Subchapter A. COST DETERMINATION PROCESS

The Texas Health and Human Services Commission (HHSC) proposes to amend Chapter 355, Medicaid Reimbursement Rates. Chapter 355 describes the reimbursement methodology of the Texas medical assistance (Medicaid) program. HHSC proposes amendments to §355.8085, concerning Texas Medicaid Reimbursement Methodology (TMRM); amendments to §355.8081, concerning Payments for Laboratory and X-ray Services, Radiation Therapy, Physical Therapists' Services, Physician Services, Podiatry Services, Chiropractic Services, Optometric Services, Ambulance Services, Dentists' Services, and Psychologists' Services; the addition of new rule §355.8600, concerning Reimbursement for Ambulance Services, and the addition of new rule §355.8610, concerning Reimbursement for Clinical Laboratory Services, all in its Medicaid Reimbursement Rates chapter. The purpose of the revisions and additions is to transfer reimbursement methodologies for ambulance and clinical diagnostic laboratory services that do not follow TMRM out of the TMRM rule into new rules of their own. Since the TMRM applies only to covered services provided by physicians and certain other practitioners, the title of the rule is being changed to TMRM for Physicians and Certain Other Practitioners. The proposal also updates TMRM by replacing references to the "Texas Department of Health" and "department" with references to "HHSC and/or its designee". The proposal provides HHSC with more flexibility in making inflation adjustments to the TMRM conversion factor. The new rule at §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 §355.8600 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.

Tom Suehs, Deputy Commissioner for Financial Services, has determined that, for the first five-year period the proposed amendments and new sections are in effect, there are fiscal implications for state government as a result of enforcing or administering the sections. There are no fiscal implications for local governments as a result of enforcing or administering the sections.

The effect on state government for the first five-year period the sections are in effect is an estimated cost savings of $252,387 in fiscal year (FY) 2004; $248,581 in FY 2005; $248,581 in FY 2006; $248,581 in FY 2007; and $248,581 in FY 2008.

Steve Lorenzen, Director of Rate Analysis, has determined that during the first five years the proposed sections are in effect, the public benefit anticipated as a result of enforcing the sections is increased provider understanding of the various affected reimbursement methodologies. There is no adverse economic effect on small or micro-businesses as a result of enforcing or administering the proposed sections. There is no anticipated economic cost to persons who are required to comply with the proposed sections. There is no anticipated effect on local employment in geographic areas affected by these sections.

Questions about the content of this proposal may be directed to Nancy Kimble (telephone: 512-338-6496; FAX: 512-338-6544) in HHSC Rate Analysis. Written comments on the proposal may be submitted to Ms. Kimble via facsimile or mail to HHSC Rate Analysis, Mail Code H-410, 1100 West 49th Street, Austin, TX 78756-3101, within 30 days of publication in the Texas Register .

A public hearing is scheduled for Wednesday, July 16, 2003, from 2:00 pm until 5:00 pm. The hearing will be held in the Public Hearing Room, of the Brown-Heatly State Office Building, 4900 North Lamar Boulevard, Austin, Texas 78756-3101.

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

Chapter 62, Health and Safety Code, establishes the State Child Health Plan authorized under Title XXI of the federal Social Security Act, 42 U.S.C. §§1397aa, et seq. Section 62.051, Health and Safety Code, designates the Commission as the agency responsible for developing the state-designed child health plan program for Texas, making policy for the program, and adopting rules as necessary to implement Chapter 62.

The Health and Human Services Commission (HHSC or Commission) proposes to amend Chapter 370, State Children's Health Insurance Program. Specifically, the HHSC proposes 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, §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, 370.49, concerning Eligibility Criteria; Division 5, §§370.51-370.54, concerning Review and Reconsideration of Eligibility Denials and Temporary Enrollment and new Subchapter C, Division 1, §§370.301, 370.303, 370.305, 370.307, 370.309, concerning TexCare Enrollment and Division 2, §§370.321, 370.323 and 370.325, concerning Cost-Sharing Requirements. Throughout the Chapter, the proposed amendments replace "TCP" (an abbreviation of TexCare Partnership), wherever it occurs, with "TexCare." In subchapter A, Program Administration, §370.4, Definitions, the definitions for "income deductions" and "Texas Healthy Kids Corporation" are deleted. In addition, a definition was added for "gross budget group income." The definition of "income eligibility standard" was changed to mean the "monthly gross budget group income." The definitions have been renumbered to reflect the proposed changes.

Amendments are proposed to several rules in subchapter B, Application Screening, Referral and Processing. The amendments are based on legislative changes to income eligibility standards and removal of the deduction allowances. In Division 1, TexCare application process, the proposed amendment to §370.22, Completion of telephone applications, adds a child's social security number or proof of application to the Social Security Administration for a social security number to the information that must be included in an application. Under the amendments, certain information on budget groups no longer need be included in the application.

In Division 4, Eligibility criteria, the proposed amendment to §370.43, Citizenship and residency, adds refugee letters to the documents that may be submitted to show that a child is a qualified alien. The proposed amendment to §370.44, currently Income (as proposed, Income and assets), deletes language concerning net income and income deductions and adds language concerning gross income. Under the proposed amendment, a gross income test will be used to determine eligibility. The proposal also deletes provisions concerning verification of income deductions. Section 370.44, as proposed, requires an assets test for budget groups with a gross monthly income greater than 150% of the federal poverty level (FPL).

Section 370.46 governs the waiting period and is amended to reflect legislative changes to §62.154, Health and Safety Code, which requires a 90-day waiting period for applicants determined to be CHIP eligible but who do not meet certain program exceptions. As proposed, 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 proposal also adds to the exempt category children who have access to group-based health benefits plan coverage and who are required to participate in HHSC's premium payment reimbursement program.

The Commission is also proposing new Subchapter C, Enrollment, Disenrollment, and Renewal of Membership. Proposed language in Divisions 1 and 2 removes the requirement of an annual enrollment fee. Proposed Division 1, TexCare Enrollment, addresses enrollment issues. Proposed new §370.301 identifies the contents of the CHIP enrollment packet. Section 370.303 explains how to complete the enrollment process. Section 370.305 governs the enrollment process for children with complex special health care needs. Section 370.307 addresses CHIP's continuous enrollment period. Under the proposed new rule, a child determined to be CHIP eligible will remain enrolled for a period of 6 months. This is a change from the previous continuous eligibility period of 12 months for CHIP. Section 370.309 explains what happens if an enrollment packet is submitted that is incomplete or missing required information.

Division 2, Cost-Sharing Requirements, of proposed new subchapter C governs cost-sharing requirements. Sections 370.321, 370.323, and 370.325 explain the cost-sharing requirements, the exemptions to cost-sharing, and the annual cost-sharing cap. Under proposed §370.321, cost-sharing requirements, cost sharing may be determined based on the maximum levels authorized under federal law and applied to income levels so as to maximize administrative costs. Proposed §370.325, Annual cost-sharing cap, establishes a cost sharing cap of 2.5% of gross income during the 6-month coverage period for budget groups at or below 150% of FPL. Budget groups with gross income during the 6-month coverage period greater than 150% of FPL have a cost-sharing cap equal to 5% of its gross income.

The proposed amendments will bring CHIP into compliance with federal law, H.B. 2292, 78th Leg., Regular .Session. (2003), and the General Appropriations Act, 78th Leg., R.S. (2003). The proposed amendments also update references, delete unnecessary terms and provisions, and make other non-substantive changes for clarification.

Tom Suehs, Chief Financial Officer, has determined that a savings would result from the proposed amended and new rules. Annual savings to General Revenue funds are; $83.8M in FY04, $103.4 in FY05, $87.1M in FY06, $90.6M in FY07, and $94.2M in FY08.

Mr. Suehs has also determined that there will be no effect on small businesses or micro-businesses to comply with this proposal. This was determined by interpretation of the rule that small businesses and micro-businesses will not be required to alter their business practices in order to comply with the rules as proposed. There is no anticipated economic costs to persons who are required to comply with the amended and new rules as proposed. There is no anticipated fiscal impact to local government. The proposal will not negatively impact local employment.

Mr. Suehs has also determined that for each year of the first five years the proposal is in effect, the public will benefit from adoption of the amendments. The anticipated public benefit, as a result of enforcing the proposal, will be to continue to make low-cost insurance available for children of low-income families within levels of available appropriated funds. However, public hospitals and medical facilities may incur more cost as uninsured children seek medical attention.

HHSC has determined that none of the proposed amended and new rules is 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 and materially affect 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. None of the proposed amended or new rules is specifically intended to protect the environment or reduce risks to human health from environmental exposure.

HHSC has evaluated the takings impact of the proposed rules under §2007.043, Government Code. HHSC has determined that this action 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 amended and new rules are administrative and do not impose any new regulatory requirements. The proposal is reasonably taken to fulfill requirements of state law.

Public comment may be submitted in writing to Greg Holt, Health and Human Services Commission, by mail addressed to P.O. Box 13247, Austin, Texas 78711, or email at Greg.Holt@hhsc.state.tx.us. Comments must be submitted by 5:00 p.m., Central Time, within 30 days of publication of this proposal in the Texas Register . Further information may be obtained by calling Gregory Holt at (512) 685-3145.

HHSC has scheduled a public hearing to accept public testimony regarding the proposed rules. The hearing will be held from 28:00 to 512:00 p.m., Central Time, on July 164, 2003, in the Public Hearing Room of the Brown-Heatly State Office Building, 4900 North Lamar Boulevard, Austin, Texas. Persons requiring further information, special assistance, or accommodations should contact Linda Williams, Medicaid/CHIP, 512-424-6646 or linda.williams@hhsc.state.tx.us.

Subchapter A. PROGRAM ADMINISTRATION