TITLE 1.ADMINISTRATION

Part 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION

Chapter 354. MEDICAID HEALTH SERVICES

Subchapter A. PURCHASED HEALTH SERVICES

1. MEDICAID PROCEDURES FOR PROVIDERS

1 TAC §354.1003

The Health and Human Services Commission (HHSC) proposes to amend §354.1003, concerning Time Limits for Submitted Claims. The proposed rule change represents a significant change in the claims submission procedures for providers awaiting the issuance of a Texas Provider Identifier (TPI) number. The current rule requires that claims must be received within 95 days from the date of service (or discharge), even though the claims will be denied because the TPI was not issued prior to the claims being received. Under the amended rule, providers who are awaiting the issuance of a TPI number will have 95 days from the date of service (or discharge) or 95 days from the date the TPI number is issued, whichever is later, to ensure that their claims are received by HHSC or its designee. The rule change will also eliminate claims being denied because the TPI Number was not issued prior to the claims being received by HHSC or its designee. Further, providers will no longer have to submit paper intensive appeals, and in many cases, repeated appeals for claims denied for this reason.

Don Green, Chief Financial Officer, has determined that during the first five years that the proposed rule is in effect the fiscal implication will be as follows: a one-time administrative cost, estimated to be $15,000 GR, for the changes to the claims processing system necessary to accommodate the changes described in the proposed rule. It is anticipated that the proposed rule will have long-term positive fiscal implications for the state's revenue. This assumption is based on the savings derived from the decreased administrative costs of processing fewer appeals. This proposed rule will not result in any fiscal implications for local health and human service agencies. Local governments will not incur additional costs.

Mr. Green has also determined that for each year of the first five years the proposed rule is in effect, the public will benefit from adoption of the rule. The anticipated public benefit, as a result of enforcing the proposed provision, will be to decrease the number of claims denied because the Medicaid provider had not been issued a TPI number prior to filing a claim.

The proposed rule will not result in additional costs to persons required to comply with the proposed rule, nor does the proposed rule have any anticipated adverse affect on small or micro-businesses. Medicaid enrolled providers will be required to alter their business practices in order to comply with the rule as proposed. HHSC will provide policy notification, information, and training to enrolled providers in order to assure minimal business impact. The proposed rule will not negatively affect local employment.

HHSC has determined that the proposed rule is not a "major environmental rule" as defined by §2001.0225, Government Code. "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risks to human health from environmental exposure and that may adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. The proposed rule is not specifically intended to protect the environment or reduce risks to human health from environmental exposure.

HHSC has evaluated the takings impact of the proposed rule under §2007.043, Government Code. HHSC has determined that this proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of governmental action and therefore does not constitute a taking. The proposed provision is reasonably taken to fulfill requirements of state law.

Comments on the proposal may be submitted to Rick Castillo, Medicaid/CHIP Division, Texas Health and Human Services Commission, 1100 W. 49th Street, MC Y-927, Austin, Texas 78756-3199, within 30 days of publication of this proposal in the Texas Register .

A public hearing is scheduled for February 26, 2003 from 1 p.m. to 3 p.m. The hearing will be held in the Public Hearing Room, Health and Human Services Commission, 12555 Riata Vista Circle, Bldg. #3, Austin, Texas 78727.

The amendment is proposed under the Texas Government Code, §531.033, which provides the Commissioner of HHSC with broad rulemaking authority, and under the Human Resources Code, §32.021, and the Government Code, §531.021(a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas.

The proposed amendment affects the Government Code, Chapter 531, and Chapter 32 of the Human Resources Code. No other statutes, articles, or codes are affected by the proposed rule.

§354.1003.Time Limits for Submitted Claims.

(a) Claims filing deadlines. Claims must be received by the Health and Human Services Commission (HHSC) or its designee [ health insuring agent ] in accordance with the following time limits to be considered for payment. Due to the volume of claims processed, claims that do not comply with the following deadlines will be denied payment.

(1) Inpatient hospital claims . Final inpatient hospital claims must be received by HHSC or its designee [ the health insuring agent ] within 95 days from the date of discharge or 95 days from the date the Texas Provider Identifier (TPI) Number is issued, whichever occurs later . In the following situations , hospitals may, and in one instance, must file interim claims: [ the claim must be received by the health insuring agent within 95 days from the last date of service on the claim. ]

(A) Hospitals reimbursed according to prospective payment may submit an interim claim after the patient has been in the facility 30 consecutive days or longer.

(B) Children's hospitals reimbursed according to Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) methodology may submit interim claims prior to discharge and must submit an interim claim if the patient remains in the hospital past the hospital's fiscal year end.

(2) Outpatient hospital claims must be received by HHSC or its designee [ the health insuring agent ] within 95 days from each date of service on the claim or 95 days from the date the Texas Provider Identifier (TPI) Number is issued, whichever occurs later .

(3) Claims from all other providers must be received by HHSC or its designee [ the health insuring agent ] within 95 days from each date of service on the claim or 95 days from the date the Texas Provider Identifier (TPI) Number is issued, whichever occurs later .

(4) The following exceptions to the claims-filing deadline apply to all claims received by HHSC or its designee [ the health insuring agent ] regardless of provider or service type.

(A) Claims on behalf of an individual who has applied for Medicaid coverage but has not been assigned a Medicaid recipient number on the date of service must be received by HHSC or its designee [ the health insuring agent ] within 95 days from the date the Medicaid eligibility is added to HHSC's [ the health insuring agent's ] eligibility file. This date is referred to as the "add date."

(B) If a client loses Medicaid eligibility and is later determined to be eligible, the claim must be received by HHSC or its designee [ the health insuring agent ] within 95 days from the "add date."

(C) When a service is a benefit of Medicare and Medicaid and the client is covered by both programs, the claim must first be filed with Medicare. There is no filing deadline on claims submitted to Medicaid for payment of the Medicare deductible and/or coinsurance. Claims denied by Medicare must be received by HHSC or its designee [ the health insuring agent ] within 95 days from the date of Medicare disposition.

(D) When a client is eligible for Medicare Part B only, the inpatient hospital claim for services covered as Medicaid only should be submitted directly to Medicaid. The time limits in subsection (a)(1) of this section apply.

(E) When a service is billed to another insurance resource, the claim must be received by HHSC or its designee [ the health insuring agent ] within 95 days from the date of disposition by the other insurance resource.

(F) When a service is billed to a third party resource that has not responded, the claim must be received by HHSC or its designee [ the health insuring agent ] within 12 months of the date of service. However, 110 days must elapse after the third party billing before submitting the claim to HHSC or its designee [ the health insuring agent ].

(G) When a Title XIX family planning service is denied by Title XX prior to being submitted to Medicaid, the claim must be received by HHSC or its designee [ the health insuring agent ] within 95 days of the date on the Title XX Denial Remittance Advice.

(H) Claims for services rendered by out-of-state providers must be received by HHSC or its designee [ the health insuring agent ] within 365 days from the date of service.

(b) All appeals of claims and requests for adjustments must be received by HHSC or its designee [ the health insuring agent ] within 180 days from the date of the last denial of and/or adjustment to the original claim.

(c) Claims received by HHSC or its designee [ the health insuring agent ] which are lacking the information necessary for processing are denied as incomplete claims. The resubmission of the claim containing the necessary information must be received by HHSC or its designee [ the health insuring agent ] within 180 days from the last denial date.

(d) Extension. If a filing deadline falls on a weekend or holiday, the filing deadline shall be extended to the next business day following the weekend or holiday.

(e) Exceptions to the 95-day deadline. HHSC [ The department ] shall consider exceptions only when at least one of the situations included in this subsection exists. The final decision of whether a claim falls within one of the exceptions will be made by HHSC's [ the department's ] Resolution Services Section [ Medical Appeals office ].

(1) Exceptions to the filing deadline are considered when one of the following situations exists:

(A) catastrophic event that substantially interferes with normal business operations of the provider, or damage or destruction of the provider's business office or records by a natural disaster, including but not limited to fire, flood, or earthquake; or damage or destruction of the provider's business office or records by circumstances that are clearly beyond the control of the provider, including but not limited to criminal activity. The damage or destruction of business records or criminal activity exception does not apply to any negligent or intentional act of an employee or agent of the provider because these persons are presumed to be within the control of the provider. The presumption can only be rebutted when the intentional acts of the employee or agent leads to termination of employment and filing of criminal charges against the employee or agent;

(B) delay or error in the eligibility determination of a recipient, or delay due to erroneous written information from HHSC or its designee [ the department ], or another state agency[ , or health insuring agent ];

(C) delay due to electronic claim or system implementation problems; or

(D) submission of claims within the 365-day federal filing deadline when services are authorized retroactively.

(2) Under the conditions and circumstances included in paragraph (1) of this subsection, providers must submit the following documentation, if appropriate, and any additional requested information to substantiate approval of an exception.

(A) All exception requests. The provider must submit an affidavit or statement from the provider stating the details of the cause for the delay, the exception being requested, and verification that the delay was not caused by neglect, indifference, or lack of diligence of the provider or the provider's employee or agent. This affidavit or statement must be made by the person with personal knowledge of the facts.

(B) Exception requests within paragraph (1)(A) of this subsection. The provider must submit independent evidence of insurable loss; medical, accident, or death records; or police or fire report substantiating the exception of damage, destruction, or criminal activity.

(C) Exception requests within paragraph (1)(B) of this subsection. The provider must submit the written document from HHSC [ the department ] or its designee that contains the erroneous information or explanation of the delayed information.

(D) Exception requests within paragraph (1)(C) of this subsection. The provider must submit the written repair statement, invoice, computer or modem generated error report (indicating attempts to transmit the data failed for reasons outside the control of the provider), or the explanation for the system implementation problems. The documentation must include a detailed explanation made by the person making the repairs or installing the system, specifically indicating the relationship and impact of the computer problem or system implementation to claims submission, and a detailed statement explaining why alternative billing procedures were not initiated after the delay in repairs or system implementation was known.

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 January 13, 2003.

TRD-200300152

Steve Aragon

General Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: February 23, 2003

For further information, please call: (512) 424-6576

Chapter 355. MEDICAID REIMBURSEMENT RATES

The Texas Health and Human Services Commission (HHSC) proposes to amend §355.503, concerning reimbursement methodology for the Community-Based Alternatives waiver program, §355.505, concerning reimbursement methodology for the Community Living Assistance and Support Services waiver program--a 1915(c) Medicaid home and community- based waiver for persons with related conditions, and §355.9022, concerning reimbursement methodology for community-based services provided to people who are deaf-blind with multiple disabilities, in its Medicaid Reimbursement Rates chapter.

The purpose of the amendments is to modify reimbursement methodology for the Community-Based Alternatives (CBA), Community Living Assistance and Support Services (CLASS), and community-based services provided to people who are Deaf-Blind with Multiple Disabilities (DB-MD) programs. The proposal implements and describes the method used to determine an add-on rate to the registered nursing and licensed vocational nursing services rates for specialized nurses who care for clients requiring daily nursing care for their ventilators or tracheostomies. For the CLASS and DB-MD programs, the proposal also replaces references to the Texas Department of Human Services (DHS) with references to HHSC. These changes reflect that HHSC is the agency responsible for Medicaid rates.

Don Green, Chief Financial Officer, has determined that, for the first five-year period the proposed sections will be in effect, there will be no fiscal implications for state government or local government as a result of enforcing or administering the sections. Increased costs will be offset by savings generated by unfilled waiver slots.

Steve Lorenzen, Director, Rate Analysis, 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 that home health agencies will be paid more for specialized nurses, which will assist them in hiring and retaining qualified, experienced nursing staff. Clients who require specialized nursing care for their ventilators or tracheostomies will have access to more qualified, experienced nursing care. There will be no adverse economic effect on small or micro businesses as a result of enforcing or administering the sections, because the proposal provides for higher rates to home health agencies when clients require daily nursing care for their ventilators or tracheostomies. These higher rates will be paid to providers by DHS. There is no anticipated economic cost to persons who are required to comply with the proposed sections. There will be no anticipated effect on local employment in geographic areas affected by these sections.

Questions about the content of this proposal may be directed to Carolyn Pratt at (512) 685- 3127 in HHSC's Rate Analysis Department. Written comments on the proposal may be submitted to Supervisor, Rules and Handbooks Unit-085, Texas Department of Human Services E-205, P.O. Box 149030, Austin, Texas 78714-9030, within 30 days of publication in the Texas Register . For further information regarding the proposal or to make the proposal available for public review, contact local offices of DHS or Carolyn Pratt at (512) 685-3127 in HHSC Rate Analysis.

Under §2007.003(b) of the Government Code, HHSC has determined that Chapter 2007 of the Government Code does not apply to these rules. Accordingly, HHSC is not required to complete a takings impact assessment regarding these rules.

Subchapter E. COMMUNITY CARE FOR AGED AND DISABLED

1 TAC §355.503, §355.505

The amendments are proposed under the Government Code, §531.033, which authorizes the commissioner of HHSC to adopt rules necessary to carry out the commission's duties, and §531.021(b), which establishes HHSC as the agency responsible for adopting reasonable rules governing the determination of fees, charges, and rates for medical assistance payments under the Human Resources Code, Chapter 32.

The amendments implement the Government Code, §§531.033 and 531.021(b).

§355.503.Reimbursement Methodology for the Community-Based Alternatives Waiver Program.

(a) General requirements. [ Cost reports pertaining to providers' fiscal year ending in calendar year 1997 and subsequent years will be governed by the information in this section. ] The Texas Health and Human Services Commission (HHSC) applies the general principles of cost determination as specified in §355.101 of this title (relating to Introduction).

(b)-(c) (No change.)

(d) Waiver reimbursement determination. Recommended reimbursements are determined in the following manner.

(1)-(5) (No change.)

(6) Specialized nursing reimbursement add-on. A specialized nursing reimbursement add-on will be paid in addition to the unit-of-service reimbursements for skilled nursing services provided by an RN or by an LVN. The specialized nursing reimbursement add-on is paid when a client requires, as determined by a physician, daily skilled nursing to cleanse, dress, and suction a tracheostomy or daily skilled nursing assistance with ventilator or respirator care. The client must be unable to do self-care and require the assistance of a nurse for the ventilator, respirator, or tracheostomy care. This specialized nursing reimbursement add-on will be determined in accordance with subsection (c) of this section.

(7) [ (6) ] Exceptions to the reimbursement determination methodology. HHSC may adjust reimbursement if new legislation, regulations, or economic factors affect costs, according to §355.109 of this title (relating to Adjusting Reimbursement When New Legislation, Regulations, or Economic Factors Affect Costs).

(e)-(h) (No change.)

§355.505.Reimbursement Methodology for the Community Living Assistance and Support Services Waiver Program[ --a 1915(c) Medicaid Home and Community-Based Waiver for Persons with Related Conditions ].

(a) General requirements. [ Cost reports pertaining to providers' fiscal years ending in calendar year 1997 and subsequent years will be governed by the information in this section. ] The Texas Health and Human Services Commission (HHSC) [ Department of Human Services (DHS) ] applies the general principles of cost determination as specified in §355.101 of this title (relating to Introduction).

(b) General. Texas Medicaid contracted [ DHS will reimburse qualified ] providers will be reimbursed for waiver services provided to Medicaid-eligible persons with related conditions (waiver services). Additionally, [ DHS will reimburse qualified ] Texas Medicaid contracted providers will be reimbursed for a pre-enrollment assessment of potential waiver participants. The pre-enrollment assessment covers care planning for the participant and is reimbursed by a one-time administrative expense fee which is not included in the waiver services but will be paid from Medicaid administrative funds.

(c) Reporting of cost.

(1) (No change.)

(2) All contracted providers must submit a cost report unless the number of days between the date the first Texas Department of Human Services ( DHS ) client received services and the provider's fiscal year end is 30 days or fewer.

(3) A provider may be excused from submitting a cost report if circumstances beyond the control of the provider make cost report completion impossible, such as the loss of records due to natural disasters or removal of records from the provider's custody by any governmental entity. Requests to be excused from submitting a cost report must be received by HHSC [ the ] Rate Analysis [ Department ] before the due date of the cost report.

(d) Waiver reimbursement determination methodology.

(1)-(2) (No change.)

(3) Reporting and verification of allowable cost.

(A) Providers are responsible for reporting only allowable costs on the cost report, except where cost report instructions indicate that other costs are to be reported in specific lines or sections. Only allowable cost information is used to determine recommended reimbursements. HHSC [ DHS ] excludes from reimbursement determination any unallowable expenses included in the cost report and makes the appropriate adjustments to expenses and other information reported by providers; the purpose is to ensure that the database reflects costs and other information that [ which ] are necessary for the provision of services[ ; ] and are consistent with federal and state regulations.

(B)-(C) (No change.)

(4) Reimbursement determination. Recommended unit of service reimbursements are determined in the following manner.

(A) Unit of service reimbursement for habilitation, nursing services provided by an RN, nursing services provided by an LVN, physical therapy, occupational therapy, speech pathology, and psychological services are determined in the following manner:

(i)-(v) (No change.)

(vi) For nursing services provided by an RN, nursing services provided by an LVN, physical therapy, occupational therapy, speech pathology, and psychological services:

(I)-(II) (No change.)

(III) Specialized nursing reimbursement add-on. A specialized nursing reimbursement add-on will be paid in addition to the unit-of-service reimbursements for skilled nursing services provided by an RN or by an LVN. The specialized nursing reimbursement add-on is paid when a client requires, as determined by a physician, daily skilled nursing to cleanse, dress, and suction a tracheostomy or daily skilled nursing assistance with ventilator or respirator care. The client must be unable to do self-care and require the assistance of a nurse for the ventilator, respirator, or tracheostomy care. This specialized nursing reimbursement add-on will be determined in accordance with §355.105(h) of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures).

(vii) (No change.)

(B)-(C) (No change.)

(D) HHSC [ DHS ] also adjusts reimbursement according to §355.109 of this title (relating to Adjusting Reimbursement When New Legislation, Regulations, or Economic Factors Affect Costs) if new legislation, regulations, or economic factors affect costs.

(e)-(i) (No change.)

(j) Reviews and field audits of cost reports. Desk [ DHS staff perform desk ] reviews or field audits are performed on all contracted providers' cost reports [ providers ]. The frequency and nature of the field audits [ audit ] are determined by HHSC [ DHS ] to ensure the fiscal integrity of the program. Desk reviews and field audits will be conducted in accordance with §355.106 of this title (relating to Basic Objectives and Criteria for Audit and Desk Review of Cost Reports), and providers will be notified of the results of a desk review or a field audit in accordance with §355.107 of this title (relating to Notification of Exclusions and Adjustments). Providers may request an informal review and, if necessary, an administrative hearing to dispute an action taken [ by DHS ] under §355.110 of this title (relating to Informal Reviews and Formal Appeals).

(k) (No change.)

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 January 10, 2003.

TRD-200300088

Steve Aragón

General Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: February 23, 2003

For further information, please call: (512) 438-3734

Subchapter M. MISCELLANEOUS MEDICAID PROGRAMS

2. MEDICAID WAIVER PROGRAM FOR PEOPLE WITH DEAF-BLINDNESS AND MULTIPLE DISABILITIES

1 TAC §355.9022

The amendment is proposed under the Government Code, §531.033, which authorizes the commissioner of HHSC to adopt rules necessary to carry out the commission's duties, and §531.021(b), which establishes HHSC as the agency responsible for adopting reasonable rules governing the determination of fees, charges, and rates for medical assistance payments under the Human Resources Code, Chapter 32.

The amendment implements the Government Code, §§531.033 and 531.021(b).

§355.9022.Reimbursement Methodology for Community-Based Services Provided to People Who Are Deaf-Blind with Multiple Disabilities.

(a) General information. [ Cost reports pertaining to providers' fiscal years ending in calendar year 2000 and subsequent years will be governed by information in this section. ] The Texas Health and Human Services Commission (HHSC) [ Department of Human Services (DHS) ] applies the general principles of cost determination as specified in §355.101 of this title (relating to Introduction).

(b) General. HHSC [ DHS ] will reimburse qualified Texas Medicaid contracted providers for waiver services provided to individuals who are deaf-blind with multiple disabilities.

(c) Other sources of cost information. If HHSC [ DHS ] has determined that there is not sufficient reliable cost report data from which to set reimbursements and reimbursement ceilings for waiver services, reimbursements and reimbursement ceilings will be developed by using data from surveys; cost report data from other similar programs; consultation with other service providers and/or professionals experienced in delivering contracted services; and other sources. Since sufficient cost data are not available for orientation and mobility, chore, and dietary services, the reimbursement rates for these services will be determined in this manner.

(d) Waiver rate determination methodology. Recommended reimbursements for waiver services will be determined on a fee-for-service basis in the following manner for each of the services provided:

(1)-(5) (No change.)

(6) Specialized nursing reimbursement add-on. A specialized nursing reimbursement add-on will be paid in addition to the unit-of-service reimbursements for skilled nursing services provided by an RN or by an LVN. The specialized nursing reimbursement add-on is paid when a client requires, as determined by a physician, daily skilled nursing to cleanse, dress, and suction a tracheostomy or daily skilled nursing assistance with ventilator or respirator care. The client must be unable to do self-care and require the assistance of a nurse for the ventilator, respirator, or tracheostomy care. This specialized nursing reimbursement add-on will be determined in accordance with subsection (c) of this section.

(7) [ (6) ] For habilitation day, residential habilitation (less than 24-hour and 24-hour residential habilitation), assisted living (24-hour supervision and less than 24-hour supervision), and intervenor services, two cost areas are created:

(A) The attendant cost area includes salaries, wages, benefits, and mileage reimbursement calculated as specified in §355.112 of this title (relating to Attendant Compensation Rate Add-on).

(B) An "other direct care" cost area is created which includes costs for services not included in subparagraph [ (6) ](A) of this paragraph as determined in paragraphs [ subparagraphs ] (1)-(4) of this subsection [ paragraph ]. An allowable cost per unit of service is determined for each contracted provider for the other direct care cost area. The allowable costs per unit of service for each contracted provider are arrayed. The units of service for each contracted provider in the array are summed until the median unit of service is reached. The corresponding expense to the median unit of service is determined and is multiplied by 1.044.

(C) The attendant cost area and the other direct care cost area are summed to determine the cost per unit of service.

(D) The room and board payments for waiver clients receiving assisted living services are covered in the reimbursement for these services and will be paid to providers from the client's Supplemental Security Income, less a personal needs allowance.

(8) [ (7) ] The lifetime ceiling per client for environmental accessibility services is determined from sources other than cost reports for this program. The annual ceiling per client for specialized medical equipment is determined from sources other than cost reports for this program.

(9) [ (8) ] Pre-enrollment assessment services are based on the hourly case management reimbursement.

(10) [ (9) ] HHSC [ DHS ] may adjust reimbursement if new legislation, regulations, or economic factors affect costs, according to §355.109 of this title (relating to Adjusting Reimbursement When New Legislation, Regulations, or Economic Factors Affect Costs).

(e) (No change.)

(f) Reporting of cost.

(1) Cost-reporting guidelines. If HHSC [ DHS ] requires a cost report for any waiver service in this program, providers must follow the cost-reporting guidelines as specified in §355.105 of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures).

(2) Excused from submission of cost reports. If required by HHSC [ DHS ], all contracted providers must submit a cost report unless the number of days between the date the first Texas Department of Human Services ( DHS ) client received services and the provider's fiscal year end is 30 days or fewer. The provider may be excused from submitting a cost report if circumstances beyond the control of the provider make cost- report completion impossible, such as the loss of records due to natural disasters or removal of records from the provider's custody by any regulatory agency. A Deaf-Blind Multiple Disabilities (DB-MD) Waiver contracted provider may also be excused from submitting a cost report if the total number of [ DHS ] DB-MD clients served during the reporting period is three or less. Requests to be excused from submitting a cost report must be received by HHSC's [ DHS's ] Rate Analysis Department before the due date of the cost report.

(3) Reporting and verification of allowable cost.

(A) Providers are responsible for reporting only allowable costs on the cost report, except where cost-report instructions indicate that other costs are to be reported in specific lines or sections. Only allowable cost information is used to determine recommended reimbursements. HHSC [ DHS ] excludes from reimbursement determination any unallowable expenses included in the cost report and makes the appropriate adjustments to expenses and other information reported by providers; the purpose is to ensure that the database reflects costs and other information that [ which ] are necessary for the provision of services[ ; ] and are consistent with federal and state regulations.

(B)-(C) (No change.)

(4) (No change.)

(g) (No change.)

(h) Reviews and field audits of cost reports. Desk [ DHS staff perform desk ] reviews or field audits are performed on cost reports for all contracted providers. The frequency and nature of field audits are determined by HHSC [ DHS ] staff to ensure the fiscal integrity of the program. Desk reviews and field audits will be conducted in accordance with §355.106 of this title (relating to Basic Objectives and Criteria for Audit and Desk Review of Cost Reports), and providers will be notified of the results of a desk review or a field audit in accordance with §355.107 of this title (relating to Notification of Exclusions and Adjustments). Providers may request an informal review and, if necessary, an administrative hearing to dispute an action taken [ by DHS ] under §355.110 of this title (relating to Informal Reviews and Formal Appeals).

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 January 10, 2003.

TRD-200300089

Steve Aragón

General Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: February 23, 2003

For further information, please call: (512) 438-3734