TITLE 25.HEALTH SERVICES

Part 1. DEPARTMENT OF STATE HEALTH SERVICES

Chapter 39. PRIMARY HEALTH CARE SERVICES PROGRAM

The Executive Commissioner of the Health and Human Services Commission, on behalf of the Department of State Health Services (department), proposes the repeal of §§39.1 - 39.22 and new §§39.1 - 39.11, concerning the provision of primary health care services in this state.

BACKGROUND AND PURPOSE

The repeal and new sections are necessary to comply with Health and Safety Code, Chapter 31, which directs the department to establish a program to provide primary health care services to eligible individuals. The Primary Health Care Services Program provides access to basic health care services for individuals whose incomes do not exceed 150% of the Federal Poverty Level residing in Texas who are unable to access the same care through other funding sources or programs.

Government Code, §2001.039, requires that each state agency review and consider for re-adoption each rule adopted by that agency pursuant to the Government Code, Chapter 2001 (Administrative Procedure Act). Sections 39.1 - 39.22 have been reviewed, and the department has determined that reasons for adopting the sections continue to exist because rules on this subject are needed.

Since legal, policy, and operational issues have changed significantly since the rules were adopted in 1986, the department determined that review and revision of the subchapter could be accomplished most effectively by proposing the repeal of the existing sections in the subchapter and proposing new language to remove outdated information and replace it with current information in a better-organized manner.

SECTION-BY-SECTION SUMMARY

Section 39.1 introduces the subchapter and states a purpose and mission for the provision of primary health care services as prescribed by Health and Safety Code, Chapter 31.

Health and Safety Code, §31.002, authorizes the department to define terms as necessary to administer the chapter. Section 39.2 defines specific terms used throughout the subchapter that pertain to the delivery of primary health care services by the department.

Health and Safety Code, §31.003 and §31.005, direct the department to adopt rules to guide the effective and efficient provision of services. Section 39.3 includes general requirements for the provision of primary health care services and a prioritization of the types of services that, at a minimum, must be provided to recipients because the department faces budgetary limitations. These fundamental services consist of diagnosis and treatment, emergency services, family planning services, preventive health services, health education, and diagnostic services. The requirements also include criteria, such as geographic area, socioeconomic status and available community resources, to guide where and to whom services should be provided, based upon unmet needs. If the department determines that existing community resources are unavailable or unable to meet the primary health care needs of the population in need, the department may deliver services directly to eligible individuals. Section 39.3 also clarifies that recipients eligible for Medicare Part D must receive prescription drug benefits according to Medicare regulations if the provider offers supplemental prescription drug benefits as part of the department's primary health care program.

As required by Health and Safety Code, §31.004 and §31.006, §39.4 outlines the process and requirements for the provision of contracts to providers that deliver primary health care services. Services may be delivered through a network of providers, directly by the department, or by a combination of both to ensure recipients are able to receive necessary services. The department must contract for services using a Request for Proposals process in accordance with state law and department policy. The department may deny, modify, suspend or terminate provider contracts for cause, and an applicant or current contractor that is aggrieved in relation to the award of a contract may file a protest in accordance with department policy.

Section 39.5 delineates the circumstance in which the department is obligated to reimburse providers for contracted services rendered and the timeframe in which providers can expect to receive payment.

Health and Safety Code, §31.007 and §31.008, require the department to adopt rules relating to application procedures and eligibility criteria for potential program recipients. Section 39.6 states an individual must be in financial need and be a Texas resident in order to be eligible for program services. Individuals found ineligible for services may reapply at any time. The section also states that providers are required to assist applicants in completing the application process, provide coverage if the applicant meets eligibility criteria, determine if the applicant is eligible for Medicare Part D coverage, and provide services to potentially-eligible individuals with immediate medical needs. Although providers may collect co-payments from eligible individuals receiving services, no one shall be denied services based on an inability to pay, and pre-treatment deposits and/or payments are prohibited. The section explains that providers that offer supplemental prescription drug coverage as part of their primary health care program may reimburse eligible recipients for co-payments made for medications under Medicare Part D upon availability of funds.

Section 39.7 outlines the criteria necessary to maintain eligibility for program services. Recipients must continue to be in financial need and reside in Texas. Recipients are required to inform their providers of changes in address, health insurance coverage, employment, income, and family composition to ensure continued eligibility for services.

Health and Safety Code, Chapter 31, requires that primary health care services must be provided, to the greatest extent possible, to low-income individuals who are not eligible for similar services through other publicly-funded programs and who do not have another source of support. In order to assure that the department is the payer of last resort, §39.8 mandates coordination of benefits between the department, providers of other benefits programs, and person(s) who have a legal obligation to financially support the recipient.

Section 39.9 describes the terms under which services to recipients and applicants may be denied, modified, suspended, or terminated as required by Health and Safety Code, §31.009. Applicants who intentionally provide false or incomplete information, recipients that are no longer eligible for services, and recipients or other persons who have a legal obligation to support a recipient that do not reimburse the department for services will receive written notice of the denial, modification, suspension, or termination of services and an opportunity for a fair hearing.

Section 39.10 establishes the process by which an appeal requested by a recipient or applicant aggrieved by a program decision to deny, modify, suspend, or terminate participation in program services will be conducted.

According to Health and Safety Code, §31.015, the department is required to adopt rules relating to the information a provider shall report to the department. Section 39.11 states that program review activities will be conducted to ensure the delivery of appropriate services and evaluate the continued need for services. The department will require providers to report on the number of recipients served, demographic information about recipients, fiscal and expenditure information, program accomplishments, and coordination of benefits with other providers.

FISCAL NOTE

Cindy Jones, Ph.D., R.N., Manager, Preventive and Primary Care Unit, has determined that for each year of the first five years the sections are in effect, there will be no fiscal implications to state or local governments as a result of administering the sections as proposed. The new sections are not anticipated to have significant fiscal impact because the proposed rules do not change current program structure and implementation.

SMALL AND MICRO-BUSINESS IMPACT ANALYSIS

Dr. Jones has also determined that there will be no effect on small businesses or micro-businesses required to comply with the sections as proposed, because neither small businesses nor micro-businesses that are providers of primary health care services will be required to alter their business practices in order to comply with the sections. There are no anticipated economic costs to persons who are required to comply with the sections as proposed. There is no anticipated negative impact on local employment.

PUBLIC BENEFIT

Dr. Jones has also determined that for each year of the first five years the sections are in effect, the public benefit anticipated as a result of administering the sections will be continued access to basic health care services for eligible, low-income Texas residents.

REGULATORY ANALYSIS

The department has determined that this proposal is not a "major environmental rule" as defined by Government Code, §2001.0225. "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk 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 a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure.

TAKINGS IMPACT ASSESSMENT

The department has determined that the proposed sections do not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, do not constitute a taking under Government Code, §2007.043.

PUBLIC COMMENT

Comments on the proposal may be submitted to Kim Roberts, Mail Code 1923, Community Health Services Section, Department of State Health Services, 1100 West 49th Street, Austin, Texas 78756-3189 or by e-mail to kim.roberts@dshs.state.tx.us. Comments will be accepted for 30 days following publication of the proposal in the Texas Register .

LEGAL CERTIFICATION

The Department of State Health Services General Counsel, Cathy Campbell, certifies that the proposed rules have been reviewed by legal counsel and found to be within the state agencies' authority to adopt.

Subchapter A. TEXAS PRIMARY HEALTH CARE SERVICES ACT PROGRAM RULES

25 TAC §§39.1 - 39.22

(Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the Department of State Health Services or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

STATUTORY AUTHORITY

The proposed repeals are authorized by Health and Safety Code, §31.004, which requires the department to adopt rules necessary to administer the Texas Primary Health Care Services Act; and Government Code, §531.0055, and Health and Safety Code, §1001.075, which authorize the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter 1001.

The proposed repeals affect Health and Safety Code, Chapter 31. Review of the sections implements Government Code, §2001.039.

§39.1.Introduction.

§39.2.Definitions.

§39.3.General Program Requirements.

§39.4.Contracts and Written Agreements.

§39.5.Selection of Providers.

§39.6.Matching Share.

§39.7.Eligibility.

§39.8.Determination of Eligibility.

§39.9.Maintaining Eligibility.

§39.10.Co-payment for Primary Health Care Services.

§39.11.Primary Health Care Services Provided.

§39.12.Funds.

§39.13.Coordination of Benefits and Recovery of Costs.

§39.14.Denial/Modification/Suspension/Termination of Services.

§39.15.Payment for Services.

§39.16.Development and Evaluation of Program.

§39.17.Program Review.

§39.18.Appeals.

§39.19.Confidentiality.

§39.20.Gifts.

§39.21.Nondiscrimination.

§39.22.Federal Poverty Income Guidelines.

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 February 13, 2006.

TRD-200600720

Cathy Campbell

General Counsel

Department of State Health Services

Earliest possible date of adoption: March 26, 2006

For further information, please call: (512) 458-7111 x6972


Subchapter A. PRIMARY HEALTH CARE SERVICES PROGRAM

25 TAC §§39.1 - 39.11

STATUTORY AUTHORITY

The proposed new sections are authorized by Health and Safety Code, §31.004, which requires the department to adopt rules necessary to administer the Texas Primary Health Care Services Act; and Government Code, §531.0055, and Health and Safety Code, §1001.075, which authorize the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter 1001.

The proposed new sections affect Health and Safety Code, Chapter 31. Review of the sections implements Government Code, §2001.039.

§39.1.Introduction.

(a) The purpose of these sections is to establish a system of primary health care services for eligible individuals as prescribed by Health and Safety Code, Chapter 31.

(b) The Department of State Health Services seeks to fund local projects that utilize early intervention and prevention of health problems. These projects will utilize and integrate a plurality of existing primary health care services and providers into a structured service delivery system. Access to appropriate levels of health care can reduce health expenditures, mortality, morbidity, and improve individual productivity, health status, and economic growth.

§39.2.Definitions.

The following words and terms, when used in these sections, shall have the following meanings, unless the context clearly indicates otherwise:

(1) Act--The Texas Primary Health Care Services Act, Health and Safety Code, Chapter 31.

(2) Applicant--An individual and/or family applying to receive primary health care services.

(3) Commission--The Texas Health and Human Services Commission.

(4) Commissioner--The Commissioner of Health.

(5) Department--The Department of State Health Services.

(6) Eligible individual--An eligible recipient of primary health care services under the Act.

(7) Other benefit--A benefit, other than a benefit provided under the Act, to which an individual is entitled for payment of the costs of primary health care services, including:

(A) benefits available from:

(i) an insurance policy, group health plan, or prepaid medical care plan;

(ii) Title XVIII or Title XIX of the Social Security Act;

(iii) the Veterans Administration;

(iv) the Civilian Health and Medical Program of the Uniformed Services; and

(v) workers compensation or any other compulsory employer's insurance program;

(B) a public program created by federal or state law, or by an ordinance or rule of a municipality or political subdivision of the state, except those benefits created by the establishment of a city or county hospital, a joint city-county hospital, a county hospital authority, a hospital district, or by the facilities of a publicly supported medical school; or

(C) benefits resulting from a cause of action for medical, facility, or medical transportation expenses, or a settlement or judgment based on the cause of action, if the expenses are related to the need for services provided by the Act.

(8) Primary health care services--which include the following:

(A) diagnosis and treatment;

(B) emergency services;

(C) family planning services;

(D) preventive health services, including immunizations;

(E) health education;

(F) laboratory, x-ray, nuclear medicine, or other appropriate diagnostic services;

(G) nutrition services;

(H) health screening;

(I) home health care;

(J) dental care;

(K) transportation;

(L) prescription drugs and devices and durable supplies;

(M) environmental health services;

(N) podiatry services; and

(O) social services.

(9) Program--The primary health care services program created by the Act.

(10) Provider--An entity that, through a grant or a contract with the department, delivers primary health care services that are purchased by the department for the purposes of the Act.

(11) Recipient--An individual receiving primary health care services under the Act.

(12) Request for proposal--A solicitation providing guidance and instructions issued by the department to entities interested in submitting applications to provide primary health care services under the Act.

(13) Services--Primary health care services.

(14) Texas resident--An individual who is physically present within the geographic boundaries of the state, and who:

(A) intends to remain within the state, whether permanently or for an indefinite period;

(B) maintains an abode within the state (i.e., house or apartment, not merely a post office box);

(C) does not claim residency in any other state or country;

(D) is under 18 years of age, and at least one of his/her parents, managing conservator, or guardian is a bona fide resident of Texas;

(E) is a person residing in Texas and his/her legally dependent spouse is a bona fide resident of Texas; or

(F) is an adult residing in Texas whose legal guardian is a bona fide resident of Texas.

§39.3.General Program Requirements.

(a) Because budgetary limitations exist, all program providers shall offer at least the following priority services:

(1) diagnosis and treatment;

(2) emergency services;

(3) family planning services;

(4) preventive health services, including immunizations;

(5) health education; and

(6) laboratory, x-ray, nuclear medicine, or other appropriate diagnostic services.

(b) The department, through approved providers, shall provide for the delivery of primary health care services to those populations that demonstrate unmet needs due to the inaccessibility and/or unavailability of primary health care services. Unmet needs may be determined by, but are not limited to, the following criteria:

(1) geographic area;

(2) demography;

(3) socioeconomic conditions;

(4) cultural factors affecting the health status;

(5) health problems; and

(6) health resources available in the community.

(c) The department may deliver services directly to eligible individuals if existing private or public providers or other resources in the service area are unavailable or unable to provide those services, as evidenced by the applications received during the Request for Proposals process. The department shall make determinations that providers or resources are unavailable or unable to provide services in accordance with Health and Safety Code, §31.005.

(d) Individuals eligible for prescription drug benefits under Medicare, Part D, who reside in areas of the state served by program providers that offer prescription drugs as a primary health care service shall receive prescription drug benefits according to Medicare regulations and procedures. Individuals who are not eligible for prescription drug benefits under Medicare, Part D, who reside in areas of the state served by program providers that offer prescription drugs as a primary health care service shall receive covered prescription drugs dispensed by pharmacy providers according to this chapter.

§39.4.Provision of Contracts for Primary Health Care Services.

(a) Primary health care services will be delivered through a network of providers, directly by the department, or by the department and providers in combination. Eligible individuals should receive services as close to their home as possible, except in those situations where providers or policies require treatment at specific facilities.

(b) Services may be limited as to frequency, duration, and cost for budgetary and administrative reasons.

(c) In order to conserve funds and effectively administer the program, the department shall contract on a Request for Proposal basis for primary health care services.

(d) The department shall publish public notice of Requests for Proposal, release the applications, and select providers in accordance with state law and department policy.

(e) The department may deny, modify, suspend, or terminate the approval of providers for submitting false or fraudulent claims or failing to provide and maintain quality services according to medically acceptable standards. A provider's performance under its contract may subject the provider to review, fraud referral to the appropriate authority, and/or administrative sanctions.

(f) An applicant and/or a current contractor who is aggrieved in connection with the award of a department contract to provide primary health care services may file a protest in accordance with department policy.

§39.5.Provider Reimbursement for Primary Health Care Services.

(a) The department will reimburse providers for services rendered in accordance with the contracts between the providers and the department. The department shall pay only valid claims submitted according to the terms of the providers' contracts.

(b) Except for prescription drugs covered under Medicare, Part D, primary health care providers will be reimbursed for services delivered to presumptively eligible clients.

(c) All payments made on behalf of individuals will be for claims received within 90 days from the date services were delivered.

§39.6.Eligibility Requirements and Provision of Services to Recipients.

(a) Individuals covered under the Act are those who are not eligible for other benefits. Individuals eligible for prescription drug benefits under Medicare, Part D, who reside in areas of the state served by program providers that offer prescription drugs as a primary health care service may be eligible for other program services, and for prescription drugs not covered by Medicare, Part D.

(b) Nothing in this section shall preclude a system of integrated eligibility with the commission.

(c) In order for an individual to be eligible for primary health care services, the individual must:

(1) be in financial need based on a family income that does not exceed 150% of the current Federal Poverty Level guidelines; and

(2) be a Texas resident.

(d) In accordance with program policy, providers:

(1) shall assist applicants in completing the eligibility screening process and shall provide coverage if the applicant is potentially eligible for program services;

(2) shall determine whether each program participant is eligible for prescription drug benefits under Medicare, Part D;

(3) may collect co-payments from eligible individuals who receive primary health care services; and

(4) shall provide services to potentially eligible individuals who require immediate medical attention on a presumptive eligibility basis.

(e) Subsection (d)(4) of this section notwithstanding, no otherwise eligible individual unable to pay a co-payment may be denied services.

(f) If funds are available, the program may pay co-payments required under federal regulations for eligible individuals receiving prescription drug benefits under Medicare, Part D, if the eligible individual resides in an area of the state served by a program provider that offers prescription drugs as a benefit under the primary health care service program.

(g) No eligible individual or person legally responsible for an eligible individual shall be required to make a pre-treatment payment or deposit.

(h) An individual found ineligible for program services may reapply at any time.

§39.7.Maintaining Eligibility.

To maintain eligibility for program benefits, the recipient must continue to reside in Texas, be in financial need as defined by these sections, and inform the provider in writing or by telephone within 14 days of changes in the following:

(1) permanent home address;

(2) health insurance coverage;

(3) employment;

(4) other income; or

(5) family composition.

§39.8.Coordination of Benefits.

(a) An individual is not eligible to receive services delivered under the Act when the individual, or a person with a legal obligation to support the individual, is eligible for some other benefit that would pay for all or part of the services, unless coverage for those services has been denied.

(b) An individual who applies for or receives primary health care services shall inform the provider at the time of application or at the time the individual receives services of any other benefit to which the individual or person who has a legal obligation to support the individual may be entitled.

(c) An applicant or person who has a legal obligation to support an applicant who has received services that are covered by some other benefit shall reimburse the department to the extent of the services provided when the other benefit is received.

(d) The commissioner, or the manager of the department unit having responsibility for oversight of the primary health care services program, if so authorized by the commissioner, may waive enforcement of this section concerning individual applicants if enforcement of this section would deny services to a class of otherwise eligible individuals because of conflicting federal, state, or local laws or regulations.

§39.9.Denial/Modification/Suspension/Termination of Services.

The department may deny, modify, suspend, or terminate services to an applicant or recipient after written notice and an opportunity for a fair hearing if:

(1) the applicant has provided intentionally false or incomplete information on the application form;

(2) the recipient is no longer eligible; or

(3) reimbursement for a benefit to which the recipient or a person who has a legal obligation to support the recipient is entitled is not provided to the program.

§39.10.Appeals.

(a) A recipient or applicant aggrieved by the denial, modification, suspension or termination of services may appeal the program's decision according to the procedures in §§1.51 - 1.55 of this title (relating to Fair Hearing Procedures). If an aggrieved recipient requests a hearing, the department shall not terminate services to the recipient until a final decision is rendered.

(b) An applicant or recipient may not appeal a denial, modification, suspension, or termination of program services by the department if the department has restricted program services according to priorities established by §39.3(b) of this title (relating to General Program Requirements) and/or program funds are reduced or curtailed.

(c) Upon a final determination that program benefits will be denied, modified, suspended, or terminated, the department will notify the aggrieved recipient's provider in writing.

§39.11.Program Review.

(a) Program review activities will be accomplished through monitoring systems developed to ensure the delivery of appropriate services.

(b) At least annually, the department shall review and determine the continued need for the services it provides directly in accordance with the methods and procedures used to make the initial determination prescribed by the Act and these sections.

(c) The department will require providers to report to the department the following:

(1) demographic information on eligible individuals;

(2) the number of eligible individuals receiving services and the cost of services per individual recipient;

(3) fiscal and financial management reports of expenditures;

(4) program accomplishments;

(5) the number of applicants found ineligible for services; and

(6) networking and coordination of services with other providers.

(d) The department may request other data and/or reports upon prior notification.

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 February 13, 2006.

TRD-200600721

Cathy Campbell

General Counsel

Department of State Health Services

Earliest possible date of adoption: March 26, 2006

For further information, please call: (512) 458-7111 x6972


Chapter 230. SPECIFIC ADDITIONAL REQUIREMENTS FOR DRUGS

Subchapter B. LIMITATIONS ON SALES OF PRODUCTS CONTAINING EPHEDRINE, PSEUDOEPHEDRINE, AND NORPSEUDOEPHEDRINE

25 TAC §§230.11 - 230.16

The Executive Commissioner for Health and Human Services Commission, on behalf of the Department of State Health Services (department), proposes new §§230.11 - 230.16, concerning limitations on sales of products containing ephedrine, pseudoephedrine, and norpseudoephedrine.

BACKGROUND AND PURPOSE

These new sections are necessary to comply with Health and Safety Code (HSC), new Chapter 486, relating to the over-the-counter sales of ephedrine, pseudoephedrine, and norpseudoephedrine. The chapter requires the department to adopt rules to implement and enforce the chapter. Under the new chapter, any business establishment (other than a pharmacy licensed by the Board of Pharmacy) that wishes to engage in over-the-counter sales of products containing any quantity of ephedrine, pseudoephedrine, or norpseudoephedrine must have a certificate of authority (COA) from the department. In order to obtain a COA, a business must file an application with the department; pay the required fee; and agree to comply with the restrictions to access and record keeping requirements of these sections. Compliance with these sections will be verified through audits and inspections.

SECTION-BY-SECTION SUMMARY

The name of Title 25, Texas Administrative Code, Chapter 230, was amended to reflect the addition of the new subchapter concerning the limitations on sales of products containing ephedrine, pseudoephedrine, and norpseudoephedrine. New §§230.11 - 230.16 set out the rules that limit the over-the-counter sales of these regulated products. Section 230.11 defines the purpose and definitions used in the rules. Section 230.12 sets out exemptions from licensing. Section 230.13 and §230.14 explain the requirements for a COA to engage in over-the-counter sales of these products, and provide the minimum standards required to obtain and maintain the COA. Section 230.15 provides the records that must be maintained for each transaction involving the sale of these regulated products. Section 230.16 establishes the enforcement actions that can be taken to ensure that the rules are followed.

FISCAL NOTE

Susan E. Tennyson, Section Director, Environmental and Consumer Safety Section, has determined that for each fiscal year of the first five years the sections are in effect, there will be fiscal implications to the state as a result of enforcing or administering the sections as proposed. The effect on state government will be an increase in revenue to the state of $1,125,000 the first fiscal year, and $750,000 each year for fiscal years two through ten due to the requirement for each retailer that engages in over-the-counter sales of regulated products to obtain a COA. These additional revenues will offset the costs associated with administering and enforcing these sections. Implementation of the proposed sections will not result in any fiscal implications for local governments.

SMALL AND MICRO-BUSINESS IMPACT ANALYSIS

Ms. Tennyson has also determined that there are anticipated economic costs to small businesses or micro-businesses required to comply with the sections as proposed. There will be a fee for businesses or persons required to obtain a COA. The probable economic cost to persons required to comply with the fee for the certificate will be $600 every two years for each retail establishment obtaining a certificate. There is no anticipated negative impact on local employment.

PUBLIC BENEFIT

In addition, Ms. Tennyson has also determined that for each year of the first five years the sections are in effect, the public will benefit from adoption of the sections. The public benefit anticipated as a result of enforcing or administering the sections is to reduce the diversion of regulated products that could be used to illegally manufacture methamphetamines.

REGULATORY ANALYSIS

The department has determined that this proposal is not a "major environmental rule" as defined by Government Code, §2001.0225. "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk 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 a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure.

TAKINGS IMPACT ASSESSMENT

The department has determined that the proposed rules do not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, do not constitute a taking under Government Code, §2007.043.

PUBLIC COMMENT

Comments on the proposal may be submitted to Tom Brinck, Drugs and Medical Devices Group, Environmental and Consumer Safety Section, Division for Regulatory Services, Department of State Health Services, 1100 West 49th Street, Austin, Texas 78756, (512) 719-0243, or by e-mail to Tom.Brinck@dshs.state.tx.us. Comments will be accepted for 30 days following publication of the proposal in the Texas Register .

PUBLIC HEARING

A public hearing to receive comments on the proposal is scheduled for March 20, 2006, at 9:00 a.m. at the Department of State Health Services, Room K-100, 1100 West 49th Street, Austin, Texas 78756. For information, please contact Karen Tannert, R.Ph., at (512) 834-6770, extension 2350.

LEGAL CERTIFICATION

The Department of State Health Services General Counsel, Cathy Campbell, certifies that the proposed rules have been reviewed by legal counsel and found to be within the state agencies' authority to adopt.

STATUTORY AUTHORITY

The proposed new sections are authorized by Health and Safety Code, §12.0111, which requires the department to charge fees for issuing or renewing a license; §12.0112, which requires the term of each license issued to be two years; and Health and Safety Code, §486.003, which authorizes adoption of rules necessary for the implementation and enforcement of Chapter 486; Government Code, §531.0055, and Health and Safety Code, §1001.075, which authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter 1001.

The proposed new sections affect the Health and Safety Code, Chapters 12, 486, and 1001; and Government Code, Chapter 531.

§230.11.General Provisions.

(a) Purpose and applicability. The purpose of these sections is to implement the duties of the Department of State Health Services (department) under the Health and Safety Code (HSC), Chapter 486, relating to over-the-counter sales of ephedrine, pseudoephedrine, and norpseudoephedrine.

(b) Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. Unless otherwise specified, the terms have the meaning assigned by HSC, Chapters 481 and 486, or their common use meaning.

(1) Business establishment--A retail distributor such as a grocery store; general merchandise store; drug store; or other entity or person, other than a licensed pharmacy, that engages in direct sales to end-user consumers. A distributor who engages in greater than 5% of gross annual sales of regulated products to other than end-user consumers must obtain a license as a wholesaler under HSC, Chapter 431, Subchapter I or Subchapter N.

(2) Department--The Department of State Health Services.

(3) Certificate of authority (COA)--A grant of authority to engage in over-the-counter sales of regulated products, issued by the department to a person under this subchapter.

(4) Certificate of authority holder (COA holder)--A person that has been issued a certificate of authority by the department to engage in over-the-counter sales of regulated products.

(5) Pharmacy--A person holding a current license to operate a pharmacy issued by the Texas State Board of Pharmacy (Board of Pharmacy) under Occupations Code, Chapter 560.

(6) Record of sale--The paper or electronic documentation prepared and maintained in compliance with §230.15 of this title (relating to Records).

(7) Regulated products--Any compound, mixture, or preparation containing any detectable amount of ephedrine, pseudoephedrine, or norpseudoephedrine, including its salts, optical isomers, and salts of optical isomers. The term does not include any compound, mixture, or preparation that is in liquid, liquid capsule, or liquid gel capsule form. A list of regulated products, by name and universal product code (UPC) or stock-keeping unit (SKU) identifiers, may be obtained from the Department of State Health Services, 1100 West 49th, Austin, Texas 78756.

(8) Over-the-counter sale--The sale of not more than two packages or six grams of regulated products, in a single transaction to an individual.

§230.12.Exemptions.

The following persons are exempt from the requirement to obtain a COA from the department before engaging in the sale of regulated products:

(1) a person licensed by the department under HSC, Chapter 431, Subchapter I or N, or who is specifically exempted from licensure under HSC, Chapter 431, Subchapter I or N;

(2) a person licensed as a pharmacist under Occupations Code, Chapter 558, who dispenses or delivers regulated products according to prescription issued by a practitioner for a valid medical purpose and in the course of professional practice; and

(3) a person licensed by the Board of Pharmacy to operate a pharmacy under Occupations Code, Chapter 560. Business establishments operating a licensed pharmacy must follow the requirements of the Texas State Board of Pharmacy and the provisions of HSC, Chapter 486. Those business establishments may not be issued a COA.

§230.13.Certificate of Authority.

(a) General.

(1) Except for persons who are exempt under §230.12 of this title (relating to Exemptions), a person is prohibited from engaging in over-the-counter sales of regulated products without a COA issued by the department under these sections.

(2) The grant of authority to sell regulated products under a COA confers only the right to sell regulated products in compliance with these sections.

(3) A COA is effective on the date of issuance and terminates on the expiration date. There is no implied or ongoing right or authority to sell regulated products beyond the expiration date on a COA.

(4) A COA confers no right or interest in property.

(5) A separate COA is required for each place of business.

(6) A COA cannot be conveyed, sold or transferred.

(b) Application. A person must submit an application for each place of business on a form, or in an electronic format through Texas Online (www.Texasonline.com), as prescribed by the department. Incomplete applications or applications submitted without the required fees will not be processed by the department. At a minimum the applicant must provide the following information:

(1) the name, home address, and business address of the applicant;

(2) the type of entity, whether sole proprietor, partnership, corporation, or other legal entity;

(3) the registered or trade name under which business is conducted;

(4) the name, residential address, and driver's license number of the person responsible for compliance with these rules at the place of business where regulated products will be sold, as well as all corporate officers, and all partners, if applicable;

(5) the normal business hours of the place of business;

(6) the name(s), address(es), and contact person(s) of the applicant's wholesale distributor(s);

(7) an indication of all health care products, by type, sold at the place of business;

(8) a list or inventory, including brand name, of all regulated products the applicant proposes to sell at the place of business;

(9) a detailed description of training provided to employees or other persons who will have access to; conduct sales of; and/or prepare records of sales of regulated products, including sales techniques and other measures designed to deter theft of regulated products; and

(10) written procedures on how regulated products will be kept; whether behind a sales counter, or in a locked display case within 30 feet and in the direct line of sight of a sales counter continuously staffed by an employee.

(c) Fees. The fee for a COA is $600 for a two-year license. All fees, including any late fee or past due fee, must be paid before a COA will be issued. All fees are non-refundable.

(d) Term and expiration. The term of a COA is two years. The department may stagger the expiration dates of COAs issued under these sections. The department determines the expiration date. The grant of authority to sell regulated products ends on the expiration date indicated on a COA. Any sale under an expired COA is a violation of HSC, Chapter 486, and these rules.

(e) Renewal. The department may renew a COA only if the COA holder is in substantial compliance with these sections. A COA holder must submit a renewal application along with the required fee before the expiration date on the current certificate to avoid a lapse in authority to sell regulated products under these sections.

§230.14.Minimum Standards for Certificate of Authority.

(a) Criminal history of applicant. A COA may be denied to an applicant if the applicant, or a partner, or a corporate officer, or the person responsible for business operations such as a manager, has been convicted of an offense related to the manufacture or sale of illegal drugs or has been convicted of any felony reasonably related to the COA requested.

(b) Failures or omissions. A COA may be denied to an applicant who:

(1) has furnished material information in an application that is false, fraudulent, or misleading;

(2) has failed to establish or maintain effective theft prevention and deterring measures;

(3) has failed to maintain records required to be kept by §230.15 of this title (relating to Records);

(4) has refused to allow an inspection as authorized by HSC, Chapter 486, or refused or failed to produce required records for inspection; or

(5) has violated HSC, Chapter 486, or these rules.

(c) Theft prevention and deterring measures.

(1) A COA holder shall maintain regulated products behind a sales counter or in a locked case within 30 feet and in direct line of sight from a sales counter continuously staffed by an employee.

(2) A COA holder must document and implement sales techniques and other measures designed to deter the theft of regulated products and other products commonly used in the illicit manufacture of methamphetamines. Written procedures must be developed by the COA holder to include:

(A) security of regulated products, including receiving at the business; storage in the stockroom or other storage facility; and stocking of the sales counter or locked display cabinet;

(B) measures to ensure that employees and other staff who have a criminal drug history do not have access to regulated products; and

(C) measures to ensure that regulated products cannot be accessed without the assistance of an authorized employee of the business.

§230.15.Records.

(a) Before completing a sale of a regulated product, an employee with authority to access regulated products must:

(1) require the person making the purchase to:

(A) display a driver's license or other form of government identification containing the person's photograph and indicating that the person is 16 years of age or older; and

(B) sign for the purchase;

(2) make a record of the sale, using a format approved or provided by the department for this purpose, that includes the name of the person making the purchase, the date of the purchase, and the item purchased by UPC or SKU; and

(3) take reasonable measures to limit single sales transactions to:

(A) two packages of a regulated product; or

(B) UPC or SKU codes that, when totaled, contain no more than 6 grams of ephedrine, pseudoephedrine, or norpseuodoephedrine base.

(b) The COA holder must maintain these records at the business establishment for a minimum of two years from the date the record is made.

(c) The COA holder must make the records available to the agent(s) of the Department of State Health Services or the Department of Public Safety upon request.

§230.16.Enforcement.

(a) The department may impose an administrative penalty for a violation of HSC, Chapter 486, or these rules.

(b) The amount of the administrative penalty may be up to $1000 per violation per day, not to exceed $20,000 for a violation of a continuing nature.

(c) The amount of the penalty is based on:

(1) the seriousness of the violation;

(2) the threat to health or safety caused by the violation;

(3) the history of previous violations;

(4) the amount necessary to deter a future violation;

(5) whether the violator demonstrated good faith, including good faith efforts to correct the violation; and

(6) any other matter that justice may require.

(d) The department may revoke a COA for a violation of HSC, Chapter 486, or these rules. The department may also revoke a COA if the COA holder is convicted of any offense related to the manufacture or distribution of illegal drugs.

(e) A request for a hearing by a COA holder in response to a notice of violation will be referred to the State Office of Administrative Hearings. An informal enforcement conference with the department may be held prior to a hearing to dispose of all matters related to the notice of violation.

(f) Failure to respond within 15 days to a Notice of Violation letter issued by the department may result in the factual allegations listed in the notice being deemed admitted, and the relief sought in the notice of hearing may be granted by default. The Commissioner of the Department of State Health Services or his designee may sign the default order.

(g) Hearings at the State Office of Administrative Hearings are governed by the procedures in Government Code, Chapter 2001, and by Health and Safety Code, Chapter 486.

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 February 10, 2006.

TRD-200600703

Cathy Campbell

General Counsel

Department of State Health Services

Earliest possible date of adoption: March 26, 2006

For further information, please call: (512) 458-7111 x6972