TITLE 1.ADMINISTRATION

Part 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION

Chapter 353. MEDICAID MANAGED CARE

Subchapter A. GENERAL PROVISIONS

1 TAC §353.4

The Health and Human Services Commission (HHSC) adopts new §353.4, Requirements of STAR and STAR+PLUS Programs Concerning Out-of-Network Providers, with changes to the proposed text as published in the August 5, 2005, issue of the Texas Register (30 TexReg 4396). The text of the rule will be republished.

HHSC amended Chapter 353, Medicaid Managed Care, by adding new rule §353.4 to Subchapter A. Subsection (a) of the rule identifies HHSC as the state agency with oversight for the Medicaid managed care program and confirms the responsibility of the participating managed care organizations (MCOs) to offer a provider network that meets the needs of their members. Subsection (b) outlines the steps for an appropriate referral to an out-of-network provider, use of out-of-network emergency services, and member access to other out-of-network services that may be necessary in other circumstances.

Subsection (c) describes the methodology used to determine the amount of reimbursement paid by an MCO for out-of-network services. Subsection (d) describes the timing and content of quarterly reports to HHSC from MCOs concerning out-of-network use. Subsection (e) concerns MCO member utilization of out-of-network services, including the standards by which excessive utilization will be determined and the special circumstances taken into consideration by HHSC in calculating an MCO's out-of-network utilization.

The provider complaint process is covered in subsection (f), including the timeframes for HHSC's response and for any action required from the MCO if HHSC determines that the complaint is valid. Subsection (g) describes when a corrective action plan will be required for an MCO, what the plan will require, and what actions must be taken either by HHSC or the MCO as a result of the need for a corrective action plan.

After further internal review, HHSC is making a technical correction to subsection (d), Reporting Requirements, to clarify that the report required by the rule and by the Medicaid Managed Care Organization contracts is the Out-Of-Network report in the Uniform Managed Care Manual and not the financial statistical report (FSR), another quarterly report provided by the Medicaid MCOs. HHSC also is adding subsection (h) to clarify that the requirements of this rule apply to MCO contracts in effect on or after September 1, 2006.

HHSC received comments regarding the proposed rule during the comment period from the Texas Hospital Association and Texas Health Resources. A summary of the comments and HHSC's responses follow.

Comment:

HHSC received a comment from the Texas Hospital Association (THA) regarding the proposed July 1, 2006, effective date of the rule. Citing a high number of complaints and litigation associated with this issue since 1998, THA strongly recommends that HHSC implement the rule within 30 days of adoption. In addition, THA urges HHSC to amend existing or new Medicaid managed care contracts to require the MCOs to comply with the out-of-network reimbursement rules. Texas Health Resources (THR) supported this recommendation.

Response:

HHSC acknowledges the comment received from THA and THR, but disagrees. This rule requires contract changes and new tracking, reporting, and monitoring systems for both HHSC and the MCOs. Those changes, along with the time required for implementation of new policies and procedures, affect the timeline for the rule's implementation. While the rule will be adopted effective January 22, 2006, it will apply to contracts in effect on or after September 1, 2006, to coincide with the start date of the new Medicaid MCO contracts. Subsection (h) has been added to reflect that applicability.

Comment:

HHSC received a comment from both THA and THR concerning Subsection (c)(1), Reasonable Reimbursement Methodology, related to the reimbursement rate for an out-of-network, in service area provider. Both recommend that the rate be set at 100% of the Medicaid fee schedule, rather than no less than the prevailing fee-for-service (FFS) rate, less 3%.

Response:

HHSC acknowledges the comments, but disagrees. Section 2.203 of House Bill 2292, codified in relevant part at Government Code §533.007(g) and (h), provides for HHSC's determination of a reasonable reimbursement methodology for use by the MCOs when reimbursing out-of-network providers. That section also provides for HHSC's imposing a corrective action plan on an MCO found to be in violation of that reasonable reimbursement methodology. One statutory element of such a corrective action plan is a requirement that the affected MCO pay the out-of-network provider the prevailing Medicaid FFS rate rather than paying according to the reasonable reimbursement methodology. HHSC has interpreted House Bill 2292 as directing the reasonable reimbursement methodology to be something less than the prevailing Medicaid FFS rate. The rule as proposed includes a reasonable reimbursement methodology in accordance with HHSC's interpretation of the statute.

Comment:

HHSC received a comment from THA in support of the language in subsection (c)(2) Reasonable Reimbursement Methodology, related to out-of-network, out-of-service area providers.

Response:

HHSC agrees with the comment and appreciates the support of THA for the proposed language related to reimbursement for out-of-network, out-of-service area providers.

Comment:

HHSC received a comment concerning subsection (d), Reporting Requirements, from THA expressing concern that two reporting requirements found in a previous draft version of the rules have been eliminated. THA requests that these reporting requirements be re-instated into the final adoption of the rules.

Response:

HHSC acknowledges the comment received from THA, but disagrees. HHSC felt, after considering stakeholder input, the additional reporting requirements in the earlier draft version of the proposed rule would yield little useful information and be an unnecessary burden to the reporters. HHSC eliminated those requirements from the proposed rule as published.

Comment:

HHSC received a comment from both THA and THR concerning subsection (e)(2)(B), Out-Of-Network Usage Standards - Emergency Room Visits. Both believe that the allowance of no more than 30% of the Managed Care Organization's (MCO) emergency room (ER) visits at an out-of-network facility is too generous. They recommend that HHSC use 25% in keeping with the 25% benchmark for inpatient services found at subsection (e)(2)(A).

Response:

HHSC acknowledges THA and THR's comment, but disagrees. Out-of-network usage standards were established based upon a review of recent Medicaid MCO utilization of services. Emergency room usage is typically higher than that of the other service categories. The MCO member may not be near a network provider when the need for emergency care arises. Therefore, the standard allowance for out-of-network emergency room care was set at a greater percentage than the allowance for out-of-network inpatient services or other outpatient services.

Comment:

HHSC received comments concerning subsection (e)(2)(C), Out-Of-Network Usage Standards - Other Outpatient Services. Both THA and THR recommend that the MCO be limited to no more than 25% for "other outpatient services." They also recommend that the calculation be based on 25% of "what the MCO would have paid to the provider for 'other outpatient services' based on the Medicaid fee schedule for specialty, pediatric subspecialty and ancillary provider services."

Response:

HHSC acknowledges the comments, but disagrees. HHSC is reserving the right to establish the out-of-network usage limit as proposed because of the variety of services that are under the umbrella of "other outpatient services". The utilization benchmarks were established based upon dollars billed.

Comment:

HHSC received a comment from THA concerning subsection (e)(3)(A) and (B), Special Considerations in Calculating Out-of-Network Usage. THA expressed appreciation for the degree of thoroughness HHSC will undertake to determine out-of-network usage and network adequacy. However, they suggest in order for HHSC to reliably determine the effort the MCO made to contract, that HHSC consider information from both the MCO and facility, and not just the MCO.

Response:

HHSC appreciates the recognition of the thoroughness with which HHSC intends to examine out-of-network usage. HHSC acknowledges the comment concerning HHSC's consideration of information from the provider involved, but disagrees that any change in the proposed rule is necessary. The rule does not preclude HHSC from seeking information from sources other than the MCO to determine if the MCO has met the applicable usage standards. HHSC assures the commenter that efforts to include all relevant information will be made.

Comment:

HHSC received two comments related to subsection (f)(5)(A) related to Provider Complaints. Both THA and THR expressed appreciation for HHSC's willingness to impose a payment deadline on the MCO when it has been determined that additional reimbursement by the MCO is owed to the out-of-network provider. However, they claim that the inclusion of the language allowing the MCO 30 days from the date the claim is considered a "clean claim" is unnecessary, and recommend that it be removed.

Response:

HHSC recognizes the commencer's concerns, but disagrees. The language in the rule meets statutory requirements set out in Government Code 533.007(j) and Section 2.203 of House Bill 2292.

Comment:

HHSC received the same comment from THA and THR related to subsection (g)(2), Corrective Action Plan. They state that the Lewin Report suggested the withholding of 5 percent of all capitation funds from the MCO until the out-of-network volumes are compliant within the required standard. They also claim that a March 16, 2005, letter from Medical Care Advisory Committee Chairman Linda Ponder also asked HHSC to reconsider this corrective action and include it in the proposed rule when published. THA suggests the following language: "(E) Initiate a 5 percent withhold of all capitation funds from the MCO until such time the out-of-network volumes become compliant within the required standard for three consecutive months. Once maintained, all withheld funds will be paid to the MCO without interest." THR suggests the following language: "(E) Initiate a 5 percent withhold of all capitation funds from the MCO for that period of time the out-of-network volumes are not compliant within the required standard."

Response:

HHSC acknowledges the comment, but disagrees. The recommended change is more restrictive than the statute requires. HHSC has determined that the rule and applicable contract language contain sufficient protection for affected providers.

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

§353.4.Requirements of STAR and STAR+PLUS Programs Concerning Out-of-Network Providers.

(a) Network adequacy. The Health and Human Services Commission (HHSC) is the state agency responsible for overseeing and monitoring the Medicaid managed care program. The managed care organizations (MCOs) participating in the Medicaid managed care program must offer a network of providers that is sufficient to meet the needs of the Medicaid population who are MCO members. HHSC will monitor MCO members' access to an adequate provider network through reports from the MCOs and complaints received from providers and members. The reporting requirements are discussed in paragraph (d) of this section.

(b) MCO requirements concerning treatment of members by out-of-network providers.

(1) The MCO shall allow referral of its member(s) to an out-of-network provider, shall timely issue the proper authorization for such referral, and shall timely reimburse the out-of-network provider for authorized services provided when:

(A) Medicaid covered services are medically necessary and these services are not available through an in-network provider;

(B) A provider currently providing authorized services to the member requests authorization for such services to be provided to the member by an out-of-network provider; and

(C) The authorized services are provided within the time period specified in the MCO's authorization. If the services are not provided within the required time period, a new request for referral from the requesting provider must be submitted to the MCO prior to the provision of services.

(2) An MCO may not refuse to reimburse an out-of-network provider for emergency or post-stabilization services provided as a result of the MCO's failure to arrange for and authorize a timely transfer of a member.

(3) MCO requirements concerning emergency services.

(A) The MCO shall allow its members to be treated by any emergency services provider for emergency services and/or for services to determine if an emergency condition exists.

(B) The MCO is prohibited from requiring an authorization for emergency services or for services to determine if an emergency condition exists.

(4) MCOs may be required by contract with HHSC to allow members to obtain services from out-of-network providers in circumstances other than those described above.

(c) Reasonable Reimbursement Methodology

(1) The MCO shall reimburse an out-of-network, in area service provider no less than the prevailing Medicaid Fee-For-Service (FFS) rate less 3 percent. The Medicaid Fee-For-Service rates are defined as those rates for providers of services in the Texas Medicaid Program for which reimbursement methodologies are specified in the Texas Administrative Code (TAC) at Title 1, Part 15, Chapter 355, exclusive of the rates and payment structures in Medicaid Managed Care.

(2) The MCO shall reimburse an out-of-network, out-of-area service provider at no less than 100 percent of the Medicaid Fee-For-Service rate.

(3) In accordance with Subsections 533.005 (a)(12) and (b) of the Government Code, all post stabilization services provided to a member by an out-of-network provider must be reimbursed by the MCO at the rates for providers of services in the Texas Medicaid Program for which reimbursement methodologies are specified in the Texas Administrative Code (TAC) at Title 1, Part 15, Chapter 355 until the MCO arranges for the timely transfer of the member, as determined by the member's attending physician, to a provider in the MCO's network.

(d) Reporting requirements

(1) Each MCO that contracts with HHSC to provide health care services to members in a health care service region must submit quarterly information in its Out-of-Network quarterly report to HHSC.

(2) Each report submitted by an MCO must contain information about members enrolled in each HHSC Medicaid managed care program provided by the MCO. The report shall include the following information:

(A) The types of services provided by out-of-network providers for members of the MCO's Medicaid managed care plan.

(B) The scope of services provided by out-of-network providers to members of the MCO's Medicaid managed care plan.

(C) Total number of hospital admissions, as well as number of admissions that occur at each out-of-network hospital. Each out-of-network hospital must be identified.

(D) Total number of emergency room visits, as well as total number of emergency room visits that occur at each out-of-network hospital. Each out-of-network hospital must be identified.

(E) Total dollars billed for other outpatient services, as well as total dollars billed by out-of-network providers for other outpatient services.

(F) Any additional information required by HHSC.

(3) HHSC will determine the specific form of the report described above and will include the report form as part of the Medicaid managed care contract between HHSC and the MCOs.

(e) Utilization

(1) Upon review of the reports described in paragraph (d) of this section that are submitted to HHSC by the MCOs, HHSC may determine that an MCO exceeded maximum Out-of-Network usage standards set by HHSC for out-of-network access to health care services during the reporting period.

(2) Out-of-Network Usage Standards

(A) Inpatient Admissions: No more than 25 percent of an MCO's total hospital admissions, by service delivery area, may occur in out-of-network facilities.

(B) Emergency Room Visits: No more than 30 percent of an MCO's total emergency room visits, by service delivery area, may occur in out-of-network facilities.

(C) Other Outpatient Services: No more than 30 percent of total dollars billed to an MCO for "other outpatient services" may be billed by out-of-network providers.

(3) Special Considerations in Calculating MCO Out-of-Network Usage of Inpatient Admissions and Emergency Room Visits.

(A) In the event that an MCO exceeds the maximum Out-of-Network usage standard set by HHSC for Inpatient Admissions or Emergency Room Visits, HHSC may modify the calculation of that MCO's Out-of-Network usage for that standard if:

(i) The admissions or visits to a single out-of-network facility account for 25% or more of the MCO's admissions or visits in a reporting period; and

(ii) HHSC determines that the MCO has made all reasonable efforts to contract with that out-of-network facility as a network provider without success.

(B) In determining whether the MCO has made all reasonable efforts to contract with the single out-of-network facility described above in Subparagraph (A) of this paragraph, HHSC will consider at least the following information:

(i) How long the MCO has been trying to negotiate a contract with the out-of-network facility;

(ii) The in-network payment rates the MCO has offered to the out-of-network facility;

(iii) The other, non-financial contractual terms the MCO has offered to the out-of-network facility, particularly those relating to prior authorization and other utilization management policies and procedures;

(iv) The MCO's history with respect to claims payment timeliness, overturned claims denials, and provider complaints;

(v) The MCO's solvency status; and

(vi) The out-of-network facility's reasons for not contracting with the MCO.

(C) If the conditions described in subparagraph (A) of this paragraph are met, HHSC may modify the calculation of the MCO's Out-of-Network usage for the relevant reporting period and standard by excluding from the calculation the Inpatient Admissions or Emergency Room Visits to that single out-of-network facility.

(f) Provider Complaints.

(1) HHSC will accept provider complaints regarding reimbursement for or overuse of out-of-network providers and will conduct investigations into any such complaints.

(2) When a provider files a complaint regarding out-of-network payment, HHSC will require the relevant MCO to submit data to support its position on the adequacy of the payment to the provider. The data will include at a minimum a copy of the claim for services rendered and an explanation of the amount paid and of any amounts denied.

(3) Not later than the 60th day after HHSC receives a provider complaint, HHSC shall notify the provider who initiated the complaint of the conclusions of HHSC's investigation regarding the complaint. The notification to the complaining provider will include:

(A) A description of the corrective actions, if any, required of the MCO in order to resolve the complaint; and

(B) If applicable, a conclusion regarding the amount of reimbursement owed to an out-of-network provider.

(4) If HHSC determines through investigation that an MCO did not reimburse an out-of-network provider based on a reasonable reimbursement methodology as described within subsection (c) of this section, HHSC shall initiate a corrective action plan. Refer to subsection (g) of this section for information about the contents of the corrective action plan.

(5) If, after an investigation, HHSC determines that additional reimbursement is owed to an out-of-network provider, the MCO must:

(A) Pay the additional reimbursement owed to the out-of-network provider within 90 days from the date the complaint was received by HHSC or 30 days from the date the clean claim, or information required that makes the claim clean, is received by the MCO, whichever comes first; or,

(B) Submit a reimbursement payment plan to the out-of-network provider within 90 days from the date the complaint was received by HHSC. The reimbursement payment plan provided by the MCO must provide for the entire amount of the additional reimbursement to be paid within 120 days from the date the complaint was received by HHSC.

(6) If the MCO does not pay the entire amount of the additional reimbursement within 90 days from the date the complaint was received by HHSC, HHSC may require the MCO to pay interest on the unpaid amount. If required by HHSC, interest accrues at a rate of 18 percent simple interest per year on the unpaid amount from the 90th day after the date the complaint was received by HHSC, until the date the entire amount of the additional reimbursement is paid.

(7) HHSC will pursue any appropriate remedy authorized in the contract between the MCO and HHSC if the MCO fails to comply with a corrective action plan under subsection (g) of this section.

(g) Corrective Action Plan.

(1) A corrective action plan is required by HHSC in the following situations:

(A) The MCO exceeds a maximum standard established by HHSC for out-of-network access to health care services described in subsection (e) of this section; or

(B) The MCO does not reimburse an out-of-network provider based on a reasonable reimbursement methodology as described within subsection (c) of this section.

(2) A corrective action plan imposed by HHSC will require one of the following:

(A) Reimbursements by the MCO to out-of-network providers at rates that equal the allowable rates for the health care services as determined under Sections 32.028 and 32.0281, Human Resources Code, for all health care services provided during the period:

(i) the MCO is not in compliance with a utilization standard established by HHSC; or

(ii) the MCO is not reimbursing out-of-network providers based on a reasonable reimbursement methodology, as described in subsection (c) of this section.

(B) Initiation of an immediate freeze by HHSC on the enrollment of additional recipients in the MCO's managed care plan until HHSC determines that the provider network under the managed care plan can adequately meet the needs of the additional recipients;

(C) Education by the MCO of recipients enrolled in the managed care plan regarding the proper use of the provider network under the health care plan; or

(D) Any other actions HHSC determines are necessary to ensure that Medicaid recipients enrolled in managed care plans provided by the MCO have access to appropriate health care services and that providers are properly reimbursed by the MCO for providing medically necessary health care services to those recipients.

(h) The requirements of this rule apply to an MCO contract that is in effect on or after September 1, 2006.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on January 2, 2006.

TRD-200600007

Steve Aragón

Chief Counsel

Texas Health and Human Services Commission

Effective date: January 22, 2006

Proposal publication date: August 5, 2005

For further information, please call: (512) 424-6900


Chapter 355. REIMBURSEMENT RATES

Subchapter A. COST DETERMINATION PROCESS

1 TAC §355.112

The Texas Health and Human Services Commission (HHSC) adopts the amendment to §355.112, concerning attendant compensation rate enhancement, in its Reimbursement Rates chapter, without changes to the proposed text as published in the October 21, 2005, issue of the Texas Register (30 TexReg 6848) and will not be republished.

The amended §355.112 makes several changes to the Attendant Compensation Rate Enhancement program. The amendment mandates that providers that fail to meet their enhancement requirements in a prior period have their enrollment in the attendant compensation rate enhancement program limited to the level they achieved in the prior period. However, a provider is permitted to present documentation supporting a higher level of enrollment if the provider believes that his or her prior period achievement does not represent his or her current attendant compensation levels. The amendment prohibits granting newly requested enhancements to providers owing funds identified for recoupment. The amendment deletes existing enrollment limitation rules.

The amendment changes the spending requirement from accrued attendant compensation revenue per unit of service divided by 1.10 to accrued attendant compensation revenue per unit of service times 0.90. The amendment eliminates the base rate for participants in all Attendant Compensation Rate Enhancement programs, except Community Based Alternatives Assisted Living/Residential Care (CBA AL/RC), and modifies the enrollment process to accommodate this change.

The amendment mandates that if a report is not received within a year of its due date, any recoupments due to nonsubmittal of the report are made permanent and the vendor hold relating to the report is released. Under the amendment, for a contract to qualify for reinvestment, HHSC Rate Analysis must have received an acceptable Attendant Compensation Report at least 30 days prior to, and the contract must be ongoing at, the time reinvestment is determined. If the provider fails to repay the amount due or fails to submit an acceptable payment plan within 60 days of notification of the recoupment, the amendment allows HHSC or its designee to collect recoupments owed by a provider from other Texas Department of Aging and Disability Services (DADS) contracts controlled by the provider.

Under the amended rule, amended Attendant Compensation Reports must be received by HHSC Rate Analysis prior to the date the provider is notified of compliance with spending requirements for the report in question. In addition, the amendment clarifies attendant compensation reporting requirements; training requirements for Attendant Compensation Report preparers; the process for calculating enhancement level add-ons; and the process for calculating reinvestment. The amendment explains that if the granting of newly requested enhancements to ongoing providers is limited during enrollment, the granting of enhancements to new providers is limited to that same level. Under the amendment, informal reviews and formal appeals relating to Attendant Compensation Reports are governed by §355.110 of this title (relating to Informal Reviews and Formal Appeals). The amendment also clarifies resulting enrollment levels and grouping statuses for contracts after contract assignments and explains that Attendant Compensation Rate Enhancement rules do not prohibit providers from compensating attendants at a level above that funded by the enhanced attendant compensation rate.

Finally, the amendment replaces references to the Texas Department of Human Services with references to DADS or HHSC or its designee, as appropriate; replaces references to Primary Home Care/Family Care with references to Primary Home Care; and replaces references to Priority 1 with references to Priority.

The amendments will increase consistency between the community care Attendant Compensation Rate Enhancement and the nursing facility Direct Care Staff Rate Enhancement. As well, the amendment pertaining to limiting providers' enrollment in the enhancement program to the level they achieved in a prior period will, in years in which no new funds are appropriated for enhanced attendant compensation rates, allow providers at the lowest enhancement levels to increase their levels and nonparticipants to become participants using funds that are made available by this limitation while allowing providers at the highest enhancement levels to keep their levels when they have met their spending requirements.

The spending requirement calculation amendment will make the calculation of the spending requirement more straightforward and give providers more flexibility in allocating limited funding between attendant compensation and other operating expenses. The amendment eliminating the participant base rate with no enhancement levels for all Attendant Compensation Rate Enhancement programs except for CBA AL/RC is adopted because participants (other than CBA AL/RC participants) are not currently paid a different base rate than nonparticipants, rather participants receive the same base rate as nonparticipants plus enhancements. The amendments pertaining to reinvestment will ensure that reinvested funds are distributed to ongoing contracts rather than to entities no longer contracted to provide care to clients. As well, these changes will ensure that reinvestment can be calculated in a timely fashion. The amendment pertaining to recouping funds owed by a provider from other DADS contracts controlled by the provider if the provider fails to repay the amount due will simplify the collection process for delinquent recoupments. The remaining amendments will clarify and simplify the administration of the attendant compensation rate enhancement.

HHSC received positive comments regarding the proposed amendment from the Texas Association for Home Care during the comment period. As well, the Texas Association for Home Care suggested an additional rule change that was not part of the rule proposal and, therefore, not considered for purposes of this rulemaking action.

Comment: The Texas Association for Home Care proposed that the minimum level of participation for providers that wish to begin participating in the attendant compensation rate enhancement be entered at or above the level set for the Consumer Directed Services option.

Response: HHSC acknowledges receipt of this comment but will not be making changes in response to a comment on a portion of a rule to which no amendment was proposed. Any such change would violate the notice requirement of the Administrative Procedures Act.

The amendment is adopted under the Texas Government Code, §531.033, which authorizes the Executive Commissioner of HHSC to adopt rules necessary to carry out the Commission's duties; Texas Government Code §531.0055, which authorizes the Executive Commissioner to adopt rules for the operation and provision of health and human services by the health and human services agencies and to adopt or approve rates of payment required by law to be adopted or approved by a health and human services agency.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on December 30, 2005.

TRD-200506137

Steve Aragón

Chief Counsel

Texas Health and Human Services Commission

Effective date: January 19, 2006

Proposal publication date: October 21, 2005

For further information, please call: (512) 424-6900


Subchapter E. COMMUNITY CARE FOR AGED AND DISABLED

1 TAC §355.503

The Texas Health and Human Services Commission (HHSC) adopts the amendment to §355.503, concerning the reimbursement methodology for the Community-Based Alternatives Waiver Program, in its Reimbursement Rates chapter, without changes to the proposed text as published in the October 21, 2005, issue of the Texas Register (30 TexReg 6860) and will not be republished.

The amended §355.503 includes the process of annually adjusting provider payment rates for the Community Based Alternatives Assisted Living/Residential Care Waiver in the reimbursement methodology for this program. The reimbursement methodology for this program states that clients will use the increase in their Supplemental Security Income (SSI) Federal Benefit Rate, which they receive January 1 each year, to increase their room-and-board payment and cover a greater share of the rate, thereby reducing the Department of Aging and Disability Services (DADS) share of the rate. In addition, the amendment states that the direct care rate component for the Community Based Alternatives Assisted Living/Residential Care Waiver is calculated into the six levels of care for clients in this program. Finally, references and citations relating to cost reporting for the Community Based Alternatives Assisted Living/Residential Care Waiver have been updated from former Department of Human Services (DHS) rules to HHSC and/or DADS rules as applicable.

HHSC did not receive any comments regarding the proposed amendment during the comment period.

The amendment is adopted under the Texas Government Code, §531.033, which authorizes the Executive Commissioner of HHSC to adopt rules necessary to carry out the Commission's duties; Texas Government Code §531.0055, which authorizes the Executive Commissioner to adopt rules for the operation and provision of health and human services by the health and human services agencies and to adopt or approve rates of payment required by law to be adopted or approved by a health and human services agency.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on December 30, 2005.

TRD-200506138

Steve Aragón

Chief Counsel

Texas Health and Human Services Commission

Effective date: January 19, 2006

Proposal publication date: October 21, 2005

For further information, please call: (512) 424-6900


1 TAC §355.509

The Texas Health and Human Services Commission (HHSC) adopts the amendments to §355.509, concerning the reimbursement methodology for Residential Care, in its Reimbursement Rates chapter, without changes to the proposed text as published in the October 21, 2005, issue of the Texas Register (30 TexReg 6863) and will not be republished.

The amended §355.509 includes the process of annually adjusting provider payment rates for the Residential Care Program in the reimbursement methodology for this program. The reimbursement methodology for this program states that clients will use the increase in their Supplemental Security Income (SSI) Federal Benefit Rate, which they receive January 1 each year, to increase their room-and-board payment and cover a greater share of the rate, thereby reducing the Department of Aging and Disability Services (DADS) share of the rate. In addition, references and citations relating to cost reporting for the Community Based Alternatives Assisted Living/Residential Care Waiver have been updated from former Department of Human Services (DHS) rules to HHSC and/or DADS rules as applicable.

HHSC did not receive any comments regarding the proposed amendments during the comment period.

The amendments are adopted under the Texas Government Code, §531.033, which authorizes the Executive Commissioner of HHSC to adopt rules necessary to carry out the Commission's duties; Texas Government Code §531.0055, which authorizes the Executive Commissioner to adopt rules for the operation and provision of health and human services by the health and human services agencies and to adopt or approve rates of payment required by law to be adopted or approved by a health and human services agency.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on December 30, 2005.

TRD-200506139

Steve Aragón

Chief Counsel

Texas Health and Human Services Commission

Effective date: January 19, 2006

Proposal publication date: October 21, 2005

For further information, please call: (512) 424-6900


Chapter 394. MEDIATION AND NEGOTIATED RULEMAKING

1 TAC §§394.1 - 394.7

The Texas Health and Human Services Commission (HHSC) adopts new Chapter 394, §§394.1 - 394.7, concerning mediation and negotiated rulemaking. Sections 394.1, 394.3, 394.4, 394.6 and 394.7 are adopted with changes to the proposed text as published in the July 8, 2005, issue of the Texas Register (30 TexReg 3949). The text of the rules will be republished. Section 394.2 and §394.5 are adopted without changes to the proposed text as published in the July 8, 2005, issue of the Texas Register (30 TexReg 3949) and will not be republished.

The purpose of §394.1 and §394.2 is to define the terms employed in the chapter and to set forth HHSC's policy regarding mediation and negotiated rulemaking for all HHS agencies.

The purpose of §394.3 is to note that mediation is offered by the HHSC Office of Ombudsman, in contested cases, civil rights disputes and personnel actions.

The roles of the dispute resolution administrator and the various dispute resolution coordinators are outlined in §394.4 and §394.5.

The purpose of §394.6 is to clarify the mediation process, addressing issues such as confidentiality, costs, requirements of a mediation agreement and the voluntary nature of the process.

The factors to consider in deciding whether an agency should consider employing negotiated rulemaking are set forth in §394.7.

HHSC received several comments from the Texas Department of State Health Services regarding the proposed rules during the comment period:

Comment: Concerning the subject matter that may be mediated in §394.1(2), the rules should be revised to include only "disagreements in which an HHS agency has authorized use of mediation."

Response: HHSC does not agree. A primary purpose of the rules is to set forth those areas that will be subject to mediation across system agencies. This purpose corresponds to the intent of Texas Government Code, §531.0161.

Comment: Concerning the definition of "health and human services agencies" in §394.1(5), the rules should not use this expression to include HHSC because that is not how it is used in Texas Government Code, §531.001(4).

Response: HHSC does not agree. "Health and human services agencies" is defined in the rules to include HHSC as well as the other agencies in the system. This common usage is clear and understandable.

Comment: Concerning §394.4(b)(1), "regulated person" should be used in lieu of "regulated industry," giving person the usual broad definition.

Response: HHSC agrees and will adopt the comment.

Comment: Concerning §394.1(6) and (7), the definitions of Dispute Resolution Administrator and Coordinator (i.e., "DR Administrator" and "DR Coordinator") should not be abbreviated.

Response: HHSC does not agree. Abbreviations are appropriate in rules where clear and useful.

Comment: Concerning §394.6(c), the rules should be revised to say " . . . except in contested cases in which the costs will be shared equally unless agreed to otherwise by the parties" in order to clarify how costs will apportioned.

Response: HHSC agrees and will adopt the comment.

Comment: Concerning §394.6(d), the proposed language should be revised to further emphasize the need for any agreement to be adopted by the agency head or his representative.

Response: HHSC agrees and will substantively adopt the suggested language to §394.6(d), concerning mediation.

Comment: Concerning §394.7, add the following language: "The HHS agency will make the final decision regarding the use of negotiated rulemaking."

Response: HHSC agrees and will adopt the suggested language.

The new rules are adopted under the Texas Government Code §531.033, which provides the Commissioner of HHSC with broad rulemaking authority to carry out the Commissions duties.

§394.1.Definitions.

For purposes of this chapter, terms used herein have the following meaning:

(1) Mediation--is a method by which an impartial third party facilitates communication between the parties to promote reconciliation and settlement. It may include the use of early neutral evaluation in which an impartial third party first evaluates the strengths and weaknesses of each party's position in order to initiate mediation or any other form of informal assistance that facilitates the settlement of disputes.

(2) Dispute--any disagreement, complaint, contested case, or other circumstances in which the commission authorizes the use of mediation. Disputes that may result in claims under Chapter 2260 of the Texas Government Code are conducted in accordance with the rules in Chapter 392 of this title.

(3) Impartial third party or mediator--a person who meets the qualifications and conditions under the Governmental Dispute Resolution Act (Chapter 2009 of the Texas Government Code) for impartial third parties.

(4) Commission--the Texas Health and Human Services Commission.

(5) HHS agencies--the Commission and all health and human service agencies.

(6) DR Administrator--the Commission's dispute resolution manager.

(7) DR Coordinator--the dispute resolution coordinator for an area, program or agency.

(8) Negotiated rulemaking--is a process authorized by Chapter 2008 of the Texas Government Code in which agency officials and representatives of various affected interests meet in an attempt to develop a consensus regarding proposed rules.

(9) Contested Case--as defined in Texas Government Code §2001.003.

§394.3.Circumstances in Which Mediation is Offered.

(a) An individual may request mediation through the Office of the Ombudsman in order to resolve issues related to HHS agency programs, processes, staff or facilities. Mediation should be requested through the Office of the Ombudsman when circumstances require assistance beyond the normal health and human services procedures. The Office of the Ombudsman may use informal means to facilitate settlement to disputes prior to employing formal mediation processes.

(b) Employees of HHS agencies may request mediation of grievances or other workplace conflicts.

(c) Employees of HHS agencies may request mediation of internal civil rights or administrative complaints. The Civil Rights Office may use informal means to facilitate settlement to disputes prior to referral to the formal mediation process. The Civil Rights Office will coordinate referral for formal mediation as appropriate.

(d) Either party to a contested case involving HHS agencies may request mediation.

§394.4.Dispute Resolution Administrator.

(a) The Commission will designate a Dispute Resolution Administrator to perform the following functions:

(1) coordinate the implementation of the above policy;

(2) serve as a resource for any training needed to implement mediation or negotiated rulemaking;

(3) collect data concerning the effectiveness of these procedures as implemented by the HHS agencies; and

(4) receive requests for mediation and identify impartial third parties.

(b) In the performance of these functions, the DR Administrator will be responsible for:

(1) providing information about available mediation procedures to employees, regulated persons, and other potential users;

(2) arranging for training and education necessary to foster the implementation and use of mediation and negotiated rulemaking;

(3) establishing a process to collect data on mediation and to evaluate the mediation program; and

(4) recommending policies, rules or rule amendments to implement the policy.

§394.6.Mediation Process.

(a) Request for Mediation. Any request for the use of mediation to resolve a dispute must be made in writing and submitted to the appropriate DR Coordinator or Administrator except in contested cases, where the request must be made to the administrative law judge. The request must state the nature of the dispute and the parties involved. In determining whether mediation is appropriate in a particular case, the following factors may be considered:

(1) whether there are potential outcomes and solutions that are only available through mediation;

(2) whether there is a reasonable likelihood that mediation will result in an agreement;

(3) whether a candid and confidential discussion among the parties may help resolve the dispute;

(4) whether negotiations between the parties have been unsuccessful and could be improved with the assistance of an impartial third party; or

(5) whether the use of mediation may use less resources and take less time than other available procedures.

(b) Voluntary Use of Mediation. Mediation will be employed only if all parties to the dispute agree to its use. The only exceptions are that upper management in an HHS agency may require employees to participate in the management-directed mediation of a workplace conflict when no administrative complaint or grievance has been filed, and may require a supervisor to participate in the mediation of an administrative complaint filed by an employee under his supervision.

(c) Impartial Third Parties and Costs. For each case referred for mediation, the parties must mutually agree on an impartial third party. If the parties agree to use an impartial third party who charges for mediation services, then the costs for the impartial third party will be borne by the HHS agency except in contested cases in which the costs will be shared equally unless agreed to otherwise by the parties.

(d) Agreement. All parties participating in mediation are expected to participate in good faith and with the authority to negotiate and reach an agreement, subject to final approval by the appropriate final decision maker for the participating HHS agency. The decision to reach an agreement is voluntary for all parties. The resolution of a dispute reached as a result of mediation must be in writing, signed by all parties, and is enforceable in the same manner as any other written contract once it is finally approved by the appropriate HHS agency or authorized representative. Moreover, any such agreement may be subject to disclosure pursuant to Texas Government Code §2009.054(c).

(e) Confidentiality. The confidentiality of the communications, records, and conduct in a mediation will be as provided under Texas Government Code §2009.054.

§394.7.Negotiated Rulemaking.

(a) Use of Negotiated Rulemaking. Before considering whether to propose the use of negotiated rulemaking, HHS agencies will consider whether, to a significant degree, its use would:

(1) be more likely to result in workable or reasonable regulations;

(2) offer opportunity for a creative solution to regulatory issues; or

(3) decrease the likelihood of litigation.

(b) The HHS agency will make the final decision regarding the use of negotiated rulemaking.

(c) Process. HHS agencies will follow the process set forth in Chapter 2008 of the Texas Government Code.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on December 30, 2005.

TRD-200506151

Steve Aragón

Chief Counsel

Texas Health and Human Services Commission

Effective date: January 19, 2006

Proposal publication date: July 8, 2005

For further information, please call: (512) 424-6900