04-000216RP Florida Association Of Rehabilitation Facilities, Inc. vs. Department Of Children And Family Services And Agency For Health Care Administration Status: Closed Settled and/or Dismissed prior to entry of RO/FO on Wednesday, July 20, 2005.

Summary: Portions of the waiver program handbook were invalid exercises of delegated legislative authority. The limitation of services for residential rehabilitation services, respite care, and adult day training were determined to be valid.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA ASSOCIATION OF )

REHABILITATION FACILITIES, )

INC., )

)

Petitioner, )

)

vs. ) Case No. 04 - 0216RP

)

DEPARTMENT OF CHILDREN AND )

FAMILY SERVICES AND AGENCY FOR )

HEALTH CARE ADMINISTRATION, )

)

Respondent s . )

___________________ ____________ )

ASSOCIATION FOR RETARDED )

CITIZENS OF FLORIDA, INC., )

)

Petitioner, )

)

vs. ) Case No. 04 - 0258RP

)

DEPARTMENT OF CHILDREN AND )

FAMILY SERVICES AND AGENCY FOR )

HEALTH CARE ADMINISTRATION, )

)

Respondent s . )

)

FINAL ORDER

Pursuant to notice, a final hearing was held in these cases

on May 3 through 7 and 10 through 13, 2004, in Tallahassee,

Florida, before Susan B. Harrell, 1 a designated Admin istrative

Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioners: Gary J. Clarke, Esquire

Frank P. Rainer, Esquire

Sternstein, Rainer & Clarke, P.A.

411 East College Avenu e

Tallahassee, Florida 32301

For Respondent: M. Catherine Lannon, Esquire

Stephanie Daniel, Esquire

Chesterfield Smith, Esquire

Office of the Attorney General

Ad ministrative Law Section

The Capitol, Plaza Level 01

Tallahassee, Florida 32399 - 1050

STATEMENT OF THE ISSUE

Whether proposed amendments to Florida Administrative Code

Rule 59G - 8.200 are invalid exercises of delega ted legislative

authority.

PRELIMINARY STATEMENT

On January 16, 2004, each Petitioner individually filed

challenges to proposed rule amendments to Florida Administrative

Code Rule 59G - 8.200 and challenges to a non - rule policy. The

proposed rule challenges were assigned Case Nos. 04 - 0216RP and

04 - 0258RP. The challenges to a non - rule policy were assigned

Case Nos. 04 - 0217RU and 04 - 0259RU. By order dated February 10,

2004, the cases were consolidated.

Respondents filed a Motion to Dismiss the Joint Amended

Petition to Challenge Proposed Rule 59G - 8.200, and the motion

was heard by telephonic conference call on April 20, 2005. The

undersigned orally granted the motion as it pertained to the

Department of Children and Family Services (DCF).

At the final hear ing, Petitioners called the following

witnesses: Terry Farmer, John Hall, Donna Fassett, Sheldon J.

Hershman, Nancy Waglow, Jean - Marie Moore, James G. Weeks,

Suzanne Sewell, Deborah Linton, Keith Young, and Michelle

Kathleen Brantley. Petitioners' Exhibi ts 1 through 27 were

admitted. Petitioners' Exhibit 28 was proffered. Petitioners

submitted the two - volume deposition of Dennis Haas, which was

received in evidence.

At the final hearing, Petitioners requested that

portions of Karen Henderson's deposi tion be admitted as

rebuttal testimony. Petitioners, pursuant to leave granted by

the undersigned, filed portions of the deposition after the

final hearing. Respondent Agency for Health Care

Administration (AHCA) filed Respondent's Motion to Strike or t o

Deny Petitioner's Rebuttal Submittal of Deposition Transcript of

Karen Henderson. Having considered the submittal and response,

it is ORDERED that the deposition testimony is admitted in

evidence.

AHCA called the following witnesses: Michelle Kathleen

Brantley, Karen Henderson, Denise T. Arnold, Kerry Schoolfield,

and John Hall. AHCA's Exhibits 1, 3 through 11, 13 through 19,

21 through 26, 33, 34, 41, 46, 48, 50 through 54, 58 through 65,

and 93 through 97 were admitted in evidence . Official

recognit ion was taken of AHCA's Exhibits 74 and 84, and Florida

Administrative Code Chapter 65 - 29.

Joint Exhibits 1 through 27 were admitted in evidence.

During the final hearing Respondent AHCA announced that it

had filed a Notice of Rule Development with regard to the matter

alleged to constitute an unpromulgated rule. By separate, order

Case Nos. 04 - 0217RU and 04 - 0259RU have been placed in abeyance.

The 12 - volume Transcript was filed on July 27, 2005. On

September 4, 2005, the parties filed their proposed orde rs,

which have been considered in rendering this Final Order.

FINDINGS OF FACT

1. AHCA is designated as the single state agency for

administering the Federal/State Medicaid Program pursuant to

Section 409.902, Florida Statutes (2003). 2 The Florida Medica id

Developmental Services Home and Community - Based Services Waiver

Program (HCBS or DS waiver services) is one of several Medicaid

waiver programs. HCBS is designed to provide services to

individuals with developmental disabilities to allow them to

remain in the community and avoid placement in institutions.

2. AHCA and DCF have entered into an agreement, by which

DCF has agreed to implement the HCBS program. AHCA retains the

authority and responsibility to issue policy, rules, and

regulations concerning the HCBS program, and DCF is required to

operate the program in accordance with those policies, rules,

and regulations.

3. The Florida Association of Rehabilitation Facilities,

Inc. (FARF) , is a not - for - profit 501(c)3 corporation, and a

state - wide associ ation of corporate organizations providing

services to handicapped and developmentally disabled persons.

Of the 61 members of FARF, 51 are Medicaid home and community -

based waiver providers who provide services to developmentally

disabled persons, who are recipients of the Florida Medicaid

program and are enrolled under the HCBS waiver program.

4. The Association for Retarded Citizens of Florida, Inc.

(ARC), a not - for - profit corporation, is a state - wide association

which works through advocacy, education, and training to reduce

the incidence of mental retardation and other developmental

disabilities. It has 43 aff iliate chapters located through out

the state. Of those affiliate chapters, 40 are Medicaid

providers, which provide Medicaid services to develo pmentally

disabled persons who are recipients of the Florida Medicaid

program and are enrolled under the HCBS waiver program. ARC

also has approximately 1,500 individual members. Between 25 to

50 percent of the individual members are either self - advocate

recipients of services from the HCBS waiver program or family

members or guardians of HCBS waiver program recipients.

5. On January 17, 2003, AHCA published a Notice of Rule

Development concerning proposed amendments to Florida

Administrative Code Rule 59G - 8.200. The proposed amendments

incorporated by reference changes to a handbook entitled

"Developmental Services Waiver Services and Coverage and

Limitations Handbook" (Handbook). AHCA published its Notice of

Proposed Rule on July 25, 2003. A First N otice of Change was

published on October 17, 2003, and a Second Notice of Change was

published on November 26, 2003. A Notice of Additional Hearing

was published on November 26, 2003, and a final public hearing

on the proposed amendments was held on Janua ry 6, 2004.

6. The Handbook's purpose is stated in the Handbook as

follows:

The purpose of the Medicaid handbooks is to

furnish the Medicaid provider with the

policies and procedures needed to receive

reimbursement for covered services provided

to eligibl e Florida Medicaid recipients.

7. The Handbook provides that a provider must have a

signed DS Waiver Services Agreement with DCF in order to be

eligible to provide DS waiver services. The Developmental

Disabilities Program Medicaid Waiver Services Agree ment (DS

Waiver Services Agreement) requires the provider to comply with

all the terms and conditions contained in the Handbook for

specific services rendered by the provider.

8. During the rulemaking process, AHCA involved

stakeholders in the developmen t of the amendments to Florida

Administrative Code Rule 59G - 8.200, including changes to the

Handbook. A stakeholder is an organization or individual who

has a primary interest in the HCBS waiver program or is directly

affected by changes in the program. At the final hearing,

Shelly Brantley, former bureau chief of AHCA's Medicaid Program

Development, correctly described ARC and FARF as stakeholders

for the HCBS waiver program.

9. Petitioners conducted surveys of their membership to

determine whether th e proposed changes to the Handbook would

adversely affect their members. Surveys were also conducted to

determine whether any of the members were small businesses as

that term is defined in Section 288.703, Florida Statutes. Of

the 51 provider members in FARF, 15 qualified as small

businesses having less than 200 employees and less than $5

million in total assets. Of ARC's 40 provider members, 38 met

the small business definition of Section 288.703, Florida

Statutes. Such surveys by associations provide the type of

information that would be commonly relied upon by reasonably

prudent persons in the conduct of their affairs.

10. AHCA acknowledged that small businesses would be

impacted by the changes to the Handbook, and the impact to small

businesses was discussed and considered in developing the

proposed rules. As of the date of the final hearing, AHCA had

not sent a copy of the proposed rules to the small business

ombudsman of the Office of Tourism, Trade, and Economic

Development as required by Subsec tion 120.54(3)(b)2 .b. , Florida

Statutes.

11. Petitioners have alleged that AHCA f ailed to follow

applicable rule making procedures by not having the Handbook

available at the time of the publication of the notice of

rulemaking on July 25, 2003, and the not ices of changes

published on October 17, 2003, and November 21, 2003. Although

the Handbook was incorporated by reference as an amendment to

Florida Administrative Code Rule 59G - 8.200(12), the major

purpose of the amendment was to make changes in the Hand book.

The Notice of Rulemaking published on July 25, 2003, provided

that the Handbook was available from the Medicaid fiscal agent.

However, the revised Handbook was not generally available until

August 2003. Further revisions to the Handbook were not r eadily

available at the time the notices of changes were published.

The lack of availability of the Handbook on the dates of the

publication of the notices did not impair the fairness of the

rulemaking proceedings or the substantial interests of

Petitione rs. Petitioners had an opportunity to review the

handbook and to give input to AHCA concerning the proposed

changes. Petitioners did get copies of the revised Handbook in

time to meaningfully participate in the two public hearings

which were held on the proposed rules, and Petitioners had an

opportunity to provide written comments on the revisions to the

Handbook.

12. At the final public hearing held on January 6, 2004,

AHCA provided the participants with a "clean copy" of the

Handbook, meaning a copy i n which the underlines and strike -

throughs had been deleted and the text read as it would read

when published in the Florida Administrative Code. This caused

confusion among the attendees at the public hearing because

"clean copy" Handbooks had not been a vailable to the public

prior to the final hearing. With one exception concerning

residential habilitation services for children, which is

discussed below, the "clean copy" of the Handbook was

essentially the same as the version which had been available to

the public, in which added language was underlined and deleted

language was struck - through. The interests of Petitioners and

the fairness of the rulemaking proceedings were not impaired by

the use of a "clean copy" of the Handbook at the January 2004

fin al public hearing.

13. A state Medicaid Agency is required to provide notice

to a recipient ten days before the agency takes action to reduce

a benefit pursuant to 42 CFR Section 431.200. The evidence did

not establish whether AHCA provided notice to HCB S waiver

recipients that the proposed changes to the rule would reduce

certain benefits. Some of Petitioners' witnesses did not think

that any of their individual members received notice, but there

was no direct evidence to establish that no notice was pr ovided.

14. Petitioners challenged the following provision of the

Handbook:

Providers wishing to expand their status

from a solo provider to an agency provider,

or a provider desiring to obtain

certification in additional waiver services

must be approved by the district in order to

expand. A provider must have attained an

overall score of at least 85% on their last

quality assurance monitoring conducted by

the Agency, the Department, or an authorized

agent of the Agency or Department in order

to be consid ered for expansion.

Petitioners argue that the language in this portion of the

Handbook is vague and gives AHCA unbridled discretion when

"considering" a provider for expansion. The language is not

vague and does not give AHCA unbridled discretion when a

provider is considered for expansion. In order for a provider

to be considered for expansion, the provider must have scored at

least 85 percent on their last quality assurance monitoring.

The 85 - percent score is a threshold which the provider must meet

before AHCA will determine whether the provider meets other

criteria for expansion , which are set out in the Handbook,

statutes, and rules.

15. Recipients have a freedom of choice in selecting their

service providers from among enrolled, qualified servi ce

providers. Recipients may change service providers to meet the

goals and objectives set out in the their support plans.

Petitioners have challenged the following provision, which AHCA

proposes to add to the freedom of choice section of the

Handbook:

Freedom of choice includes recipient

responsibility for selection of the most

cost beneficial environment and combination

of services and supports to accomplish the

recipient's goals.

Petitioners contend that the language is vague, arbitrary, and

capricio us, fails to establish adequate standards for agency

discretion, and vests unbridled discretion in AHCA.

16. The term "cost beneficial" is defined in the Handbook

to mean "economical in terms of the goods or services received

and the money spent." The Handbook also contains the following

definition for a support plan:

Support plan is an individualized plan of

supports and services designed to meet the

needs of an enrolled recipient. This plan

is based upon the preferences, interests,

talents, attribut es and needs of a

recipient. The recipient or parent, legal

guardian advocate, as appropriate, shall be

consulted in the development of the plan and

shall be receive a copy of the plan and any

revisions made to the plan. Each plan shall

include the most appropriate, least

restrictive, and most cost - beneficial

environment for accomplishment of the

objectives and a specification of all

services authorized. The plan shall include

provisions for the most appropriate level of

care for the recipient. The ulti mate goal

of each plan, whenever possible, shall be to

enable the recipient to live a dignified

life in the least restrictive setting,

appropriate to the recipient's needs. The

support plan must be completed according to

the instructions provided by the D epartment.

( e mphasis supplied)

17. The "most cost - beneficial" language is not new. It

already exists in the current H andbook, which is incorporated by

reference in Florida Administrative Code Rule 59G - 8.200. The

proposed amendment does not impose a ne w requirement on

recipients, and it is not vague, arbitrary, or capricious.

18. The "most cost beneficial" language is consistent with

the Handbook provision defining the terms "medical necessity" or

"medically necessary" as they relate to the determina tion of the

need and appropriateness of Medicaid services for a recipient.

One of the conditions needed for a determination that a service

is a medical necessity is that the service "be reflective of the

level of service that can be safely furnished, and f or which no

equally effective and more conservative or les s costly treatment

is available, statewide."

19. Petitioners have challenged the following provision of

the Handbook:

All direct service providers are required to

complete training in the Departme nt Direct

Care Core Competencies Training, or an

equivalent curriculum approved by the

Department within 120 days from the

effective date of this rule. Said training

may be completed using the Department's web -

based instruction, self - paced instruction,

or classroom instruction.

20. Providers are expected to have direct care staff who

are competent in a set of direct care core areas. A curriculum

has been developed to provide assistance to the providers in

training their direct staff to become competent in these direct

care areas. The training curriculum consists of two modules,

with three different training formats.

21. Petitioners contend that the curriculum was not

completely developed, and would not be in existence at the time

the rules are adopte d. The Web - based format was completed in

the fall of 2003, and the other two formats were completed in

the spring of 2004. Thus, the Department's Direct Care Core

Competencies Training is available.

22. Petitioners have challenged the following provisio n of

the Handbook:

The current Department approved assessment,

entitled Individual Cost Guidelines (I CG ),

is a tool designed to determine the

recipients' resource allocations of

waiver(s) funds for recipients receiving

supports from the State of Florida,

D epartment of Children and Families,

Developmental Disabilities Program (DDP).

The ICG is a validated tool that provides a

rational basis for the allocation of the

waiver funds to individuals with

developmental disabilities. Waiver(s) funds

refers to fund s allocated through the

Developmental Services HCBS waiver, the

Supported Living Wavier, and the Consumer -

Directed Care Plus waiver (CDC). The

instructions for the completion of this

assessment is provided by the Department and

is completed at least ever y three years or

as determined necessary by the recipient and

the waiver support coordinator, due to

changing needs of the recipients.

23. It is Petitioners' contention that the ICG, like the

Direct Care Core Competencies Training, was not completed and

would not be available to the providers prior to the adoption of

the proposed rules. The ICG was completed in the fall of 2003.

Its validity and reliability as an assessment tool for assessing

needs of individual recipients has been tested.

24. During September and October 2003, a three - day

workshop was held in every d istrict of DCF for the purpose of

training workers to administer the ICG. The first day of the

workshop provided an overview for interested persons.

Hardcopies of the ICG were handed out for review by the

participants, including providers.

25. Petitioners have challenged the portion of the

Handbook which provides, "[t]he primary live in support worker

shall be named on the lease along with all other recipients."

It is Petitioners' posit ion that the proposed language is in

conflict with unchallenged language in the proposed Handbook and

is contrary to the guidelines in the State Medicaid Manual.

26. The unchallenged portion of the Handbook at page 2 - 77

provides:

The in - home support provi der or the

provider's immediate family shall not be

the recipient's landlord of have any

interest in the ownership of the housing

unit as stated in Chapter 65B - 11.005(2)(c),

F.A.C. [3] If renting, the name of the

recipient receiving in - home support servic es

must appear on the lease singularly or as a

guarantor.

27. The State Medicaid Manual provides at page 4 - 450,

subsection 12 , that "FFP for live - in care givers is not

available in situations in which the recipient lives in a

caregiver's home or a resid ence owned or leased by the provider

of Medicaid services."

28. AHCA contends that the purpose for requiring the live -

in support worker to sign the lease is to prevent the live - in

home support worker (worker) from taking advantage of the

recipient by fail ing to contribute anything to the normal living

expenses. Having the worker named on the lease does not

guarantee that the worker will pay his or her portion of the

rent. The recipient is still liable to the landlord whether the

worker pays, and the work er would be liable whether the

recipient paid. The unchallenged portion of the proposed

changes to the Handbook provides that the worker must pay an

equal share of the room and board for the home.

29. Having the worker on the lease poses problems when t he

worker is no longer providing services. The landlord may not be

willing to renegotiate the lease by substituting another worker

on the lease. Additionally, the worker may not wish to vacate

the premises just because he or she is no longer providing

se rvices, and, since the worker is a lessee of the property, the

recipient may have to find new quarters if the recipient does

not desire to share the home with the worker.

30. Petitioners have challenged the portion of the

Handbook which provides that "[t ]he amount of respite services

are determined individually and limited to no more than thirty

(30) days per year, (720 hours) per recipient." Respite care is

defined in the Handbook as "a service that provides supportive

care and supervision to a recipien t when the primary caregiver

is unable to perform these duties due to a planned brief

absence, an emergency absence or when the caregiver is

available, but temporarily unable to care for or supervise the

recipient for a brief period of time." Respite care services

are designed to be provided for a short time.

3 1 . In determining the amount of time to limit respite

care, A HC A reviewed historical data and did not find that many

individuals used respite care service for more than two weeks.

Stakeholders, f amily members of recipients, and recipients were

involved in discussions with AHCA concerning the time limitation

to 30 days. AHCA reviewed other waiver state agencies and found

that waivers for individuals with developmental disabilities

have similar lim its on respite care.

3 2 . Individuals whose primary caregiver may become

unavailable for a period of greater than 30 days may receive

other types of services to assist them while their caregivers

are absent. The types of services that may be available are

determined on a case - by - case basis.

3 3 . Petitioners have challenged the portion of the

Handbook which provides:

III. FINES AND PENALTIES

1. In accordance with the provisions of

Section 402.73(7), Florida Statutes, and

Section 65 - 29.001, Florida Admini strative

Code, penalties may be imposed for failure

to implement or to make acceptable progress

on such quality improvement plans as

specified in Section II.A of this Agreement.

2. The increments of penalty imposition

that shall apply, unless the Departme nt

determines that extenuating circumstances

exist, shall be based upon the severity of

the non - compliance, non - performance or

unacceptable performance that generated the

need for a quality improvement plan. The

penalty, if imposed, shall not exceed ten

p ercent (10%) of the total billed by the

provider for services during the period in

which the quality improvement plan has not

been implemented, or in which acceptable

progress toward implementation has not been

made. This period is defined, as the time

pe riod from receipt of the report of

findings to the time of the follow - up

determination that correction or progress

toward improvement has not been made.

3. Non - compliance that is determined to

have a direct effect on individual health

and safety shall res ult in the imposition of

a ten percent (10%) penalty of the total

payments billed by the provider during the

period in which the quality improvement plan

has not been implemented or in which

acceptable progress toward implementation

has not been made.

4. Non - compliance involving the provision

of training responsibilities or direct

service to the individual not having a

direct effect on individual health and

safety shall result in the imposition of a

five percent (5%) penalty. Non - compliance

as a result of unacceptable performance of

administrative tasks, such as policy and

procedure development, shall result in the

imposition of a two percent(2%) penalty.

5. In the event of nonpayment, the

Department will request the Agency for

Health Care Administration deduct the amount

of the penalty from claims submitted by the

provider for the covered time period.

3 4 . This penalty provision is contained in the DS Waiver

Services Agreement contained in Appendix B of the Handbook. The

providers are required to comple te the agreement to provide

services to recipients and are required to comply with the terms

and conditions of the agreement.

3 5 . Although the agreement is between the Developmental

Disabilities Program of DCF and the providers, DCF is entering

into the a greement pursuant to an interagency agreement between

DCF and A HC A that DCF will operate the waiver program on behalf

of AHCA. AHCA establishes the rules, policies, procedures,

regulations, manuals, and handbooks under which DCF operates the

program.

3 6 . The inclusion of the penalties provision in the

agreement is done based on the authority of Subsection

402.73(7), Florida Statutes, and Florida Administrative Code

Rule 65 - 29.001, which govern the authority of DCF, not AHCA. If

AHCA seeks to impose p enalties on providers relating to the

waiver program, it can do so only based on its statutory

authority. DCF merely stands in the shoes of AHCA and has only

the authority for the operation of the waiver program that AHCA

would have if AHCA were operating the program itself.

3 7 . Petitioners have challenged the portion of the

Handbook which reduces the maximum limits of residential

habilitation services from 365 days to 350 days. AHCA contends

that the reduction of days is merely a reduction in the maximu m

number of days that a provider can bill for residential

habilitation services. The rate at which the provider is being

compensated includes a 15 - day vacancy factor. The State

Medicaid Manual from the Center for Medicare and Medicaid allows

for this typ e of reimbursement and provides:

FFP [federal financial participation] is

not available to facilities providing

services in residential settings on days

when waiver recipients are temporarily

absent and are not receiving covered waiver

services (sometim es called reserve bed

days). Medicaid payment may be made only

for waiver services actually provided to an

eligible recipient. Since providers incur

fixed costs such as rent, staff salaries,

insurance, etc., even when a waiver

recipient is temporarily ab sent, you may

account for such continuing costs when

developing payment rates for these

providers. For example, rent is generally

paid for a period of 1 month. However, day

habilitation services are generally

furnished only 5 days per week. You may

take the entire month's rental cost into

consideration in setting the rate paid for

services furnished on the days the recipient

is present. Similarly, if data shows that a

recipient is served in residential

habilitation an average of 325 days per year

and th e slot is held open when the recipient

is on a leave of absence, you may consider

the entire yearly cost to the provider when

establishing its rate of payment. However,

in the rate setting process, it must be

assumed that a facility will not have a 100

pe rcent utilization rate every day of the

year. Consequently, payment rates are

established by dividing the provider's total

allowable costs by the number of Medicaid

patient days you estimate recipients will

actually utilize.

3 8 . The change from 365 days to 350 days is not a

reduction in service, it is a reimbursement method which

utilizes a 15 - day vacancy factor. The number of days chosen was

based on information furnished by the providers to AHCA during a

survey completed in July 2003. Based on the su rvey, it was

concluded that the providers billed for services for 345 to 350

days per year.

39 . Contrary to its present position, Petitioner FARF took

the position early in the rulemaking procedure that billing on a

365 - day year would be harmful to the pr oviders. In a letter to

AHCA dated February 4, 2003, Terry Farmer, CEO of FARF, advised:

Attached is a compilation of written

comments from Florida ARF members on the

proposed rule #59G - 8.200, titled "the Home

and Community Based Services Waiver."

* * *

Going to the 365 day billing schedule will

create hardships for consumers, families and

providers because it discourages weekly home

visits and doesn't address frequent

hospitalizations or vacations. The 15 day

down factor is very low for consumers w ho

want to go home 2 - 3 times a month and would

also like a yearly vacation.

Recommendation: Increase the down factor to

5 days per month (60 days per year) to

accommodate for absences in order to reduce

the negative impact of home visits and

vacations up on both the consumer and group

home provider. This is particularly

important when the focus is on meeting

Personal Outcomes that may result in the

consumer being away from the group home.

4 0 . Petitioners have challenged the portion of the

Handbook which deleted the following provision:

Residential habilitation services may be

provided to children residing in a licensed

facility or children with severe behavioral

issues living in their family home. The

child must have a written behavior analysis

service plan that is written and monitored

by a certified behavior analyst, in order

for the services by a behavior assistant to

be reimbursed under residential

habilitation. The focus of the service is

to assist the parents in training and

implementing the behav ior analysis services

plan.

4 1 . At the final hearing, AHCA conceded that it was in

error when it deleted the language relating to the provision of

residential habilitation services to children and stated that

the language would be reinstated.

4 2 . Section 409.908, Florida Statutes, provides:

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 han dbooks incorporated by reference

therein.

AHCA set out its rate methodology for Developmental Services

Home and Community Based Services rate reimbursement in Appendix

A of the Handbook. Petitioners have challenged the rate

methodology, stating that it w as vague, failed to establish

standards for agency discretion and vested unbridled discretion

in AHCA's determination of rate reimbursement.

4 3 . The rate of reimbursement cannot be determined based

on rate methodology. However, based on a reading of the

introductory language to the rate methodology, it does not

appear that it was the intent of A HC A to be able to determine

the rates by using the rate methodology in Appendix A, and staff

of AHCA readily admit that a specific rate for a specific

service cann ot be determined using the language in the

methodology alone. The first paragraph of the methodology

states:

The following section describes key

aspects of the Developmental Services (DS)

Home and Community Based Services (HCBS)

rate reimbursement s tructure. Specifically

the cost items for each rate component are

listed, agency and independent contract

status is defined, and the rate structure

for various services is described.

4 4 . It appears that the methodology set out in Appendix A

is an overvi ew of the process that was used in determining the

rates. AHCA is in the process of developing rules that set out

the actual rates that will be used.

4 5 . Petitioners have challenged the portion of the

Handbook which provides that the maximum limit for ad ult day

training is 240 days, a reduction from 260 days. The reduction

of adult day training days is a limitation on services and a

limitation on billing. The rate for providing adult day

training contains a similar vacancy factor as contained in the

rat e for residential habilitation services.

4 6 . The purpose of adult day training is to provide

training for skills acquisition. Adult day training is provided

five days a week, meaning that the maximum time any recipient

could spend in adult day training i s 260 days a week. However,

adult day training is not provided 260 days a year. No training

is provided on holidays such as Christmas, Thanksgiving,

Memorial Day, Labor Day, and other normal holidays. Generally,

individuals do not attend training 260 da ys a year for other

reasons such as hospitalizations.

4 7 . In determining that 240 days would be sufficient in

amount, duration, and scope, AHCA contacted providers and

learned that recipients generally do not receive adult day

training more than 240 day s per year.

CONCLUSIONS OF LAW

4 8 . The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of this

proceeding. § 120. 56, Fla. Stat.

49 . Respondents have asserted that Petitioners do not have

standing to chall enge the proposed rules or do not have standing

to challenge some of the proposed rules. In order for

associations such as Petitioners to have standing, they must

demonstrate the following:

[A] substantial number of its members,

although not necessarily a majority, are

"substantially affected" by the challenged

rule[,] . . . the subject matter [is] within

the association's general scope of interest

and activity, and the relief requested

[is]of the type appropriate for a trade

association to receive on beha lf of its

members.

Florida Home Builders Association v. Department of Labor and

Employment Security , 412 So. 2d 351, 353 - 354 (Fla. 1982).

5 0 . Petitioners have demonstrated that they have standing

to challenge the proposed amendments to the Handbook. Bo th

associations have a substantial number of provider members who

provide DS waiver services. ARC has 1500 individual members,

and a substantial number of these members, from 25 to 50

percent, receive DS waiver services or are guardians or family

members of individuals who are receiving DS waiver services.

Requesting that the proposed amendment to the Handbook be

changed is a type of relief that is appropriate for ARC and FARF

to ask on behalf of its members.

5 1 . The DS waiver program is within the scop e of interest

and activity of the associations. The associations have been

involved in the development of the proposed amendments to the

handbooks and have provided comments to AHCA during the

rulemaking process concerning the amendments.

5 2 . Subsectio n 120.56 (2)(b), Florida Statutes, provides

that the petitioner in a challenge to a proposed rule has the

burden of going forward and that the agency has the burden to

prove by a preponderance of the evidence that the proposed rule

is not an invalid exerci se of delegated legislative authority as

to the objections raised by the petitioner. See Florida Board

of Medicine v. Florida Academy of Cosmetic Surgery, Inc. , 808

So. 2d 243, 251 (Fla. 1st DCA 2002).

5 3 . "Invalid exercise of delegated legislative auth ority"

is defined in Subsection 120.52(8), Florida Statutes, as

follows:

(8) "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. A

rule is arbitrary if it is not supported by

logic or the necessary facts; a rule is

capricious is it is adopted without thought

or reason or is irrational; or

(f) 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.

5 4 . Petitioners have alleged that AHCA failed to follow

certain applicable rulemaking procedures. Subsection

120.56(1)(c), Florida Statutes, provides:

The failure of an agency to follow the

applicable rulemaking procedures or

requirements set forth in this c hapter shall

be presumed to be material; however, the

agency may rebut this presumption by showing

that the substantial interests of the

petitioner and the fairness of the

proceeding have not been impaired.

5 5 . Petitioners have established that at the ti mes the

Notice of Rulemaking and the Notices of Changes were published

that the Handbook with its revisions was not readily available

to the public. AHCA has demonstrated that the failure to have

Handbook available on the day that the notices were publish ed

did not impair either the substantive interests of Petitioners

or the fairness of the rulemaking proceedings. Petitioners did

get the revised Handbook and had ample opportunity to be heard

during the rulemaking proceedings concerning the changes to the

Handbook.

5 6 . Subsection 120.54(3)(b)2 . b . , Florida Statutes,

provides:

b.(l) If the agency determines that the

proposed action will affect small businesses

as defined by the agency as provided in sub -

subparagraph a., the agency shall send

written notice of the rule to the small

business ombudsman of the Office of Tourism,

Trade, and Economic Development not less

than 28 days prior to the intended action.

(ll) Each Agency shall adopt those

regulatory alternatives offered by the small

business ombudsman and provided to the

agency no later than 21 days after the

ombudsman's receipt of the written notice of

the rule which it finds are feasible and

consistent with the state d objectives of the

proposed rule and which would reduce the

impact on small businesse s. When regulatory

alternatives are offered by the small

business ombudsman, the 90 - day period for

filing the rule in subparagraph (e)2. is

extended for 21 days.

In reading sub - subparagraphs (l) and (ll) in pari materia , it

appears that an agency does no t have to give notice to the small

business ombudsman until 28 days before the agency plans to file

the proposed rule.

5 7 . The evidence established that the proposed revisions

to the Handbook would affect small businesses and A HC A had

discussed and considered the impact on small businesses during

the rulemaking process. Thus, it is clear that AHCA should

provide notice to the small business ombudsman prior to filing

the proposed rule for adoption. However, the fact that A HC A has

not provided notic e to the small business ombudsman at this

point in the rulemaking proceeding does not mean that AHCA has

failed to follow the rulemaking procedures required by

Section 120.54, Florida Statutes. AHCA has until 28 days prior

to the filing of the proposed r ule to provide notice to the

small business ombudsman.

5 8 . Petitioners have argued that AHCA failed to give

notice to recipients pursuant to 42 CFR Section 431.200. There

is no direct evidence whether notice was provided; however,

there is no requirement in Chapter 120, Florida Statutes, that

AHCA provide such notice as part of the rulemaking process.

Petitioners argued in their proposed order that AHCA failed to

comply with the public notice requirement in 42 CFR Section

447.205; however, Petitioners di d not raise that issue in their

Joint Second Amended Petition to Challenge Proposed Rule 59G -

8.200. Thus, compliance with 42 CFR Section 447.205 is not

considered in this Final Order.

59 . Petitioners have alleged that the provision of the

Handbook requir ing that an agency provider or a solo provider

must have a total score of 85 percent on its last quality

assurance monitoring is vague and vests AHCA with unbridled

discretion. The language is not vague and does not vest AHCA

with unbridled discretion. T he language states merely that the

provider has to have a total score of 85 percent to be

considered and does not eliminate other requirements imposed by

the Handbook, statute, or rule that the provider has to meet in

order to expand its services. It is n ot an invalid exercise of

delegated legislative authority.

6 0 . Petitioners have challenged the portion of the

Handbook which adds "most cost beneficial" language to the

provision dealing with a recipient's freedom of choice of

enrolled, qualified service providers. The proposed language

adds no new requirements, is not arbitrary, capricious, or

vague, and does not vest AHCA with unbridled discretion. It is

not an invalid exercise of delegated legislative authority.

6 1 . Petitioners have challenged the po rtion of the

Handbook requiring the providers to have their staff meet the

training requirements in the Department's Direct Care Core

Competencies within 120 days of the effective date of the rule.

Petitioners contend that the training modules were not in

existence, and therefore, the proposed rule was arbitrary,

capricious, and vague, vested unbridled discretion in AHCA, and

failed to establish adequate standards for agency discretion.

As of the date of the final hearing, AHCA established that the

module s were completed. The modules were completed in a Web -

based format in the fall of 2003. AHCA has established that the

modules will be available as of the date of the filing of the

ru les. Thus, the portion of the H andbook requiring compliance

with the De partment's Direct Core Competencies Training is not

vague, arbitrary, or capricious; does not vest AHCA with

unbridled discretion, and establishes adequate standards to be

used by AHCA. It is not an invalid exercise of delegated

legislative authority.

6 2 . Petitioners contend the portion of the Handbook

relating to the use of ICG as an assessment tool to determine

the allocation of waiver funds to individuals with developmental

disabilities is vague, arbitrary, and capricious; vests AHCA

with unbridled dis cretion; and fails to establish standards for

AHCA in using its agency discretion. This contention is based

on Petitioners belief that the ICG was not finalized and had not

been validated. Contrary to Petitioners' belief, the ICG was

completed in the fal l of 2003 and has been validated. The ICG

portion of the Handbook is not arbitrary, capricious or vague.

It does not give AHCA unbridled discretion and does establish

standards which can be used in assessing the needs of the

recipients. The portions of the Handbook relating to the use of

ICG is not an invalid exercise of legislative delegated

authority.

6 3 . Petitioners correctly contend that the provision of

the Handbook requiring that the live - in home support worker be

named on the lease along with the recipient is an invalid

exercise of delegated legislative authority. The proposed

amendment is contrary to the unchallenged portion of the

Handbook which prohibits a worker from having an ownership

interest in the housing unit. Although ownership intere st is

not defined in the Handbook, it could be interpreted to mean one

who has a possessory right to the land or the person occupying

the land. See State Road Department v. White , 148 So. 2d (Fla.

2d DCA 1963); and Tobin v. Gartiez , 191 P. 1063 (Nev. 1920 ).

6 4 . The proposed lease amendment is contrary to the State

Medicaid Handbook which precludes federal fund participation for

live - in care givers when the recipient lives in the caregiver's

home which is leased by the provider of the Medicaid services.

6 5 . The proposed lease amendment is arbitrary in that it

is without logic. The unchallenged portion of the Handbook

requires the worker to share in the costs of room and board.

Making the worker a lessee on the same lease with the recipient

will not neces sarily prevent the worker from taking advantage of

the recipient, and it will cause numerous problems when the

worker is no longer providing the services, but the lease is

still in effect.

6 6 . Petitioners contend that the provision in the Handbook

limiti ng respite care to 30 days is arbitrary and capricious.

The evidence presented does not support Petitioners' contention.

A 30 - day limitation on respite care is reasonable and is based

on information gleaned from providers, recipients, and other

states. If a recipient is in need of assistance longer than 30

days, other types of services may be available to the recipient.

6 7 . Whether AHCA is required to give notice to recipients

pursuant to federal rules prior to the effective date of the

30 - day limitati on is not relevant to whether the proposed change

is an invalid exercise of delegated legislative authority

because such notice is not part of the rulemaking process. If

notice is required and not given, a recipient's remedy is in a

forum other than that which would pertain to a rule challenge.

6 8 . The portion of the Handbook limiting respite care

services to 30 days per year is not an invalid exercise of

delegated legislative authority.

69 . Petitioners correctly contend that the inclusion of

the penalt ies provision in the Medicaid Waiver Services

Agreement is an invalid exercise of delegated legislative

authority. Article I, Section 18 of the Florida Constitution

provides that no administrative agency shall impose a penalty

except as provided by law. AHCA has no statutory authority to

impose the penalties allowed by Subsection 402.73(7), Florida

Statutes.

7 0 . Petitioners challenged the reduction of residential

habilitation days from 365 to 350, claiming that AHCA did not

have the authority to make th e change, that the recipients had

not been advised of the change pursuant to 42 CFR Section

431.211, and that the rulemaking record was devoid of any

comments as to the "365 day amendment."

7 1 . AHCA does have the authority to determine whether the

rates paid to the providers have a built - in vacancy factor, and

AHCA has chosen to use that method. If the providers are paid

on a reimbursement rate based on a 365 - day billing schedule, the

providers will not be able to recoup their continuing costs such

as u tilities and rent because they will not be paid for days in

when the recipient is absent.

7 2 . No direct evidence was presented that recipients did

or did not receive notice of the change; however, since the

change is not a reduction in services, but a cha nge in billing

methodology, notice would not be required pursuant to 42 CFR

Section 431.211. Additionally, such notice is not required as

part of the rulemaking process pursuant to Chapter 120, Florida

Statutes.

7 3 . Comments were submitted to AHCA by FAR F during the

rulemaking process that the 365 - day billing was detrimental to

the recipients and to the providers. FARF advocated reducing

the number of billing days from 365 to 350 days. Thus, there

were comments to support a reduction from billing 365 da ys per

year for residential habilitation services.

7 4 . The reduction in billing from 365 days to 350 days for

residential habilitation services is not an invalid exercise of

delegated legislative authority.

7 5 . AHCA acknowledged that the deletion of th e language in

the Handbook relating to residential habilitation services for

children is an invalid exercise of delegated legislative

authority.

7 6 . The rate methodology challenged by Petitioners is not

an invalid exercise of delegated legislative autho rity. The

rate methodology is a general overview of the factors that AHCA

considered in determining what rate would be applied. The

actual rates will be established by a separate rule.

7 7 . Petitioners challenged the portion of the Handbook

that reduce s the number of adult day training days from 260 to

240. Petitioners contend that portion of the Handbook is an

invalid exercise of delegated legislative authority because AHCA

has no statutory authority to reduce the number of days and did

not provide no tice to recipients pursuant to 42 CFR Section

431.200.

7 8 . Subsection 409.906, Florida Statutes, provides that

AHCA may make payments for optional services such as the waiver

services. The section also provides: "Nothing in this section

shall be constru ed 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 prov ided in the General Appropriations Act or chapter

216." Thus, AHCA does have the authority to adjust the days of

services that may be provided.

79 . AHCA is directed in 42 CFR Section 440.230 to provide

services that are sufficient in amount, duration and scope and

that appropriate limits may be placed on a service based on

medical necessity and control utilization services. The

reduction of adult day training days to 240 is sufficient in

amount, duration, and scope to provide training on a five - day

per w eek basis, given the inclusion of holidays and days in

which recipients are not attending the training for other

reasons. It is not logical to have a maximum limit of days that

is greater than the days that the training is available to the

recipient or th at the recipient is available to participate in

the training.

8 0 . As previously stated, whether AHCA is required to

provide notice to recipients of a reduction in benefits pursuant

to 42 CFR Section 431.200 is irrelevant to the rulemaking

proceeding.

8 1 . The reduction in adult day training days from 260 to

240 is not an invalid exercise of delegated legislative

authority.

ORDER

Based on the foregoing Findings of Fact and Conclusions of

Law, it is ORDERED

1. Case Nos. 04 - 0216RP and 04 - 0 258RP are dismisse d as to

Respondent Department of Children and Family Services.

2. The challenged portions of the Handbook pertaining to

the deletion of residential habilitation services for children

at page 2 - 104; the penalty structure contained in Appendix B,

and the le asing requirements for in - home support workers at page

2 - 77 are invalid exercises of delegated legislative authority.

3. The remainder of the challenged provisions of the

Handbook are not invalid exercises of delegated legislative

authority, and the Joint Second Amended Petition to Challenge

Proposed Rule 59G - 8.200 is dismissed as to those provisions.

4. Jurisdiction is reserved to determine attorney's fees

pursuant to Subsection 120.595(2), Florida Statutes, as it

relates to those portion s of the Handboo k held to be invalid

exercises of delegated legislative authority.

DONE AND ORDERED this 29th day of April , 2005 , in

Tallahassee, Leon County, Florida.

S

SUSAN B. HARRELL

Administrative Law Judge

Division of Administrat ive Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 29th day of April , 2005 .

ENDNOTES

1/ At the time of the final hearing Administrative Law Judge

Harrell was named Susan B. Kirkland.

2/ All references to the Florida Statutes are to the 2003

version unless otherwise indicated.

3/ The correct reference is 65B - 11.00 5(2)(b).

COPIES FURNISHED :

Gary J. Clarke, Esquire

Frank P. Rainer, Esquire

Sternstein, Rainer & Clarke, P.A.

411 East College Avenue

Tallahassee, Florida 3230 1

M. Catherine Lannon, Esquire

Stephanie Daniel, Esquire

Chesterfield Smith, Esquire

Office of the Attorney General

Administrative Law Section

The Capitol, Plaza Level 01

Tallahassee, Florida 32399 - 1050

Scott Boyd, Executive Director and General Counsel

Joint Administrative Procedures Committee

120 Holland Building

Tallahassee, Florida 32399 - 1 300

Liz Cloud, Program Administrator

Administrative Code

Department of State

R. A. Gray Building, Suite 101

Tallahassee, Florida 32399

Gregory Venz, Agency Clerk

Department of Children and Family Services

Building 2, Room 204B

1317 Winewood Boulevard

T allahassee, Florida 32399 - 0700

Richard Shoop, Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive, Mail Station 3

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 the original Notice of Appeal with the agency clerk of

the Div ision of Administrative Hearings and a 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.