99-002497RX Consult Care, Inc. vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Tuesday, June 27, 2000.

Summary: Challenged portion of rule, adopting by reference ARNP Medicaid Providers handbook, invalidly modifies statutes implemented. No rationale for limitations on mobile units; delegating to other entities authority to deny mobile unit participation in program.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CONSULT CARE, INC., )

)

Petitioner, )

)

vs. ) Case No. 99-2497RX

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

___________________________________)

FINAL ORDER

Pursuant to notice, a formal hearing was conducted in this

case on February 17, 2000, in Tampa, Florida, before Lawrence P.

Stevenson, a duly-designated Administrative Law Judge of the

Division of Administrative Hearings.

APPEARANCES

For Petitioner: Bruce Culpepper, Esquire

Akerman, Senterfitt & Eidson, P.A.

301 South Bronough Street, Suite 200

Post Office Box 10555

Tallahassee, Florida 32302-2555

For Respondent: Moses E. Williams, Esquire

Steven A. Grigas, Esquire

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Fort Knox Building 3, Suite 3431

Tallahassee, Florida 32308-5403

STATEMENT OF THE ISSUE

The issue in this case is whether Rule 59G-4.010, Florida

Administrative Code, including pages 1-5 and 1-6 of the Florida

Medicaid Advanced Registered Nurse Practitioner Coverage and

Limitations Handbook (the "ARNP Handbook"), which is incorporated

in the rule by reference, is an invalid exercise of delegated

legislative authority.

PRELIMINARY STATEMENT

Petitioner, Consult Care, Inc. ("CCI") challenges the

amendment of the ARNP Handbook by the Agency for Health Care

Administration ("AHCA"). The amendment to the ARNP Handbook was

adopted by reference in Rule 59G-4.010, Florida Administrative

Code. The challenge focuses on the ARNP Handbook's amended

language regarding mobile ARNP units. CCI is a Medicaid provider

offering health related services to the Medicaid community via a

stationary office and two retrofitted recreational vehicles.

AHCA published its notice of development of proposed rules

in the December 4, 1998, issue of the Florida Administrative

Weekly (vol. 24, no. 49, pp. 6616-6617). The agency conducted a

rule development hearing on December 21, 1998. AHCA published

its rule adoption notice in the February 19, 1999, issue of the

Florida Administrative Weekly (vol. 25, no. 7, p. 702). The

agency conducted a rule adoption hearing on March 18, 1999. CCI

attended the adoption hearing and provided oral and documentary

testimony regarding the proposed rule. On May 19, 1999, AHCA

submitted its filing for final adoption to the Secretary of

State. CCI filed its petition challenging the adopted rule on

June 1, 1999. The final hearing was scheduled for June 29-30,

1999, but was continued and then abated at the parties' request.

The hearing was eventually rescheduled for and held on February

17, 2000.

At final hearing, Petitioner CCI called as witnesses Alan

Strowd, program administrator in Medicaid program development;

Jackie Manescala, co-owner of Albany Avenue ACLF, Inc.; Thomas J.

McClusky of McClusky Enterprises; and JoAnna Mulder, president of

CCI. Petitioner's Exhibits 1 and 2 were admitted into evidence.

AHCA called as witnesses John A. Owens, bureau chief of the

Medicaid Program Integrity Section of AHCA; Glen D. Stone, a

medical program analyst in the Medicaid Program Integrity

Section, accepted as an expert in Medicaid program integrity

oversight functions; and Lynne Metz, physician services

coordinator for AHCA, accepted as an expert in Medicaid program

development and rule making. AHCA Exhibits 1 through 23 were

admitted into evidence.

The parties requested and were given 30 days from the filing

of the transcript in which to file proposed final orders. The

Transcript was filed on March 13, 2000, and parties filed

Proposed Final Orders on April 12, 2000.

FINDINGS OF FACT

Based on the oral and documentary evidence adduced at the

final hearing, and the entire record in this proceeding, the

following findings of fact are made:

1. Rule 59G-4.010, Florida Administrative Code, "applies to

all advanced registered nurse practitioners enrolled in the

Medicaid program for advanced registered nurse practitioner

services under Section 409.906, F.S." It requires all ARNP

service providers to comply with the "Florida Medicaid Advanced

Registered Nurse Practitioner Coverage and Limitations Handbook,

January 1999, which is incorporated by reference . . . ."

2. The ARNP Handbook "explains covered services, their

limits and who is eligible to receive them." The issue in this

proceeding is Medicaid reimbursement for mobile ARNP units. The

challenged language is found at pp. 1-5 and 1-6 of the ARNP

Handbook, and reads as follows:

Mobile ARNP Units

Description

A mobile ARNP unit is a fully operational

vehicle, unit, trailer or office that travels

to different locations for the provision of

ARNP services and is not a stationary ARNP

unit or office.

Limitations and Exceptions

Medicaid will not reimburse for any ARNP

service rendered in a mobile unit regardless

of the location with the following

exceptions:

Mobile ARNP unit owned or operated

by the Department of Health

complying with Medicaid's County

Health Department (CHD) Clinic

Services program specifications as

a CHD provider;

Mobile ARNP unit owned, operated

by, or having a contractual

arrangement with a Federally

Qualified Health Center (FQHC),

complying with Medicaid's Federally

Qualified Health Center

specifications as a FQHC provider;

and

Mobile ARNP unit certified as a

mobile Rural Health Clinic (RHC)

Contractual Arrangements with an FQHC

Any contractual arrangement between a mobile

ARNP unit and a FQHC for the provision of

Medicaid ARNP services is subject to the

following conditions:

The services must be provided by a

licensed ARNP on the premises;

The services must be covered by the

Medicaid ARNP services program and

be subject to the same limitations

and prior authorization

requirements that apply to the ARNP

services program;

Medicaid reimbursement for ARNP

services will only be to the FQHC,

which is assigned a clinic group

number to bill an encounter rate

for clinic services. The treating

practitioner who renders the

services must enroll as a Medicaid

provider affiliated with the FQHC

clinic group provider number;

The services must be provided at a

mobile satellite clinic affiliated

with the FQHC; and

The services must be provided in

accordance with the policy

guidelines specified in the

Federally Qualified Health Center

Coverage and Limitations Handbook.

Contractual Arrangements with an RHC

All services must be provided in accordance

with the policy guidelines specified in the

Medicaid Rural Health Clinic Services

Coverage and Limitations Handbook.

3. Federal law governs the provisions, requirements,

benefits, and service payments of Rural Health Clinics (RHCs),

Federally Qualified Health Centers (FQHCs), and County Health

Departments (CHDs) as they participate in the Medicaid program.

See Title 42 C.F.R. Parts 440.20 and 491 (RHCs), 491 (FQHCs), and

440.130 ( CHDs).

4. CCI is a private corporation providing on-site community

based primary and behavioral health care services in

Hillsborough, Pinellas, Pasco, Polk, and Manatee counties. CCI

offers services through a stationary facility in Tampa and two

mobile units. The mobile units are retrofitted recreational

vehicles configured to have waiting areas, patient work-up areas,

lab areas, and private examination rooms. CCI has ceased

treating Medicaid patients in the mobile units since the adoption

of the challenged rule.

5. CCI's client population consists of the developmentally

disabled, psychiatric disabled, and displaced frail elderly

living in congregate living facilities. CCI's group of health

care professionals includes physicians, ARNPs, and behavioral

care therapists.

6. The genesis of the challenged rule was reports of

abusive practices by mobile dental units providing services to

children. In 1997, ACHA received reports that several such

units, all based in Miami, were trolling the state seeking large

concentrations of Medicaid-eligible children. These units would

stop in low-income housing projects and offer free diagnostic and

preventive services to children.

7. Diagnostic and preventive services are especially

profitable for the provider, as they take comparatively little

time and are usually performed by auxiliary staff rather than the

dentist. AHCA found that some of these mobile units functioned

as mills, treating as many as 60 children per day.

8. Problems began to arise when these children later

presented themselves to their regular dentists for treatment.

Medicaid places six month reimbursement limits per child for

items such as periodic exams and x-rays. The regular dentists,

unaware that their patients had used their eligibility in their

visits to the mobile units, performed these services and then

found their reimbursement denied due to the six month rule.

9. AHCA also found problems with the treatment provided by

the nomadic mobile dental units. There could be no continuity of

care because the units moved on after the initial visit. Audits

of certain mobile providers found the mobile units dirty,

disorganized, and packed with waiting children. Up to 75% of the

x-rays taken in the audited units were not of diagnostic quality.

Obvious problems such as rotting teeth were ignored in the mobile

units, leaving these time consuming and less remunerative

procedures to be performed by the regular dentists.

10. During the same time period, AHCA became aware of

billing discrepancies involving Vision Express, a mobile provider

of optometric services. AHCA found that Vision Express was

billing for services not covered by Medicaid, and was employing

misleading place of service codes on its claims.

11. AHCA introduced several exhibits documenting its

investigation of Vision Express. The exhibits show that the

agency's concerns with Vision Express involved billing, not

quality of service. The exhibits also indicate that Vision

Express was the only mobile visual or optometric unit known to

have presented Medicaid billing problems for the agency.

12. The conjunction of problems with dental and optometric

mobile units led the agency to conduct a review of its policies

and practices regarding mobile units overall. The agency's

traditional practice had been to deny reimbursement to mobile

service providers because a mobile unit was not termed a valid

"place of service" under the Medicaid billing codes. AHCA had no

written rule or policy regarding Medicaid reimbursement to mobile

service providers in any discipline.

13. AHCA's review was intended to determine whether mobile

units should henceforth be reimbursed by Medicaid and, if so,

what restrictions should be placed on the activities of mobile

units to curb the potential for abuse.

14. Lynne Metz, AHCA's expert in Medicaid program rule

making, testified that the agency's research revealed additional

problems with ARNPs, as well as the already acknowledged problems

with dental and optometric mobile units.

15. Ms. Metz explained that Medicaid rules permit ARNPs to

treat a patient and bill Medicaid under their own provider

number, which reimburses the ARNP at 80% of the reimbursement

rate for physicians. ARNPs may also bill under the provider

number for their supervising physician and receive 100% of the

physician rate, but may do so only when the physician is

physically present and reviews, dates, and co-signs the medical

record. Ms. Metz testified that some ARNP mobile units were

found to have billed Medicaid at the higher rate even though the

supervising physician was not physically present on the mobile

unit.

16. Alan Strowd, who was program administrator with the

practitioner services unit of Medicaid during the development of

this rule, testified that he recalled no complaints about ARNP

mobile units regarding the delivery of services, as opposed to

billing complaints.

17. AHCA ultimately determined that mobile units have the

potential to increase the availability of and access to medical

services. However, the agency also determined that there is a

potential for abuse of services, potential lack of follow-up

care, and potential problems with management of patient records

involved with the provision of mobile unit services. The agency

decided to craft rules allowing Medicaid reimbursement for mobile

unit services, but also decided that some monitoring system

should be put in place to minimize the potential for abuse.

18. Mr. Strowd admitted that the agency could address abuse

through the existing means of billing edits and the investigative

Medicaid Integrity Bureau, and that these means were attempted

prior to promulgation of the challenged rule. However, Mr.

Strowd testified that these were inefficient "pay and chase"

methods, meaning that Medicaid routinely pays the claims, then

investigates fraud and abuse after the fact. He testified that

these methods require the agency to sift through thousands of

providers to find the ones who are committing fraud.

19. John A. Owens, bureau chief of the Medicaid Program

Integrity Section, agreed that the standards were in place to

enforce compliance with the Medicaid program by mobile unit

providers prior to adoption of the rule. Mr. Owens stated that

the rule was desirable because it "places a control mechanism" on

the mobile unit providers, giving AHCA an entity it can look to

for assurance that proper medical records and quality of service

are maintained. Mr. Owens testified that AHCA is "at capacity"

in terms of the direct oversight it is able to provide.

20. Ms. Metz testified that the agency sought some

mechanism to monitor the mobile unit providers that was less

onerous than the "pay and chase" method. After considering and

discarding the idea of carving out geographic regions to regulate

the mobile providers, the agency decided to examine programs that

were already working successfully at the county level. The

agency's registered nurse specialist for CHDs informed Ms. Metz

that federal law has already established mobile provider

guidelines for CHD, FQHC, and RHC programs. Ms. Metz testified

that "the system was almost handed to us . . . . Here was a

local control network . . . that had already been sitting there

for us to just turn on the allowance and put it into place."

21. Mr. Strowd opined that he saw no distinction between

the activities of a mobile dental unit and a mobile ARNP unit in

terms of the potential for problems with continuity of care,

billing fraud, and sanitary conditions. No evidence was

presented that the agency performed an actual evaluation

comparing the services offered by a mobile dental unit to those

performed by a mobile ARNP unit. Mr. Strowd agreed that a mobile

unit could provide a valuable service, especially if it confined

its activity to a small geographic area or primarily serviced

rural areas.

22. Thus, the agency decided to amend all twelve of its

practitioner handbooks, including the ARNP Handbook, to allow

reimbursement of mobile unit service providers, but only if they

were owned by or contractually affiliated with a CHD, FQHC, or

RHC. The agency determined that this was the least intrusive

method to allow the provision of mobile unit services while

ensuring quality and continuity of care and reducing the

potential for fraud and abuse in the Medicaid program.

23. Mr. Strowd testified that this limitation would assure

that there would be oversight of the mobile unit providers at the

local level, thus eliminating the need for AHCA supervision at

the state level. Ms. Metz also stated that a main purpose of the

limitation was to provide for local control:

That's the basis of Medicaid, to make sure

recipients can get the services they need

when they need it, not just, okay, I need a

doctor but not five days from now. So that's

why we're trying to put this in the local

area and not have it regulated from up at the

Tallahassee headquarters office. We don't

need to be the ones regulating the policy.

It has to be in the local county level, FQHC

level or RHC level, where they know these

recipients are the ones who need the phone

pickup, the phone call, the mobile provider,

and say we need you to go out.

24. However, Ms. Metz also stated that AHCA would allow a

mobile unit provider to provide services pursuant to a

contractual arrangement with any RHC, FQHC, or CHD, regardless of

the entity's location in the state. Ms. Metz testified that she

told Joanna Mulder, the president of CCI, that she did not have

to contract with an entity in her service area, that "she could

get a contract with anybody and do her services in this area."

Ms. Metz did not explain how an FQHC in Pensacola, for example,

could provide to a mobile unit provider in Tampa the kind of

local knowledge and control that she stated was a prime reason

for the limitation adopted by the challenged rule.

25. Mr. Strowd conceded that the actual language adopted in

the ARNP Handbook, quoted above, appears to allow mobile ARNP

providers to contract with FQHCs and RHCs, but not with CHDs.

Mr. Strowd testified that this was an inadvertent omission, and

that the intent of the rule is to allow mobile ARNP providers to

affiliate contractually with any of the three named providers.

26. Both Mr. Strowd and Ms. Metz conceded that the agency

conducted no inquiry as to the practical ability of mobile unit

providers to contract with RHCs, FQHCs, or CHDs, or as to legal

impediments to such contracts.

27. Ms. Mulder of CCI testified that she has made several

efforts to contract with the listed entities. She contacted the

Hillsborough CHD and was told that it does not contract with

private entities and had no interest in offering additional

services. The Polk and Pasco CHDs also had no interest.

28. Ms. Mulder stated that she spent five days trying to

contact FQHCs, and that most of them also showed no interest.

She was finally able to meet with Jeff Zimmerman, the chief

financial officer of Parrish Health Clinic, an FQHC. Mr.

Zimmerman told Ms. Mulder that reimbursement limitations in the

FQHC Handbook made it impossible for his FQHC to contract with

CCI in a way that would provide any financial benefit to the

FQHC.

29. Mr. Strowd testified that he had assurances from Greg

Glass, president of the Florida Association of Community Health

Clinics, the statewide FQHC organization, that any of the 27

FQHCs in the state would be willing to discuss and enter into

contracts with private mobile service providers. However, Ms.

Mulder testified that Mr. Glass refused to discuss the issue with

her, and told her that she would have to contact the individual

FQHCs. Ms. Mulder stated that Mr. Glass could not or would not

provide her with a list of the FQHCs. He referred her to AHCA

for the list. AHCA promised to provide the list, but never did

so.

30. Finally, Ms. Mulder stated that she could find only one

RHC, and that it never returned her calls. She did not believe a

contract with an RHC would be workable in any event, because not

all of her patients live in the rural areas to which RHCs are

limited in their provision of services.

31. AHCA demonstrated that the amendment to Rule 59G-4.010,

Florida Administrative Code, was properly promulgated, and that

the procedures instituted for its adoption were proper. The

agency considered the rule's impact on small business, concluding

it was negligible.

32. The federal Health Care Financing Administration

("HCFA") reviewed and approved the proposed amendment to Rule

59G-4.010, Florida Administrative Code. AHCA conceded that no

federal statute or rule mandates the limitation of mobile unit

services to entities affiliated with RHCs, FQHCs, or CHDs, but

contended that there would be practical difficulties in obtaining

HCFA approval of further changes to the approved rule.

CONCLUSIONS OF LAW

33. Section 120.56(1)(a), Florida Statutes (1999),

provides: "Any person substantially affected by a rule or a

proposed rule may seek an administrative determination of the

invalidity of the rule on the ground that the rule is an invalid

exercise of delegated legislative authority." An existing rule

is presumed valid, and the petitioner challenging the rule has

the burden of establishing that it is invalid. St. Johns River

Water Management District v. Consolidated -Tomoka Land Company ,

717 So. 2d 72, 76 (Fla. 1st DCA 1998).

34. Rule 59G-4.010, Florida Administrative Code,

incorporates by reference the January 1999 edition of the ARNP

Handbook. Petitioner challenges only pages 1-5 and 1-6 of the

ARNP Handbook. Petitioner demonstrated at hearing that it is

substantially affected by the challenged portion of the rule and

accordingly has standing to bring this rule challenge.

Petitioner has alleged a real and sufficiently immediate injury

in fact, in that the rule has forced it to cease serving Medicaid

clients from its mobile unit. Petitioner's alleged injury is

within the zone of interest that is regulated by the Medicaid

statutes purportedly implemented by the challenged portion of the

rule. See Lanoue v. Florida Department of Law Enforcement , 751

So. 2d 94 (Fla. 1st DCA 1999), and cases cited therein regarding

the "substantially affected" test to establish standing in a rule

challenge proceeding.

35. AHCA contends that Petitioner's "alleged injury does

not appear substantial given the availability of the exceptions

and alternatives afforded" by the challenged portion of the rule,

i.e., the ability to contract with RHCs, FQHCs, or CHDs. A party

is not required to comply with a rule at his peril in order to

obtain standing to challenge the rule. Ward v. Board of Trustees

of the Internal Improvement Trust Fund , 651 So. 2d 1236, 1238

(Fla. 4th DCA 1995); Professional Firefighters of Florida, Inc.

v. Department of Health and Rehabilitative Services , 396 So. 2d

1194, 1195 (Fla. 1st DCA 1981). A logical corollary is that a

party's ability to comply with the challenged rule should not

stand as a barrier to the challenge.

36. Section 120.52(8), Florida Statutes (1999), provides:

"Invalid exercise of delegated legislative

authority" means action which goes beyond the

powers, functions, and duties delegated by

the Legislature. A proposed or existing rule

is an invalid exercise of delegated

legislative authority if any one of the

following applies:

(a) The agency has materially failed to

follow the applicable rulemaking procedures

or requirements set forth in this chapter;

(b) The agency has exceeded its grant of

rulemaking authority, citation to which is

required by s. 120.54(3)(a)1.;

(c) The rule enlarges, modifies, or

contravenes the specific provisions of law

implemented, citation to which is required by

s. 120.54(3)(a)1.;

(d) The rule is vague, fails to establish

adequate standards for agency decisions, or

vests unbridled discretion in the agency;

(e) The rule is arbitrary or capricious;

(f) The rule is not supported by competent

substantial evidence; or

(g) The rule imposes regulatory costs on the

regulated person, county, or city which could

be reduced by the adoption of less costly

alternatives that substantially accomplish

the statutory objectives.

A grant of rulemaking authority is necessary

but not sufficient to allow an agency to

adopt a rule; a specific law to be

implemented is also required. An agency may

adopt only rules that implement or interpret

the specific powers and duties granted by the

enabling statute. No agency shall have

authority to adopt a rule only because it is

reasonably related to the purpose of the

enabling legislation and is not arbitrary and

capricious or is within the agency's class of

powers and duties, nor shall an agency have

the authority to implement statutory

provisions setting forth general legislative

intent or policy. Statutory language

granting rulemaking authority or generally

describing the powers and functions of an

agency shall be construed to extend no

further than implementing or interpreting the

specific powers and duties conferred by the

same statute.

37. The specific authority cited by AHCA is Section

409.919, Florida Statutes (1999), which provides: "The agency

shall adopt any rules necessary to comply with or administer ss.

409.901 -409.920 and all r ules necessary to comply with federal

requirements." Petitioner concedes that this provision allows

AHCA to adopt rules relative to the disbursement of Medicaid

funds for the delivery of health services to qualified

recipients. However, Petitioner contends that the selection of

some ARNP mobile service providers for reimbursement, to the

exclusion of others, is not "necessary" for the conduct of the

Medicaid program and requires a more specific grant of authority.

38. The laws implemented by Rule 59G-4.010, Florida

Administrative Code, as set forth in the agency's notice of

rulemaking, are Sections 409.905, 409.908, and 409.9081, Florida

Statutes.

39. Section 409.905, Florida Statutes, titled "Mandatory

Medicaid services," provides in relevant part:

The agency may make payments for the

following services, which are required of the

state by Title XIX of the Social Security

Act, furnished by Medicaid providers to

recipients who are determined to be eligible

on the dates on which the services were

provided. Any service under this section

shall be provided only when medically

necessary and in accordance with state and

federal law. Nothing in this section shall

be construed to prevent or limit the agency

from adjusting fees, reimbursement rates,

lengths of stay, number of visits, number of

services, or any other adjustments necessary

to comply with the availability of moneys and

any limitations or directions provided for in

the General Appropriations Act or chapter

216.

(1) Advanced registered nurse practitioner

services. - - The agency shall pay for services

provided to a recipient by a licensed

advanced registered nurse practitioner who

has a valid collaboration agreement with a

licensed physician on file with the

Department of Health or who provides

anesthesia services in accordance with

established protocol required by state law

and approved by the medical staff of the

facility in which the anesthetic service is

performed. Reimbursement for such services

must be provided in an amount that equals not

less than 80 percent of the reimbursement to

a physician who provides the same services,

unless otherwise provided for in the General

Appropriations Act. (Emphasis added)

40. The underscored portion of Section 409.905 provides the

agency with authority to make reimbursement adjustments, but

limits that authority to those "adjustments necessary to comply

with the availability of moneys" and any limitations set forth by

the Legislature in the General Appropriations Act or in Chapter

216, Florida Statutes, which governs agency planning and

budgeting.

41. Petitioner contends that this language provides no

authority for AHCA to differentiate between qualified Medicaid

providers or selectively allow reimbursement to one qualified

provider over another in the provision of ARNP services.

Petitioner contends that Section 409.905 provides for

reimbursement determinations "across the board," to be applied

evenly to every ARNP, without a distinction as to whether the

ARNP is employed by a private company, an RHC, an FQHC, or a CHD.

42. Petitioner's contention has merit, under the

circumstances presented by this case. Section 409.905(1)

establishes that ARNP services are reimbursable, and provides no

basis for distinguishing between ARNP services provided by

private corporations and those provided by government affiliated

entities. The italicized statutory language is plainly aimed at

providing the agency flexibility in performing its legislatively

defined duties within budgetary constraints; it does not give the

agency authority to redefine its duties. The "adjustments" set

forth in the statute are in the nature of accounting or budgetary

adjustments, as opposed to substantive changes in the

reimbursable services enumerated below the underscored language,

including those for ARNPs. For example, the statute allows AHCA

to adjust the number of visits or services to comply with budget

constraints, but does not of itself allow the agency to adjust

the kind of services that are reimbursable. Similarly, the

statute allows AHCA to adjust reimbursement rates , but does not

of itself give the agency authority to declare some otherwise

qualified providers ineligible for reimbursement.

43. It is concluded that the challenged portions of Rule

59G-4.010, Florida Administrative Code, improperly enlarge or

modify the provisions of Section 409.905, Florida Statutes.

44. Section 409.908, Florida Statutes, titled

"Reimbursement of Medicaid providers," provides in relevant part:

Subject to specific appropriations, the

agency shall reimburse Medicaid providers, in

accordance with state and federal law,

according to methodologies set forth in the

rules of the agency and in policy manuals and

handbooks incorporated by reference therein.

These methodologies may include fee

schedules, reimbursement methods based on

cost reporting, negotiated fees, competitive

bidding pursuant to s. 287.057, and other

mechanisms the agency considers efficient and

effective for purchasing services or goods on

behalf of recipients. Payment for Medicaid

compensable services made on behalf of

Medicaid eligible persons is subject to the

availability of moneys and any limitations or

directions provided for in the General

Appropriations Act or chapter 216. Further,

nothing in this section shall be construed to

prevent or limit the agency from adjusting

fees, reimbursement rates, lengths of stay,

number of visits, or number of services, or

making any other adjustments necessary to

comply with the availability of moneys and

any limitations or directions provided for in

the General Appropriations Act, provided the

adjustment is consistent with legislative

intent .

* * *

(3) Subject to any limitations or directions

provided for in the General Appropriations

Act, the following Medicaid services and

goods may be reimbursed on a fee -for -service

basis. For each allowable service or goods

furnished in accordance with Medicaid rules,

policy manuals, handbooks, and state and

federal law, the payment shall be the amount

billed by the provider, the provider's usual

and customary charge, or the maximum

allowable fee established by the agency,

whichever amount is less, with the exception

of those services or goods for which the

agency makes payment using a methodology

based on capitation rates, average costs, or

negotiated fees.

(a) Advanced registered nurse practitioner

services.

45. The underscored language in Section 409.908, Florida

Statutes, is virtually identical to that discussed above in

Section 409.905, Florida Statutes. For the reasons discussed

above, it is concluded that the challenged portions of Rule 59G-

4.010, Florida Administrative Code, improperly enlarge or modify

the provisions of Section 409.908, Florida Statutes. The

analysis is not affected by the fact that Section 409.908(3)

provides that allowable services or goods must be furnished in

accordance with Medicaid policy manuals and handbooks. The

policy manuals and handbooks are adopted by reference as rules,

and rules must comport with the specific provisions of law they

purport to implement.

46. Section 409.90 81, Florida Statutes, titled

"Copayments," provides in relevant part:

(1) The agency shall require, subject to

federal regulations and limitations, each

Medicaid recipient to pay at the time of

service a nominal copayment for the following

Medicaid services:

(a) Hospital outpatient services: up to $3

for each hospital outpatient visit.

(b) Physician services: up to $2 copayment

for each visit with a physician licensed

under chapter 458, chapter 459, chapter 460,

chapter 461, or chapter 463.

(2) The agency shall, subject to federal

regulations and any directions or limitations

provided for in the General Appropriations

Act, require copayments for the following

additional services: hospital inpatient,

laboratory and X -ray services, transportation

services, home health care services,

community mental health services, rural

health services, federally qualified health

clinic services, and nurse practitioner

services. The agency may only establish

copayments for prescribed drugs or for any

other federally authorized service if such

copayment is specifically provided for in the

General Appropriations Act or other law.

47. Section 409.9081, Florida Statutes, relates exclusively

to co-payments. On its face, it appears not to be implemented by

or related to the challenged portions of Rule 59G-4.010, Florida

Administrative Code. AHCA offered no evidence for or explanation

of any connection between this statute and the challenged

portions of the rule.

48. At the final hearing and in its proposed final order,

AHCA contended that two other provisions of the governing

statutes are implemented by the challenged provisions of Rule

59G-4.010, Florida Administrative Code. Those provisions are

Section 409.912(13)(a) and 409.913, Florida Statutes.

49. Section 409.91 2(13)(a), Florida Statutes, provides:

The agency shall identify health care

utilization and price patterns within the

Medicaid program which are not cost -effective

or medically appropriate and assess the

effectiveness of new or alternate methods of

providing and monitoring service, and may

implement such methods as it considers

appropriate. Such methods may include

disease management initiatives, an integrated

and systematic approach for managing the

health care needs of recipients who are at

risk of or diagnosed with a specific disease

by using best practices, prevention

strategies, clinical -practice improvement,

clinical interventions and protocols,

outcomes research, information technology,

and other tools and resources to reduce

overall costs and improve measurable

outcomes.

50. Section 409.913, Florida Statutes, provides the

following preliminary statement:

The agency shall operate a program to oversee

the activities of Florida Medicaid

recipients, and providers and their

representatives, to ensure that fraudulent

and abusive behavior and neglect of

recipients occur to the minimum extent

possible, and to recover overpayments and

impose sanctions as appropriate.

51. Section 409.913 goes on to define the terms "abuse,"

"fraud," and "overpayment," then to list in detail the agency's

powers to curb those activities. Those powers include the

conduct of reviews, investigations, analyses and audits of

Medicaid providers; prepayment review of provider claims;

reporting of criminal violations to the Attorney General's

Medicaid Fraud Control Unit; peer review of Medicaid providers;

provider certification of submitted claims; provider retention of

records for five years and free agency access to those records;

provider repayment of for inappropriate, medically unnecessary or

excessive services; administrative remedies, including fine,

suspension, and termination of participation in the Medicaid

program; follow-up reviews of providers with a history of

overpayments; and the withholding of payments upon receipt of

reliable evidence of fraud or willful misrepresentation by the

provider.

52. Putting aside the question of the agency's authority to

rely on statutory provisions not set forth as "specific

provisions of law implemented" in the rule, these late-cited

statutes are not properly implemented by the challenged portions

of Rule 59G-4.010, Florida Administrative Code.

53. Section 409.912(13)(a), Florida Statutes, requires AHCA

to identify cost-ineffective and medically inappropriate health

care utilization and price patterns in the Medicaid program, and

permits the agency to implement "new or alternate methods of

providing and monitoring service." While the accompanying list

of methods is not exclusive, it does indicate a legislative

intent that the methods to be employed should be in the nature of

improvements in practice management techniques in utilization or

price patterns shown not to be cost effective or medically

appropriate as currently practiced.

54. No persuasive evidence was presented at hearing that

the utilization or price patterns of ARNP mobile unit providers

are not cost-effective or medically necessary, or that the agency

conducted a review specific to mobile ARNP providers to determine

their utilization or price patterns. AHCA had in hand some

anecdotal evidence of utilization problems with mobile dental

units. Rather than treating these as problems related to such

services as dental examinations, which may be performed quickly

on many patients and thus invite abuse by unscrupulous providers,

the agency simply assumed that these problems were generic to all

mobile providers, including ARNPs. Even assuming that Section

409.912(13)(a) could be implemented by the rule at issue, AHCA

failed to meet the statutory condition precedent to introducing a

"new or alternate method of providing and monitoring service:"

it failed to identify utilization or price pattern problems that

would justify the restrictions placed on ARNP mobile unit

providers by the challenged portions of the rule.

55. Section 409.913, Florida Statutes, requires the agency

to operate a program of Medicaid oversight designed to minimize

fraudulent and abusive behavior and to recover overpayments and

impose sanctions where appropriate. This requirement, and the

powers granted to the agency to meet it, substantially embody the

"pay and chase" concept that ACHA's witnesses derided at the

hearing as an inefficient, ineffective way to combat fraud and

abuse.

56. AHCA is granted some authority to take preemptive

action to deny or withhold claims, but only as to individual

providers suspected of wrongdoing or known to have committed

violations in the past. Section 409.913, Florida Statutes,

provides no authority to take preemptive "fraud and abuse"

control measures against entire classes of providers, or to

subject a subclass of ARNPs to special "fraud and abuse"

controls, absent any evidence that the class or subclass has

engaged in fraudulent or abusive activities. To the extent AHCA

may rely on a statute not expressly cited in its rule as a

"specific provision of law implemented," the challenged portions

of Rule 59G-4.010, Florida Administrative Code, enlarge and

modify the provisions of Section 409.913, Florida Statutes.

57. Section 409.913, Florida Statutes, provides that the

agency shall operate a program to oversee the Florida Medicaid

program to minimize fraudulent and abusive behavior and neglect

of recipients. The statute makes no provision for delegation of

the agency's authority to other entities. The challenged

portions of Rule 59G-4.010, Florida Administrative Code, allow

private ARNP mobile unit providers to participate in the Medicaid

program only through contractual arrangements with RHCs, FQHCs,

and CHDs. However, the rule does not require those entities to

contract with ARNPs, meaning that AHCA has delegated to those

entities the power to prevent private ARNP mobile unit providers

from participating in the Medicaid program at all. The agency's

witnesses made it clear that this delegation was a prime

motivation for drafting the rule as it did. In this respect, the

challenged portions of the rule contravene the provisions of

Section 409.913, Florida Statutes.

58. AHCA argues that the rule is justified by the overall

goals of the Medicaid program: efficiency, economy, and quality

care. AHCA argues that it is the best judge of the means by

which those goals are to be achieved, quoting a recent federal

decision: "A general and undefined requirement of efficiency and

economy for the Medicaid program as a whole is a concept for

policy makers, not for the courts." Florida Pharmacy Association

v. Cook , 17 F.Supp. 3d 1293, 1301 (N.D. Fla. 1998).

59. This argument is unpersuasive. For purposes of this

rule challenge proceeding, the ultimate "policy maker" is the

Legislature. The agency's policy decisions must be premised upon

specific statutory authority. In the Florida Pharmacy case, the

plaintiffs were attempting to challenge the ACHA's implementation

of a Medicaid pharmacy fee schedule that was expressly mandated

by the Legislature itself. In the instant case, ACHA pointed to

no persuasive legislative authorization for the challenged

portions of Rule 59G-4.010, Florida Administrative Code. The

general goals of efficiency, economy, and quality care do not

substitute for the specific authority required by Section

120.52(8)(b)&(c), Florida Statutes.

60. Finally, the challenged portions of Rule 59G-4.010,

Florida Administrative Code, are arbitrary and capricious. An

"arbitrary" decision is one not supported by facts or logic, or

despotic. A "capricious" decision is one taken irrationally, or

without thought or reason. Board of Clinical Laboratory

Personnel v. Florida Association of Blood Banks , 721 So. 2d 317,

318 (Fla. 1st DCA 1998); Board of Trustees of the Internal

Improvement Trust Fund v. Levy , 656 So. 2d 1359, 1362 (Fla. 1st

DCA 1995). In undertaking this analysis, the undersigned is

mindful that these definitions

add color and flavor to our traditionally dry

legal vocabulary, but do not assist an

objective legal analysis. If an

administrative decision is justifiable under

any analysis that a reasonable person would

use to reach a decision of similar

importance, it would seem that the decision

is neither arbitrary nor capricious.

Dravo Basic Materials Company, Inc. v. Department of

Transportation , 602 So. 2d 632, 634 n.3 (Fla. 2d DCA 1992).

61. Under any of the standards provided by the cited cases,

the challenged portion of Rule 59G-4.010 is arbitrary and

capricious. Having received anecdotal complaints of abuses by

mobile dental units, the agency leaped to the conclusion that

mobile units generally presented a fraud and abuse problem, and

crafted a rule that prohibits private ARNPs from providing mobile

unit services unless they are able to establish contractual

affiliations with RHCs, FQHCs, or CHDs. As noted above, the rule

does not require those entities to enter contracts with the

ARNPs, or even to negotiate with them. The evidence at hearing

established that CCI made substantial efforts to contract with

one of the named entities, and was uniformly rebuffed. The

practical effect of the rule has been to prohibit CCI from

providing ARNP mobile unit services to Medicaid recipients,

because the agency discovered abuses by mobile dental units.

There is no rational connection between the cause and effect of

the rule.

62. AHCA promulgated the rule without making inquiry as to

the willingness or ability of RHCs, FQHCs, or CHDs to contract

with private ARNPs. Neither was evidence provided that the

agency chose those entities based on their ability to deliver the

ARNP mobile unit services differently or better than private

providers. The agency's stated reason for choosing these

entities was not their capacity for delivering services but their

ability to provide local oversight of the ARNPs' activities.

However, Ms. Metz testified that the rule would allow an ARNP to

contract with an RHC, FQHC, or CHD anywhere in the state, thus

rendering irrational the purported local control purpose.

63. The evidence e stablished that ACHA promulgated the

challenged portions of the rule as part of a blanket amendment to

its practitioner handbooks, without thought for ARNP services in

particular. The agency conceded there was no evidence that ARNP

mobile unit providers were engaging in the abusive practices

found in the dental field, and provided no evidence as to the

pervasiveness of the abusive practices even among dental

providers. The agency provided no evidence that it even

considered whether the nature of ARNP services carries the

potential for such "Medicaid patient mill" abuses as it found in

certain mobile dental units. These factors further indicate that

the rule is arbitrary and capricious.

64. In conclusion, Petitioner established, and Respondent

failed to refute, that the challenged portions of Rule 59G-4.010,

Florida Administrative Code, enlarge, modify, or contravene the

specific provisions of law implemented, and are arbitrary and

capricious.

ORDER

Based upon the foregoing Findings of Fact and Conclusio ns of

Law, it is ORDERED that pages 1-5 and 1-6 of the ARNP Handbook,

adopted by reference in Rule 59G-4.010, Florida Administrative

Code, constitute an invalid exercise of delegated legislative

authority within the meaning of Sections 120.52(8)(c)&(e),

Florida Statutes.

DONE AND ORDERED this 27th day of June, 2000, in

Tallahassee, Leon County, Florida.

___________________________________

LAWRENCE P. STEVENSON

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 27th day of June, 2000.

COPIES FURNISHED:

Bruce Culpepper, Esquire

Ackerman, Senterfitt & Eidson, P.A.

301 South Bronough Street, Suite 200

Post Office Box 10555

Tallahassee, Florida 32302-2555

Moses E. Williams, Senior Attorney

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Fort Knox Building Three, Suite 3431

Tallahassee, Florida 32308

Sam Power, Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive

Fort Knox Building Three, Suite 3431

Tallahassee, Florida 32308

Julie Gallagher, General Counsel

Agency for Health Care Administration

2727 Mahan Drive

Fort Knox Building Three, Suite 3431

Tallahassee, Florida 32308

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is entitled

to judicial review pursuant to Section 120.68, Florida Statutes.

Review proceedings are governed by the Florida Rules of Appellate

Procedure. Such proceedings are commenced by filing one copy of

a notice of appeal with the Clerk of the Division of

Administrative Hearings and a second copy, accompanied by filing

fees prescribed by law, with the District Court of Appeal, First

District, or with the District Court of Appeal in the Appellate

District where the party resides. The notice of appeal must be

filed within 30 days of rendition of the order to be reviewed.