The amendments to the rules are proposed 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 proposed amendments affect the Human Resources Code, Chapter 32, and the Texas Government Code, Chapter 531. No other statutes, articles, or codes are affected by this proposal.

§353.1. Purpose [ ~~Rules of Other Agencies~~ ].

(a) The purpose of this chapter is to define the requirements for the Medicaid Managed Care program.

(b) The rules in this Chapter 353 must be read in conjunction with federal and state statutes, rules relating to Medicaid in Chapter 254 of this title, and the Texas Department of Insurance rules regarding regulation of HMOs at 28 TAC Chapter 11, except where otherwise indicated.

(c) A managed care organization must comply with all terms of its contract with the Health and Human Services Commission. [ These rules shall be read in conjunction with rules adopted by other state agencies charged with operation of the state's Medicaid managed care program, including the Texas Department of Health, at 25 TAC §§30.21-30.32 (Standards for the State of Texas Access Reform (STAR)), and the Texas Department of Mental Health and Mental Retardation, at 25 TAC §§409.401-409.406 (Standards for Managed Care Organizations Providing Behavioral Healthcare Services to Medicaid Recipients). ]

§353.2.Definitions.

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

(1) Action--An action is defined as:

(A) The denial or limited authorization of a requested Medicaid service, including the type or level of service;

(B) the reduction, suspension, or termination of a previously authorized service;

(C) failure to provide services in a timely manner, the failure of an HMO to act within the timeframes set forth by the Commission and state and federal law;

(D) the denial in whole or in part of payment for a service;

(E) or for a resident of a rural area with only one HMO, the denial of a Medicaid Members' request to obtain services outside of the Network.

(2) Acute Care--Preventive care, primary care, and other medical or behavioral health care provided under the direction of a physician for a condition having a relatively short duration.

(3) Acute Care Hospital--A hospital that provides acute care services.

(4) Agreement or Contract--The formal, written, and legally enforceable Contract and amendments thereto between the Commission and HMOs.

(5) Allowable Revenue--All managed care revenue received by the HMO pursuant to the Contract during the Contract Period, including retroactive adjustments made by HHSC. This would include any revenue earned on Medicaid managed care funds such as investment income, earned interest, or third party administrator earnings from services to delegated networks.

(6) Appeal--a request for review of an Action.

(7) [ ~~(1)~~ ] Behavioral Health Services-- Covered services for the treatment of mental or emotional disorders, or chemical abuse or dependence. [ ~~Allowable services for the treatment of mental or emotional disorders and treatment of chemical dependency disorders.~~ ]

(8) Capitation Rate--A fixed predetermined fee paid by HHSC to the HMO each month in accordance with the Contract, for each enrolled Member in exchange for the HMO arranging for or providing a defined set of Covered Services to such a Member, regardless of the amount of Covered Services used by the enrolled Member.

(9) [ ~~(2)~~ ] Client--Any Medicaid eligible recipient . [ ~~and, where the context indicates, a Medicaid eligible recipient who meets the qualifications for enrollment in Medicaid managed care. See also "member."~~ ]

(10) CMS--The Centers for Medicare & Medicaid Services, the federal agency charged with oversight of all states participating in the Medicaid program.

(11) Commission--The Texas Health and Human Services Commission.

(12) Complainant--A Member or a treating provider or other individual designated to act on behalf of the member, who files a complaint.

(13) [ ~~(3)~~ ] Complaint-- Any dissatisfaction expressed by a Complainant, orally or in writing to the HMO, about any matter related to the HMO other than an Action. Complaints may include, but are not limited to:

(A) the quality of care of services provided,

(B) aspects of interpersonal relationships such as rudeness of a provider or employee or failure to respect; and

(C) the Medicaid member's rights. [ Any dissatisfaction, expressed by a complainant orally or in writing to the managed care organization (MCO), with any aspect of the MCO's operation, including but not limited to dissatisfaction with plan administration; the denial, reduction or termination of a service; the way a service is provided; or disenrollment decisions expressed by a complainant. A complaint is not a misunderstanding or misinformation that is resolved informally by supplying the appropriate information for clearing up the misunderstanding to the satisfaction of the member. ]

(14) Contract--The formal, written, and legally enforceable agreement, amendments, and document incorporated into the agreement between an HMO and HHSC.

(15) Core Service Area--The service area counties defined by HHSC for the STAR and STAR+PLUS programs in which eligibles, people who are eligible for managed care, will be required to enroll in the HMO.

(16) Covered Services--Health care services the HMO must arrange to provide to Members, including all services required by the Commission, state and federal law, and all Value-added Services negotiated by the Commission and an HMO. Covered Services include Behavioral Health Services.

(17) Cultural Competency--The ability of individuals and systems to provide services effectively to people of various cultures, races, ethnic backgrounds, and religions in a manner that recognizes, values, affirms, and respects the worth of the individuals and protects and preserves their dignity.

(18) Day--A calendar day, unless specified otherwise.

(19) Default Enrollment--Assignment of a client to a PCP and HMO by the Commission if the client does not select a PCP and HMO during the enrollment period established by the Commission.

(20) Disproportionate Share Hospital (DSH)--A hospital that serves a higher than average number of Medicaid and other low-income patients and receives additional reimbursement from the State.

(21) Disability--A physical or mental impairment that substantially limits one or more of an individual's major life activities, such as caring for oneself, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, socializing and/or working.

(22) Elective Enrollment--Selection of a PCP and HMO by a client during the enrollment period established by the Commission.

(23) Emergency Behavioral Health Condition--Any condition, without regard to the nature or cause of the condition, which in the opinion of a prudent layperson possessing an average knowledge of health and medicine:

(A) requires immediate intervention and/or medical attention without which the Client would present an immediate danger to themselves or others, or

(B) renders the Client incapable of controlling, knowing or understanding the consequences of his or her actions.

(24) Emergency Services--Covered inpatient and outpatient services furnished by a Provider that is qualified to furnish such services that are needed to evaluate or stabilize an Emergency Medical Condition and/or an Emergency Behavioral Health Condition.

(25) Emergency Medical Condition--A medical condition manifesting itself by acute symptoms of recent onset and sufficient severity (including severe pain), such that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical care could result in:

(A) placing the patient's health in serious jeopardy;

(B) serious impairment to bodily functions;

(D) serious disfigurement; or

(E) serious jeopardy to the health of a pregnant woman or her unborn child.

(26) Encounter--A Covered Service or group of Covered Services delivered by a Provider to a Member during a visit between the Member and Provider. This also includes Value-added services.

(27) EPSDT--The federally mandated Early and Periodic Screening, Diagnosis and Treatment program defined in Chapter 33 of Title 25 of the Texas Administrative Code. The State of Texas has adopted the name Texas Health Steps (THSteps) for its EPSDT program.

(28) EPSDT-CCP--The Early and Periodic Screening, Diagnosis and Treatment-Comprehensive Care Program, includes medically necessary benefits for children under 21 years of age in addition to benefits to the general Medicaid population.

(29) Experience Rebate--The portion of the HMO's net income before taxes that is returned to the State in accordance with 28 TAC Chapter 11, Subchapter S.

(30) Fair Hearing--The process adopted and implemented by HHSC in Chapter 357 of this title relating to Medical Fair Hearing rules, in compliance with federal regulations and state rules relating to Medicaid Fair Hearings.

(31) Federal Waiver--Any waiver permitted under federal law and approved by CMS that allows states to implement Medicaid managed care.

(32) [ ~~(4)~~ ] Health Care Services-- The acute, behavioral health care and health-related services that an enrolled population might reasonably require in order to be maintained in good health. [ ~~Physical medicine, behavioral health care and health-related services.~~ ]

(33) [ ~~(5)~~ ] Health and Human Services Commission ( HHSC ) --The single state agency charged with administration and over sight of the state Medicaid program. The Commission's authority is established in Chapter 531 of the Government Code [ ~~Texas Health and Human Services Commission~~ ].

(34) HMO (Health Maintenance Organization) or Contractor--An organization that holds a certificate of authority from the Texas Department of Insurance to operate as an HMO under Chapter 20A of the Texas Insurance Code or a certified Approved Non-Profit Health Corporation (ANHC) formed in compliance with Article 21.52F of the Texas Insurance Code.

(35) Hospital--A licensed public or private institution as defined by Chapter 241, Texas Health and Safety Code.

(36) Managed Care--A health delivery system in which the overall care of a patient is coordinated by or through a single provider or organization.

(37) Marketing--Any communication from the HMO to a Client that can reasonably be interpreted as intended to influence the Client's decision to enroll or to disenroll from a particular HMO.

(38) Marketing Materials--Materials that are produced in any medium by or on behalf of the HMO and can reasonably be interpreted as intending to transfer goods, ideas, concepts or information from producer to consumer or Clients.

[ ~~(6)~~ MCO--Managed Care Organization. An entity which has a current Texas Department of Insurance certificate of authority to operate as a health maintenance organization under Texas Insurance Code, Article 20A, or as an approved nonprofit health corporation under Texas Insurance Code, Article 21.52F.]

(39) Medicaid--The medical assistance program authorized and funded pursuant to Title XIX, Social Security Act (42 U.S.C. §1396 et seq) and administered by HHSC.

(40) [ ~~(7)~~ ] Medical Home-- A PCP or specialty care Provider who has accepted the responsibility for providing accessible, continuous, comprehensive and coordinated care to Members participating in an HHSC HMO. [ A primary care provider who has accepted the responsibility for providing accessible, continuous, comprehensive and coordinated care to members participating in the state's Medicaid managed care program. ]

(41) Medically Necessary Behavioral Health Services--Those behavioral health services that are documented and:

(A) are reasonable and necessary for the diagnosis or treatment of a mental health or chemical dependency disorder or to improve, maintain or prevent deterioration of functioning resulting from such a disorder;

(B) are in accordance with professionally accepted clinical guidelines and standards of practice in behavioral health care;

(D) are the most appropriate level or supply of service that can safely be provided;

(E) could not have been omitted without adversely affecting the member's mental and/or physical health or the quality of care rendered, and

(F) are not experimental or investigational.

(42) Medically necessary health services--Health services other than behavioral health services that are documented and:

(A) reasonable and necessary to prevent illnesses or medical conditions, or provide early screening, interventions, and/or treatments for conditions that cause suffering or pain, cause physical deformity or limitations in function, threaten to cause or worsen a handicap, cause illness or infirmity of a member, or endanger life;

(B) provided at appropriate facilities and at the appropriate levels of care for the treatment of the member's medical conditions;

(C) consistent with health care practice guidelines and standards that are issued by professionally recognized health care organizations or governmental agencies;

(D) consistent with the diagnoses of the conditions; and

(E) no more intrusive or restrictive than necessary to provide a proper balance of safety, effectiveness, and efficiency.

(43) [ ~~(8)~~ ] Member-- A person who is eligible for the (Medicaid) medical assistance program under Title XIX of the Social Security Act and is enrolled with the STAR or STAR+PLUS program. [ ~~Any eligible Medicaid recipient who is enrolled in the state's Medicaid managed care program.~~ ]

(44) [ ~~(9)~~ ] Member education program--A planned program of education:

(A) regarding access to health care through the managed care organization and about specific health topics;

(B) that is approved by the Health and Human Services Commission [ ~~Texas Department of Health~~ ]; and

(C) is provided to members through a variety of mechanisms that [ ~~which~~ ] must include, at a minimum, written materials and face-to-face or audiovisual communications.

(45) Member Materials--All written materials produced or authorized by the HMO and distributed to Members or potential members containing information concerning the HMO. Member Materials include, but are not limited to, Member ID cards, Member handbooks, Provider directories, and Marketing Materials.

(46) Participating HMOs--Those HMOs that have a contract with the Commission to provide services to Medicaid managed care members.

(47) PCCM (Primary Care Case Management)--PCCM is a managed care delivery system allowed under federal regulations in which the Commission contracts with providers to form a managed care provider network.

(48) [ ~~(10)~~ ] Primary Care Provider-- A physician or provider who has agreed with the HMO to provide a Medical Home to Members and who is responsible for providing initial and primary care to patients, maintaining the continuity of patient care, and initiating referral for care. [ ~~An individual who has agreed with the state or an MCO to provide a medical home for members.~~ ]

(49) [ ~~(11)~~ ] Provider-- Credentialed and licensed individuals, facilities, agencies, institutions, organizations or other entities, and its employees and subcontractors, that have a contract with the HMO for the delivery of Covered Services to the HMO's Members. [ ~~An individual or entity and its employees and contractors that provide health care services to members under the state's Medicaid managed care program.~~ ]

(50) [ ~~(12)~~ ] Provider education program--Program of education about the Medicaid managed care program and about specific health care issues presented by the managed care organization to its providers through written materials and training events.

(51) Provider Network or Network--All Providers that have contracted with the HMO for the applicable program.

(52) QAPI--Quality Assessment Performance Improvements.

(53) Quality Improvement--A system to continuously examine, monitor and revise processes and systems that support and improve administrative and clinical functions.

(54) Risk--The potential for loss if the HMO's expenses and costs exceed payments made by HHSC under the Contract.

(55) Service Area--The counties included in any HHSC-defined Core Service Area as applicable to each HMO.

(56) Significant Traditional Provider (STP)--Providers identified by HHSC as having provided a significant level of care to the target population. Disproportionate Share Hospitals (DSH) are also Medicaid STPs.

(57) [ ~~(13)~~ ] STAR Program-- The State of Texas Access Reform (STAR), means the State of Texas Medicaid managed care program in which HHSC contracts with HMOs to provide, arrange for, and coordinate preventive, primary, and acute care Covered Services to non-disabled children and families, and pregnant women. [ ~~The State of Texas Access Reform, which is the name of the State of Texas managed care program established in response to legislative mandate and by federal waiver.~~ ]

(58) STAR+PLUS Program--The State of Texas Medicaid managed care program in which HHSC contracts with HMOs to provide and coordinate preventive, primary, acute, and long-term care covered services to persons age 21 years and older with disabilities and elderly persons age 65 and over who qualify for Medicaid through SSI/MAO.

(59) Supplemental Security Income (SSI)--The federal cash assistance program of direct financial payments to the aged, blind, and disabled administered by the Social Security Administration (SSA) under Title XVI of the Social Security Act. All persons who are certified as eligible for SSI in Texas are eligible for Medicaid. Local SSA claims representatives make SSI eligibility determinations. The transactions are forwarded to the SSA in Baltimore, which then notifies the states through the State Data Exchange (SDX).

(60) TDI--Texas Department of Insurance.

(61) Texas Health Steps (THSteps)--The name adopted by the State of Texas for the federally mandated Early and Periodic Screening, Diagnosis and Treatment (EPSDT) program.

(62) Value-Added Services--Additional services for coverage beyond those specified in the Request For Proposal. Value-Added Services must be actual health care services or benefits rather than gifts, incentives, health assessments or educational classes. Best practice approaches to delivering Covered Services are not considered Value-Added Services.

§353.3.Experience Rebate in the Managed Care Program [ ~~STAR and STAR+Plus Programs~~ ].

(a) Each health maintenance organization (HMO) participating in the State of Texas Access Reform (STAR) and the State of Texas Access Reform Plus (STAR+Plus) program must pay to the state an experience rebate calculated according to the graduated rebate method described in subsection (b) of this section. The experience rebate is based on the excess of allowable HMO revenues, as defined by the state, over allowable HMO expenses, as defined by the state, as reviewed and confirmed by the state and as specified in the contract between HHSC and the HMO .

(b) The graduated rebate method is as follows:

(1) The HMO retains 100 percent of that portion of excess allowable revenues that falls between zero and less than or equal to three percent of total allowable revenues.

(2) The HMO retains 75 percent of that portion of excess allowable revenues that falls between three percent and less than or equal to seven percent of total allowable revenues. The remaining 25 percent is paid to the state.

(3) The HMO retains 50 percent of that portion of excess allowable revenues that falls between seven percent but less than or equal to 10 percent of total allowable revenues. The remaining 50 percent is paid to the state.

(4) The HMO retains 25 percent of that portion of excess allowable revenues that falls between 10 percent but less than or equal to 15 percent of total allowable revenues. The remaining 75 percent is paid to the state.

(5) The HMO pays to the state 100 percent of that portion of excess allowable revenues that is greater than 15 percent of total allowable revenues.

(6) The state reserves the right to modify the rebate method in this subsection for purposes of establishing incentive programs to encourage HMO's to meet or exceed goals and objectives of the Medicaid Managed Care Program established by the Commission through its contract.

(d) Losses incurred for one contract period can only be carried forward to the next contract period.

(e) There are two settlements for payment of the experience rebate, which will be paid by the HMO to the state as prescribed by the state. The state reserves the right to make corrections to the settlements based on an audit/review by the state or other documentation acceptable to the state. The state may also adjust the experience rebate if the state determines that the HMO paid affiliates amounts for goods or services that are higher than the fair market value of the goods and services in the service area.

(f) Effective for the SFY 2003 contract period, the tiered methodology is applied to the sum of the Net Income Before Taxes for all STAR, STAR+PLUS HMO, and Children's Health Insurance Plan (CHIP) service areas.

(g) [ ~~(f)~~ ] HHSC is the [ ~~The state has the~~ ] final authority in assessing the amount of the experience rebate.

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 January 10, 2005.

TRD-200500090

Earliest possible date of adoption: February 20, 2005

For further information, please call: (512) 424-6900

Subchapter B. PROVIDER AND MEMBER EDUCATION PROGRAMS

1 TAC §§353.101, 353.102, 353.104, 353.105

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

§353.101.Purpose.

This subchapter implements the Health and Human Services Commission's authority to establish provider and member education requirements for managed care organizations participating in the state Medicaid program. This authority is granted in Government Code §531.0211 (Relating to Medicaid Managed Care Program: Rules; Education Programs). [ ~~Texas Civil Statutes, Article 4413(502), §16, reprinted as Government Code, Chapter 531, §531.021.~~ ]

§353.102.Provider and Member Education Programs Generally.

The managed care organizations that contract with the Health and Human Services Commission [ ~~Texas Department of Health~~ ] to provide health care services through the Medicaid program must [ ~~shall~~ ] provide education programs for providers and members using a variety of techniques and media as described in this chapter and in the contract between the Health and Human Services Commission [ ~~Texas Department of Health~~ ] and the managed care organization.

§353.104.Member Education Program.

A member education program must present information in a manner that is easy to understand. In addition to any requirements specified in the contract between the managed care organization and the Health and Human Services Commission [ ~~Texas Department of Health~~ ], a program must include, at a minimum, information on:

(1) a member's rights and responsibilities under the Bill of Rights and the Bill of Responsibilities [ ~~bill of rights and the bill of responsibilities~~ ] prescribed in Subchapter C of this chapter [ ~~by this chapter~~ ];

(2) how to access health care services, including how to access behavioral health services;

(3) how to access complaint and appeal procedures , the member's right to request a fair hearing, and the process for requesting a fair hearing. [ ~~and the member's right to bypass the managed care organization's internal complaint system and use the notice and appeal procedures otherwise provided by the Medicaid program~~ ];

(4) Medicaid policies, procedures, eligibility standards, and benefits;

(5) the policies and procedures of the managed care organization; and

(6) the importance of prevention, early intervention and appropriate use of services.

§353.105.Provider Education Program.

In addition to any requirements specified in the contract between the managed care organization and the Health and Human Services Commission [ ~~Texas Department of Health~~ ], a provider education program must include, at minimum, information on:

(1) Medicaid policies, procedures, eligibility standards and benefits;

(2) the specific problems and needs of Medicaid clients;

(3) screening, identification and referral processes for coordinating behavioral health and other health care services; and

(4) members' rights and responsibilities set out in subchapter C of this chapter, relating to Medicaid Members' Bill of Rights and Responsibilities [ ~~the rights and responsibilities of members under the bill of rights and the bill of responsibilities prescribed by this section~~ ].

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 January 10, 2005.

TRD-200500091

Earliest possible date of adoption: February 20, 2005

For further information, please call: (512) 424-6900

1 TAC §353.103

(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 Health and Human Services Commission or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The repeal is proposed 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 proposed repeal 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.

§353.103.Contract Compliance.

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 January 10, 2005.

TRD-200500092

Earliest possible date of adoption: February 20, 2005

For further information, please call: (512) 424-6900

Subchapter C. MEMBER BILL OF RIGHTS AND RESPONSIBILITIES

1 TAC §§353.201 - 353.203

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

§353.201.Purpose.

This subchapter implements the Health and Human Services Commission's authority to adopt a member bill of rights and responsibilities. This authority is granted in Government Code §531.0211 (relating to Medicaid Bill of Rights and Bill of Responsibilities). [ ~~Texas Civil Statutes, Article 4413(502), §16, reprinted as Government Code, Chapter 531, §531.021.~~ ]

§353.202.Member Bill of Rights.

Each managed care organization participating in the state's Medicaid program shall provide to each member an easy-to-read, written document describing the Member's rights, which must include the following [ ~~stating~~ ]:

Figure: 1 TAC §353.202

§353.203.Member Bill of Responsibilities.

Each managed care organization participating in the state's Medicaid program shall provide to each member an easy-to-read, written document stating:

Figure: 1 TAC §353.203

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 January 10, 2005.

TRD-200500093

Steve Aragón

Chief Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: February 20, 2005

For further information, please call: (512) 424-6900

1 TAC §353.204

The proposed repeal 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.

§353.204.Construction.

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 January 10, 2005.

TRD-200500094

Earliest possible date of adoption: February 20, 2005

For further information, please call: (512) 424-6900

Subchapter D. TELEPHONE-BASED HEALTH CARE SYSTEMS PILOT PROGRAM

1 TAC §§353.301 - 353.304

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

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

§353.301.Purpose.

§353.302.Pilot Program Study.

§353.303.Federal Waiver.

§353.304.Expiration

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 January 10, 2005.

TRD-200500095

Earliest possible date of adoption: February 20, 2005

For further information, please call: (512) 424-6900

Subchapter E. STANDARDS FOR THE STATE OF TEXAS ACCESS REFORM (STAR)

1 TAC §353.401, §353.402

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

§353.401.General Provisions.

§353.402.Definitions.

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 January 10, 2005.

TRD-200500096

Earliest possible date of adoption: February 20, 2005

For further information, please call: (512) 424-6900

Subchapter E. STANDARDS FOR MEDICAID MANAGED CARE

1 TAC §§353.403, 353.405, 353.407, 353.409, 353.411, 353.413, 353.415, 353.417, 353.419

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

§353.403.Enrollment.

(a) For purposes of this section, Health Plan includes Primary Care Case Management (PCCM) and health maintenance organizations (HMO) [ ~~For the purposes of this section, a managed care organization (MCO) includes a primary care case management (PCCM) provider network~~ ].

(b) The Commission will [ ~~department shall~~ ] determine which Medicaid eligible clients residing in a Medicaid Managed Care [ ~~STAR Program~~ ] service area will be mandatory or voluntary members and which Medicaid eligible clients may be excluded from participation in managed care.

(c) The Commission [ ~~department~~ ] or its designee will [ ~~shall~~ ] conduct enrollment and disenrollment activities . [ ~~or contract with another agency or contractor to assume administration of these functions.~~ ] The Commission [ ~~department~~ ] may not contract with a participating managed care organization to serve as the administrator for enrollment or disenrollment activities in any area of the state.

(d) The Commission will [ ~~department shall~~ ] establish procedures for enrollment into participating Health Plans [ ~~MCOs~~ ] and with primary care providers (PCPs), including enrollment periods and time limits within which enrollment must occur. Members who are mandatory members must select a Health Plan and [ ~~an MCO or~~ ] PCP within the time period allowed by the department or be defaulted to a Health Plan and [ ~~an MCO or~~ ] PCP.

(e) Mandatory members who fail to select a Health Plan [ ~~an MCO~~ ] or PCP during the period established by the Commission [ ~~department~~ ] will have a Health Plan [ ~~an MCO~~ ] or PCP selected for them by the Commission [ ~~department~~ ] or its designee [ ~~contractor~~ ] using criteria determined by the Commission [ ~~department~~ ]. The Commission [ ~~department~~ ] shall establish a detailed default methodology that incorporates the following requirements.

(1) A member who does not select a PCP and Health Plan [ ~~MCO~~ ] will be assigned a PCP and Health Plan [ ~~MCO~~ ] through the default process established by the Commission [ ~~department~~ ]. A member who selects a Health Plan [ ~~an MCO~~ ] but not a PCP, will be assigned to the selected Health Plan [ ~~MCO~~ ] and the member will be assigned to a PCP through the default process. A member who selects a PCP but not a Health Plan [ ~~an MCO~~ ] will be assigned to the PCP chosen by the member, subject to PCP restrictions on client age, gender, and capacity, and the member will be assigned to a Health Plan [ ~~an MCO~~ ] through a manual default process that is established by the Commission [ ~~department based on the provisions of paragraph (6) of this subsection~~ ].

(2) Each member, who has not selected a PCP, will be defaulted to the PCP with whom there is the most recent Medicaid managed care encounter history. The number of encounters between the member and the PCP may also be considered.

(3) If there is no Medicaid managed care encounter history, each member will be defaulted to the PCP with whom there is the most recent traditional Medicaid claims history. The number of prior encounters between the member and the PCP may also be considered.

(4) If a member does not have history with a PCP, the member will be defaulted to a PCP on the basis of geographic proximity to the PCP.

(5) The Commission [ ~~department~~ ] may identify other criteria to be used along with the criteria based on geographic proximity such as, but not limited to, capacity of the PCP, PCP performance, and greatest variance between the percentage of elective and default enrollments (with the percentage of default enrollments subtracted from the percentage of elective enrollments).

(6) The Commission will [ ~~department shall~~ ] develop a methodology for assignment of defaults to each Health Plan [ ~~MCO~~ ] in the service area. Such methodology may be based on Health Plan [ ~~MCO~~ ] performance, the greatest variance between the percentage of elective and default enrollments (with the percentage of default enrollments subtracted from the percentage of elective enrollments), or other factors determined by the Commission [ ~~department~~ ].

(7) Members who cannot be assigned to a PCP and Health Plan [ ~~MCO~~ ] on the basis of an automated default process may be assigned through a manual default process determined by the Commission [ ~~department~~ ].

(8) Members with special medical needs may be defaulted on the basis of a manual default methodology if such members can be identified and if the automated default process cannot be administered for such members.

(9) A member who is defaulted to a PCP who is contracted with only one Health Plan will [ ~~MCO shall~~ ] be assigned to that Health Plan [ ~~MCO~~ ].

(10) PCP restrictions on Client age, gender, and capacity will [ ~~shall~~ ] be considered as limitations to default assignments to PCPs.

(11) Family members shall be defaulted to the same PCP and Health Plan [ ~~MCO~~ ] to the maximum extent possible within the limitation of PCP restrictions on client age, gender, and capacity by Health Plan [ ~~MCO~~ ] as well as geographic proximity [ ~~considerations~~ ].

(12) The detailed default methodology developed by the Commission will [ ~~department shall~~ ] be fully applicable to each Health Plan [ ~~MCO~~ ] in the Medicaid managed care program by service area. However, the number of defaults assigned to the state administered PCCM network will be restricted as follows:

(A) If a Member is defaulted to a PCP who is contracted only with the PCCM program, the Member will be defaulted to the PCCM program;

(B) If a Member is defaulted to a PCP who is contracted with the PCCM program and an HMO, the Member will be defaulted to the HMO;

(C) If a member is defaulted to a PCP who is contracted with the PCCM program and two or more HMOs, the member will be defaulted to one of the HMOs on the basis of paragraph (6) of this subsection;

(D) A member will be defaulted to the PCCM program if a PCCM provider is the only PCP within reasonable geographical proximity to the member as defined by the Commission [ ~~department~~ ].

(f) A member may request to change Health Plan [ ~~MCOs~~ ] at any time and for any reason, regardless of whether the Health Plan [ ~~MCO~~ ] was selected by the member or assigned by the Commission [ ~~department~~ ]. Disenrollment will take place no later than the first day of the second month after the month in which the member has requested termination. Health Plans [ ~~MCOs~~ ] must inform members of disenrollment procedures at the time of enrollment. Health Plans [ ~~MCOs~~ ] must notify members in appropriate communication formats.

(g) The Commission [ ~~department~~ ] shall establish limits for the number of members each PCP may accept to ensure members have reasonable access to the provider. The Commission [ ~~department~~ ] shall develop criteria to allow exceptions to this limit on a case-by-case basis, provided the exceptions do not adversely affect member access.

~~[ ~~(h)~~ The department may not enroll any Medicaid eligible recipient who is excluded from participation by federal rule or regulation.]~~

(h) [ ~~(i)~~ ] Recipients who are located more than 30 miles from the nearest PCP in a Health Plan [ ~~an MCO~~ ] cannot be enrolled in the Health Plan [ ~~MCO~~ ] unless an exception is made by the Commission [ ~~department~~ ].

[ ~~(j)~~ Medicaid recipients and Medicare beneficiaries must constitute less than 75% of the total enrollment of an MCO, unless the MCO has received a waiver for this requirement under 42 Code of Federal Regulations §434.26.]

(i) The Commission has the option to implement a modified default process of member enrollment for a period not to exceed 6 months, when contracting with new Health Plan or when implementing managed care in a new service area.

§353.405.Marketing.

(a) Health Maintenance Organizations (HMOs) [ ~~Managed care organizations (MCOs)~~ ] must submit a marketing plan and all marketing materials to the Commission [ ~~department~~ ] for prior written approval.

(b) HMO's [ ~~MCOs~~ ] may present their marketing materials to eligible Medicaid clients through any method or media determined to be acceptable by the Commission [ ~~department~~ ]. The media may include , but are not limited to: written materials, such as brochures, posters, or fliers, which can be mailed directly to the client or left at HHSC [ ~~Texas Department of Human Services~~ ] eligibility offices; Commission-sponsored [ ~~department-sponsored~~ ] community enrollment events; and public service announcements on radio.

(c) HMO [ ~~MCO~~ ] enrollment or marketing representatives are required to complete the Commission's [ ~~department's~~ ] marketing orientation and training program prior to engaging in marketing activities on behalf of the HMO [ ~~MCO~~ ].

(d) Prohibited marketing practices.

(1) HMOs [ ~~MCOs~~ ] and providers shall not conduct any direct contact marketing except through Commission-sponsored [ ~~department-sponsored~~ ] enrollment events.

(2) HMOs [ ~~MCOs~~ ] and providers shall not make any written or oral statement containing material misrepresentations of fact or law relating to their plan or the Medicaid Managed Care [ ~~STAR~~ ] Program.

(3) HMOs [ ~~MCOs~~ ] and Providers shall not make false, misleading or inaccurate statements relating to services or benefits, providers, or potential providers through their plan.

(4) HMOs [ ~~MCOs~~ ] and providers shall not offer Medicaid recipients material or financial gain as an inducement for enrollment, unless an exception is made by the Commission [ ~~department~~ ].

(5) Marketing or enrollment practices of HMOs [ ~~MCOs~~ ] and providers shall not discriminate against a client because of a client's race, creed, age, color, religion, national origin, ancestry, marital status, sexual orientation, physical or mental disability, health status, or existing need for medical care.

§353.407. Requirements [ ~~Selection~~ ] of Health Maintenance Organizations [ ~~Managed Care Organizations (MCO)~~ ].

(a) An entity or person that contracts with the Commission [ ~~department~~ ] under a federal waiver to provide or arrange for services under this subchapter on a comprehensive risk [ ~~comprehensive~~ ] basis [ ~~, as defined at 42 CFR 434.21(b), must be an MCO as defined in this subchapter~~ ].

(b) Entities or individuals who subcontract with a health maintenance organization (HMO) [ ~~an MCO~~ ] to provide benefits, perform services, or carry out any essential function of the HMO [ ~~MCO~~ ] contract shall meet the same qualifications and contract requirements as the HMO [ ~~MCO~~ ] for the service, benefit, or function delegated under the subcontract.

(c) The Commission will [ ~~department shall~~ ] require all HMOs [ ~~MCOs~~ ] to comply with the Commission's [ ~~department's~~ ] policy on contracting and subcontracting with historically underutilized businesses (HUBs). The Commission's [ ~~department's~~ ] policy is to meet the goals and good faith effort requirements as stated in the Texas Building and Procurement Commission rules at 1 TAC §§111.11-111.28, relating to Historically Underutilized Business Program [ ~~General Services Commission rules, at 1 Texas Administrative Code (TAC) §§111.11-111.24~~ ].

§353.409.Scope of Services.

(a) All health maintenance organizations (HMOs) [ ~~Managed Care Organizations (MCO)~~ ] shall provide services and benefits available to Medicaid clients [ ~~recipients~~ ] under the [ ~~purchased or fee for service~~ ] Medicaid program, as defined in Chapter 354 of this title, relating to Medicaid Health Services , except services that [ ~~which~~ ] are excluded from the Medicaid Managed Care [ ~~STAR~~ ] Program [ ~~or by contract~~ ].

(b) The Commission will [ ~~department shall~~ ] establish the scope and level of benefits, which all HMOs [ ~~MCOs~~ ] must agree to provide as a condition for participation. These requirements may exceed the scope and level of covered benefits and services available to [ ~~purchased or~~ ] fee-for-service Medicaid Clients [ ~~recipients~~ ]. These requirements will [ ~~shall~~ ] be contained in all contracts entered into by an HMO [ ~~MCOs~~ ] and the Commission [ ~~department~~ ].

(c) HMOs [ ~~MCOs~~ ] are encouraged to provide any value-added services or benefits beyond the level and scope required as a condition for participation in the competitive procurement process. [ Any services or benefits offered by an MCO beyond those required by the state will be considered as a selection factor during the competitive procurement process. These services or benefits can be any that may make member access to services easier, increase the quality or timeliness of services or benefits offered members, or increase the scope of services offered by the MCO. ] These services and benefits cannot increase the cost borne or capitation rates paid by the Commission [ ~~department~~ ] during any current contract term or in any subsequent contract term. These services or benefits cannot violate any other state or federal rule or regulation.

§353.411.Accessibility of Services.

(a) Health maintenance organizations (HMO) [ ~~Managed care organizations (MCO)~~ ] must provide a broad-based and accessible primary care provider (PCP) network within the service area to ensure member accessibility to providers in time, distance, cultural competency and language.

(b) HMOs [ ~~MCOs~~ ] must [ ~~shall~~ ] have pediatric and family practitioner PCPs in their network of providers in sufficient numbers to provide regular and preventive pediatric care and THSteps services to all eligible children enrolled in the service area.

(c) HMOs [ ~~MCOs~~ ] must [ ~~shall~~ ] have PCPs and acute care hospitals available throughout the service area to ensure that no member must travel more than 30 miles to access the PCP, unless an exception has been made by the Commission [ ~~department~~ ].

(d) HMOs [ ~~MCOs~~ ] must [ ~~shall~~ ] have PCPs in sufficient numbers to ensure [ ~~that PCPs do not exceed the maximum allowable enrolled members,~~ ] that no member must wait an unreasonable amount of time for an appointment, and that no member must wait an unreasonable amount of time to be seen at their appointed time.

(e) HMOs [ ~~MCOs~~ ] must [ ~~shall~~ ] ensure the reasonable availability and accessibility of specialists in all areas of medical and behavioral health practice. Specialists must also be reasonably accessible to members in time, distance, cultural competency and language.

(f) A member must [ ~~shall~~ ] not be required to travel in excess of 75 miles to secure initial contact with referral specialists; special hospitals; psychiatric hospitals; diagnostic and therapeutic services; and single service health care physicians, dentists or providers except as provided in subsections (g) and (h) of this section.

(g) If any service or provider is not available to a member within the mileage radius specified in subsection (f) of this section, the HMO [ ~~MCO~~ ] must [ ~~shall~~ ] submit to the Commission [ ~~department~~ ] for approval health care utilization data that indicate [ ~~which indicates~~ ] a normal pattern for securing health care services within the service area.

(h) The provisions in subsection (f) of this section do not preclude an HMO [ ~~MCO~~ ] from making arrangements with another source outside the service area for members to receive a higher level of skill or specialty than the level that is available within the HMO [ ~~MCO~~ ] service area such as, but not limited to, treatment of cancer, burns, and cardiac diseases.

(i) HMO [ ~~MCOs~~ ] must [ ~~shall~~ ] provide education and training to providers on the specific health and behavioral health problems and needs of Medicaid Managed Care [ ~~STAR~~ ] Program members, and the contract and rule requirements for accessibility and availability. HMOs [ ~~MCOs~~ ] and the Commission [ ~~department~~ ] shall cooperate and coordinate education and training activities for providers.

(j) HMOs [ ~~MCOs~~ ] must develop a written cultural competency plan describing how the HMO [ ~~MCO~~ ] will effectively provide health care services to members from varying cultures, races, ethnic backgrounds and religions to ensure those characteristics do not pose barriers to gaining access to needed services. As part of the requirement to develop the cultural competency plan, the HMO [ ~~MCO~~ ] must at a minimum:

(1) employ multi-cultural and multi-lingual staff;

(2) make available interpreter services for members as necessary to ensure availability of effective communication regarding treatment, medical history or health education;

(3) display to HHSC [ ~~the department~~ ] through the written plan a method for incorporating the plan into the HMOs [ ~~MCOs~~ ] policy-making process, administration, and daily practices; and

(4) submit the written plan to HHSC [ ~~the department~~ ] for review and approval at intervals specified by the department.

(k) HMOs [ ~~MCOs~~ ] must ensure that communication or physical access barriers do not deter members' timely access to health care services. The HMOs [ ~~MCOs~~ ] shall provide information in appropriate communication formats, including formats accessible to people with disabilities.

(l) HMOs [ ~~MCOs~~ ] are prohibited from excluding Significant Traditional Providers [ ~~significant traditional Medicaid providers~~ ] from their network for a period of time and under conditions determined by the state and specified in the contract.

(m) HMOs [ ~~MCOs~~ ] must [ ~~shall~~ ] develop written provider manuals clearly stating the policies and procedures adopted by the HMO [ ~~MCO~~ ] to meet the provider's duties and obligations required by these and other agency rules and the contract.

§353.413.Managed Care Benefits and Services for Children Under 21 Years of Age.

(a) The Commission [ ~~department~~ ] will [ ~~shall~~ ] require all participating health maintenance organizations (HMOs) [ ~~managed care organization (MCO)~~ ] to provide comprehensive, timely and cost-effective diagnostic, screening and treatment services for [ of ] the medical, vision, hearing, and dental needs of [ ~~eligible~~ ] Medicaid Managed Care [ ~~STAR~~ ] Program members under the age of 21, at a level and frequency that meet the requirements of the federal EPSDT Program , as determined by the Commission [ ~~found at 42 United States Code §1396d(r) and the Texas Health Steps Program (THSteps) found at Chapter 33 of this title (relating to Early and Periodic Screening, Diagnosis and Treatment)~~ ]. These requirements will be contained in all contracts.

(b) The Commission will [ ~~department shall~~ ] require each HMO [ ~~the MCOs~~ ] to make available special training about THSteps benefits and goals to all providers of health and dental services contracting with the HMO [ ~~MCO~~ ], to providers' staffs, and to all employees and contractors of the HMO [ ~~MCO~~ ] who will provide oral presentations or marketing to members or prospective members. To fulfill this requirement, the HMOs [ ~~MCOs~~ ] may use the training programs created by the Commission [ ~~department~~ ] or its contractors, or they may create their own training programs. Any training program created by the HMO [ ~~MCO~~ ] under this subsection must meet the requirements of [ ~~the department~~ ] and be approved by the Commission [ ~~department~~ ].

(c) HMOs must [ ~~MCOs shall~~ ] coordinate and cooperate with the Commission [ ~~department~~ ] in developing effective outreach, access, and monitoring systems to ensure that all qualified members receive THSteps benefits.

(d) The managed care programs of participating HMOs [ ~~MCOs~~ ] are intended to complement and enhance the effectiveness and availability of THSteps benefits in the service areas. The Commission may [ ~~department shall~~ ] not delegate the responsibility and accountability for monitoring and [ ~~for~~ ] ensuring that THSteps benefits are available and accessible to all eligible children.

§353.415.Member Complaint Procedures.

(a) Health maintenance organizations (HMO) must [ ~~Managed care organizations (MCO) shall~~ ] develop and maintain a system and process for taking, tracking [ ~~tracing~~ ], reviewing, and reporting member complaints.

(b) HMOs must [ ~~MCOs shall~~ ] establish and maintain internal procedures for the resolution of member complaints. The procedures must be in writing. The procedures must be detailed and specific regarding how complaints are to be taken, to whom complaints are referred, and by when a complaint must be resolved.

(c) HMOs must [ ~~MCOs shall~~ ] establish a procedure to assist members in understanding and using the HMOs [ ~~MCOs~~ ] internal complaint process. The members' complaint procedure must be in writing and distributed to each member upon enrollment. The member must also receive written notice of the procedure each time the member's benefits are being reduced, denied, or terminated for any reason. The procedure must be easy for members to understand and simple to follow. The procedure must contain a prominent notice to the Member that he or she retains all rights as Medicaid Clients [ ~~recipients~~ ] to a fair hearing through the Commission [ ~~department~~ ], in addition to the HMOs [ ~~MCOs~~ ] complaint process. The HMO notice to the Member should comply with the Fair Hearing rules found at Chapter 357 of this title, relating to Fair Hearings.

(d) The Commission will [ ~~department shall~~ ] review the HMOs [ ~~MCO's~~ ] complaint procedures to determine if they comply with HHSC's [ ~~the department's~~ ] standards before HHSC approves use of the procedures [ ~~approval for MCO use of the complaint procedure is given by the department~~ ]. Reports containing complaint summaries must [ ~~shall~~ ] be submitted to the Commission [ ~~department~~ ] in compliance with Commission's [ ~~department~~ ] policy.

(e) The Commission [ ~~department~~ ] shall retain the authority to make the final decision following the Commission's [ ~~departments~~ ] fair hearing process.

§353.417.Quality Assessment and Performance Improvement [ ~~Improvement~~ ].

(a) Each health maintenance organization (HMO) must develop and implement an ongoing quality assessment and performance improvement program for services it furnishes to its enrollees. The HMO must maintain and provide documentation of its compliance for the Commission's review, including performance measurement data. The HMO's quality assessment and performance improvement program must meet the requirements contained in 42 CFR §438.240 and, at a minimum, include:

(1) a program of performance improvement projects that focus on clinical and non-clinical areas;

(2) mechanisms to assess the quality and appropriateness of care furnished to enrollees with special health care needs;

(3) mechanisms to detect both under and over-utilization of services;

(4) practice guidelines that meet CMS requirements under 42 CFR §438.236.

[ ~~(a)~~ Each managed care organization (MCO) shall develop and follow quality standards based on current Quality Assurance Reform Initiative (QARI) and Health Plan Employer Data and Information Set (HEDIS) guidelines as a minimum requirement of its internal quality improvement program (QIP). MCOs shall establish a QIP system that includes at least the following:]

~~[ ~~(1)~~ a system of oversight and supervision for the MCO quality improvement (QI) processes;]~~

[ ~~(2)~~ an independent organizational structure within the MCO responsible for performing QI functions. This organization must meet operational and documentation requirements of the department, including the requirement that membership includes Medicaid managed care members and members with disabilities or a chronic or complex condition;]

~~[ ~~(3)~~ written contracts for all QI functions subcontracted to outside contractors;]~~

[ ~~(4)~~ written policies and procedures for ensuring providers in the MCO's network are qualified and properly credentialed, and a system to periodically update and review qualifications and credentials of all providers;]

~~[ ~~(5)~~ policies and procedures for disciplinary actions against providers and an appeal process for providers who have disciplinary action taken against them;]~~

[ ~~(6)~~ a procedure for informing MCO members of their rights and responsibilities, benefits and services, MCO policies, and other information required in the Texas Health and Human Services Commission's rules on client education and member bill of rights and responsibilities, and the MCO contract with the department;]

~~[ ~~(7)~~ performance standards for the availability of and accessibility to routine and emergency care, referral to specialists, and telephone services;]~~

~~[ ~~(8)~~ time standards within which providers must respond to the medically necessary physical and behavioral health needs of the members;]~~

~~[ ~~(9)~~ standards for the confidentiality, accessibility, and availability of medical records;]~~

~~[ ~~(10)~~ a written utilization review and management program which gives guidelines and criteria for determining medical necessity, preauthorization, and utilization of services;]~~

~~[ ~~(11)~~ an effective referral and coordination of care system to ensure comprehensive and coordinated care for members through the PCPs; and]~~

~~[ ~~(12)~~ a complaint system for members as described in §30.29 of this title (relating to Member Complaint Procedures).]~~

(b) The Quality Performance Assessment Improvements (QAPI) [ ~~QIP~~ ] functions may be subcontracted but the responsibility for QAPI [ ~~QIP~~ ] compliance cannot be delegated by the HMO [ ~~MCO~~ ].

(c) The Commission will [ ~~department shall~~ ] develop monitoring and review systems and procedures to ensure HMO [ ~~MCO~~ ] compliance with HMO [ ~~MCO~~ ] contracts, this subchapter, and all related state and federal rules, regulations, and guidelines. Commission [ ~~Department~~ ] monitoring and review will [ ~~shall~~ ] include, but not be limited to, the following.

(1) The Commission will [ ~~department shall~~ ] monitor each HMO [ ~~MCO~~ ] to ensure it is following its QAPI [ ~~QIP~~ ] standards.

(2) The Commission will [ ~~department shall~~ ] require HMO [ ~~MCOs~~ ] to submit QAPI [ ~~QIP~~ ] information at regular and periodic intervals.

(3) The Commission will [ ~~department shall~~ ] require all HMOs [ ~~MCOs~~ ] to submit to periodic inspection and review to determine compliance with all contract terms, and state and federal rules, regulations, and policies.

(d) Evaluations of each HMOs [ ~~MCO's~~ ] quality of services in each Medicaid managed care service area and the cost-effectiveness, member access, and quality of care under each waiver shall be conducted by independent, external entities after initial implementation of Medicaid managed care in a particular service delivery area. The quality evaluation must be conducted at the end of the first year following initial implementation; and the assessment of cost-effectiveness, member access, and quality of care under each waiver must be conducted once during the first two years of the time period for which a waiver has been approved. The Commission will reevaluate the periodicity of both evaluation types after each evaluation is initially completed in a managed care service delivery area.

§353.419.Financial Standards.

(a) Health maintenance organizations (HMO) [ ~~Managed care organization (MCO)~~ ] must meet solvency standards established by the Texas Department of Insurance at 28 TAC Chapter 11, Subchapter S, and by the Commission [ ~~department~~ ] in its competitive procurement proposals.

(b) The Commission may share in the experience rebates in accordance with §353.3, Experience Rebate in Managed Care Organization [ The state may share in profits realized by MCOs providing services on a risk basis at a rate determined by the department, as long as the profit-sharing arrangement complies with federal law and is contained in the contract between the MCO and the department ].

(c) The Commission [ ~~department~~ ] may establish incentive payment programs to encourage HMOs [ ~~MCOs~~ ] to meet or exceed the goals and objectives of the Medicaid Managed Care [ ~~STAR~~ ] Program established by the Commission [ ~~department~~ ] through its contract.

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 January 10, 2005.

TRD-200500097