01-004415CON Big Bend Hospice, Inc. vs. Agency For Health Care Administration Status: Closed Recommended Order on Thursday, November 7, 2002.

Summary: Competent, substantial evidence indicates that there is a numeric need for one additional hospice program in service area 2B.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BIG BEND HOSPICE, INC., )

)

Petitioner, )

)

vs. ) Case No. 01 - 4415CON

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent, )

)

and )

)

COVENANT HOSPICE, INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

A formal hearing was conducted in this case on June 10 - 14

and 17 - 21, 2002, and July 18, 2002, in Tallahassee, Florida,

before Suzanne F. Hood, Administrative Law Judge with the

Division of Administrative Hearings.

APPEARANCES

For Petitioner: W. David Watkins, Esquire

R. L. Caleen, Jr. Esquire

Watkins & Caleen, P.A.

1725 Mahan Drive, Suite 201

Post Offic e Box 15828

Tallahassee, Florida 32317 - 5828

For Respondent: Michael O. Mathis, Esquire

Agency for Health Care Administration

2727 Mahan Drive

Fort Knox Building Three, Suite 3431

Tallahassee, Florida 32308 - 5403

For Intervenor: J. Robert Griffin, Esquire

J. Robert Griffin, P.A.

2559 Shiloh Way

Tallahassee, Florida 32308

STATEMENT OF THE ISSUE

The issue is whether Respondent properly determined that

there is a numeric need for one additional hospice program in

health planning Service Area 2B for the January 2003 planning

horizon pursuant to a revised fixed need pool projection.

PRELIMINARY ST ATEMENT

On or about July 27, 2001, Respondent Agency for Health

Care Administration (AHCA) published the fixed need pool

projections for additional hospice programs for the January 2003

planning horizon. The fixed need pool projections indicated

that the re was no numeric need for hospice programs in Service

Area (SA) 2B.

On or about August 17, 2001, AHCA published revised fixed

need pool projections for the same batch cycle in the Florida

Administrative Weekly, Volume 27, Number 33. The revised fixed

need pool projections indicated that there was a numeric need

for one additional hospice program in SA 2B.

By letter dated August 24, 2001, Petitioner Big Bend

Hospice, Inc. (BBH), advised AHCA of what BBH believed was an

error in the determination of the need for one additional

hospice program in SA 2B. AHCA responded in a letter dated

August 27, 2001, that the revised fixed need pool would not be

reversed.

By letter dated August 29, 2001, Intervenor Covenant

Hospice, Inc. (Covenant) advised AHCA that C ovenant intended to

file an application for a Certificate of Need (CON) to establish

a hospice program in SA 2B. Covenant filed the letter of intent

pursuant to the notice of the revised fixed need pool as

published in the Florida Administrative Weekly, V olume 27,

Number 33, on August 17, 2001.

Covenant filed its application with AHCA on September 6,

2001. The application was assigned CON Action No. 9475

(CON 9475).

BBH filed a Petition for Formal Administrative Proceeding

with AHCA on September 6, 2001. The Petition challenged the

validity of the revised fixed need pool for one additional

hospice program in SA 2B.

On or about November 14, 2001, AHCA referred BBH's

challenge to the revised fixed need pool to the Division of

Administrative Hear ings (DOAH). The matter was assigned DOAH

Case No. 01 - 4415CON.

On December 3, 2001, BBH filed a Response to Initial Order

in DOAH Case No. 01 - 4415CON. The response included an unopposed

request to place the case in abeyance. An Order Placing Case In

A beyance was entered that same day.

On December 20, 2001, BBH filed an unopposed Motion for

Continued Abeyance. The undersigned granted the motion in an

Order dated December 24, 2001.

On or about December 28, 2001, Covenant filed a Petition to

Intervene in DOAH 01 - 4415CON. The undersigned granted

Covenant's Petition to Intervene on January 10, 2002.

On or about December 28, 2001, AHCA announced its

preliminary agency action approving Covenant's application for

CON 9475. AHCA published notice of its de cision in the Florida

Administrative Weekly, Volume 27, Number 52, December 28, 2001.

On January 17, 2002, BBH filed a Petition for Formal

Administrative Proceeding with AHCA. The petition contested

AHCA's preliminary approval of CON 9475.

On January 2 4, 2002, the parties filed a Joint Motion for

Continued Abeyance in DOAH Case No. 01 - 4415CON. The motion was

granted on January 25, 2002.

On February 5, 2002, AHCA referred BBH's challenge to the

preliminary approval of CON 9475 to DOAH. The case was as signed

DOAH Case No. 02 - 0455CON.

On February 6, 2002, Covenant filed a Petition for

Administrative Hearing with AHCA. Covenant filed the petition

in support of CON 9475.

On February 11, 2002, the undersigned issued an Order of

Consolidation. The Or der consolidated DOAH Case Nos. 01 - 4415CON

and 02 - 0455CON.

On February 18, 2002, the parties in DOAH Case

Nos. 01 - 4415CON and 02 - 0455CON filed a Joint Response to Initial

Order. After a telephone conference on February 19, 2002, the

undersigned issued a Notice of Hearing dated February 20, 2002.

The notice scheduled DOAH Case Nos. 01 - 4415CON and 02 - 0455CON

for hearing on June 10 - 14 and 17 - 21, 2002.

On March 2, 2002, AHCA referred Covenant's Petition for

Administrative Hearing to DOAH. The Peti tion was assigned DOAH

Case No. 02 - 0880CON.

On March 12, 2002, the parties in DOAH Case No. 02 - 0880CON

filed a Joint Response to Initial Order. The response included

a request to consolidate DOAH Case Nos. 01 - 4415CON, 02 - 0455CON

and 02 - 0880CON.

On Ma rch 19, 2002, the undersigned issued a Second Order of

Consolidation. The order consolidated DOAH Case

Nos. 01 - 4415CON, 02 - 0455CON, and 02 - 0880CON for hearing

purposes. An Amended Notice of Hearing scheduled the cases for

hearing on June 10 - 1 4 and 17 - 21, 2002.

On April 2, 2002, BBH filed a Motion to Bifurcate Final

Hearing. Covenant and AHCA filed responses in opposition to the

motion on April 18, 2002. The motion was denied by Order dated

April 23, 2002.

On May 21, 2002, BBH filed a Motio n for Continuance or, in

the Alternative, Motion in Limine. Covenant and AHCA filed

responses in opposition to the motions. By Order dated June 3,

2002, the undersigned denied both motions with leave for BBH to

address the issues raised in its Motion in Limine in its

proposed recommended order.

On June 7, 2002, BBH filed a Motion in Limine and Request

for Oral Argument. During the hearing, the undersigned reserved

ruling on the motion.

During the hearing, Covenant presented testimony from the

followi ng witnesses: (a) Dale O. Knee, expert in hospice and

healthcare administration; (b) Paula Montgomery, M.D., expert in

medical care and hospice medical direction; (c) Autumn Caughey,

expert in healthcare quality improvement; (d) Pam Edwards,

expert in hos pice nursing; (e) Delia Leslie, expert in hospice

program development; (f) Anthony Martinez, expert in hospice

volunteer program development; (g) Chetta McCart, expert in

hospice AIDS program development; (h) Wayne Ralph, expert in

hospice chaplaincy; (i) Janet Wilkie, expert in hospice social

work and special programs; (j) Charles Lee, expert in hospice

education, outreach programs, and program development; (k) Mary

Cummins, expert in hospice nursing and education; (l) Julie

Patton, expert in hospice staff training, curriculum

development, and education; (m) Eric Rost, M.D., expert in

radiation oncology; (n) Amy Bajjaly, expert in human resource

management; (o) Carolyn Burbank, expert in hospice community

education; (p) Jay Daniel Cushman, expert in health planning;

(q) Christopher Comeaux, expert in hospice financial management;

and (r) Darryl Weiner, expert in healthcare finance and

financial feasibility analysis. With the exception of

Covenant's Exhibit Nos. C13 and C22, which were withdrawn,

Covenant of fered Exhibit Nos. C1 through C121 that were admitted

into evidence.

AHCA presented the testimony of the following witnesses:

(a) Jeffrey N. Gregg, expert in healthcare planning and

healthcare regulation; and (b) Laura MacLafferty, expert in

health pla nning. AHCA did not offer any exhibits for admission

into evidence.

BBH presented the testimony of the following witnesses:

(a) Elaine Bartelt, expert in hospice administration;

(b) Jessie V. Furlow, M.D., expert in general medicine and

general surgery; (c) James Everett, M.D., expert in family

practice medicine; (d) James Mabry, M.D., expert in internal

medicine, medical oncology, hematology, hospice medicine, and

administration of hospice medical programs; (e) Carol

Vanderford, R.N., expert in nursing and hospice nursing

administration; (f) Diane Tomasi, expert in community relation

and development; (g) Lisa Kalaf, expert in hospice

administration; (h) James McKnight, expert in healthcare

administration; (i) Lynne Mulder, expert in healthcare pl anning;

and (j) Robert Beiseigel, expert in healthcare finance.

BBH offered Exhibit Nos. BB1 through BB102 that were

received into evidence. BBH's exhibits included the following

deposition transcripts: (a) Dr. Julie Schindler; (b) Dr. John

Mackay; (c) Eugene Gesner; (d) Regina Compton; (e) Dr. Nancy

Chorba; (f) Joseph Brown; (g) Charles McClellan; (h) Dr. Dale

Wickstrum; (i) Dr. Diane Haisten; (j) Marlane Williams;

(k) Claire Benjamin; and (l) John Davis.

At the conclusion of the hearing, the pa rties were directed

to file separate proposed recommended orders for DOAH Case

No. 01 - 4415CON involving the revised fixed need pool projection

and DOAH Case Nos. 02 - 0455CON and O2 - 0880CON involving the

preliminary approval of Covenant's CON application . Pursuant to

the agreement of the parties, the proposed recommended orders

were due to be filed on or before September 30, 2002.

The complete Transcript of the hearing was filed on the

following dates: (a) Volumes I - VI and IX on July 16, 2002;

(b) Vo lumes VII - VIII and XI - XX on September 4, 2002; and

(c) Volumes XXI - XXII on September 6, 2002. The hearing

Transcript does not contain a Volume X.

BBH filed Proposed Recommended Orders in DOAH Case

No. 01 - 4415CON and DOAH Case Nos. 02 - 0455C ON and 02 - 0880CON on

September 30, 2002. BBH also filed a Memorandum of Law in

Support of Proposed Recommended Order on September 30, 2002.

Covenant and AHCA filed a joint Proposed Recommended Order

in DOAH Case Nos. 02 - 0455CON and 02 - 0880CON on Septem ber 30,

2002. Covenant and AHCA timely served a joint Proposed

Recommended Order in DOAH Case No. 01 - 4415CON on BBH. However,

due to an oversight, Covenant and AHCA failed to file the latter

proposed order with the Division of Administrative Hearings

unt il October 8, 2002. For the reasons set forth in Covenant's

letter dated October 11, 2002, Covenant's and AHCA's joint

Proposed Recommended Order in DOAH Case No. 01 - 4415CON is hereby

deemed timely filed.

On October 10, 2002, BBH filed a Motion to Supple ment the

Record and for Official Recognition. The motion seeks official

recognition of AHCA's Notice of Hospice Program Fixed Need Pool

as published in the Florida Administrative Weekly, Volume 28,

Number 41, October 11, 2002. The notice indicates that t he

fixed need pool projection for hospice programs planned for

January 2004 in SA 2B is zero. On October 22, 2002, Covenant

filed a response in opposition to the motion, which is hereby

denied.

The record in its entirety is inextricably shared between

DOAH Case No. 01 - 4415CON and DOAH Case Nos. 02 - 0455CON and

02 - 0880CON. Therefore, except for the respective Proposed

Recommended Orders, all orders, pleadings, volumes of

Transcript, and exhibits are located in DOAH Case

No. 01 - 4415CON.

DOAH Case No. 01 - 4415CON, relating to AHCA's fixed need

pool determination, and DOAH Case Nos. 02 - 0455CON and

02 - 0880CON, related to Covenant's CON application, are hereby

deconsolidated for purposes of issuance of separate recommended

orders in t he respective cases. Rulings on BBH's pending

motions in limine and other issues raised in BBH's memorandum of

law are denied for reasons set forth in the Conclusions of Law

section of the Recommended Order in DOAH Case Nos. 02 - 0455CON

and 02 - 0880CON.

F INDINGS OF FACT

The Parties

1. AHCA is the state agency that is responsible for

administering the CON program and laws in Florida. In

conjunction with these duties, AHCA determines, on a semi - annual

basis, the net numeric need for new hospice programs p ursuant to

Rule 59C - 1.0355(4), Florida Administrative Code (the Rule).

AHCA then publishes such need in the Florida Administrative

Weekly.

2. Community volunteers began organizing BBH in 1981.

After its incorporation in 1983 as a not - for - profit communit y

organization, BBH commenced operation under a license that

authorized it to provide hospice services only in SA 2B,

consisting of the following eight counties: Franklin, Gadsden,

Jefferson, Leon, Liberty, Madison, Taylor, and Wakulla. On

average, BBH s erves 162 patients per day. Its main office is

located in Tallahassee, Florida, but it operates the following

branch offices and/or community centers: Franklin County at

Carrabelle, Florida; Gadsden County at Quincy, Florida;

Jefferson County at Monticel lo, Florida; Madison County at

Madison, Florida; and Taylor County at Perry, Florida. BBH also

operates a twelve - bed inpatient facility, The Hospice House,

located in Tallahassee, Florida.

3. Covenant, formerly known as Hospice of Northwest

Florida, is a not - for - profit community organization that was

founded by a committee in 1982. Covenant began treating its

first patients in 1984 and is currently licensed to provide

hospice services in SA 1 and SA 2A. The following counties are

located in SA 1: Escam bia, Santa Rosa, Okaloosa, and Walton.

The following counties are located in SA 2A: Holmes,

Washington, Jackson, Calhoun, Bay and Gulf. Covenant also is

licensed to provide hospice services in 26 southern Alabama

counties. On average, Covenant serves 4 29 Florida hospice

patients per day. Its main office and its eight - bed inpatient

facility are located in Pensacola, Florida. Covenant operates

the following Florida branch offices: Okaloosa County at

Niceville, Florida; Jackson County at Marianna, Flori da, and Bay

County at Panama City, Florida. Covenant operates Florida

community centers in Okaloosa County at Crestview, Florida, and

in Walton County at Destin, Florida.

The Hospice CON Rule and Need Methodology

4. The Rule establishes criteria and st andards for

assessing the need for new hospice programs. The Rule includes

a numeric need formula for determining whether a new hospice is

needed in a particular SA. In this case, AHCA used the

following data sources to produce need projections:

(a) population projections from the Executive Office of the

Governor; (b) mortality data as reported in the applicable

Florida Vital Statistics Annual Report from the Department of

Health's Office of Vital Statistics; and (c) utilization data

based on t he number of hospice patients served by all licensed

hospice programs in the SA as reported by licensed hospice

programs.

5. Under the Rule, numeric need is demonstrated if the

projected number of unserved patients who would elect a hospice

program is 3 50 or greater. The Rule targets 350 as the minimum

number of patients that should be admitted to a hospice program

in a 12 - month period.

6. Pursuant to the Rule, AHCA calculates need for

additional facilities and services every six months or twice

annu ally. The numeric need formula contained in the Rule is a

conditional formula, which works as follows: If HPH minus HP is

equal to or greater than 350, then a net numeric need exists.

7. HPH is the projected number of patients who will elect

hospice s ervices in a particular SA during the 12 - month period

beginning in the planning horizon. Specifically, HPH is the sum

of (U65C X P1) (65C X P2) (U65NC X P3) (65NC X P4).

8. U65C is the projected number of SA resident cancer

deaths under age 65. U65C is calculated by dividing the current

annual number of cancer deaths under age 65 by the current

annual total of resident deaths, and multiplying the result by

the SA's projected annual total of resident deaths at the

planning horizon. P1 is the proj ected proportion of U65C who

will be hospice patients. P1 is calculated by dividing the

current 12 - month statewide total of hospice admissions under age

65 with cancer by the current statewide total of deaths under

age 65 from cancer.

9. 65C is the pro jected number of SA resident cancer

deaths age 65 and over. 65C is calculated by dividing the

current annual number of cancer deaths age 65 and over by the

current annual total of resident deaths, and multiplying the

result by the SA's projected annual to tal of resident deaths at

the planning horizon. P2 is the projected proportion of 65C who

will be hospice patients. P2 is calculated by dividing the

current 12 - month statewide total of hospice admissions age 65

and over with cancer by the current statewi de total of deaths

age 65 and over from cancer.

10. U65NC is the projected number of SA resident deaths

under age 65 from all causes except cancer. U65NC is calculated

by dividing the current annual number of deaths under age 65

from all causes except cancer by the current annual total of

resident deaths, and multiplying the result by the SA's

projected annual total of resident deaths at the planning

horizon. P3 is the projected proportion of U65NC who will be

hospice patients. P3 is calculated by div iding the current

12 - month total of hospice admissions under age 65 with diagnoses

other than cancer by the current statewide total of deaths under

age 65 from causes other than cancer.

11. 65NC is the projected number of SA resident deaths age

65 and o ver from all causes except cancer. 65NC is calculated

by dividing the current annual number of deaths age 65 and over

from all causes except cancer by the current annual total of

resident deaths, and multiplying the result by the SA's

projected annual tot al of resident deaths at the planning

horizon. P4 is the projected proportion of 65NC who will be

hospice patients. P4 is calculated by dividing the current

12 - month statewide total of hospice admissions age 65 and over

with diagnoses other than cance r by the current statewide total

of deaths age 65 and over from causes other than cancer.

12. In other words, HPH is a projection of the number of

persons who will elect hospice care in a particular SA,

irrespective of their normal place of residence. It is a

compilation of projected hospice usage for four age and

diagnostic classes. Thus, the need methodology and need

projection is specific to the particular demographics and

diagnostic experiences of a SA.

13. HP represents the number of admissions to hospice

programs serving a SA during the most recent 12 - month period

ending on June 30 or December 31. The number is derived from

reports on standardized forms submitted to AHCA by licensed

hospice programs every six months.

14. The Rule uses a sta tewide use rate as a normative

standard for each age and diagnostic category. The use rate is

a ratio of the hospice admissions in a particular age and

diagnostic class to deaths in the same age and diagnostic class

for the state as a whole. When applied to any particular

hospice SA, the use rate projects what the hospice admissions

should be in that SA, based upon the performance of the state as

a whole, rather than the actual historical penetration rate in

the SA. The need methodology thus provides tha t the hospice

penetration rate in a SA should equal the state average

penetration rate.

15. The need methodology does not assume that the level of

hospice services being provided in a particular area is

sufficient to meet the needs of the area. This is appropriate

because hospice is a fast - growing and relatively new service

that has been widely available only since the early 1980s. Not

only has there been a rapid increase in hospice penetration

rates but also there is a wide variation in hospice penetr ation

from SA to SA.

16. The numeric need formula set forth in the Rule

provides a reasonable and appropriate methodology to project

need for additional hospice services. In this case, AHCA's

procedures for collecting and analyzing data and for calcula ting

numeric need were consistent with the Rule.

Publication of the Fixed Need Pools

17. AHCA initially published the "Florida Need Projections

for Hospice Programs: Background for Use in Conjunction with

the July 2001 Batching Cycle for the January 200 3 Hospice

Planning Horizon." The initial publication resulted a numeric

need in SA 2B of 340. In other words, there was no net numeric

need for an additional hospice program in SA 2B.

18. AHCA subsequently published a revision to the fixed

need pool after it was notified of some errors in the data used

in the numeric need calculation. The errors principally

involved AHCA's failure to update the population data from a

previous batching cycle.

19. The necessity of a revised publication created an

o pportunity for hospices to submit revised admissions data,

which was then incorporated into the second computations of the

need methodology. Several hospices took advantage of this

opportunity.

20. Using the revised data, AHCA determined that the

proj ected number of hospice admissions in SA 2B would be 1209

patients (HPH = 1209). AHCA also determined that the number of

patients served by SA 2B's licensed provider, BBH, for the

relevant period was 858 patients (HP = 858). The difference

between these calculations was 351, indicating a need for an

additional hospice program in SA 2B. AHCA published the revised

fixed need pool determination on August 17, 2001.

Counting Admissions

21. At issue here is the definition and use of the term

"admissions" on AHCA's semiannual utilization report form

(report form). Item 1 on the report form indicates that hospice

providers should show the "[n]umber of patients admitted to your

program (unduplicated) for the following categories . . . ."

The reporting block a lso indicates that the data to be included

are "New Patients Admitted."

22. The term "unduplicated" means admissions in the

reporting period, exclusive of those from a prior reporting

period. In other words, the same admission is not counted and

reporte d twice. For example, a patient initially admitted in

one reporting period, subsequently discharged, and readmitted in

the following reporting period should be reported as an

admission in the prior reporting period and as an admission in

the following rep orting period. Likewise, a patient who

initially is admitted, discharged, and subsequently readmitted

in the same reporting period is counted as two admissions. This

is true whether the second admission occurs in the same SA or in

a different SA and whet her the second admission is to the same

or a different hospice provider. The second admission relates

to the same patient but is counted as a "new patient admitted"

each time the patient is admitted as long as the same admission

is not counted twice on a report form.

23. The counting of unduplicated admissions is consistent

with the language of the Rule, which requires hospice providers

to "indicate the number of new patients admitted during the six -

month period . . . ." It also is consistent with the language

of the Rule that requires the report form to show "[t]he number

of admissions during each of the six months covered by the

report by service area of residence."

24. The "service area of residence" is not defined by the

Rule. AHCA interprets t he term to mean the location of patients

when they are admitted regardless of the place that they

consider their permanent residence. AHCA's interpretation of

the term "service area of residence" is reasonable and

appropriate. The fact that admissions ar e counted for each SA

regardless of a patient's normal place of residence, while

resident death data is derived from information contained in

death certificates showing the deceased person's permanent

residence (no matter where the death occurred) does not change

this result or improperly skew the hospice use rates.

25. In the course of treatment, a hospice patient may

account for two or more admissions to the same or another

hospice, in the same or another service area, during a period of

time that cove rs two reporting periods. This could happen for a

number of reasons, including but not limited to the following:

(a) a patient may temporarily decide that he or she no longer

desires hospice services resulting in an admission, a discharge,

and second adm ission to the same or another hospice in the same

or another SA; (b) a patient may decide to relocate and receive

services in another SA with the same or another hospice

resulting in separate admissions in both SAs; and (c) a patient

may elect to transfer from one hospice to another hospice in the

same SA resulting in a separate admission for each hospice.

26. All Florida hospices, including BBH, count a patient

as having generated two admissions when the patient is admitted,

discharged, and readmitted t o the same hospice in the same SA.

They also count a patient as having generated a second admission

when the patient transfers or relocates to their hospice from

another hospice in the same or another SA.

27. AHCA's report form requires hospices that s erve

multiple SAs to separate their admissions by SA to enhance the

verisimilitude of the counts. Twelve hospice providers,

including Covenant, serve multiple SAs in Florida. Under the

Rule, multiple SA providers, like Covenant and unlike BBH, count

admi ssions when a patient transfers from the provider's program

in one SA to the same provider's program in another SA.

28. The ability to count an admission in both SAs when a

patient transfers from one SA to another SA but continues to

receive services fr om the same hospice, does not result in

impermissible "double counting" or give multiple SA providers a

competitive edge. To the contrary, it is consistent with AHCA's

interpretation of an unduplicated admission. More importantly,

AHCA's methodology of c ounting of such admissions is consistent

with the method that Medicare uses to count admissions and with

the way AHCA counts admissions in determining numeric need for

nursing homes, hospitals, and open - heart programs.

29. For the reporting period at is sue here, Covenant

reported zero admissions based on transfers of its patients

between SA 1 and SA 2A. Moreover, there is no persuasive

evidence that allowing any multiple SA provider to count

transfers of its patients from one of its SAs to another of it s

SAs as two separate admissions has adversely impacted the fixed

need pool determination in this case.

30. Covenant is not the only hospice provider in SA 1 and

SA 2A. No doubt, some patients in one of Covenant's SAs

transferred to and from Covenant a nd the alternate providers in

SA 1 and SA 2A or other Florida SAs with no corresponding death

being recorded in one of Covenant's SAs. Covenant surely served

some Alabama patients who sought hospice care in Florida but

whose deaths were not counted as res ident deaths in any

Florida SA. At least for the calendar years 1999 and 2000,

Covenant experienced a net in - migration of patients while BBH

experienced a net out - migration of patients for the same

periods. Even so, there is no persuasive evidence tha t in -

migration and out - migration of patients has affected the

validity of the numeric need at issue in this proceeding.

31. AHCA consistently has counted admissions in this

manner since the Rule was adopted and implemented. Counting

admissions by "serv ice area of residence" as interpreted by AHCA

ensures that all patients served are counted, even those who are

homeless or have a permanent residence in another state.

32. AHCA's interpretation of an admission based on

"service area of residence" also i s consistent with Section

400.601(6), Florida Statutes, which provides that hospice

services may be provided in "a place of temporary or permanent

residence used as the patient's home . . . ." Thus, a patient's

residence could be a private home, an assist ed living facility,

a nursing home, or a hospital regardless of the location of the

patient's legal or permanent residence.

33. The State of Florida has an interest in knowing how

much hospice care is provided in each SA. The application of

the Rule p romotes that interest because HPH projects the number

of patients in a particular SA who will choose hospice care in

the applicable time frame. HP is the number of patients

admitted to hospice programs during the most recent 12 - month

period. HPH and HP m easure the utilization of hospice care in a

SA and not the number of residents of an SA who will elect

hospice care or who are admitted to hospice care.

34. In calculating the numeric need in this case, the

number of admissions was based on data for th e year ending

June 2001. The resident deaths were based on data for the

period ending December 2000. The time periods do not match

because the Rule requires AHCA to use the most recent mortality

data from the Department of Health's Office of Vital Stat istics.

The time periods are never the same and can differ from six

months to one year. Thus, there is no intent under the Rule to

have a one - to - one correspondence between the deaths that are

used in determining the P factors and the admissions that are

multiplied by the factors. Every SA in the state is treated

consistently. No SA is disadvantaged by this characteristic of

the Rule's need methodology.

35. The batching cycle at issue here is the only one since

the Rule was implemented that showed a fixed need for another

hospice program in SA 2B. Until now, AHCA has never

preliminarily approved any applicant where the net numeric need

was only 351. The numeric need projection made in April 2002

showed no fixed need in SA 2B for another hospice prog ram. None

of these facts serve to undermine the validity of AHCA's

determination of numeric need in this case.

The Revised Fixed Need Pool Determination

36. The initial fixed need pool projection published by

AHCA did not indicate that there was a nu meric need for an

additional hospice in SA 2B. However, the initial publication

was based on incorrect population projections.

37. AHCA published a revised fixed need pool projection

based, in part, on the updated and most current population data.

Tha t revision alone would have resulted in a numeric need for an

additional hospice program in SA 2B, i.e. HPH - HP equaled 350.

38. However, other corrections also were made based on

revisions to semiannual utilization reports of several hospices.

BBH's revised report form increased its HP number by four.

Another hospice, Hospice of Southwest Florida, reported a

substantial revision. The total revisions resulted in a numeric

need for one additional hospice program in SA 2B because

HPH - HP equaled 351.

39. The revised fixed need pool determination was

correctly calculated in accordance with AHCA's application and

interpretation of all rules relating to fixed need pool

determination. AHCA's interpretation and application of the

rules is reasonabl e and appropriate. Therefore, the fixed need

pool projection at issue here is valid and correct. As

discussed below, there is no persuasive evidence that BBH

over - reported its admissions.

BBH's Reported Admissions

40. An admission consists of several components: (a) a

physician's diagnosis and prognosis of a terminal illness; (b) a

patient's expressed request for hospice care; (c) the informed

consent of the patient; (d) the provision of information

regarding advance directives to the patient; and (e) performance

of an initial professional assessment of the patient. At that

point, the patient is considered admitted. A patient does not

have to sign an election of Medicare benefits form for hospice

care prior to being deemed admitted.

41. BBH report ed 858 admissions for the July 2000 through

June 2001 reporting period. These admissions included patients

who had completed the admission process outlined above.

42. For accounting and billing purposes only, BBH

separates its admissions into patients who have authorized the

election of Medicare benefits and those who have not made that

election. For the latter group, BBH uses the acronym WAP as a

billing code. BBH provides WAP patients with services but does

not bill them for those services because B BH is unable to report

them to Medicare for reimbursement. BBH does not bill patients

for services that it has no intention of collecting.

43. In fact, BBH's billing department initially logs all

patients in as WAPs. BBH's admission policy states that

patients who will not be accepting services immediately should

be entered as a WAP with reasons and follow - up dates to initiate

regular services. The admission specialist at BBH enters a

patient as a WAP then gets the attending physician's signature

on t he interdisciplinary care plan and certification of terminal

illness. The admission specialist also requests the patient's

medical record and completes the other admission steps. The WAP

designation is not removed until the admission process is

complete and the patient has elected the Medicare benefit. The

WAP patient is not counted as an admission for purposes of

reporting to AHCA until the admission process is complete.

44. Occasionally, a WAP patient dies before the admission

process is complete. In that case, the patient is not counted

as an admission. Sometimes a WAP patient dies after completing

the admissions process but before electing the Medicare benefit

or receiving any additional hospice services. It is not

necessary for a hospice to dev elop a plan of care in order for a

patient to be considered admitted. An admitted patient has a

right to choose or refuse additional services. In such a case,

the patient is still counted as an admission for purposes of

reporting to AHCA.

45. BBH's pr actice of including WAP patients who have

completed the admission process in its count of admissions is

consistent with AHCA's interpretation of the Rule. AHCA's

interpretation of the Rule is reasonable and appropriate in this

regard. The fact that 10 pe rcent of BBH's admissions are WAP

patients while Covenant has no such patients does not change

this result.

46. BBH's financial department also is responsible for

submitting reports to the Department of Elder Affairs (DEA).

Therefore, BBH has filed rep orts with DEA consistent with its

Medicare reports and has not included the WAP patients.

CONCLUSIONS OF LAW

47. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of these

proceedings. Sections 120.569 and 120.57(1), Florida Statutes.

Hospice Care in General

48. Section 400.6005, Florida Statutes, sets forth the

Legislature's findings and intent regarding terminally ill

persons who are no longer seeking curative treatment and their

families. First, the y "should have the opportunity to select a

support system that permits the patient to exercise maximum

independence and dignity during the final days of life."

Section 400.6005, Florida Statutes. Second, "hospice care

provides a cost - effective and less i ntrusive form of medical

care while meeting the social, psychological, and spiritual

needs" of the patients and their families. Id.

49. Section 400.601, Florida Statutes, states as follows

in relevant part:

(6) "Hospice services" means items and

s ervices furnished to a patient and family

by a hospice, or by others under arrangement

with such a program, in a place of temporary

or permanent residence used as the patient's

home for the purpose of maintaining the

patient at home; or, if the patient nee ds

short - term institutionalization, the

services shall be furnished in cooperation

with those contracted institution or in the

hospice inpatient facility.

* * *

(9) "Plan of care" means a written

assessment by the hospice of each patient's

and fami ly's needs and preferences, and the

services to be provided by the hospice to

meet those needs.

50. Hospices must provide services that are "tailored to

specific needs and preferences of the patient and family at any

point in time throughout the length o f care for the terminally

ill patent and during the bereavement period." Section 400.609,

Florida Statutes. The core services include "nursing services,

social work services, pastoral or counseling services, dietary

counseling, and bereavement counseling services." Section

400.609(1)(a), Florida Statutes. Other services, such as

physical therapy, home health aide services, provision of

medical supplies and durable medical equipment, and funeral

services must be provided or arranged for by hospices, as

n eeded, to meet the palliative and support needs of the patient

and family. Section 400.609(1)(a), Florida Statutes.

51. "Hospice care and services provided in a private home

shall be the primary form of care." Section 400.609(2), Florida

Statutes. Ho wever, hospices also may provide services in a

residential setting other than the home and in an inpatient

facility such as a hospital. Sections 400.609(3) and

400.609(4), Florida Statutes. Thus, it is clear "that a patient

may be admitted legally to hos pice while in the hospital no

matter where the patient resides or the location of the

patient's permanent residence." Hernando - Pasco Hospice, Inc. v.

Agency for Health Care Administration and LifePath, Inc. ,

DOAH Case No. 00 - 1067 (Recommended Order, M ay 18,

2002)(hereinafter referred to as LifePath ).

Admissions and Resident Deaths

52. Section 400.6095, Florida Statutes, governs patient

admissions and states as follows in pertinent part:

(2) Admission to a hospice program shall

be made upon a diagno sis and prognosis of

terminal illness by a physician licensed

pursuant to chapter 458 or chapter 459 and

shall be dependent upon the express request

and informed consent of the patient.

(3) At the time of admission, the hospice

shall inquire whether adv ance directives

have been executed pursuant to chapter 765,

and if not, provide information to the

patient concerning the provision of that

chapter. The hospice shall also provide the

patient with information concerning patient

rights and responsibilities pursuant to

s. 381.206.

(4) The admission process shall include a

professional assessment of the physical,

social, psychological, spiritual, and

financial needs of the patient. This

assessment shall serve as the basis for a

plan of care.

53. Section 400.6095, Florida Statutes, goes on to

describe the plan of care. The statute does not make "reference

to the existence of a plan of care or initiation of care for the

patient as a prerequisite to the patient having achieved the

status of 'admissi on' to the hospice." LifePath . Under the

statute, "it appears that the admission process is considered

complete once the appropriate assessments have been conducted in

the form of a professional assessment." LifePath .

54. LifePath has resolved some of the questions at issue

here. First, admissions should be counted based on the

patient's location at the time of admission and not in the SA of

his or her usual place of residence. This conclusion is

supported by AHCA's interpretation of the Rule, whic h requires

admissions to be reported by "service area of residence." Rule

59C - 1.0355(9)(a)2, Florida Administrative Code.

55. In deciding that admissions are counted at the

location of the patient at the time of admission, it necessarily

follows that AH CA is not required to construe the Rule as

requiring a correlation between the admission and death of a

patient. The parties agree that under some circumstances, a

patient may generate more than one admission in the same or

subsequent reporting period, i. e., an admission to and discharge

from one hospice provider followed by an admission to another

hospice provider in the same SA. Therefore, there can never be

a direct correlation between the admissions and deaths of

patients.

56. Additionally, Rule 5 9C - 1.0355(4)(a), Florida

Administrative Code, specifically requires resident deaths to be

calculated using data, which is available from the Department of

Health's Office of Vital Statistics at least three months prior

to publication. This data is collect ed based on information

contained in death certificates that indicate the deceased

person's permanent residence no matter where the death occurred.

Because admissions are counted in the SA where the patient is

located at the time of admission regardless o f the patient's

usual residence and resident deaths are counted in the SA of

permanent residence regardless of where the death occurred, a

correlation between admissions and deaths is not possible, much

less required.

57. The second issue that LifePath resolved is that the

patient is admitted when the admissions process outlined above

is complete. It is not necessary for the hospice to develop a

plan of care or provide additional services. The patient does

not have to elect Medicare benefits to be admi tted. Therefore,

BBH correctly and accurately reported admissions of all patients

who had completed the admissions process. This is true even

though some of the patients never elected Medicare benefits and

never received additional services under a plan of care.

58. LifePath did not resolve a remaining question at issue

here. The issue is whether a hospice may "double count" the

admissions of the same patient who is admitted, discharged, and

readmitted, or who transfers or relocates, to the same or

di fferent hospice, in the same or different SA, in the same or

subsequent reporting period.

59. BBH particularly objects to the scenario in which

hospices that serve more than one SA, such as Covenant, are

allowed to count the admission of a patient in on e of its SAs

and to count the same patient as a second admission when the

patient transfers to the provider's other SA without a break in

service. BBH makes this objection, claiming that Covenant has

an unfair competitive advantage, despite the fact that Covenant

counted no such double admissions for the time period at issue

here. Moreover, there is no persuasive evidence that allowing

any multiple SA provider to count transfers of its patients from

one of its SAs to another of its SAs as two separate adm issions,

has adversely impacted the fixed need pool determination in this

case.

60. BBH asserts that LifePath implicitly rejected the

propriety of double - counting of admissions of the same patient

admitted in one SA and subsequently transferred to its p rogram

in a different SA. LifePath, Inc., was licensed to serve

hospice patients in SA 6A and SA 6B, while Hernando - Pasco

Hospice, Inc., was licensed in SA 3D and SA 5A. AHCA initially

determined that there was a need for one additional hospice in

SA 6A. However, based on revised report forms submitted by

LifePath, Inc., AHCA recalculated numeric need formula

determining that there was zero need for a new hospice in SA 6A.

Hernando - Pasco Hospice, Inc., challenged the revised fixed need

pool projection.

61. In LifePath , the revised report forms submitted by

LifePath, Inc., subtracted 36 admissions from its count of

patients served in SA 6B and added them to its count of patients

served in SA 6A. LifePath, Inc., made this change because the

36 patients w ere physically located in hospitals in SA 6A when

they were admitted before returning to their homes in SA 6B for

continued hospice services.

62. LifePath, Inc.'s, revised reports also subtracted four

admissions from its count of patients served in SA 6 A and added

them to its count of patients served in SA 6B. LifePath, Inc.,

made this change because the four patients were physically

located in hospitals in SA 6B when they were admitted before

returning to their homes in SA 6A for continued hospice

serv ices.

63. LifePath, Inc., did not count the patients as having

been admitted in both of its SAs. AHCA accepted LifePath,

Inc.'s, revised reports with full knowledge of the

circumstances.

64. In his Findings of Fact, the Administrative Law Judge

in L ifePath stated as follows:

27. . . . LifePath's ability to admit in

one service area and provide treatment later

in a different services area makes this case

somewhat unusual. There are few hospices in

Florida that provide service in more than

one se rvice area. For that reason, the

issues presented in this case have not

surfaced in the past. The more common

situation for when a patient is admitted in

a hospital in one service area and provided

hospice services there and then returns to a

permanent r esidence in another service area

would call for the patient to be admitted to

two different hospices at two different

times. In such a case, for the sake of

consistency, the Agency "would want to

see . . . an admission to the program in

[the service ar ea in which the hospital was

located]" (Tr.934) and then a second

admission to the hospice in the service area

in which the patient had a permanent

residence when the patient moved back home

or to a location in the second service area.

This expectation of the Agency, however, is

not required by the rule. It is one that

apparently has emerged in the context of

this case.

* * *

34. The Agency interprets "service area

of residence" not to mean the service area

where the patient has a "permanent

residenc e," but the service area which is

the patient's "location at the time of

admission."

35. There are good reasons in support of

the AHCA's interpretation. Hospitalized

hospice patients come from a population that

has been mobile. Some have permanent

res idences in foreign countries, other

states (so - called "snowbirds") or in other

counties in the state or different health

planning service areas than the one in which

they are hospitalized. Some hospice

patients may have no permanent residence at

all, as i n the case of the homeless. To

report as admissions only those who reside

permanently in a service area in Florida by

that service area and to not report the

patient as an admission when admitted in the

service area in which the patient is

hospitalized or located at the time of

admission would omit many admissions. As

Mr. Gregg testified on behalf of the Agency,

the numeric need formula produces the "most

accurate projection of need by having the

best data and the most complete data;

therefore you would w ant every possible

admission to be reported." (Tr. 958).

65. In this case, AHCA is not taking an inconsistent

position from the one it took in LifePath . The question of

counting multiple admissions of the same patient was not

addressed in that case. Instead, AHCA's interpretation of the

Rule here is consistent with its position in LifePath , i.e.,

every possible admission should be counted.

66. Here, as in LifePath , AHCA accepted the revised report

forms with full knowledge that unduplicated but mu ltiple

admissions were being reported for some of the patients. In

doing so, AHCA relied on its interpretation of the terms "new

patients admitted" and "service area of residence" in the Rule

as meaning that every admission or readmission of the same

pati ent should be counted in any of the following situations:

(a) a patient may temporarily decide that he or she no longer

desires hospice services resulting in an admission, a discharge,

and second admission to the same or another hospice in the same

or ano ther SA; (b) a patient may decide to relocate and receive

services in another SA with the same or another hospice

resulting in separate admissions in both SAs; and (c) a patient

may elect to transfer from one hospice to another hospice in the

same SA resul ting in a separate admission for each hospice.

67. AHCA's interpretation of the Rule is appropriate and

reasonable. It results in the most accurate projection of

hospice need ensuring that every possible admission is reported

by "service area of reside nce."

68. AHCA's interpretation of the Rule is not contrary to

the plain language of the Rule. An agency's interpretation of

its own rules is entitled to great weight and will not be

disregarded unless clearly erroneous, Orange Park Kennel Club,

Inc. v . State, Department of Business Regulation , 644 So. 2d 574

(Fla. 1st DCA 1994), even if not the sole interpretation, the

most logical, or even the most desirable. State, Board of

Optometry v. Florida Society of Ophthalmology , 538 So. 2d 878,

885 (Fla. 1st DCA 1988).

69. AHCA's approach to counting admissions is consistent

with the definition of HP, which is "the number of patients

admitted to hospice programs serving an area during the most

recent 12 - month period." Rule 59C - 1.0355(4)(a), Florida

Adminis trative Code. If the definition of HP does not square

with the Rule's reporting requirement, it is a matter of

internal rule consistency that AHCA should address. As a matter

of attempting to construe the terms of its rule to achieve

consistency in an ma nner that most effectuates the purposes of

the Rule, AHCA's interpretation is not clearly erroneous.

70. Perhaps BBH's numerous arguments about what

constitutes an admission and what is not an admission of the

same patient should be incorporated into a n agency rule but that

is a decision for AHCA on another day. This is not a

rule - making proceeding. It is a proceeding challenging the

validity of agency action: revision of a fixed need pool.

71. Whatever merit BBH's many arguments have with re gard

to what AHCA's policy should be on the subject of admissions,

and particularly the multiple admissions of the same patient,

there is nothing in law that compels a result different from the

one last reached by AHCA and maintained throughout this

procee ding.

72. BBH has failed to carry its burden of proof to

overturn AHCA's revised fixed need pool determination showing a

net need for an additional hospice program in SA 2B, as

published on August 17, 2001.

RECOMMENDATION

Based on the foregoing Findi ngs of Facts and Conclusions of

Law, it is

RECOMMENDED:

That AHCA enter a final order determining the fixed need

pool for SA 2B for the January 2003 planning horizon to be one.

DONE AND ENTERED this 7th day of November, 2002, in

Tallahassee, Leon Count y, Florida.

___________________________________

SUZANNE F. HOOD

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 - 6 847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 7th day of November, 2002.

COPIES FURNISHED :

J. Robert Griffin, Esquire

J. Robert Griffin, P.A.

2559 Shiloh Way

Tallahassee, Florida 32308

Michael O. Mathis , Esquire

Agency for Health Care Administration

2727 Mahan Drive

Fort Knox Building Three, Suite 3431

Tallahassee, Florida 32308 - 5403

W. David Watkins, Esquire

R. L. Caleen, Jr., Esquire

Watkins & Caleen, P.A.

1725 Mahan Drive, Suite 201

Post Office Box 15828

Tallahassee, Florida 32317 - 5828

Lealand McCharen, Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

Valda Clark Christian, General Counsel

Agency for Health Care Administration

2727 Mahan Drive

Fort Knox Building, Suite 3431

Tallahassee, Florida 32308

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Or der should be filed with the agency that

will issue the final order in this case.