PART 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION
CHAPTER 355. REIMBURSEMENT RATES
SUBCHAPTER D. REIMBURSEMENT METHODOLOGY FOR INTERMEDIATE CARE FACILITIES FOR PERSONS WITH MENTAL RETARDATION (ICF/MR)
The Texas Health and Human Services Commission (HHSC) adopts the repeal of §355.454, concerning Frequency of Reporting Costs and adopts an amendment to §355.457, concerning Fiscal Accountability, in its Reimbursement Rates Chapter. The repeal of §355.454 is adopted without changes to the proposed text as published in the February 15, 2008, issue of the Texas Register (33 TexReg 1203) and will not be republished. The amendment to §355.457 is adopted with changes to the proposed text as published in the February 15, 2008, issue of the Texas Register (33 TexReg 1203). The text of the rule will be republished.
Background and Justification
Section 355.454 concerning Frequency of Reporting Costs outlined the requirements for reporting direct service costs for the ICF/MR program; however, HHSC is repealing this rule as it has been superseded by other rules.
Section 355.457 establishes the fiscal accountability process for the Intermediate Care Facilities for Persons with Mental Retardation (ICF/MR) program. HHSC, under its authority and responsibility to administer and implement rates, is updating this rule to clarify and formalize certain requirements relating to required documentation and allowable costs, add procedures for determining recoupments when a provider fails to submit a cost report, and formalize procedures for allowing providers with control of multiple component codes in the program to request to aggregate their reports for purposes of determining compliance with spending requirements.
In addition, the amendment updates administrative procedures relating to notification of recoupment amounts and recoupment of those amounts; removes outdated language; and adds definitions or updates references to other rules due to changes in those rules. The amendment revises allowable cost limitations and the point in the recoupment determination process at which HHSC will notify providers of their recoupment amount. HHSC is also deleting obsolete language regarding: (1) a transitional add-on, (2) references to a subsection that no longer exists, and (3) descriptions of ICF/MR fiscal accountability processes prior to January 1, 1999.
Cost reports are necessary to determine whether providers met their fiscal accountability requirements and if they did not meet their requirements, to determine the amount of funds to be recouped by HHSC or its designee. Currently, the only enforcement tool available to HHSC when a provider fails to submit a cost report is to place the provider's vendor payments on hold until the report is submitted. While vendor hold is an effective enforcement tool in cases where a provider's contract is active, it is not effective in cases where the provider's contract has been terminated. The amended rule creates an incentive for providers whose contracts have been terminated to submit required reports by establishing a process to determine dollars to be recouped from such providers if they do not submit the required reports. The amended rule makes the fiscal accountability system more equitable by ensuring that terminated contracts are subject to fiscal accountability requirements along with ongoing contracts.
Currently, controlling entities are permitted to request evaluation of spending requirements for all of their controlled entities within the ICF/MR program in the aggregate, but there are no rules defining an entity or control for this purpose. This lack of rules leads to difficulties and confusion in the administration of the aggregation process. The amendment formalizes current administrative procedures, which should result in an increased understanding of the aggregation process and of provider requirements. The amendment should also reduce areas of disagreement between providers and HHSC as to how the aggregation process is applied.
Additional changes update the rule to clarify and formalize current administrative practices, delete other outdated language and ensure that documentation requirements, spending requirements notification requirements, and recoupment collection processes are clearly outlined in rule.
Comments
The 30-day comment period ended March 17, 2008. During this period, HHSC received comments regarding the proposed amendment to §355.457 from representatives of the Private Providers Association of Texas, various ICF/MR provider chains, and individual ICF/MR providers. Some commenters submitted additional comments that did not relate to the proposed rules. A summary of the comments relating to the proposed rules and HHSC's responses follows:
General comment concerning §355.457. One commenter recommended that any rule having the potential to negatively impact a provider and/or its operations not be assigned an effective date until the end of the current cost reporting period.
Response: Typically, a rule takes effect 20 days after the date on which it is filed with the Secretary of State unless a later date is specified as the effective date in the rule. It is not appropriate to have different effective dates depending upon whether a section of a rule is favorable or unfavorable to a specific class of providers. HHSC did not change the proposed rule in response to this comment.
Comment concerning §355.457(c)(2). Four commenters recommended modifying this paragraph to state that "HHSC or its designee will recoup any amount owed from a provider's vendor payment(s) following the date of the notification letter only after a final judgment on an appeal or expiration of appeal deadline, whichever is later." One commenter stated that even though it is HHSC's position that it does not recoup funds until appeals are exhausted they have experienced the opposite.
Response: HHSC does not pursue collection of owed funds until appeals are exhausted. The example to the contrary provided by the commenter referred to recoupments relating to eligibility determination which are not governed by this rule. The wording proposed for this paragraph parallels current wording in rules for all other long term care programs subject to recoupments by HHSC or its designee for failure to meet specific fiscal accountability requirements. HHSC did not change the proposed rule in response to this comment.
Comment concerning §355.457(c)(5). Five commenters recommended modifying this paragraph to more closely parallel current business practices wherein organizations not owned by the same parent company are owned and controlled by the same individual or group of individuals.
Response: HHSC has modified this paragraph to allow for aggregation in cases where a group of five or fewer persons who are individuals, estates or trusts own two or more corporations and the group owns at least 50 percent of total voting power or value in the corporations when only identical ownership is considered.
Comment concerning §355.457(c)(5)(F): One commenter recommended modifying this subparagraph to provide for a process for correction in the event of an inadvertent error in reporting/disclosure of controlled component codes.
Response: HHSC has determined that proposed subparagraph (F) is superfluous because subparagraph (B) will require that all ICF/MR component codes controlled by an entity at the end of its fiscal year or at the effective date of the change of ownership or termination of its last ICF/MR contract be included in the aggregation calculations. As a result, HHSC has deleted proposed subparagraph (F).
The repeal 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; and the Texas Government Code §531.021(b), which provides HHSC with the authority to propose and adopt rules governing the determination of Medicaid reimbursements.
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 June 5, 2008.
TRD-200802900
Steve Aragón
Chief Counsel
Texas Health and Human Services Commission
Effective date: June 25, 2008
Proposal publication date: February 15, 2008
For further information, please call: (512) 424-6900
The amendment 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; and the Texas Government Code §531.021(b), which provides HHSC with the authority to propose and adopt rules governing the determination of Medicaid reimbursements.
§355.457.Fiscal Accountability.
(a) General principles. The Texas Health and Human Services Commission (HHSC) applies the general principles of cost determination as specified in §355.101 of this title (relating to Introduction). Fiscal accountability is a process used to gauge the ongoing financial performance under the non-state operated facility reimbursement rates.
(b) Annual reporting. Fiscal accountability will consist of the annual reporting of direct service costs from all non-state operated providers. The data will be collected on a cost report designed by HHSC in accordance with §355.105(b) of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures).
(1) Direct service costs include costs associated with personnel who provide direct hands-on support for consumers and include personnel such as direct care workers, first-level supervisors of direct care staff, Qualified Mental Retardation Professional (QMRPs), as defined in 42 Code of Federal Regulations, Part 483, Subpart I, §483.430, registered nurses, and licensed vocational nurses. Direct service costs include: costs related to wages, benefits, payroll taxes, and contracts for direct services. Accrued leave (sick or annual) can only be considered a direct service cost if the employee has a right to the cash value of that leave upon termination.
(2)The provider is responsible for submission of the fiscal accountability cost report to HHSC, and payment of amounts owed in accordance with subsection (c) of this section, regardless of whether the provider contracts with another entity for the management or operation of the ICF/MR.
(A) If the provider contracts with another entity for the management or operation of the ICF/MR, the provider must report the specific direct services costs of that entity as required in the cost report instructions and not the amount for which the provider is contracting for the entity's services.
(B) For staff whose duties include work other than the provision of direct services for the provider, time spent providing direct services and associated expenses may be reported as direct service costs if properly documented in accordance with §355.105 of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures).
(C) Allowable compensation for owners and related parties and definitions of owners and related parties are specified in §355.102(i) and §355.103(b)(2) of this title (relating to General Principles of Allowable and Unallowable Costs and Specifications for Allowable and Unallowable Costs).
(i) Owners and related-parties who provide multiple types of direct service, both direct care and indirect services and/or both direct hands-on support and first-level supervision of direct care workers must maintain daily time sheets that record the time spent on activities in each area. The provider must maintain documentation relating to the compensation, bonuses, and benefits of each owner or related party in accordance with §355.105(b)(2)(B)(xi) of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures).
(ii) Allowable hours, hourly wage rate and benefits for direct service work must be the lesser of the actual hours worked, hourly wage rate paid and benefits paid or the hours, hourly wage rate and benefits for a comparable direct care staff person assumed in the fully-funded model. The fully-funded model is the model as calculated under §355.456(d) of this title (relating to Reimbursement Methodology) prior to any adjustments made in accordance with §355.101 of this title (relating to Introduction) and §355.109 of this title (relating to Adjusting Reimbursement When New Legislation, Regulations or Economic Factors Affect Costs) for the rate period.
(iii) If at least 40 percent of total labor hours in a specific related-party's direct service type were provided by non-related-parties, the related-party's hourly wage rate may be the higher of the model assumption for that direct service type described in clause (ii) of this subparagraph or the non-related party average for that direct service type, so long as the non-related party average does not exceed the related-party's actual hourly wage.
(iv) During any single fiscal year, the sum of all direct care hours reported on ICF/MR cost report(s) for any individual owner or related party cannot exceed 2,600.
(v) Hours, hourly wages and benefits above the limits described in clauses (ii) - (iv) of this subparagraph are to be reported as administrative hours, hourly wages and benefits.
(3) The Department of Aging and Disability Services (DADS) will place a vendor hold on a prior owner at a change of ownership which results in the execution of a new provider agreement or a contract termination. The prior owner must submit a cost report to HHSC for the current reporting period. Upon receipt of an acceptable cost report and resolution of any outstanding balances, the vendor hold will be released.
(4) Providers with an ownership change from one legal entity to a different legal entity or a contract termination that do not submit a cost report for the fiscal year of the ownership change or contract termination within 60 days of the change of ownership or contract termination are subject to recoupment of funds related to fiscal accountability as described in subsection (c)(1)(D) of this section. The recouped funds will not be restored until the provider submits an acceptable cost report and has paid the actual amount due as specified in subsection (c)(1)(A) - (C) of this section. If an acceptable cost report is not received within 365 days of the change of ownership or contract termination date, the recoupment will become permanent.
(5) Providers that do not submit a cost report completed in accordance with all applicable rules and instructions within 60 days of the placement of a vendor hold due to the failure to submit the cost report are subject to an immediate recoupment of funds related to fiscal accountability as described in subsection (c)(1)(D) of this section. The recouped funds will not be restored until the provider submits an acceptable cost report and has paid the actual amount due as specified in subsection (c)(1)(A) - (C) of this section. If an acceptable cost report is not received within 365 days of the due date, the recoupment will become permanent.
(6) For cost reports pertaining to providers' fiscal years ending in calendar year 2004 and subsequent years the following applies:
(A) Providers must follow the cost-reporting guidelines as specified in §355.105 of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures).
(B) Providers must follow the guidelines in determining whether a cost is allowable or unallowable as specified in §355.102 and §355.103 of this title (relating to General Principles of Allowable and Unallowable Costs, and Specifications for Allowable and Unallowable Costs).
(C) Revenues must be reported on the cost report in accordance with §355.104 of this title (relating to Revenues).
(7) Field Audit and Desk Review. Desk reviews or field audits are performed on cost reports for all contracted providers. The frequency and nature of the field audits are determined by HHSC to ensure the fiscal integrity of the program. Desk reviews and field audits will be conducted in accordance with §355.106 of this title (relating to Basic Objectives and Criteria for Audit and Desk Review of Cost Reports), and providers will be notified of the results of a desk review or a field audit in accordance with §355.107 of this title (relating to Notification of Exclusions and Adjustments).
(8) Reviews of exclusions or adjustments. An ICF/MR provider who disagrees with HHSC's exclusion or adjustment of items in cost reports may request an informal review and, when appropriate, an administrative hearing as specified in §355.110 of this title (relating to Informal Reviews and Formal Appeals).
(c) HHSC will require providers to report all direct costs incurred in their annual fiscal year. HHSC will compare the reported direct service costs to the direct service cost component of the modeled rates.
(1) The total direct service revenue of the modeled rates is the direct service portion of the rate multiplied by the number of allowable units paid for services provided during the reporting period.
(A) Providers whose direct service costs are 90% or more of the direct service revenues will not be subject to repayment under this section.
(B) Providers whose direct service costs are less than 85% of the direct service revenues will be required to pay to HHSC or its designee the difference between the direct service costs and 95% of the direct service revenues.
(C) Providers whose direct service costs are less than 90% but greater than or equal to 85% of the direct service revenues will be required to pay to HHSC or its designee 75% of the difference between the direct service costs and 90% of the direct service revenues.
(D) Providers who do not submit an acceptable cost report as described in subsection (b)(4) or (5) of this section will be assumed to have direct service costs equal to 65% of the direct services revenues and HHSC or its designee will recoup the difference between 65% of the direct services revenues and 95% of the direct service revenues, subject to the provisions of subsection (b)(4) or (5) of this section.
(2) Providers will be notified, by certified mail, within 90 days of the determination of their recoupment amount by HHSC of the amount to be repaid to HHSC or its designee. If a subsequent review by HHSC or audit results in adjustments to the Cost Report as described in subsection (b)(7) of this section that changes the amount to be repaid to HHSC or its designee, the provider will be notified in writing of the adjustments and the adjusted amount to be repaid. HHSC or its designee will recoup any amount owed from a provider's vendor payment(s) following the date of the notification letter.
(3) Repayment will be collected from the following:
(A) the provider or legal entity submitting the report;
(B) any other legal entity responsible for the debts or liabilities of the submitting entity; or
(C) the legal entity on behalf of which a report is submitted.
(4) For providers undergoing an ownership change or contract termination, HHSC or its designee will recoup any amount owed from the provider's vendor payments that are being held. In cases where funds identified for recoupment cannot be repaid from the held vendor payments, the responsible entity from paragraph (3) of this subsection will be jointly and severally liable for any additional payment due to HHSC or its designee. Failure to repay the amount due or submit an acceptable payment plan within 60 days of notification will result in the recoupment of the owed funds from other Medicaid contracts controlled by the responsible entity, placement of a vendor hold on all Medicaid contracts controlled by the responsible entity and will bar the responsible entity from receiving any new contracts with HHSC or its designee until repayment is made in full. The responsible entity for these contracts will be notified as described in paragraph (2) of this subsection prior to the recoupment of owed funds, placement of vendor hold and barring of new contracts.
(5) Aggregation.
(A) Definitions. The following words and terms have the following meanings when used in this paragraph.
(i) Aggregation. For an entity defined in clause (iii) of this subparagraph that controls, as defined in clause (iv) of this subparagraph, more than one ICF/MR component code, the process of determining compliance with the spending requirements detailed in paragraph (1) of this subsection for all component codes controlled by the entity in the aggregate rather than requiring each component code to meet its spending requirement individually. For commonly owned corporations defined in clause (ii) of this subparagraph, the process of determining compliance with the spending requirements detailed in paragraph (1) of this subsection for all component codes in the controlled small group in the aggregate rather than requiring each component code to meet its spending requirement individually. Corporations that do not meet the definitions under clauses (ii) - (iii) of this subparagraph are not eligible for aggregation.
(ii) Commonly owned corporations--two or more corporations where five or fewer identical persons who are individuals, estates, or trusts own greater than 50 percent of the total voting power in each corporation.
(iii) Entity--a parent company, sole member, individual, limited partnership, or group of limited partnerships controlled by the same general partner.
(iv) Control--greater than 50 % ownership by the entity.
(B) Component Codes Included in Aggregation. If an entity controlling more than one ICF/MR component code or commonly owned corporations requests aggregation, compliance with the spending requirements will be evaluated in the aggregate for all ICF/MR component codes that the entity or commonly owned corporations controlled at the end of its fiscal year or at the effective date of the change of ownership or termination of its last ICF/MR contract.
(C) Aggregation Request. To exercise the aggregation option, the entity or commonly owned corporations must submit an aggregation request, in a manner prescribed by HHSC, at the time each cost report is submitted. In limited partnerships in which the same single general partner controls all the limited partnerships, that single general partner must make this request. Other such aggregation requests will be reviewed on a case-by-case basis.
(D) Frequency of Aggregation Requests. The entity or commonly owned corporations must submit a separate request for aggregation for each reporting period.
(E) Ownership Changes and Contract Terminations. ICF/MR contracts that change ownership or terminate effective after the end of the applicable reporting period, but prior to the determination of compliance with spending requirements as per paragraph (1) of this subsection, are excluded from all aggregate spending calculations. These contracts' compliance with spending requirements will be determined on an individual basis and the costs and revenues will not be included in the aggregate spending calculation.
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 June 5, 2008.
TRD-200802901
Steve Aragón
Chief Counsel
Texas Health and Human Services Commission
Effective date: June 25, 2008
Proposal publication date: February 15, 2008
For further information, please call: (512) 424-6900
The Texas Health and Human Services Commission (HHSC) adopts an amendment to §355.722, concerning Reporting Costs by Home and Community-based Services (HCS) Providers, in its Reimbursement Rates Chapter. The amendment is adopted with changes to the proposed text as published in the February 15, 2008, issue of the Texas Register (33 TexReg 1203).
Background and Justification
This rule establishes the cost reporting and fiscal accountability process for the Home and Community-based Services (HCS) waiver program and outlines the requirements of reporting direct service costs for the HCS waiver program. HHSC, under its authority and responsibility to administer and implement rates, is updating this rule by clarifying and formalizing certain requirements related to documentation and allowable costs, adding procedures for determining recoupments when a provider fails to submit a cost report, and formalizing procedures for allowing providers with control of multiple component codes in the program to request to aggregate their reports for purposes of determining compliance with spending requirements.
In addition, the amendment updates administrative procedures relating to notification of recoupment amounts and adds definitions or updates references to other rules due to changes in those rules. The amendment revises allowable cost limitations and the point in the recoupment determination process at which HHSC will notify providers of their recoupment amount and deletes obsolete language regarding: (1) Mental Retardation Local Authority conversion, and (2) references to a subsection that no longer exists.
Cost reports are necessary to determine whether providers met their fiscal accountability requirements, and if they did not meet their requirements, to determine the amount of funds to be recouped by HHSC or its designee. Currently, the only enforcement tool available to HHSC when a provider fails to submit a cost report is to place the provider's vendor payments on hold until the report is submitted. While vendor hold is an effective enforcement tool in cases where a provider's contract is active, it is not effective in cases where the provider's contract has been terminated. The amended rule creates an incentive for providers whose contracts have been terminated to submit required reports by establishing a process to determine dollars to be recouped from such providers if they do not submit the required reports. The amended rule makes the fiscal accountability system more equitable by ensuring that terminated contracts are subject to fiscal accountability requirements along with ongoing contracts.
Currently, controlling entities are permitted to request evaluation of spending requirements for all of their controlled entities within the HCS program in the aggregate but there are no rules defining an entity or control for this purpose. This lack of rules leads to difficulties and confusion in the administration of the aggregation process. The amendment formalizes current administrative procedures, which should result in increased understanding of the aggregation process and requirements by providers. The amendment should reduce areas of disagreement between providers and HHSC as to how the aggregation process is applied.
Comments
The 30-day comment period ended March 17, 2008. During this period, HHSC received comments regarding the proposed amendment to §355.722 from representatives of the Private Providers Association of Texas and various ICF/MR provider chains and individual ICF/MR providers. Some commenters submitted additional comments that did not relate to the proposed rules. A summary of the comments relating to the proposed rules and HHSC's responses follows:
General comment concerning §355.722. One commenter recommended that any rule having the potential to negatively impact a provider and/or its operations not be assigned an effective date until the end of the current cost reporting period.
Response: Typically, a rule takes effect 20 days after the date on which it is filed with the Secretary of State unless a later date is specified as the effective date in the rule. It is not appropriate to have different effective dates depending upon whether a section of a rule is favorable or unfavorable to a specific class of providers. HHSC did not change the proposed rule in response to this comment.
Comment concerning §355.722(j)(5). Four commenters recommended modifying this paragraph to state that "HHSC or its designee will recoup any amount owed from a provider's vendor payment(s) following the date of the notification letter only after a final judgment on an appeal or expiration of appeal deadline, whichever is later." One commenter stated that even though it is HHSC's position that it does not recoup funds until appeals are exhausted they have experienced the opposite.
Response: HHSC does not pursue collection of owed funds until appeals are exhausted. The example to the contrary provided by the commenter referred to recoupments relating to eligibility determination which are not governed by this rule. The wording proposed for this paragraph parallels current wording in rules for all other long term care programs subject to recoupments by HHSC or its designee for failure to meet specific fiscal accountability requirements. HHSC is adopting this paragraph without change.
Comment concerning §355.722(j)(8). Five commenters recommended modifying this paragraph to more closely parallel current business practices wherein organizations not owned by the same parent company are owned and controlled by the same individual or group of individuals.
Response: HHSC has modified this paragraph to allow for aggregation in cases where a group of five or fewer persons who are individuals, estates or trusts own two or more corporations and the group owns at least 50 percent of total voting power or value in the corporations when only identical ownership is considered.
Comment concerning §355.722(j)(8)(F): One commenter recommended modifying this subparagraph to provide for a process for correction in the event of an inadvertent error in reporting/disclosure of controlled component codes.
Response: HHSC has determined that proposed subparagraph (F) is superfluous because subparagraph (B) will require that all ICF/MR component codes controlled by an entity at the end of its fiscal year or at the effective date of the change of ownership or termination of its last ICF/MR contract be included in the aggregation calculations. As a result, HHSC has deleted proposed subparagraph (F).
The amendment 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; and the Texas Government Code §531.021(b), which provides HHSC with the authority to propose and adopt rules governing the determination of Medicaid reimbursements.
§355.722.Reporting Costs by Home and Community-based Services (HCS) Providers.
(a) On an annual basis, all providers must submit cost reports as directed by HHSC or its designee and in accordance with this subchapter. The Texas Health and Human Services Commission (HHSC) applies the general principles of cost determination as specified in §355.101 of this title (relating to Introduction).
(1) Direct service costs are defined to include costs associated with personnel who provide direct hands-on support for consumers and include personnel such as direct care workers, first-level supervisors of direct care workers, registered nurses, licensed vocational nurses, and other personnel who provide activities of daily living training and clinical program services. Direct service costs include: costs related to wages, benefits, payroll taxes, and contracts for direct services. Accrued leave (sick or vacation) can only be considered a direct service cost if the employee has a right to a cash value of that leave upon termination.
(2) For staff whose duties include work other than the provision of direct services for the provider, time spent providing direct services and associated expenses may be reported as direct service costs if properly documented in accordance with §355.105 of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures).
(3) Providers must report the following costs:
(A) Staff wages related to the delivery of direct services including residential assistance, day habilitation services, and the direct supervision of the delivery of these services.
(B) These costs may be either the provider's actual expense or contracted expenditures.
(b) Reviews of exclusions or adjustments. A provider who disagrees with HHSC's exclusion or adjustment of items in cost reports may request an informal review and, when appropriate, an administrative hearing as specified in §355.110 of this title (relating to Informal Reviews and Formal Appeals).
(c) Field audit and desk review. Desk reviews or field audits are performed on cost reports for all contracted providers. The frequency and nature of the field audits are determined by HHSC to ensure the fiscal integrity of the program. Desk reviews and field audits will be conducted in accordance with §355.106 of this title (relating to Basic Objectives and Criteria for Audit and Desk Review of Cost Reports).
(d) Notification of exclusions and adjustments. HHSC will notify a provider of the results of a desk review or field audit in accordance with §355.107 of this title (relating to Notification of Exclusions and Adjustments).
(e) Providers must follow the cost-reporting guidelines as specified in §355.105 of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures).
(f) Providers must follow the guidelines in determining whether a cost is allowable or unallowable as specified in §355.102 and §355.103 of this title (relating to General Principles of Allowable and Unallowable Costs, and Specifications for Allowable and Unallowable Costs).
(g) Revenues must be reported on the cost report in accordance with §355.104 of this title (relating to Revenues).
(h) Allowable compensation for owners and related parties and definitions of owners and related parties are specified in §355.102(i) and §355.103(b)(2) of this title (relating to General Principles of Allowable and Unallowable Costs and Specifications for Allowable and Unallowable Costs).
(1) Owners and related parties who provide multiple types of direct service, both direct care and indirect services and/or both direct hands-on support and first-level supervision of direct care workers must maintain daily time sheets that record the time spent on activities in each area. The provider must maintain documentation relating to the compensation, bonuses, and benefits of each owner or related party in accordance with §355.105(b)(2)(B)(xi) of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures).
(2) Allowable hours, hourly wage rate and benefits for direct service work must be the lesser of the actual hours worked, hourly wage rate paid and benefits paid or the hours, hourly wage rate and benefits for a comparable direct care staff person assumed in the fully-funded model. The fully-funded model is the model as calculated under §355.723(d) of this title (relating to Reimbursement Methodology for Home and Community-based Services) prior to any adjustments made in accordance with §355.101 of this title (relating to Introduction) and §355.109 of this title (relating to Adjusting Reimbursement When New Legislation, Regulations or Economic Factors Affect Costs) for the rate period.
(3) If at least 40 percent of total labor hours in a specific related-party's direct service type were provided by non-related-parties, the related-party's hourly wage rate may be the higher of the model assumption for that direct service type described in paragraph (2) of this subsection or the non-related party average for that direct service type, so long as the non-related party average does not exceed the related-party's actual hourly wage.
(4) During any single fiscal year, the sum of all direct care hours reported on HCS cost report(s) for any individual owner or related party cannot exceed 2,600.
(5) Hours, hourly wages and benefits above the limits described in paragraphs (2) - (4) of this subsection are to be reported as administrative hours, hourly wages and benefits.
(i) Each provider's total reported allowable costs, excluding depreciation and mortgage interest, are projected from the historical cost-reporting period to the prospective reimbursement period as described in §355.108 of this title (relating to Determination of Inflation Indices). HHSC may adjust reimbursement if new legislation, regulations, or economic factors affect costs, according to §355.109 of this title (relating to Adjusting Reimbursement When New Legislation, Regulations, or Economic Factors Affect Costs).
(j) Fiscal Accountability.
(1) General principles. Fiscal accountability is a process used to gauge the ongoing financial performance under the reimbursement rates.
(2) Annual reporting. Fiscal accountability will consist of the annual reporting of the direct service costs including wages, and benefits, from all providers. The data will be collected on a cost report designed by HHSC in accordance with §355.105(b) of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures).
(A) The Department of Aging and Disability Services (DADS) will place a vendor hold on payments to a provider whose provider agreement is being assigned or terminated. The provider will submit a cost report for the current reporting period to HHSC. Upon receipt of an acceptable cost report and repayment of any amounts due in accordance with this section, the vendor hold will be released.
(B) Providers that do not submit a cost report completed in accordance with all applicable rules and instructions within 60 days of the placement of a vendor hold due to the failure to submit the cost report are subject to an immediate recoupment of funds related to fiscal accountability as described in paragraph (4)(E) of this subsection. The recouped funds will not be restored until the provider submits an acceptable cost report and has paid the actual amount due as specified in paragraphs (5) - (7) of this subsection. If an acceptable cost report is not received within 365 days of the due date, the recoupment will become permanent.
(C) Providers with an ownership change from one legal entity to a different legal entity or a contract termination that do not submit a cost report for the fiscal year of the ownership change or contract termination within 60 days of the change of ownership or contract termination are subject to recoupment of funds related to fiscal accountability as described in paragraph (4)(E) of this subsection. The recouped funds will not be restored until the provider submits an acceptable cost report and has paid the actual amount due as specified in paragraphs (5) - (7) of this subsection. If an acceptable cost report is not received within 365 days of the change of ownership or contract termination date, the recoupment will become permanent.
(3) HHSC will require providers to report all direct costs incurred on an annual fiscal year basis. HHSC will compare the reported direct service costs to the total direct service revenue.
(4) Direct Service Revenues are calculated by multiplying the number of units eligible for payment that have been paid for services delivered during the reporting period times the appropriate direct service portion of the rate for the service billed.
(A) Providers whose direct service costs are 90% or more of the direct service revenues will not be subject to repayment under this section.
(B) Providers whose direct service costs are less than 90% but greater than or equal to 85% of the direct service revenues will be required to pay to DADS 50% of the difference between the direct service costs and 90% of the direct service revenues.
(C) Providers whose direct service costs are less than 85% but greater than or equal to 80% of the direct service revenues will be required to pay to DADS 100% of the difference between the direct service costs and 85% of the direct service revenues plus 50% of the difference between 85% and 90% of the direct service revenues.
(D) Providers whose direct service costs are less than 80% of the direct service revenues will be required to pay to DADS the difference between the direct service costs and 95% of the direct service revenues.
(E) Providers who do not submit a cost report as described in paragraph (2)(B) or (C) of this subsection will be assumed to have direct service costs equal to 65% of the direct services revenues and will be required to pay to DADS the difference between 65% of the direct services revenues and 95% of the direct service revenues, subject to the provisions of paragraph (2)(B) or (C) of this subsection.
(5) Where applicable, providers will be notified, by certified mail, within 90 days of the determination of their recoupment amount by HHSC of the amount to be repaid to HHSC or its designee. If a subsequent review by HHSC or audit results in adjustments to the cost report as described in subsection (a) of this section that change the amount to be repaid to HHSC or its designee, the provider will be notified in writing of the adjustments and the adjusted amount to be repaid. Providers will submit the repayment amount within 60 days of notification.
(6) Repayment will be made by the following:
(A) the provider or legal entity submitting the report;
(B) any other legal entity responsible for the debts or liabilities of the submitting entity; or
(C) the legal entity on behalf of which a report is submitted.
(7) Providers required to repay revenues to DADS will be jointly and severally liable for any repayment. DADS will apply a vendor hold on Medicaid payments to a provider for not making the payment to DADS within 60 days of receiving notice.
(8) Aggregation.
(A) Definitions. The following words and terms have the following meanings when used in this paragraph.
(i) Aggregation. For an entity defined in clause (iii) of this subparagraph that controls, as defined in clause (iv) of this subparagraph, more than one HCS component code, the process of determining compliance with the spending requirements detailed in paragraph (4) of this subsection for all component codes controlled by the entity in the aggregate rather than requiring each component code to meet its spending requirement individually. For commonly owned corporations defined in clause (ii) of this subparagraph, the process of determining compliance with the spending requirements detailed in paragraph (4) of this subsection for all component codes in the controlled small group in the aggregate rather than requiring each component code to meet its spending requirement individually. Corporations that do not meet the definitions under clauses (ii) - (iii) of this subparagraph are not eligible for aggregation.
(ii) Commonly owned corporations--two or more corporations where five or fewer identical persons who are individuals, estates, or trusts own greater than 50 percent of the total voting power in each corporation.
(iii) Entity--a parent company, sole member, individual, limited partnership, or group of limited partnerships controlled by the same general partner.
(iv) Control--greater than 50% ownership by the entity.
(B) Component Codes Included in Aggregation. If an entity controlling more than one HCS component code or commonly owned corporations requests aggregation, compliance with the spending requirements will be evaluated in the aggregate for all HCS component codes that the entity or commonly owned corporations controlled at the end of its fiscal year or at the effective date of the change of ownership or termination of its last HCS contract.
(C) Aggregation Request. To exercise the aggregation option, the entity or commonly owned corporations must submit an aggregation request, in a manner prescribed by HHSC, at the time each cost report is submitted. In limited partnerships in which the same single general partner controls all the limited partnerships, that single general partner must make this request. Other such aggregation requests will be reviewed on a case-by-case basis.
(D) Frequency of Aggregation Requests. The entity or commonly owned corporations must submit a separate request for aggregation for each reporting period.
(E) Ownership Changes and Contract Terminations. HCS contracts that change ownership or terminate effective after the end of the applicable reporting period, but prior to the determination of compliance with spending requirements as per paragraph (4) of this subsection, are excluded from all aggregate spending calculations. These contracts' compliance with spending requirements will be determined on an individual basis and the costs and revenues will not be included in the aggregate spending calculation.
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 June 5, 2008.
TRD-200802902
Steve Aragón
Chief Counsel
Texas Health and Human Services Commission
Effective date: June 25, 2008
Proposal publication date: February 15, 2008
For further information, please call: (512) 424-6900