Contract period - the beginning date through the ending date specified in the original contract, or earlier if the contract is terminated before the end of the contract period. The Texas Department of Human Services considers extensions as separate contract periods. ]

[ ~~(2)~~

[ ~~(3)~~ ] Expansion funds - funds made available to a contractor that has sponsored the participation of day care homes for at least one year at the time of application for expansion funds to expand the participation of the CACFP in day care homes located in low-income and/or rural areas, and to assist potential day care home providers who are unlicensed or unregistered to become licensed or registered.

(3) [ ~~(4)~~ ]

Low-income area - local area where at least 50% of the area children are eligible for free or reduced-price school meals under the National School Lunch Program, as determined:

by the number of free and reduced-price lunches or breakfasts served to children attending public and nonprofit private schools located in areas where there are CACFP sites,

by information provided from departments or agencies that shows the family size and income of families in specific geographical boundaries, or

from other appropriate sources.

Participant - for the purpose of determining eligibility for participation in the At Risk Afterschool program of the Child and Adult Care Food Program, the term "participant" as defined in 7 Code of Federal Regulations, §226.2 is expanded to include:

individuals through 18 years of age;

individuals who turn 19 years of age during the regular school year; and

individuals who have been determined to be mentally or physically disabled, regardless of age.

§12.3.Eligibility of Contractors, Facilities, and Food Service Management Companies.

Facilities , except participants in the CACFP At Risk Afterschool program not subject to state licensing requirements, must be licensed or otherwise approved by federal, state, or local authorities to provide child care . CACFP At Risk Afterschool programs that are not subject to state licensing requirements must provide documentation from the Texas Department of Protective and Regulatory Services (TDPRS) to show that they are not subject to state licensing requirements. Adult day care centers must be licensed by DHS or the Texas Department of Mental Health and Mental Retardation (TxMHMR), except that receipt of Title XIX funds (Medicaid) constitutes approval for program participation. Child care centers must be licensed or registered by TDPRS [ ~~DHS~~ ]. General Exception: Facilities operated by federal and Indian tribal governments are not required to be licensed or otherwise approved by DHS or TxMHMR.

(d)-(f)

DHS requires contractors to submit as proof of eligibility one or more of the following forms of documentation of tax-exempt status:

letter from the IRS acknowledging acceptance of the contractor's application for tax-exempt status under the Internal Revenue Code of 1954. Organizations approved to participate in the CACFP on the basis of IRS acknowledgment of application for tax-exempt status are eligible to participate in the program, if otherwise eligible, for a period of 180 days from the date of acceptance by the IRS of the organization's application. An organization that is unable to obtain documentation of tax-exempt status within 180 days may request a one- time extension of 90 days to obtain the documentation. DHS will grant a one-time extension upon receipt from the organization of documentation provided by the IRS that the organization has complied with all requests for information pursuant to the establishment of tax-exempt status. An organization that is unable to obtain documentation of tax-exempt status within the prescribed deadline(s) will be ineligible to participate in the CACFP immediately upon expiration of the deadline(s) and will not be eligible to apply to participate in the program until a determination of tax-exempt status has been made in writing by the IRS.

(h)-(n)

To be eligible to participate in the CACFP At Risk Afterschool program, contractors and facilities must:

(o)

be an organization eligible to participate in the CACFP in accordance with this chapter;

operate an after school program which:

provides individuals with regularly scheduled activities in an organized, structured, and supervised environment, including weekends and holidays during the regular school year;

includes educational or enrichment activities;

is located in a geographical area served by a school in which 50% or more of the children enrolled are eligible for free or reduced price school meals; and

is not comprised of an organized athletic program engaged in interscholastic or community level competitive sports including, but not limited to, youth sports leagues. After school programs that include supervised athletic activity are allowed in the CACFP At Risk Afterschool program provided the programs are open to all and do not limit membership for reasons other than space or security or licensing requirements, if applicable; and

meet state or local licensing requirements as applicable, or otherwise meet state or local health and safety standards.

§12.5.Application for Program Benefits - Contractors.

(a)-(d)

DHS conducts a pre-approval visit of contractors who are private nonprofit or private for-profit organizations who apply to participate in the CACFP in order to determine that the contractor demonstrates the capability of successfully operating the CACFP in accordance with the requirements of 7 Code of Federal Regulations 226 and this chapter.

(f) [ ~~(e)~~ ]

If a contractor's application for participation is incomplete, DHS will deny the application if the requested additional information is not submitted to DHS within 30 days of the date of the written request. The contractor may reapply when all required information and documentation is available.

(g) [ ~~(f)~~ ]

To be eligible for start-up funds or expansion funds, contractors that sponsor day care homes must submit an application. DHS approves or denies applications for start-up and expansion funds according to 7 Code of Federal Regulations §§226.6, 226.12, 226.15, 226.16, and 226.23.

Start-up funds are available only to sponsors of day care homes or contractors that are attempting to add day care homes to their operation, and to assist potential day care home providers who are unlicensed or unregistered to become licensed or registered.

Expansion funds are available only to contractors that have sponsored day care homes for at least one year at the time of application and may be used only to expand program operations in low-income and/or rural areas, and to assist potential day care home providers who are unlicensed or unregistered to become licensed or registered. DHS considers the anticipated amount of expansion funds and alternate sources of funds when evaluating an applicant sponsor's plan for expansion. Contractors that are eligible to receive expansion funds may receive expansion funds only once in any 12-month period and one time only for an expansion effort in any geographic area. Applications for expansion funds must include:

an acceptable and realistic plan for recruiting day care homes to participate in the program, including activities which the sponsoring organization will undertake;

the amount of expansion funds needed and a budget detailing the costs the organization will incur, document, and claim;

the time necessary for the expansion of program operations; and

documentation that the expansion area meets the definition of a rural or low-income area.

§12.9.Reporting and Record Retention.

Contractors must keep records and documents pertaining to the CACFP for at least three years and 90 days after the termination of the program fiscal year [ ~~contract period~~ ]. If any litigation, claim, audit, or investigation involving these records begins before the stipulated time period expires, the contractor must keep the records and documents for not less than three years and 90 days after the termination of the program fiscal year [ ~~contract period~~ ] and until all litigation, claims, audits, or investigation findings are resolved. DHS considers the case resolved when a final order is issued in litigation or a written agreement is signed between DHS and the sponsoring organization.

(c)-(h)

§12.11.Participant Eligibility for Free and Reduced-price Meals.

(a)-(c)

Contractors approved to operate the Child and Adult Care Food Program (CACFP) At Risk Afterschool program must provide an after school supplement (snack) free of charge to all eligible participants attending an after school program in accordance with the at risk component of the program.

§12.14.Meal Requirements.

Contractors must ensure that all program meals served and claimed for reimbursement , including after school snacks served in after school programs approved to operate the Child and Adult Care Food Program (CACFP) At Risk Afterschool program, fulfill the requirements of 7 Code of Federal Regulations §§226.2, 226.6, 226.13, 226.15-226.20, and 226, Appendix A, Alternate Foods for Meals, including meals purchased from a food service management company.

(b)-(d)

§12.15.Reimbursement Methodology.

Contractors approved to operate the Child and Adult Care Food Program (CACFP) At Risk Afterschool program may submit a claim for reimbursement for one snack per child per day for all eligible after school snacks served to eligible program participants. DHS reimburses contractors for eligible snacks at the free rate of reimbursement.

Contractors are not eligible to be reimbursed for after school snacks served to participants in an approved At Risk Afterschool program if the participants have already received the maximum number of reimbursable meals under the CACFP (two meals and one supplement, or two supplements and one meal per child per day).

(e) [ ~~(c)~~ ]

To be eligible for reimbursement, contractors must ensure that claims for reimbursement are postmarked or received by DHS no later than 60 days after the end of the claim month. Persons who sign the DHS certificate of authority form as the authorized representative of the contractor must sign claims.

(f) [ ~~(d)~~ ]

DHS may not pay claims postmarked or received by DHS later than 60 days after the end of the claim month, unless the United States Department of Agriculture (USDA) determines that the submission of the late claim is the result of good cause beyond the contractor's control. For claims postmarked or received by DHS later than 60 days after the end of the claim month, DHS will notify the contractor that they may submit a written request for payment which demonstrates that the claim was submitted late for good cause beyond the control of the contractor. If DHS does not agree that good cause beyond the control of the contractor exists for the submission of a claim later than 60 days after the end of the claim month, DHS will notify the contractor that the request for payment will not be forwarded to USDA for consideration. If DHS agrees that the claim was submitted late for good cause beyond the control of the contractor, DHS will forward the request for payment to USDA with a recommendation that the claim be paid. If USDA determines that good cause exists, DHS may pay the claim. If USDA determines that good cause beyond the control of the contractor does not exist or if the contractor chooses not to submit a request for payment of a late claim demonstrating that good cause beyond his control exists, DHS may grant an exception and pay a claim postmarked or received by DHS later than 60 days after the end of the claim period provided that the contractor:

requests an exception in writing; and

has not been granted an exception in the 36 months preceding the month for which a request for an exception is submitted.

(g) [ ~~(e)~~ ]

Contractors serve and claim second meals for reimbursement according to 7 Code of Federal Regulations §226.20(j). Contractors that serve meals family style are not eligible for reimbursement for second meals.

(h) [ ~~(f)~~ ]

Day home providers may not claim Child and Adult Care Food Program (CACFP) reimbursement for meals served to another day home provider's own children at any time when both day home providers are participating in the CACFP. The "providers' own child" of one day home provider may be considered a "nonresidential child" for the purpose of claiming reimbursement for a meal service at the day home of another provider only if the criteria in paragraphs (1) and (2) are met:

the children are enrolled for child care at the substitute facility; and

the provider for whom substitute care is being provided does not claim reimbursement for any meals served during the period of substitute care.

(i) [ ~~(g)~~ ]

Contractors that sponsor child and adult care centers may not include in a claim for reimbursement any meals:

purchased from a food service management company (FSMC) that is not registered with DHS on or before the date of the meal service; or

prepared at an unapproved food preparation facility operated by a registered FSMC.

§12.19.Program Reviews.

DHS will conduct periodic visits to private nonprofit and private for-profit contractors participating in the Child and Adult Care Food Program (CACFP) who have been determined by DHS through the program review process and technical assistance sessions to have demonstrated potential for noncompliance with program requirements. [ ~~Contractors that sponsor day homes conduct their reviews of day home providers according to 7 Code of Federal Regulations §226.16 and this chapter.~~ ]

Each fiscal year, DHS will select by random sample at least 10% of the providers of each sponsor participating in the CACFP. Each contractor that sponsors day care homes must verify that the children for which meals are being claimed for reimbursement are enrolled for and receiving child care services and participating in the program. For each provider selected, the sponsor must contact the family of each child reported as enrolled for child care and participating in the program, excluding the day care home provider, during a test period established by DHS. Nothing in this chapter shall prohibit a contractor from verifying the participation of children in day care homes not randomly selected for verification by DHS or from conducting additional verification of participation in homes randomly selected by DHS. [ Day home sponsoring organizations must conduct at least three monitoring reviews of each of their day care homes each 12 months. A meal service must be observed during each of the reviews. Each review of each provider must be conducted without prior notice (unannounced). An unannounced follow-up review must be made no more than two weeks after a review at which the sponsor is unable to confirm program participation. ]

Contractors that sponsor day homes conduct their reviews of day home providers according to 7 Code of Federal Regulations §226.16 and this chapter. [ Each fiscal year, DHS will select by random sample at least 10% of the providers of each sponsor participating in the CACFP. Each contractor that sponsors day care homes must verify that the children for which meals are being claimed for reimbursement are enrolled for and receiving child care services and participating in the program. For each provider selected, the sponsor must contact the family of each child reported as enrolled for child care and participating in the program, excluding the day care home provider, during a test period established by DHS. Nothing in this chapter shall prohibit a contractor from verifying the participation of children in day care homes not randomly selected for verification by DHS or from conducting additional verification of participation in homes randomly selected by DHS. ]

Day home sponsoring organizations must conduct at least three monitoring reviews of each of their day care homes each 12 months. A meal service must be observed during each of the reviews. Each review of each provider must be conducted without prior notice (unannounced). An unannounced follow-up review must be made no more than two weeks after a review at which the sponsor is unable to confirm program participation. [ ~~Day home sponsoring organizations must ensure that at least one of their three monitoring reviews of day home providers participating on weekends is conducted on Saturday or Sunday.~~ ]

Day home sponsoring organizations must ensure that at least one of their three monitoring reviews of day home providers participating on weekends is conducted on Saturday or Sunday.

[ ~~(f)~~ ] Contractors that sponsor the participation of child and adult care centers must:

conduct a preapproval visit to each food preparation site and the administrative offices of the food service management company (FSMC) prior to awarding a contract for food service;

review the FSMC, including each food preparation site and administrative offices, at least three times per contract period. The first review must occur within the first six weeks of the beginning of the program year, and no more than six months can pass between reviews. If a food service contract is executed after the beginning of the contract period, the contractor may adjust the number of reviews based on the number of months remaining in the contract period;

review the FSMC meal preparation and delivery system, including but not limited to sanitation and food preparation practices, transportation of food, record keeping, and compliance with state and local health requirements;

maintain written verification of monitoring visits, including the date of the visit and all findings; and

require the FSMC to take appropriate action to correct all deficiencies discovered during the review within a reasonable amount of time. If the health and well being of program participants are at risk as a result of program deficiencies identified during a FSMC review, the contractor may immediately terminate the contract for cause.

§12.24.Sanctions and Penalties.

If DHS has evidence that a contractor has submitted false information, DHS will immediately suspend all program payments, including advance payments, until DHS can determine whether the contractor knowingly submitted false information. If DHS determines, after a review of information provided by the contractor or other sources, that the contractor has knowingly submitted false information, DHS will immediately declare the contractor seriously deficient, terminate the contractor's agreement , in whole or in part , suspend payment of any unpaid claim for reimbursement, and notify the contractor's eligible providers that they may transfer to another approved sponsor.

If a contractor fails to attend training designated by DHS as mandatory, DHS will immediately declare the contractor seriously deficient and terminate the contractor's agreement , in whole or in part . DHS will deny payment of any administrative costs claimed for reimbursement beginning with the first month after the month in which the contractor failed to attend the required training. DHS will notify the contractor's eligible providers that they may transfer to another approved sponsor.

DHS imposes sanctions against contractors that sponsor day care homes who fail to comply with program requirements for monitoring, and who fail to train providers when program violations related to monitoring or training of providers identified during an administrative review exceed a tolerance level of one provider or 10% of the providers sampled, whichever amount is greater. DHS imposes sanctions according to the following procedure:

DHS will conduct a second follow-up review not later than 45 days after notifying the contractor of the findings of the initial follow- up review to determine if the sponsor is in compliance with the requirements in this subsection. DHS will notify the contractor that failure to correct all instances of noncompliance with the requirements in this subsection will result in the termination, in whole or in part, of the contractor's agreement, [ ~~contract termination,~~ ] declaration that the organization is seriously deficient in its administration of the program, forfeiture of any outstanding claims for reimbursement, release of the contractor's eligible providers to transfer to another approved sponsor, and that individuals responsible for the deficiencies will be debarred.

DHS imposes sanctions against contractors that sponsor day care homes who fail to ensure that claims are submitted only for eligible meals served to eligible children according to the following procedure:

If more than 10% of the meals sampled for the test month of the follow-up review fail to meet program requirements, DHS will conduct a second follow-up review not later than 45 days after notifying the contractor of the findings of the initial follow-up review to determine if the sponsor is in compliance with requirements for ensuring claims are submitted only for eligible meals served to eligible children. DHS will notify the contractor that failure to correct all instances of noncompliance with requirements for ensuring claims are submitted only for eligible meals served to eligible children will result in the termination, in whole or in part, of the contractor's agreement, [ ~~contract termination,~~ ] declaration that the organization is seriously deficient in its administration of the program, forfeiture of any outstanding claims for reimbursement, release of the contractor's eligible providers to transfer to another approved sponsor, and that individuals responsible for the deficiencies will be debarred.

DHS imposes sanctions against contractors that sponsor day care homes who fail to disburse program funds to providers in accordance with program requirements when program violations related to the disbursement of program funds to providers identified during an administrative review exceed a tolerance level of one provider or 10% of the providers sampled, whichever amount is greater. DHS imposes sanctions according to the following procedure:

DHS will conduct a second follow-up review not later than 45 days after notifying the contractor of the findings of the initial follow- up review to determine if the sponsor is in compliance with the requirements identified in subsection (h) of this section. DHS will notify the contractor that failure to correct all instances of noncompliance relating to the disbursement of provider funds will result in the termination, in whole or in part, of the contractor's agreement, [ ~~contract termination,~~ ] declaration that the organization is seriously deficient in its administration of the program, forfeiture of any outstanding claims for reimbursement, release of the contractor's eligible providers to transfer to another approved sponsor, and that individuals responsible for the deficiencies will be debarred.

(h)-(j)

DHS imposes fiscal sanctions specified in this subsection on contractors who are required to obtain an audit in accordance with the Single Audit Act, as amended, and who fail to comply with the requirements of said Act. The contractor has the right to appeal this action as specified in Chapter 79 of this title (relating to Legal Services).

(k)

DHS takes fiscal sanctions against a contractor according to the procedures specified in paragraphs (1)-(4) of this subsection.

DHS notifies each contractor upon approval of the application for program participation of the date by which an acceptable audit must be received by DHS, and that failure to comply will result in the termination, in whole or in part, of the contractor's agreement, [ ~~contract termination~~ ] and recovery of overpayments as identified through audit findings.

DHS provides the contractor two advance notices reminding the contractor of the specific date that the audit is due.

DHS issues the second notice by certified and regular mail eight months after the end of the contractor's fiscal year for which the audit is due. DHS notifies the contractor that:

(I)

if DHS does not receive the audit on or before the specified due date, DHS will terminate the contractor's agreement, in whole or in part, [ ~~contract~~ ] effective the first day of the month following the month in which the audit was due; and

(II)

(III)

If DHS does not receive the audit on or before the specified due date, DHS notifies the contractor by certified and regular mail that their agreement [ ~~contract~~ ] was terminated , in whole or in part, effective the first day of the month following the month in which the audit was due.

If a contractor submits an audit which does not meet the requirements of the Single Audit Act, as amended, then DHS notifies the contractor in writing that the audit is unacceptable, how it is unacceptable, and that the contractor has 30 calendar days from the date on the notification to submit an acceptable audit to DHS. If DHS does not receive the required audit by the specified time frame and has not granted an extension of the due date, DHS notifies the contractor by certified and regular mail that:

(A)-(B)

if DHS does not receive an acceptable audit by the specified due date, DHS will terminate their agreement, in whole or in part, [ ~~contract~~ ] effective the first day of the month following the due date specified in this notification; and

If DHS does not receive the required audit by the specified due date and has not granted an extension of the due date, DHS notifies the contractor by certified and regular mail that:

DHS terminated their agreement, in whole or in part, [ ~~contract~~ ] effective the first day of the month following the specified due date.

Once a contractor's participation in the CACFP [ ~~contractor~~ ] has been terminated for failure to submit an acceptable audit, the contractor must provide an acceptable audit for any outstanding audit year(s) and comply with the requirements of the Single Audit Act, as amended, in order to be eligible to participate in the Special Nutrition Programs.

(l)

§12.25.Denials and Terminations.

The Texas Department of Human Services (DHS) denies applications for participation and terminates agreements , in whole or in part, between DHS and contractors for failure to meet basic eligibility requirements, and according to 7 Code of Federal Regulations §§226.6, 226.14-226.16, 226.18, 226.23, 226.25, and 7 Code of Federal Regulations Part 3015.

DHS terminates agreements, in whole or in part, [ ~~contracts~~ ] and denies subsequent applications of sponsoring organization of day care homes who fail to submit reports in accordance with §12.9 of this title (relating to Reporting and Record Retention).

DHS terminates agreements, in whole or in part, [ ~~contracts~~ ] and denies applications of contractors who have been determined to be seriously deficient in their administration of the program for failure to comply with program requirements as described in §§12.3, 12.5, 12.6, 12.20, and 12.24 of this title (relating to Eligibility of Contractors and Facilities, Application for Program Benefits-Contractors, Agreement, Training/Technical Assistance, and Sanctions and Penalties). DHS may approve an application and execute a contract with a contractor found to be seriously deficient for failure to comply with program requirements if such contractor demonstrates to the satisfaction of DHS that all serious deficiencies identified by DHS have been or will be corrected. DHS will establish a date by which the day care home sponsoring organization must submit an acceptable plan to correct the serious deficiencies identified by DHS. If a contractor fails to demonstrate by submission of an acceptable corrective action plan by the specified date that all serious deficiencies identified by DHS have been or will be corrected, DHS will notify the contractor that their agreement is terminated , in whole or in part, effective the last day of the month in which their corrective action plan was due and that DHS will deny payment of any claims for reimbursement after that date. [ Exception: If DHS specifies a due date for the submittal of a corrective action plan which extends beyond the expiration date of the contractor's agreement, DHS will offer an extension to the agreement for a period not to exceed 180 days beyond the expiration date of the agreement unless terminated earlier for failure to comply with program requirements or submit an acceptable corrective action plan. DHS will determine the duration of the extension based on the amount of time needed to complete the corrective action process. If the contractor rejects the offer of extension, the agreement will expire on the original expiration date. ]

DHS denies applications for participation and terminates agreements , in whole or in part, with contractors sponsoring day homes for failure to submit a balanced and reasonable budget.

DHS denies applications and terminates agreements , in whole or in part, with contractors if they have permitted any individual identified in §12.3(h) of this title (relating to Eligibility of Contractors and Facilities) to enter the facility when children are present.

DHS denies applications and terminates agreements , in whole or in part, with contractors if they have permitted any individual identified in 12.3(i) of this title (relating to Eligibility of Contractors and Facilities) to engage in any activity related to the administration of the CACFP.

(h)

DHS terminates agreements , in whole or in part, with contractors that sponsor day care homes if they receive reimbursement for fewer than 50 day care homes for three consecutive months.

DHS denies applications for participation and terminates agreements , in whole or in part, with contractors subject to the bonding requirement identified in §12.3(b) of this title (relating to Eligibility of Contractors and Facilities) if they fail to submit and maintain in good standing a performance bond in the amount established by DHS. DHS denies requests for relief from the bonding requirement if the contractor has an outstanding financial obligation to DHS.

Contractors may appeal a DHS decision not to request a USDA determination of good cause for submission of a late claim, as described in §12.15(f) [ ~~§12.15(d)~~ ] of this title (relating to Reimbursement Methodology). Contractors may not appeal a USDA decision that the late claim is ineligible for payment.

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.

Filed with the Office of the Secretary of State, on June 17, 1999.

TRD-9903609

For further information, please call: (512) 438-3765

Subchapter B. Summer Food Service Program

40 TAC §§12.108, 12.121, 12.122

The amendments are proposed under the Human Resources Code, Title 2, Chapters 22 and 33, which provides the department with the authority to administer public and nutritional assistance programs.

The amendments implement §§22.001-22.030 and §§33.001-32.024 of the Human Resources Code.

§12.108.Record Retention.

Sponsors must keep financial and supporting documents, statistical records, and any other records of services for which the sponsor submits a claim for reimbursement in the manner and detail prescribed by DHS. The sponsor's staff must keep records and documents for at least three years and 90 days after the end of the program fiscal year [ ~~termination of the contract period~~ ]. If any litigation, claim, audit, or investigation involving these records begins before the stipulated time period expires, the sponsor must keep the records and documents for not less than three years and 90 days after the end of the program fiscal year [ ~~termination of the contract period~~ ] and until the litigation, claim, audit, or investigation findings are resolved. The DHS considers the case resolved when a final order is issued in litigation or a written agreement is signed by DHS and the sponsor. [ Contract period means the beginning date through the ending date specified in the original contract, or earlier if the contract is terminated before the end of the contract period. The DHS considers extensions to be separate contract periods. ]

§12.121.Sanctions and Penalties.

DHS imposes fiscal sanctions specified in this subsection on sponsors who are required to obtain an audit in accordance with the Single Audit Act, as amended, and who fail to comply with the requirements of the said Act. The sponsor has the right to appeal this action as specified in Chapter 79 of this title (relating to Legal Services).

DHS takes fiscal sanctions against a sponsor according to the procedures specified in paragraphs (1)-(4) of this subsection.

DHS notifies each sponsor upon approval of the application for program participation of the date by which an acceptable audit must be received by DHS, and that failure to comply will result in the termination, in whole or in part, of the contractor's agreement, [ ~~contract termination~~ ] and recovery of overpayments as identified through audit findings.

DHS provides the sponsor two advance notices reminding the sponsor of the specific date that the audit is due.

DHS issues the second notice by certified and regular mail eight months after the end of the sponsor's fiscal year for which the audit is due. DHS notifies the sponsor that:

(I)

if DHS does not receive the audit on or before the specified due date, DHS will terminate the sponsor's agreement, in whole or in part, [ ~~contract~~ ] effective the first day of the month following the month in which the audit was due; and

(II)

(III)

If DHS does not receive the audit on or before the specified due date, DHS notifies the sponsor by certified and regular mail that their agreement [ ~~contract~~ ] was terminated , in whole or in part, effective the first day of the month following the month in which the audit was due.

If a sponsor submits an audit which does not meet the requirements of the Single Audit Act, as amended, then DHS notifies the sponsor in writing that the audit is unacceptable, how it is unacceptable, and that the sponsor has 30 calendar days from the date on the notification to submit an acceptable audit to DHS. If DHS does not receive the required audit by the specified time frame and has not granted an extension of the due date, DHS notifies the sponsor by certified and regular mail that:

If DHS does not receive the required audit by the specified due date and has not granted an extension of the due date, DHS notifies the sponsor by certified and regular mail that:

DHS terminated their agreement, in whole or in part, [ ~~contract~~ ] effective the first day of the month following the specified due date.

§12.122.Denials and Terminations.

The Texas Department of Human Services (DHS) denies applications for participation and terminates agreements , in whole or in part, between DHS and sponsors for failure to meet eligibility requirements and violation of the terms of the agreement according to 7 Code of Federal Regulations §§225.6, 225.11, and 225.18 and Part 3015.

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.

Filed with the Office of the Secretary of State, on June 17, 1999.

TRD-9903610

For further information, please call: (512) 438-3765

Subchapter C. Special Milk Program

40 TAC §12.209

The amendment is proposed under the Human Resources Code, Title 2, Chapters 22 and 33, which provides the department with the authority to administer public and nutritional assistance programs.

The amendment implements §§22.001-22.030 and §§33.001-32.024 of the Human Resources Code.

§12.209.Fiscal Action.

DHS takes fiscal sanctions against a contractor according to the procedures specified in paragraphs (1)-(4) of this subsection.

DHS provides the contractor two advance notices reminding the contractor of the specific date that the audit is due.

DHS issues the second notice by certified and regular mail eight months after the end of the contractor's fiscal year for which the audit is due. DHS notifies the contractor that:

If DHS does not receive the required audit by the specified due date and has not granted an extension of the due date, DHS notifies the contractor by certified and regular mail that:

DHS terminated their agreement, in whole or in part, [ ~~contract~~ ] effective the first day of the month following the specified due date.

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.

Filed with the Office of the Secretary of State, on June 17, 1999.

TRD-9903611

For further information, please call: (512) 438-3765

Subchapter D. School Breakfast Program

40 TAC §12.309

The amendment is proposed under the Human Resources Code, Title 2, Chapters 22 and 33, which provides the department with the authority to administer public and nutritional assistance programs.

The amendment implements §§22.001-22.030 and §§33.001-32.024 of the Human Resources Code.

§12.309.Fiscal Action.

DHS takes fiscal sanctions against a contractor according to the procedures specified in paragraphs (1)-(4) of this subsection.

DHS provides the contractor two advance notices reminding the contractor of the specific date that the audit is due.

DHS issues the second notice by certified and regular mail eight months after the end of the contractor's fiscal year for which the audit is due. DHS notifies the contractor that:

If DHS does not receive the required audit by the specified due date and has not granted an extension of the due date, DHS notifies the contractor by certified and regular mail that:

DHS terminated their agreement, in whole or in part, [ ~~contract~~ ] effective the first day of the month following the specified due date.

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.

Filed with the Office of the Secretary of State, on June 17, 1999.

TRD-9903612

For further information, please call: (512) 438-3765

Subchapter E. National School Lunch Program

40 TAC §§12.402, 12.404, 12.405, 12.407, 12.409

The amendments are proposed under the Human Resources Code, Title 2, Chapters 22 and 33, which provides the department with the authority to administer public and nutritional assistance programs.

The amendments implement §§22.001-22.030 and §§33.001-32.024 of the Human Resources Code.

§12.402.Definitions.

Definitions of words and terms used in the National School Lunch Program (NSLP) [ ~~NSLP~~ ] are those stipulated in 7 Code of Federal Regulations, §210.2 and §245.2 , except that, for the purpose of participation in the Afterschool Care Snack program in the NSLP, the term "child" as defined in 7 Code of Federal Regulations, §210 is expanded to include individuals:

through age 18 years for children, including children of migrant workers;

who turn 19 during the school year; and

who are determined to be mentally or physically disabled, regardless of age.

§12.404.Reimbursement.

[ ~~Reimbursement rates are set by the Texas Department of Human Services (DHS) according to standards and procedures stipulated in 7 Code of Federal Regulations §210.7.~~ ] To the extent funds are made available to the Texas Department of Human Services (DHS) [ ~~DHS~~ ] by the Food and Nutrition Service (FNS), reimbursement payments are made to contractors according to the requirements stipulated in 7 Code of Federal Regulations, §210.7 and §210.8. Exception: DHS does not make advance payments.

Reimbursement rates are set by DHS according to the standards and procedures stipulated in 7 Code of Federal Regulations, §210.7.

Schools may claim reimbursement for one snack per child per day participating in an approved after school program. Reimbursement rates for snacks in an after school care program are determined as follows: If the after school site is located in an area served by a school where:

50% or more of the enrolled children are eligible for free or reduced price meals, all eligible snacks served are reimbursed at the free rate; or

fewer than 50% of the enrolled children are eligible for free or reduced-price meals, the school must document the eligibility of participating children and claim reimbursement for snacks based on the eligibility category (free, reduced-price and paid) of program participants.

(d) [ ~~(b)~~ ]

DHS does not pay claims postmarked or received by DHS later than 60 days after the end of the claim month, unless the United States Department of Agriculture (USDA) determines that the submission of the late claim is the result of good cause beyond the contractor's control. If USDA determines that good cause does not exist, DHS may grant an exception and pay a claim postmarked or received by DHS later than 60 days after the end of the claim period provided that the contractor:

requests an exception in writing; and

has not been granted an exception in the 36 months preceding the month for which a request for an exception is submitted.

(e) [ ~~(c)~~ ]

Contractors may appeal a DHS decision not to request a USDA determination of good cause for submission of a late claim, as described in subsection (d) [ ~~(b)~~ ] of this section. Contractors may not appeal a USDA decision that the late claim is ineligible for payment.

§12.405.Contractor Eligibility.

To participate as a contractor in the National School Lunch Program (NSLP) , a contractor must meet the definition of a school as stipulated in 7 Code of Federal Regulations, §210.2 and provide lunches to a child as defined in 7 Code of Federal Regulations, §210.2.

To be eligible to administer an Afterschool Care Snack program in the NSLP, a school food authority must operate the lunch component of the NSLP and retain final administrative and financial responsibility for the program. Afterschool Care Snack programs operated at facilities that are not subject to state licensing requirements must provide documentation from the Texas Department of Protective and Regulatory Services (TDPRS) to show that they are not subject to state licensing requirements.

§12.407.Contractor Participation Requirements.

To participate in the program, the contractor must:

(1)-(11)

comply with hearing requirements stipulated in 7 Code of Federal Regulations, §245.7 ; and

(12)

(13)

agree, if approved to operate an Afterschool Care Snack program, to sponsor or operate a program which:

provides free snacks to all eligible children participating in an Afterschool Care Snack program operated in an area served by a school in which 50% or more of the enrolled children are eligible for free or reduced-price meals;

charges no more than 15 cents per snack served to children eligible for reduced-price meals if operating a site located in an area served by a school in which fewer than 50% of the enrolled children are eligible for free or reduced-price meals;

provides children with regularly scheduled activities in an organized, structured, and supervised environment after their school day has ended, excluding weekends and holidays;

includes educational or enrichment activities;

(E)

is not comprised of an organized athletic program engaged in interscholastic or community level competitive sports. Afterschool Care Snack programs that are "open to all" and do not limit membership for reasons other than space, security, or where applicable, licensing requirements may include supervised athletic activities in their program; and

(F)

meets state or local licensing requirements as applicable, or otherwise meets State or local health and safety standards.

§12.409.Fiscal Action.

DHS imposes fiscal sanctions specified in this subsection on contractors who are required to obtain an audit in accordance with the Single Audit Act, as amended, and who fail to comply with the requirements of the Single Audit Act. The contractor has the right to appeal this action as specified in Chapter 79 of this title (relating to Legal Services).

DHS takes fiscal sanctions against a contractor according to the procedures specified in paragraphs (1)-(4) of this subsection.

DHS provides the contractor two advance notices reminding the contractor of the specific date that the audit is due.

DHS issues the second notice by certified and regular mail eight months after the end of the contractor's fiscal year for which the audit is due. DHS notifies the contractor that:

If DHS does not receive the required audit by the specified due date and has not granted an extension of the due date, DHS notifies the contractor by certified and regular mail that:

DHS terminated their agreement, in whole or in part, [ ~~contract~~ ] effective the first day of the month following the specified due date.

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.

Filed with the Office of the Secretary of State, on June 17, 1999.

TRD-9903613

For further information, please call: (512) 438-3765

Chapter 19. Nursing Facility Requirements for Licensure and Medicaid Certification

The Texas Department of Human Services (DHS) proposes amendments to §19.216, concerning license fees; §19.502, concerning transfer and discharge in Medicaid-certified facilities; §19.2004, concerning determinations and actions pursuant to inspections; §19.2112, concerning administrative penalties; and §19.2147, concerning informal dispute resolution, in its Nursing Facility Requirements for Licensure and Medicaid Certification chapter. The purpose of the amendments is to conform existing procedures to Health Care and Financing Administration (HCFA) directives, update the names of program areas that changed as the result of the Long Term Care - Regulatory (LTC-R) re-engineering, and clarify the procedures for ending a continuing violation that is subject to an administrative penalty.

Eric M. Bost, commissioner, has determined that for the first five- year period the sections are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the sections.

Mr. Bost also has determined that for each year of the first five years the sections are in effect the public benefit anticipated as a result of enforcing the sections will be ongoing protection of nursing home residents as the result of clarifying existing rules for the Nursing Facility Requirements for Licensure and Medicaid Certification. There will be no effect on small businesses because the proposed rule changes are editorial only and do not implement new policies or procedures. There is no anticipated economic cost to persons who are required to comply with the proposed sections.

Questions about the content of this proposal may be directed to Linda Williams at (512) 438-3167 in DHS's Long Term Care Policy Section. Written comments on the proposal may be submitted to Supervisor, Rules and Handbooks Unit-108, Texas Department of Human Services E-205, P.O. Box 149030, Austin, Texas 78714-9030, within 30 days of publication in the Texas Register .

Subchapter C. Nursing Facility Licensure Application Process

40 TAC §19.216

The amendment is proposed under the Health and Safety Code, Chapter 242, which authorizes the department to license and regulate nursing facilities.

The amendment implements the Health and Safety Code, §242.037.

§19.216.License Fees.

Change of administrator. A facility that hires a new administrator must notify the Texas Department of Human Services (DHS) , Long Term Care-Regulatory, Facility Enrollment Section [ ~~in writing~~ ] not later than the 30th day after the date on which the change became [ ~~becomes~~ ] effective by submitting a change of administrator application and paying [ ~~pay~~ ] a $20 change of administrator fee to DHS.

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.

Filed with the Office of the Secretary of State on June 15, 1999.

TRD-9903558

For further information, please call: (512) 438-3765

Subchapter F. Admission, Transfer, and Discharge Rights in Medicaid-Certified Facilities

19 TAC §19.502

The amendment is proposed under the Human Resources Code, Title 2, Chapters 22 and 32, which authorizes the department to administer public and medical assistance programs, and under Texas Government Code §531.021, which provides the Health and Human Services Commission with the authority to administer federal medical assistance funds.

The amendment implements the Human Resources Code, §§22.001- 22.030 and §§32.001-32.042.

§19.502.Transfer and Discharge in Medicaid-certified Facilities.

(a)-(d)

Timing of the notice.

(1)-(3)

When an immediate involuntary transfer or discharge as specified in subsection (b)(3) or (4) of this section, is contemplated, unless the discharge is to a hospital, the facility must:

immediately call the staff of the state office LTC-R Customer Service [ ~~Quality Assurance Review and Investigations~~ ] Section of the Texas Department of Human Services (DHS) [ ~~Services' (DHS's) state office~~ ] to report their intention to discharge; and

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.

Filed with the Office of the Secretary of State on June 15, 1999.

TRD-9903559

For further information, please call: (512) 438-3765

Subchapter U. Inspections, Surveys, and Visits

40 TAC §19.2004

The amendment is proposed under the Health and Safety Code, Chapter 242, which authorizes the department to license and regulate nursing facilities.

The amendment implements the Health and Safety Code, §242.037.

§19.2004.Determinations and Actions Pursuant to Inspections.

Violations found during complaint investigations will be discussed with the facility management at the exit conference. If deficiencies are cited, a list of the deficiencies will be sent to the facility within 10 working days. The source of the complaint will not be revealed.

(d)-(f)

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.

Filed with the Office of the Secretary of State on June 15, 1999.

TRD-9903560

For further information, please call: (512) 438-3765

Subchapter V. Enforcement

2. Licensing Remedies

40 TAC §19.2112

The amendment is proposed under the Health and Safety Code, Chapter 242, which authorizes the department to license and regulate nursing facilities.

The amendment implements the Health and Safety Code, §242.037.

§19.2112.Administrative Penalties.

(a)-(e)

Administrative penalties may be levied for each violation found in a single survey. Each day of a continuing violation constitutes a separate violation. The administrative penalties for each day of a continuing violation cease on the date the violation is corrected. A violation that is the subject of a penalty is presumed to continue on each successive day until it is corrected. The date of correction alleged by the facility in its written plan of correction will be presumed to be the actual date of correction unless it is later determined by DHS that the correction was not made by that date or was not satisfactory. The following table contains the gradations of penalties in accordance with the relative seriousness of the violation. The penalties for a violation of the requirement to post notice of the suspension of admissions, additional reporting requirements found at §19.601(a) of this title (relating to Resident Behavior and Facility Practice), or residents' rights cannot exceed $1,000 a day for each violation, unless the violation of a resident's right also violates a rule in Subchapter H, Quality of Life, or Subchapter J, Quality of Care.

Figure: 40 TAC §19.2112(f)

(g)-(j)

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.

Filed with the Office of the Secretary of State on June 15, 1999.

TRD-9903561

For further information, please call: (512) 438-3765

3. Remedies in Medicaid-Certified Facilities

40 TAC §19.2147

The amendment is proposed under the Health and Safety Code, Chapter 242, which authorizes the department to license and regulate nursing facilities.

The amendment implements the Human Resources Code, §§22.001- 22.030 and §§32.001-32.042, and the Health and Safety Code, §242.037.

§19.2147.Informal Dispute Resolution.

The Texas Department of Human Services (DHS) provides an informal dispute resolution process (IDR) in the central office, as follows:

A written request , [ ~~and~~ ] all supporting documentation , and registration information as required under paragraph (3) of this section, must be submitted to the Texas Department of Human Services, Long Term Care-Regulatory, ATTN: IDR Coordinator, [ ~~Texas Department of Human Services (DHS)~~ ], P.O. Box 149030 (MC- E-343 [ ~~Y-976~~ ]), Austin, TX 78714- 9030, no later than the 10th calendar day after receipt of the official statement of deficiencies.

DHS will complete the IDR process no later than the 30th calendar day after receipt of the facility's written [ a ] request , [ ~~from a facility~~ ] all documentation, and required registration information .

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.

Filed with the Office of the Secretary of State on June 15, 1999.

TRD-9903562

For further information, please call: (512) 438-3765

Chapter 49. Contracting for Community Care Services

40 TAC §49.19

The Texas Department of Human Services (DHS) proposes an amendment to §49.19, concerning sanctions, in its Contracting for Community Care Services chapter. The purpose of the amendment is to clarify rules concerning the application and release of vendor hold for Community Care providers. The amendment adds restitution and recoupment as grounds for placing a provider on vendor hold and deletes contract termination as an automatic reason for placing a provider on vendor hold. The amendment also adds provisions for placing providers on vendor hold for outstanding overpayments or audit exceptions and recoupment of overpayments from outstanding claims. The amendment specifies that DHS releases vendor hold when outstanding overpayments from the provider agency are recouped and clarifies that providers may appeal any adverse action against their contract, not just contract termination.

Eric M. Bost, commissioner, has determined that for the first five- year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section.

Mr. Bost also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be more accountability to the public, by providers, regarding recoupment of money owed to the state. There will be no effect on small businesses. This rule does not apply to providers that operate according to program requirements. Furthermore, vendor hold is only a temporary hold until the contract issues are resolved. There is no anticipated economic cost to persons who are required to comply with the proposed section.

Questions about the content of this proposal may be directed to Marilyn Eaton at (512) 438-3136 in DHS's Community Care Section. Written comments on the proposal may be submitted to Supervisor, Rules and Handbooks Unit-196, Texas Department of Human Services E-205, P.O. Box 149030, Austin, Texas 78714-9030, within 30 days of publication in the Texas Register .

Under §2007.003(b) of the Texas Government Code, the department has determined that Chapter 2007 of the Government Code does not apply to these rules. Accordingly, the department is not required to complete a takings impact assessment regarding these rules. The department has determined that the proposed rule will not affect any private real property interests. Accordingly, no takings impact assessment regarding this rule is required under §2007.043 of the Texas Government Code and §2.19 of the Private Real Property Rights Preservation Act Guidelines adopted by the Attorney General and published on January 12, 1996, in the Texas Register (21 TexReg 387).

The amendment implements the Human Resources Code, Chapters 22 and 32, and Government Code, §531.021.

Sanctions may include one or more of the following at the discretion of DHS:

Hold on client referrals. DHS may place [ ~~places~~ ] a hold on client referrals for reasons including, but not limited to:

DHS determines [ ~~the~~ ] client [ ~~client's~~ ] health and safety is jeopardized by the agency's failure to comply with the terms of the contract/program requirements [ ~~provide services~~ ];

the provider agency fails to comply with their [ ~~its~~ ] corrective action plan;

the provider agency [ ~~is potentially terminated or~~ ] receives notice of contract termination or is appealing contract termination ;

the provider agency fails to provide services according to contract/program requirements; or

(E)

the provider agency is on vendor hold . [ ~~; or~~ ]

[ ~~(F)~~

~~a contract termination is being appealed.~~ ]

Vendor hold.

DHS may place [ ~~places~~ ] a vendor hold (withholding a provider agency's payment) upon one or all of a provider agency's contracts with DHS for reasons including, but not limited to:

[ ~~(i)~~

~~contract termination, whether voluntary or involuntary;~~ ]

[ ~~(ii)~~ ] the provider agency's failure to follow an [ ~~the~~ ] agreed upon audit resolution payment plan;

the provider agency's failure to submit an acceptable cost report;

[ ~~(iii)~~

~~failure to comply with licensure requirements, if applicable;~~ ]

(iii)

[ ~~(iv)~~ ] the provider agency's failure to provide services according to contract/program requirements;

(iv)

the provider agency's failure to comply with their corrective action plan;

(v)

the expiration of any required license; [ or ]

(vi)

DHS's recoupment of overpayments to a provider agency and restitution of audit exceptions assessed against a provider agency; or

[ ~~(vi)~~

~~monetary penalties assessed by DHS, if allowed by program rules, which have not been appealed or which have been appealed and have been sustained by a final decision.~~ ]

(vii)

DHS's determination that client health and safety is jeopardized by the provider agency's failure to comply with the terms of the contract and/or program requirements.

DHS may accept an irrevocable letter of credit, in a format and an amount approved by DHS, to allow the release of all or a portion of vendor payments on hold. Vendor holds are released after resolution of all outstanding audits and/or after complete resolution of the reason cited for vendor hold [ ~~any contract compliance issues~~ ].

Contract termination. DHS may initiate contract termination for one or more reasons including, but not limited to[ ~~, the provider agency's~~ ]:

the provider agency's failure to comply with the terms of the contract[ ~~/rule;~~ ] , rules, and/or program requirements;

the provider agency's failure to maintain a current required license;

[ ~~gross failure to ensure a client's health and safety~~ ] DHS's determination that client health and safety is jeopardized by the agency's failure to comply with the terms of the contract and/or program requirements ;

the provider agency's failure to comply with corrective action plans;

(E)

the provider agency's exclusion from contracting for Title XVIII or XIX of the Social Security Act services;

(F)

the provider agency's failure to submit an acceptable cost report by the due date;

(G)

the provider agency having validated report(s) of abuse, neglect, or exploitation when the perpetrator is an employee, volunteer, or owner who has or will have access to clients served through this contract; or

(H)

the provider agency's knowing [ ~~knowingly~~ ] and willful [ ~~willfully~~ ] solicitation [ ~~soliciting~~ ] of clients from another provider agency.

If the agency has [ an ] outstanding overpayments or audit exceptions [ ~~exception~~ ] upon termination of a contract, DHS can place vendor hold upon one or all of the provider agency's contracts with DHS and take the balance owed from outstanding claims submitted.

The provider agency has the right to appeal any adverse action against their contract, including contract termination , by filing a written request for a hearing so that DHS receives the request [ it ] within 15 calendar days after the provider agency receives DHS's written notification of adverse action [ ~~termination letter~~ ].

When a contract is involuntarily terminated by DHS, clients may be transferred to another provider, even if appealed. [ ~~If appealed, DHS can give clients a choice of returning to the provider agency.~~ ]

If [ ~~DHS upholds~~ ] the appeal decision sustains DHS's action, [ ~~to terminate, DHS terminates~~ ] the contract termination remains in effect .

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.

Filed with the Office of the Secretary of State, on June 15, 1999.

TRD-9903563