Subchapter A. COST DETERMINATION PROCESS

The Texas Health and Human Services Commission (HHSC) adopts amendments to §355.8081, Payments for Laboratory and X-ray Services, Radiation Therapy, Physical Therapists' Services, Podiatry Services, Chiropractic Services, Optometric Services, Ambulance Services, Dentists' Services, and Psychologists' Services and §355.8085, Texas Medicaid Reimbursement Methodology (TMRM) for Physicians and Certain Other Practitioners; and new §355.8600, Reimbursement for Ambulance Services and §355.8610, Reimbursement for Clinical Laboratory Services. Section 355.8081 and §355.8600 are adopted without changes to the proposed text as published in the June 27, 2003, issue of the Texas Register (28 TexReg 4734). The text of the rules will not be republished. HHSC adopts the amendment to §355.8085 with a minor change and adopts new §355.8610, Reimbursement for Clinical Laboratory Services, with one change to the proposed text as published in the June 27, 2003, issue of the Texas Register (28 TexReg 4734). The text of the rules will be republished.

HHSC is adopting the amendments and new sections to transfer reimbursement methodologies for ambulance and clinical diagnostic laboratory services that do not follow Texas Medicaid Reimbursement Methodology (TMRM) out of the TMRM rule into new sections of their own. Since the TMRM applies only to covered services provided by physicians and certain other practitioners, the title of the §355.8085 is being changed to reflect that. The amendments and new sections also replace references to the "Texas Department of Health" and "department" with references to "HHSC and/or its designee." The amendments and new sections provide HHSC with more flexibility in making inflation adjustments to the TMRM conversion factor. The new §355.8610, concerning Reimbursement for Clinical Laboratory Services, allows HHSC more flexibility in reviewing, determining, and updating these fees by removing the requirement that the fees be based solely on the Medicare-established fee schedule, by changing the required period for review to at least every two years, and by adding the requirement that fees must be established within available funding and not exceed the Medicare fee schedule. Revisions to §355.8085 and §355.8081 add the requirement that fees must be established within available funding. The revisions to §355.8081 update rule citations for TMRM for Physicians and Certain Other Practitioners at §355.8085, for ambulance services at §355.8600, and for clinical laboratory services at §355.8610. The rules are effective 20 days after submission to the Secretary of State.

The minor change to §355.8085 falls under paragraph (2)(D). The change is grammatical and allows the paragraph read more clearly.

HHSC received one written comment from the Coalition for Nurses in Advanced Practice regarding §355.8610. A summary of the comment and HHSC's response follows.

Comment: Concerning §355.8610, the Coalition for Nurses in Advanced Practice suggested that the first sentence of the rule be changed to read, "Clinical diagnostic laboratory tests performed in a physician's office, by an independent laboratory, or by a hospital laboratory for its outpatients shall be reimbursed the lower of the provider's usual customary charge for that service or a maximum fee determined by the Texas Health and Human Services Commission (HHSC) or its designee." By limiting the reimbursable locations for these services, the rule seems to exclude clinics and other providers, such as advanced practice nurses, who perform some basic laboratory tests and are currently reimbursed for those tests.

Response: HHSC agrees with the commenter and is adopting the rule with the following change, "Clinical diagnostic laboratory tests performed in a practitioner's office, by an independent laboratory, or by a hospital laboratory for its outpatients shall be reimbursed the lower of the provider's usual customary charge for that service or a maximum fee determined by the Texas Health and Human Services Commission (HHSC) or its designee."

The Health and Human Services Commission (HHSC or Commission) adopts amendments to Chapter 370, State Children's Health Insurance Program (CHIP). Specifically, HHSC adopts amendments to: Subchapter A, §370.4 and §370.10, concerning Program Administration; Subchapter B, Division 1, §§370.20-370.25, concerning TexCare Partnership Application Process; Division 2, §370.30 and §370.31, concerning Applicant Rights and Responsibilities Regarding Application and Eligibility; Division 3, §370.40, concerning Eligibility Determination; Division 4, §§370.43, 370.44, 370.46, 370.48, and 370.49, concerning Eligibility Criteria; and Division 5, §§370.51-370.54, concerning Review and Reconsideration of Eligibility Denials and Temporary Enrollment. In addition, the Commission adopts new Subchapter C, Division 1, §§370.301, 370.303, 370.305, 370.307, and 370.309, concerning TexCare Enrollment and Division 2, §§370.321, 370.323, and 370.325, concerning Cost-Sharing Requirements. Sections 370.23, 370.43, 370.46, 370.301 and 370.303, are adopted with changes to the proposed text as published in the June 27, 2003, issue of the Texas Register (28 TexReg 4748). The text of the rules will be republished. The new text of the amended rules §§370.23, 370.43, 370.46 and 370.301, with changes in response to comments, is set out below. Sections 370.4, 370.10, 370.20-370.22, 370.24, 370.25, 370.30, 370.31, 370.40, 370.44, 370.48, 370.49, 370.51-370.54, 370.305, 370.307, 370.309, 370.321, 370.323 and 370.325 are adopted without changes to the proposed text as published in the June 27, 2003, issue of the Texas Register (28 TexReg 4748). The text of the rules will not be republished. Section 370.303(d) is adopted with changes. In the proposal process, the last sentence was inadvertently left incomplete.

The adopted rules amend Subchapters A and B to reflect legislative changes to income eligibility standards and the removal of deduction allowances. The new subchapter C addresses enrollment issues and cost sharing issues. The adoption of these sections brings CHIP into compliance with HB 2292, 78th Leg., Regular Session (2003) and the General Appropriations Act, 78th Leg., Regular Session (2003). These adopted rules also update references, delete unnecessary terms and provisions, and make other non-substantive changes for clarification.

The following comments were received by HHSC concerning the proposed rules: Advocacy, Inc. opposes the adoption of the proposed amendments. Comments both in support of and in opposition to various amendments were received from the Center for Public Policy Priorities, Affiliated Computer Services (ACS), and individual commenters. Following each comment is the response from HHSC.

Comment: One commenter expressed concern regarding §370.325. The commenter stated that many families with incomes between 101% and 150% of Federal Poverty Level (FPL) who need CHIP coverage would not be able to afford a $15 per month premium and recommended going back to a one-time enrollment fee instead.

Response: HHSC acknowledges the commenter's concern about the cost of a monthly premium, but believes that the commenter cited §370.325 in error. New rule §370.321 does refer to a monthly premium that a member may be required to pay as part of their CHIP cost-share obligation, but does not state any specific dollar amounts. Program changes occurring on or after September 1, 2003, are due to severe fiscal constraints facing CHIP in the FY 2004-2005 biennium. In order to reduce program administration costs, HHSC must determine new cost-share amounts for all CHIP FPL ranges based on maximum levels authorized under federal law. HHSC cannot return to a position of collecting an annual enrollment fee from families in the 100-150% FPL range as HHSC is eliminating the concept of the annual enrollment fee in order to operate within budget restrictions. All FPL groups above 100% FPL will pay a monthly premium, effective September 1, 2003. No changes were made in response to the comment.

Comment: One commenter expressed concern that the term "entrant" was unfamiliar and would cause confusion.

Response: HHSC acknowledges the comment regarding the use of the new term "entrant" rather than the former "alien" and the potential for confusion. In recognition of that, HHSC provided a definition of the term "entrant" in §370.4 in order to avoid any possible confusion regarding the use of the term within these rules. No changes were made as a result of this comment.

Comment: Two comments were received regarding the removal of the income disregard for child support or alimony. The commenters believed that this income should not be counted in determining income level, as it was unavailable to the CHIP family.

Response: HHSC acknowledges the concern expressed by the commenter and the potential for counting "non-available" outbound child support or alimony payments as "available" income for the paying family. However, effective September 1, 2003, HHSC will not have the statutory authority to apply offsets to reported income when determining CHIP eligibility for an applying child. As a result, HHSC cannot retain the existing income offsets. No change was made as a result of these comments.

Comment: One comment was received on the complexity of immigration laws. The commenter expressed appreciation for the Commission staff's attempt to clarify the use of some of these documents to establish eligibility but wanted more examples added to the list of documents that could be used to establish eligibility.

Response: HHSC agrees with the commenter's remarks concerning the complexity of immigration documents and acknowledges the practical difficulty associated with making an exhaustive list of acceptable documents. The list of acceptable documents published in the proposed version §370.43 was intended to provide a sample of documents that CHIP may use in determining whether or not a non-citizen child has qualified legal entrant status. Rather than complicating the matter further by expanding a partial listing of acceptable documents, HHSC has revised §370.43 to require that a non-citizen child provide a document approved by the Bureau of Citizenship and Immigration Services (formerly the U.S. Immigration and Naturalization Service) demonstrating qualified legal entrant status.

Comment: One comment was received expressing concern that the assets test for the families above 150% of FPL had not been well researched and that there was no reliable data on what the actual impact of applying this test would be. The commenter recommended that the Commission collect data on this and report on the actual impact of applying the assets test. The commenter also believed that HHSC's application of the Food Stamp Policy for disregard of vehicle value was not appropriate for the CHIP group and recommended the Commission modify the vehicle policy to be less restrictive.

Response: The Commission acknowledges the commenter's concern Program changes occurring on or after September 1, 2003, are due to severe fiscal constraints facing CHIP in the FY 2004-2005 biennium. Section 2.46 of HB 2292, 78th Leg., Regular Session (2003) allows HHSC to establish eligibility standards regarding the amount and types of allowable assets for a family whose gross family income is above 150% of the federal poverty level. HHSC has determined that the proposed assets test for these families will assist HHSC in operating CHIP within budget restrictions. The proposed assets test requires the family to own $5000 or less in countable liquid resources, combined with excess vehicle value; real property is not countable. $15,000 of the fair market value is exempt for the household's highest valued countable vehicle. Exemptions for vehicles include a vehicle used as the only home, a vehicle modified to provide transportation for a disabled household member, a vehicle necessary to carry fuel or water for household daily use, or a vehicle used more that 50% of the time to produce income. The assets tests will not be implemented prior to the January 2004 eligibility cut-off date. HHSC recognizes the limitations of available data to project the impact of the assets test on CHIP eligibility. After implementation, data will be available over time to identify the number of families who are ineligible for CHIP due to assets although their gross income is between 150%-200% FPL. Data can be evaluated and policy reviewed when this information is available. No changes were made in response to the comment.

Comment: The Commission received one comment regarding the 90-day waiting period for coverage. The commenter believed this new waiting period would increase the burden on providers to provide uncompensated care and recommended encouraging families to enroll their children before a health crisis. The commenter also believed the policy description was not clear with regard to the enrollment of newborns.

Response: HHSC acknowledges the commenter's remarks and concerns about the 90-day waiting period. However, HHSC believes it is important to note that CHIP was never intended to be, nor is it today, an emergency assistance program. The idea behind getting CHIP coverage is similar to the idea behind getting private health insurance: to be protected and prepared in the event of a future illness. CHIP has never provided coverage back to the date of or before application to the program. Coverage in CHIP has always been prospective. Since CHIP began, the vast majority of CHIP families have waited two months between the initial application and the start of CHIP coverage. A smaller number of families have had to wait three months or more due to a lack of prompt responses to CHIP mailings seeking necessary application information. The practical effect, therefore, of the new waiting period is either no extra waiting time or approximately an additional month of waiting time. In addition, HHSC is statutorily bound to enact this waiting period. As far as the enrollment of newborns is concerned, CHIP policy will clearly differentiate between (1) children born to CHIP enrolled teen mothers and (2) children born to the parents of CHIP enrolled children. In the case of (1), CHIP policy will be to pursue the referral of the newborn children to the Medicaid program for eligibility determination. In the case of (2), CHIP policy will be to enroll the children in their sibling's CHIP participation and not subject those children to the new waiting period. The only exceptions in (2) are those children that are determined to be tentatively eligible for Medicaid. They will be referred to the Texas Department of Human Services (DHS) for final determination of Medicaid eligibility. No changes were made in response to the comment.

Comment: One commenter questioned the Legislature's decision regarding the reduction of the eligibility period from twelve to six months.

Response: HHSC acknowledges the commenter's concern but notes that HHSC must comply with applicable statutes. Therefore, HHSC reduced the eligibility period from 12 to 6 months in order to be in compliance with recently enacted statutory changes.

Comment: The Commission received a compliment from one commenter on the cost sharing changes. The commenter also expressed regret that the annual cap would now be more complex since it will be calculated based on income rather than being a fixed dollar amount.

Response: HHSC appreciates the compliment related to cost-sharing requirement rules and agrees in part with the commenter's views about the annual cap. As noted by the commenter, the annual cap will be calculated as a percentage of income rather than being a fixed dollar amount. Although more administratively complex, the burden of the complexity will be borne by the state and its contractors. Members will receive notification by letter of their individually computed cost cap. No changes were made as a result of the comment.

Comment: One commenter opposed the implementation of the Income Disregards and Assets Test on a separate schedule from the six month eligibility period's implementation. The commenter believed it would result in disenrolling children based on outdated information, would necessitate additional notifications to families, would leave families with inadequate time to arrange alternate coverages, and would create additional costs and problems for the MCOs. The commenter also believed the "disjointed" effective dates of the benefit and cost-sharing changes would create additional complexities and administrative burdens for families and recommended the Commission coordinate these time frames and send out a notice to CHIP families that identifies all of the planned CHIP policy changes.

Response: HHSC acknowledges the commenter's concerns, but disagrees with the commenter's conclusions concerning the changes. Due to the major processing impact of those changes, HHSC has determined that it must proceed with implementation timelines for the disregard elimination and assets test separate and apart from the timeline for implementing the 6-month term of coverage. However, HHSC's plans regarding the notification of CHIP families and implementation timelines should ease the concerns of the commenter. The general notification letter sent to CHIP enrolled and eligible families in late July-early August contains information about the upcoming disregard elimination and the potential for disenrollment. Additionally, the letter also urges families to report any changes in income as soon as possible in order to have their eligibility re-determined without use of the income disregards. Effective November 1, 2003, HHSC plans to disenroll children who, without disregards, are over 200% FPL. CHIP will re-calculate the FPL of all enrolled families after the September 2003 cut-off. All children found to be ineligible due to a new FPL over 200%, or found to be in a to a higher FPL band (with a higher cost-share), will receive a notice in late September-early October. The notice will inform them of their impending disenrollment or FPL band switch and ask for new income data prior to cut-off in October. In addition to this late September run, the program will also identify all enrolled children who appear to be ineligible without disregards after the August 2003 cut-off. The families of these children will also receive advance notice of the need to update their income data by October cut-off to best avoid the possibility of disenrollment on November 1. Finally, HHSC will use the new assets test for the 150%+ FPL population after January 2004 cut-off. At that point, CHIP will apply the new test to all new applicants and CHIP renewal applicants. No currently enrolled child will face the threat of disenrollment prior to completing his/her current 6-month or 12 month term of coverage. No changes were made to the rules in response to the comments.

Comment: One comment noted that the text that was deleted in §370.23 (2) (H) is still applicable in the application process and should be restored.

Response: HHSC agrees with the comment. HHSC has revised the proposed rule to restore the information deleted; it is required on the combined CHIP/Medicaid application for the purpose of determining Medicaid eligibility. The revised CHIP rule indicates that this information will not be used to determine CHIP eligibility. This change is reflected in §370.46. The deleted section (a) is restored, as this provision will relate to any child who may be participating in a premium assistance program that may be implemented by HHSC.

Comment: One commenter noted that the text that was deleted in §370.23 (3) (C) and §370.22 (3) (D) was still applicable and should be restored.

Response: HHSC agrees with the comment and has revised the proposed rule to restore the deleted item. The information included in this item is required to be for the combined CHIP/Medicaid application for the purpose of determining Medicaid eligibility. The revision indicates that this information is not used to determine CHIP eligibility.

Comment: One commenter believed the 90 day waiting period is an imprecise calculation, and that the actual waiting period will vary under the rule. They recommended using three calendar months instead of 90 days to describe the waiting period.

Response: HHSC acknowledges the commenter's concern, but disagrees with the commenter's recommendation. Revised §370.46 governs the waiting period and reflects legislative changes requiring a 90-day waiting period for applicants determined to be CHIP eligible, but who do not fall within certain exceptions. The waiting period would begin on the first day of the month in which or after which the child is enrolled in CHIP, depending on whether enrollment is before or after the 15th of the month; the waiting period then extends for 90 days. No changes were made to the rule in response to the comment.

Comment: One comment was received on §340.46 (a). The commenter noted that the deleted text contained correct information regarding the enrollment of children otherwise eligible for CHIP.

Response: HHSC agrees with the commenter. HHSC has revised the proposed rule to reflect the restoration of the deleted information to reflect current policy. As noted above, this provision will not apply to CHIP applicants who may be enrolled in a premium payment plan that may be implemented by HHSC as reflected in §371.46 (b) (4).

Comment: Comments were received on two sections of §370.46 regarding Medicaid eligibility and involuntary loss of insurance that had no proposed changes.

Response: The Commission did not propose changes to these two sections, but will review these policies for future clarification. No changes were made to the rule in response to the comment.

Comment: One commenter was confused about the implementation of §371.46 (b) (4).

Response: HHSC recognizes that confusion may exist. This provision is required as an exemption to the current rule if HHSC implements other rule provisions concerning a premium assistance program. §371.46 (b) (4) is not a change in the current rule but will be implemented if a premium assistance program is developed.

Comment: The Commission received one comment that the information relating to the form to help applicant's track cost sharing expenditure in §370.301 6 (C) should be deleted.

Response: HHSC agrees that this rule should be clarified and that the requirements of this section should specify the types of information included in the enrollment packet rather than the means for providing the information. The section has been revised accordingly.

Subchapter A. PROGRAM ADMINISTRATION