96-001682RX Irene Reynolds vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Wednesday, July 17, 1996.

Summary: Rules limit medicaid for deductibles and copay for medicare Patient Bill physicians to medicaid rate. Recent federal cases make clear rules violate fed laws and invalid.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

IRENE REYNOLDS, )

)

Petitioner, )

and )

)

FLORIDA MEDICAL ASSOCIATION, INC., )

)

Intervenor, ) CASE NO. 96-1682RX

)

vs. )

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

____________________________________)

SUMMARY FINAL ORDER

Considering the written and oral arguments, together with other pertinent

matters of record, it is concluded that summary final order is appropriate under

F.A.C. Rule 60Q-2.030.

PRELIMINARY STATEMENT

On April 8, 1996, the Petition to Determine Invalidity of Rules 59G-

3.010(4), 59G-3.230(7)(f) [since renumbered 59G-3.230(6)(e)] and Portions of The

Florida Medicaid Provider Reimbursement Handbook (specifically, pp. 4-1, 4-2, 4-

4, 4-5 and 4-6 and Appendix A-34-35) was filed. The Reimbursement Handbook,

HCFA-1500, Nov. 1994, is incorporated by reference in F.A.C. Rule 59G-3.230(8).

Final hearing initially was scheduled for May 10, 1996.

On April 18, 1996, Petitioner's Motion to Establish Expedited Discovery

Schedule was filed, and on April 22 the Respondent filed a Motion to Dismiss

Petitioner's Request for an Administrative Proceeding, together with memorandum

of law in support, on the ground that the Petitioner did not allege a sufficient

factual basis for her standing to file the rule challenge.

On April 24, 1996, a telephone hearing was held on the Petitioner's Motion

to Establish Expedited Discovery Schedule, which was resolved through entry of

an Order Continuing Final Hearing to August 5, 1996, which also established a

deadline for the Petitioner's written response to the motion to dismiss.

Discovery proceeded, and the Petitioner filed a Memorandum of Law in

Response to Respondent's Motion to Dismiss. On May 18, 1996, an Order Denying

Motion to Dismiss was entered.

Meanwhile, Florida Medical Association's Petition for Leave to Intervene

was filed on May 3, 1996, and on May 6 an Order Granting Leave to Intervene was

entered, subject to the ruling on any timely F.A.C. Rule 60Q-2.004 motion. No

F.A.C. Rule 60Q-2.004 motion was filed.

On June 11, 1996, Petitioner's and Intervenor's Joint Motion for Summary

Final Order and Statement of Undisputed Material Facts was filed in this case,

together with a memorandum of law in support and a request for oral argument.

On June 26, 1996, AHCA filed its response. Oral argument on the motion was held

by telephone on July 8, 1996.

The Petitioner's and Intervenor's Motion to Amend Petitions to Determine

Invalidity of Rules was filed on June 18, 1996. Although the motion referenced

F.A.C. Rule 59G-3.320, attachments to the motion make it clear that the

references to F.A.C. Rule 59G-3.320 were typographical errors and that the

motion was to intended to amend the references in the petitions to F.A.C. Rule

59G-3.230(7)(f) to reflect recent renumbering to 59G-3.230(6)(e). (Emphasis

added.) The motion to amend was granted without objection at the telephone

hearing on July 8, 1996.

FINDINGS OF FACT

There is no genuine issue as to any of the following material facts:

1. The Petitioner is 78 years old and, since at least 1995, has been

eligible for Medicare based on her age.

2. The Petitioner's monthly income is $594, and she has no assets or

resources. Since at least 1995, she has been eligible for Medicaid based on her

income and assets.

3. F.A.C. Rule 59G-3.010(4) provides:

(b) Medicare Supplemental Insurance

(Part B)

1. The monthly Medicare insurance premium

is paid by the Agency directly to the Depart-

ment of Health and Human Services for the

Medicare and Medicaid eligible recipient.

2. The deductible and co-insurance under

Part B, Medicare, are paid for the Medicare

and Medicaid eligible recipient by the Medi-

caid fiscal agent. For physician services,

Medicaid will cover the deductible and co-

insurance only to the extent that the total

payment received by the physician will not

exceed the recognized Medicaid payment or,

if there is no comparable Medicaid payment,

100 percent of the deductible and 75 percent

of the co-insurance. In these situations,

whether the physician did nor did not receive

a payment from Medicaid, by billing Medicaid

he is bound to the Medicaid payment schedule

as payment in full.

4. F.A.C. Rule 59G-3.230(6)(e) provides:

Payment Methodology for Covered Services.

* * *

(e) Services provided to individuals who

are covered by both Medicare and Medicaid

must be billed to Medicare first. Medicaid

will consider payment of the deductible and

coinsurance, but in no case shall the

combined Medicare and Medicaid payments

exceed the maximum allowable Medicaid amount

for the procedure.

5. Pages 4-1, 4-2, 4-4, 4-5 and 4-6 and Appendix A-34-35 of The Florida

Medicaid Provider Reimbursement Handbook, HCFA-1500, Nov. 1994, incorporated by

reference in F.A.C. Rule 59G-3.230(8), contain language that essentially

implements F.A.C. Rules 59G-3.010(4) and 59G-3.230(6)(e).

6. When rules on this subject initially were adopted on January 1, 1977,

they did not include the challenged provisions. The challenged provisions were

added by amendment adopted January 6, 1978. The preamble to the adopting rule's

description of the impact of the challenged rules states that the rule "could .

. . decrease . . . the number of physicians [and] result in Medicaid eligible

individuals paying their own deductible and co-insurance, . . . changing

physicians, or maintaining the same physician with the physician accepting a

loss in income." (Fla. Admin. Weekly, Vol. 4, No. 1, Jan. 6, 1978, at 224-25.)

7. Some Florida physicians who accept other patients, including patients

eligible for Medicare based on age but not eligible for Medicaid, do not accept

"dual eligible" patients like the Petitioner (i.e., patients eligible for both

Medicare and Medicaid) because the physician makes less money providing services

for "dual eligible" patients under the terms of F.A.C. Rules 59G-3.010(4) and

59G-3.230(6)(e) and The Florida Medicaid Provider Reimbursement Handbook than

the physician can make providing services for other patients, including patients

eligible for Medicare based on age but not eligible for Medicaid.

8. In 1995, the Petitioner's physician required her to pay him fees for

service in addition to the reimbursement he received from the Respondent under

the terms of F.A.C. Rules 59G-3.010(4) and 59G-3.230(6)(e) and The Florida

Medicaid Provider Reimbursement Handbook although those provisions as well as

his agreement with the Respondent prohibit him from doing so. The Intervenor

asserts that other Florida physicians participating the Medicaid program,

likewise in violation of F.A.C. Rules 59G-3.010(4) and 59G-3.230(6)(e) and The

Florida Medicaid Provider Reimbursement Handbook as well as their agreements

with the Respondent, also "attempt to collect Medicare coinsurance and

deductibles from patients who are indigent."

CONCLUSIONS OF LAW

9. Under Section 120.52(8)(c), Fla. Stat. (1995), a rule is an "[i]nvalid

exercise of delegated legislative authority" if it "enlarges, modifies, or

contravenes the specific provisions of law implemented."

10. Section 409.908, Fla. Stat. (1995), provides in pertinent part:

Subject to specific appropriations, the

agency shall reimburse Medicaid providers,

[in accordance with state and federal law],

according to methodologies set forth in the

rules of the agency and in policy manuals and

handbooks incorporated by reference therein.

* * *

(13) Premiums, deductibles, and coinsurance

for Medicare services rendered to Medicaid

eligible persons shall be reimbursed in

accordance with fees established by Title

XVIII of the Social Security Act.

[Emphasis added.]

11. Until relatively recently, the Respondent reasonably believed that the

challenged rules did not "enlarge, modify or contravene" the cited parts of

Section 409.908. The challenged rules were approved by the federal Department

of Health and Human Services (DHHS). But things changed with a series of

federal court decisions in cases in other states, in which the federal DHHS and

the respective state welfare agencies were aligned in defense of state

regulatory provisions very similar to the rules challenged in this case and

ultimately were on the losing side. Rehabilitation Ass'n of Virginia, Inc., v.

Kozlowski, 42 F.3d 1444 (4th Cir. 1994), cert. den., ___ U.S. ___, 116 S.Ct. 60

(1995); Haynes Ambulance Service, Inc., v. State of Alabama, 36 F.3d 1074 (11th

Cir. 1994); Pennsylvania Medical Society v. Snider, 29 F.3d 886 (3d Cir. 1994);

New York City Health & Hospitals Corp. v. Perales, 954 F.2d 854 (2d Cir.

1992)(by divided vote, with dissenting opinion), cert. den., ___ U.S. ___, 113

S.Ct. 461, 121 L.Ed.2d 369 (1992). (Until the Kozlowski decision, the district

court in each case had ruled in favor of DHHS and the state welfare agency.)

12. It would serve little purpose to try to explain the opinions of the

federal circuit courts in this Summary Final Order. The Fourth Circuit was not

exaggerating when it observed:

There can be no doubt but that the statutes

and provisions in question, involving the

financing of Medicare and Medicaid, are among

the most completely impenetrable texts with-

in human experience. Indeed, one approaches

them at the level of specificity herein

demanded with dread, for not only are they

dense reading of the most tortuous kind, but

Congress also revisits the area frequently,

generously cutting and pruning in the process

and making any solid grasp of the matters

addressed merely a passing phase.

Rehabilitation Ass'n of Virginia, Inc., v. Kozlowski, supra, at 1450. The

various court opinions, some with dissenting opinions, are likewise difficult

reading. For purposes of this Summary Final Order, it suffices to say that, in

light of those decisions, it is clear that the challenged rules no longer can be

viewed as being in accord with federal law. Under these decisions, Florida's

rules cannot limit reimbursement for Medicare Part B premiums, deductibles and

coinsurance for "dual eligibles" like the Petitioner, or for "pure" Medicare

"qualified medical beneficiaries," to the maximum Medicaid rate; rather, those

items must be reimbursed fully, subject only to the possibility of nominal

charges under 42 U.S.C. s. 1396o. Cf. Kozlowski, supra, at 1458-1459. Those

wanting more detail and "willing to plunge into the morass," can try reading the

court opinions. Cf. Kozlowski, supra, at 1458 (referring to the facial

ambiguities in the federal statutes in question).

13. Medicaid payment of a person's Medicare Part B premiums, deductibles

and coinsurance is a benefit under federal law; Florida's rules refusing to pay

those items to the extent that they exceed the Medicaid rate take away part of

the federal benefit and directly affect a "dual eligible" patient like the

Petitioner. Even if Medicaid payment of Medicare Part B premiums, deductibles

and coinsurance could be viewed strictly as reimbursement to physician(s),

instead of a benefit to "dual eligibles" like the Petitioner, it is undisputed

that the challenged rules reduce the number of physicians willing to serve "dual

eligibles." Even the preamble to the adopting rule's description of the impact

of the challenged rules states that the rules "could . . . decrease . . . the

number of physicians [and] result in Medicaid eligible individuals . . .

changing physicians . . .." (Fla. Admin. Weekly, Vol. 4, No. 1, Jan. 6, 1978,

at 224-25.) It is concluded that the impact which the challenged rules have on

the Petitioner are sufficient to support her standing to bring this challenge.

See Dept. of Prof. Reg. v. Dental Hygienist, 612 So. 2d 646, 651 (Fla. 1st DCA

1993).

DISPOSITION

Based on the foregoing Findings of Fact and Conclusions of Law, the

Petitioner's and Intervenor's Joint Motion for Summary Final Order is granted,

and F.A.C. Rules 59G-3.010(4) and 59G-3.230(6)(e), together with implementing

language on pages 4-1, 4-2, 4-4, 4-5 and 4-6 and Appendix A-34-35 of The Florida

Medicaid Provider Reimbursement Handbook, HCFA-1500, Nov. 1994, incorporated by

reference in F.A.C. Rule 59G-3.230(8), are held invalid.

DONE AND ENTERED this 17th day of July, 1996, in Tallahassee, Florida.

_____________________________________

J. LAWRENCE JOHNSTON, Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 17th day of July, 1996.

COPIES FURNISHED:

Anne Swerlick, Esquire

Florida Legal Services, Inc.

2121 Delta Boulevard

Tallahassee, Florida 32303

Miriam Harmatz, Esquire

Florida Legal Services

Miami Advocacy Office, Suite 450

3000 Biscayne Bouelvard

Miami, Florida 33137

Paulette Ettachild, Esquire

Legal Services of the Florida Keys

600 White Street

Key West, Florida 33040

Moses E. Williams, Esquire

Senior Attorney

Agency for Health Care Administration

Fort Knox Building 3, Room 3431

2727 Mahan Drive

Tallahassee, Florida 32308-5403

Christopher L. Nuland, Esquire

760 Riverside Avenue

Jacksonville, Florida 32204

Carroll Webb, Executive Director

Administrative Procedures Committee

120 Holland Building

Tallahassee, Florida 32399-1300

NOTICE OF RIGHT TO JUDICIAL REVIEW

PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL

REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES. REVIEW PROCEEDINGS ARE

GOVERNED BY THE FLORIDA RULES OF APPELLATE PROCEDURE. SUCH PROCEEDINGS ARE

COMMENCED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF THE

DIVISION OF ADMINISTRATIVE HEARINGS AND A SECOND COPY, ACCOMPANIED BY FILING

FEES PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, OR

WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY

RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE

ORDER TO BE REVIEWED.

=================================================================

MOTION TO CORRECT SUMMARY FINAL ORDER

=================================================================

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

IRENE REYNOLDS,

Petitioner,

FLORIDA MEDICAL ASSOCIATION,

Intervenor,

vs. CASE NO. 96-1682RX

STATE OF FLORIDA, AGENCY FOR

HEALTH CARE ADMINISTRATION,

Respondent.

_______________________________/

MOTION TO CORRECT SUMMARY FINAL ORDER

Comes now undersigned counsel for Petitioner, pursuant to Fla. Admin Code

R. 60Q-2032, and filed this motion for correction of the rule referenced in the

July 17, 1996 Summary Final Order as "59G-3.230(6)(e)". The correct number of

the rule is 59G-4.230(6)(e)

Respectfully submitted,

______________________________

MIRIAM HARMATZ

Attorneys for Petitioner

Miriam Harmatz

Florida bar No. 0562017

Florida Legal Service, Inc./

Miami Advocacy Office

3000 Biscayne Blvd., Suite 450

Miami, Florida 33137

[phone]

Paulette Ettachild

Florida Bar No. 198854

Legal Services Of The Florida Keys

600 White Street

Key West, Florida 33040

[phone]

Anne Swerlick

Florida Bar No. 0241040

Florida Legal Services, Inc.

2121 Delta Blvd.

Tallahassee, FL. 32303

[phone]

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true copy of the foregoing was sent by regular mail

on this 19th day of July, 1996 to Moses Williams of Agency for Health Care

Administration, Medicaid Legal Department, 2727 Mahan Drive, Building 31 Fort

Knox executive Center, Tallahassee, Florida 3230 and to Christopher Nuland,

Esquire, 760 Riverside Avenue Jacksonville, Florida 32204

_____________________________

MIRIAM HARMATZ

=================================================================

MOTION FOR REHEARING

=================================================================

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

IRENE REYNOLDS,

Petitioner,

FLORIDA MEDICAL ASSOCIATION,

Intervenor,

vs. CASE NO. 96-1682RX

STATE OF FLORIDA, AGENCY FOR

HEALTH CARE ADMINISTRATION,

Respondent.

_______________________________/

MOTION FOR RE-HEARING

COMES NOW Respondent, STATE OF FLORIDA, AGENCY FOR HEALTH CARE

ADMINISTRATION, and moves the Hearing Officer for a rehearing pursuant to FAC

Rule 60Q-2.016 on the Summary Final Order dated July 17, 1996, and states in

support of this Motion as follows:

1. Petitioner has conceded by motion dated July 19, 1996, that the Summary

Final Order contains substantial errors: FAC Rule 59G-3.230(6)(e) is not the

subject of this proceeding as indicated throughout the Summary Final Order.

2. Respondent has filed a Motion to Dismiss Florida Medical Association's

Petition to Intervene, to which the Hearing Officer has yet to respond.

3. Attached to this Motion for Rehearing is Respondent's Request for Oral

Argument on Petitioner's and Respondent's Oral Argument on Petitioner's and

Respondent's Outstanding Motions.

Respectfully submitted,

_____________________________________

MOSES E. WILLIAMS

Senior Attorney

Florida Bar No. 402656

Agency for Health Care Administration

Office of the General Counsel

2727 Mahan Drive

Tallahassee, Florida 32308-5403

[phone]

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing Motion for

Rehearing has been furnished by U.S. Mail to CHRISTOPHER NULAND, Esquire, 760

Riverside Avenue, Jacksonville, Florida 32204, and MIRIAM HARMATZ, Esquire,

Florida Legal Services, Inc., Miami Advocacy Office, 3000 Biscayne Boulevard,

Suite 450, Miami, Florida 33137 this 25th day of July 1996.

_____________________________________

Moses E. Williams, Esquire

=================================================================

PETITIONER'S RESPONSE TO RESPONDENT'S MOTION FOR REHEARING

=================================================================

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

IRENE REYNOLDS,

Petitioner,

vs. CASE NO. 96-1682RX

FLORIDA MEDICAL

ASSOCIATION, INC.,

Intervenor,

vs.

STATE OF FLORIDA/AGENCY FOR

HEALTH CARE ADMINISTRATION,

Respondent.

_________________________________/

PETITIONER'S RESPONSE TO RESPONDENT'S MOTION FOR REHEARING

Comes now Petitioner's counsel and files the following response:

1. Respondent's Motion is improper based on Fla. Admin. Code R. 60Q-

2.032(3). That rule specifies that "[n]o motion for rehearing shall be

addressed to any recommended order or final order issued by a Hearing Officer.

2. Respondent's argument that Petitioner has "conceded . . that the Final

Order contains substantial errors", is a blatant mischaracterization of

Petitioner's Motion to Correct Summary Final Order. That motion was directed to

correct an error in the numerical designation of one of the challenged rules, an

error which can only be characterized as clerical. Petitioner's motion in no

way concedes "substantial" errors in the order.

Based upon the above, Petitioner requests that the Hearing Officer dismiss

Respondent's Motion for Re-Hearing.

Respectfully submitted,

By_______________________________

MIRIAM HARMATZ

Attorneys for Petitioner

Miriam Harmatz

Florida Bar No. 0562017

Florida Legal Services, Inc./

Miami Advocacy Office

3000 Biscayne Blvd., Suite 450

Miami, Florida 33137

[phone]

Paulette Ettachild

Florida Bar No. 198854

Legal Services of The Florida Keys

600 White Street

Key West, Florida 33040

[phone]

Anne Swerlick

Florida Bar No. 0241040

Florida Legal Services, Inc.

2121 Delta Blvd.

Tallahassee, Florida 32303

[phone]

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true copy of the foregoing was sent by regular mail

on this 31st day of July, 1996 to Moses Williams of Agency for Health Care

Administration, Medicaid Legal Department, 2727 Mahan Drive, Building 3, Fort

Knox Executive Center, Tallahassee, Florida 32308 and by regular mail to

Christopher Nuland, Esquire, 760 Riverside Avenue, Jacksonville, Florida 32204.

_______________________________

MIRIAM HARMATZ

=================================================================

DOAH ORDER CORRECTING SUMMARY FINAL ORDER

=================================================================

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

IRENE REYNOLDS, )

)

Petitioner, )

)

and )

)

FLORIDA MEDICAL ASSOCIATION, INC., )

)

vs. ) CASE NO. 96-1682RX

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

____________________________________)

ORDER

CORRECTING SUMMARY FINAL ORDER

On July 19, 1996, the Petitioner filed a Motion to Correct Summary Final

Order; on July 29, 1996, the Respondent filed a Motion for Re-Hearing. The

Respondent also requests a ruling on its Motion to Dismiss Florida Medical

Association's Petition for Leave to Intervene filed on July 17, 1996.

The Petitioner's Motion to Correct Summary Final Order is granted, and the

mistaken citations to F.A.C. Rule 59G-3.230 are corrected to read F.A.C. Rule

59G-4.230. F.A.C. Rule 60Q-2.032.

The Respondent's Motion for Re-Hearing is denied. Id.

The Respondent's Motion to Dismiss Florida Medical Association's Petition

for Leave to Intervene, which was filed on the day of entry of Summary Final

Order, is denied as untimely.

DONE and ORDERED this 6th day of August, 1996, in Tallahassee, Florida.

___________________________________

J. LAWRENCE JOHNSTON

Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 6th day of August, 1996.

COPIES FURNISHED:

Anne Swerlick, Esquire

Florida Legal Services, Inc.

2121 Delta Boulevard

Tallahassee, Florida 32303

Miriam Harmatz, Esquire

Florida Legal Services

Miami Advocacy Office, Suite 450

3000 Biscayne Boulevard

Miami, Florida 33137

Paulette Ettachild, Esquire

Legal Services of the Florida Keys

600 White Street

Key West, Florida 33040

Moses E. Williams, Esquire

Senior Attorney

Agency for Health Care Administration

Fort Knox Building 3, Room 3431

2727 Mahan Drive

Tallahassee, Florida 32308-5403

Christopher L. Nuland, Esquire

760 Riverside Avenue

Jacksonville, Florida 32204

Carroll Webb, Executive Director

Administrative Procedures Committee

120 Holland Building

Tallahassee, Florida 32399-1300