TITLE 1.ADMINISTRATION

Part 5. TEXAS BUILDING AND PROCUREMENT COMMISSION

Chapter 111. EXECUTIVE ADMINISTRATION DIVISION

Subchapter B. HISTORICALLY UNDERUTILIZED BUSINESS PROGRAM

1 TAC §111.23

(Editor's note: The text of the following section proposed for repeal will not be published.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

The Texas Building and Procurement Commission proposes the repeal of 1 TAC §111.23, concerning Graduation Procedures used in the HUB Program. The rule sets out the requirements necessary for a Historically Underutilized Businesses (HUB) to be graduated. The proposed repeal is necessary because the process no longer serves its intended purpose and discourages minority and women-owned businesses from reaching their maximum growth potential.

Ms. Cindy Reed, Deputy Executive Director, has determined for the first five year period the rule is repealed there will be no fiscal implications for the state and local governments as a result of the repeal.

Ms. Reed has further determined that for each year of the first five year period the repeal is in effect, the public benefit anticipated as a result of the repeal will be negligible. There will be no effect on large, small or micro-businesses. There is no anticipated economic cost to persons who are required to comply with the rule and there is no impact on local employment.

Comments on the proposals may be submitted to Cynthia de Roch, General Counsel, Texas Building and Procurement Commission, P.O. Box 13047, Austin, Texas 78711-3047. Comments may also be sent via email to cynthia.deroch@tbpc.state.tx.us. Comments must be received no later than 30 days from the date of publication of the proposal in the Texas Register .

The repeal is proposed under the authority of Chapter 2161.002 of the Texas Government Code.

The following code is affected by this rule: Government Code, Title 10, Chapter 2161, §§2161.061, 2161.062, 2161.066, & 2161.182.

§111.23.Graduation Procedures.

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 June 23, 2004.

TRD-200404199

Cynthia de Roch

General Counsel

Texas Building and Procurement Commission

Earliest possible date of adoption: August 8, 2004

For further information, please call: (512) 463-4257

1 TAC §111.27

The Texas Building and Procurement Commission proposes amendments to 1 TAC §111.27, concerning Historically Underutilized Businesses (HUB) Forum Programs for state agencies. The proposed amendments delete the requirements to advertise required HUB Forums in trade publications and permits advertising through existing means, including the Centralized Master Bidders List, the HUB Directory and the TBPC's website without incurring costs and without compromising the intent/purpose of administering the HUB Forums;

Provide for administering HUB Forums at a location other than the offices of the state agency when state agency offices will not accommodate HUB Forum participants; and

Provide for administering HUB Forums cooperatively with other agencies.

Ms. Cindy Reed, Deputy Executive Director, has determined, for the first five year period the rule is in effect, enforcing or administering the rule will not have foreseeable implications relating to costs or revenues of state or local governments.

Ms. Reed has further determined that for each year of the first five year period the proposed amendments are in effect, the public benefit anticipated as a result of these amendments will be a long term reduction of costs associated with advertising HUB Forums. There will be no effect on large, small or micro-businesses and there will be no impact on local employment.

Comments on the proposals may be submitted to Cynthia de Roch, General Counsel, Texas Building and Procurement Commission, P.O. Box 13047, Austin, Texas 78711-3047. Comments may also be sent via email to cynthia.deroch@tbpc.state.tx.us . Comments must be received no later than 30 days from the date of publication of the proposal in the Texas Register .

The amendments are proposed under the authority of Chapter 2161 of the Texas Government Code.

The following code is affected by this rule: Government Code, Title 10, Chapter 2161, §§2161.002, 2161.063, and 2161.066.

§111.27.HUB Forum Programs for State Agencies.

(a) In accordance with Texas Government Code, §2161.066, the Commission shall design a program of forums in which historically underutilized businesses are invited by state agencies to deliver technical and business presentations that demonstrate their capability to do business with the agency:

(1) to senior managers and procurement personnel at state agencies that acquire goods and services of a type supplied by the historically underutilized businesses; and

(2) to contractors/vendors with the state who may be subcontracting for goods and services of a type supplied by the historically underutilized businesses.

(b) The forums shall be held at state agency offices. Each agency with a biennial appropriation exceeding $10 million shall participate in the forums by sending senior managers and procurement personnel to attend relevant presentations. The agency will inform their contractors/vendors about presentations relevant to subcontracting opportunities for HUBs and small businesses. The commission and each agency that has a HUB coordinator shall:

(1) design its own forum program and model the program, to the extent appropriate, following the format established by the commission;

(2) sponsor presentations by HUBs at the agency; and

[ (3) advertise the forums in appropriate trade publications to target HUBs; and]

(3) [ (4) ] identify and invite HUBs to make marketing presentations on the types of goods and services they provide.

(c) Agencies may elect to implement forums individually or cooperatively with other agencies. The agency's forum programs may include, but are not limited to, the following initiatives:

(1) providing marketing information that will direct HUBs to key staff within the agency;

(2) requesting other state agencies to assist in the preparation and planning of the forum when necessary;

(3) informing HUBs about potential contract opportunities and future awards; and

(4) preparing an annual report of each sponsored and/or cosponsored forum.

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 June 23, 2004.

TRD-200404203

Cynthia de Roch

General Counsel

Texas Building and Procurement Commission

Earliest possible date of adoption: August 8, 2004

For further information, please call: (512) 463-4257

Chapter 117. SUPPORT SERVICES DIVISION

Subchapter B. BUSINESS MACHINE REPAIR

1 TAC §117.41

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

The Texas Building and Procurement Commission proposes the repeal of 1 TAC §117.41, concerning the Business Machine Repair Services. The chapter establishes the procedures that TBPC is to follow regarding the repair of business machines for state agencies, the legislature, and legislative agencies. The proposed repeal is necessary because the agency no longer repairs business machines.

Dan Contreras, Deputy Executive Director, has determined for the first five year period the rule is repealed, there will be no fiscal implication for the state or local governments as a result of the repeal.

Mr. Contreras has further determined that for each year of the first five year period the repeal is in effect, the public benefit anticipated as a result of repealing of the rule will be negligible. There will be no effect on large, small or micro-businesses. There is no anticipated economic cost to persons who are required to comply with the rule and there is no impact on local employment.

Comments on the proposals may be submitted to Cynthia de Roch, General Counsel, Texas Building and Procurement Commission, P.O. Box 13047, Austin, Texas 78711-3047. Comments may also be sent via email to cynthia.deroch@tbpc.state.tx.us. Comments must be received no later than 30 days from the date of publication of the proposal in the Texas Register.

The repeal is proposed under the authority of Chapter 2172 of the Texas Government Code, Title 10, Subtitle §2172.002.

The following code is affected by this rule: Government Code, Title 10, Subtitle D, Chapter 117.

§117.41.Business Machine Repair Services.

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 June 23, 2004.

TRD-200404200

Cynthia de Roch

General Counsel

Texas Building and Procurement Commission

Earliest possible date of adoption: August 8, 2004

For further information, please call: (512) 463-4257

Subchapter C. CENTRAL STORE

1 TAC §117.51

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

The Texas Building and Procurement Commission proposes the repeal of 1 TAC §117.51, concerning the Central Store. The chapter establishes the procedures that TBPC is to follow regarding the sale of small, desktop supply items, how the agencies are to pay for their purchases, and the monthly reports required of the Commission. The proposed repeal is necessary because the agency no longer operates the Central Store.

Dan Contreras, Deputy Executive Director, has determined for the first five year period the rule is repealed, there will be no fiscal implication for the state or local governments as a result of the repeal.

Mr. Contreras has further determined that for each year of the first five year period the repeal is in effect, the public benefit anticipated as a result of repealing of the rule will be negligible. There will be no effect on large, small or micro-businesses. There is no anticipated economic cost to persons who are required to comply with the rule and there is no impact on local employment.

Comments on the proposals may be submitted to Cynthia de Roch, General Counsel, Texas Building and Procurement Commission, P.O. Box 13047, Austin, Texas 78711-3047. Comments may also be sent via email to cynthia.deroch@tbpc.state.tx.us. Comments must be received no later than 30 days from the date of publication of the proposal in the Texas Register.

The repeal is proposed under the authority of Chapter 2172 of the Texas Government Code, Subtitle §2172.001.

The following code is affected by this rule: Government Code, Title 10, Subtitle D, Chapter 117.

§117.51.Operation Authority.

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 June 23, 2004.

TRD-200404201

Cynthia de Roch

General Counsel

Texas Building and Procurement Commission

Earliest possible date of adoption: August 8, 2004

For further information, please call: (512) 463-4257

Subchapter D. PRINTING

1 TAC §117.61

The Texas Building and Procurement Commission proposes amendments to 1 TAC §117.61, concerning the Printing Services. The chapter establishes how TBPC is to assess and evaluate the printing assistance it offers state agencies.

Dan Contreras, Deputy Executive Director, has determined for the first five year period the amendments are in effect, there will be no fiscal implication for the state or local governments as a result of the amendments.

Mr. Contreras has further determined that for each year of the first five year period the amendments are in effect, the public benefit anticipated as a result of the amendments will be negligible. There will be no effect on large, small or micro-businesses. There is no anticipated economic cost to persons who are required to comply with the rule and there is no impact on local employment.

Comments on the proposals may be submitted to Cynthia de Roch, General Counsel, Texas Building and Procurement Commission, P.O. Box 13047, Austin, Texas 78711-3047. Comments may also be sent via email to cynthia.deroch@tbpc.state.tx.us. Comments must be received no later than 30 days from the date of publication of the proposal in the Texas Register.

The amendments are proposed under the authority of Chapter 2172 of the Texas Government Code, Title 10, Subtitle §2172.002.

The following code is affected by this rule: Government Code, Title 10, Subtitle D, Chapter 117.

§117.61.Printing.

(a) Pursuant to Texas Government Code, Title 10, Subtitle D, §2172.003, the Commission [ commission ] may provide assistance to any state agency regarding their printing activities. Assistance can be provided by telephone, fax, letter, e-mail or in person.

(b) The Commission [ commission ] assesses and evaluates printing activities to ensure the best interests of the State of Texas are met. The Commission [ commission ] may make recommendations to state agencies that will increase the productivity and cost-effectiveness of their printing operations. The assessment may include but is not limited to an appraisal of equipment, customer base, sales, printing volume, costs, and personnel.

(c) The Commission [ commission ] adopted the Council on Competitive Government's (CCG) Cost Methodology as a baseline for evaluating and comparing cost of state agency printing operations. All state agency print [ printing ] shops in Travis County (except higher education) operate under a Franchise Agreement ("Agreement") with the Commission [ commission ], which allows state agencies currently operating a printing shop to maintain direct control with general oversight provided by the commission through Franchise Agreements. Failure to sign the Agreement will eliminate the authority for an agency to operate a print [ printing ] shop. The Agreement requires each printing shop to utilize the CCG Cost Methodology in determining the cost of printing. Each print [ The commission requires that each printing ] shop shall provide quarterly data to the Commission, which will summarize [ commission. The commission summarizes ] this information in quarterly and annual reports.

(d) The Commission [ commission ] reviews state agency requisitions for new print [ printing ] shop equipment, including copiers/duplicators and other printing devices used in quick copy operations. To complete the review, the state agency must provide written documentation to the commission. This documentation may include but is not limited to:

(1) a [ A ] summary narrative justifying the proposed purchase, rent or lease of equipment;

(2) a [ A ] description of the method of finance;

(3) a [ A ] detailing of the model(s) of printing equipment the agency currently has that it plans to replace (if applicable);

(4) a [ A ] detailing of the model(s) of printing equipment the agency plans to acquire;

(5) a [ A ] detailing of current annual costs for equipment to be replaced (if applicable);

(6) a [ A ] detailing of the estimated annual cost for the proposed equipment;

(7) the [ The ] cost benefit of proposed equipment;

(8) the [ The ] estimated volume of work which may be processed through the proposed equipment;

(9) a [ A ] summary of the equipment(s) enhanced features;

(10) the [ The ] number of hours per day the proposed equipment will run;

(11) the [ The ] number of shifts the proposed equipment will be operated on a daily basis; and

(12) miscellaneous [ Miscellaneous ] information that may be pertinent as a consequence of other information supplied by the agency.

(e) The Commission [ commission ] shall assist state agencies with expediting the production of printing and graphic arts by serving as a source of information, facilitating disputes, hosting meetings or performing other services.

(f) A roster of franchised printing shops is maintained by the commission. This roster includes printing shop equipment, facilities, special capabilities and staffing. The roster will be provided to requesting entities.

(g) The Commission [ commission ] will work with state agencies to ensure that printing services and supplies are purchased in the most economical manner possible. A vendor listing by commodity and services is maintained to maximize information regarding private sector suppliers. A summary vendor listing will be provided to requesting entities.

(h) The Commission [ commission ] will work with state agencies to coordinate the consolidation of printing shops when the agencies involved determine a consolidation is appropriate.

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 June 23, 2004.

TRD-200404205

Cynthia de Roch

General Counsel

Texas Building and Procurement Commission

Earliest possible date of adoption: August 8, 2004

For further information, please call: (512) 463-4257

Part 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION

Chapter 355. MEDICAID REIMBURSEMENT RATES

Subchapter F. REIMBURSEMENT METHODOLOGY FOR ALL PROGRAMS SERVING PERSONS WITH MENTAL ILLNESS AND MENTAL RETARDATION

1 TAC §355.746

The Texas Health and Human Services Commission (HHSC) proposes to amend §355.746, Subchapter F, concerning reimbursement methodology for Mental Retardation (MR) Service Coordination in its Medicaid Reimbursement Rates chapter. This proposed rule amends §355.746 to create the reimbursement methodology for Mental Retardation (MR) Service Coordination that is separate from the reimbursement methodology for Mental Health (MH) Case Management. This separation of MR Service Coordination and MH Case Management is consistent with the separation of these services in the Texas Department of Mental Health and Mental Retardation (TDMHMR) programmatic rules. The Mental Retardation Local Authority (MRLA) program was eliminated on September 1, 2003; and this rule is being modified to reflect that and to create the MR Service Coordination rules. This rule is also being amended to change the references from the general cost determination rules of Subchapter F to the cost determination process rules of Subchapter A. That reference change will achieve consistency with the rules used for other HHSC long-term care programs. Also, references to a settle-up process are being removed; under the proposed rule, the rate will no longer be adjusted after the establishment of a cost-based rate. The proposed rule replaces the references to "TDMHMR" with references to "TDMHMR or its successor agency". Those proposed reference changes recognize the impending transfer of TDMHMR's program responsibilities to other agencies pursuant to H.B. 2292, 78th Legislature (R.S.). Proposed changes are to be effective August 31, 2004.

Tom Suehs, Deputy Executive Commissioner for Financial Services, has determined that for each year of the first five-year period that the proposed amendment is in effect, there are no foreseeable fiscal implications relating to costs or revenues of state or local government.

Ed White, Director of HHSC Rate Setting and Forecasting, has determined that, for each year of the first five-year period the proposed amendment is in effect, the public benefit anticipated as a result of enforcing the section is that the reimbursement methodology for Mental Retardation Service Coordination will: (a) reflect the structure of the TDMHMR programmatic rules by separating the MR Service Coordination and MH Case Management programs into separate reimbursement methodology rules; (b) reflect use of the cost determination process rules consistent with all HHSC long-term care programs; (c) reflect the elimination of the settle-up process after the payment rates have been established and paid to providers; and (d) recognize the impending transfer of TDMHMR's program responsibilities to agencies created by H.B. 2292, 78th Legislature (R.S.). There is no anticipated impact on small 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 amendments. There are no anticipated economic costs to persons required to comply with the proposed amendment. There is no anticipated impact on a local economy.

Under §2007.003(b) of the Government Code, HHSC has determined that Chapter 2007 of the Government Code does not apply to this proposed rule. The changes made by this rule do not implicate a recognized interest in private real property. Accordingly, HHSC is not required to complete a takings impact assessment regarding this rule.

Comments concerning the proposed amendment may be submitted in writing to Lupita Villarreal, Rate Analysis, by mail to 1100 West 49th Street, Mail Code H-400, Austin, Texas 78756-3101, by fax to 512/491-1998,or by e-mail to lupita.villarreal@hhsc.state.tx.us within 30 days of publication of this proposal in the Texas Register . For further information regarding the proposal or to make the proposal available for public review, contact local offices of DHS or Lupita Villarreal at (512) 491-1178 in HHSC's Rate Analysis Department.

The amendment is proposed under the Texas Government Code, §531.033, which provides the executive commissioner of HHSC with broad rulemaking authority; the Texas Government Code, §531.021(a), and the Texas Human Resources Code, §32.021(a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas; and the Texas Government Code, §531.021(b), which provides HHSC with the authority to propose and adopt rules governing the determination of Medicaid reimbursements.

The proposed amendment affects the Texas Government Code, Chapter 531, and the Texas Human Resources Code, Chapter 32.

§355.746.Reimbursement Methodology for Mental Retardation (MR) [ MRLA ] Service Coordination.

(a) The Texas Department of Mental Health and Mental Retardation (TDMHMR) or its successor agency reimburses qualified authorities for service coordination provided to Medicaid-eligible individuals who are eligible for service coordination and are enrolled in the MR [ MRLA ] program in accordance with program rules [ 25 TAC, Chapter 409, Subchapter L (relating to Mental Retardation Local Authority (MRLA) Program) ]. HHSC determines reimbursement for MR service coordination. Reimbursement is:

(1) uniform statewide;

(2) prospective; and

(3) cost related [ with a year-end settlement ].

(b) Service coordination rates are set for services provided to individuals with mental retardation or a related condition as defined in program rules established by TDMHMR or its successor agency. [ who are enrolled in and receiving services through the MRLA Program; ]

(c) Local authority qualifications. 42 U.S.C. §1396n(g) is invoked to limit the provision of service coordination to the state mental retardation authorities, [ the state mental health authorities, ] TDMHMR or its successor agency , or its designated local authorities authorized under §534.054 of the Texas Health and Safety Code, which offer a service delivery system of required services as outlined in §534.053 of the Texas Health and Safety Code.

(d) Rules and procedures. TDMHMR or its successor agency has implemented rules and procedures to ensure that service coordination is provided by persons who meet the requirements specified by TDMHMR or its successor agency and is provided in compliance with federal and state laws, rules, and regulations.

(e) Reimbursement methodology. HHSC determines reimbursement according to §355.101 [ §355.701 ] of this title (relating to Introduction [ General Specifications ]). HHSC may also adjust reimbursement if new legislation, regulations, or economic factors effect costs, as described in [ As specified in ] §355.109 [ §355.706 ] of this title (relating to Adjusting Reimbursement [ Rates ] When New Legislation, Regulations, or Economic Factors Affect Costs), [ HHSC may also adjust reimbursements ].

(1) Local [ MRLA ] authorities will be reimbursed a statewide rate comprising a modeled rate plus a statewide weighted average associated service add-on.

(A) The modeled rate is based on cost calculations that include a statewide weighted average hourly wage for persons who provide service coordination as 100 percent of their job responsibilities, a predetermined caseload size, a statewide weighted average supervisory wage rate and span of control, and a statewide weighted average benefits factor.

(B) The associated service add-on includes clerical and support costs, travel and training costs, and other allowable operating costs (e.g., rent, utilities, office supplies, administration, and depreciation) necessary to provide service coordination.

[ (2) At the end of each reimbursement period HHSC will compare the difference between the statewide rate and each MRLA authority's service coordination costs as submitted on its cost report in accordance with subsection (g) of this section.]

[ (A) If a MRLA authority's costs are less than 95 percent of the statewide rate, the MRLA authority will pay TDMHMR the difference between that MRLA authority's costs and 95 percent of the statewide rate. The MRLA authority will be notified of the amount due to TDMHMR by certified mail.]

[ (i) The MRLA authority will have 30 days to make payment. If payment is not received from the MRLA authority within 30 days of the date that the notice was received, as specified on the certified mail receipt, HHSC will notify TDMHMR to place the MRLA authority on vendor hold.]

[ (ii) A MRLA authority that has been placed on vendor hold may request an administrative hearing in accordance with §355.707 of this title (relating to Reviews and Administrative Hearings).]

[ (B) If a MRLA authority's costs exceed the statewide rate, TDMHMR will reimburse the MRLA authority its costs up to 125 percent of the statewide rate. TDMHMR will notify the local authority by certified mail within 30 days of the date that the notice of the amount due to the local authority was received, as specified on the certified mail receipt.]

(2) [ (3) ] At such time as HHSC determines that cost data collected as described in subsection (g) of this section are reliable, statewide reimbursement rates will be developed based on the cost data submitted by Local [ MRLA ] authorities in the following manner:

(A) Total allowable costs for each provider for each rate will be determined from analyzing the allowable historical costs reported on the cost report.

(B) Each provider's total allowable costs are projected from the historical cost reporting period to the prospective reimbursement period using inflation factors according to §355.108 [ §355.704 ] of this title (relating to Determination of Inflation Indices) for each covered contact.

(C) Each provider's projected cost per unit of service is calculated. The mean provider cost per contact is calculated, and the statistical outliers (those providers whose cost per contact exceeds plus or minus (+/-) two standard deviations from the mean provider cost per contact) are removed. After removal of the statistical outliers, the mean cost per contact is calculated. This mean cost per contact becomes the recommended cost per contact. [ Following each annual reimbursement period, allowable costs will be compared to reimbursement and any resulting monetary reconciliation will be made in accordance with paragraph (2) of this subsection. ]

(f) Reimbursable unit of service.

(1) The unit of service upon which reimbursement is made is a face-to-face contact with a Medicaid-eligible individual eligible for MR [ MRLA ] service coordination in accordance with program rules established by TDMHMR or its successor agency [ 25 TAC, §409.505 (relating to Eligibility Criteria) ].

(2) Reimbursement is limited to one unit of service per Medicaid-eligible individual per month.

(g) Reporting of costs. HHSC or its designee collects from Local [ MRLA ] authorities statistical and cost data. The statistical data include, but are not limited to, the total number of individuals receiving service coordination, and the number of Medicaid-eligible individuals receiving service coordination. The cost data include direct costs, programmatic indirect costs, and general and administrative costs including salaries, benefits, and non-labor costs.

(1) Cost reports. Each Local [ MRLA ] authority must submit financial and statistical information in a cost report or survey format designated by HHSC or its designee. The cost report will capture the expenses of the Local [ MRLA ] authority including salaries and benefits, administration, building and equipment, utilities, supplies, travel, and indirect overhead costs related to the provision of service coordination. Only allowable cost information is used to compile the cost base . [ , as defined in §355.741 of this title (relating to Definitions and General Specifications) and ] Each Local authority must follow the guidelines in determining whether a cost is allowable or unallowable as specified in §355.102 & §355.103 [ §355.708 ] of this title (relating to General Principles of Allowable and Unallowable Costs and Specifications for Allowable and Unallowable Costs). Local authorities must follow the cost-reporting guidelines as specified in §355.105 of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures). Revenues must be reported on the cost report in accordance with §355.104 of this title (relating to Revenues).

(A) Accounting requirements. All information submitted on the cost reports must be based upon the accrual method of accounting unless the governmental entity operates on a cash or modified accrual basis. The Local [ MRLA ] authority must complete the cost report according to the prescribed statement of allowable and unallowable costs [ as referenced ] in accordance with §355.102 & §355.103 [ §355.702 ] of this title (relating to General Principles of Allowable and Unallowable Costs and Specifications for Allowable and Unallowable Costs [ Method of Cost Determination ]). Cost reporting should be consistent with generally accepted accounting principles (GAAP) in this subchapter. In cases in which cost reporting rules conflict with GAAP, Internal Revenue Service, or other authorities, the cost reporting rules take precedence.

(B) Reporting period. The Local [ MRLA ] authority must prepare the cost report according to §355.105 [ §355.702 ] of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures [ Method of Cost Determination ]).

(2) Exclusions or adjustments. Local [ MRLA ] authorities must exclude unallowable costs from the cost report. HHSC or its designee excludes from the cost reimbursement base any unallowable costs included in the cost report and makes adjustments to expenses reported by Local [ MRLA ] authorities to ensure that the cost reimbursement base reflects costs that are consistent with efficiency, economy, and quality care, are necessary for the provision of service coordination services, and are consistent with federal and state Medicaid regulations as specified in §355.102 & §355.103 [ §355.701 ] of this title (relating to General Principles of Allowable and Unallowable Costs and Specifications for Allowable and Unallowable Costs [ Definitions and General Specifications ]). If there is doubt as to the accuracy of allowability of a significant part of the information reported, individual cost reports may be eliminated from the cost base.

(3) Desk reviews. As specified in §355.106 [ §355.703 ] of this title (relating to Basic Objectives and Criteria for Audit and Desk Review of Cost Reports), HHSC or its designee reviews such cost reports or surveys. Cost reports not completed according to instructions or rules will be corrected and resubmitted by the Local [ MRLA ] authority within the time frame prescribed by HHSC.

(4) On-site audit of cost reports. HHSC or its designee performs a sufficient number of audits each year to ensure the fiscal integrity of the service coordination reimbursement. The number of on-site audits actually performed each year may vary.

(A) HHSC or its designee notifies MR [ MRLA ] authorities of disallowances and adjustments to reported expenses made during desk reviews and on-site audits of cost reports according to §355.107 [ §355.705 ] of this title (relating to Notification of Exclusions and Adjustments ).

(B) Reviews of cost report disallowances. A Local [ MRLA ] authority which disagrees with HHSC or its designee on cost report disallowances may request a review of the disallowances as specified in §355.110 [ §355.707 ] of this title (relating to Informal Reviews and Formal Appeals [ Administrative Hearings ]).

(5) Recordkeeping requirements. Each Local [ MRLA ] authority must maintain records according to the requirements specified in program [ TDMHMR ] rules established by TDMHMR or its successor agency and the provider agreement. The Local [ MRLA ] authority must ensure that the records are accurate and sufficiently detailed to support the financial and statistical information reported in the cost report. If a Local [ MRLA ] authority does not maintain records that support the financial and statistical information submitted on the cost report, the Local [ MRLA ] authority will be notified by certified mail that the local authority has 90 days to correct this recordkeeping. HHSC will notify TDMHMR or its successor agency to place the Local [ MRLA ] authority on vendor hold if the correction is not made within 90 days from the date the Local [ MRLA ] authority receives notification.

(6) Access to records. The Local [ MRLA ] authority must allow HHSC access to any and all records necessary to verify information on the cost report.

(h) Billing and payment reviews. The provider must allow TDMHMR or its successor agency access to any and all records regarding service coordination.

(1) TDMHMR or its successor agency will conduct periodic billing and payment reviews utilizing TDMHMR's or its successor agency Billing and Payment Review Protocol.

(2) Recoupment will be taken according to the application of error calculations contained in TDMHMR's or its successor agency Billing and Payment Review Protocol.

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 June 25, 2004.

TRD-200404261

Steve Aragón

General Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: August 8, 2004

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