PART 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION

CHAPTER 354. MEDICAID HEALTH SERVICES

SUBCHAPTER A. PURCHASED HEALTH SERVICES

DIVISION 1. MEDICAID PROCEDURES FOR PROVIDERS

1 TAC §354.1003

The Texas Health and Human Services Commission (HHSC) proposes to amend §354.1003, in Title 1, Part 15, Chapter 354, Subchapter A, Division 1, related to time limits for submitted claims for Medicaid school based services.

Background and Justification

The current cost reporting year for providing school based services, known in Texas as the School Health and Related Services Program (SHARS), is based on the Texas state fiscal year (September to August). The Centers for Medicare and Medicaid Services (CMS) approved Texas' request to base the cost reporting year on the federal fiscal year (October to September). HHSC requested this change in order to align SHARS cost reporting quarters with reporting for additional SHARS requirements and other Medicaid programs. As a result, HHSC proposes to base the claims filing deadline on the federal fiscal year.

The proposed amendment to the filing deadline will need to be in place by January 1, 2010, to enable school districts to complete their cost reports by March 1, 2010.

Section-by-Section Summary

Section 354.1003(a)(3) is modified to correct a TAC reference;

Section 354.1003(a)(5)(A) is modified to update an incorrect reference to the Health and Human Services Commission (HHSC);

Section 354.1003(a)(5)(J) changes the basis of the cost reporting year for SHARS claims from the state fiscal year to the federal fiscal year (FFY).

The rule was also modified to clarify certain provisions.

Fiscal Note

Thomas M. Suehs, Deputy Executive Commissioner for Financial Services, has determined that during the first five years the amended rule is in effect there will be no fiscal impact to state government. The proposed rule will not result in any fiscal implications for local health and human services agencies. Local governments will not incur additional costs.

Small and Micro-Business Impact Analysis

Mr. Suehs has also determined that there will not be an effect on small businesses or micro businesses to comply with the proposed amendment, as they will not be required to alter their business practices as a result of the rules. There are no anticipated economic costs to persons who are required to comply with the proposed rule. There is no anticipated negative impact on local employment.

Public Benefit

Chris Traylor, Associate Commissioner for Medicaid and CHIP, has determined that for each of the first five years the proposed rule is in effect, the public will benefit from the adoption of the rule. The anticipated public benefit, as a result of enforcing the proposed amendment, will be that the Medicaid reimbursement for SHARS providers will be in compliance with the new CMS requirements.

Regulatory Analysis

HHSC has determined that this proposal is not a "major environmental rule" as defined by the Government Code, §2001.0225. A "major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risks to human health from environmental exposure and that may adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure.

Takings Impact Assessment

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

Public Comment

Written comments on the proposal may be submitted to Clarice Cefai, Senior Policy Analyst, Medicaid/CHIP Division, Texas Health and Human Services Commission, P.O. Box 85200, Austin, TX 78708-5200, Mail Code H-390 91X; by fax to (512) 249-3707; or by e-mail to Clarice.Cefai@hhsc.state.tx.us within 30 days of the publication of this proposal in the Texas Register.

Public Hearing

A public hearing is scheduled for August 20, 2009, from 1:00 to 2:00 p.m. at the John H. Winters Building, Public Hearing Room, 125-E, located at 701 W. 51st Street, Austin, Texas. Persons requiring further information, special assistance, or accommodations should contact Mary Haifley at (512) 491-5605.

Statutory Authority

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

The proposed amendment affects the Human Resources Code, Chapter 32, and the Texas Government Code, Chapters 531 and 533. No other statutes, articles, or codes are affected by this proposal.

§354.1003.Time Limits for Submitted Claims.

(a) Claims filing deadlines. Claims must be received by the Health and Human Services Commission (HHSC) or its designee in accordance with the following time limits to be considered for payment. Due to the volume of claims processed, claims that do not comply with the following deadlines will be denied payment.

(1) Inpatient hospital claims. Final inpatient hospital claims must be received by HHSC or its designee within 95 days from the date of discharge or 95 days from the date the Texas Provider Identifier (TPI) Number is issued, whichever occurs later. In the following situations, hospitals may, and in one instance, must file interim claims:

(A) Hospitals reimbursed according to prospective payment may submit an interim claim after the patient has been in the facility 30 consecutive days or longer.

(B) Children's hospitals reimbursed according to Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) methodology may submit interim claims prior to discharge and must submit an interim claim if the patient remains in the hospital past the hospital's fiscal year end.

(2) Outpatient hospital claims must be received by HHSC or its designee within 95 days from each date of service on the claim or 95 days from the date the Texas Provider Identifier (TPI) Number is issued, whichever occurs later.

(3) Claims from all other providers delivering services reimbursed by the Texas Medicaid acute care program must be received by HHSC or its designee within 95 days from each date of service on the claim or 95 days from the date the Texas Provider Identifier (TPI) Number is issued, whichever occurs later. This requirement does not apply to providers who deliver long-term care services and are subject to the billing requirements under Title [of] 40 of the Texas Administrative Code [TAC §49.9].

(4) Providers [All claims] must adhere to claims [claim ] filing and appeal deadlines and all claims must be finalized [paid] within 24 months of the date of service. Submitted claims that exceed this time frame and do not qualify for one of the exceptions listed in subsection (g) of this section will not be considered for payment by the Texas Medicaid program.

(5) The following exceptions to the claims-filing deadlines listed in this subsection [ deadline] apply to all claims received by HHSC or its designee regardless of provider or service type.

(A) Claims on behalf of an individual who has applied for Medicaid coverage but has not been assigned a Medicaid recipient number on the date of service must be received by HHSC or its designee within 95 days from the date the Medicaid eligibility is added to HHSC'S [Husk's ] eligibility file. This date is referred to as the "add date."

(B) If a client loses Medicaid eligibility and is later determined to be eligible, or if the Medicaid eligibility is established retroactively, the claim must be received by HHSC or its designee within 95 days from the "add date" and within 365 days from the date of service.

(C) When a service is a benefit of Medicare and Medicaid, and the client is covered by both programs (dually eligible), the claim must first be filed with Medicare. Claims processed by Medicare must be received by HHSC or its designee within 95 days from the date of Medicare disposition or final determination of any Medicare appeal decision.

(D) When a client is eligible for Medicare Part B only, the inpatient hospital claim for services covered as Medicaid only should be submitted directly to Medicaid. The time limits in paragraph (1) of this subsection apply.

(E) When a service is billed to another insurance resource, the claim must be received by HHSC or its designee within 95 days from the date of disposition by the other insurance resource.

(F) When a service is billed to a third party resource that has not responded, the claim must be received by HHSC or its designee within 365 days from the date of service. However, 110 days must elapse after the third party billing before submitting the claim to HHSC or its designee.

(G) When a Title XIX family planning service is denied by Title XX prior to being submitted to Medicaid, the claim must be received by HHSC or its designee within 95 days of the date on the Title XX Denial Remittance Advice.

(H) Claims for services rendered by out-of-state providers must be received by HHSC or its designee within 365 days from the date of service.

(I) Claims for services rendered by the County Indigent Health Care Program, for which certification of the expenditures of local or state funds is required, are due to HHSC or its designee within the 365-day federal filing deadline.

(J) Claims for services rendered by school districts under the School Health and Related Services (SHARS) program, for which certification of the expenditures of local or state funds is required, are due to HHSC or its designee within the 365-day federal filing deadline or 95 days after the last day of the Federal [State] Fiscal Year (FFY) [(SFY) ], whichever comes first.

(b) Appeals. All appeals of claims and requests for adjustments must be received by HHSC or its designee within 120 days from the date of the last denial of and/or adjustment to the original claim. Appeals must comply with §354.2217 of this title.

(c) Incomplete Claims. Claims received by HHSC or its designee that [which] are lacking the information necessary for processing will be [are] denied as incomplete claims. The resubmission of the claim containing the necessary information must be received by HHSC or its designee within 120 days from the last denial date.

(d) Extension. If a filing deadline falls on a weekend or holiday, the filing deadline shall be extended to the next business day following the weekend or holiday.

(e) Additional Exceptions to the 95-day Claim Filing Deadline [claim filing deadline].

(1) HHSC shall consider the following additional exceptions [only] when at least one of the situations included in this subsection exists. The final decision of whether a claim falls within one of the exceptions will be made by HHSC.

[(1) Exceptions to the filing deadline are considered when one of the following situations exists:]

(A) Catastrophic event that substantially interferes with normal business operations of the provider, or damage or destruction of the provider's business office or records by a natural disaster, including but not limited to fire, flood, or earthquake; or damage or destruction of the provider's business office or records by circumstances that are clearly beyond the control of the provider, including but not limited to criminal activity. The damage or destruction of business records or criminal activity exception does not apply to any negligent or intentional act of an employee or agent of the provider because these persons are presumed to be within the control of the provider. The presumption can only be rebutted when the intentional acts of the employee or agent leads to termination of employment and filing of criminal charges against the employee or agent; or

(B) Delay or error in the eligibility determination of a recipient, or delay due to erroneous written information from HHSC or its designee, or another state agency; or

(C) Delay due to electronic claim or system implementation problems experienced by HHSC and its designee or providers; or

(D) Submission of claims occurred within the 365-day federal filing deadline, but the claim was not filed within 95-days from the date of service because the service was determined to be a benefit of the Medicaid program and an effective date for the new benefit was applied retroactively; or

(E) Recipient eligibility is determined retroactively and the provider is not notified of retroactive coverage.

(2) Under the conditions and circumstances included in paragraph (1) of this subsection, providers must submit the following documentation, if appropriate, and any additional requested information to substantiate approval of an exception. All claims that are to be considered for an exception must accompany the request. HHSC will consider only the claims that are attached to the request.

(A) All exception requests. The provider must submit an affidavit or statement from the provider stating the details of the cause for the delay, the exception being requested, and verification that the delay was not caused by neglect, indifference, or lack of diligence of the provider or the provider's employee or agent. This affidavit or statement must be made by the person with personal knowledge of the facts.

(B) Exception requests within paragraph (1)(A) of this subsection. The provider must submit independent evidence of insurable loss; medical, accident, or death records; or police or fire report substantiating the exception of damage, destruction, or criminal activity.

(C) Exception requests within paragraph (1)(B) of this subsection. The provider must submit the written document from HHSC, or its designee, that contains the erroneous information or explanation of the delayed information.

(D) Exception requests within paragraph (1)(C) of this subsection.

(i) The provider must submit the written repair statement, invoice, computer or modem generated error report (indicating attempts to transmit the data failed for reasons outside the control of the provider), or the explanation for the system implementation problems. The documentation must include a detailed explanation made by the person making the repairs or installing the system, specifically indicating the relationship and impact of the computer problem or system implementation to claims submission, and a detailed statement explaining why alternative billing procedures were not initiated after the delay in repairs or system implementation was known.

(ii) If the provider is requesting an exception based upon an electronic claim or system implementation problem experienced by HHSC or its designee, the provider must submit a written statement outlining the details of the electronic claim or system implementation problems experienced by HHSC or its designee that caused the delay in the submission of claims by the provider, any steps taken to notify the state or its designee of the problem, and a verification that the delay was not caused by the neglect, indifference, or lack of diligence on the part of the provider or its employees or agents.

(E) Exception requests within paragraph (1)(D) of this subsection. The provider must submit a written, detailed explanation of the facts and documentation to demonstrate the 365-day federal filing deadline for the benefit was met.

(F) Exception requests within paragraph (1)(E) of this subsection. The provider must submit a written, detailed explanation of the facts and activities illustrating the provider's efforts in requesting eligibility information for the recipient. The explanation must contain dates, contact information, and any responses from the recipient.

(f) Exceptions to the 120-day appeal deadline. HHSC shall consider exceptions to the 120-day appeal deadline if the criteria listed in this subsection is met and there is evidence to support paragraphs (1) or (2) of this subsection [for the situations listed below]. The final decision about whether a claim falls within one of the exceptions will be made by HHSC. This is a one-time exception request; therefore, all claims that are to be considered within the request for an exception must accompany the request. Claims submitted after HHSC's determination has been made for the exception will be denied consideration because they were not included in the original request.

[(1)] An exception request must be received by HHSC within 18 months from the date of service in order to be considered. This requirement will be waived for the exceptions listed in paragraphs (2) and (3) [paragraph (2)(B) and (3)(C) ] of this subsection and subsection (g) of this section.

[(2) The following exceptions to the 120-day appeal deadline will be considered if the criteria in paragraph (1) of this subsection is met and there is evidence to support subparagraph (A) or (B) of this paragraph:]

(1) [(A)] Errors made by a third party payor that were outside the control of the provider. The provider must submit a statement outlining the details of the cause for the error, the exception being requested, and verification that the error was not caused by neglect, indifference, or lack of diligence on the part of the provider, the provider's employee, or agent. This affidavit or statement should be made by the person with personal knowledge of the facts. In lieu of the above affidavit or statement from the provider, the provider may obtain an affidavit or statement from the third party payor including the same information, and provide this to HHSC as part of the request for appeal.

(2) [(B)] Errors made by the reimbursement entity that were outside the control of the provider. The provider must submit a statement from the original payor outlining the details of the cause of the error, the exception being requested, and verification that the error was not caused by neglect, indifference, or lack of diligence on the part of the provider, the provider's employee or agent. In lieu of the above reimbursement entity's statement, the provider may submit a statement including the same information, and provide this to HHSC as part of the request for appeal.

(3) [(C)] Claims were adjudicated, but an error in the claim's processing was identified after the 120-day appeal deadline. The error is not the fault of the provider but an error occurred in the claims processing system that is identified after the 120-day appeal deadline has passed.

(g) Exceptions to the 24-month claim payment deadline. HHSC shall consider exceptions to the 24-month claim payment deadline for the situations listed in paragraphs (1) - (3) of this subsection. The final decision about whether a claim falls within one of the exceptions will be made by HHSC.

(1) Refugee Eligible Status: The payable period for all Refugee Medicaid eligible recipient claims is the federal fiscal year in which each date of service occurs plus one additional Federal Fiscal year. The date of service for inpatient claims is the discharge date.

(2) Medicare/Medicaid Eligible Status: The payable period for Medicaid/Medicare eligible recipient claims filed electronically is 24 months from the date the file is received from Medicare by the claims administrator for Medicaid. The payable period for Medicaid/Medicare eligible recipient claims filed on paper is 24 months from the date listed on the Medicare Remittance Advice.

(3) Retroactive Supplemental Security Income Eligible: The payable period for Supplemental Security Income (SSI) Medicaid eligible recipients when the Medicaid eligibility is determined retroactively is 24 months from the date the Medicaid eligibility is added to the eligibility file. This date is referred to as the "add date."

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on July 20, 2009.

TRD-200902944

Steve Aragón

General Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: August 30, 2009

For further information, please call: (512) 424-6576

SUBCHAPTER A. COST DETERMINATION PROCESS

1 TAC §355.112

The Texas Health and Human Services Commission (HHSC) proposes to amend §355.112, concerning Attendant Compensation Rate Enhancement, under Title 1, Part 15, Chapter 355, Subchapter A.

Background and Justification

This rule establishes the reimbursement methodology for the Attendant Compensation Rate Enhancement. Under this rule, providers in eligible programs may choose to maintain a certain attendant compensation level in return for increased attendant compensation rates. Participating providers failing to meet their spending requirements are subject to a recoupment of all attendant compensation revenues associated with unmet spending goals. Recouped funds are reinvested (paid to) other providers within the same program that have spent more than they were paid for attendant compensation.

HHSC, under its authority and responsibility to administer and implement rates, is proposing changes to these rules to:

modify Attendant Compensation Report submittal requirements to use cost reports in place of Attendant Compensation Reports in most situations;

eliminate reinvestment of recouped funds;

describe how spending requirements are determined when more than one enhancement level is in effect during a reporting period;

require that an authorized representative, as designated per the Department of Aging and Disability Services (DADS) Form 2031, sign any request to withdraw from participation in the enhancement program or to reduce a provider's enhancement payment to a lower participation level; and

Formalize procedures for allowing providers with control of multiple contracts to request to aggregate their reports for purposes of determining compliance with spending requirements.

The following is a discussion of the changes noted above.

Cost Reports. Currently the Attendant Compensation Rate Enhancement program mandates that each provider that receives enhanced funds submit an abbreviated enhancement cost report on the state fiscal year (the Attendant Compensation Report) in addition to the full cost report that is submitted on the provider's fiscal year for rate determination purposes. This stand alone Attendant Compensation Report is only necessary for reinvestment and will be eliminated if reinvestment is eliminated, as proposed. The cost report will be modified to add additional items to accommodate the information necessary to verify compliance with spending requirements. When reinvestment ends, HHSC will allow a transition period of one year in which Attendant Compensation Reports will still be required to be submitted.

Enrollment Levels for Different ReportingPeriods. Currently, the required reporting period for Attendant Compensation Reports is the state fiscal year. This reporting period coincides with the effective period of the spending requirements and enrollment levels under the enhancement program. The required reporting period for cost reports is the provider's fiscal year, which is not necessarily the same as the state's fiscal year. As a result, a single cost report can be subject to multiple sets of enrollment levels. If full cost reports are to be used in place of enhancement reports for Attendant Compensation Report purposes, the rule must be amended to describe how enhancement requirements are determined when multiple sets of enrollment levels are in effect during a reporting period. The proposed amendment describes how enrollment levels are determined in such situations.

Elimination of Reinvestment Process. The amount of funds reinvested each year is dependent on the amount of funds recouped for that year and providers are not guaranteed that funds will be available for reinvestment in any given year. The amount of funds recouped and available for reinvestment has declined since the inception of the Attendant Compensation Rate Enhancement because of reforms that were made to the rules for this program that adjust downward the enhancement levels of providers that do not meet their spending requirements.

Over the past three reinvestment years, total attendant compensation reinvestments have ranged between $500,000 and $1.4 million per year. Because of the low levels of reinvested funds, the effort it takes providers to complete the Attendant Compensation Reports, and the effort it takes the state to process these reports and reinvestment payments, it is not cost effective to continue the requirements that providers submit an enhancement cost report in addition to their full cost report and that the state reinvest the recouped funds. Instead of reinvesting these recouped funds, the funds will be returned to the state and the federal Centers for Medicare and Medicaid Services as appropriate.

Provider Withdrawal. Providers participating in the enhancement are currently allowed to withdraw from the enhancement program or lower their enhancement level at any time upon submission of a letter requesting to withdraw. The proposed amendment will require that the letter requesting to withdraw or lower an enhancement level be signed by an authorized representative, as designated per the Department of Aging and Disability Services (DADS) Form 2031. This proposed change will ensure that the request for withdrawal or reduction of an enhancement level is made by an authorized individual.

Aggregation of Costs. Currently, controlling entities are permitted to request evaluation of spending requirements for all of their controlled entities within a 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 proposed amendment formalizes current administrative procedures, which should result in an increased understanding of the aggregation process and of provider requirements. The proposed amendment should also reduce areas of disagreement between providers and HHSC as to how the aggregation process is applied.

Section-by-Section Summary

The proposed amendments to §355.112 are as follows:

Revise subsection (f) to indicate that groups are defined in subsection (ee).

Revise subsections (f) and (g) to state that an acceptable enrollment contract amendment must be signed by an authorized representative as designated per the DADS Form 2031 applicable to the provider's contract or ownership type.

Modify Attendant Compensation Report submittal requirements described in subsection (h) to use cost reports in place of Attendant Compensation Reports for services delivered after September 1, 2009, with certain exceptions.

Add a new subsection (h)(2) to explain that cost reports will replace Attendant Compensation Reports, with certain exceptions, for services delivered on September 1, 2009 and thereafter; and re-designate the subsequent paragraphs.

Add a new subsection (h)(2)(A) to state that Transition Attendant Compensation reports may be required in addition to required cost reports for services delivered from September 1, 2009 to August 31, 2010.

Add a new subsection (h)(2)(B) to state that when a participating provider changes ownership through a contract assignment, the prior owner will be required to submit an Attendant Compensation Report covering the period from the beginning of the provider's cost reporting period to the date recognized by HHSC as the contract-assignment effective date and that this report will be used to determine any recoupment amounts for the indicated reporting period. In addition, this subparagraph will require the new owner to submit a cost report covering the period from the day after the date recognized by HHSC as the contract-assignment date to the end of the provider's fiscal year.

Add a new subsection (h)(2)(C) to state that when a participating provider undergoes a contract termination, the provider will be required to submit an Attendant Compensation Report covering the period from the beginning of the provider's cost reporting period to the contract termination date and that this report will be used to determine any recoupment amounts.

Add a new subsection (h)(2)(D) to state that when a participating provider voluntarily withdraws from participation, the provider will be required to submit an Attendant Compensation Report covering the period from the beginning of the provider's cost reporting period to the date of withdrawal and that this report will be used to determine any recoupment amounts. Additionally, this subparagraph will require these providers to submit a cost report covering the entire cost reporting period.

Add a new subsection (h)(2)(E) to state that for new providers participating in the enhancement, the cost reporting period will begin with the effective date of participation in the enhancement.

Add a new subsection (h)(2)(F) to state that when an existing provider becomes a participant as a result of the open enrollment process on any day other than the first day of their fiscal year, they will be required to submit an Attendant Compensation Report with a reporting period that begins on their first day of participation and ends on the last day of the provider's fiscal year and that this report will be used to determine any recoupment amounts. As well, this subparagraph will require these providers to submit a cost report covering the entire cost reporting period.

Renumber subsection (h)(3) as subsection (h)(4) and add new subsection (h)(4)(A) and (h)(4)(B). New subsection (h)(4) and (h)(4)(A) add cost reports functioning as Attendant Compensation Reports to the reports governed by the vendor hold and recoupment due to non-submittal of an acceptable report rules described in the paragraph.

Renumber former subsection (h)(4) as (h)(5) and revise it to include cost reports functioning as Attendant Compensation Reports as being governed by the provider-initiated amended accountability report rules described in the paragraph.

Revise subsection (i) to include cost reports functioning as Attendant Compensation Reports as being governed by the report content rules described in the subsection.

Revise subsection (j) to include cost reports functioning as Attendant Compensation Reports as being governed by the completion of reports rules described in the subsection and to indicate that, for services delivered on or after September 1, 2009, preparers must have attended cost report training as described in 1 TAC §355.102(d).

Revise subsection (s) to include cost reports functioning as Attendant Compensation Reports as being used to determine the amount of attendant compensation spending per unit of service delivered.

Add a new subsection (s)(4) to describe how the weighted average enhancement level in effect during the reporting period is calculated in cases where more than one enhancement level is in effect during the reporting period.

Revise subsection (t) to include cost reports functioning as Attendant Compensation Reports as being governed by the notification of recoupment rules described in the subsection.

Revise subsection (u) to include cost reports functioning as Attendant Compensation Reports as being governed by the enrollment limitation rules described in the subsection.

Revise subsection (u)(1) to include cost reports functioning as Attendant Compensation Reports as being governed by the enrollment limitation rules described in the paragraph.

Revise subsection (u)(1)(D) to include cost reports functioning as Attendant Compensation Reports as being governed by the enrollment limitation rules described in the subparagraph.

Revise subsection (u)(2) to include cost reports functioning as Attendant Compensation Reports as being governed by the informal review and formal appeal rules described in the paragraph.

Revise subsection (v) to remove references to subsection (h)(1)(B) and (h)(2)(A) and replace them with references to subsection (h).

Revise subsection (w)(4) to remove references to subsection (h)(1)(A) and (h)(2)(B) and replace them with references to subsection (h).

Revise subsection (x) to require that requests to withdraw from participation in the enhancement be signed by an authorized representative, as designated per the DADS Form 2031 applicable to the provider's contract or ownership type.

Revise subsection (y) to require that requests to adjust attendant compensation requirements be signed by an authorized representative, as designated per the DADS Form 2031 applicable to the provider's contract or ownership type.

Revise subsection (dd) to state that for services delivered beginning September 1, 2009, and thereafter, HHSC will not reinvest recouped funds in the attendant compensation rate enhancement.

Add new subsection (ee) which formalizes requirements for compliance with spending requirements to be calculated in the aggregate for entities which control more than one contract within a program and re-designate the subsequent subsection.

Fiscal Note

Gordon E. Taylor, Chief Financial Officer for the Department of Aging and Disability Services, has determined that during the first five-year period the amended rule is in effect there will be a fiscal impact to state government of -$211,339 for state fiscal year (SFY) 2010, -$210,570 for SFY 2011, -$210,467 for SFY 2012, -$210,467 for SFY 2013, and -$210,467 for SFY 2014. The proposed rule will not result in any fiscal implications for local health and human services agencies. There are no fiscal implications for local governments as a result of enforcing or administering the section.

Small Business and Micro-business Impact Analysis

HHSC has determined that there is no adverse economic effect on small businesses or micro-businesses as a result of enforcing or administering the amendment. The implementation of the proposed rule amendment does not require any changes in practice or any additional cost to the contracted provider. There is no impact because current rules do not guarantee providers that funds will be available for reinvestment in any given year and do not guarantee that reinvestment funds will be paid to any particular provider for any particular time period.

HHSC does not anticipate that there will be any economic cost to persons who are required to comply with this amendment. The amendment will not affect local employment.

Public Benefit

Carolyn Pratt, Director of Rate Analysis, has determined that, for each of the first five years the amendment is in effect, the expected public benefit is that community care providers will no longer have to complete, and HHSC will no longer have to process, Attendant Compensation Rate Enhancement cost reports in addition to full cost reports. Additionally, HHSC and providers will have clear guidance on how to calculate spending requirements when more than one set of enrollment levels is in effect during a cost reporting period and authorized representatives of the providers will be responsible for requesting the withdrawal from the enhancement program, making the providers aware that they will no longer receive enhancement payments. Finally, agency staff and providers will have clear guidance on requirements for compliance with spending requirements to be calculated in the aggregate for entities which control more than one contract in a program.

Takings Impact Assessment

HHSC has determined that this proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Texas Government Code §2007.043.

Regulatory Analysis

HHSC has determined that this proposal is not a "major environmental rule" as defined by §2001.0225 of the Texas Government Code. "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure.

Public Comment

Questions about the content of this proposal may be directed to Pam McDonald in the HHSC Rate Analysis Department by telephone at (512) 491-1373. Written comments on the proposal may be submitted to Ms. McDonald by facsimile at (512) 491-1998, by e-mail to pam.mcdonald@hhsc.state.tx.us, or by mail to HHSC Rate Analysis, Mail Code H-400, P.O. Box 85200, Austin, Texas 78708-5200, within 30 days of publication of this proposal in the Texas Register.

Statutory Authority

The amendment is proposed under Texas Government Code §531.033, which authorizes the Executive Commissioner of HHSC to adopt rules necessary to carry out the commission's duties; Texas Human Resources Code §32.021 and Texas Government Code §531.021(a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas; and Texas Government Code §531.021(b), which establishes HHSC as the agency responsible for adopting reasonable rules governing the determination of fees, charges, and rates for medical assistance payments under the Human Resources Code, Chapter 32.

The amendment affects Texas Government Code Chapter 531 and Texas Human Resources Code Chapter 32. No other statutes, articles, or codes are affected by this proposal.

§355.112.Attendant Compensation Rate Enhancement.

(a) (No change.)

(b) Definition of attendant. An attendant is the unlicensed caregiver providing direct assistance to the clients with Activities of Daily Living (ADL) and Instrumental Activities of Daily Living (IADL).

(1) In the case of DAHS, RC, and CBA AL/RC programs, the attendant may perform some nonattendant functions. In such cases, the attendant must perform attendant functions at least 80% of his or her total time worked. Staff in these settings not providing attendant services at least 80% of their total time worked are not considered attendants. Time studies must be performed in accordance with §355.105(b)(2)(B)(i) of this title (relating to General Reporting and Documentation Requirements, Methods and Procedures) for staff in the DAHS, RC, and CBA AL/RC programs that are not full-time attendants but perform attendant functions to determine if a staff member meets this 80% requirement. Failure to perform the time studies for these staff will result in the staff not being considered to be attendants.

(2) - (4) (No change.)

(c) - (e) (No change.)

(f) Enrollment contract amendment. An initial enrollment contract amendment is required from each provider choosing to participate in the attendant compensation rate enhancement. On the initial enrollment contract amendment, the provider must specify for each contract a desire to participate or not to participate. The participating provider must specify for each program the desire to have all participating contracts be considered as a group as defined in subsection (ee) of this section or as individuals for purposes related to the attendant compensation rate enhancement. For the PHC program, the participating provider must also specify if he wishes to have priority, nonpriority, or both priority and nonpriority services participating in the attendant compensation rate enhancement. If the PHC provider selects to have their contracts participating as a group as defined in subsection (ee) of this section, then the provider must select to have priority, nonpriority, or both priority and nonpriority services participate for the entire group of contracts. For providers delivering services to both RC and CBA AL/RC clients in the same facility, participation includes both the RC and CBA AL/RC programs. After initial enrollment, participating and nonparticipating providers may request to modify their enrollment status during any open enrollment period. A nonparticipant can request to become a participant; a participant can request to become a nonparticipant; a participant can request to change its participation level; a provider whose participating contracts are being considered as a group can request to have them considered as individuals; and a provider whose participating contracts are being considered as individuals can request to have them considered as a group. Providers whose prior year enrollment was limited by subsection (u) of this section who request to increase their enrollment levels will be limited to increases of three or fewer enhancement levels during any single open enrollment period. Requests to modify a provider's enrollment status during an open enrollment period must be received by HHSC Rate Analysis by the last day of the open enrollment period as per subsection (e) of this section. If the last day of open enrollment is on a weekend day, state holiday, or national holiday, the next business day will be considered the last day requests will be accepted. Providers from which HHSC Rate Analysis has not received an acceptable request to modify their enrollment by the last day of the open enrollment period will continue at the level of participation and group or individual status in effect during the open enrollment period within available funds until the provider notifies HHSC in accordance with subsection (x) of this section that it no longer wishes to participate or until the provider's enrollment is limited in accordance with subsection (u) of this section. To be acceptable, an enrollment contract amendment must be completed according to instructions, signed by an authorized representative [ signatory] as per the Texas Department of Aging and Disability Services' (DADS') signature authority designation form applicable to the provider's contract or ownership type, and legible.

(g) New contracts. For the purposes of this section, for each rate year a new contract is defined as a contract delivering its first day of service to a DADS client on or after the first day of the open enrollment period, as defined in subsection (e) of this section, for that rate year. Contracts that underwent a contract assignment are not considered new contracts. For purposes of this subsection, an acceptable contract amendment is defined as a legible enrollment contract amendment that has been completed according to instructions, signed by an authorized representative [signator] as per the DADS' signature authority designation form applicable to the provider's contract or ownership type, and received by HHSC Rate Analysis within 30 days of the mailing of notification to the provider that such an enrollment contract amendment must be submitted. If the 30th day is on a weekend day, state holiday, or national holiday, the next business day will be considered the last day requests will be accepted. New contracts will receive the nonparticipant attendant compensation rate as specified in subsection (l) of this section with no enhancements. For new contractors specifying their desire to participate in the attendant compensation rate enhancement on an acceptable enrollment contract amendment, the attendant compensation rate is adjusted as specified in subsection (r) of this section, effective on the first day of the month following receipt by HHSC of an acceptable enrollment contract amendment. If the granting of newly requested enhancements was limited by subsection (p)(2)(B) of this section during the most recent enrollment, enrollment for new contracts will be subject to that same limitation. If the most recent enrollment was cancelled by subsection (e) of this section, new contracts will not be permitted to be enrolled.

(h) Attendant Compensation Report submittal requirements. [Attendant Compensation Reports must be submitted as follows.]

(1) Annual Attendant Compensation Report. For services delivered on or before August 31, 2009, providers must file Attendant Compensation Reports as follows. All participating contracted providers will provide HHSC Rate Analysis, in a method specified by HHSC Rate Analysis, an annual Attendant Compensation Report reflecting the activities of the provider while delivering contracted services from the first day of the rate year through the last day of the rate year. This report must be submitted for each participating contract if the provider requested participation individually for each contract; or, if the provider requested participation as a group, the report must be submitted as a single aggregate report covering all contracts participating at the end of the rate year within one program of the provider. A participating contract that has been terminated in accordance with subsection (v) of this section or that has undergone a contract assignment in accordance with subsection (w) of this section will be considered to have participated on an individual basis for compliance with reporting requirements for the owner prior to the termination or contract assignment. This report will be used as the basis for determining compliance with the spending requirements and recoupment amounts as described in subsection (s) of this section. Contracted providers failing to submit an acceptable annual Attendant Compensation Report within 60 days of the end of the rate year will be placed on vendor hold until such time as an acceptable report is received and processed by HHSC Rate Analysis.

(A) When a participating provider changes ownership through a contract assignment, the prior owner must submit an Attendant Compensation Report covering the period from the beginning of the rate year to the effective date of the contract assignment as determined by HHSC, or its designee. This report will be used as the basis for determining any recoupment amounts as described in subsection (s) of this section. The new owner will be required to submit an Attendant Compensation Report covering the period from the day after the date recognized by HHSC, or its designee, as the contract-assignment effective date to the end of the rate year.

(B) - (D) (No change.)

(2) For services delivered on September 1, 2009, and thereafter, cost reports as described in §355.105(b) of this title (relating to General Reporting and Documentation Requirements, Methods and Procedures) will replace the Attendant Compensation Report with the following exceptions:

(A) For services delivered from September 1, 2009, to August 31, 2010, participating providers may be required to submit Transition Attendant Compensation Reports in addition to required cost reports. The Transition Attendant Compensation Report reporting period will include those days in calendar years 2009 and 2010 not included in either the 2009 Attendant Compensation report or the provider's 2010 cost report. This report must be submitted for each participating contract if the provider requested participation individually for each contract; or, if the provider requested participation as a group, the report must be submitted as a single aggregate report covering all contracts participating at the end of the transition reporting period within one program of the provider. A participating contract that has been terminated in accordance with subsection (v) of this section or that has undergone a contract assignment in accordance with subsection (w) of this section will be considered to have participated on an individual basis for compliance with transition reporting requirements for the owner prior to the termination or contract assignment. This report will be used as the basis for determining any recoupment amounts as described in subsection (s) of this section for the transition reporting period. Participating providers failing to submit an acceptable Transition Attendant Compensation Report within 60 days of the date of the HHSC request for the report will be placed on vendor hold until such time as an acceptable report is received and processed by HHSC Rate Analysis.

(B) When a participating provider changes ownership through a contract assignment, the previous owner must submit an Attendant Compensation Report covering the period from the beginning of the provider's cost reporting period to the date recognized by HHSC, or its designee, as the contract-assignment effective date. This report will be used as the basis for determining any recoupment amounts as described in subsection (s) of this section. The new owner will be required to submit a cost report covering the period from the day after the date recognized by HHSC or its designee as the contract-assignment effective date to the end of the provider's fiscal year.

(C) Participating providers whose contracts are terminated either voluntarily or involuntarily must submit an Attendant Compensation Report covering the period from the beginning of the provider's cost reporting period to the date recognized by HHSC, or its designee, as the contract termination date. This report will be used as the basis for determining any recoupment amounts as described in subsection (s) of this section.

(D) Participating providers who voluntarily withdraw from participation as per subsection (x) of this section must submit an Attendant Compensation Report within 60 days of the date of withdrawal as determined by HHSC, covering the period from the beginning of the provider's cost reporting period to the date of withdrawal as determined by HHSC. This report will be used as the basis for determining any recoupment amounts as described in subsection (s) of this section. These providers must still submit a cost report covering the entire cost reporting period. The cost report will not be used for determining any recoupment amounts.

(E) For new contracts as defined in subsection (g) of this section, the cost reporting period will begin with the effective date of participation in enhancement.

(F) Existing providers who become participants in the enhancement as a result of the open enrollment process described in subsection (e) of this section on any day other than the first day of their fiscal year are required to submit an Attendant Compensation Report with a reporting period that begins on their first day of participation in the enhancement and ends on the last day of the provider's fiscal year. This report will be used as the basis for determining any recoupment amounts as described in subsection (s) of this section. These providers must still submit a cost report covering the entire cost reporting period. The cost report will not be used for determining any recoupment amounts.

(3) [(2)] Other reports. HHSC may require other reports from all contracts as needed.

(4) [(3)] Vendor hold. HHSC, or its designee, will place on hold the vendor payments for any participating contractor who does not submit a timely report as described in paragraph (1) of this subsection, or for services delivered on or after September 1, 2009, a timely report as described in paragraph (2) of this subsection [ an Attendant Compensation Report ] completed in accordance with all applicable rules and instructions [by the due dates described in this subsection]. This vendor hold will remain in effect until HHSC Rate Analysis receives an acceptable report [Attendant Compensation Report].

(A) Participating contracts that do not submit an acceptable report [Attendant Compensation Report] completed in accordance with all applicable rules and instructions within 60 days of the due dates described in this subsection or, for cost reports, the due dates described in §355.105(b) of this title (relating to General Reporting and Documentation Requirements, Methods and Procedures) will become nonparticipants retroactive to the first day of the reporting period in question and will be subject to an immediate recoupment of funds related to participation paid to the contractor [facility] for services provided during the reporting period in question. These contracts will remain nonparticipants and recouped funds will not be restored until they submit an acceptable report and repay to HHSC, or its designee, funds identified for recoupment from subsection (s) of this section. If an acceptable report is not received within 365 days of the due date, the recoupment will become permanent and, if all funds associated with participation during the reporting period in question have been recouped by HHSC, or its designee, the vendor hold associated with the report will be released. [ In addition, participating]

(B) Participating contracts that have terminated or undergone a contract assignment from one legal entity to a different legal entity that do not submit an acceptable report completed in accordance with all applicable rules and instructions [Attendant Compensation Report] within 60 days of the contract assignment or contract termination effective date will become nonparticipants retroactive to the first day of the reporting period in question. These contracts will remain nonparticipants and recouped funds will not be restored until they submit an acceptable report and repay to HHSC, or its designee, funds identified for recoupment under subsection (s) of this section. If an acceptable report is not received within 365 days of the contract assignment or contract termination effective date, the recoupment will become permanent and, if all funds associated with participation during the reporting period in question have been recouped by HHSC, or its designee, the vendor hold associated with the report will be released.

(5) [(4)] Provider-initiated amended Attendant Compensation Reports and cost reports functioning as Attendant Compensation Reports. [Provider-initiated amended Attendant Compensation] Reports must be received prior to the date the provider is notified of compliance with spending requirements for the report in question in accordance with subsection (s) of this section.

(i) [Attendant Compensation] Report contents. Each Attendant Compensation Report and cost report functioning as an Attendant Compensation Report will include any information required by HHSC to implement this attendant compensation rate enhancement.

(j) Completion of compensation reports. All Attendant Compensation Reports and cost reports functioning as Attendant Compensation Reports must be completed in accordance with the provisions of §§355.102 - 355.105 of this title (relating to General Principles of Allowable and Unallowable Costs, Specifications for Allowable and Unallowable Costs, Revenues, and General Reporting and Documentation Requirements, Methods, and Procedures) and may be reviewed or audited in accordance with §355.106 of this title (relating to Basic Objectives and Criteria for Audit and Desk Review of Cost Reports). Beginning with the rate year that starts September 1, 2002, all Attendant Compensation Reports and cost reports functioning as Attendant Compensation Reports must be completed by preparers who have attended the required cost report training for the applicable program under §355.102(d) of this title (relating to General Principles of Allowable and Unallowable Costs). For services delivered on or before August 31, 2009, for Attendant Compensation Reports for even numbered state fiscal years, preparers must have attended the cost report training for that same even numbered year. For Attendant Compensation Reports for odd numbered state fiscal years, preparers must have attended the most recent cost report training sessions provided prior to the due date of the Attendant Compensation Report. For services delivered on or after September 1, 2009, preparers must have attended cost report training as described in §355.102(d) of this title (relating to General Principles of Allowable and Unallowable Costs).

(k) - (r) (No change.)

(s) Spending requirements for participating contracts. HHSC will determine from the Attendant Compensation Report or cost report functioning as an Attendant Compensation Report, as specified in subsection (h) of this section and other appropriate data sources, the amount of attendant compensation spending per unit of service delivered. The provider's compliance with the spending requirement is determined based on the total attendant compensation spending as reported on the Attendant Compensation Report or cost report functioning as an Attendant Compensation Report for each participating contract if the provider requested participation individually for each contract. A participating contract that has been terminated in accordance with subsection (v) of this section or that has undergone a contract assignment in accordance with subsection (w) of this section will be considered to have participated on an individual basis for compliance with the spending requirement for the owner prior to the termination or contract assignment. In all other cases, if the provider specified that he wished to have all participating contracts be considered as a group for purposes related to the attendant compensation rate enhancement (as specified in subsection (f) of this section) compliance with the spending requirement is based on the total attendant compensation as reported on the single aggregate Attendant Compensation Report described in subsection (h) of this section or, for cost reports functioning as Attendant Compensation Reports, the total attendant compensation as reported on the aggregated cost reports for the group. Compliance with the spending requirement is determined separately for each program specified in subsection (a) of this section, except for providers delivering services to both RC and CBA AL/RC clients in the same facility whose compliance is determined by combining both programs. HHSC will calculate recoupment, if any, as follows.

(1) - (3) (No change.)

(4) In cases where more then one enhancement level is in effect during the reporting period, the spending requirement will be based on the weighted average enhancement level in effect during the reporting period calculated as follows:

(A) Multiply the first enhancement level in effect during the reporting period by the most recently available, reliable Medicaid units of service utilization data for the time period the first enhancement level was in effect.

(B) Multiply the second enhancement level in effect during the reporting period by the most recently available, reliable Medicaid units of service utilization data for the time period the second enhancement level was in effect.

(C) Sum the products from subparagraphs (A) and (B) of this paragraph.

(D) Divide the sum from subparagraph (C) of this paragraph by the sum of the most recently available, reliable Medicaid units of service utilization data for the entire reporting period used in subparagraphs (A) and (B) of this paragraph.

(t) Notification of recoupment. Providers will be notified in a manner specified 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 annual Attendant Compensation Report or cost reporting, as described in subsection (h)[(1)] of this section, that change the amount to be repaid, 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.

(u) Enrollment limitations. A provider will not be enrolled in the attendant compensation rate enhancement at a level higher than the level it achieved on its most recently available, audited Attendant Compensation Report or cost report functioning as an Attendant Compensation Report. HHSC will issue a notification letter that informs a provider in writing of its enrollment limitations (if any) prior to the first day of the open enrollment period.

(1) Requests for revision. A provider may request a revision of its enrollment limitation if the provider's most recently available audited Attendant Compensation Report or cost report functioning as an Attendant Compensation Report does not represent its current attendant compensation levels.

(A) - (C) (No change.)

(D) If the provider's Attendant Compensation Report or cost report functioning as an Attendant Compensation Report for the rate year that included the open enrollment period described in subsection (e) of this section shows the provider compensated attendants below the level it presented in its request for revision, HHSC will immediately recoup all enhancement payments associated with the request for revision documents, and the provider will be limited to the level supported by the report for the remainder of the rate year.

(2) Informal reviews and formal appeals. The filing of a request for an informal review or formal appeal relating to a provider's most recently available, audited Attendant Compensation Report or cost report functioning as an Attendant Compensation Report under §355.110 of this title (relating to Informal Reviews and Formal Appeals) does not stay or delay implementation of an enrollment limitation applied in accordance with the requirements of this subsection. If an informal review or formal appeal relating to a provider's most recently available, audited Attendant Compensation Report or cost report functioning as an Attendant Compensation Report is pending at the time the enrollment limitation is applied, the result of the informal review or formal appeal shall be applied to the provider's enrollment retroactively to the beginning of the rate year to which the enrollment limitation was originally applied.

(3) - (4) (No change.)

(v) Contract terminations. For contracted providers required to submit an Attendant Compensation Report due to a contract termination as described in subsection (h)[(1)(B)] of this section, HHSC, or its designee, will place a vendor hold on the payments of the contracted provider until HHSC receives an acceptable Attendant Compensation Report, as specified in subsection (h)[(2)(A)] of this section, and funds identified for recoupment from subsection (s) of this section are repaid to HHSC, or its designee. Informal reviews and formal appeals relating to these reports are governed by §355.110 of this title (relating to Informal Reviews and Formal Appeals). 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 subsection (cc) of this section 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 HHSC and/or DADS contracts controlled by the responsible entity, placement of a vendor hold on all HHSC and/or DADS contracts controlled by the responsible entity, and will bar the responsible entity from enacting new contracts with HHSC and/or DADS until repayment is made in full. The responsible entity for these contracts will be notified as described in subsection (t) of this section prior to the recoupment of owed funds, placement of vendor hold on additional contracts, and barring of new contracts.

(w) Contract assignments. The following applies to contract assignments.

(1) - (2) (No change.)

(3) The assignee is responsible for the reporting requirements in subsection (h) of this section for any reporting period days occurring after the contract assignment effective date. If the contract assignment occurs during an open enrollment period as defined in subsection (e) of this section, the owner recognized by HHSC, or its designee, on the last day of the enrollment period may request to modify the enrollment status of the contract in accordance with subsection (f) of this section.

(4) For contracted providers required to submit an Attendant Compensation Report due to contract assignment, as described in subsection (h)[(1)(A)] of this section, HHSC, or its designee, will place a vendor hold on the payments of the existing contracted provider until HHSC receives an acceptable Attendant Compensation Report, as specified in subsection (h)[ (2)(B)] of this section, and until funds identified for recoupment from subsection (s) of this section are repaid to HHSC, or its designee. 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 subsection (cc) of this section will be jointly and severally liable for any additional payment due to HHSC, or its designee. Failure to repay the amount due within 60 days of notification will result in the recoupment of the owed funds from other HHSC and/or DADS contracts controlled by the responsible entity, placement of a vendor hold on all HHSC and/or DADS contracts controlled by the responsible entity, and will bar the responsible entity from enacting new contracts with HHSC and/or DADS until repayment is made in full. The responsible entity for these contracts will be notified, as described in subsection (t) of this section, prior to the recoupment of owed funds, placement of vendor hold on additional contracts, and barring of new contract.

(x) Voluntary withdrawal. Participating contracts wishing to withdraw from the attendant compensation rate enhancement must notify HHSC Rate Analysis in writing by certified mail and the request must be signed by an authorized representative as designated per the DADS Form 2031 applicable to the provider's contract or ownership type. The requests will be effective the first of the month following the receipt of the request. Contracts voluntarily withdrawing must remain nonparticipants for the remainder of the rate year. Providers whose contracts are participating as a group must request withdrawal of all the contracts in the group.

(y) Adjusting attendant compensation requirements. Providers that determine that they will not be able to meet their attendant compensation requirements may request to reduce their attendant compensation requirements and associated enhancement payment to a lower participation level by submitting a written request to HHSC Rate Analysis by certified mail and the request must be signed by an authorized representative as designated per the DADS Form 2031 applicable to the provider's contract or ownership type. These requests will be effective the first of the month following the receipt of the request. Providers whose contracts are participating as a group must request the same reduction for all of the contracts in the group.

(z) - (cc) (No change.)

(dd) Reinvestment. For services delivered on or before August 31, 2009, HHSC will reinvest recouped funds in the attendant compensation rate enhancement to the extent there are qualifying contracts. For services delivered beginning September 1, 2009, and thereafter, HHSC will not reinvest recouped enhanced attendant compensation rate funds.

(1) - (4) (No change.)

(ee) Determination of compliance with spending requirements in the aggregate for a group.

(1) Definitions. The following words and terms have the following meanings when used in this subsection.

(A) 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.

(B) Entity--a parent company, sole member, individual, limited partnership, or group of limited partnerships controlled by the same general partner.

(C) Combined entity--one or more commonly owned corporations and one or more limited partnerships where the general partner is controlled by the same identical persons as the commonly owned corporation(s).

(D) Control--greater than 50 percent ownership by the entity.

(E) Group--an entity, commonly owned corporation, or combined entity that controls more than one participating contract within a single program.

(2) Aggregation. For a group, compliance with the spending requirements detailed in subsection (s) of this section can be determined in the aggregate for all participating contracts controlled by the group at the end of the rate year, the effective date of the change of ownership of the group's last participating contract, or the effective date of the termination of the group's last participating contract rather than requiring each contract to meet its spending requirement individually. Corporations that do not meet the definitions under paragraph (1)(A) - (C) of this subsection are not eligible for aggregation to meet spending requirements.

(A) Aggregation Request. To exercise aggregation, the entity, combined entity, or commonly owned corporations must request to participate as a group, in a manner prescribed by HHSC, upon submission of each Enrollment Contract Amendment. In limited partnerships in which the same single general partner controls all the limited partnerships, the single general partner must make this request. Other such aggregation requests will be reviewed on a case-by-case basis.

(B) Ownership changes or terminations. 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 subsection (s) of this section, 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.

(ff) [(ee)] Disclaimer. Nothing in these rules should be construed as preventing providers from compensating attendants at a level above that funded by the enhanced attendant compensation rate.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on July 20, 2009.

TRD-200902961

Steve Aragón

General Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: August 30, 2009

For further information, please call: (512) 424-6576

1 TAC §355.308

The Texas Health and Human Services Commission (HHSC) proposes to amend §355.308, concerning Direct Care Staff Rate Component, under Title 1, Part 15, Chapter 355, Subchapter C.

Background and Justification

This rule establishes the reimbursement methodology for the Nursing Facility Direct Care Staff Rate Component rate enhancement. Under this rule, nursing facilities may choose to maintain a certain staffing level in return for increased direct care staff reimbursement rates. Participating facilities failing to meet their staffing and/or spending requirements are subject to a recoupment of all direct care staff revenues associated with unmet staffing and/or spending goals. Currently, recouped funds are reinvested (paid to) other nursing facilities that have exceeded their staffing requirements.

HHSC, under its authority and responsibility to administer and implement rates, is proposing changes to this rule to:

modify Staffing and Compensation Report submittal requirements to use cost reports in place of Staffing and Compensation Reports in most situations;

eliminate reinvestment of recouped funds;

allow for release of vendor hold if an acceptable report is not received within 365 days of the due date and all funds associated with participation during the reporting period in question have been recouped by HHSC or its designee;

describe how staffing requirements are determined when minimum required Licensed Vocational Nurse (LVN)-equivalent minutes per resident day of service associated with a Resource Utilization Group III (RUG-III) case mix group or supplemental reimbursement group (e.g., the continuous ventilation add-on group, the less-than-continuous ventilation add-on group and the pediatric tracheotomy add-on group) changes during a reporting period;

describe how enhanced staffing levels are determined in cases where more than one enhanced staffing level is in effect during a reporting period;

require that an authorized representative, as designated per the Department of Aging and Disability Services (DADS) Form 2031, sign any request to withdraw from participation in the enhancement program; and

add commonly owned corporations to the types of controlled entities permitted to aggregate their costs for determination of compliance with spending requirements.

The following is a discussion of the changes noted above.

Cost Reports. Currently, the Nursing Facility Direct Care Staff Rate Component enhancement program (enhancement program) mandates that each provider that receives enhanced funds submit an abbreviated enhancement cost report for the state fiscal year (the Staffing and Compensation Report) in addition to the full cost report that is submitted for the provider's fiscal year for rate determination purposes. This stand-alone Staffing and Compensation Report is only necessary for reinvestment purposes and will be eliminated if the process of reinvestment is eliminated, as proposed. The cost report will be modified to add additional items to accommodate the information necessary to verify compliance with staffing and spending requirements. After the process of reinvestment ends, HHSC will allow a transition period of one year in which the Staffing and Compensation Reports will still be required to be submitted.

Staffing Requirements for Different Reporting Periods. Currently, the required reporting period for Staffing and Compensation Reports is the state fiscal year. This reporting period coincides with the effective period of the staffing requirements and enrollment levels under the enhancement program. The required reporting period for cost reports is the provider's fiscal year, which is not necessarily the same as the state's fiscal year. As a result, a single cost report can be subject to multiple sets of staffing requirements and enrollment levels. If full cost reports are to be used in place of enhancement reports for Direct Care Staff Rate purposes, the rule must be amended to describe how enhancement requirements are determined when multiple sets of staffing requirements and enrollment levels are in effect during a reporting period. The proposed amendment describes how staffing requirements and enrollment levels are determined in such situations.

Elimination of Reinvestment Process. The amount of funds reinvested each year is dependent on the amount of funds recouped for that year and providers are not guaranteed that funds will be available for reinvestment in any given year. The amount of funds recouped and available for reinvestment has declined since the inception of the enhancement program because of reforms that were made to the rules for this program that adjust downward the enhancement levels of providers that do not meet their staffing requirements.

Over the past three reinvestment years, total nursing facility reinvestments have ranged between $1 million and $3.2 million per year. Because of the low levels of reinvested funds, the effort it takes providers to complete the Staffing and Compensation Reports, and the effort it takes the state to process these reports and reinvestment payments, HHSC has determined it is not cost effective to continue to require that providers submit an enhancement cost report in addition to their full cost report and that the state reinvest the recouped funds. Instead of reinvesting these recouped funds, the funds will be returned to the state and the federal Centers for Medicare and Medicaid Services, as appropriate.

Vendor Hold. Providers who fail to submit an acceptable Staffing and Compensation Report within stated timeframes have their vendor payments held by the state until an acceptable report is submitted. If an acceptable report is not submitted within 60 days of the stated due date, all enhanced funds associated with the report are recouped by the state and if an acceptable report is not submitted within 365 days of the stated due date, the recoupment becomes permanent and the vendor remains on vendor hold. The proposed amendment will allow for the release of the vendor hold after the recoupment becomes permanent.

Provider Withdrawal. Providers participating in the enhancement program are currently allowed to withdraw from the enhancement program at any time upon submission of a letter requesting to withdraw. The proposed amendment will require that the letter requesting to withdraw be signed by an authorized representative, as designated per the Department of Aging and Disability Services (DADS) Form 2031. This proposed change will ensure that the request for withdrawal is made by an authorized individual.

Aggregation of Costs. Currently, providers participating in the enhancement program are allowed to request that all participating nursing facilities controlled by their controlling entity be permitted to aggregate their costs for determination of compliance with spending requirements. The proposed amendment adds commonly owned corporations to the types of controlled entities permitted to aggregate their costs for this purpose. The proposal also makes non-substantive changes to rule language governing aggregation for nursing facilities to make the language consistent with rule language governing aggregation in other programs.

Section-by-Section Summary

The proposed amendments to §355.308 are as follows:

Revise subsections (d) and (e) to state that an acceptable enrollment contract amendment must be signed by an authorized representative as designated per the DADS Form 2031 applicable to the provider's contract or ownership type;

Modify Staffing and Compensation Report submittal requirements described in subsection (f) to use cost reports in place of Staffing and Compensation Reports for services delivered after September 1, 2009, with certain exceptions;

Add a new subsection (f)(2) to explain that cost reports will replace the Staffing and Compensation Reports, with certain exceptions, for services delivered on September 1, 2009, and thereafter; and re-designate the subsequent paragraphs.

Add a new subsection (f)(2)(A) to state that Transition Staffing and Compensation reports may be required in addition to required cost reports for services delivered from September 1, 2009, to August 31, 2010.

Add a new subsection (f)(2)(B) to state that when a participating facility changes ownership, the prior owner will be required to submit a Staffing and Compensation Report covering the period from the beginning of the facility's cost reporting period to the date recognized by HHSC as the ownership-change effective date and that this report will be used to determine any recoupment amounts for the indicated reporting period. In addition, this subparagraph will require the new owner to submit a cost report covering the period from the day after the date recognized by HHSC as the ownership-effective date to the end of the facility's fiscal year.

Add a new subsection (f)(2)(C) to state that when a participating facility undergoes a contract termination, the facility will be required to submit a Staffing and Compensation Report covering the period from the beginning of the facility's cost reporting period to the contract termination date and that this report will be used to determine any recoupment amounts.

Add a new subsection (f)(2)(D) to state that when a participating facility voluntarily withdraws from participation, the facility will be required to submit a Staffing and Compensation Report covering the period from the beginning of the facility's cost reporting period to the date of withdrawal and that this report will be used to determine any recoupment amounts. Additionally, this subparagraph will require these facilities to submit a cost report covering the entire cost reporting period.

Add a new subsection (f)(2)(E) to state that for new facilities participating in the enhancement, the cost reporting period will begin with the effective date of participation in the enhancement.

Add a new subsection (f)(2)(F) to state that when an existing facility becomes a participant as a result of the open enrollment process on any day other than the first day of its fiscal year, the facility will be required to submit a Staffing and Compensation Report with a reporting period that begins on their first day of participation and ends on the last day of the facility's fiscal year and that this report will be used to determine any recoupment amounts. In addition, this subparagraph will require these facilities to submit a cost report covering the entire cost reporting period.

Renumber subsection (f)(3) as subsection (f)(4) and add new subsection (f)(4)(A) and (f)(4)(B). New subsection (f)(4) and (f)(4)(A) add cost reports functioning as Staffing and Compensation Reports to the reports governed by the vendor hold and recoupment due to non-submittal of an acceptable report rules described in the paragraph and to allow for the release of vendor holds placed due to non-submittal of an acceptable report if an acceptable report is not received within 365 days of the due date and all funds associated with participation in the enhancement during the reporting period in question have been recouped.

Renumber former subsection (f)(4) as (f)(5) and revise it to include cost reports functioning as Staffing and Compensation Reports as being governed by the provider-initiated amended accountability report rules described in the paragraph.

Revise subsection (g) to include cost reports functioning as Staffing and Compensation Reports as being governed by the report content rules described in the subsection.

Revise subsection (h) to include cost reports functioning as Staffing and Compensation Reports as being governed by the completion of reports rules described in the subsection.

Revise subsection (i) to include cost reports functioning as Staffing and Compensation Reports as being governed by the enrollment limitation rules described in the subsection.

Revise subsection (i)(1) to include cost reports functioning as Staffing and Compensation Reports as being governed by the enrollment limitation rules described in the paragraph.

Revise subsection (i)(1)(D) to include cost reports functioning as Staffing and Compensation Reports as being governed by the enrollment limitation rules described in the subparagraph.

Add a new subsection (j)(1)(G) to describe how the weighted average LVN equivalent minutes in effect during the reporting period are determined in cases where the minimum required LVN equivalent minutes per resident day of service change during the reporting period.

Add a new subsection (j)(5) to describe how the weighted average level in effect during the reporting period is calculated in cases where more than one enhanced staffing level is in effect during the reporting period.

Revise subsection (r) to require that requests to withdraw from participation in the enhancement must be signed by an authorized representative as designated per the DADS Form 2031 applicable to the provider's contract or ownership type.

Revise subsection (s) to include cost reports functioning as Staffing and Compensation Reports as being governed by the notification of recoupment rules described in the subsection and to change a reference to subsection (f)(1) to a reference to subsection (f).

Revise subsection (t) to change a reference to subsection (f)(1)(A) - (B) to a reference to subsection (f).

Revise subsection (aa) to add new subsection (aa)(1) to add definitions relating to aggregation and to define commonly owned corporations.

Revise subsection (aa) to add new subsection (aa)(2) to add commonly owned corporations to the types of entities allowed to aggregate their costs for determination of compliance with spending requirements and to make changes to the rule language to clarify the intent of aggregation and to make the language consistent with rule language governing aggregation in other programs.

Revise subsection (cc) to state that for services delivered beginning September 1, 2009, and thereafter, HHSC will not reinvest recouped funds in the enhanced direct care staff rate program.

Fiscal Note

Gordon E. Taylor, Chief Financial Officer for the Department of Aging and Disability Services, has determined that during the first five-year period the amended rule is in effect there will be a fiscal impact to state government of -$1,309,911 for state fiscal year (SFY) 2010, -$1,305,143 for SFY 2011, -$1,304,507 for SFY 2012, -$1,304,507 for SFY 2013, and -$1,304,507 for SFY 2014. The proposed rule will not result in any fiscal implications for local health and human services agencies. There are no fiscal implications for local governments as a result of enforcing or administering the section.

Small Business and Micro-business Impact Analysis

HHSC has determined that there is no adverse economic effect on small businesses or micro-businesses as a result of enforcing or administering the amendment. The implementation of the proposed rule amendment does not require any changes in practice or any additional cost to the contracted provider. There is no impact because current rules do not guarantee providers that funds will be available for reinvestment in any given year and do not guarantee that reinvestment funds will be paid to any particular provider for any particular time period.

HHSC does not anticipate that there will be any economic cost to persons who are required to comply with this amendment. The amendment will not affect local employment.

Public Benefit

Carolyn Pratt, Director of Rate Analysis, has determined that, for each of the first five years the amendment is in effect, the expected public benefit is that nursing facility providers will no longer have to complete, and HHSC will no longer have to process enhancement cost reports in addition to full cost reports. Additionally, vendor holds will no longer be required to be maintained after enhancement-related recoupments are received and HHSC and providers will have clear guidance on how to calculate weighted average minimum staffing requirements and enrollment levels when more than one set of minimum staffing requirements or enrollment levels are in effect during a cost reporting period. Also, authorized representatives of the nursing facilities will be responsible for requesting the withdrawal from the enhancement program, ensuring that nursing facilities will be aware that they will no longer receive enhancement payments. Finally, commonly owned corporations will be permitted to aggregate their costs for determination of compliance with spending requirements.

Takings Impact Assessment

HHSC has determined that this proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Texas Government Code §2007.043.

Regulatory Analysis

HHSC has determined that this proposal is not a "major environmental rule" as defined by §2001.0225 of the Texas Government Code. "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure.

Public Comment

Questions about the content of this proposal may be directed to Pam McDonald in the HHSC Rate Analysis Department by telephone at (512) 491-1373. Written comments on the proposal may be submitted to Ms. McDonald by facsimile at (512) 491-1998, by e-mail to pam.mcdonald@hhsc.state.tx.us, or by mail to HHSC Rate Analysis, Mail Code H-400, P.O. Box 85200, Austin, Texas 78708-5200, within 30 days of publication of this proposal in the Texas Register.

Statutory Authority

The amendment is proposed under Texas Government Code §531.033, which authorizes the Executive Commissioner of HHSC to adopt rules necessary to carry out the commission's duties; Texas Human Resources Code §32.021 and Texas Government Code §531.021(a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas; and Texas Government Code §531.021(b), which establishes HHSC as the agency responsible for adopting reasonable rules governing the determination of fees, charges, and rates for medical assistance payments under the Human Resources Code, Chapter 32.

The amendment affects Texas Government Code Chapter 531 and Texas Human Resources Code Chapter 32. No other statutes, articles, or codes are affected by this proposal.

§355.308.Direct Care Staff Rate Component.

(a) - (c) (No change.)

(d) Enrollment contract amendment. An initial enrollment contract amendment is required from each facility choosing to participate in the enhanced direct care staff rate. Participating and nonparticipating facilities may request to modify their enrollment status (i.e., a nonparticipant can request to become a participant, a participant can request to become a nonparticipant, a participant can request to change its enhancement level) during any open enrollment period. Nonparticipants and participants requesting to increase their enrollment levels will be limited to requesting increases of three or fewer enhancement levels during any single open enrollment period unless such limits are waived by HHSC. Requests to modify a facility's enrollment status during an open enrollment period must be received by HHSC Rate Analysis by the last day of the open enrollment period as per subsection (c) of this section. If the last day of the open enrollment period falls on a weekend, a national holiday, or a state holiday, then the first business day following the last day of the open enrollment period is the final day the receipt of the enrollment contract amendment will be accepted. An enrollment contract amendment that is not received by the stated deadline will not be accepted. A facility from which HHSC Rate Analysis has not received an acceptable request to modify their enrollment by the last day of the open enrollment period will continue at the level of participation in effect during the open enrollment period within available funds until the facility notifies HHSC in accordance with subsection (r) of this section that it no longer wishes to participate or until the facility's enrollment is limited in accordance with subsection (i) of this section. If HHSC determines that funds are not available to continue participation at the level of participation in effect during the open enrollment period, facilities will be notified as per subsection (ee) of this section. To be acceptable, an enrollment contract amendment must be completed according to instructions, signed by an authorized representative [signator] as per the Texas Department of Aging and Disabilities Services (DADS) Form 2031 applicable to the provider's contract or ownership type, and be legible.

(e) New facilities. For purposes of this section, for each rate year a new facility is defined as a facility delivering its first day of service to a Medicaid recipient after the first day of the open enrollment period, as defined in subsection (c) of this section, for that rate year. Facilities that underwent an ownership change are not considered new facilities. For purposes of this subsection, an acceptable enrollment contract amendment is defined as a legible enrollment contract amendment that has been completed according to instructions, signed by an authorized representative [ signator] as per the DADS Form 2031 applicable to the provider's contract or ownership type, and received by HHSC within 30 days of the mailing of notification to the facility by HHSC that such an enrollment contract amendment must be submitted. New facilities will receive the direct care staff base rate as determined in subsection (k) of this section with no enhancements. For new facilities specifying their desire to participate on an acceptable enrollment contract amendment, the direct care staff rate is adjusted as specified in subsection (l) of this section, effective on the first day of the month following receipt by HHSC of the acceptable enrollment contract amendment. If the granting of newly requested enhancements was limited as per subsection (j)(3) of this section during the most recent enrollment, enrollment for new facilities will be subject to that same limitation.

(f) Staffing and Compensation Report submittal requirements. [Staffing and Compensation Reports must be submitted as follows:]

(1) Annual Staffing and Compensation Report. For services delivered on or before August 31, 2009, providers must file Staffing and Compensation Reports as follows. All participating facilities will provide HHSC, in a method specified by HHSC, an Annual Staffing and Compensation Report reflecting the activities of the facility while delivering contracted services from the first day of the rate year through the last day of the rate year. This report will be used as the basis for determining compliance with the staffing requirements and recoupment amounts as described in subsection (n) of this section, and as the basis for determining the spending requirements and recoupment amounts as described in subsection (o) of this section. Participating facilities failing to submit an acceptable Annual Staffing and Compensation Report within 60 days of the end of the rate year will be placed on vendor hold until such time as an acceptable report is received and processed by HHSC.

(A) - (D) (No change.)

(2) For services delivered on September 1, 2009, and thereafter, cost reports as described in §355.105(b) of this title (relating to General Reporting and Documentation Requirements, Methods and Procedures) will replace the Staffing and Compensation Report with the following exceptions:

(A) For services delivered from September 1, 2009, to August 31, 2010, participating facilities may be required to submit Transition Staffing and Compensation Reports in addition to required cost reports. The Transition Staffing and Compensation Report reporting period will include those days in calendar years 2009 and 2010 not included in either the 2009 Staffing and Compensation report or the facility's 2010 cost report.

(B) When a participating facility changes ownership, the prior owner must submit a Staffing and Compensation Report covering the period from the beginning of the facility's cost reporting period to the date recognized by HHSC or its designee as the ownership-change effective date. This report will be used as the basis for determining any recoupment amounts as described in subsections (n) and (o) of this section. The new owner will be required to submit a cost report covering the period from the day after the date recognized by HHSC or its designee as the ownership-change effective date to the end of the facility's fiscal year.

(C) Participating facilities whose contracts are terminated either voluntarily or involuntarily must submit a Staffing and Compensation Report covering the period from the beginning of the facility's cost reporting period to the date recognized by HHSC or its designee as the contract termination date. This report will be used as the basis for determining any recoupment amounts as described in subsections (n) and (o) of this section.

(D) Participating facilities who voluntarily withdraw from participation as per subsection (r) of this section must submit a Staffing and Compensation Report within 60 days of the date of withdrawal as determined by HHSC, covering the period from the beginning of the facility's cost reporting period to the date of withdrawal as determined by HHSC. This report will be used as the basis for determining any recoupment amounts as described in subsections (n) and (o) of this section. These facilities must still submit a cost report covering the entire cost reporting period. The cost report will not be used for determining any recoupment amounts.

(E) For new facilities as defined in subsection (e) of this section, the cost reporting period will begin with the effective date of participation in enhancement.

(F) Existing facilities which become participants in the enhancement as a result of the open enrollment process described in subsection (c) of this section on any day other than the first day of their fiscal year are required to submit a Staffing and Compensation Report with a reporting period that begins on their first day of participation in the enhancement and ends on the last day of the facility's fiscal year. This report will be used as the basis for determining any recoupment amounts as described in subsections (n) and (o) of this section. These facilities must still submit a cost report covering the entire cost reporting period. The cost report will not be used for determining any recoupment amounts.

(3) [(2)] Other reports. HHSC may require other Staffing and Compensation Reports from all facilities as needed.

(4) [(3)] Vendor hold. HHSC or its designee will place on hold the vendor payments for any participating facility that does not submit a timely report as described in paragraph (1) of this subsection, or for services delivered on or after September 1, 2009, a timely report as described in paragraph (2) of this subsection [Staffing and Compensation Report] completed in accordance with all applicable rules and instructions [by the due dates described in this subsection]. This vendor hold will remain in effect until HHSC receives an acceptable report [Staffing and Compensation Report is received by HHSC].

(A) Participating facilities that do not submit an acceptable report [a Staffing and Compensation Report] completed in accordance with all applicable rules and instructions within 60 days of the due dates described in this subsection or, for cost reports, the due dates described in §355.105(b) of this title (relating to General Reporting and Documentation Requirements, Methods and Procedures), will become nonparticipants retroactive to the first day of the reporting period in question and will be subject to an immediate recoupment of funds related to participation paid to the facility for services provided during the reporting period in question. These facilities will remain nonparticipants and recouped funds will not be restored until they submit an acceptable report and repay to HHSC, or its designee, funds identified for recoupment from subsections (n) and/or (o) of this section. If an acceptable report is not received within 365 days of the due date, the recoupment will become permanent and, if all funds associated with participation during the reporting period in question have been recouped by HHSC or its designee, the vendor hold associated with the report will be released. [In addition, participating]

(B) Participating facilities with an ownership change or contract termination that do not submit an acceptable [a Staffing and Compensation] report completed in accordance with all applicable rules and instructions within 60 days of the change in ownership or contract termination will become nonparticipants retroactive to the first day of the reporting period in question and will be subject to an immediate recoupment of funds related to participation paid to the facility for services provided during the reporting period in question. These facilities will remain nonparticipants and recouped funds will not be restored until they submit an acceptable report and repay to HHSC or its designee funds identified for recoupment from subsections (n) and/or (o) of this section. If an acceptable report is not received within 365 days of the change of ownership or contract termination date, the recoupment will become permanent and if all funds associated with participation during the reporting period in question have been recouped by HHSC or its designee, the vendor hold associated with the report will be released.

(5) [(4)] Provider-initiated amended accountability reports and cost reports functioning as Staffing and Compensation Reports. Reports must be received prior to the date the provider is notified of compliance with spending and/or staffing requirements for the report in question as per subsections (n) and/or (o) of this section.

(g) Report contents. Annual Staffing and Compensation Reports and cost reports functioning as Staffing and Compensation Reports will include any information required by HHSC to implement this enhanced direct care staff rate.

(h) Completion of Reports. All Staffing and Compensation Reports and cost reports functioning as Staffing and Compensation Reports must be completed in accordance with the provisions of §§355.102 - 355.105 of this title (relating to General Principles of Allowable and Unallowable Costs, Specifications for Allowable and Unallowable Costs, Revenues, and General Reporting and Documentation Requirements, Methods, and Procedures) and may be reviewed or audited in accordance with §355.106 of this title (relating to Basic Objectives and Criteria for Audit and Desk Review of Cost Reports). Beginning with the state fiscal year 2002 report, all Staffing and Compensation Reports and cost reports functioning as Staffing and Compensation Reports must be completed by preparers who have attended the required nursing facility cost report training as per §355.102(d) of this title (relating to General Principles of Allowable and Unallowable Costs). For services delivered on or before August 31, 2009, for Staffing and Compensation Reports for even-numbered state fiscal years, preparers must have attended the cost report training for that same even-numbered year. For Staffing and Compensation Reports for odd-numbered state fiscal years, preparers must have attended the most recent cost report training sessions provided prior to the due date of the Staffing and Compensation Report. For services delivered on or after September 1, 2009, preparers must have attended cost report training as described in §355.102(d) of this title (relating to General Principles of Allowable and Unallowable Costs).

(i) Enrollment limitations. A facility will not be enrolled in the enhanced direct care staff rate at a level higher than the level it achieved on its most recently available, audited Staffing and Compensation Report or cost report functioning as its Staffing and Compensation Report. HHSC will issue a notification letter that informs a facility in writing of its enrollment limitations (if any) prior to the first day of the open enrollment period.

(1) Requests for revision. A facility may request a revision of its enrollment limitation if the facility's most recently available, audited Staffing and Compensation Report or cost report functioning as its Staffing and Compensation Report does not represent its current staffing levels.

(A) - (C) (No change.)

(D) If the facility's Staffing and Compensation Report or cost report functioning as its Staffing and Compensation Report for the rate year that included the open enrollment period described in subsection (d) of this section shows the facility staffed below the level it presented in its request for revision, HHSC will immediately recoup all enhancement payments associated with the request for revision documents and the facility will be limited to the level supported by the report for the remainder of the rate year.

(E) (No change.)

(2) - (3) (No change.)

(j) Determination of staffing requirements for participants. Facilities choosing to participate in the enhanced direct care staff rate agree to maintain certain direct care staffing levels above the minimum staffing levels described in paragraph (1) of this subsection. In order to permit facilities the flexibility to substitute RN, LVN and aide (Medication Aide and nurse aide) staff resources and, at the same time, comply with an overall nursing staff requirement, total nursing staff requirements are expressed in terms of LVN equivalent minutes. Conversion factors to convert RN and aide minutes into LVN equivalent minutes are based upon most recently available, reliable relative compensation levels for the different staff types.

(1) Minimum staffing levels. HHSC determines, for each participating facility, minimum LVN equivalent staffing levels as follows.

(A) - (F) (No change.)

(G) In cases where the minimum required LVN-equivalent minutes per resident day of service associated with a RUG-III case mix group or supplemental reimbursement group change during the reporting period, the minimum required LVN-equivalent minutes for the RUG-III case mix group or supplemental reimbursement group for the reporting period will be equal to the weighted average LVN-equivalent minutes in effect during the reporting period for that group calculated as follows:

(i) Multiply the first minimum required LVN equivalent minutes per resident day of service associated with the RUG-III case mix group or supplemental reimbursement group in effect during the reporting period by the most recently available, reliable Medicaid days of service utilization data for the time period the first minimum required LVN equivalent minutes were in effect.

(ii) Multiply the second minimum required LVN equivalent minutes per resident day of service associated with the RUG-III case mix group or supplemental reimbursement group in effect during the reporting period by the most recently available, reliable Medicaid days of service utilization data for the time period the second minimum required LVN equivalent minutes were in effect.

(iii) Sum the products from clauses (i) and (ii) of this subparagraph.

(iv) Divide the sum from clause (iii) of this subparagraph by the sum of the most recently available, reliable Medicaid days of service utilization data for the entire reporting period used in clauses (i) and (ii) of this subparagraph.

(2) - (4) (No change.)

(5) In cases where more than one enhanced staffing level is in effect during the reporting period, the staffing requirement will be based on the weighted average enhanced staffing level in effect during the reporting period calculated as follows:

(A) Multiply the first enhanced staffing level in effect during the reporting period by the most recently available, reliable Medicaid days of service utilization data for the time period the first enhanced staffing level was in effect.

(B) Multiply the second enhanced staffing level in effect during the reporting period by the most recently available, reliable Medicaid days of service utilization data for the time period the second enhanced staffing level was in effect.

(C) Sum the products from subparagraphs (A) and (B) of this paragraph.

(D) Divide the sum from subparagraph (C) of this paragraph by the sum of the most recently available, reliable Medicaid days of service utilization data for the entire reporting period used in subparagraphs (A) and (B) of this paragraph.

(k) - (l) (No change.)

(m) Staffing requirements for participating facilities. Each participating facility will be required to maintain adjusted LVN-equivalent minutes equal to those determined in subsection (j) of this section. Each participating facility's adjusted LVN-equivalent minutes maintained during the reporting period will be determined as follows.

(1) (No change.)

(2) Determine adjusted LVN-equivalent minutes maintained. Compare the unadjusted LVN-equivalent minutes maintained by the facility during the reporting period from paragraph (1) of this subsection to the LVN-equivalent minutes required of the facility as determined in subsection (j) of this section. The adjusted LVN-equivalent minutes are determined as follows:

(A) (No change.)

(B) If the number of unadjusted LVN-equivalent minutes maintained by the facility during the reporting period is less than the number of LVN-equivalent minutes required of the facility, but greater than or equal to the minimum LVN-equivalent minutes required for participation as determined in subsection (j)(1) of this section, the following steps are performed.

(i) - (v) (No change.)

(vi) If the facility's direct care spending surplus from clause (iv) of this subparagraph is greater than zero, the adjusted LVN-equivalent minutes maintained by the facility during the reporting period is set equal to the facility's direct care spending surplus from clause (iv) of this subparagraph divided by the per diem enhancement add-on as determined in subsection (l) of this section plus the unadjusted LVN-equivalent minutes maintained by the facility during the reporting period from paragraph (1) of this subsection[.] according to the following formula: (Direct Care Spending Surplus/Per Diem Enhancement Add-on for One LVN-equivalent Minute) + Unadjusted LVN-equivalent Minutes.

(C) (No change.)

(n) - (q) (No change.)

(r) Voluntary withdrawal. Facilities wishing to withdraw from participation must notify HHSC in writing by certified mail and the request must be signed by an authorized representative as designated per the DADS Form 2031 applicable to the provider's contract or ownership type. Facilities voluntarily withdrawing must remain nonparticipants for the remainder of the rate year. Facilities that voluntarily withdraw from participation will have their participation end effective on the date of the withdrawal, as determined by HHSC.

(s) Notification of recoupment based on Annual Staffing and Compensation Report or cost report. Facilities will be notified, in a manner specified by HHSC, 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 Annual Staffing and Compensation Report or cost report as described in subsection (f)[(1)] of this section that changes the amount to be repaid to HHSC or its designee, the facility 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 facility's vendor payment(s) following the date of the notification letter.

(t) Change of ownership and contract terminations. Facilities required to submit a Staffing and Compensation Report due to a change of ownership or contract termination as described in subsection (f)[(1)(A) - (B)] of this section will have funds held as per 40 TAC §19.2308(2) (relating to Change of Ownership) until an acceptable Staffing and Compensation Report is received by HHSC and funds identified for recoupment from subsections (n) and/or (o) of this section are repaid to HHSC or its designee. Informal reviews and formal appeals relating to these reports are governed by §355.110 of this title (relating to Informal Reviews and Formal Appeals). HHSC or its designee will recoup any amount owed from the facility'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 subsection (x) of this section 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 designees until repayment is made in full. The responsible entity for these contracts will be notified as described in subsection (s) of this section prior to the recoupment of owed funds, placement of vendor hold and barring of new contracts.

(u) - (z) (No change.)

(aa) Determination of compliance with spending requirements in the aggregate. [In cases where a parent company, sole member, or governmental body controls more than one nursing facility (NF) contract participating in the enhanced direct care staff rate, the parent company, sole member, or governmental body has the option to have its participating contracts' compliance with the spending requirements detailed in subsection (o) of this section for the applicable reporting period evaluated in the aggregate. In such cases, compliance with the spending requirements will be evaluated in the aggregate for all participating NF contracts that the parent company, sole member or governmental body controlled at the end of the rate year or at the effective date of the change of ownership or termination of its last participating NF contract. This option is called grouping. To exercise the grouping option, the parent company, sole member, or governmental body must submit a grouping request, in a manner prescribed by HHSC, at the time each Annual Staffing and Compensation 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 requests will be reviewed on a case-by-case basis. A new request to have compliance with spending requirements evaluated in the aggregate must be submitted for each reporting period. NF 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 subsection (o) of this section, 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. A facility that does not participate in the enhanced direct care staff rate is excluded from all aggregate spending calculations because it is not subject to the spending requirements detailed in subsection (o) of this section.]

(1) Definitions. The following words and terms have the following meanings when used in this subsection.

(A) Commonly owned corporations--two or more corporations where five or fewer identical persons who are individuals, estates, or trusts control greater than 50 percent of the total voting power in each corporation.

(B) Entity--a parent company, sole member, individual, limited partnership, or group of limited partnerships controlled by the same general partner.

(C) Combined entity--one or more commonly owned corporations and one or more limited partnerships where the general partner is controlled by the same person(s) as the commonly owned corporation(s).

(D) Control--greater than 50 percent ownership by the entity.

(2) Aggregation. For an entity, commonly owned corporation, or combined entity that controls more than one participating nursing facility contract, compliance with the spending requirements detailed in subsection (o) of this section can be determined in the aggregate for all participating nursing facility contracts controlled by the entity, commonly owned corporations, or combined entity at the end of the rate year, the effective date of the change of ownership of its last participating NF contract, or the effective date of the termination of its last participating NF contract rather than requiring each contract to meet its spending requirement individually. Corporations that do not meet the definitions under paragraph (1)(A) - (C) of this subsection are not eligible for aggregation to meet spending requirements.

(A) Aggregation Request. To exercise aggregation, the entity, combined entity, or commonly owned corporations must submit an aggregation request, in a manner prescribed by HHSC, at the time each Staffing and Compensation Report or cost report is submitted. In limited partnerships in which the same single general partner controls all the limited partnerships, the single general partner must make this request. Other such aggregation requests will be reviewed on a case-by-case basis.

(B) Frequency of Aggregation Requests. The entity, combined entity, or commonly owned corporations must submit a separate request for aggregation for each reporting period.

(C) Ownership changes or terminations. Nursing facility 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 subsection (o) of this section, 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.

(bb) (No change.)

(cc) Reinvestment. For services delivered on or before August 31, 2009, HHSC will reinvest recouped funds in the enhanced direct care staff rate program, to the extent that there are qualifying facilities. For services delivered beginning September 1, 2009, and thereafter, HHSC will not reinvest recouped enhanced direct care staff rate funds.

(1) - (5) (No change.)

(dd) - (ee) (No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on July 20, 2009.

TRD-200902962

Steve Aragón

General Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: August 30, 2009

For further information, please call: (512) 424-6576