TITLE 1.ADMINISTRATION

Part 3. OFFICE OF THE ATTORNEY GENERAL

Chapter 69. CENTRAL PURCHASING

Subchapter C. MANAGEMENT OF VEHICLES

1 TAC §69.35, §69.36

The Office of the Attorney General proposes new Subchapter C, relating to the management of vehicles, and new §69.35. and §69.36, relating to State Vehicle Management Plan and Restrictions on Assignment of Vehicles. House Bill 3125, 76th Texas Legislature, mandated the Office of Vehicle Fleet Management, under the direction of the Council on Competitive Government, to develop and implement a vehicle management plan to improve the administration and operation of the state's fleet. The management plan was adopted by the Council of Competitive Government on October 11, 2000. House Bill 3125, now codified in Government Code § 2171, requires state agencies to adopt rules consistent with the plan.

Becky Pestana, Assistant Attorney General, has determined that for each year of the first five-year period the new subchapter is in effect there will be no fiscal implications for state or local governments as a result of enforcing or administering the new section. There are no anticipated fiscal implications to local government or local economies.

Ms. Pestana also has determined that for each year of the first five-year period the new subchapter is in effect the public benefit anticipated as a result of enforcing the rule will be the assurance of greater utilization and management of the fleet vehicles operated by the agency. There is no anticipated adverse economic effect on individuals, small businesses, or micro-businesses.

Written comments on the proposed new subchapter may be submitted to Becky Pestana, Assistant Attorney General, at the Office of the Attorney General, General Counsel Division, P.O. Box 12548, Austin, TX, 78711-2548, (512) 936-2912, or by e-mail to becky.pestana@oag.state.tx.us.

The new subchapter is proposed under Government Code § 2171.1045, which requires agencies to adopt rules relating to the assignment and use of their vehicles.

No other statutes, articles, or codes are affected by the proposed new subchapter or sections.

§69.35.State Vehicle Management Plan.

To the extent applicable, the agency adopts the State Vehicle Management Plan as adopted by the Office of Vehicle Fleet Management, under the direction of the Council on Competitive Government, on October 11, 2000.

§69.36.Restrictions on Assignment of Vehicles.

(a)

Each agency vehicle, with the exception of a vehicle assigned to a field employee or a vehicle used for undercover and/or surveillance activities, shall be assigned to the agency motor pool and be available for check-out.

(b)

The agency may assign a vehicle to an individual administrative or executive employee on a regular or everyday basis only if the agency makes a written determination that the assignment is critical to the needs and mission of the agency.

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 May 1, 2001.

TRD-200102490

Susan D. Gusky

Assistant Attorney General

Office of the Attorney General

Earliest possible date of adoption: June 17, 2001

For further information, please call: A.G. Younger at (512) 463-2110.


Part 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION

Chapter 355. MEDICAID REIMBURSEMENT RATES

Subchapter A. COST DETERMINATION PROCESS

1 TAC §355.112

The Texas Health and Human Services Commission (HSSC) proposes an amendment to §355.112, concerning attendant compensation rate enhancement, in its Rate Analysis chapter. The purpose of the amendment is to clarify the definition of an attendant, add the Deaf Blind Multiple Disabilities Waiver program, and clarify the enrollment process. The amendment also revises the enrollment process to allow enrollments to "roll over" unchanged to the following year, unless the provider changes their enrollment status during the open enrollment period and revises the procedures for enrolling new facilities. The proposal states that a contract on vendor hold for 60 days for failure to submit an accountability report will become a nonparticipant until the report is submitted and the recoupments are made. Detail was added to the description of the calculation of the attendant compensation rate component to better describe the actual calculation. The proposal clarifies that, when a provider serves clients in both the Residential Care (RC) program and the Community Based Alternatives (CBA) Assisted Living/Residential Care (AL/RC) program in a single facility, the spending requirement is determined for both programs together and not separately. The proposal also clarifies the effective date for contractors who voluntarily withdraw contracts from being participants or request to reduce the enhancement levels and clarifies the group or individual status of a provider that acquires a participating contract through a contract assignment.

The Texas Department of Human Services (DHS) is simultaneously proposing a related amendment to 40 TAC §20.112 in this issue of the Texas Register .

Don Green, Chief Financial Officer, has determined that for the first five-year period the sections are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the sections.

Commissioner Don Gilbert has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of adoption of the proposed rules will be that providers will be given greater clarification of the definition of direct care staff; the enrollment process will be easier for those providers who do not want to change their enrollment status; the enrollment process has been clarified; and Deaf Blind Multiple Disabilities contracts will be able to participate and receive enhanced rates. This revision will require a provider desiring to enroll as a participant under a new contract to submit an enrollment contract amendment, rather than being enrolled automatically. The proposal will remove a contract from participation and will stop paying higher participation rates if the provider is on vendor hold for more than 60 days for failure to submit an accountability report. The calculation of attendant compensation is described in greater detail under the proposed rule. The proposal clarifies for CBA AL/RC and RC providers that, when they operate both programs in one facility, the spending requirement is based on the entire facility. The proposal clarifies the effective date of a reduction in the reimbursment rate of a contractor who voluntarily withdraws a contract from participation or requests to reduce the enhancement level of a contract. Finally, the proposed rule clarifies the group or individual status of a provider that obtains a contract through a contract assignment. There will be no adverse economic effect on large, small, or micro businesses, because the proposal is a clarification of administrative practices. There is no anticipated economic cost to persons who are required to comply with the proposed section.

Questions about the content of this proposal may be directed to Alisa Jacquet at (512) 438-4952 in DHS's Rate Analysis Department. Written comments on the proposal may be submitted to Supervisor, Rules and Handbooks Unit-120, Texas Department of Human Services E-205, P.O. Box 149030, Austin, Texas 78714-9030, within 30 days of publication in the Texas Register .

Under §2007.003(b) of the Texas Government Code, the HHSC determined that Chapter 2007 of the Government Code does not apply to these rules. Accordingly, the department is not required to complete a takings impact assessment regarding these rules.

The amendment is proposed under Government Code, §531.033, which authorizes the commissioner of the Health and Human Services Commission to adopt the rules necessary to carry out the commission's duties, and §531.021(b), which establishes the commission as the agency responsible for adopting reasonable rules governing the determination of fees, charges, and rates for medical assistance payments under Chapter 32, Human Resources Code.

The amendment implements the Government Code §531.003 and §531.021(b).

§355.112.Attendant Compensation Rate Enhancement.

(a)

Eligible programs. Providers contracted in the Primary Home Care, including Family Care (PHC/FC); Day Activity and Health Services (DAHS); Residential Care (RC); Community Living Assistance and Support Services (CLASS) - Direct Service Agency; Community Based Alternatives (CBA) - Home and Community Support Services (HCSS); Deaf-Blind Multiple Disabilities Waiver (DBMD); Consumer-Managed Personal Assistance Services (CMPAS) and CBA - Assisted Living/Residential Care (AL/RC) programs are eligible to participate in the attendant compensation rate enhancement.

(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)

(No change.)

(2)

Attendants do not include the director, administrator, assistant director, assistant administrator, clerical and secretarial staff, professional staff, other administrative staff, licensed staff, attendant supervisors, cooks and kitchen staff, maintenance and groundskeeping staff, activity director, and laundry and housekeeping staff. In the case of PHC/FC, CLASS, CBA HCSS, and DBMD staff other than attendants may deliver attendant services and be considered an attendant if they must perform attendant services that cannot be delivered by another attendant to prevent a break in service.

(3)

(No change.)

(4)

An attendant also includes medication aides in the RC and AL/RC program.

(c)

Attendant compensation cost center. This cost center will include employee compensation, contract labor costs, and personal vehicle mileage reimbursement for attendants as defined in subsection (b) of this section.

(1)

Attendant compensation is the allowable compensation for attendants defined in §355.103(b)(1) of this title (relating to Specifications for Allowable and Unallowable Costs [ Compensation of Employees ]) and required to be reported as either salaries and/or wages, including payroll taxes and workers' compensation, or employee benefits. Benefits required by §355.103(b)(1)(A)(iii) of this title (relating to Specifications for Allowable and Unallowable Costs) to be reported as costs applicable to specific cost report line items, except as noted in paragraph (3) of this subsection, are not to be included in this cost center.

(2)-(3)

(No change.)

(d)

(No change.)

(e)

Open enrollment. Open enrollment begins on the first day of July and ends on the last day of that same July preceding the rate year for which payments are being determined. The Texas Department of Human Services (DHS) may conduct additional enrollment periods during a rate year.

(f)

Enrollment contract amendment. An initial enrollment contract amendment is required from each provider choosing to participate in the attendant compensation rate enhancement. [ All contracted providers must submit an enrollment contract amendment during the open enrollment period. ] On the initial enrollment contract amendment the provider must specify for each contract a [ his ] desire to participate or [ his desire ] not to participate. The participating provider must specify for each program the desire [ if he wishes ] to have all participating contracts be considered as a group or as individuals [ individually ] for purposes related to the attendant compensation rate enhancement. For the PHC/FC program, the participating provider must also specify if he wishes to have either priority 1, nonpriority, or both priority 1 and nonpriority services participating in the attendant compensation rate enhancement. If the PHC/FC provider selects to have their contracts participating as a group, then the provider must select to have either priority 1, nonpriority, or both priority 1 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. Requests to modify a provider's enrollment status during an open enrollment period must be received by DHS's Rate Analysis Department by the last day of the open enrollment period as per subsection (e) of this section. Providers from which DHS's Rate Analysis Department 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. To be acceptable, an enrollment contract amendment must be completed according to DHS instructions, signed by an authorized signatory as per the DHS Corporate Board of Directors Resolution applicable to the provider's contract or ownership type, and legible. [ The provider also must submit with the contract amendment all required documentation to the DHS in a manner specified by DHS. Any provider failing to submit an acceptable enrollment contract amendment by the end of the open enrollment period will be a nonparticipating contract for the entire rate year following the open enrollment period. ]

(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 DHS 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 DHS instructions, signed by an authorized signator as per the Corporate Board of Directors Resolution applicable to the provider's contract or ownership type, and received by DHS's Rate Analysis Department within 30 days of DHS's mailing of notification to the provider that such an enrollment contract amendment must be submitted. New contracts will receive the nonparticipant attendant compensation rate as specified in subsection (m) until: [ 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 DHS 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. New contractors must complete the enrollment contract amendment specified in subsection (f) of this section within 30 days of notification by DHS. Any provider failing to submit an acceptable enrollment contract amendment within 30 days of notification by DHS will be a nonparticipating contract for the remainder of the rate year. New contracts will receive the attendant compensation rate as specified in subsection (l) of this section until: ]

(1)

for new contractors specifying the desire not to participate on an acceptable enrollment contract amendment, the attendant compensation rate component is as specified in subsection (m) of this section. [ based on the enrollment contract amendment information received, participating contracts will have their attendant compensation rate adjusted effective on the first day of the month following receipt of an acceptable enrollment contract amendment. ]

(2)

for new contractors specifying the desire to participate on an acceptable enrollment contract amendment the [ based on the enrollment contract amendment information received, nonparticipating contracts will have their ] attendant compensation rate component is adjusted as specified in subsections (l) and (n) [ subsection (m) ] of this section retroactive to the first day of their contract. [ attendant compensation rate will be adjusted effective on the sixty-first day of the contract with DHS. ]

(3)

for new contracts from which an acceptable enrollment contract amendment is not received, the attendant compensation rate component is as specified in subsection (m) of this section.

(h)

Attendant Compensation Report submittal requirements. Attendant Compensation Reports must be submitted by participating contracted providers as follows.

(1)

Annual report. Participating contracted providers will provide DHS, in a method specified by DHS, 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 participating contracts within one program of the provider. The aggregate report must include contracts that are new, excluded from participation, voluntary withdrawal from participation, and contract assignments, as defined in subparagraphs (B)-(E) of this paragraph, which were part of the group for any portion of the rate year. 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. [ The aggregate report must include excluded from participation, new, and contract assignment contracts (for the legal entity accepting the contract assignment), as defined in subparagraphs (A)-(E) of this paragraph, which were part of the group for any portion of the rate year. A participating contract which has been terminated in accordance with subsection (v) of this section or that has undergone a contract assignment in accordance with subsection (w)(3) of this section will be considered to have participated on an individual basis for compliance with reporting requirements. ] 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 DHS. Contracted providers participating for less than a full year must provide Attendant Compensation Reports as follows.

(A)

(No change.)

(B)

In cases where a participating provider changes ownership through a contract assignment [ from one legal entity to another legal entity ], the owner prior to the change of ownership 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 DHS. The owner after the change of ownership must submit an Attendant Compensation report within 60 days of the end of the rate year, covering the period from the effective date of the contract assignment as determined by DHS to the end of the rate year. This report will be used as the basis for determining recoupment as described in subsection (s) of this section.

(C)-(D)

(No change.)

(E)

A participating provider who is a new contractor as per subsection (g) of this section must submit an Attendant Compensation Report within 60 days of the end of the rate year, covering the period from the [ sixty- ]first day of the month following receipt by DHS's Rate Analysis Department of an acceptable enrollment contract amendment as per paragraph (g)(1) of this section [ contract as determined by DHS ] through the end of the rate year.

(2)

Six-month report. Within 60 days of the end of the first six months of the rate year, participating [ Participating ] contracted providers will provide DHS, in a method specified by DHS, a six-month 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 February of the rate year. [ DHS will place on vendor hold contracted providers failing to submit an acceptable six-month Attendant Compensation Report within 60 days of the last day of February of the rate year until DHS receives and processes an acceptable report. ] The 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 participating contracts within one program of the provider. [ If the provider requested participation as a group the report must be submitted as a single aggregate report covering all participating contracts within one program of the provider. ] Participating providers will use this six-month report to assist them in determining their level of compliance with the spending requirements and to take any appropriate action necessary to come into compliance with the spending requirements. The provider is responsible for the management of attendant compensation expenditures in compliance with the spending requirements stated in subsection (s) of this section.

(3)

(No change.)

(4)

Vendor hold. DHS will place on hold the vendor payments for any contractor who does not submit 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 an acceptable Attendant Compensation Report is received by DHS. Participating contractors who do not submit an annual Attendant Compensation Report completed in accordance with all applicable rules and instructions within 60 days of the vendor hold being placed will become nonparticipants until the first day of the month after all of the following conditions are met:

(A)

the provider submits an acceptable annual Attendant Compensation Report;

(B)

the provider submits a separate Attendant Compensation Report from the beginning of the current rate year to the date they were disenrolled as a participant;

(C)

the provider repays to DHS funds that are identified for recoupment from subsection (s) of this section; and

(D)

DHS receives, in writing by certified mail, a request from the provider to be restored to the participant status.

(i)-(j)

(No change.)

(k)

Enrollment. Providers choosing to participate in the attendant compensation rate enhancement must submit to DHS a signed enrollment contract amendment as described in subsection (f) of this section , before the end of the enrollment period . Participation is determined separately for each program specified in subsection (a) of this section, except that 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. For PHC/FC participation is also determined separately for priority 1 and nonpriority services. Participation will remain in effect, subject to availability of funds, until the provider notifies DHS, in accordance with subsection (x) of this section, that it no longer wishes to participate or until DHS excludes the contract from participation for reasons outlined in subsection (u) of this section. Contracts voluntarily withdrawing from participation will have their participation end effective with the date of withdrawal as determined by DHS. Contracts excluded from participation will have their participation end effective on the date determined by DHS.

(l)

Determination of attendant compensation rate component for participating contracts. For each of the programs identified in subsection (a) of this section attendant compensation rate enhancement increments associated with each enhanced attendant compensation level will be determined for participating contracts from subsection (k) of this section. The attendant compensation rate enhancement increments will be determined by taking into consideration quality of care, labor market conditions, economic factors, and budget constraints. The attendant compensation rate enhancement increments will be determined on a per-unit-of-service basis applicable to each program or service. [ Determination of attendant compensation rate component participating contracts. For each of the programs identified in subsection (a) of this section an attendant compensation rate component will be calculated for participating contracts from subsection (k) of this section and for the first 60 days of a new contract from subsection (g) of this section as follows. ]

[(1)

Determine for each contract included in the cost report data base used in the determination of rates in effect on September 1, 1999, the attendant compensation cost center from subsection (c) of this section.]

[(2)

Adjust the cost center data from paragraph (1) of this subsection, as specified in §355.108 of this title (relating to Determination of Inflation Indices), to inflate the costs to the prospective rate year.]

[(3)

For each contract included in the cost report data base used in the determination of rates in effect on September 1, 1999, divide the result from paragraph (2) of this subsection by the units of service and multiply the result by 1.044 for all programs in subsection (a) of this section except for RC and AL/RC which are multiplied by 1.07. The result is the attendant compensation rate component for participating contracts and the first 60 days of new contracts.]

[(4)

The cost base from paragraph (1) of this subsection used in determining the attendant compensation rate component will not change over time, except for adjustments for inflation from paragraph (2) of this subsection. DHS may recommend adjustments to the rates in accordance with §355.109 of this title (relating to Adjusting Reimbursement When New Legislation, Regulations, or Economic Factors Affect Costs).]

(m)

Determination of attendant compensation rate component for nonparticipating contracts. For each of the programs identified in subsection (a) of this section DHS will calculate an attendant compensation rate component [ will be calculated ] for nonparticipating contracts as follows.

(1)-(2)

(No change.)

(3)

For each contract included in the cost report data base used in determination of rates in effect on September 1, 1999, divide the result from paragraph (2) of this subsection by the corresponding units of service . Provider projected costs per unit of service are rank-ordered from low to high, along with the provider's corresponding units of service. For DAHS the median cost per unit of service is selected. For all other programs the units of service are summed until the median hour of service is reached. The corresponding projected cost per unit of service is the weighted median cost component. The result is multiplied [ and multiply the result ] by 1.044 for all programs in subsection (a) of this section except for RC and AL/RC which is multiplied by 1.07. The result is the attendant compensation rate component for nonparticipating contracts.

(4)

(No change.)

(n)-(r)

(No change.)

(s)

Spending requirements for participating contracts. DHS will determine from the 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 providers' compliance with the spending requirement is determined based on the total attendant compensation spending as reported on the 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)[ (3) ] 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 . 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. 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 . DHS will calculate recoupment, if any, as follows.

(1)

(No change.)

(2)

The adjusted attendant compensation per unit of service from paragraph (1) of this subsection will be subtracted from the accrued attendant compensation revenue per unit of service to determine the amount to be recouped by DHS. If the adjusted attendant compensation per unit of service is greater than or equal to the accrued attendant compensation revenue per unit of service, there is no recoupment.

(3)

(No change.)

(t)-(v)

(No change.)

(w)

Contract assignments. The following applies to contract assignments.

(1)

Contracts participating under the prior legal entity will continue participation under the legal entity accepting the contract assignment. When the provider or legal entity accepting the contract assignment has their contracts participating as individuals, participation in the attendant compensation rate enhancement confers to the provider or legal entity accepting the contract assignment. When the provider or legal entity accepting the contract assignment has their contracts participating as a group, the contract will participate with the group of the legal entity accepting the contract assignment for purposes related to the attendant compensation rate enhancement. When the new owner has no contracts participating, the individual or group status of participating contracts under the old owner will transfer to the new owner.

[(2)

When the contract assignment is a change only in the organizational structure or name of the legal entity, the provider or legal entity accepting the contract assignment is responsible for the reporting requirements in subsection (h) of this section and for any recoupment amount owed to DHS for the entire rate year identified, even if part of the rate year was under the responsibility of the previous legal entity.]

(2)

[ (3) ] When the contract assignment is an ownership change from one legal entity to a different legal entity, DHS will place a vendor hold on the payments of the existing contracted provider until DHS receives an acceptable Attendant Compensation Report specified in subsection (h)(1)(B) of this section and until funds identified for recoupment from subsection (s) of this section are repaid to DHS. DHS 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 by the existing contracted provider's vendor payments that are being held, the responsible entity from subsection (cc) of this section will be jointly and severally liable for any additional payment due to DHS. Failure to repay the amount due [ or submit an acceptable payment plan ] within 60 days of notification will result in placement of a vendor hold on all DHS contracts controlled by the responsible entity and will bar the responsible entity from enacting new contracts with DHS until repayment is made in full.

(x)

Voluntary withdrawal. Participating contracts wishing to withdraw from the attendant compensation rate enhancement must notify DHS in writing by certified mail. 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 [ and are excluded from participation the following 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 [ a reduction to ] their attendant compensation requirements and associated enhancement payment to a lower participation level by submitting a written request to DHS by certified mail . These requests will be effective the first of the month following [ 30 days from ] 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.)

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 May 3, 2001.

TRD-200102531

Marina Henderson

Executive Deputy Commissioner

Texas Health and Human Services Commission

Earliest possible date of adoption: June 17, 2001

For further information, please call: (512) 438-3734


Subchapter D. REIMBURSEMENT METHODOLOGY FOR THE INTERMEDIATE CARE FACILITIES FOR PERSONS WITH MENTAL RETARDATION (ICF/MR) PROGRAM

1 TAC §355.451, §355.456

The Texas Health and Human Services Commission (HHSC) proposes amendments to §355.451, concerning definitions and general reimbursement information, and §355.456, concerning rate setting methodology.

Background and Summary of Factual Basis for the Rules

Section 531.021, Government Code, entitled "Administration of Medicaid Program," provides, among other things, that HHSC adopt rules and standards to govern the determination of fees, charges, and rates for medical assistance payments under Chapter 32, Human Resources Code, in consultation with the agencies that operate the Medicaid program. The amendments describe how interim rates for state-operated facilities in the Intermediate Care Facilities for Persons with Mental Retardation (ICF/MR) Program in Texas will be established.

Explanation

The amendments will maximize the state's opportunity to draw federal funds to cover allowable costs in state-operated facilities. The amendments will simplify the rate setting process for state-operated facilities. Currently, the state sets a separate rate for each state-operated facility, resulting in 54 different rates. The amendments will result in one rate for large state-operated facilities (Medicaid certified capacity of 17 or more) and another rate for small state-operated facilities (Medicaid certified capacity of 16 or less).

Subsection (a) of §355.451 is amended to add a definition of "interim rate." Subsection (b) is amended to specify that interim rates for state-operated facilities are prospective and uniform for each class of state operated facility on a statewide basis and settled on an annual basis.

The proposed amendment to §355.456 is intended to establish 2 classes of state generated facilities for purposes of settling interim rates--large facilities (those with a Medicaid certified capacity of 17 or more on the first day of the month immediately preceding a rate's effective date) and small facilities (those with a Medicaid certified capacity of 16 or less on the first day of the month immediately preceding a rate's effective date). For a facility certified after the effective date of a reimbursement rate, the facility will be classified in accordance with the Medicaid certified capacity in effect on the date of initial certification.

Public Benefit

Fiscal Note

Don Green, Chief Financial Officer, has determined that for the first five years that the proposed amendments are in effect, there is no anticipated fiscal impact resulting from the adoption of the amendments. No additional costs will be borne by local governments as a result of the proposed amendments, nor is there any anticipated impact of revenues of state or local government.

Mr. Green has determined that during the first five years that the proposed amendments are in effect, the public will benefit from adoption of the amendments because the amendments will maximize the state's opportunity to draw federal funds to cover allowable costs in state operated facilities and simplify the rate setting process by setting two rates instead of 54 rates.

Small and Micro-business Impact Analysis

The proposed amendments will not result in additional costs to persons required to comply with the rules, nor do the rules have any anticipated adverse effect on small or micro-businesses. The rules will not affect local employment.

Regulatory Analysis

HHSC has determined that none of the proposed amended rules is a "major environmental rule" as defined by §2001.0225, Government Code. "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. The proposed amendments are not specifically intended to protect the environment or reduce risks to human health from environmental exposure.

Takings Impact Assessment

HHSC has assessed the takings impact of the proposed amended rules under Texas Government Code, §2007.043. HHSC has determined that this action does not restrict or limit an owner's right to property that would otherwise exist in the absence of governmental action and therefore does not constitute a taking. The majority of the proposed amendments are administrative, non-substantive, and do not impose any new regulatory requirements. The proposed amended rules are reasonably taken to fulfill requirements of state law.

Public Comment

A hearing to accept oral and written testimony from members of the public concerning the proposal has been scheduled for 9:30 a.m., Wednesday, May 23, 2001, in the Texas Department of Mental Health and Mental Retardation Central Office Auditorium in Building 2 at 909 West 45th Street, in Austin, Texas. Persons requiring an interpreter for the deaf or hearing impaired should contact the department's Central Office operator at least 72 hours prior to the hearing at TDD (512) 206-5330. Persons requiring other accommodations for a disability should notify Tera Cardella, at least 72 hours prior to the hearing at (512) 206-5854 or at the TDY phone number of Texas Relay, 1-800-735-2988.

Public comment may be submitted in writing to Steve Lorenzen, Director, Medicaid Rates Setting, Health and Human Services Commission, by mail addressed to 4900 North Lamar Boulevard, 4th Floor, Austin, Texas 78751, or by facsimile to (512) 424-6586. Comments must be submitted by 5:00 p.m., Monday, June 4, 2001. Further information may be obtained by calling Steve Lorenzen at (512) 424-6633.

Statutory Authority

The amendments are proposed under §531.021(b), Government Code, which requires HHSC to adopt reasonable rules and standards to govern the determination of fees, charges, and rates for medical assistance payments under Chapter 32, Human Resources Code, in consultation with the agencies that operate the Medicaid program; and §531.033, Government Code, which provides the commissioner of health and human services with authority to adopt rules necessary to carry the duties of HHSC under Chapter 531, Government Code.

The proposed amended rules implement §531.021(b), Government Code, concerning the adoption of rules and standards to govern the determination of fees, charges, and rates for medical assistance payments under Chapter 32, Human Resources Code, and §32.0281, Human Resources Code, concerning the adoption of rules regarding Medicaid reimbursement rates.

§355.451.Definitions and General Reimbursement Information.

(a)

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1)-(7)

(No change.)

(8)

Interim rate--Rate paid to a state-operated facility prior to settlement conducted in accordance with §355.456(e)(1)(B) of this title (relating to Rate Setting Methodology).

(9)

[ (8) ] Person--An individual, partnership, corporation, association, governmental subdivision or agency, or a public or private organization of any character.

(10)

[ (9) ] Provider--Any person with whom TDMHMR has an ICF/MR provider agreement.

(11)

[ (10) ] Provider agreement--Any written agreement that obligates TDMHMR to pay money to a person for goods or services under the Title XIX Medical Assistance Program.

(12)

[ (11) ] Rebase--The revision to the underlying assumptions on which the modeled rates are calculated, including revisions to staffing ratios, pay structure, the composition of direct care staff, or other cost factors used in the formula for modeling the rates.

(13)

[ (12) ] State-operated facility--An ICF/MR for which a facility or division of TDMHMR is the provider.

(14)

[ (13) ] TDMHMR--The Texas Department of Mental Health and Mental Retardation or its designee.

(b)

TDMHMR reimburses providers for services provided to eligible recipients in ICFs/MR. There are two types of facilities: non-state operated and state-operated.

(1)

(No change.)

(2)

State-operated facilities.

(A)

Interim rates [ Rates ] for state-operated facilities are uniform statewide by class [ set prospectively based on each facility's historical cost pattern with adjustments for inflation ]. There is no differentiation based on client level-of-need categories. Interim rates are set prospectively with annual settlement.

(B)

Classes of state-operated facilities. Classes of state-operated facilities are based upon facility size.

§355.456.Rate Setting Methodology.

(a)

Types of facilities. There are two types of facilities for purposes of rate setting: state-operated and non-state operated. Facilities [ Non-state operated facilities ] are further divided into [ by ] classes that are determined by the size of the facility.

(b)

(No change.)

(c)

Classes of state-operated facilities. There is a separate interim rate for each class of state-operated facilities, which are as follows:

(1)

Large facility--A facility with a Medicaid certified capacity of 17 or more as of the first day of the full month immediately preceding a rate's effective date or, if certified for the first time after a rate's effective date, as of the date of initial certification.

(2)

Small facility--A facility with a Medicaid certified capacity of 16 or less as of the first day of the full month immediately preceding a rate's effective date or, if certified for the first time after a rate's effective date, as of the date of initial certification.

[(c)

State-operated facilities. There are no classes of state-operated facilities. State-operated facilities are reimbursed on a facility-based per diem rate that is determined by each facility's allowable costs, inflated forward to the rate period. The reimbursement rates include residential, day, and comprehensive medical services.]

(d)

(No change.)

(e)

Reimbursement [ Rate ] determination for state-operated facilities. Except as provided in paragraph (2) of this subsection and subsection (f) of this section, state-operated facilities are reimbursed an interim rate with a settlement conducted in accordance with paragraph (1)(B) of this subsection. HHSC will adopt the interim reimbursement rates for state-operated facilities in accordance with §§355.701-355.709 [ Subchapter F ] of this title [ chapter (relating to General Reimbursement Methodology for all TDMHMR Medical Assistance Programs) ] and this subchapter. [ Rates are facility specific, determined prospectively, and cost related. A per diem rate for each facility, which is based on the total projected allowable costs for selected cost centers, is divided by the total days of service the facility delivered either in the rate period or in the cost reporting period. ]

(1)

State-operated facilities certified prior to January 1, 2001, will be reimbursed using an interim reimbursement rate and settlement process. [ Reimbursement rates for state-operated facilities are based on the most current costs reported on their cost reports. ]

(A)

Interim reimbursement rates for state-operated facilities are based on the most recent cost report accepted by HHSC.

(B)

Settlement is conducted each state fiscal year by class of facility. If there is a difference between allowable costs and the reimbursement paid under the interim rate, including applied income, for a state fiscal year, federal funds to the state will be adjusted based on that difference.

(2)

A state-operated facility certified on or after January 1, 2001, will be reimbursed using a pro forma rate determined in accordance with §355.702(i) of this title (relating to Method for Cost Determination). A facility will be reimbursed under the pro forma rate methodology until HHSC receives an acceptable cost report which includes at least 12 months of the facility's cost data and is available to be included in the annual interim rate determination process.

[(2)

Costs for each facility are divided into three groups: salaries and benefits, comprehensive medical, and other. These costs are inflated by the factors identified in §355.704 of this title (relating to Determination of Inflation Indices). Each facility will have its own per diem rate.]

[(3)

Reimbursement rates for newly certified state-operated facilities are based on a pro forma model. The pro forma rate is the average of all available similarly sized state-operated facilities' per diem rates for that particular rate year. Newly certified facilities will be required to submit three-month cost reports to reflect costs incurred during the first 90 days of certified operation. These costs will be used to determine the facility's specific per diem rate within 180 days of certification.]

(f)

(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 April 23, 2001.

TRD-200102329

Marina S. Henderson

Executive Deputy Commissioner

Texas Health and Human Services Commission

Earliest possible date of adoption: June 17, 2001

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


Subchapter F. GENERAL REIMBURSEMENT METHODOLOGY FOR ALL MEDICAL ASSISTANCE PROGRAMS

1 TAC §355.781

The Texas Health and Human Services Commission (HHSC) proposes amendments to §355.781, concerning rehabilitative services reimbursement methodology.

Background and Summary of Factual Basis for the Rules

Section 531.021, Government Code, entitled "Administration of Medicaid Program," provides, among other things, that HHSC adopt rules and standards to govern the determination of fees, charges, and rates for medical assistance payments under Chapter 32, Human Resources Code, in consultation with the agencies that operate the Medicaid program. The amendments describe how an interim, uniform, statewide rate with a cost related year-end settlement for each rehabilitative service type in Texas will be established. The amendments also provide that the interim rate will be determined prospectively and at least annually.

Explanation

The costs for rehabilitative services have varied significantly across providers and across services. This variation is caused by providers adjusting their delivery methods and costs in order to address local conditions. This variation in costs has resulted in rate variances from year to year that cause disruption and an inability on the part of the industry to reasonably predict revenue. In order to maintain the flexibility in service delivery rules and bring more stability to costs and rates, the proposed amendments will ensure that individual providers will be reimbursed for the reasonable costs they incur delivering services to meet their local needs.

The amendments specify in subsection (a) that providers are reimbursed a uniform, statewide, interim rate with a cost-related year-end settlement. The interim rate is determined prospectively and at least annually. An interim rate is set for each service type. New subsection (b) defines "interim rate," "service type," and "unit of service." Existing subsection (b), which addresses reimbursement during the initial reimbursement period, and existing subsection (c), which addresses reimbursement during subsequent periods, are deleted, as is a sentence in new subsection (c)(1). Those provisions are no longer necessary because HHSC has collected sufficient reliable cost data to establish interim rates for each service type.

New subsection (d) is revised to delete other provisions that are no longer necessary because HHSC has collected sufficient reliable cost data to establish interim rates for each service type. Language in new subsection (d) is revised to reflect current HHSC usage and to describe the interim rate methodology and allowable and unallowable costs in paragraph (3). New paragraph (4) in subsection (d) describes the year-end settlement process.

Fiscal Note

Don Green, Chief Financial Officer, has determined that for the first five years that the proposed amendments are in effect, there is no anticipated fiscal impact resulting from the adoption of the amendments. No additional costs will be borne by local governments as a result of the proposed amendments. The financial costs to the state will decrease.

Public Benefit

Mr. Green has determined that during the first five years that the proposed amendments are in effect, the public will benefit from adoption of the amendments because they bring more stability to costs and rates and ensuring that individual providers will be reimbursed for the reasonable costs they incur delivering services to meet their local needs.

Small and Micro-business Impact Analysis

The proposed amendments will not result in additional costs to persons required to comply with the rules, nor do the rules have any anticipated adverse effect on small or micro-businesses. The rules will not affect local employment.

Regulatory Analysis

HHSC has determined that none of the proposed amended rules is a "major environmental rule" as defined by §2001.0225, Government Code. "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. The proposed amendments are not specifically intended to protect the environment or reduce risks to human health from environmental exposure.

Takings Impact Assessment

HHSC has assessed the takings impact of the proposed amended rules under Texas Government Code, §2007.043. HHSC has determined that this action does not restrict or limit an owner's right to property that would otherwise exist in the absence of governmental action and therefore does not constitute a taking. The majority of the proposed amendments are administrative, non-substantive, and do not impose any new regulatory requirements. The proposed amended rules are reasonably taken to fulfill requirements of state law.

Public Comment

A hearing to accept oral and written testimony from members of the public concerning the proposal has been scheduled for 9:30 a.m., Wednesday, May 23, 2001, in the Texas Department of Mental Health and Mental Retardation Central Office Auditorium in Building 2 at 909 West 45th Street, in Austin, Texas. Persons requiring an interpreter for the deaf or hearing impaired should contact the department's Central Office operator at least 72 hours prior to the hearing at TDD (512) 206-5330. Persons requiring other accommodations for a disability should notify Tera Cardella, at least 72 hours prior to the hearing at (512) 206-5854 or at the TDY phone number of Texas Relay, 1-800-735-2988.

Public comment may be submitted in writing to Steve Lorenzen, Director, Medicaid Rates Setting, Health and Human Services Commission, by mail addressed to 4900 North Lamar Boulevard, 4th Floor, Austin, Texas 78751, or by facsimile to (512) 424-6585. Comments must be submitted by 5:00 p.m., Monday, June 4, 2001. Further information may be obtained by calling Steve Lorenzen at (512) 424-6633.

Statutory Authority

The amendments are proposed under §531.021(b), Government Code, which requires HHSC to adopt reasonable rules and standards to govern the determination of fees, charges, and rates for medical assistance payments under Chapter 32, Human Resources Code, in consultation with the agencies that operate the Medicaid program; and §531.033, Government Code, which provides the commissioner of health and human services with authority to adopt rules necessary to carry the duties of HHSC under Chapter 531, Government Code.

The proposed amended rules implement §531.021(b), Government Code, concerning the adoption of rules and standards to govern the determination of fees, charges, and rates for medical assistance payments under Chapter 32, Human Resources Code, and §32.0281, Human Resources Code, concerning the adoption of rules regarding Medicaid reimbursement rates.

§355.781.Rehabilitative Services Reimbursement Methodology.

(a)

General information.

(1)

The Texas Health and Human Services Commission (HHSC) will reimburse qualified rehabilitative services providers for rehabilitative services provided to Medicaid-eligible persons with mental illness.

(2)

HHSC determines reimbursement according to §§355.701 - 355.709 of this subchapter, relating to General Reimbursement Methodology for all Texas Department of Mental Health and Mental Retardation Medical Assistance Programs. Rehabilitative services providers are reimbursed a uniform, statewide, interim rate with a cost-related year-end settlement. The interim rate is determined prospectively and at least annually. An interim rate is set for each service type. [ The reimbursement is uniform and determined prospectively and at least annually. Reimbursement may be determined more often if HHSC determines it to be necessary. ]

(b)

Definitions.

(1)

Interim rate--Rate paid to a rehabilitative services provider prior to settlement conducted in accordance with subsection (d)(4) of this section.

(2)

Service type--Types of Medicaid reimbursable rehabilitative services as specified in §419.453 of this title (relating to Definitions); §419.456 of this title (relating to Community Support Services); §419.457 of this title (relating to Day Programs for Acute Needs); §419.458 of this title (relating to Day Programs for Skills Training); §419.459 of this title (relating to Day Programs for Skills Maintenance); and §419.460 of this title (relating to Rehabilitative Treatment Plan Oversight):

(A)

Adult day programs--acute needs;

(B)

Adult day programs--skills training;

(C)

Adult day programs--skills maintenance;

(D)

Child day program--acute needs;

(E)

Child day program--skills training;

(F)

Individual community support services--professional;

(G)

Individual community support services--para-professional;

(H)

Small group community support services--professional;

(I)

Small group community support services--para-professional; and

(J)

Rehabilitative treatment plan oversight.

(3)

Unit of service--The amount of time an individual, eligible for Medicaid rehabilitative services or non-Medicaid rehabilitative services (or parent or guardian of the person of an eligible minor), is engaged in face-to-face contact with a person described in §419.455(d) of this title (relating to Rehabilitative Services: General Requirements) plus any time spent by such person traveling to and from the off-site location of the eligible individual to provide the contact . The units of service are as follows:

(A)

Individual and group community support services--up to 1/2 hour;

(B)

Day programs--up to 1 hour; and

(C)

Rehabilitative treatment plan oversight--one contact.

[(b)

Reimbursement during initial reimbursement period.]

[(1)

For the initial reimbursement period beginning January 1, 1997 and until such time as HHSC determines that cost data collected as described in subsection (d) of this section are reliable, rehabilitative services providers will be reimbursed utilizing estimated costs to determine pro forma rates. The pro forma rates will be developed based on the most recent salary data obtained from the Texas Medical Association and the National Survey of Hospital and Medical School Salaries. Salaries will be based on median salary rates and adjusted as appropriate for Texas-specific salaries. The Personal Consumption Expenditures (PCE) Chain-Type Index will be used to inflate the 1994 salaries to the rate period. Rates are cost based using staffing requirements as specified in §419.455 of this title (relating to Rehabilitative Services: General Requirements); §419.456 of this title (relating to Community Support Services); §419.457 of this title (relating to Day Programs for Acute Needs); §419.458 of this title (relating to Day Programs for Skills Training); §419.459 of this title relating to Day Programs for Skills Maintenance); and §419.460 of this title (relating to Rehabilitative Treatment Plan Oversight).]

[(2)

HHSC will collect cost data as described in subsection (d) of this section.]

[(3)

HHSC will calculate rates using the process described in subsection (e) of this section when reliable rehabilitative services provider cost data becomes available.]

[(c)

Reimbursement during subsequent periods. At such time that reliable cost data become available the reimbursement will be developed using HHSC's cost report process as described in subsections (d) and (e) of this section.]

(c)

[ (d) ] Reporting of Costs.

(1)

Cost reporting. Rehabilitative services providers must submit information quarterly, unless otherwise specified, on a cost report formatted according to HHSC's specifications. [ From the data, HHSC will develop and implement cost-based, statewide, uniform reimbursements for rehabilitative services. ] Rehabilitative services providers must complete the cost report according to the rules and specifications set forth in this section.

(2)

Reporting period and due date. Rehabilitative services providers must prepare the cost report to reflect rehabilitative services provided during the designated cost report reporting period. The cost reports must be submitted to HHSC no later than 45 days following the end of the designated reporting period unless otherwise specified by HHSC.

(3)

Extension of the due date. HHSC may grant extensions of due dates for good cause. A good cause is one that the rehabilitative services provider could not reasonably be expected to control. Rehabilitative services providers must submit requests for extensions in writing to HHSC before the cost report due date. HHSC will respond to requests within 10 workdays of receipt.

(4)

Failure to file an acceptable cost report. If a rehabilitative services provider fails to file a cost report according to all applicable rules and instructions, HHSC will notify TDMHMR to place the rehabilitative services provider on hold until the rehabilitative services provider submits an acceptable cost report.

(5)

Allocation method. If allocations of cost are necessary, rehabilitative services providers [ provider ] must use and be able to document reasonable methods of allocation. HHSC adjusts allocated costs if HHSC considers the allocation method to be unreasonable. The rehabilitative services provider must retain work papers supporting allocations for a period of three years or until all audit exceptions are resolved (whichever is longer).

(6)

Cost report certification. Rehabilitative services providers must certify the accuracy of cost reports submitted to HHSC in the format specified by HHSC. Rehabilitative services providers may be liable for civil and/or criminal penalties if they misrepresent or falsify information.

(7)

Cost data supplements. HHSC may require additional financial and statistical information other than the information contained on the cost report.

(8)

Review of cost reports. HHSC reviews each cost report to ensure that financial and statistical information submitted conforms to all applicable rules and instructions. The review of the cost report includes a desk audit. HHSC reviews all cost reports according to the criteria specified in §355.703 of this title (relating to Basic Objectives and Criteria for Review of Cost Reports). If a rehabilitative services provider fails to complete the cost report according to instructions or rules, HHSC returns the cost report to the rehabilitative services provider for proper completion. HHSC may require information other than that contained in the cost report to substantiate reported information.

(9)

On-site audits. HHSC may perform on-site audits on all rehabilitative services providers that participate in the Medicaid program for rehabilitative services. HHSC determines the frequency and nature of such audits but ensures that they are not less than that required by federal regulations related to the administration of the program.

(10)

Notification of exclusions and adjustments. HHSC notifies rehabilitative services providers of exclusions and adjustments to reported expenses made during desk reviews and on-site audits of cost reports.

(11)

Access to records. Each rehabilitative services provider must allow access to all records necessary to verify cost report information submitted to HHSC. Such records include those pertaining to related-party transactions and other business activities engaged in by the rehabilitative services provider. If a rehabilitative services provider does not allow inspection of pertinent records within 14 days following written notice HHSC will notify TDMHMR to place the rehabilitative services provider on vendor until access to the records is allowed. If the rehabilitative services provider continues to deny access to records, TDMHMR may terminate the rehabilitative services provider agreement with the rehabilitative services provider.

(12)

Record keeping requirements. Rehabilitative services providers must maintain service delivery records and eligibility determination for a period of five years or until any audit exceptions are resolved (whichever is later). Rehabilitative services providers must ensure that records are accurate and sufficiently detailed to support the financial and statistical information contained in cost reports.

(13)

Failure to maintain adequate records. If a rehabilitative services provider fails to maintain adequate records to support the financial and statistical information reported in cost reports, HHSC allows 30 days for the rehabilitative services provider to bring record keeping into compliance. If a rehabilitative services provider fails to correct deficiencies within 30 days from the date of notification of the deficiency, HHSC will notify TDMHMR to terminate the rehabilitative services provider agreement with the rehabilitative services provider.

(d)

[ (e) ] Reimbursement determination. HHSC determines reimbursement in the following manner:

(1)

Inclusion of certain reported expenses. Rehabilitative services providers must ensure that all requested costs are included in the cost report.

(2)

Data collection. HHSC collects several different kinds of data. These include the number of units of service [ rehabilitative services ] that individuals receive and cost data, including [ the number of direct care service minutes by staff. The cost data will include ] direct costs, programmatic indirect costs, and general and administrative overhead costs. These costs include salaries, benefits, and other costs. Other costs include nonsalary related costs such as building and equipment maintenance, repair, depreciation, amortization, and insurance expenses; employee travel and training expenses; utilities; and material and supply expenses.

[(A)

Server time is reported by the type of service delivered.]

[(B)

Server time can be given by professionals and paraprofessionals. These include, but are not necessarily limited to physicians, psychologists, nurses, social workers, counselors, therapists, therapy associates, and paraprofessionals. HHSC collects the wages, salaries, benefits, and other costs to determine reimbursement.]

[(C)

Programmatic indirect costs include salaries, benefits, and other costs of the rehabilitative service programs that are indirectly related to the delivery of rehabilitative services to individuals. General administrative overhead includes the salaries, benefits, and other costs of operations of the rehabilitative services provider that, while not directly part of the rehabilitative program, constitute costs which support the operations of the rehabilitative program.]

(3)

Interim rate methodology. HHSC projects and adjusts reported costs from the historical reporting period to determine the interim rate for the prospective reimbursement period. Cost projections adjust the allowed historical costs based on significant changes in cost-related conditions anticipated to occur between the historical cost period and the prospective reimbursement period. Changes in cost-related conditions include, but are not limited to, inflation or deflation in wage or price, changes in program utilization and occupancy, modification of federal or state regulations and statutes, and implementation of federal or state court orders and settlement agreements. Costs are adjusted for the prospective reimbursement period by a general cost inflation index as specified in §355.704 of this tile (relating to Determination of Inflation Indices). [ Reimbursement methodology. HHSC determines the reimbursement rate using the following method: ]

[(A)

Projected and adjusted costs. Reported costs are projected and adjusted prior to calculations for determining reimbursement. HHSC uses reasonable methods for projecting costs from the historical reporting period to the prospective reimbursement period. The historical reporting period is the time period covered by the cost report. Cost projections adjust the allowed historical costs for significant changes in cost related conditions anticipated to occur between the historical cost period and the prospective reimbursement period. Significant conditions include, but are not necessarily limited to, wage and price inflation or deflation, changes in program utilization and occupancy, modification of federal or state regulations and statutes, and implementation of federal or state court orders and settlement agreements. HHSC determines reasonable and appropriate economic adjusters to calculate the projected expenses. The PCE, which is based on data from the U.S. Department of Commerce, is the most general measure of inflation and is applied to most salaries, materials, supplies, and services when other specific inflators are not appropriate. The three payroll tax inflators, FICA (Social Security), FUTA/SUTA (federal and state unemployment) and WCI (Workers' Compensation) are based on data obtained from the Statistical Abstract of the United States, the Texas Employment Commission, and the Texas Board of Insurance, respectively. For non-state operated rehabilitative services providers, wage inflation factors are based on wage and hour survey information submitted on cost reports or special surveys or the PCE, when wage and hour survey information is unavailable. For state-operated rehabilitative services providers, the inflation factor is based on wage increases approved by the Texas Legislature. HHSC adjusts reimbursement if new legislation, regulations, or economic factors affect costs, as specified in §355.706 of this title (relating to Adjusting Reimbursement).]

(A)

[ (B) ] Reimbursement determination. For each service type, [ type of rehabilitative service ] each rehabilitative services provider's projected cost per unit of service is calculated. The mean rehabilitative services provider cost per unit of service is calculated, and the statistical outliers (those rehabilitative services providers whose unit costs exceed plus or minus (+/-) two standard deviations of the mean rehabilitative services provider cost) are removed. After removal of the statistical outliers, the mean cost per unit of service is calculated. This mean cost per unit of service becomes the recommended reimbursement per unit of service.

(B)

[ (C) ] Reimbursement setting authority. HHSC establishes the reimbursement rate. HHSC sets reimbursements that, in its opinion, are within budgetary constraints, adequate to reimburse the cost of operations for an economic and efficient rehabilitative services provider, and justifiable given current economic conditions.

(C)

[ (D) ] Reviews of cost report disallowances. A rehabilitative services provider may request notification of the exclusions and adjustments to reported expenses made during either desk reviews or on-site audits, according to §355.705 of this title (relating to Notification). Rehabilitative services providers may request an informal review and, if necessary, an administrative hearing to dispute the action taken by HHSC under §355.707 of this title (relating to Reviews and Administrative Hearings).

(D)

Allowable and unallowable costs. Cost reports may only include costs that meet the requirements as specified in §355.708 of this title (relating to Allowable and Unallowable Costs).

[(E)

Requirements for allowable costs. Allowable costs must be:]

[(i)

necessary and reasonable for the proper and efficient administration of rehabilitative services for which TDMHMR has contracted;]

[(ii)

authorized or not prohibited under state or local laws or regulations;]

[(iii)

consistent with any limitations or exclusions described in this section, federal or state laws, or other governing limitations as to types or amounts of cost items;]

[(iv)

consistent with policies, regulations, and procedures that apply to both rehabilitative services and other activities of the organization of which the rehabilitative services provider is a part;]

[(v)

treated consistently using generally accepted accounting principles appropriate to the circumstances;]

[(vi)

not allowable to or included as a cost of any other program in either the current or a prior period; and]

[(vii)

net of all applicable credits.]

[(F)

Reasonableness. A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by an ordinarily prudent person in the conduct of competitive business. In determining the reasonableness of a given cost, HHSC considers the following:]

[(i)

whether the cost is of a type generally recognized as ordinary and necessary for the provision of rehabilitative services or the performance under the provider agreement;]

[(ii)

the restraints or requirements imposed by generally accepted sound business practices, arm's length bargaining, federal and state laws and regulations, and contract terms and specifications; and]

[(iii)

the action that a prudent person would take in the circumstances, considering his/her responsibilities to the public, the government, employees, clients, shareholders, and/or members, and the fulfillment of the purpose for which the business was organized.]

[(G)

Allowable costs. Costs associated with rehabilitative services for persons with mental illness for which a claim is submitted must be found to be allowable as described in federal Circular OMB-A87, with the following exceptions:]

[(i)

Equipment is defined as having a useful life of more than one year and a value of $2500 or more.]

[(ii)

Legal expenses to prosecute claims against the state of Texas or the United States are unallowable.]

(4)

Settlement process. At the end of each reimbursement period, HHSC will compare the amount reimbursed at the interim rate for each service type and the rehabilitative services provider's costs for each service type, as submitted on its cost report in accordance with subsection (c) of this section.

(A)

If a rehabilitative service provider's costs are less than 95% of the amount reimbursed at the interim rate, HHSC will demand that payment be made to TDMHMR by the rehabilitative services provider of the difference between its allowable costs and 95% of the amount reimbursed at the interim rate for each service type.

(i)

A rehabilitative services provider may request an administrative hearing in accordance with 25 TAC Chapter 409, Subchapter B (relating to Adverse Actions) to contest the demand for payment.

(ii)

If the rehabilitative services provider does not request an administrative hearing to contest the demand for payment, the provider must pay TDMHMR the amount due within 30 days after the demand for payment was received by the provider. If TDMHMR has not received payment of the amount due within this time period, TDMHMR may impose a vendor hold on or recoup Medicaid payments due to the rehabilitative services provider.

(B)

If a rehabilitative services provider's costs exceed the amount reimbursed at the interim rate, TDMHMR will reimburse the rehabilitative services provider the difference between its allowable costs and the reimbursement at the interim rate up to 125% of the interim rate for each service type. Prior to reimbursement, TDMHMR will notify the rehabilitative services provider of the amount owed to the provider.

[(f)

Definition. "Unit of service" or "unit of rehabilitative service" means:]

[(1)

for community support services--a direct contact lasting up to 30 minutes including the time spent by the staff person traveling to and from the location at which the direct contact occurs;]

[(2)

for day programs--one hour; and]

[(3)

for rehabilitative treatment plan oversight--one direct contact.]

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 April 23, 2001.

TRD-200102330

Marina S. Henderson

Executive Deputy Commissioner

Texas Health and Human Services Commission

Earliest possible date of adoption: June 17, 2001

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