TITLE 1.ADMINISTRATION

Part 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION

Chapter 353. MEDICAID MANAGED CARE

The Texas Health and Human Services Commission (HHSC or Commission) proposes to amend Chapter 353, Subchapter A, §353.2 and §353.3 and Subchapter E, §§353.403, 353.405, 353.407, 353.409, 353.411, 353.413, 353.415, 353.417 and 353.419. Chapter 353 describes standards for the Medicaid Managed Care program.

HHSC proposes to amend the following rules: §353.2, Definitions; §353.3, Experience Rebate in the Managed Care Program; §353.403, Enrollment; §353.405, Marketing; §353.407, Requirements of Health Maintenance Organizations; §353.409, Scope of Services; §353.411, Accessibility of Services; §353.413, Managed Care Benefits and Services for Children Under 21 Years of Age; §353.415, Member Complaint Procedures; §353.417, Quality Assessment and Performance Improvement; and §353.419, Financial Standards.

Background and Purpose

The current Medicaid Managed Care rules were adopted to be effective February 28, 1997 (22 TexReg 1799) (1997). They were most recently amended to be effective August 10, 2005, (30 TexReg 4466) (2005). The 79th Legislature, Regular Session, 2005, through Senate Bill 1188, mandated that HHSC adopt rules that define "regular business hours." These rules implement provisions of Section 6 of SB 1188 and include revisions to update and clarify language.

Section-by-Section Summary

HHSC proposes to amend Chapter 353, Medicaid Managed Care, as outlined in this section-by-section summary. Throughout, the amendments replace "Health Maintenance Organization" and "HMO," wherever they occur, with "Managed Care Organization" and "MCO." HHSC proposed to change the term HMO to MCO to designate not only HMOs, but Exclusive Provider Benefit Plans (EPBP) and approved non-profit health corporations as well. In some instances, terms that are not being changed have been capitalized because they have been added to the defined terms in §353.2. These are the only changes made to §§353.405, 353.409, 353.413, and 353.417. Other changes to Chapter 353 are summarized below.

Subchapter A of Chapter 353, relating to general provisions, describes general information for the Medicaid managed care program. In §353.2, Definitions, the proposed amendments add, update, and re-order the definitions of terms used throughout Chapter 353 and make minor, non-substantive editorial corrections. In addition, references to the STAR+PLUS Program have been deleted. In §353.3, Experience Rebate in the Managed Care Program, existing language will be deleted and replaced with new broader language that will align the Medicaid Managed Care and Children's Health Insurance Program (CHIP) experience rebate rules.

Subchapter E, Standards for Medicaid Managed Care, sets forth the standards for the Medicaid managed care program. The criteria and standards for enrollment in a Medicaid managed care organization are described in §353.403. The proposed amendments to §353.403, Enrollment, replace "Health Plan" with "Managed Care Plan" to more clearly describe these organizations. The proposed amendment adds Primary Care Case Management (PPCM) and EPBP to the array of Medicaid managed care arrangements. An EPBP is another form of managed care. Section 353.403(i) is amended to allow HHSC's Executive Commissioner discretion in responding to market forces when a new managed care plan enters a service delivery area. HHSC's requirements for managed care organizations (previously, health maintenance organizations) and their subcontractors are listed in §353.407, Requirements of Health Maintenance Organizations. HHSC proposes to amend this section by adding new language describing the rate at which MCOs must reimburse Federally Qualified Health Centers (FQHC) and Rural Health Clinics for services outside of regular business hours.

Section 353.411, Accessibility of Services, outlines the MCO's obligation to provide services that are accessible to clients. The proposed amendment adds language requiring MCOs to submit to the Commission for approval data showing that covered health services are not available to the member within the required distance. The language was changed to better correspond with upcoming practices.

The procedures MCOs must use when responding to member complaints are defined in §353.415, Member Complaint Procedures. HHSC proposes to amend §353.415 by adding the terms "and Appeal" to the title and the section where indicated. Medicaid Managed Care clients may request an appeal of any "action" taken by the MCO. They may also submit a complaint on any matter other than an "action" taken by the MCO.

The Commission proposes to amend §353.419, Financial Standards. The proposed amendments add new language establishing requirements for MCOs and delete obsolete language establishing requirements for HMOs. The proposed language broadens the standards to cover more than solvency.

Fiscal Note

Thomas M. Suehs, Deputy Executive Commissioner for Financial Services, has determined that during the first five-year period the proposed amendments to the rules are in effect the fiscal impact to the state will be neutral for state fiscal years 2006 - 2010. The proposed amendments will not result in any fiscal implications for local health and human services agencies. Local governments will not incur additional costs.

Small and Micro-business Impact Analysis

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

Public Benefit

Mr. David Balland, Associate Commissioner for Medicaid and CHIP, has determined that for each year of the first five years the proposed amendments are in effect, the public will benefit from the adoption of the rules. The anticipated public benefit of enforcing the proposed amendments will be improved access to and quality of health care services.

Regulatory Analysis

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

Takings Impact Assessment

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

Public Comment

Written comments on the proposed amendments to the rules may be submitted to Gilbert Estrada, Policy Analyst in the Medicaid/CHIP Division, Texas Health and Human Services Commission, P.O. Box 85200, MC-H600, Austin, Texas 78708-5200, by fax to (512) 491-1953, or by e-mail to gilbert.estrada@hhsc.state.tx.us within 30 days of publication of this proposal in the Texas Register .

Public Hearing

A public hearing is scheduled for May 30, 2006, from 9:00 a.m. to 10:00 a.m. in the HHSC Lone Star Conference Room at 11209 Metric Boulevard, Austin, Texas. Persons requiring further information, special assistance, or accommodations should contact Meisha Spencer at (512) 491-1453.

Subchapter A. GENERAL PROVISIONS

1 TAC §353.2, §353.3

Statutory Authority

The amendments are proposed under the Texas Government Code, §531.033, which provides the Executive 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.

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.

§353.2.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) the 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) the failure of a Managed Care Organization (MCO) to act within the timeframes set forth by the Commission and state and federal law; or

(F) [ (E) ] [ or ] for a resident of a rural area with only one MCO [ HMO ], the denial of a Medicaid member's [ 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) Adverse Determination--A determination by an MCO that the health and behavioral health care services furnished, or proposed to be furnished, to a patient are not medically necessary or appropriate.

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

(6) [ (5) ] Allowable Revenue--All managed care revenue received by the MCO [ HMO ] pursuant to the contract [ Contract ] during the contract period [ 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.

(7) [ (6) ] Appeal-- The formal process by which a member or his or her representative requests a review of the MCO's action. [ a request for review of an Action. ]

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

(9) [ (8) ] Capitation Rate--A fixed predetermined fee paid by HHSC to the MCO [ HMO ] each month , in accordance with the contract [ Contract ], for each enrolled member [ Member ] in exchange for which the MCO arranges [ HMO arranging ] for or provides [ providing ] a defined set of covered services [ Covered Services ] to the member [ such a Member ], regardless of the amount of covered services [ Covered Services ] used by the enrolled member [ Member ].

(10) [ (9) ] Client--Any Medicaid-eligible recipient.

(11) [ (10) ] CMS--The Centers for Medicare & Medicaid Services, which is the federal agency responsible for administering Medicare and overseeing state administration of Medicaid and the Children's Health Insurance Program (CHIP). [ the federal agency charged with oversight of all states participating in the Medicaid program. ]

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

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

(14) [ (13) ] Complaint--Any dissatisfaction expressed by a complainant [ Complainant ], orally or in writing to the MCO [ HMO ], about any matter related to the MCO [ HMO ] other than an action [ Action ]. Subjects for complaints [ 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) failure to respect the Medicaid member's rights.

(15) [ (14) ] Contract--The formal, written, and legally enforceable agreement and any [ , ] amendments[ , ] and documents [ document ] incorporated into the agreement between an MCO [ HMO ] and HHSC.

(16) [ (15) ] Core Service Area--The core set of service area counties defined by HHSC for the Medicaid Managed Care [ STAR and STAR+PLUS ] programs in which Medicaid eligibles[ , people who are eligible for managed care, ] will be required to enroll in the MCO [ HMO ].

(17) [ (16) ] Covered Services--Health Care Services [ care services ] the MCO [ HMO ] must arrange to provide to member [ Members ], including all services required by the Commission, state and federal law, and all value added services [ Value-added Services ] negotiated by the Commission and an MCO [ HMO ]. Covered services [ Services ] include behavioral health services [ Behavioral Health Services ].

(18) [ (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.

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

(20) [ (19) ] Default Enrollment-- The process established by HHSC to assign a mandatory Medicaid Managed Care enrollee to an MCO when an MCO has not been selected by the client. [ 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. ]

(21) [ (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.

(22) [ (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.

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

(24) [ (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 [ Client ] would present an immediate danger to themselves or others, or

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

(25) [ (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, including Post-stabilization Care Services [ Emergency Medical Condition and/or an Emergency Behavioral Health Condition ].

(26) [ (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;

(C) serious dysfunction of any bodily organ or part;

(D) serious disfigurement; or

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

(27) [ (26) ] Encounter--A covered service [ Covered Service ] or group of covered service [ Covered Services ] delivered by a provider [ Provider ] to a member [ Member ] during a visit between the member [ Member ] and provider [ Provider ]. This also includes value added [ Value-added ] services.

(28) [ (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.

(29) [ (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 available to the general Medicaid population.

(30) Exclusive Provider Benefit Plan (EPBP)--A Managed Care Plan that complies with 28 TAC §§3.9201 - 3.9212, relating to the Texas Department of Insurance's requirements for exclusive provider benefit plans, and contracts with the Commission to provide CHIP or Medicaid coverage.

(31) [ (29) ] Experience Rebate--The portion of the MCO's [ HMO's ] net income before taxes that is returned to the State in accordance with 28 TAC Chapter 11, Subchapter S , relating to solvency standards for Medicaid managed care organizations .

(32) [ (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.

(33) Federally Qualified Health Center (FQHC)--An entity certified by CMS to meet the requirements of §1861(aa)(3) of the Social Security Act (42 U.S.C. §1395x(aa)(3)) as a Federally Qualified Health Center that is enrolled as a Provider in the Texas Medicaid program.

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

(35) [ (32) ] 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 , including, at a minimum, emergency services and inpatient and outpatient services .

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

(37) [ (34) ] Health Maintenance Organization (HMO) [ 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 843 [ 20A ] of the Texas Insurance Code or a certified Approved Non-Profit Health Corporation (ANHC) formed in compliance with Chapter 844 [ Article 21.52F ] of the Texas Insurance Code.

(38) [ (35) ] Hospital--A licensed public or private institution as defined in the Texas Health and Safety Code at [ by ] Chapter 241, relating to hospitals, or Chapter 261, relating to municipal hospitals [ Texas Health and Safety Code ].

(39) [ (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.

(40) MCO--An entity that has a valid Texas Department of Insurance certificate of authority to operate as a Health Maintenance Organization under Chapter 843 of the Texas Insurance Code, an approved nonprofit health corporation under Chapter 844 of the Texas Insurance Code, or an Exclusive Provider Benefit Plan issued by an insurer licensed by the Texas Department of Insurance, as described at 28 TAC Chapter 3, Subchapter KK, relating to exclusive provider benefit plans.

(41) Managed Care Plan--Includes Primary Care Case Management (PCCM), HMO, and Exclusive Provider Benefit Plans (EPBP).

(42) [ (37) ] Marketing-- Any communication from an MCO to a client who is not enrolled with an MCO that can reasonably be interpreted as intended to influence the client's decision to enroll, not to enroll, or to disenroll from a particular MCO. [ 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. ]

(43) [ (38) ] Marketing Materials--Materials that are produced in any medium by or on behalf of the MCO that [ HMO and ] can reasonably be interpreted as intending to market to potential members. Health-related materials are not marketing materials. [ transfer goods, ideas, concepts or information from producer to consumer or Clients. ]

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

(45) [ (40) ] Medical Home--A PCP or specialty care provider [ Provider ] who has accepted the responsibility for providing accessible, continuous, comprehensive and coordinated care to members [ Members ] participating in an HHSC MCO [ HMO ].

(46) [ (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;

(C) are furnished in the most appropriate and least restrictive setting in which services can be safely provided;

(D) are the most appropriate level or supply of service that can [ safely ] be safely 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 ; and [ . ]

(G) are not primarily for the convenience of the Member or Provider.

(47) [ (42) ] Medically Necessary Health Services [ necessary health services ]--Health services other than behavioral health services that are documented and:

(A) reasonable and necessary to prevent illness [ 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 ; [ . ]

(F) are not experimental or investigative; and

(G) are not primarily for the convenience of the member or provider.

(48) [ (43) ] Member--A person who is eligible for benefits under Title XIX of the Social Security Act and Medicaid, is in a Medicaid eligibility category included in the Medicaid Managed Care Program, and is enrolled in the Medicaid Managed Care Program and a Medicaid MCO. [ the (Medicaid) medical assistance program under Title XIX of the Social Security Act and is enrolled with the STAR or STAR +PLUS program. ]

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

(A) concerning [ 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; and

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

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

(51) Outside Regular Business Hours--As applied to FQHCs and RHCs, means before 8 a.m. and after 5 p.m. Monday through Friday, weekends, and federal holidays.

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

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

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

(55) [ (49) ] Provider-- A credentialed and licensed individual, facility, agency, institution, organization or other entity, and its employees and subcontractors, that have a Contract with the MCO for the delivery of covered services to the MCO's members. [ 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. ]

(56) [ (50) ] Provider Education Program [ 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.

(57) [ (51) ] Provider Network or Network--All providers [ Providers ] that have contracted with the MCO [ HMO ] for the applicable program.

(58) [ (52) ] QAPI--Quality Assessment Performance Improvements.

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

(60) [ (54) ] Risk--The potential for loss as a result of expenses and costs of the MCO exceeding payments made by HHSC under the contract. [ if the HMO's expenses and costs exceed payments made by HHSC under the Contract. ]

(61) Rural Health Clinic (RHC)--An entity that meets all of the requirements for designation as a rural health clinic under §1861(aa)(1) of the Social Security Act (42 U.S.C. §1395x(aa)(1)) and is approved for participation in the Texas Medicaid program.

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

(63) [ (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) 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.]

[(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.]

(64) [ (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).

(65) [ (60) ] TDI--Texas Department of Insurance.

(66) [ (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 described at 42 U.S.C. §1905d(r) and 42 CFR §440.40 and §§441.40 - 441.62 .

(67) [ (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 [ Covered Services ] are not considered Value-Added Services. For foster children in a statewide Medicaid managed care program, value added services may include non-health care services and benefits that support the physical, mental and/or developmental well being of the child.

§353.3.Experience Rebate in the Managed Care Program.

[ (a) ] Each Managed Care Organization (MCO) participating in Medicaid managed care must pay to the state an experience rebate calculated according to the graduated rebate method described in the MCO's contract with HHSC. [ 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.]

[(c) The experience rebate is based on a pre-tax basis.]

[(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) HHSC is 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 May 8, 2006.

TRD-200602548

Steve Aragón

Chief Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: June 18, 2006

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 amendments are proposed under the Texas Government Code, §531.033, which provides the Executive 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.

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, managed care plan [ Health Plan ] includes Primary Care Case Management (PCCM) , [ and ] health maintenance organizations (HMO) and Exclusive Provider Benefit Plans (EPBP) .

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

(c) The Commission or its designee will conduct enrollment and disenrollment activities. The Commission 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 establish procedures for enrollment into participating managed care plans [ Health Plans ] 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 managed care plan [ Health Plan ] and PCP within the time period allowed by the department or be defaulted to a managed care plan [ Health Plan ] and PCP.

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

(1) A member who does not select a PCP and managed care plan [ Health Plan ] will be assigned a PCP and managed care plan [ Health Plan ] through the default process established by the Commission. A member who selects a managed care plan [ Health Plan ] but not a PCP, will be assigned to the selected managed care plan [ Health Plan ] and the member will be assigned to a PCP through the default process. A member who selects a PCP but not a managed care plan [ Health Plan ] 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 managed care plan [ Health Plan ] through a manual default process that is established by the Commission.

(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 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 develop a methodology for assignment of defaults to each managed care plan [ Health Plan ] in the service area. Such methodology may be based on managed care plan [ Health Plan ] 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.

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

(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 [ Member ] who is defaulted to a PCP who is contracted with only one managed care plan [ Health Plan ] will be assigned to that managed care plan [ Health Plan ].

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

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

(12) The detailed default methodology developed by the Commission will be fully applicable to each managed care plan [ Health Plan ] 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 [ Member ] is defaulted to a PCP who is contracted only with the PCCM program, the member [ Member ] will be defaulted to the PCCM program;

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

(C) If a member is defaulted to a PCP who is contracted with the PCCM program and two or more MCOs [ HMOs ], the member will be defaulted to one of the MCOs [ 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.

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

(g) The Commission shall establish limits for the number of members each PCP may accept to ensure members have reasonable access to the provider. The Commission 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) Recipients who are located more than 30 miles from the nearest PCP in a managed care plan [ Health Plan ] cannot be enrolled in the managed care plan [ Health Plan ] unless an exception is made by the Commission.

(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 a new managed care plan [ Health Plan ] or when implementing managed care in a new service area.

§353.405.Marketing.

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

(b) MCOs [ HMOs ] may present their marketing materials to eligible Medicaid clients through any method or media determined to be acceptable by the Commission. 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 eligibility offices; [ Commission-sponsored community ] enrollment events; and public service announcements on radio.

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

(d) Prohibited marketing practices.

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

(2) MCOs [ HMOs ] 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 Program.

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

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

(5) Marketing or enrollment practices of MCOs [ HMOs ] 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 of Managed Care [ Health Maintenance ] Organizations.

[(a) An entity or person that contracts with the Commission under a federal waiver to provide or arrange for services under this subchapter on a comprehensive risk basis.]

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

(b) MCOs must reimburse a Federally Qualified Health Center (FQHC) or a Rural Health Clinic (RHC) for Health Care Services provided to a Member Outside of Regular Business Hours as defined at §353.2(51) of this title, at a rate that is equal to the allowable rate for those services as determined under §32.028(e) and (f), Human Resources Code, if the Member does not have a referral from the Member's Primary Care Physician.

(c) The Commission will require all MCOs [ HMOs ] to comply with the Commission's policy on contracting and subcontracting with historically underutilized businesses (HUBs). The Commission'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.

§353.409.Scope of Services.

(a) All Managed Care Organizations (MCOs) [ health maintenance organizations (HMOs) ] shall provide services and benefits available to Medicaid clients under the Medicaid program, as defined in Chapter 354 of this title, relating to Medicaid Health Services, except services that are excluded from the Medicaid Managed Care Program.

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

(c) MCOs [ HMOs ] are encouraged to provide any value added [ value-added ] services or benefits beyond the level and scope required as a condition for participation in the competitive procurement process. These services and benefits cannot increase the cost borne or capitation rates paid by the Commission 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) Managed Care Organizations (MCOs) [ Health maintenance organizations (HMO) ] 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) MCOs [ HMOs ] must 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) MCOs [ HMOs ] must 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 the Commission has made an exception [ unless an exception has been made by the Commission ].

(d) MCOs [ HMOs ] must have PCPs in sufficient numbers to ensure 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) MCOs [ HMOs ] must 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 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 MCO [ HMO ] must submit to the Commission for approval data that indicates covered health services are not available to the member within the required distance [ health care utilization data that indicate 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 MCO [ HMO ] 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 MCO [ HMO ] service area such as, but not limited to, treatment of cancer, burns, and cardiac diseases.

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

(j) MCOs [ HMOs ] must develop a written cultural competency plan describing how the MCO [ HMO ] 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 MCO [ HMO ] 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 through the written plan a method for incorporating the plan into the MCOs [ HMOs ] policy-making process, administration, and daily practices; and

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

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

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

(m) MCOs [ HMOs ] must develop written provider manuals clearly stating the policies and procedures adopted by the MCO [ HMO ] 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 will require all participating managed care organizations (MCOs) [ health maintenance organizations (HMOs) ] to provide comprehensive, timely and cost-effective diagnostic, screening and treatment services for the medical, vision, hearing, and dental needs of Medicaid Managed Care 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. These requirements will be contained in all contracts.

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

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

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

§353.415.Member Complaint and Appeal Procedures.

(a) Managed Care Organizations (MCO) [ Health maintenance organizations (HMO) ] must develop and maintain a system and process for taking, tracking, reviewing, and reporting member complaints and appeals .

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

(c) MCOs must establish a procedure to assist members in understanding and using the MCO's internal complaint and appeal process. The member's complaint and appeal procedure must be:

(1) in writing and distributed to each member upon enrollment;

(2) provided to the member each time the member's benefits are reduced, denied, or terminated for any reason;

(3) easy for members to understand and follow; and

(4) contain a prominent notice to the member that complies with the Fair Hearings rules found in Chapter 357 of this title, relating to Fair Hearings, stating the member retains all rights as a Medicaid client to a Fair Hearing through the Commission, in addition to the MCO's complaint and appeal process.

[(c) HMO's must establish a procedure to assist members in understanding and using the HMOs 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 to a fair hearing through the Commission, in addition to the HMOs 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 review the MCO's [ HMOs ] complaint and appeals procedures to determine if they comply with HHSC's standards before HHSC approves use of the procedures. Reports containing complaint summaries must be submitted to the Commission in compliance with Commission's policy.

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

§353.417.Quality Assessment and Performance Improvement.

(a) Each managed care organization (MCO) [ health maintenance organization (HMO) ] must develop and implement an ongoing quality assessment and performance improvement program for services it furnishes to its enrollees. The MCO [ HMO ] must maintain and provide documentation of its compliance for the Commission's review, including performance measurement data. The MCO's [ 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.

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

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

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

(2) The Commission will require MCO [ HMO ] to submit QAPI information at regular and periodic intervals.

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

(d) Evaluation of each MCO's [ HMOs ] 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) Managed Care Organizations (MCO) must maintain compliance with the Texas Insurance Code and rules promulgated and administered by the Texas Department of Insurance requiring a fiscally sound operation. [ Health maintenance organizations (HMOs) must meet solvency standards established by the Texas Department of Insurance at 28 TAC Chapter 11, Subchapter S, and by the Commission 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.

(c) The Commission may establish incentive payment programs to encourage MCOs [ HMOs ] to meet or exceed the goals and objectives of the Medicaid Managed Care Program established by the Commission 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 May 8, 2006.

TRD-200602549

Steve Aragón

Chief Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: June 18, 2006

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

Chapter 361. CHILDREN'S HEALTH INSURANCE PROGRAM

1 TAC §361.1

(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 Texas Health and Human Services Commission (HHSC or Commission) proposes to repeal Chapter 361, §361.1, Children's Health Insurance Program (CHIP). The definition for Significant Traditional Provider is now found in new Subchapter E, Provider Requirements, in Chapter 370, State Children's Health Insurance Program, which is proposed elsewhere in this issue of the Texas Register .

Background and Justification

This chapter is repealed in order to consolidate all CHIP rules in a single chapter of the Texas Administrative Code.

Fiscal Note

Thomas M. Suehs, Deputy Executive Commissioner for Financial Services, has determined that during the first five-year period the proposed repeal is in effect there should not be a fiscal impact to state government. The proposed repeal should not result in any fiscal implications for local health and human services agencies. Local governments should not incur additional costs.

Small and Micro-business Impact Analysis

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

Public Benefit

Mr. David Balland, Associate Commissioner for Medicaid and CHIP, has determined that for each year of the first five years the proposed repeal is in effect, the public will benefit from the repeal of the rule. The anticipated public benefit, as a result of repealing the rule, will be the consolidation of all CHIP rules in a single chapter of the Texas Administrative Code.

Regulatory Analysis

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

Takings Impact Assessment

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

Public Comment

Written comments on the proposed repeal of the rule may be submitted to Gilbert Estrada, Policy Analyst in the Medicaid/CHIP Division, by mail to Texas Health and Human Services Commission, P.O. Box 85200, MC-H600, Austin, Texas 78708-5200, by fax to (512) 491-1953, or by e-mail to gilbert.estrada@hhsc.state.tx.us within 30 days of publication of this proposal in the Texas Register .

Public Hearing

A public hearing is scheduled for May 30, 2006, from 1:00 p.m. to 2:00 p.m. in the HHSC Lone Star Conference Room at 11209 Metric Boulevard, Austin, Texas. Persons requiring further information, special assistance, or accommodations should contact Meisha Spencer at (512) 491-1453.

Statutory Authority

The repeal is proposed under the authority granted to HHSC by Government Code, §531.033, which authorizes the Executive Commissioner of HHSC to adopt rules necessary to implement HHSC's duties and the Texas Health and Safety Code, §62.051(d), which directs HHSC to adopt rules as necessary to implement the Children's Health Insurance Program.

The proposed repeal affects the Texas Health and Safety Code, Chapter 62, and the Texas Government Code, Chapter 531. No other statutes, articles, or codes are affected by the proposed rule.

§361.1.Definition of Significant Traditional Provider.

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

Filed with the Office of the Secretary of State on May 8, 2006.

TRD-200602521

Steve Aragón

Chief Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: June 18, 2006

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

Chapter 370. STATE CHILDREN'S HEALTH INSURANCE PROGRAM

Subchapter E. PROVIDER REQUIREMENTS

1 TAC §§370.451 - 370.454

The Texas Health and Human Services Commission (HHSC or Commission) proposes new Subchapter E, Provider Requirements, §§370.451 - 370.454, in Chapter 370, State Children's Health Insurance Program. This subchapter defines Significant Traditional Provider (STP) for the Children's Health Insurance Program (CHIP). This term was previously defined in Chapter 361, CHIP, which is being repealed elsewhere in this issue of the Texas Register . HHSC also proposes new rules in this subchapter to prohibit balance billing and to describe the experience rebate requirements in the CHIP program.

Background and Justification

The definition of STP for CHIP is revised from its previous definition to conform to the term as it is defined in Medicaid Managed Care. Balance billing has not previously been addressed in the CHIP program rules. The new rules formalize what is currently found only in contract language. Experience rebate requirements for CHIP also are currently found only in contract language. Referencing them in rule makes these rules more consistent with what is found in the Medicaid Managed Care rules. Definitions are added to support the new rules.

Section-by-Section Summary

Definitions of terms used in this subchapter are added in new §370.451. The new §370.452 aligns the CHIP definition of STP with the definition in the Medicaid Managed Care rules. New §370.453 prohibits a CHIP provider from billing the member or guardian for any balance remaining after payment is made by CHIP for a covered service or for any billing error made by the provider. The balance billing prohibition does not apply to an unauthorized out-of-network service or to any service that is not a covered CHIP benefit. New §370.454 describes the requirement for a health plan to pay an experience rebate to the State, which is calculated according to the graduated rebate method described in the health plan's contract with HHSC.

Fiscal Note

Thomas M. Suehs, Deputy Executive Commissioner for Financial Services, has determined that during the first five-year period the proposed rules are in effect there should not be a fiscal impact to state government. The proposed rules should not result in any fiscal implications for local health and human services agencies. Local governments should not incur additional costs.

Small and Micro-business Impact Analysis

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

Public Benefit

Mr. David Balland, Associate Commissioner for Medicaid and CHIP, has determined that for each year of the first five years the proposed new rules are in effect, the public will benefit from the adoption of the rules. The anticipated public benefit, as a result of enforcing the rules, will be a consistent definition of Significant Traditional Provider in Medicaid and CHIP, the prohibition of CHIP balance billing, and clarification that CHIP experience rebate requirements are specified in each health plan's contract with HHSC.

Regulatory Analysis

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

Takings Impact Assessment

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

Public Comment

Written comments on the proposed rules may be submitted to Gilbert Estrada, Policy Analyst in the Medicaid/CHIP Division, by mail to Texas Health and Human Services Commission, P.O. Box 85200, MC-H600, Austin, Texas 78708-5200, by fax to (512) 491-1953, or by e-mail to gilbert.estrada@hhsc.state.tx.us within 30 days of publication of this proposal in the Texas Register .

Public Hearing

A public hearing is scheduled for May 30, 2006, from 1:00 p.m. to 2:00 p.m. in the HHSC Lone Star Conference Room at 11209 Metric Boulevard, Austin, Texas. Persons requiring further information, special assistance, or accommodations should contact Meisha Spencer at (512) 491-1453.

Statutory Authority

The new rules are proposed under the authority granted to HHSC by Government Code, §531.033, which authorizes the Executive Commissioner of HHSC to adopt rules necessary to implement HHSC's duties and the Texas Health and Safety Code, §62.051(d), which directs HHSC to adopt rules as necessary to implement the Children's Health Insurance Program.

The proposed new rules affect the Texas Health and Safety Code, Chapter 62, and the Texas Government Code, Chapter 531. No other statutes, articles, or codes are affected by these proposed new rules.

§370.451.Definitions.

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

(1) Claims Processing Entity--The Health Maintenance Organization (HMO), Exclusive Provider Benefit Plan (EPBP) or its subcontractor who processes claims for CHIP.

(2) Day--A calendar day.

(3) Eligible Provider--A network or non-network provider who provides medical services to a covered CHIP member.

(4) Exclusive Provider Benefit Plan (EPBP)--A managed care plan that complies with 28 TAC §§3.9201 - 3.9212, relating to the Texas Department of Insurance's requirements for exclusive provider benefit plans, and contracts with the Commission to provide CHIP or Medicaid coverage.

(5) Experience Rebate--A portion of the HMO or EPBP's net income before taxes that is returned to the State.

(6) Health Maintenance Organization (HMO)--An organization that holds a certificate of authority from the Texas Department of Insurance to operate as an HMO under Chapter 843 of the Texas Insurance Code or a certified Approved Non-Profit Health Corporation (ANHC) formed in compliance with Chapter 844 of the Texas Insurance Code.

(7) Significant Traditional Provider or STP--A provider with whom CHIP members have well-established or longstanding provider/client relationships, or to whom the members have typically or traditionally visited for health care.

§370.452.Significant Traditional Provider.

(a) The Health and Human Services Commission (HHSC) will determine whether a provider meets the definition of STP at §370.451(7) of this title (relating to Significant Traditional Provider or STP).

(b) If a provider is not initially determined to be an STP, the provider may appeal that determination by sending a written notice to the HHSC, Children's Health Insurance Program, P.O. Box 13247, Austin, Texas 78711-3247, stating that it wishes to appeal the STP determination. HHSC will then notify the provider of the appeal procedure to follow.

§370.453.Balance Billing.

(a) Providers who contract with an HMO or EPBP must agree that payment received for covered services will be accepted as payment in full and must agree that they will not bill the member or the member's guardian for any remaining balance for covered services rendered.

(b) The prohibition in subsection (a) of this section does not apply to unauthorized out-of-network services, or to services that are not a covered benefit.

(c) Providers who contract with an HMO or EPBP may not bill or take other recourse against the member or the member's guardian for claims denied as a result of error attributed to the eligible provider or Claims Processing Entity.

§370.454.Experience Rebate in the Children's Health Insurance Program.

Each HMO and EPBP participating in CHIP must pay to the State an experience rebate calculated according to the graduated rebate method described in the HMO's or EPBP's contract with HHSC.

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

Filed with the Office of the Secretary of State on May 8, 2006.

TRD-200602520

Steve Aragón

Chief Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: June 18, 2006

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