TRD-9618247

Texas Department of Mental Health and Mental Retardation

Earliest possible date of adoption: January 24, 1997

For further information, please call: (512) 206-4516

The Texas Department of Mental Health and Mental Retardation (TDMHMR) proposes new §§406.101-406.103 of Chapter 406, Subchapter C, governing Vendor Payments. Existing §§406.101- 406.103 are contemporaneously proposed for repeal in this issue of the Texas Register .

The proposed new §§406.101-406.103 would identify supported employment as an allowable cost; revise the formula for the applied income daily reimbursement rate for Title XIX consumers by including the daily rate for an individual's level of need (LON); and revise the special provisions regarding reduced, denied, and incorrect vendor payments and the prohibition of charging or penalizing a Medicaid consumer, a Medicaid consumer's family members, or a Medicaid consumer's representatives for provider claims denied or reduced as the result of the change of an individual's level of need.

Don Green, chief financial officer, has determined that for each year of the first five-year period the proposed new sections are in effect there will be for FY 1997 a total fiscal impact of $326,277,794, of which $204,119,388 is federal and $122,158,406 is state. For FY 1998, the total fiscal impact is $354,498,870, of which $220,781,896 is federal and $133,716,974 is state. For FY 1999, the total fiscal impact is $354,189,079, of which $220,588,958 is federal and $133,600,120 is state. For FY 2000, the total fiscal impact is $354,189,079, of which $220,588,958 is federal and $133,600,120 is state. For FY 2001, the total fiscal impact is $354,189,079, of which $220,588,958 is federal and $133,600,120 is state. There is no anticipated local economic impact.

Ernest McKenney, director, Medicaid Administration, has determined that for each year of the first five years the rules are in effect the public benefit anticipated will be the revision of the formula for the applied income daily reimbursement rate for Title XIX consumers by including the daily rate for the individual's level of need; and the revision of special provisions regarding reduced, denied, and incorrect vendor payments. There is no anticipated economic cost to persons required to comply with the proposed new sections. There will be no effect on small businesses.

Questions about the content of the proposal may be directed to Mr. McKenney. Comments on the proposed sections may be submitted to Linda Logan, director, Policy Development, Texas Department Mental Health and Mental Retardation, P.O. Box 12668, Austin, Texas 78711-2668, within 30 days of publication.

The repeals affects Texas Human Resources Code, §§32.001- 32.040, and Texas Government Code, §531.021.

§406.101.Vendor Payments.

(a)

The Texas Department of Mental Health and Mental Retardation (TDMHMR) or its authorized agent makes vendor payments only for periods of time in which all of the following conditions are met:

(1)

TDMHMR or its designated agent has approved the facility's application to participate in the Title XIX Texas Medical Assistance Program;

(2)

the state survey agency, the Texas Department of Human Services (TDHS), has licensed, if applicable, and certified the facility for operation;

(3)

the facility has a signed contract with TDMHMR or its designated agent to provide services to eligible Title XIX recipients; and

(4)

the state survey agency has determined that the facility is in compliance with federal regulations and state standards for participation.

(b)

The state survey agency determines the effective date of eligibility for participation.

§406.102.Applied Income and the Daily Reimbursement Rate.

(a)

The Medicaid eligibility worker calculates the daily reimbursement rate for each Title XIX client by:

(1)

multiplying the established daily rate for the individual's level of need (LON) times the number of days in the month,

(2)

subtracting the individual's applied income for the month, and

(3)

dividing the result by the number of days in the month.

(b)

The facility is entitled to collect from the individual only the monthly amount of applied income specified on the individual's payment plan.

(c)

When an individual's payment plan requires correction or revision, the facility contacts TDHS to request a plan change. The facility must not collect an increased amount of applied income from the individual unless and until TDHS changes the payment plan.

(d)

If an individual does not have a payment plan, the facility contacts TDHS to determine how much applied income the individual must pay. If TDHS subsequently determines that the individual's correct payment amount is lower than initially specified, the facility must immediately return the amount overpaid and notify TDHS of the refund.

(e)

No facility may collect a sum of Medicaid and applied income payments that exceeds the vendor payment. A violation of this requirement is also a violation of Public Law 95-142, which makes solicitation of supplementation a felony punishable by a fine of up to $25,000 or imprisonment for up to five years or both. Texas Department of Human Services regional staff must report all apparent violations of this requirement. If an investigation verifies an apparent violation, TDMHMR is entitled to withhold vendor payments, terminate or suspend the contract, take other contract actions, and/or refer the matter to a court of law.

§406.103.Special Provisions Regarding Reduced, Denied, and Incorrect Vendor Payments.

(a)

If the department or its authorized agent inadvertently makes vendor payments for services performed during a period in which a facility is not participating in the Title XIX Texas Medical Assistance Program, the facility must refund the inadvertent payments to the department.

(b)

Providers of Title XIX services must not charge or penalize Medicaid clients, their family members, or their representatives for any claim that the department denies or reduces as a result of the change of LON or the provider's failure to comply with the department rules, regulations, or procedures.

(c)

Payments may be adjusted due to the submission of any false statement, misrepresentation, or omission of facts, as indicated in §409.055 (relating to Fraud and Abuse and Recovery of Benefits).

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Issued in Austin, Texas, on December 16, 1996.

TRD-9618248

Ann Utley

Chairman, Texas MHMR Board

Texas Department of Mental Health and Mental Retardation

Earliest possible date of adoption: January 24, 1997

For further information, please call: (512) 206-4516

Subchapter D. Reimbursement Methodology

25 TAC §§406.151, 406.152, 406.154-406.160

The Texas Department of Mental Health and Mental Retardation (TDMHMR) proposes the repeal to §406.151, §406.152 and §§406.154-406.160 of Chapter 406, ICF/MR Programs, Subchapter D, governing reimbursement methodology. The repeal accommodates the contemporaneous proposal of new §406.151, §406.152 and §§406.154- 406.158 in this issue of the Texas Register .

The proposed repeal would enable the addition of new sections to Chapter 406, Subchapter D.

The repeals affects Texas Human Resources Code, §§32.001- 322.040, and Texas Government Code, §531.021.

§406.151.General Reimbursement Information.

§406.152.Cost Reporting Procedures.

§406.154.List of Allowable Costs.

§406.155.List of Unallowable Costs.

§406.156.Cost Finding Methodology.

§406.157.Rate Setting Methodology.

§406.158.ICF/MR/RC VIII Experimental Class.

§406.159.Chart of Accounts for Large Level V and Large Level VI Providers.

§406.160.Chart of Accounts for Level I Providers, Small Level V and Small Level VI Providers, and Level VIII Providers.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

TRD-9618249

Texas Department of Mental Health and Mental Retardation

Earliest possible date of adoption: January 24, 1997

For further information, please call: (512) 206-4516

25 TAC §§406.151, 406.152, 406.154-406.158

The Texas Department of Mental Health and Mental Retardation (TDMHMR) proposes new §406.151, §406.152 and §§406.154- 406.158 of Chapter 406, Subchapter D, governing reimbursement methodology. The contemporaneous repeal of existing §406.151, §406.152 and §§406.154-406.160 is proposed in this issue of the Texas Register .

The proposed new sections would create a new reimbursement methodology that will target funding to provide more supports for persons with greater needs for staff supervision and intervention.

Don Green, chief financial officer, has determined that for each year of the first five-year period the proposed new section is in effect there will be for FY 1997 a total fiscal impact of $326,277,794, of which $204,119,388 is federal and $122,158,406 is state. For FY 1998, the total fiscal impact is $354,498,870, of which $220,781,896 is federal and $133,716,974 is state. For FY 1999, the total fiscal impact is $354,189,079, of which $220,588,958 is federal and $133,600,120 is state. For FY 2000, the total fiscal impact is $354,189,079, of which $220,588,958 is federal and $133,600,120 is state. For FY 2001, the total fiscal impact is $354,189,079, of which $220,588,958 is federal and $133,600,120 is state. There is no anticipated local economic impact.

Ernest McKenney, director, Medicaid Administration, has determined that for each year of the first five years the new sections are in effect the public benefit anticipated will be the creation of a new reimbursement methodology that will target funding to provide more supports for persons with greater needs for staff supervision and intervention. There is no anticipated economic cost to persons who are required to comply with the proposed new sections. There will be no effect on small businesses.

Questions about the content of the proposal may be directed to Mr. McKenney. Written comments on the proposal may be sent to Linda Logan, director, Policy Development, Texas Department of Mental Health and Mental Retardation, P.O. Box 12668, Austin, Texas 78711-2668, within 30 days of publication.

The new sections are proposed under the Health and Safety Code, §532.015(a), which provides the Texas Mental Health and Mental Retardation Board with broad rulemaking authority; and under the provisions of Texas Government Code, which provides the Texas Health and Human Services Commission with the authority to administer federal medical assistance funds.

The new sections affects Texas Human Resources Code, §§32.001- 32.040, relating to General Provisions, and Texas Government Code, §531.021.

§406.151.General Reimbursement Information.

The Texas Department of Mental Health and Mental Retardation (TDMHMR) reimburses Texas Medicaid contracted providers for care provided to eligible recipients in Intermediate Care Facilities for the Mentally Retarded (ICF/MR). The Texas Department of Mental Health and Mental Retardation Board determines reimbursement rates that are statewide and uniform by type of service annually as specified in §409.1 and §409.2 of this title (relating to General Specifications and Methodology). There are two types of services: non-state operated and state-operated.

Non-state operated services.

(A)

Uniform rates. Except for demonstration or pilot projects involving experimental classes as specified in §406.156 of this title (relating to Rate Setting Methodology), reimbursement rates for levels of need are uniform statewide for the same class of non- state operated services. Rates are set prospectively with no annual settlement.

(B)

Classes of non-state operated provider service. Classes of non- state operated provider service are based upon facility size.

State-operated services. Rates for state-operated services are set prospectively based on each facility's historical cost pattern with adjustments for inflation. There is no differentiation based on client level-of-need categories.

§406.152.Cost Reporting Procedures.

Reporting costs. Each provider must submit financial and statistical information on forms provided by TDMHMR or its authorized agent or on facsimiles which are formatted according to TDMHMR or its authorized agent's specifications and are preapproved by TDMHMR or its authorized agent.

Record keeping requirements. Each provider must maintain records according to the requirements in Chapter 406, Subchapter G of this title (relating to Additional Facility Responsibilities). Providers must ensure that records are accurate and sufficiently detailed to support the legal, financial, and statistical information provided to the department.

Noncompliance with record keeping requirements. Failure to maintain records that support the information submitted in a form which is in compliance with TDMHMR or its authorized agent's format constitutes an administrative contract violation. In the case of an administrative contract violation, penalties are applied as specified in §406.62(c)(2) of this title (relating to Sanction Provisions for Violations of Title XIX ICF/MR Contractual Agreements).

(d)

Allowable and unallowable costs. Providers must complete reports according to TDMHMR or its authorized agent's statements of allowable and unallowable costs as contained in §409.008 of this title (relating to allowable and unallowable costs ).

(e)

Certification. Providers must certify the accuracy of costs submitted to TDMHMR or its authorized agent in the format specified by TDMHMR or its authorized agent. Providers may be liable for civil and/or criminal penalties if the cost report is not completed according to TDMHMR requirements.

(f)

Due date. Providers must submit reported costs no later than 45 calendar days after the end of the reporting or 45 days after the date that TDMHMR or its authorized agent mails the format to the provider, whichever is later.

(g)

Extension of due date. TDMHMR may grant extensions of due dates for good cause. A good cause is defined as one that the provider could not reasonably be expected to control. Providers must submit requests for extensions in writing to TDMHMR or its authorized agent before the cost report due date. TDMHMR or its authorized agent must respond to requests for extensions within ten work days of their receipt.

(h)

Cost data. TDMHMR or its authorized agent may at times require additional financial and statistical information to ensure the fiscal integrity of the Texas Medicaid ICF/MR Program. Each provider must submit additional information to TDMHMR or its authorized agent upon request, unless the information is not at the provider's disposal.

(i)

Failure to submit requested data. Failure to submit acceptable cost data by the due date constitutes an administrative contract violation. In the case of an administrative contract violation, penalties are applied as specified in §406.62 of this title (relating to Sanction Provisions for Violations of Title XIX ICF/MR Contractual Agreements).

(j)

Review of cost data. TDMHMR or its authorized agent reviews each provider's cost data to ensure that the financial and statistical information submitted conforms to all applicable rules and instructions. Data that are not completed according to TDMHMR's instructions or rules are returned to the provider for proper completion.

(k)

On-site audits. TDMHMR or its authorized agent performs a sufficient number of on-site audits to ensure the fiscal integrity of the TDMHMR Medicaid Programs. The number of on-site audits performed may vary.

(l)

On-site audit standards. TDMHMR or its authorized agent performs on-site cost report audits in a manner consistent with the generally accepted auditing standards (GAAS) approved by the American Institute of Certified Public Accountants and included in Standards for Audit of Governmental Organizations, Programs, Activities and Functions, issued by the United States Comptroller General.

(m)

Access to records. Each provider or its designated agent(s) must allow access to any and all records necessary to verify information submitted to TDMHMR or its authorized agent on Medicaid cost reports or cost surveys. This requirement includes records pertaining to related-party transactions and other business activities engaged in by the provider. Failure to allow inspection of pertinent records within ten working days following written notice from TDMHMR or its authorized agent constitutes an administrative contract violation. In the case of an administrative contract violation, penalties are applied as specified in §406.62 of this title (relating to Sanction Provisions for Violations of Title XIX ICF/MR Contractual Agreements). If a central office or other entity pertaining to a multi-facility operation refuses access to records, then the penalties are extended to all related parties having Medicaid contracts with TDMHMR. Additional rules regarding access to records that are out of state may be found in Chapter 409, Subchapter A of this title (relating to General Reimbursement Methodology for all Medical Assistance Programs).

(n)

Reviews of cost disallowances. A provider who disagrees with disallowances of items may request an informal review and, when necessary, an administrative hearing as specified in §409.007 of this title (relating to Reviews and Administrative Hearings).

(o)

Notification of exclusions and adjustments. TDMHMR or its authorized agent notifies providers of exclusions and adjustments to reported expenses made during the department's desk reviews and on-site audits.

§406.154.Reporting Costs.

On an annual basis, all state-operated provider agencies must submit cost reports as directed by TDMHMR or its designee in accordance with Chapter 409, Subchapter A of this title (relating to General Reimbursement Methodology for all Medical Assistance Programs) and §406.152 of this title (relating to Cost Reporting Procedures).

Non-state operated provider agencies must submit cost report information as directed by TDMHMR or its designee in accordance with Chapter 409, Subchapter A of this title (relating to General Reimbursement Methodology for all Medical Assistance Programs).

On an annual basis, non-state operated providers will submit direct service cost information according to §406.152 of this title (relating to Cost Reporting Procedures) and §406.157 of this title (relating to Fiscal Accountability).

Every three years, non-state operated providers may be required to provide a report of all of their costs according to §406.152 of this title (relating to Cost Reporting Procedures) and §406.158 of this title (relating to Rebasing the Non-State Operated Modeled Rates).

§406.155.Determining Non-State Operated Modeled Rates.

TDMHMR will pay non-state-operated providers model-based rates that will vary by class of service and the individual's level of need as outlined in Chapter 406, Subchapter E (relating to Eligibility and Review).

The non-state operated rates include both the residential and day program services. Individuals receive medical and dental services through the Medicaid identification card. Any medical expenses other than covered services are the responsibility of the provider.

Providers may submit vouchers to TDMHMR for the actual cost of expenses for an individual's durable medical equipment such as wheelchairs that cost in excess of $1,000, provided that the expenditure was preapproved by the department. Persons who are eligible for Medicare payments for wheelchairs must file a Medicare claim prior to requesting ICF/MR payments.

Persons are limited to $5,000 for durable medical equipment per year.

There are modeled rates for each level of need for each class of service:

large facilities of 14 or more beds;

Medium facilities that have from 9-13 beds;

Small facilities that have eight beds or less;

The modeled rates are based on cost components deemed appropriate for an economically and efficiently operating ICF/MR provider of quality services. The determination of these components is based on historical cost and operational information collected from a representative sample of ICF/MR providers. An advisory panel consisting of service providers, advocates, and department personnel, analyzes available information regarding historical cost and operational data and level-of-need assessment. TDMHMR will use the analysis to make recommendations to the board for the modeled rates.

§406.156.Rate Setting Methodology.

Types of services. There are two types of services for the purposes of rate setting: state-operated and non-state operated services. Non-state operated services are further divided by classes that are determined by the size of the facility.

Classes of non-state operated services. A separate set of reimbursement rates are set for each class of non-state operated services. The three classes are large, medium, and small facilities. Large facilities are those with 14 or more Medicaid-contracted beds. Medium facilities are those with 9-13 beds. Small facilities are those with eight or fewer Medicaid-contracted beds.

State-operated facilities. There are no classes of provider services for state-operated ICF/MR facilities. These facilities are reimbursed on a facility-based per diem rate which is determined by each facility's allowable costs inflated forward to the rate period. The reimbursement rates include residential, day, and comprehensive medical services. There will be a cost settlement if there is a difference between the projected rates and the actual costs.

(d)

Rate determination for non-state operated services. The Texas Mental Health and Mental Retardation Board determines reimbursement in accordance with Chapter 409, Subchapter A of this title (relating to General Reimbursement Methodology for all Medical Assistance Programs) and this subchapter. Rates for 1997 are set according to §406.155 of this title (relating to Reporting Costs). Annual rates for the time period between the years that model rates are rebased are set by inflating the previous year's rates by the IPD-PCE as defined in Chapter 409, Subchapter A of this title (relating to General Reimbursement Methodology for all Medical Assistance Programs). If the findings of the accountability process, §406.157 of this title (relating to Fiscal Accountability), show a significant difference between the direct care costs of the non-state operated providers and the direct care reimbursement received by the non-state providers, the TDMHMR Board may adjust, either up or down, the direct cost portion of the previous year's rates before applying the IPD-PCE. These rates are uniform by class and level of need category, determined prospectively, and adjusted annually. There is no cost settlement.

Non-state operated service rates include both the residential and day program services which includes payment for the full 24- hours of daily service.

Reimbursement rates will be differentiated based on client level of need as outlined in §§406.201-406.217 of this title (relating to Eligibility and Review). The levels of need are intermittent, limited, extensive, pervasive. A pervasive plus level is available for those individuals that have behavior challenges that are so significant that they pose a threat to themselves or others and require constant one on one supervision for 16 or more hours per day.

(3)

Reimbursement will be on a per diem basis based on the class of the facility and the level of need of the client. For each class of service, the TDMHMR Board will set per diem rates for:

Model rates are rebased according to §406.158 of this title (relating to Rebasing the Non-State Operated Modeled Rates).

(e)

Rate determination for state-operated facilities. The TDMHMR Board determines reimbursement in accordance with Chapter 409, Subchapter A of this title (relating to General Reimbursement Methodology for all medical Assistance Programs) and this subchapter. Rates are facility specific, determined prospectively, and cost related.

Description of rate class. The state-operated facility rate class consists of all ICF/MR facilities that are operated by TDMHMR.

Determination of state-operated facility rates. State-operated facilities are reimbursed in the following manner:

(A)

The per diem rate for each facility is based on the total projected allowable costs for selected cost centers divided by the total days of service the facility delivered in the cost reporting period.

(i)

Rates for state-operated ICFs/MR are based on the most current costs reported on their cost reports.

(ii)

Costs for each facility are divided into three groups: salaries and benefits, comprehensive medical, and other. These costs are inflated by the factors identified in §409.004 of this title (relating to Determination of Inflation Indices). Each facility will have its own per diem rate.

(iii)

Rates for newly certified facilities are based on a pro forma model. The pro forma rate is the average of all available similarly sized facilities per diem rates for that particular rate year. Newly certified facilities will be required to submit three-month cost reports to reflect costs incurred during the first 90 days of certified operation. These costs will be used to determine the facility's specific per diem rate within 180 days of certification.

(f)

Experimental class. TDMHMR may define experimental classes of service to be used in research and demonstration projects on new reimbursement methods. Demonstration or pilot projects based on experimental classes may be implemented on a statewide basis or may be limited to a specific region of the state or to a selected group of providers. Reimbursement for an experimental class is not implemented, however, unless the TDMHMR Board and the Health Care Financing Administration (HCFA) approve the experimental methodology.

§406.157.Fiscal Accountability.

General principles. Fiscal accountability is a process used to gauge the ongoing validity of the non-state operated model rates.

Fiscal accountability will consist of the annual reporting of direct service costs including wages, benefits, staffing, and supervisory span-of-control information from all non-state operated providers. The data will be collected on a cost survey designed by TDMHMR or its designee, and will include the following:

Direct service costs are defined as those costs associated with personnel who provide direct "hands-on" support for consumers and include personnel such as direct care workers, direct care worker supervisors, qualified mental retardation professionals (QMRPs), registered nurses, licensed vocational nurses, and other personnel who provide activities of daily living training and clinical program services.

Direct service costs and operational information will be collected from both the residential and day service components of the program. Day service costs may be either the provider's actual cost or contracted expenditures.

(3)

Direct service personnel whose work hours are split between two or more functions, one of which is not direct care (i.e., part-time QMRP and part-time administrator/owner) will report hours associated with the direct service, and be limited in salary to the modeled wage rate for that direct care position.

TDMHMR will collect the direct costs on a survey during a three-month period of the current rate year. The data will reflect the provider's actual costs for the fiscal quarter ending during the three-month period. The direct service costs collected will be compared to the direct service cost component of the model rates. Instances in which the actual direct service costs, as captured by the quarterly cost surveys, are significantly at variance with the assumptions in the model, recommendations may be made to the TDMHMR Board to take action affecting the next rate adjustment. The department will review the data with representatives of provider associations and advocacy groups.

§406.158.Rebasing the Non-State Operated Modeled Rates.

At least every three years TDMHMR will assess the viability of the non-state-operated modeled rates using the following process:

TDMHMR will seek to obtain an independent, detailed analysis of cost and operational information for a sample of ICF/MR service providers throughout the state in accordance with Texas Government Code, Chapter 2254.

Site visits will be made to each of the sample providers to collect cost data and discuss operations.

(3)

An advisory panel consisting of service providers, advocates, and department personnel will analyze available information regarding historical cost and operational data and level-of-need assessment. TDMHMR will use the analysis to make recommendations to the board for adjusting the models or rebasing.

(4)

TDMHMR will recommend adjustments to rate factors if required, based on the results of the analysis of the sample of cost and operational information.

(5)

Revised rates, as well as the rationale supporting the rates, will be presented to the TDMHMR Board for final approval and implementation.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

TRD-9618250

Texas Department of Mental Health and Mental Retardation

Earliest possible date of adoption: January 24, 1997

For further information, please call: (512) 206-4516

Subchapter G. Additional Facility Responsibilities

25 TAC §406.302

(Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Texas Department of Mental Health and Mental Retardation or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The Texas Department of Mental Health and Mental Retardation (TDMHMR) proposes the repeal to §409.302, of Chapter 406, ICF/MR Programs, Subchapter G, relating to additional facility responsibilities. The repeal accommodates the contemporaneous proposal of new §406.302 in this issue of the Texas Register .

The proposed repeal would enable the addition of a new sections to Chapter 406, Subchapter G.

Don Green, chief financial officer, has determined that for each year of the first five years the repealed section as proposed will be in effect, there is no anticipated fiscal impact. There will be no additional fiscal cost to state or local government or small businesses as a result of administering the rules as proposed. There will be no significant local economic impact. There is no anticipated cost to individuals required to comply with the proposed repeal.

The repeal is proposed under the Health and Safety Code, §532.015(a), which provides the Texas Mental Health and Mental Retardation Board with broad rulemaking authority; and under the provisions of Texas Government Code, §531.021, which provides the Texas Health and Human Services Commission with the authority to administer federal medical assistance funds.

The repeal affects Texas Human Resources Code, §§32.001- 32.040, and Texas Government Code, §531.021.

§406.302.Vocational, Prevocational, and Day Program Services (CFR).

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

TRD-9618252