resulted in a determination of an overpayment in the amount of $124,556.83. Dr. Henson suggests that his signature may have been falsified or forged on the medical records and information that he submitted to AHCA for its audit. Prior to hearing, he had an opportunity to review the medical records and information but could not identify one instance that his signature was falsified or forged. Consequently, a finding of fact is made that Dr. Henson signed the medical records and documentation provided to AHCA by him for the audit. Dr. Henson presented no expert testimony or any testimony to support the medical necessity or cost-effectiveness of the procedures that he used. Further, Dr. Henson contends that Latin Quarter Medical Center, the facility that employed him, received the Medicaid payments, not he. However, as the Medicaid Provider, he was not relieved of his responsibility to make sure that the medical procedures were medically necessary and cost-effective.
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 finding that Arthur Henson, D.O., received overpayments in the Medicaid program in the amount of $124,556.83, during the audit period January 1, 1998 through September 30, 2000, and requiring Arthur Henson, D.O., to repay the overpayment amount. DONE AND ENTERED this 29th day of June, 2006, in Tallahassee, Leon County, Florida. S ERROL H. POWELL 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 29th day of June, 2006.
The Issue The issue for determination in this case is whether the agency's interpretation of its Title XIX, ICF/MR Reimbursement Plan is a rule, and if so, whether it is an invalid rule.
Findings Of Fact Friendly Village of Brevard, Inc. d/b/a Washington Square (herein, Washington Square) is an intermediate care facility for the mentally retarded (ICF/MR), located at 2055 North U.S. 1, in Titusville, Florida. Friendly Village of Orange, Inc., d/b/a Lake View Court (herein, Lake View Court), is also an ICF/MR located at 920 W. Kennedy Boulevard, in Eatonville, Florida. Both facilities are operated by Developmental Services, Inc. Both are certified ICF/MR's participating in the Florida Medicaid Program. The Department of Health and Rehabilitative Services (HRS) is the state agency responsible for overseeing the ICF/MR Medicaid Program. Representatives of HRS and Florida's ICF/MR industry began negotiations on a new state Medicaid reimbursement plan in 1982 and 1983. The participants in the negotiations sought to remove certain cost limitations and to insure that individual facilities would receive fair reimbursement of their allowable costs. The negotiations resulted in the Title XIX ICF/MR Reimbursement Plan dated July 1, 1984 (the 1984 Plan). The 1984 Plan provides, in part, for the establishment of reimbursement rates for new ICF/MR's entering the Florida Medicaid program after January 1, 1983. Under the plan, a provider is required, prior to beginning operations, to prepare a budgeted costs report projecting what it expects to spend in allowable costs during the next year for care to its residents. HRS reviews these budgets and establishes a per diem rate, using the budgeted costs and the number of patients, arriving at a per patient, per day rate. Each month, as services are provided, the ICF/MR bills the state Medicaid program for the number of patient days times the per diem. During the period in question, cost settlement occurred at the conclusion of the budgeted period. The provider filed his cost report detailing what was actually spent in allowable costs, HRS compared that amount with the amount budgeted and settled with the provider. Washington Square entered the Florida Medicaid program on January 19, 1983; Lake View Court entered the program in February 1983. Both facilities filed cost reports for periods ending on February 29, 1984. Sometimes cost settlements occur quickly through a desk review. Other times, as here, audits are performed and settlement may occur much later. The audits of Washington Square and Lake View Court were conducted in 1985 for their initial cost reports ending February 1984. The audits were issued in April and May 1988. Those audits state that prior to July 1, 1984, the Florida Medicaid Program recognized only those interim rate settlements resulting in an overpayment. This is an interpretation of the 1984 Plan which Petitioners dispute and which, in this case, Petitioners contend is an invalid rule. ICF/MR Reimbursement plans prior to July 1, 1984, had one-way cost settlement, which meant that if the provider as overpaid, the funds had to be returned to HRS; if the facility as underpaid, it did not receive additional reimbursement. The 1984 ICF/MR Plan was changed to allow two-way cost settlement, thus allowing an underpaid provider to recover its approved costs. Petitioners claim that a proper interpretation of the 1984 Plan, especially when read with the 1985 Plan, is that two-way cost settlement is retroactive to January 1983, for new providers entering the program after January 1, 1983. HRS disagrees with that interpretation and this issue is the subject of the consolidated case, #88-2938. HRS' interpretation means that Petitioners will not be reimbursed for underpayments received during their first reporting period. The 1984 Plan was adopted as a rule by incorporation, in Rule 10C- 7.49(4)(a)2. Florida Administrative Code.
The Issue Whether the Department of Health and Rehabilitative Services improperly determined the Petitioners' rate of Medicaid reimbursement for the period January 1, 1990, through June 30, 1990?
Findings Of Fact The Emergency Rule and the Permanent Rule have been determined to be valid in a Final Order entered simultaneously with this Recommended Order. The Department's action in freezing the Medicaid reimbursement rate of the Petitioners in these cases was taken pursuant to the Emergency Rule and the Permanent Rule.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a Final Order in these cases dismissing the Petitioners' amended petitions. DONE and ENTERED this 26 day of May, 1992, in Tallahassee, Florida. LARRY J. SARTIN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this day of May, 1992. APPENDIX Case Numbers 91-4893, 91-4894, 91-4895, 91-4914, 91-4929, 91-5837 and 91-6191 The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. The Petitioners' Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 1 and 4. 2 5-6. 3 13. 4 7. 5 3 and 13-14. 6 15. 7 17-19. 8 20. 9 21. 10 22. 11 23. 12 8. 13 12. 14 11. 15 24. 16 25-27. 17 28-29. 18 29. 19 30-32. 20 34-37. See 39. The last three sentences are not relevant. The determination of compliance with specific federal requirements for the Department's action was the responsibility of HCFA. HCFA presumably determined that the Department complied with all federal requirements since it approved the Department's plan amendment. 39. The last two sentences are not relevant. The determination of compliance with specific federal requirements for the Department's action was the responsibility of HCFA. HCFA presumably determined that the Department complied with all federal requirements since it approved the Department's plan amendment. 23 40-41. 24 43. 25 45. 26 46. 27 47. 28 48. The last two sentences are argument. 29 49. 30 42. 31 29 and 32. The weight of the evidence failed to prove the Department's motive for providing assurances to HCFA were anything other than to meet federal requirements. 32 28. 33 55. 34 34-35. See 59-60 and 63. The detailed findings of fact concerning the nature of the Department's inflationary analysis are not necessary. HCFA rejected this analysis and based its decision on other information provided by the Department. Additionally, the determination of compliance with specific federal requirements for the Department's action was the responsibility of HCFA. HCFA presumably determined that the Department complied with all federal requirements since it approved the Department's plan amendment. 35 See 60-63. 36 52-54. 37 54. 38 55 and hereby accepted. 39 59 and hereby accepted. 40 See 60-65. HCFA did not "reject" the Department's proposed plan amendment. 41 See 63. 42-43 See 60-66. 44-46, 50-54 Although the proposed findings of fact concerning what the Department told HCFA are generally correct, these proposed findings of fact are not relevant to this proceeding. As previously stated, the determination of compliance with specific federal requirements for the Department's action was the responsibility of HCFA. HCFA presumably determined that the Department complied with all federal requirements since it approved the Department's plan amendment. 47 Hereby accepted. 48-49 Hereby accepted except for the proposed findings that the Department "misled", "misrepresented" or provided "inaccurate and misleading information." The last sentence of proposed finding of fact 49 is not relevant. 55 67. 56 Hereby accepted. 57 Not relevant. 58 69. 59 70. 60 71. 61 50 and 73. The Department's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 1. 2 4. 3 5. 4 6. 5 3 and 13-14. 6 15. 7 17-19. 8 20. 9 21. 10 22. 11 23. 12 8. 13 11. 14 24. 15 25-26. 16 Hereby accepted. 17 27 and 29-32. 18 34-37. 19 39-41. 20 41. 21 43. 22 33. 23 42. 24 52-53 and 58. 25 54. 26 55. 27 56. 28 57. 29 60-65. 30 67. 31 68. 32 69. 33 70. 34 71. 35 50 and 73. 36 72. 37 73. 38 Hereby accepted. COPIES FURNISHED: Sam Power Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 John Slye General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 Thomas C. Fox, Esquire Michael D. Smith, Esquire 1200 18th Street, N.W. Washington, D.C. 20036 Alfred W. Clark, Esquire Post Office Box 623 Tallahassee, Florida 32302 W. David Watkins, Esquire Post Office Box 6507 Tallahassee, Florida 32314-6507 David Pius Medicaid Counsel Department of Health and Rehabilitative Services 1317 Winewood Boulevard Building 6, Room 230 Tallahassee, Florida 32399-0700
The Issue Whether Petitioner received Medicaid overpayments and, if so, the total amount of the overpayments.
Findings Of Fact AHCA is charged with administration of the Medicaid program in Florida pursuant to Section 409.907, Florida Statutes. Petitioner is a durable medical equipment provider that provided Medicaid services to Medicaid beneficiaries pursuant to a valid Medicaid Provider Agreement with AHCA under provider number 9512721 00. Petitioner was an authorized Medicaid provider during the period of October 1, 1999, through September 30, 2001, which is the audit period at issue here. AHCA conducted an audit of paid Medicaid claims for services claimed to have been performed by Petitioner from October 1, 1000, through September 30, 2001. On October 16, 2002, AHCA issued a Final Agency Audit Report ("FAAR") requesting Petitioner to reimburse AHCA in the amount of $28,407.90, for Medicaid claims submitted by and paid to Petitioner, for services allegedly rendered during the audit period. When the FAAR was issued, AHCA's claims for overpayment were based upon audit findings that paid Medicaid claims for certain services performed by Petitioner did not meet Medicaid requirements. The deficiencies in the subject Medicaid claims included a lack of documentation of required medication for nebulizer equipment, payments in excess of allowable total amounts for rent-to-purchase equipment, and payments for portable oxygen with a lack of documentation that the attending practitioner has ordered a program of exercise or an activity program for therapeutic purposes, that the recommended activities cannot be accomplished by the use of stationary oxygen service, and that the use of a portable oxygen system during exercise or activity results in improvement in the individual's ability to perform the exercises or activities. During the subject audit period, the applicable statutes, rules, and Medicaid handbooks required Petitioner to retain all medical, fiscal, professional, and business records on all services provided to a Medicaid recipient. Petitioner had to retain these records for at least five years from the dates of service. Petitioner had a duty to make sure that each claim was true and accurate and was for goods and services that were provided in accordance with the requirements of Medicaid rules, handbooks, and policies, and in accordance with federal and state law. Medicaid providers who do not comply with the Medicaid documentation and record retention policies may be subject to administrative sanctions and/or recoupment of Medicaid payments. Medicaid payments for services that lack required documentation and/or appropriate signatures will be recouped. Claire Cohen, AHCA's analyst, generated a random list of 30 Medicaid recipients (cluster sample) who had received services by Petitioner during the audit period. In addition, AHCA generated work papers revealing the following: the total number of Medicaid recipients during the audit period; the total claims of Petitioner, with dates of services; the total amount of money paid to the Petitioner during the audit period; and worksheets representing the analyst's review of each recipient's claims for the audit period. After Ms. Cohen reviewed the medical records and documentation provided by Petitioner, she reviewed the Medicaid handbook requirements, and arrived at a figure of $7,572.13 as the total overpayment for all cluster sample claims. Using the Agency's formula for calculating the extrapolated overpayment, Ms. Cohen determined that the overpayment in this case amounted to $29,703.63. Ms. Cohen then prepared the June 20, 2002, Preliminary Agency Audit Report (PAAR) and mailed it to Petitioner. At that point, the case was reassigned to Ellen Williams, a program analyst/investigator. Ms. Williams reviewed additional documentation submitted by Petitioner, and on October 16, 2002, issued on behalf of AHCA, the FAAR, which reduced the alleged overpayment to $28,407.90. Part of this reduction resulted from Petitioner's paying $369.97 to satisfy the issue concerning payments in excess of allowable totals for rent-to-purchase equipment. At the hearing, Ms. Williams testified that the adjusted overpayment amount was $27,473.27. The formula used by AHCA is a valid statistical formula, the random sample used by the Agency was statistically significant, the cluster sample was random, and the algebraic formula and the statistical formula used by AHCA are valid formulas. The DME/Medical Supply Services Coverage and Limitations Handbook provides, in part: Medicaid reimburses for portable oxygen when a practitioner prescribes activities requiring portable oxygen. The oxygen provider must document the following information in the recipient's record: the recipient qualifies for oxygen service; the attending practitioner has ordered a program of exercise or an activity program for therapeutic purposes; the recommended exercises or activities cannot be accomplished by the use of stationary oxygen services; and the use of a portable oxygen system during the activity or exercise results in an improvement in the individual's ability to perform the activities and exercises. The DME/Medical Supply Services Coverage and Limitations Handbook also provides, in part: Medicaid may reimburse for a nebulizer if the recipient's ability to breathe is severely impaired. The documentation of medial necessity must include required medications. The following payments are claimed by AHCA to be overpayments for failure to provide documentation of medical necessity and required medications: Recipient Date of Service Procedure Overpayment 4 7/19/00 E0570 $106.70 9 6/30/00 E0570 $106.70 10 10/24/00 E0570 $106.70 14 02/15/00 E0570 $106.70 16 05/08/00 E0570 $106.70 23 06/09/00 E0570 $106.70 26 06/14/00 E0570 $106.70 The remaining overpayments claimed by AHCA concern the failure to document that the attending practitioner had ordered a program of exercise or an activity program for therapeutic purposes that required the use of a portable oxygen system. The Medicaid Provider Reimbursement Handbook provides, in part, that "Records must be retained for a period of at least five years from the date of service." The types of records that must be retained include "patient treatment plans" and "prescription records." The handbook goes on to provide in pertinent part: Medical records must state the necessity for and the extent of services provided. The following minimum requirements may vary according to the services rendered: * * * Treatment plan, including prescriptions; Medications, supplies, scheduling frequency for follow-up or other services; Progress reports, treatment rendered; * * * Note: See the service-specific Coverage and Limitations Handbook for record keeping requirements that are specific to a particular service. Providers who are not in compliance with the Medicaid documentation and record retention policies described in this chapter may be subject to administrative sanctions and recoupment of Medicaid Payments. Medicaid payments for services that lack required documentation or appropriate signatures will be recouped. Note: See Chapter 5 in this handbook for information on administrative sanctions and Medicaid payment recoupment. Petitioner, through its owners and operators, is of the view that it does not need to have the documentation on file, and it does not ask physicians for details about their prescriptions, "because that's something private from doctors and patient." Petitioner, by signing a Medicaid Provider agreement, agreed that all submissions for payment of claims for services will constitute a certification that the services were provided in accordance with local, state, and federal laws, as well as rules and regulations applicable to the Medicaid program, including the Medical Provider Handbooks issued by AHCA. Petitioner routinely obtained from Medicaid beneficiaries to whom it provides goods or services a written statement authorizing other healthcare provides to furnish any information needed to determine benefits.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency issue a final order requiring Petitioner to reimburse the Agency for Medicaid overpayments in the total amount of $27,473.27, plus such interest as may statutorily accrue. DONE AND ENTERED this 22nd day of September, 2003, in Tallahassee, Leon County, Florida. S MICHAEL M. PARRISH 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 22nd day of September, 2003. COPIES FURNISHED: Tom Barnhart, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Lawrence R. Metsch, Esquire Metsch & Metsch, P.A. 1455 Northwest 14th Street Miami, Florida 33125 Lealand McCharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Valda Clark Christian, General Counsel Agency for Health Care Administration Fort Knox Building, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 Rhonda M. Medows, M.D., Secretary Agency for Health Care Administration Fort Knox Building, Suite 3116 2727 Mahan Drive Tallahassee, Florida 32308
The Issue The issues in this case are whether Respondent applied the proper reimbursement principles to Petitioners' initial Medicaid rate setting, and whether elements of detrimental reliance exist so as to require Respondent to establish a particular initial rate for Petitioners' facilities.
Findings Of Fact There are nine Petitioners in this case. Each of them is a long-term health care facility (nursing home) operated under independent and separate legal entities, but, generally, under the umbrella of a single owner, Tzvi "Steve" Bogomilsky. The issues in this case are essentially the same for all nine Petitioners, but the specific monetary impact on each Petitioner may differ. For purposes of addressing the issues at final hearing, only one of the Petitioners, Madison Pointe Rehabilitation and Health Center (Madison Pointe), was discussed, but the pertinent facts are relevant to each of the other Petitioners as well. Each of the Petitioners has standing in this case. The Amended Petition for Formal Administrative Hearing filed by each Petitioner was timely and satisfied minimum requirements. In September 2008, Bogomilsky caused to be filed with AHCA a Change of Licensed Operator ("CHOP") application for Madison Pointe.1 The purpose of that application was to allow a new entity owned by Bogomilsky to become the authorized licensee of that facility. Part and parcel of the CHOP application was a Form 1332, PFA. The PFA sets forth projected revenues, expenses, costs and charges anticipated for the facility in its first year of operation by the new operator. The PFA also contained projected (or budgeted) balance sheets and a projected Medicaid cost report for the facility. AHCA is the state agency responsible for licensing nursing homes in this state. AHCA also is responsible for managing the federal Medicaid program within this state. Further, AHCA monitors nursing homes within the state for compliance with state and federal regulations, both operating and financial in nature. The AHCA Division of Health Quality Assurance, Bureau of Long-Term Care Services, Long-Term Care Unit ("Long-Term Care Unit") is responsible for reviewing and approving CHOP applications and issuance of an operating license to the new licensee. The AHCA Division of Health Quality Assurance, Bureau of Health Facility Regulation, Financial Analysis Unit ("Financial Analysis Unit") is responsible for reviewing the PFA contained in the CHOP application and determining an applicant's financial ability to operate a facility in accordance with the applicable statutes and rules. Neither the Long-Term Care Unit nor the Financial Analysis Unit is a part of the Florida Medicaid Program. Madison Pointe also chose to submit a Medicaid provider application to the Medicaid program fiscal agent to enroll as a Medicaid provider and to be eligible for Medicaid reimbursement. (Participation by nursing homes in the Medicaid program is voluntary.) The Medicaid provider application was reviewed by the Medicaid Program Analysis Office (MPA) which, pursuant to its normal practices, reviewed the application and set an interim per diem rate for reimbursement. Interim rate-setting is dependent upon legislative direction provided in the General Appropriations Act and also in the Title XIX Long-Term Care Reimbursement Plan (the Plan). The Plan is created by the federal Centers for Medicare and Medicaid Services (CMS). CMS (formerly known as the Health Care Financing Administration) is a federal agency within the Department of Health and Human Services. CMS is responsible for administering the Medicare and Medicaid programs, utilizing state agencies for assistance when appropriate. In its PFA filed with the Financial Analysis Unit, Madison Pointe proposed an interim Medicaid rate of $203.50 per patient day (ppd) as part of its budgeted revenues. The projected interim rate was based on Madison Pointe's expected occupancy rate, projected expenses, and allowable costs. The projected rate was higher than the previous owner's actual rate in large part based on Madison Pointe's anticipation of pending legislative action concerning Medicaid reimbursement issues. That is, Madison Pointe projected higher spending and allowable costs based on expected increases proposed in the upcoming legislative session. Legislative Changes to the Medicaid Reimbursement System During the 2007 Florida Legislative Session, the Legislature addressed the status of Medicaid reimbursement for long-term care facilities. During that session, the Legislature enacted the 2007 Appropriations Act, Chapter 2007-72, Laws of Florida. The industry proposed, and the Legislature seemed to accept, that it was necessary to rebase nursing homes in the Medicaid program. Rebasing is a method employed by the Agency periodically to calibrate the target rate system and adjust Medicaid rates (pursuant to the amount of funds allowed by the Legislature) to reflect more realistic allowable expenditures by providers. Rebasing had previously occurred in 1992 and 2002. The rebasing would result in a "step-up" in the Medicaid rate for providers. In response to a stated need for rebasing, the 2007 Legislature earmarked funds to address Medicaid reimbursement. The Legislature passed Senate Bill 2800, which included provisions for modifying the Plan as follows: To establish a target rate class ceiling floor equal to 90 percent of the cost- based class ceiling. To establish an individual provider- specific target floor equal to 75 percent of the cost-based class ceiling. To modify the inflation multiplier to equal 2.0 times inflation for the individual provider-specific target. (The inflation multiplier for the target rate class ceiling shall remain at 1.4 times inflation.) To modify the calculation of the change of ownership target to equal the previous provider's operating and indirect patient care cost per diem (excluding incentives), plus 50 percent of the difference between the previous providers' per diem (excluding incentives) and the effect class ceiling and use an inflation multiplier of 2.0 times inflation. The Plan was modified in accordance with this legislation with an effective date of July 1, 2007. Four relevant sentences from the modified Plan are relevant to this proceeding, to wit: For a new provider with no cost history resulting from a change of ownership or operator, where the previous provider participated in the Medicaid program, the interim operating and patient care per diems shall be the lesser of: the class reimbursement ceiling based on Section V of this Plan, the budgeted per diems approved by AHCA based on Section III of this Plan, or the previous providers' operating and patient care cost per diem (excluding incentives), plus 50% of the difference between the previous providers' per diem (excluding incentives) and the class ceiling. The above new provider ceilings, based on the district average per diem or the previous providers' per diem, shall apply to all new providers with a Medicaid certification effective on or after July 1, 1991. The new provider reimbursement limitation above, based on the district average per diem or the previous providers' per diem, which affects providers already in the Medicaid program, shall not apply to these same providers beginning with the rate semester in which the target reimbursement provision in Section V.B.16. of this plan does not apply. This new provider reimbursement limitation shall apply to new providers entering the Medicaid program, even if the new provider enters the program during a rate semester in which Section V.B.16 of this plan does not apply. [The above cited sentences will be referred to herein as Plan Sentence 1, Plan Sentence 2, etc.] Madison Pointe's Projected Medicaid Rate Relying on the proposed legislation, including the proposed rebasing and step-up in rate, Madison Pointe projected an interim Medicaid rate of $203.50 ppd for its initial year of operation. Madison Pointe's new projected rate assumed a rebasing by the Legislature to eliminate existing targets, thereby, allowing more reimbursable costs. Although no legislation had been passed at that time, Madison Pointe's consultants made calculations and projections as to how the rebasing would likely affect Petitioners. Those projections were the basis for the $203.50 ppd interim rate. The projected rate with limitations applied (i.e., if Madison Pointe did not anticipate rebasing or believe the Plan revisions applied) would have been $194.26. The PFA portion of Madison Pointe's CHOP application was submitted to AHCA containing the $203.50 ppd interim rate. The Financial Analysis Unit, as stated, is responsible for, inter alia, reviewing PFAs submitted as part of a CHOP application. In the present case, Ryan Fitch was the person within the Financial Analysis Unit assigned responsibility for reviewing Madison Pointe's PFA. Fitch testified that the purpose of his review was to determine whether the applicant had projected sufficient monetary resources to successfully operate the facility. This would include a contingency fund (equal to one month's anticipated expenses) available to the applicant and reasonable projections of cost and expenses versus anticipated revenues.2 Upon his initial review of the Madison Pointe PFA, Fitch determined that the projected Medicaid interim rate was considerably higher than the previous operator's actual rate. This raised a red flag and prompted Fitch to question the propriety of the proposed rate. In his omissions letter to the applicant, Fitch wrote (as the fourth bullet point of the letter), "The projected Medicaid rate appears to be high relative to the current per diem rate and the rate realized in 2006 cost reports (which includes ancillaries and is net of contractual adjustments). Please explain or revise the projections." In response to the omissions letter, Laura Wilson, a health care accountant working for Madison Pointe, sent Fitch an email on June 27, 2008. The subject line of the email says, "FW: Omissions Letter for 11 CHOW applications."3 Then the email addressed several items from the omissions letter, including a response to the fourth bullet point which says: Item #4 - Effective July 1, 2007, it is anticipated that AHCA will be rebasing Medicaid rates (the money made available through elimination of some of Medicaid's participation in covering Medicare Part A bad debts). Based on discussions with AHCA and the two Associations (FHCA & FAHSA), there is absolute confidence that this rebasing will occur. The rebasing is expected to increase the Medicaid rates at all of the facilities based on the current operator's spending levels. As there is no definitive methodology yet developed, the rebased rates in the projections have been calculated based on the historical methodologies that were used in the 2 most recent rebasings (1992 and 2002). The rates also include the reestablishment of the 50% step-up that is also anticipated to begin again. The rebasing will serve to increase reimbursement and cover costs which were previously limited by ceilings. As noted in Note 6 of the financials, if something occurs which prevents the rebasing, Management will be reducing expenditures to align them with the available reimbursement. It is clear Madison Pointe's projected Medicaid rate was based upon proposed legislative actions which would result in changes to the Plan. It is also clear that should those changes not occur, Madison Pointe was going to be able to address the shortfall by way of reduced expenditures. Each of those facts was relevant to the financial viability of Madison Pointe's proposed operations. Madison Pointe's financial condition was approved by Fitch based upon his review of the PFA and the responses to his questions. Madison Pointe became the new licensed operator of the facility. That is, the Long-Term Care Unit deemed the application to have met all requirements, including financial ability to operate, and issued a license to the applicant. Subsequently, MPA provided to Madison Pointe its interim Medicaid rate. MPA advised Madison Pointe that its rate would be $194.55 ppd, some $8.95 ppd less than Madison Pointe had projected in its PFA (but slightly more than Madison Pointe would have projected with the 50 percent limitation from Plan Sentence 1 in effect, i.e., $194.26). The PFA projected 25,135 annual Medicaid patient days, which multiplied by $8.95, would equate to a reduction in revenues of approximately $225,000 for the first year of operation.4 MPA assigned Madison Pointe's interim Medicaid rate by applying the provisions of the Plan as it existed as of the date Madison Pointe's new operating license was issued, i.e., September 1, 2007. Specifically, MPA limited Madison Pointe's per diem to 50 percent of the difference between the previous provider's per diem and the applicable ceilings, as dictated by the changes to the Plan. (See Plan Sentence 1 set forth above.) Madison Pointe's projected Medicaid rate in the PFA had not taken any such limitations into account because of Madison Pointe's interpretation of the Plan provisions. Specifically, that Plan Sentence 3 applies to Madison Pointe and, therefore, exempts Madison Pointe from the new provider limitation set forth in Plan Sentences 1 and 2. However, Madison Pointe was not "already in the Medicaid program" as of July 1, 2007, as called for in Plan Sentence 3. Rather, Madison Pointe's commencement date in the Medicaid program was September 1, 2007. Plan Sentence 1 is applicable to a "new provider with no cost history resulting from a change of ownership or operator, where the previous operator participated in the Medicaid program." Madison Pointe falls within that definition. Thus, Madison Pointe's interim operating and patient care per diems would be the lesser of: (1) The class reimbursement ceiling based on Section V of the Plan; (2) The budgeted per diems approved by AHCA based on Section III of the Plan; or (3) The previous provider's operating and patient care cost per diem (excluding incentives), plus 50 percent of the difference between the previous provider's per diem and the class ceiling. Based upon the language of Plan Sentence 1, MPA approved an interim operating and patient care per diem of $194.55 for Madison Pointe. Plan Sentence 2 is applicable to Madison Pointe, because it applies to all new providers with a Medicaid certification effective after July 1, 1991. Madison Pointe's certification was effective September 1, 2007. Plan Sentence 3 is the primary point of contention between the parties. AHCA correctly contends that Plan Sentence 3 is not applicable to Petitioner, because it addresses rebasing that occurred on July 1, 2007, i.e., prior to Madison Pointe coming into the Medicaid system. The language of Plan Sentence 3 is clear and unambiguous that it applies to "providers already in the Medicaid program." Plan Sentence 4 is applicable to Madison Pointe, which entered the system during a rate semester, in which no other provider had a new provider limitation because of the rebasing. Again, the language is unambiguous that "[t]his new provider reimbursement limitation shall apply to new providers entering the Medicaid program. . . ." Madison Pointe is a new provider entering the program. Detrimental Reliance and Estoppel Madison Pointe submitted its CHOP application to the Long-Term Care Unit of AHCA for approval. That office has the clear responsibility for reviewing and approving (or denying) CHOP applications for nursing homes. The Long-Term Care Unit requires, as part of the CHOP application, submission of the PFA which sets forth certain financial information used to determine whether the applicant has the financial resources to operate the nursing home for which it is applying. The Long-Term Care Unit has another office within AHCA, the Financial Analysis Unit, to review the PFA. The Financial Analysis Unit is found within the Bureau of Health Facility Regulation. That Bureau is responsible for certificates of need and other issues, but has no authority concerning the issuance, or not, of a nursing home license. Nor does the Financial Analysis Unit have any authority to set an interim Medicaid rate. Rather, the Financial Analysis Unit employs certain individuals who have the skills and training necessary to review financial documents and determine an applicant's financial ability to operate. A nursing home licensee must obtain Medicaid certification if it wishes to participate in the program. Madison Pointe applied for Medicaid certification, filing its application with a Medicaid intermediary which works for CMS. The issuance of a Medicaid certification is separate and distinct from the issuance of a license to operate. When Madison Pointe submitted its PFA for review, it was aware that an office other than the Long-Term Care Unit would be reviewing the PFA. Madison Pointe believed the two offices within AHCA would communicate with one another, however. But even if the offices communicated with one another, there is no evidence that the Financial Analysis Unit has authority to approve or disapprove a CHOP application. That unit's sole purpose is to review the PFA and make a finding regarding financial ability to operate. Likewise, MPA--which determines the interim Medicaid rate for a newly licensed operator--operates independently of the Long-Term Care Unit or the Financial Analysis Unit. While contained within the umbrella of AHCA, each office has separate and distinct duties and responsibilities. There is no competent evidence that an applicant for a nursing home license can rely upon its budgeted interim rate--as proposed by the applicant and approved as reasonable by MPA--as the ultimate interim rate set by the Medicaid Program Analysis Office. At no point in time did Fitch tell Madison Pointe that a rate of $203.50 ppd would be assigned. Rather, he said that the rate seemed high; Madison Pointe responded that it could "eliminate expenditures to align them with the available reimbursement." The interim rate proposed by the applicant is an estimate made upon its own determination of possible facts and anticipated operating experience. The interim rate assigned by MPA is calculated based on the applicant's projections as affected by provisions in the Plan. Furthermore, it is clear that Madison Pointe was on notice that its proposed interim rate seemed excessive. In response to that notice, Madison Pointe did not reduce the projected rate, but agreed that spending would be curtailed if a lower interim rate was assigned. There was, in short, no reliance by Madison Pointe on Fitch's approval of the PFA as a de facto approval of the proposed interim rate. MPA never made a representation to Madison Pointe as to the interim rate it would receive until after the license was approved. There was, therefore, no subsequent representation made to Madison Pointe that was contrary to a previous statement. The Financial Analysis Unit's approval of the PFA was done with a clear and unequivocal concern about the propriety of the rate as stated. The approval was finalized only after a representation by Madison Pointe that it would reduce expenditures if a lower rate was imposed. Thus, Madison Pointe did not change its position based on any representation made by AHCA.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Respondent, Agency for Health Care Administration, approving the Medicaid interim per diem rates established by AHCA and dismissing each of the Amended Petitions for Formal Administrative Hearing. DONE AND ENTERED this 23rd day of February, 2009, in Tallahassee, Leon County, Florida. R. BRUCE MCKIBBEN 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 23rd day of February, 2009.
The Issue The issue for determination in this case is whether Respondent’s application of a fair rental value system of property cost reimbursement to Petitioner under the Florida Title XIX Long-Term Care Medicaid Reimbursement Plan is appropriate.
Findings Of Fact Petitioner, CONSULTING MANAGEMENT AND EDUCATION, INC., d/b/a GULF COAST NURSING AND REHABILITATION CENTER (CME), is the licensed operator of a 103-bed nursing home in Clearwater, Florida, which is presently known as GULF COAST NURSING AND REHABILITATION CENTER (GULF COAST). CME participates in the Florida Medicaid Program as an enrolled provider. Respondent, AGENCY FOR HEALTH CARE ADMINISTRATION (AHCA), is the agency of the State of Florida authorized to implement and administer the Florida Medicaid Program, and is the successor agency to the former Department of Health and Rehabilitative Services, pursuant to Chapter 93-129, Laws of Florida. Stipulated Facts Prior to 1993, the GULF COAST nursing home facility was known as COUNTRY PLACE OF CLEARWATER (COUNTRY PLACE), and was owned and operated by the Clearwater Limited Partnership, a limited partnership which is not related to CME. In 1993 CME agreed to purchase, and did in fact purchase, COUNTRY PLACE from the Clearwater Limited Partnership. Simultaneous with the purchase of COUNTRY PLACE, CME entered into a Sale/Leaseback Agreement with LTC Properties, Inc., a Maryland real estate investment trust which engages in the financing of nursing homes. The Purchase and Sale Agreement between Clearwater Limited Partnership and CME was contingent upon the Sale/Leaseback Agreement and the proposed Lease between CME and LTC Properties, Inc. On September 1, 1993, CME simultaneously as a part of the same transaction purchased COUNTRY PLACE, conveyed the facility to LTC Properties, Inc., and leased the facility back from LTC Properties, Inc. As required, CME had notified AHCA of the proposed transaction. AHCA determined that the transaction included a change of ownership and, by lease, a change of provider. CME complied with AHCA's requirements and became the licensed operator and Medicaid provider for COUNTRY PLACE. Thereafter, CME changed the name of the facility to GULF COAST. After CME acquired the facility and became the licensed operator and Medicaid provider, AHCA continued to reimburse CME the same per diem reimbursement which had been paid to the previous provider (plus certain inflation factors) until CME filed its initial cost report, as required for new rate setting. In the normal course of business, CME in 1995 filed its initial Medicaid cost report after an initial period of actual operation by CME. Upon review of the cost report, AHCA contended that the cost report was inaccurate and engaged in certain "cost settlement" adjustments. During this review, AHCA took the position that CME's property reimbursement should be based on FRVS methodologies rather than "cost" due to the lease. In November of 1995, CME received from AHCA various documents which recalculated all components of Petitioner's Medicaid reimbursement rates for all periods subsequent to CME's acquisition of the facility. In effect, AHCA placed CME on FRVS property reimbursement. The practical effect of AHCA's action was to reduce CME's property reimbursement both retroactively and prospectively. The retroactive application would result in a liability of CME to AHCA, due to a claimed overpayment by AHCA. The prospective application would (and has) resulted in a reduction of revenues. CME is substantially affected by AHCA's proposed action and by Sections I.B., III.G.2.d.(1), V.E.1.h., and V.E.4. of the Florida Medicaid Plan. Additional Findings of Fact The Florida Medicaid Plan establishes methodologies for reimbursement of a nursing home's operating costs and patient care costs, as well as property costs. The dispute in this matter relates only to reimbursement of property costs. CME as the operator of the GULF COAST nursing home facility is entitled to reimbursement of property costs in accordance with the Florida Medicaid Plan. CME as the operator of the GULF COAST facility entered into a Florida Medicaid Program Provider Agreement, agreeing to abide by the provisions of the Florida Medicaid Plan. The Sale/Leaseback Agreement entered into by CME and LTC Properties Inc. (LTC) specifically provides for a distinct sale of the nursing home facility to LTC. LTC holds record fee title to GULF COAST. LTC, a Maryland corporation, is not related to CME, a Colorado corporation. The Florida Medicaid Plan is intended to provide reimbursement for reasonable costs incurred by economically and efficiently operated facilities. The Florida Medicaid Plan pays a single per diem rate for all levels of nursing care. After a nursing home facility's first year of operation, a cost settling process is conducted with AHCA which results in a final cost report. The final cost report serves as a baseline for reimbursement over the following years. Subsequent to the first year of operation, a facility files its cost report annually. AHCA normally adjusts a facility's reimbursement rate twice a year based upon the factors provided for in the Florida Medicaid Plan. The rate-setting process takes a provider through Section II of the Plan relating to cost finding and audits resulting in cost adjustments. CME submitted the appropriate cost reports after its first year of operation of the GULF COAST facility. Section III of the Florida Medicaid Plan specifies the areas of allowable costs. Under the Allowable Costs Section III.G.2.d.(1) in the Florida Title XIX Plan, a facility with a lease executed on or after October 1, 1985, shall be reimbursed for lease costs and other property costs under the Fair Rental Value System (FRVS). AHCA has treated all leases the same under FRVS since that time. AHCA does not distinguish between types of leases under the FRVS method. The method for the FRVS calculation is provided in Section V.E.1.a-g of the Florida Medicaid Plan. A “hold harmless” exception to application of the FRVS method is provided for at Section V.E.1.h of the Florida Medicaid Plan, and Section V.E.4 of the Plan provides that new owners shall receive the prior owner’s cost-based method when the prior owner was not on FRVS under the hold harmless provision. As a lessee and not the holder of record fee title to the facility, neither of those provisions apply to CME. At the time CME acquired the facility, there was an indication that the Sale/Leaseback transaction with LTC was between related parties, so that until the 1995 cost settlement, CME was receiving the prior owner’s cost-based property method of reimbursement. When AHCA determined that the Sale/Leaseback transaction between CME and LTC was not between related parties, AHCA set CME’s property reimbursement component under FRVS as a lessee. Property reimbursement based on the FRVS methodology does not depend on actual period property costs. Under the FRVS methodology, all leases after October 1985 are treated the same. For purposes of reimbursement, AHCA does not recognize any distinction between various types of leases. For accounting reporting purposes, the Sale/Leaseback transaction between CME and LTD is treated as a capital lease, or “virtual purchase” of the facility. This accounting treatment, however, is limited to a reporting function, with the underlying theory being merely that of providing a financing mechanism. Record fee ownership remains with LTC. CME, as the lease holder, may not encumber title. The Florida Medicaid Plan does not distinguish between a sale/leaseback transaction and other types of lease arrangements. Sections IV.D., V.E.1.h., and V.E.4., the “hold harmless” and “change of ownership” provisions which allow a new owner to receive the prior owner’s method of reimbursement if FRVS would produce a loss for the new owner, are limited within the Plan’s organizational context, and within the context of the Plan, to owner/operators of facilities, and grandfathered lessee/operators. These provisions do not apply to leases executed after October 1, 1985. Capital leases are an accounting construct for reporting purposes, which is inapplicable when the Florida Medicaid Plan specifically addresses this issue. The Florida Medicaid Plan specifically addresses the treatment of leases entered into after October 1985 and provides that reimbursement will be made pursuant to the FRVS method.
