1 TAC §355.312
The Texas Health and Human Services Commission (HHSC) adopts
amended rule §355.312, concerning reimbursement setting methodology--liability
insurance costs, in its Medicaid Reimbursement Rates chapter. The purpose
of the amendment is to identify the requirements that nursing facilities with
independently procured insurance and captive insurance must follow to provide
proof of payment of taxes and to outline the actions that HHSC will take if
proof of payment is not received. In addition, the amendment specifies who
must sign the affidavit for independently procured insurance and captive insurance.
The amendment also updates terminology and clarifies the section. The amended
rule is adopted with changes to the proposed text published in the November
19, 2004, issue of the
Texas Register
(29
TexReg 10669).
The amendment requires evidence that taxes were paid to and received by
the Texas Comptroller on the premiums of independently procured insurance
or captive insurance. Evidence must be provided to HHSC Rate Analysis by a
specified date following the applicable calendar year. The liability insurance
add-on payment is discontinued if it is not received by that date and any
add-on payments made for the period taxes are unpaid will be recouped if evidence
is not received within 60 days of the original deadline. Once HHSC receives
proof of paid taxes any add-on payments that were withheld or recouped will
be restored for that period. A vendor hold remains in place until all evidence
is received.
HHSC received several comments from the Texas Health Care Association regarding
the proposed rule during the comment period.
Comment: Concerning the takings impact assessment under Chapter 2007 of
the Government Code, a nursing facility's contract with the department for
furnishing nursing home services to Medicaid recipients constitutes a vested
property right under
Texas Department of Human Services
v. Silver Threads Co., 569SW2d 49 (Tex. Civ. App. - Austin 1978 writ ref'd
n. rec.)
.
Response: The takings impact assessment under Chapter 2007 of the Government
Code relates specifically to government actions affecting private
real property
interests (emphasis added). HHSC does not agree that
a nursing facility's contract property right requires a takings impact assessment
of this rule change under Chapter 2007.
Comment: Concerning §355.312(c)(4), risk retention groups chartered
in the state of Texas does not register with the Texas Department of Insurance
(TDI) and therefore TDI will not designate them as registered. It is recommended
that the paragraph should read as follows, "A risk retention group that is
chartered in Texas or that is registered with the TDI which is designated
as "registered" on the TDI website."
Response: Risk retention groups chartered outside Texas must register with
TDI and risk retention groups chartered inside Texas must be licensed as an
insurance company in the state of Texas and have the designation of "active"
with TDI. Changes were made to this paragraph and to paragraph (c)(1) to clarify
that risk retention groups chartered inside Texas must be licensed in Texas
as insurance companies.
Comment: Concerning §355.312(d) and (e), instead of determining that
the information supplied is correct and complete, HHSC Rate Analysis should
simply need to check that the insured entities listed on the affidavit are
contracted providers and that the signatory is authorized by Department of
Aging and Disability Services Form 2031.
Response: No proposed changes were made to the referenced language of these
subsections. The intent of these subsections is to allow for a review by HHSC
of the affidavit and any supporting documentation to determine if the document(s)
are correct and complete before payment was authorized. It is up to HHSC to
determine the extent of the review of the document(s) prior to authorization
of payment. HHSC is adopting these subsections without change.
Comment: Concerning §355.312(d) and (e), the proposed amended rule
should require only that the provider prove payment by submitting a copy of
the return filed with the Comptroller and the words "received by" should be
deleted. The rule should state that sufficient evidence of payment and receipt
is a copy of the return that the provider filed with the Comptroller.
Response: A copy of the tax return filed with the Comptroller does not
constitute evidence that the insurance tax was paid to and received by the
Comptroller. HHSC is adopting these subsections without change.
Comment: Concerning §355.312(f), this subsection should read, "A determination
by HHSC that the insurance purchased by the contracted provider does not qualify
for the purchased general and/or professional liability insurance add on payment
rate is subject to administrative appeal in accordance with the procedures
set out in 1 TAC §355.110 and the contracted provider may appeal any
final adverse ruling to Travis County District Court. In the event of a provider
timely appeals the determining by HHSC, HHSC will not stop payment of the
add on until the outcome of the appeal has been determined in favor of HHSC's
position."
Response: As specified in §355.312(f), the Texas Department of Insurance
(TDI), and not the Health and Human Services Commission (HHSC), determines
if insurance is unauthorized under Chapter 101 of the Texas Insurance Code.
Appeals of the determination by TDI that the insurance is unauthorized must
be filed with TDI in accordance with the procedures identified by TDI. Once
a determination has been made by TDI that the insurance purchased by the provider
is unauthorized and TDI notifies HHSC in writing of their determination, the
insurance add-on rate will be stopped. Providers will be notified in writing
that their insurance add-on payments are being stopped and that they may appeal
the termination of payments to HHSC under 1 Texas Administrative Code §357.481
through §357.490. Language has been added to §355.312(f) to specify
the add-on payments that were stopped will be paid to the provider if the
insurance is later determined to be authorized. In addition, language has
been added to specify that the provider will be notified in writing by certified
mail of the stoppage of the add-on payment and of their appeal rights with
HHSC.
Comment: Concerning §355.312(d) and (e), although it does not seem
inappropriate that the outgoing owner should remain responsible for providing
payment of premium taxes and thus defending the propriety of the insurance
add on the owner has already received, financial security arrangements already
recognized as appropriate to secure audit of cost reports should be extended
to include any such amounts.
Response: Currently for any cost reports required by an outgoing owner
as a result of an ownership change, the outgoing owner's vendor payments are
placed on hold until an acceptable cost report has been received and reviewed
by HHSC Rate Analysis and/or the Office of Inspector General, as appropriate.
The vendor hold is employed to ensure that the required proof of taxes paid
by the outgoing owner is received by HHSC as required for receipt of the add-on
rate. HHSC is adopting these subsections without change.
This amendment is adopted under the Texas Government Code, §531.033,
which provides the Commissioner of HHSC with broad rulemaking authority; the
Human Resources Code, §32.021 and the Texas Government Code, §531.021(a),
which provide HHSC with the authority to administer the federal medical assistance
(Medicaid) program in Texas; and the Texas Government Code §531.021(b),
which provides HHSC with the authority to propose and adopt rules governing
the determination of Medicaid reimbursements.
The adopted amendment affects the Human Resources Code, Chapter 32, and
the Texas Government Code, Chapter 531. No other statutes, articles, or codes
are affected by this proposal.
§355.312.Reimbursement Setting Methodology--Liability Insurance Costs.
(a)
Definitions.
(1)
Purchased commercial liability insurance--Either general
or professional liability insurance from a commercial carrier or a non-profit
service corporation in an arm's-length transaction that provides for the shifting
of risk to the unrelated party. The commercial carrier or non-profit service
corporation must meet the requirements as set by the Texas Department of Insurance
(TDI) for authorized insurance.
(2)
Self-insurance--Self-insurance is a means whereby a contracted
provider undertakes the risk to protect itself against anticipated liabilities
by providing funds equivalent to liquidate those liabilities. If a contracted
provider enters into an arrangement with an unrelated party that does not
provide for the shifting of risk to the unrelated party, such an agreement
shall be considered self-insurance. Self-insurance is not purchased liability
insurance.
(3)
Independently procured insurance--an insurance transaction
involving an insurance contract independently procured from an insurance company
not licensed in Texas through negotiations occurring entirely outside the
state of Texas that is reported and on which premium tax is paid.
(4)
Purchased captive insurance--A company providing either
general or professional liability insurance purchased from a nonadmitted captive
insurance company that insures solely directors and officer's liability insurance
for the directors and officers of the company's parent and affiliated companies
and/or the risks of the company's parent and affiliated companies.
(b)
Payment rates for purchased general and professional liability
insurance will be determined as follows:
(1)
Determine the portion of the general/administration rate
component from 1 TAC §355.307 (relating to Reimbursement Setting Methodology)
attributable to allowable liability insurance costs.
(2)
Determine the amount of total dollars that would be expended
if the liability rate component from paragraph (1) of this subsection were
paid uniformly to all providers during the rate effective period.
(3)
Estimate the number of days of service that will be covered
by purchased liability insurance during the rate period.
(4)
Divide the total dollars available for liability insurance
from paragraph (2) of this subsection by the estimated number of days of service
that will be covered by purchased liability insurance during the rate period
from paragraph (3) of this subsection. Estimate the proportion of this per
diem amount accruing from general liability insurance and the proportion accruing
from professional liability insurance to determine the payment rate for each
day of purchased general liability insurance and the payment rate for each
day of purchased professional liability insurance.
(5)
Payment rates for purchased general and professional liability
insurance may be adjusted as often as HHSC determines is necessary to ensure
that the total dollars expended during the rate period do not exceed the amount
appropriated for this purpose.
(6)
Since these payment rates are determined through an allocation
of available appropriations among estimated units of service covered by purchased
liability insurance, a public rate hearing is not required when adjustments
are made to the payment rates.
(7)
Contracted providers will be notified, in a manner determined
by HHSC, of adjustments to the payment rates for purchased general and professional
liability insurance.
(8)
Contracted providers who purchase general liability insurance
without professional liability insurance are only eligible to receive payment
of the rate for purchased general liability insurance. Contracted providers
who purchase professional liability insurance without general liability insurance
are only eligible to receive payment of the rate for purchased professional
liability insurance. Contracted providers who purchase both general and professional
liability insurance are eligible to receive payment of both rates.
(c)
Purchased liability insurance issued through entities meeting
any one of the following criteria will be determined automatically to qualify
for the payment rates for purchased general and/or professional liability
insurance as appropriate. These entities have been determined by the TDI to
be authorized to issue liability insurance policies in the State of Texas.
(1)
An insurance company identified as an admitted, licensed,
insurer authorized to write liability insurance in Texas. This type of insurance
company is designated as "active" on the TDI website. This includes risk retention
groups chartered inside the state of Texas.
(2)
An insurance company that is an eligible surplus lines
insurer which requires that there be a Texas licensed surplus lines agent
placing the coverage with the insurance company. This type of insurance company
is designated as "eligible" on the TDI website.
(3)
The Texas Medical Liability Insurance Underwriting Association
(JUA). This insurance arrangement is designated as "active" on the TDI website.
(4)
A risk retention group chartered outside the state of Texas
that is registered with the TDI and which is designated as "registered" on
the TDI website.
(d)
Independently procured insurance will not be determined
automatically to qualify for the payment rates for purchased general and/or
professional liability insurance. To qualify for the purchased general and/or
professional liability insurance payment rates, the coverage must have been
purchased through an independently procured insurance arrangement. The liability
insurance payment rates will not be paid to any nursing facility contracted
provider until HHSC Rate Analysis has received from the contracted provider
a signed and notarized affidavit in the form provided by HHSC regarding the
circumstances of the solicitation and procurement of coverage. An authorized
signatory for the contracted provider as per the Department of Aging and Disability
Services (DADS) Form 2031 must sign the affidavit. HHSC may request additional
information to support the contents of the affidavit. The affidavit and supporting
information will be reviewed by HHSC to determine if the information supplied
is correct and complete to authorize payment of rates for purchased general
and/or professional liability insurance. Upon receipt and review of the affidavit
and supporting information and a determination that the information is correct
and complete to authorize payments, payments will be made as identified in
subsection (h) of this section. HHSC may refer any questionable case to the
TDI to determine if a violation of the Texas Insurance Code has occurred.
The liability insurance payment rates will continue to be paid if evidence
that taxes on the premiums of independently procured insurance were paid to
and received by the Texas Comptroller for the calendar year in which the policy
is procured, continued or renewed. Evidence of the annual taxes paid to and
received by the Texas Comptroller for the independently procured insurance
in which the policy has been procured, continued or renewed must be received
by HHSC Rate Analysis no later than the end of the business day on June 15
following the applicable calendar year. Failure to provide HHSC by June 15
with evidence that premium taxes have been paid will result in the discontinuation
of the liability insurance rate add-on. If June 15 falls on a weekend, a national
holiday, or a state holiday, then the first business day following June 15
of that year is the due date for the evidence of taxes paid. If acceptable
evidence that taxes have been paid has not been received by HHSC within 60
days after the June 15 deadline, HHSC will recoup any add-on payments made
to the contracted provider for the period in which taxes are unpaid. Once
HHSC Rate Analysis receives evidence of taxes paid to the Texas Comptroller,
HHSC will restore any add-on payments for that period previously withheld
or recouped. Any vendor hold placed under 40 TAC §19.2308 (relating to
Change of Ownership) will remain in place until evidence that all taxes on
the premiums are paid to and received by the Texas Comptroller for all time
periods for which the liability insurance add-on rate was paid to the contracted
provider.
(e)
Insurance purchased through a captive insurance company
will not be determined automatically to qualify for the payment rates for
purchased general and/or professional liability insurance. The liability insurance
payment rates will not be paid to any nursing facility contracted provider
until HHSC Rate Analysis has received from the contracted provider a signed
and notarized affidavit in the form provided by HHSC and any requested supporting
information regarding the financial arrangements and affiliation between the
contracted provider and the captive insurance company. An authorized signatory
for the contracted provider as per DADS Form 2031 must sign the affidavit.
HHSC may request additional information to support the contents of the affidavit.
The affidavit and supporting information will be reviewed by HHSC to determine
if the information supplied is correct and complete to authorize payment of
rates for purchased general and/or professional liability insurance. Payments
will be made as identified in subsection (h) of this section. Insurance purchased
through an "active" or "eligible" insurance company will automatically qualify
for the payment rate for purchased general an/or professional liability insurance,
regardless of whether such risk has been reinsured by a captive insurance
company. It is the responsibility of the nursing facility to obtain any requested
information from the captive insurance company or affiliates. HHSC may refer
any questionable cases to TDI to determine if a violation of the Texas Insurance
Code has occurred. The liability insurance payment rates will continue to
be paid if evidence that taxes on the premiums of captive insurance were paid
to and received by the Texas Comptroller for the calendar year in which the
policy is procured, continued or renewed. Evidence of the annual taxes paid
to and received by the Texas Comptroller for the captive insurance in which
the policy has been procured, continued or renewed must be received by HHSC
Rate Analysis no later than the end of the business day on April 1 following
the applicable calendar year. Failure to provide HHSC by June 15 with evidence
that premium taxes paid have been will result in the discontinuation of the
liability insurance rate add-on. If April 1 falls on a weekend, a national
holiday, or a state holiday, then the first business day following April 1
of that year is the due date for the evidence of taxes paid. If acceptable
evidence that taxes have been paid has not been received by HHSC within 60
days after the April 1 deadline, HHSC will recoup any add-on payments made
to the contracted provider for the period in which taxes are unpaid. Once
HHSC Rate Analysis receives evidence of taxes paid to the Texas Comptroller,
HHSC will restore any add-on payments for that period previously withheld
or recouped. Any vendor hold placed under 40 TAC §19.2308 (relating to
Change of Ownership) will remain in place until evidence that all taxes on
the premiums are paid to and received by the Texas Comptroller for all time
periods for which the liability insurance add-on rate was paid to the contracted
provider.
(f)
Liability insurance payments will not be made to facilities
that obtain insurance from an insurer or person engaged in unauthorized insurance
as set forth in Chapter 101 of the Texas Insurance Code, Unauthorized Insurance.
Providers will be notified by certified mail that the liability insurance
payments are being stopped and of the provider's right to appeal the stoppage
of payment with HHSC under 1 TAC §§357.481-357.490. It is the responsibility
of the nursing facility contracted provider to ensure that liability insurance
submitted for payment is authorized. Liability insurance payments made on
insurance that is later determined by the Texas Department of Insurance to
be unauthorized insurance under Chapter 101, Texas Insurance Code will be
recouped. If the determination by TDI that the insurance is unauthorized is
successfully appealed with TDI and the insurance is determined to be authorized,
the liability insurance payments that were stopped will be paid to the provider.
(g)
To qualify for the purchased liability insurance payment
rates each contracted entity must submit the following to HHSC Rate Analysis:
(1)
A completed liability insurance coverage certification
form provided by HHSC Rate Analysis, signed by an authorized signatory for
the contracted provider as per DADS Form 2031.
(2)
A copy of evidence of coverage to include a certificate
of insurance, the ACORD 25-S or similar document provided by the insurance
company or agent that includes the type of coverage, effective and expiration
dates of coverage, insurer, policy, and form number of policy contract, agent/producer,
and claims made/occurrences. For catastrophic or excess liability coverage,
the evidence of coverage must also include the sum that the catastrophic or
excess coverage must exceed to become payable. A binder is not acceptable
as evidence of insurance.
(3)
For independently procured liability insurance, the information
identified in subsection (d) of this section.
(4)
For insurance purchased through a captive insurance company,
the information identified in subsection (e) of this section.
(h)
If an insurance policy effective date is not the first
day of the month, then the liability insurance payment rates will become effective
the first day of the following month. If an insurance policy expiration date
is not the last day of the month, then the liability insurance payment rates
will be paid for the full month that includes the expiration date.
(i)
It is the contracted provider's responsibility to notify
HHSC Rate Analysis of any changes to liability insurance coverage including
cancellation of coverage, change of insurance and renewal of coverage within
15 calendar days of the effective date of the change. Failure to notify HHSC
Rate Analysis of cancellation of coverage or change of insurance could constitute
Medicaid fraud. Renewals of coverage not received within 15 calendar days
of the effective date of the renewal could result in the liability insurance
payment rates being stopped until documentation of the renewal per subsection
(f) of this section is received by HHSC Rate Analysis.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on April 11, 2005.
TRD-200501482
Steve Aragón
Chief Counsel
Texas Health and Human Services Commission
Effective date: May 1, 2005
Proposal publication date: November 19, 2004
For further information, please call: (512) 424-6900