Subchapter C. PRIVATE DUTY NURSING

The Health and Human Services Commission (HHSC or Commission) adopts the amendments to §370.4, Definitions, and §370.44, Income and Assets, with changes to the proposed text as published in the February 20, 2004, issue of the Texas Register (29 TexReg 1491). The text of the rules will be republished. The rules have been revised in response to comments received and the amended text follows.

Currently §370.44 provides for an assets test for CHIP applicants with a gross monthly income greater than 150 percent of the federal poverty level (FPL). Section 62.101(b), Health and Safety Code, allows HHSC to establish standards regarding the amount and types of assets such families may have and still be eligible for CHIP. The proposed amendments define the elements of the assets test to be implemented. The Commission has determined that the proposed assets test is necessary to enable HHSC to provide health care coverage to eligible families that are least able to afford it within the limits of appropriated funds.

The adopted amendment to §370.4 adds definitions of "countable liquid assets," "excess vehicle value," and "household," which are used in the assets test described in the proposed amendment to §370.44. The amendment also corrects the order of the defined terms. The adopted amendments to §370.44 set out the elements of the assets test. The assets test will be applied to all eligibility determinations made on or after August 24, 2004.

HHSC received comments concerning the proposed rules. All comments but one were opposed to the proposed rules. Comments were received from seventy-seven individuals and twenty-nine organizations. Three individuals submitted comments that did not pertain to the content of the proposed rules. Comments were received from the following organizations: Advocacy Incorporated, Amerigroup Texas, Austin Child Guidance Center, Camp Fire USA First Texas Council, Center for Brain Health, Center for Public Policy Priorities, Central Texas Regional Children's Health Insurance Coalition, Children at Risk, Children's Defense Fund of Texas, Children's Hospital Association of Texas, Coalition for North Texas Children, DePelchin Children's Center, Driscoll Children's Health Plan, FSS Partnerships, Insure-a-Kid, Methodist Health Care Ministries, Seton HealthCare Network, Tarrant Area CHIP Coalition, Texas Association of Health Plans, Texas Center for Disability Studies, Texas Council for Developmental Disabilities, Texas Federation of Families for Children's Mental Health, Texas IDA Network, Texas Impact, Texas Medical Association, Texas Pediatric Society, United Way of San Antonio and Bexar County, United Ways of Texas, Voices for Children San Antonio, and WBCO Head Start.

A summary of the comments received by HHSC concerning the proposed amendments to the rules are listed below. Following each comment is HHSC's response.

Comment: Several comments were received concerning the CHIP assets test vehicle policy. Commenters indicated that the policy is a barrier to obtaining or retaining employment, the vehicle limits are more restrictive than those for Children's Medicaid, and families should not be penalized for having safe, reliable transportation.

Response: HHSC acknowledges the commenters' concern regarding the vehicle policy. The CHIP assets test as proposed, however, would allow families to own at least one vehicle valued at up to $15,000.00 and additional vehicles valued at up to $4,650.00 each. Some vehicles may be exempt from inclusion in the assets test calculation altogether, such as vehicles used more than 50 percent of the time to produce income. HHSC believes this policy allows families to obtain reliable transportation for employment and ensures that families least able to afford health care coverage qualify for the program. No changes were made to the rules in response to the comments.

Comment: Several commenters expressed concern that the implementation of the CHIP assets test would further reduce enrollment. These commenters stated that changes to CHIP policies implemented since last September have already lowered enrollment to caseload levels contemplated by House Bill 1, 78th Legislature, Regular Session, 2003, and that the additional reductions that would follow the implementation of the assets test are unnecessary.

Response: HHSC acknowledges the commenters' concerns regarding CHIP enrollment levels. HHSC projects that fiscal year 2004 CHIP caseloads will be higher than House Bill 1, 78th Legislature, Regular Session, 2003, budgeted level even when the impact of the asset test is taken into account. HHSC will continue to closely monitor CHIP enrollment, including the impact on enrollment of previous policy changes as well as the implementation of the assets test. No changes were made to the rules in response to the comments.

Comment: Several commenters asked why the Commission was proposing to implement the CHIP assets test when it was not mandated to do so by the Legislature.

Response: HHSC acknowledges the concerns expressed by the commenters about imposing an assets test for enrollment in CHIP when such test was not expressly mandated by the Legislature. The legislation authorizing the use of an assets test for CHIP (section 2.46 of House Bill 2292, 78th Legislature, Regular Session, 2003) was permissive; however, budget projections were based in part on the implementation of the test. The Legislature authorized an assets test as a method of maintaining the CHIP income eligibility level at 200 percent of the federal poverty level, while also ensuring that only families who were the least able to afford health care coverage could qualify for the program. No changes were made to the rules in response to the comments.

Comment: Some commenters remarked that the assets test creates a more complicated bureaucracy that is expensive to administer and works against the goal of a streamlined simple application process.

Response: HHSC acknowledges the commenters' concern. There will be some expense involved in implementing the assets test. However, the CHIP administrative services contractor will make one-time changes to its automated processes and to the application document and other program documents. In most cases, the information provided by applicants on the revised application will be sufficient to determine eligibility based on assets, which will support the goal of streamlining the application process. No changes were made to the rules in response to the comments.

Comment: Several commenters expressed concern that the implementation of the assets test will result in a significant loss of federal matching funds.

Response: HHSC acknowledges the commenters' concern. Again, implementation of the asset test was assumed by the state budget. By federal law, the federal CHIP match is tied to state expenditures. Federal matching funds will be reduced to the extent that the asset test reduces state expenditures. No changes were made to the rules in response to the comments.

Comment: Several commenters expressed their belief that the $5000.00 limit on assets is too low. They explained that while this level might be appropriate for the Food Stamp program, it is not an appropriate maximum for CHIP families, as they have a higher income limit. Commenters suggested that if the rule were to be adopted, the limit on assets be raised to at least $10,000.00. One commenter felt it should be raised to between $25,000.00 and $35,000.00.

Response: HHSC acknowledges the commenters' concern, but disagrees that the $5000.00 limit is too low. The assets test for most Medicaid families has a maximum of $2000.00. HHSC concluded that the higher level used in the Food Stamp program was more appropriate for the CHIP assets test and ensures that families who are the least able to afford health care coverage qualify for the program. Keeping the $5000.00 limit will assist HHSC in operating CHIP within budget allocations. No changes were made to the rules in response to the comments.

Comment: Several commenters expressed concern about the inclusion of the cash values of an Individual Development Account, Individual Retirement Account, Simplified Employee Pension plan, and Keogh retirement plans in the definition of liquid assets in §370.4(12)(D). They commented that families should not be penalized for saving for retirement, the purchase of a home, or for their children's education, and that this policy is contrary to "Texas Values." These commenters were concerned that families would be forced to exhaust their savings in order to qualify for CHIP. The commenters further stated that this policy would imperil the family's financial security and create a barrier to achieving self-sufficiency and independence. These commenters recommended the deletion of §370.4(12)(D) if the rule is adopted.

Response: HHSC acknowledges the commenters' concerns and agrees that this portion of the rule should be modified. The definition of liquid assets will be modified to exclude: Individual Development Accounts and any retirement accounts that have penalties for early withdrawal; life insurance, burial insurance or other insurance with a cash value; educational savings accounts such as 529 qualified tuition plans (26 U.S.C. §529) and Texas Tomorrow Fund accounts; and funds received as educational grants or scholarships.

Comment: Several commenters stated that the fiscal note in the proposed preamble was not accurate. These commenters stated that there would be an impact on local health and human services agencies. They said that while this policy might save the state government money, the burden for providing health care for these children would be shifted to the local level.

Response: HHSC acknowledges the comments and recognizes the possible impact these rules as amended may have on local governments and local health and human services agencies. However, HHSC cannot quantify the potential impact to local governments, but, based on caseload estimates, believes that the impact will be minimal and dispersed across the state. No changes were made to the rules in response to the comments.

Comment: Some commenters stated that the implementation of the assets test will exacerbate an already significant declining enrollment problem. The commenters explained that declining enrollment would lead to adverse selection, which could actually threaten the viability of the CHIP health plans and of the program itself. These commenters stated that it was probable that the families of sick children would spend down their assets to gain CHIP coverage, while the families of well children would not. Commenters believe that this could lead to a population of CHIP children that is sicker and more costly for plans to care for, which could make health plan participation in the program actuarially unsound.

Response: HHSC acknowledges the concerns expressed about the declining enrollment in CHIP and agrees that the possibility of adverse selection is an ongoing issue that health plans and HHSC must monitor. The possibility of adverse selection was a concern from the outset of the Children's Health Insurance Program. HHSC will continue to work with the plans regarding this issue. No changes were made to the rules in response to the comments.

Comment: Some commenters suggested that other money is available for the CHIP program and that cost savings from the implementation of the assets test are, therefore, unnecessary. The commenters specifically cited $469 million in federal funds.

Response: HHSC acknowledges the commenters' concern. Use of the federal fiscal relief funds referred to by the commenters is addressed in the state budget, House Bill 1, Article 9, 78th Legislature, Regular Session, 2003. No changes were made to the rules in response to the comments.

Comment: Several commenters expressed concern about the lack of other affordable health insurance for families denied CHIP coverage because of the assets test.

Response: HHSC acknowledges the commenters' concern. A preliminary analysis of recent CHIP disenrollment data suggests that some children previously eligible for CHIP obtain health coverage by enrolling in Medicaid or by later re-enrolling in CHIP. Some children may also be newly covered for care through private insurance obtained by a working parent. The Commission is required to operate CHIP within the limits of appropriated funds. The Commission remains committed to exploring all options for offering insurance coverage to children whose families are not able to afford it on their own. No changes were made to the rules in response to the comments.

Comment: Some commenters were concerned that families denied CHIP coverage due to the assets test would be forced to choose between spending on basic necessities and possible life-saving medications.

Response: HHSC acknowledges the commenters' concern. The assets test would only be applied to those families with monthly incomes greater than 150 percent of the federal poverty level. The assets test ensures that those families least able to afford health care coverage qualify for the program. No changes were made to the rules in response to the comments.

Comment: One commenter suggested that savings accrued on behalf of children with disabilities should be exempt.

Response: HHSC acknowledges the commenter's concern. In determining CHIP eligibility, only the assets of budget group members are counted. Children who are disabled and receiving supplemental security income (SSI) are not part of the budget group when CHIP eligibility is determined for other children in the family. Bank accounts in the name of a child receiving SSI would not be counted in the CHIP assets test. No changes were made to the rules in response to the comment.

Comment: One commenter suggested that, if the rule is adopted, §370.44(i)(4) be modified to exempt all vehicles modified to transport a household member with disabilities. The commenter stated that two-parent families will often have two such modified vehicles. Since these vehicles are frequently valued in excess of $15,000.00, such families could be determined ineligible for CHIP based on assets.

Response: HHSC agrees with the commenter's suggestion and will modify the rule to allow the exemption of all vehicles modified to transport a household member with disabilities.

Comment: Several commenters recommended that §370.44(e)(i) be modified to fully exempt one vehicle for each working parent.

Response: HHSC appreciates the recommendation. The rule as written allows families to own at least one vehicle valued at up to $15,000.00 and any number of additional vehicles valued up to $4,650.00 each. Some vehicles may be exempt from inclusion in the assets test calculation all together, such as vehicles used more than 50 percent of the time to produce income. HHSC concluded that the rules allow families to obtain reliable transportation for employment. No changes were made to the rules in response to the comments.

Comment: Several commenters recommended that §370.44(i)(4) be modified to fully exclude the family's first vehicle. This would put the CHIP vehicle policy more in line with Medicaid policy.

Response: HHSC acknowledges the commenter's recommendation, but the Commission believes that the Medicaid and CHIP vehicle policies, though not identical, are coordinated and consistent in that both are linked to and reflect the different program populations and different income eligibility levels. The assets test used for the Food Stamp program was chosen as the model for the CHIP rules because it is applicable to a population with a higher income than the general Medicaid population. Moreover, within CHIP imposition of the assets test (and consideration of vehicle valuation) depends on the budget group's gross income. Families whose income is at or less than 150 percent of the federal poverty level are not subject to the assets test at all. Also, putting CHIP assets tests rules in line with Medicaid policy would mean limiting a family's assets to $2,000.00. No changes were made to the rules in response to the comments.

Comment: Two commenters asked that the definition of excess vehicle value be rewritten. One of them suggested the following: "the lesser of a vehicle's wholesale value or the owner's equity in the vehicle, minus any allowable exemption."

Response: HHSC appreciates this suggestion. Wholesale value is used in TANF, Food Stamp, and Medicaid policies. The equity value of a vehicle is not a consideration. HHSC believes that introducing the concept of equity value into the rule will complicate and add additional expenditures for the administration of the assets test. No changes were made to the rules in response to the comments.

Comment: One commenter asked that §370.4(12)(E) be modified to distinguish between fully prepaid irrevocable contracts and open-ended prepaid funeral plans. One commenter felt that prepaid burial plans should be exempt altogether.

Response: HHSC acknowledges the commenter's concern and agrees that this section of the rule should be modified. The cash value of any pre-paid burial and funeral plan will be exempt.

Comment: One commenter felt that money saved for education should be exempt all together.

Response: HHSC acknowledges the commenter's concern and agrees the rule should be modified. Internal Revenue Code 529 qualified tuition plans (26 U.S.C. §529), such as Texas Tomorrow Fund accounts, will be exempt.

Comment: One commenter asked that §370.4(12)(G) be deleted and that all accessible trust funds be exempted.

Response: HHSC acknowledges the suggestion. However, accessible trust funds are an asset to the family and available for family needs. To exempt this asset for some families and to count other assets (such as savings accounts) for other families would be inequitable. No changes were made to the rules in response to this comment.

Comment: One commenter asked that §370.4(12)(B) and (C) (which include cash in the bank and cash in a TANF Electronic Benefit Transfer (EBT) account as countable liquid assets) be clarified as to what point in time these assets would be countable.

Response: HHSC appreciates the comment and agrees that the rule should be modified to clarify at what point in time these assets would be countable. The rule will be modified to provide that cash in the bank and cash in a TANF EBT account are defined as the balance available on the last day of the month prior to the date of the submission of an application for healthcare benefits (either initial or renewal).

Comment: One commenter felt that §370.4(12)(F) should be clarified as to what point in time the money remaining from the sale of a homestead will be counted. The commenter suggested that the rule be rewritten to match the Texas Property Code to allow six months from the date of sale before any remaining money becomes countable.

Response: HHSC acknowledges the commenter's concern. The commenter is apparently referring to Texas Property Code §41.001(c), which exempts proceeds of a sale of a homestead from seizure for a creditor's claim for six months following the sale of the property. The Commission has concluded that assessing a family's eligibility for the CHIP program and exemption from a creditor's claim are not related determinations. The proceeds from the sale of a homestead are a liquid asset available to the family to pay for health care coverage. No changes were made to the rules in response to this comment

Comment: One comment was received in support of the rule adoption. This commenter felt that it is appropriate for parents with assets to be responsible for their children's health insurance.

Response: HHSC appreciates the comment. HHSC is committed to making CHIP coverage available to those children whose families are least able to afford health coverage for them. The assets test will assist CHIP in identifying just who those families are. Families with assets in excess of $5000.00 have funds they can use to provide health care for their children. No changes were made to the rules in response to the comment.

Subchapter A. PROGRAM ADMINISTRATION

Subchapter C. UTILIZATION REVIEW