Part 12. COMMISSION ON STATE EMERGENCY COMMUNICATIONS
The Commission on State Emergency Communications (CSEC) proposes an amendment to §255.1, concerning the statewide 9-1-1 Equalization Surcharge (the surcharge) to be assessed on each customer receiving intrastate long-distance service except those specifically exempted by law. The proposed amendment raises the surcharge from 1.0% to 1.1%.
Mr. Paul Mallett, CSEC's executive director, has determined that for each of the first five years that the amended section is in effect there will be no cost implications to the state or local governments as a result of enforcing or administering the amended section. Mr. Mallett and CSEC Staff have estimated that a surcharge of 1.1% will generate an estimated $2.69 million above the Texas Comptroller of Public Accounts' (Comptroller) $38.58 million estimate of the surcharge for Fiscal Years 2008 - 2009. Rider No. 5 to CSEC's appropriation bill for Fiscal Years 2008 - 2009 authorizes CSEC to spend up to $1.91 million in excess surcharge revenues to support local 9-1-1 service and the statewide Poison Control Network.
Mr. Mallett has determined that for each year of the first five years the amended section is in effect, the public benefits will be to further increase the reliability of the Councils of Government's 9-1-1 call centers and the operation of the Poison Control Network. Mr. Mallett has also determined the estimated costs to persons who are required to comply with the rule is $1.20 million in Fiscal Year 2008 and $1.56 million in Fiscal Year 2009. Average cost to telecommunications customers, including local governments, of compliance is estimated at $.10 per TN/year in Fiscal Year 2008 and $.13 per TN/year in Fiscal Year 2009 assuming 12 million active TN's in Texas. Mr. Mallett anticipates no local employment impact as a result of enforcing the section. While no historical data is available, the direct impact on small and micro businesses is dependent on the amount of intrastate long distance that is billed on a per-call basis to such businesses.
Comments on the amendment must be submitted in writing within 30 days after publication of the proposal in the Texas Register to Paul Mallett, Executive Director, Commission on State Emergency Communications, 333 Guadalupe Street, Suite 2-212, Austin, Texas 78701-3942.
The amendment is proposed pursuant to the Health and Safety Code, Chapter 771, §§771.072, 771.073, 771.074, 771.075, 771.077, and 771.078.
No other statute, article, or code is affected by the proposed amendment.
§255.1.Statewide Equalization Surcharge.
An equalization surcharge is established in the amount of one
point one
percent (
1.1%
[
1.0%
]). Rounding
of the surcharge amount shall be in compliance with Texas Tax Code
Section 151.053. This surcharge will be assessed to each customer
receiving intrastate longdistance service, except those exempted by
Texas Health and Safety Code §771.074. The surcharge shall be
applied to the total amount for intrastate longdistance service charged
by the customer's service provider, but such amount shall not include
taxes charged by local, state, and federal authorities, nor shall
local, state, or federal taxes be applied to this surcharge unless
otherwise required by law. Texas Tax Code §151.025 shall apply
when intrastate long-distance services are not billed separately on
a customer's invoice. [
The effective date of the rounding provision
in this rule shall be 180 days after the effective date of the remainder
of the rule as determined by Texas Government Code §2001.036.
]
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 July 27, 2007.
TRD-200703261
Paul Mallett
Executive Director
Commission on State Emergency Communications
Earliest possible date of adoption: September 9, 2007
For further information, please call: (512) 305-6930
Chapter 355. REIMBURSEMENT RATES
Subchapter A. COST DETERMINATION PROCESS
The Texas Health and Human Services Commission (HHSC) proposes to amend §355.102, concerning General Principles of Allowable and Unallowable Costs, in its Reimbursement Rates Chapter.
Background and Justification
Currently, all cost report preparers signing the Cost Report Methodology Certification page of the Texas Medicaid long-term care cost reports are required to complete state-sponsored, classroom-based cost report training conducted by HHSC biennially.
Given technological advances in the area of online training, the costs to preparers to travel to attend classroom-based training in Austin, the staffing requirements and costs involved in providing classroom-based training for all cost report preparers, and the importance of providing consistent training to all cost report preparers, HHSC has been pursuing a multi-phase project to move from classroom-based training to online training. In the first phase of this process, begun in early 2006, certain preparers were allowed to test online in lieu of the classroom-based training, if they had already attended a classroom-based training. As of today, 133 preparers have successfully participated in online testing.
Based on the successful implementation of phase one (online testing), this proposed rule implements phase two (online training) by eliminating classroom-based cost report training for all but new preparers. Under the proposed rule, cost report preparers who have never attended a classroom-based cost report training will continue to be required to attend classroom-based training where they will be able to interact with the rate analysts for their program, ask questions, and benefit from questions raised by other trainees. All other preparers will be required to complete state-sponsored online cost report training; these preparers will not have the option of receiving training completion certificates through classroom-based training.
The online training will include tests for content mastery at the end of each training module. These tests will be designed as teaching tools, with incorrect responses activating links to supports within the module to assist the trainee in mastering the material required to pass the test. Trainees will continue working within each module until they are able to pass the test for that module.
A convenience fee is charged for persons taking the online training, which covers the costs of developing and maintaining the online training materials and automation interface; the state gains no income from the transaction. These fees are allowable costs for Medicaid cost reporting purposes, as are travel costs to complete state-sponsored classroom-based cost report training. Preparers participating in online training will no longer be accruing travel costs to attend classroom-based training in Austin.
Section-by-Section Summary
The proposed amendment removes language in §355.102(d) regarding cost report training being conducted by HHSC at no charge. The amendment removes language that specifies that HHSC conducts the training and substitutes language that specifies that the training will be state-sponsored. Language in §355.102(d) was also moved to §355.102(d)(2) regarding the allowability of travel costs to attend classroom-based training.
Proposed new language was added in §355.102(d)(1) to outline the cost report training requirements of new preparers of cost reports who have not previously attended classroom-based training.
Proposed new language was added in §355.102(d)(2) to outline the cost report training requirements of preparers of cost reports who have previously attended classroom-based training and to explain that a convenience fee will be charged to take the online training.
Language was deleted from §355.102(d)(1) that offered online testing in lieu of cost report classroom-based training for preparers of cost reports that previously attended classroom-based training.
Section 355.102(d)(2) and (3) were renumbered to §355.102(d)(3) and (4) respectively.
Fiscal Note
Thomas M. Suehs, Deputy Executive Commissioner for Financial Services, has determined that, for the first five-year period the proposed amendment is in effect, there are no fiscal implications for state government as a result of enforcing or administering the section. There are no fiscal implications for local governments as a result of enforcing or administering the section.
Small Business and Micro-business Impact Analysis
Mr. Suehs has also determined that there will be no adverse economic effect on small or micro-businesses as a result of enforcing or administering the proposed section. There is no anticipated economic cost to persons who are required to comply with the proposed section. There is no anticipated effect on local employment in geographic areas affected by this section.
Public Benefit and Costs
Carolyn Pratt, Director of Rate Analysis, has determined that, during the first five years the proposed section is in effect, the public benefits anticipated as a result of enforcing the section include: (1) increased consistency across cost report training experiences; (2) increased convenience for preparers; (3) eliminated travel costs for all preparers, other than new preparers; and (4) reduced administrative burdens for staff in providing classroom-based training.
Regulatory Analysis
HHSC has determined that this proposal is not a "major environmental rule" 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 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 proposal may be submitted by mail to Pam McDonald in the Rate Analysis Division, Texas Health and Human Services Commission, P.O. Box 85200, Austin, TX 78708-5200; by fax to (512) 491-1998; or by e-mail to Pam.McDonald@hhsc.state.tx.us, within 30 days of publication of this proposal in the Texas Register.
Statutory Authority
The amendment is proposed under the Texas Government Code, §531.033, which provides the Executive Commissioner of HHSC with broad rulemaking authority, and 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 amendment affects the Human Resources Code, Chapter 32 and the Texas Government Code, Chapter 531. No other statutes, articles, or codes are affected by this proposal.
§355.102.General Principles of Allowable and Unallowable Costs.
(a) Allowable and unallowable costs. Allowable and unallowable costs, both direct and indirect, are defined to identify expenses that are reasonable and necessary to provide contracted client care and are consistent with federal and state laws and regulations. When a particular type of expense is classified as unallowable, the classification means only that the expense will not be included in the database for reimbursement determination purposes because the expense is not considered reasonable and/or necessary. The classification does not mean that individual contracted providers may not make the expenditure. The description of allowable and unallowable costs is designed to be a general guide and to clarify certain key expense areas. This description is not comprehensive, and the failure to identify a particular cost does not necessarily mean that the cost is an allowable or unallowable cost.
(b) Cost-reporting process. The primary objective of the cost-reporting process is to provide a basis for determining appropriate reimbursement to contracted providers. To achieve this objective, the reimbursement determination process uses allowable cost information reported on cost reports or other surveys. The cost report collects actual allowable costs and other financial and statistical information, as required. Costs may not be imputed and reported on the cost report when no costs were actually incurred (except as stated in §355.103(b)(16)(A)(i) of this title (relating to Specifications for Allowable and Unallowable Costs) or when documentation does not exist for costs even if they were actually incurred during the reporting period.
(c) Accurate cost reporting. Accurate cost reporting is the responsibility of the contracted provider. The contracted provider is responsible for including in the cost report all costs incurred, based on an accrual method of accounting, which are reasonable and necessary, in accordance with allowable and unallowable cost guidelines in this section and in §355.103 of this title, revenue reporting guidelines in §355.104 of this title (relating to Revenues), cost report instructions, and applicable program rules. Reporting all allowable costs on the cost report is the responsibility of the contracted provider. The Texas Health and Human Services Commission (HHSC) is not responsible for the contracted provider's failure to report allowable costs; however, in an effort to collect reliable, accurate, and verifiable financial and statistical data, HHSC is responsible for providing cost report training, general and/or specific cost report instructions, and technical assistance to providers. Furthermore, if unreported and/or understated allowable costs are discovered during the course of an audit desk review or field audit, those allowable costs will be included on the cost report or brought to the attention of the provider to correct by submitting an amended cost report.
(d) Cost report training. [
HHSC is responsible
for conducting, at no charge to the provider, comprehensive cost report
training for each contracted program.
] It is the responsibility
of the provider to ensure that each preparer signing the Cost Report
Methodology Certification has completed the required
state-sponsored
cost report training [
conducted by HHSC
]. Preparers
may be employees of the provider or persons who have been contracted
by the provider for the purpose of cost report preparation. Preparers
must complete cost report training for each program for which a cost
report is submitted. Preparers must complete cost report training
every other year for the odd-year cost report in order to receive
a certificate to complete both that odd-year cost report and the following
even-year cost report. If a new preparer wishes to complete an even-year
cost report and has not completed the previous odd-year cost report
training, to receive a certificate to complete the even-year cost
report, he/she must complete an even-year cost report training. A
copy of the most recent cost report training certificate for each
preparer of the cost report must be submitted with each cost report.
[
Travel costs to complete state-sponsored cost report training
are allowable within the travel limits specified in §355.103(b)(12)
of this title.
] Contracted preparer's fees to complete state-sponsored
cost report training are allowable.
(1) New preparers. Preparers, who have not previously completed the required state-sponsored cost report training and received a completion certificate, must attend state-sponsored classroom-based cost report training for each contracted program for which a cost report is to be submitted. Travel costs associated with completing the state-sponsored cost report training are allowable within the travel limits specified in §355.103(b)(12) of this title.
(2) All other preparers. Preparers who are not new preparers as defined in paragraph (1) of this subsection must complete state-sponsored online cost report training and receive a certificate of completion for each program for which a cost report is submitted. These preparers must receive their cost report training online and do not have the option of receiving completion certificates through classroom-based training. Preparers that participate in online training will be assessed a convenience fee, which will be determined by HHSC. Convenience fees assessed for state-sponsored online cost report training are allowable costs. Applicable federal and state accessibility standards apply to online training.
[
(1)
At the discretion
of HHSC, cost report preparers may be approved to train and/or test
online, or by other methods determined by HHSC, in lieu of the classroom
training sessions required in subsection (d) of this section. The
criteria that determine whether a cost report preparer may be approved
to train and/or test online are determined by HHSC. Preparers who
participate in online training and/or testing must pass an online
examination in order to receive a certificate of completion for each
program for which a cost report is submitted. Preparers that complete
classroom session(s) will not be required to pass an examination in
order to receive a certificate. HHSC determines the criteria for passing
the online examination. Preparers who participate in online training
and/or testing and who fail the examination are required to complete
the appropriate classroom training session. Preparers approved to
participate in online training and/or testing will be assessed a convenience
fee, which will be determined by HHSC, whether the preparer passes
or fails the online examination. The convenience fees assessed for
state-sponsored online cost report training and/or testing are allowable
costs. HHSC will provide the criteria for cost report preparers to
be approved to participate in online training and/or testing when
it mails the training and cost reporting information to providers.]
(3)
[
(2)
] For nursing facilities,
failure to file a completed cost report signed by preparers who have
completed the required cost report training [
and/or testing
]
may result in vendor hold as specified in §355.403 of this title
(relating to Vendor Hold).
(4)
[
(3)
] For all other programs,
failure to file a completed cost report signed by preparers who have
completed the required cost report training [
and/or testing
]
constitutes an administrative contract violation. In the case of an
administrative contract violation, procedural guidelines and informal
reconsideration and/or appeal processes are specified in §355.111
of this title (relating to Administrative Contract Violations).
(e) Generally accepted accounting principles. Except as otherwise specified by the cost determination process rules of this chapter, cost report instructions, or policy clarifications, cost reports should be prepared consistent with generally accepted accounting principles (GAAP), which are those principles approved by the American Institute of Certified Public Accountants (AICPA). Internal Revenue Service (IRS) laws and regulations do not necessarily apply in the preparation of the cost report. In cases where cost reporting rules differ from GAAP, IRS, or other authorities, HHSC rules take precedence for provider cost-reporting purposes.
(f) Allowable costs. Allowable costs are expenses, both direct and indirect, that are reasonable and necessary, as defined in paragraphs (1) and (2) of this subsection, and which meet the requirements as specified in subsections (i), (j), and (k) of this section, in the normal conduct of operations to provide contracted client services meeting all pertinent state and federal requirements. Only allowable costs are included in the reimbursement determination process.
(1) "Reasonable" refers to the amount expended. The test of reasonableness includes the expectation that the provider seeks to minimize costs and that the amount expended does not exceed what a prudent and cost-conscious buyer pays for a given item or service. In determining the reasonableness of a given cost, the following are considered:
(A) the restraints or requirements imposed by arm's-length bargaining, i.e., transactions with nonowners or other unrelated parties, federal and state laws and regulations, and contract terms and specifications; and
(B) the action that a prudent person would take in similar circumstances, considering his responsibilities to the public, the government, his employees, clients, shareholders, and members, and the fulfillment of the purpose for which the business was organized.
(2) "Necessary" refers to the relationship of the cost, direct or indirect, incurred by a provider to the provision of contracted client care. Necessary costs are direct and indirect costs that are appropriate in developing and maintaining the required standard of operation for providing client care in accordance with the contract and state and federal regulations. In addition, to qualify as a necessary expense, a direct or indirect cost must meet all of the following requirements:
(A) the expenditure was not for personal or other activities not directly or indirectly related to the provision of contracted services;
(B) the cost does not appear as a specific unallowable cost in §355.103 of this title;
(C) if a direct cost, it bears a significant relationship to contracted client care. To qualify as significant, the elimination of the expenditure would have an adverse impact on client health, safety, or general well-being;
(D) the direct or indirect expense was incurred in the purchase of materials, supplies, or services provided to clients or staff in the normal conduct of operations to provide contracted client care;
(E) the direct or indirect costs are not allocable to or included as a cost of any other program in either the current, a prior, or a future cost-reporting period;
(F) the costs are net of all applicable credits;
(G) allocated costs of each program are adequately substantiated; and
(H) the costs are not prohibited under other pertinent federal, state, or local laws or regulations.
(3) Direct costs are those costs incurred by a provider that are definitely attributable to the operation of providing contracted client services. Direct costs include, but are not limited to, salaries and nonlabor costs necessary for the provision of contracted client care. Whether or not a cost is considered a direct cost depends upon the specific contracted client services covered by the program. In programs in which client meals are covered program services, the salaries of cooks and other food service personnel are direct costs, as are food, nonfood supplies, and other such dietary costs. In programs in which client transportation is a covered program service, the salaries of drivers are direct costs, as are vehicle repairs and maintenance, vehicle insurance and depreciation, and other such client transportation costs.
(4) Indirect costs are those costs that benefit, or contribute to, the operation of providing contracted services, other business components, or the overall contracted entity. These costs could include, but are not limited to, administration salaries and nonlabor costs, building costs, insurance expense, and interest expense. Central office and/or home office administrative expenses are considered indirect costs.
(g) Unallowable costs. Unallowable costs are expenses that are not reasonable or necessary, according to the criteria specified in subsection (f)(1) - (2) of this section and which do not meet the requirements as specified in subsections (i), (j), and (k) of this section or which are specifically enumerated in §355.103 of this title or program-specific reimbursement methodology. Providers must not report as an allowable cost on a cost report a cost that has been determined to be unallowable. Such reporting may constitute fraud. (Refer to §355.106(a) of this title (relating to Basic Objectives and Criteria for Audit and Desk Review of Cost Reports)).
(1) For nursing facilities, placement as an allowable cost on a cost report of a cost which has been determined to be unallowable may result in vendor hold as specified in §355.403 of this title.
(2) For Intermediate Care Facilities for Persons with Mental Retardation, Home and Community-based Services, Service Coordination/Targeted Case Management, Rehabilitative Services, and Texas Home Living programs, placement as an allowable cost on a cost report a cost, which has been determined to be unallowable, constitutes an administrative contract violation. In the case of an administrative contract violation, procedural guidelines and informal reconsideration and/or appeal processes are specified in §355.111 of this title.
(3) For all other programs, placement as an allowable cost on a cost report of a cost, which has been determined to be unallowable, constitutes an administrative contract violation. In the case of an administrative contract violation, procedural guidelines and informal reconsideration and/or appeal processes are specified in §355.111 of this title.
(h) Other financial and statistical data. The primary purpose of the cost report is to collect allowable costs to be used as a basis for reimbursement determination. In addition, providers may be required on cost reports to provide information in addition to allowable costs to support allowable costs, such as wage surveys, workers' compensation surveys, or other statistical and financial information. Additional data requested may include, when specified and in the appropriate section or line number specified, costs incurred by the provider which are unallowable costs. All information, including other financial and statistical data, shown on a cost report is subject to the documentation and verification procedures required for an audit desk review and/or field audit.
(1) For nursing facilities, inaccuracy in providing, or failure to provide, required financial and statistical data may result in vendor hold as specified in §355.403 of this title.
(2) For Intermediate Care Facilities for Persons with Mental Retardation, Home and Community-based Services, Service Coordination/Targeted Case Management, Rehabilitative Services, and Texas Home Living programs, inaccuracy in providing, or failure to provide, required financial and statistical data constitutes an administrative contract violation. In the case of an administrative contract violation, procedural guidelines and informal reconsideration and/or appeal processes are specified in §355.111 of this title.
(3) For all other programs, inaccuracy in providing, or failure to provide, required financial and statistical data constitutes an administrative contract violation. In the case of an administrative contract violation, procedural guidelines and informal reconsideration and/or appeal processes are specified in §355.111 of this title.
(i) Related party transactions.
(1) In determining whether a contracted provider organization is related to a supplying organization, the tests of common ownership and control are to be applied separately. Related to a contracted provider means that the contracted provider to a significant extent is associated or affiliated with, has control of, or is controlled by the organization furnishing the services, equipment, facilities, leases, or supplies. Common ownership exists if an individual or individuals possess any ownership or equity in the contracted provider and the institution or organization serving the contracted provider. Control exists if an individual or an organization has the power, directly or indirectly, to significantly influence or direct the actions or policies of an organization or institution. If the elements of common ownership or control are not present in both organizations, then the organizations are deemed not to be related to each other. The existence of an immediate family relationship will create an irrefutable presumption of relatedness through control or attribution of ownership or equity interests where the significance tests are met. The following persons are considered immediate family for cost-reporting purposes:
(A) husband and wife;
(B) natural parent, child, and sibling;
(C) adopted child and adoptive parent;
(D) stepparent, stepchild, stepsister, and stepbrother;
(E) father-in-law, mother-in-law, sister-in-law, brother-in-law, son-in-law, and daughter-in-law;
(F) grandparent and grandchild;
(G) uncles and aunts by blood or marriage;
(H) nephews and nieces by blood or marriage; and
(I) first cousins.
(2) A determination as to whether an individual (or individuals) or organization possesses ownership or equity in the contracted provider organization and the supplying organization, so as to consider the organizations related by common ownership, will be made on the basis of the facts and circumstances in each case. This rule applies whether the contracted provider organization or supplying organization is a sole proprietorship, partnership, corporation, trust or estate, or any other form of business organization, proprietary or nonprofit. In the case of a nonprofit organization, ownership or equity interest will be determined by reference to the interest in the assets of the organization, e.g., a reversionary interest provided for in the articles of incorporation of a nonprofit corporation.
(3) The term control includes any kind of control, whether or not it is legally enforceable and however it is exercisable or exercised. It is the reality of the control which is decisive, not its form or the mode of its exercise. The facts and circumstances in each case must be examined to ascertain whether legal or effective control exists. Since a determination made in a specific case represents a conclusion based on the entire body of facts and circumstances involved, such determination should not be used as a precedent in other cases unless the facts and circumstances are substantially the same. Organizations, whether proprietary or nonprofit, are considered to be related through control to their directors in common.
(4) Costs applicable to services, equipment, facilities, leases, or supplies furnished to the contracted provider by organizations related to the provider by common ownership or control are includable in the allowable cost of the provider at the cost to the related organization. However, the cost must not exceed the price of comparable services, equipment, facilities, leases, or supplies that could be purchased or leased elsewhere. The purpose of this principle is twofold: to avoid the payment of a profit factor to the contracted provider through the related organization (whether related by common ownership or control), and to avoid payment of artificially inflated costs which may be generated from less than arm's-length bargaining. The related organization's costs include all actual reasonable costs, direct and indirect, incurred in the furnishing of services, equipment, facilities, leases, or supplies to the provider. The intent is to treat the costs incurred by the supplier as if they were incurred by the contracted provider itself. Therefore, if a cost would be unallowable if incurred by the contracted provider itself, it would be similarly unallowable to the related organization. The principles of reimbursement of contracted provider costs described throughout this title will generally be followed in determining the reasonableness and allowability of the related organization's costs, where application of a principle in a nonprovider entity would be clearly inappropriate.
(5) An exception is provided to the general rule applicable to related organizations. The exception applies if the contracted provider demonstrates by convincing evidence to the satisfaction of HHSC that certain criteria have been met. If all of the conditions of this exception are met, then the charges by the supplier to the contracted provider for such services, equipment, facilities, leases, or supplies are allowable costs. If Medicare has made a determination that a related party situation does not exist or that an exception to the related party definition was granted, HHSC will review the determination made by Medicare to determine if it is applicable to the current situation of the contracted provider and in compliance with this subsection (relating to related party transactions). In order to have the Medicare determination considered for approval by HHSC, a copy of the applicable Medicare determination must accompany each written exception request submitted to HHSC, along with evidence supporting the Medicare determination for the current cost-reporting period. If the exception granted by Medicare no longer is applicable due to changes in circumstances of the contracted provider or because the circumstances do not apply to the contracted provider, HHSC may choose not to consider the Medicare determination. Written requests for an exception to the general rule applicable to related organizations must be submitted for approval to the HHSC Rate Analysis Department no later than 45 days prior to the due date of the cost report in order to be considered for that year's cost report. Each request must include documentation supporting that the contracted provider meets each of the four criteria listed in subparagraphs (A) - (D) of this paragraph. Requests that do not include the required documentation for each criteria will not be considered for that year's cost report.
(A) The supplying organization is a bona fide separate organization. This means that the supplier is a separate sole proprietorship, partnership, joint venture, association or corporation and not merely an operating division of the contracted provider organization.
(B) A majority of the supplying organization's business activity of the type carried on with the contracted provider is transacted with other organizations not related to the contracted provider and the supplier by common ownership or control and there is an open, competitive market for the type of services, equipment, facilities, leases, or supplies furnished by the organization. In determining whether the activities are of similar type, it is important also to consider the scope of the activity. The requirement that there be an open, competitive market is merely intended to assure that the item supplied has a readily discernible price that is established through arm's-length bargaining by well-informed buyers and sellers.
(C) The services, equipment, facilities, leases, or supplies are those which commonly are obtained by entities such as the contracted provider from other organizations and are not a basic element of contracted client care ordinarily furnished directly to clients by such entities. This requirement means that entities such as the contracted provider typically obtain the services, equipment, facilities, leases, or supplies from outside sources, rather than producing them internally.
(D) The charge to the contracted provider is in line with the charge of such services, equipment, facilities, leases, or supplies in the open, competitive market and no more than the charge made under comparable circumstances to others by the organization for such services, equipment, facilities, leases, or supplies.
(6) Disclosure of all related-party information on the cost report is required for all costs reported by the contracted provider, including related-party transactions occurring at any level in the provider's organization, (e.g., the central office level, and the individual contracted provider level). The contracted provider must make available, upon request, adequate documentation to support the costs incurred by the related party. Such documentation must include an identification of the related person's or organization's total costs, the basis of allocation of direct and indirect costs to the contracted provider, and other business entities served. If a contracted provider fails to provide adequate documentation to substantiate the cost to the related person or organization, then the reported cost is unallowable. For further guidelines regarding adequate documentation, refer to §355.105(b)(2) of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures).
(7) When calculating the cost to the related organization, the cost-determination guidelines specified in this section and in §355.103 of this title apply.
(j) Cost allocation. Direct costing must be used whenever reasonably possible. Direct costing means that allowable costs, direct or indirect, (as defined in subsection (f)(3) - (4) of this section) incurred for the benefit of, or directly attributable to, a specific business component must be directly charged to that particular business component. For example, the payroll costs of a direct care employee who works across cost areas within one contracted program would be directly charged to each cost area of that program based upon that employee's continuous daily time sheets and the costs of a direct care employee who works across more than one service delivery area would also be directly charged to each service delivery area based upon that employee's continuous daily time sheets.
(1) If cost allocation is necessary for cost-reporting purposes, contracted providers must use reasonable methods of allocation and must be consistent in their use of allocation methods for cost-reporting purposes across all program areas and business entities.
(A) The allocation method should be a reasonable reflection of the actual business operations. Allocation methods that do not reasonably reflect the actual business operations and resources expended toward each unique business entity are not acceptable. Allocated costs are adjusted if HHSC considers the allocation method to be unreasonable. An indirect allocation method approved by some other department, program, or governmental entity is not automatically approved by HHSC for cost-reporting purposes.
(B) HHSC reviews each cost-reporting allocation method on a case-by-case basis in order to ensure that the reported costs fairly and reasonably represent the operations of the contracted provider. If in the course of an audit it is determined that an existing or approved allocation method does not fairly and reasonably represent the operations of the contracted provider, then an adjustment to the allocation method will be made consistent with subsection (f)(3) - (4) of this section. A contracted provider may request an informal review, and subsequently an appeal, of a decision concerning its allocation methods in accordance with §355.110 of this title (relating to Informal Reviews and Formal Appeals).
(C) Any allocation method used for cost-reporting purposes must be consistently applied across all contracted programs and business entities in which the contracted provider has an interest.
(D) Providers must use an allocation method approved or required by HHSC. Any change in cost-reporting allocation methods from one year to the next must be fully disclosed by the contracted provider on its cost report and must be accompanied by a written explanation of the reasons and justification for such change. If the provider wishes to use an allocation method that is not in compliance with the cost-reporting allocation methods in paragraphs (3) - (4) of this subsection, the contracted provider must obtain written prior approval from HHSC's Rate Analysis Department.
(i) Requests for approval to use an allocation method other than those identified in paragraphs (3) - (4) of this subsection or for approval of a provider's change in cost-reporting allocation method other than those identified in paragraphs (3) - (4) of this subsection must be received by HHSC's Rate Analysis Department prior to the end of the contracted provider's fiscal year. Requests for approval of allocation methods will not be acceptable as a basis for the extension of the cost report due date.
(ii) The HHSC Rate Analysis Department will forward its written decision to the contracted provider within 45 days of its receipt of the provider's original written request. If sufficient documentation is not provided by the provider to verify the acceptability of the allocation method, then HHSC may extend the decision time frame. However, an extension of the due date of the cost report will not be granted. Written decisions made on or after the due date of the cost report will apply to the next year's cost report. A contracted provider may request an informal review, and subsequently an appeal, of a decision concerning its allocation methods in accordance with §355.110 of this title.
(iii) Failure to use an allocation method approved or required by HHSC or to disclose a change in an allocation to HHSC will result in the following.
(I) For nursing facilities, failure to disclose a change in an allocation method or failure to use the allocation method approved or required by HHSC may result in vendor hold as specified in §355.403 of this title.
(II) For Intermediate Care Facilities for Persons with Mental Retardation, Home and Community-based Services, Service Coordination/Targeted Case Management, Rehabilitative Services, and Texas Home Living programs, failure to use the allocation method approved or required by HHSC constitutes an administrative contract violation. In the case of an administrative contract violation, procedural guidelines and informal reconsideration and/or appeal processes are specified in §355.111 of this title.
(III) For all other programs, failure to disclose a change in an allocation method or failure to use the allocation method approved or required by HHSC constitutes an administrative contract violation. In the case of an administrative contract violation, procedural guidelines and informal reconsideration and/or appeal processes are specified in §355.111 of this title.
(2) Cost-reporting methods for allocating costs must be clearly and completely documented in the contracted provider's workpapers, with details as to how pooled costs are allocated to each segment of the business entity, for both contracted and noncontracted programs.
(A) If a contracted provider has questions regarding the reasonableness of an allocation method, that contracted provider should request written approval from the HHSC Rate Analysis Department prior to submitting a cost report utilizing the allocation method in question. Requests for approval must be received by the HHSC Rate Analysis Department prior to the end of the contracted provider's fiscal year. Requests for approval of allocation methods will not be acceptable as a basis for the extension of the cost report due date.
(B) The HHSC Rate Analysis Department will forward its written decision to the contracted provider within 45 days of its receipt of the original written request. If sufficient documentation is not provided by the provider to verify the acceptability of the allocation method, HHSC may extend the decision time frame. However, an extension of the due date of the cost report will not be granted. Written decisions made on or after the due date of the cost report will apply to the next year's cost report. A contracted provider may request an informal review, and subsequently an appeal, of a decision concerning its allocation methods in accordance with §355.110 of this title.
(3) When a building is shared and the building usage is separate and distinct for each entity using the building, the building costs, identified as building and facility cost categories on the cost report, should be allocated based upon square footage and may not be allocated with other indirect costs as a pool of costs. When the same building space is shared by various entities, the shared building costs, identified as building and facility cost categories on the cost report, should be allocated using a reasonable method which reflects the actual usage, such as an allocation based on time in shared activity areas or a functional study of shared dietary costs related to shared dining and kitchen areas.
(4) Where costs are shared, are not directly chargeable and are allocated as a pool of costs, the following allocation methods are acceptable for cost-reporting purposes.
(A) If all the business components of a contracted provider have equivalent units of equivalent service, indirect costs must be allocated based upon each business component's units of service. For example, if a provider had two nursing facilities, indirect costs requiring allocation as a pool of costs must be allocated based upon each nursing facility's units of service, since the units of service are equivalent units and the services are equivalent services. If a provider had a nursing facility and a residential care program, indirect costs requiring allocation as a pool of costs could not be allocated based upon units of service because even though the units of service for a nursing facility and a residential care facility are equivalent units, the services are not equivalent services. If a home health agency has indirect costs requiring allocation as a pool of costs across its Medicare home health services and its Medicaid primary home care services, it could not use units of service to allocate those costs, since neither the units of service nor the services are equivalent.
(B) If all of a contracted provider's business components are labor-intensive without programmatic residential facility or residential building costs, the contracted provider must allocate its indirect costs requiring allocation as a pool of costs based either on each business component's pro rata share of salaries or labor costs or on a cost-to-cost basis.
(i) For cost-reporting cost allocation purposes, the term "salaries" includes wages paid to employees directly charged to the specific business component. The term "salaries" also includes fees paid to contracted individuals, excluding consultants, who perform services routinely performed by employees, which are directly charged to the specific business component. The term "salaries" does not include payroll taxes and employee benefits associated with the wages of employees.
(ii) For cost-reporting cost-allocation purposes, the term "labor costs" includes salaries as defined in clause (i) of this subparagraph, plus the payroll taxes and employee benefits associated with the wages of the employees.
(iii) The cost-to-cost method allocates costs based upon the percentage of each business component's directly-charged costs to the total directly-charged costs of all business components.
(C) If a contracted provider's business components are mixed, with some being labor-intensive and others having a programmatic residential or institutional component, the contracted provider must allocate its indirect costs requiring allocation as a pool of costs either:
(i) based upon the ratio of each business component's total costs less that business component's facility or building costs, as related to the contracted provider's total business component costs less facility or building costs for all the contracted provider's business components, with "facility or building costs" referring to those cost categories as identified on the cost report; or
(ii) based upon the labor costs method stated in subparagraph (B)(ii) of this paragraph.
(D) In order to achieve a more accurate and representative reporting of costs than results from allocating shared indirect costs as a pool of costs, a provider may choose to allocate its indirect shared expenses on an appropriate and reasonable functional basis. If allocating shared direct client care costs, a provider may use an appropriate and reasonable functional method. For example, costs of a central payroll operation could be allocated to all business components based on the number of checks issued; the costs of a central purchasing function could be allocated based on the number of purchases made or requisitions handled; payroll costs for an administrative employee working across business components could be directly charged based upon that employee's time sheets and/or allocated based upon a documented time study; food costs could be allocated based upon a functional study of shared dietary costs; transportation equipment costs could be allocated based upon mileage logs; and shared laundry costs could be allocated based upon a functional study of the number of pounds/loads of laundry processed. Providers choosing to allocate allowable employee-related self-insurance paid claims in accordance with §355.103(b)(10)(B)(ii) of this title should base the allocation on percentage of salaries of employees benefiting from the coverage for fully self-insured situations or on percentage of premiums of covered employees for partially self-insured situations since purchased premiums must be directly charged.
(E) Because the determination of reimbursement is based on cost data, allocation methods based upon revenue streams are inappropriate and unallowable.
(k) Net expenses. Net expenses are gross expenses less any purchase discounts or returns and allowances. Purchase discounts are cash discounts reducing the purchase price as a result of prompt payment, quantity purchases, or for other reasons. Purchase returns and allowances are reductions in expenses resulting from returned merchandise or merchandise which is damaged, lost, or incorrectly billed. Only net expenses may be reported on the cost report. Expenses reported on the cost report must be adjusted for all such purchase discounts or returns and allowances.
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 July 30, 2007.
TRD-200703312
Steve Aragón
Chief Counsel
Texas Health and Human Services Commission
Earliest possible date of adoption: September 9, 2007
For further information, please call: (512) 424-6900
The Texas Health and Human Services Commission (HHSC) proposes to amend two rules in its Reimbursement Rates Chapter relating to care for the aged and disabled: §355.112, concerning Attendant Compensation Rate Enhancement and §355.503, concerning Reimbursement Methodology for the Community-Based Alternatives Waiver Program.
Background and Justification
Texas Government Code, §533.061, as added by House Bill 1771, 79th Legislature, Regular Session, 2005, and the 2006-07 General Appropriations Act (Article II, Special Provisions, Section 49(b), S.B. 1, 79th Legislature, Regular Session, 2005), directed HHSC to develop a non-capitated, enhanced primary care, case management model of Medicaid managed care in the Dallas/Fort Worth area. In response to this direction, HHSC, with the Department of Aging and Disability Services (DADS), developed the Integrated Care Management (ICM) program. Under the ICM program, utilization management, service coordination, and related functions will be performed by a single ICM contractor while direct services will be provided by ICM service providers contracted with DADS. The ICM program is expected to be implemented mid-2007. Upon implementation of the ICM program, DADS Community-Based Alternatives (CBA)-Home and Community Support Services (HCSS) and CBA Assisted Living/Residential Care (AL/RC) contracts in the ICM service area will be cancelled and replaced with ICM-HCSS and ICM AL/RC contracts between the direct service providers and DADS. The provider base and program requirements under these new contracts will remain substantially the same.
The 2000-01 General Appropriations Act (Article II, Department of Human Services, Rider 37, H.B. 1, 76th Legislature, Regular Session, 1999) directed HHSC to incentivize increased compensation for community care attendants. In response to this direction, HHSC developed the Attendant Compensation Rate Enhancement ("Enhancement"). The Enhancement is a voluntary program for providers in certain community-based, long-term care programs. Providers participating in the Enhancement receive higher payment rates for their attendant services and are, in turn, required to spend approximately 90 percent of their total attendant revenues, including their enhanced add-on rate revenues, on attendant compensation. For participants that fail to meet their spending requirements, HHSC recoups their enhanced rate add-on revenues associated with the unmet spending requirements. Current rules limit participation in the Enhancement program to providers contracted in the following programs: Primary Home Care (PHC); Day Activity and Health Services (DAHS); Residential Care (RC); Community Living Assistance and Support Services (CLASS)-Direct Service Agency; CBA-HCSS; Deaf-Blind Multiple Disabilities Waiver (DBMD); and CBA AL/RC.
Section-by-Section Summary
The proposed amendment to §355.112 adds ICM-HCSS and ICM AL/RC to the list of programs eligible to participate in the Enhancement. The amendment also adds language to specify that any references in the rule to CBA program services also apply to the parallel services offered under the ICM program. This amendment will enable CBA-HCSS and CBA AL/RC providers in the ICM service area who are currently participating in the Enhancement to continue participation when their contracts are replaced with ICM-HCSS and ICM AL/RC contracts.
The proposed amendment to §355.503 incorporates ICM-HCSS and ICM AL/RC into the CBA reimbursement methodology. The amendment clarifies that, for reimbursement determination purposes, ICM-HCSS and ICM AL/RC providers are subject to the same cost reporting requirements and are incorporated into the same reimbursement determination methodology as CBA-HCSS and CBA AL/RC providers. The amendment excludes ICM direct service providers from payment for pre-enrollment assessments of potential waiver applicants, since these assessments will be performed by the single ICM contractor.
Fiscal Note
Thomas M. Suehs, Deputy Executive Commissioner for Financial Services, has determined that, for the first five-year period the proposed amendment is in effect, there are no fiscal implications for state government as a result of enforcing or administering the section. There are no fiscal implications for local governments as a result of enforcing or administering the section.
Small Business and Micro-business Impact Analysis
Mr. Suehs has also determined that there will be no adverse economic effect on small or micro-businesses as a result of enforcing or administering the proposed amended section. There is no anticipated economic cost to persons who are required to comply with the proposed section. There is no anticipated effect on local employment in geographic areas affected by this section.
Public Benefit and Costs
Carolyn Pratt, Director of Rate Analysis, has determined that, during the first five years the proposed amended section is in effect, the public benefit anticipated as a result of enforcing §355.112 is that CBA-HCSS and CBA AL/RC providers in the ICM service area currently participating in the Enhancement will be able to continue participation when their contracts are replaced with ICM-HCSS and ICM AL/RC contracts. This proposed amendment will allow these providers to maintain their current attendant wage and benefit levels. Without the amendment, these providers would receive a lower payment rate under their ICM contract than under their current CBA contract, which, in turn, could lead to providers having to reduce attendant wages and/or benefits.
Ms. Pratt has determined that, during the first five years the proposed amended section is in effect, the public benefit anticipated as a result of enforcing §355.503 is that ICM-HCSS and ICM AL/RC providers will receive appropriate fee-for-service payment rates for services provided under ICM.
Regulatory Analysis
HHSC has determined that this proposal is not a "major environmental rule" 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 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 proposal may be submitted by mail to Sarah Hambrick in the Rate Analysis Division, Texas Health and Human Services Commission, P.O. Box 85200, Austin, TX 78708-5200; by fax at (512) 491-1998; or by e-mail at Sarah.Hambrick@hhsc.state.tx.us within 30 days of publication of this proposal in the Texas Register.
Subchapter A. COST DETERMINATION PROCESS
Statutory Authority
The amendments are proposed under the Texas Government Code, §531.033, which provides the Executive Commissioner of HHSC with broad rulemaking authority, and 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.
§355.112.Attendant Compensation Rate Enhancement.
(a) Eligible programs. Providers contracted in the
Primary Home Care (PHC); Day Activity and Health Services (DAHS);
Residential Care (RC); Community Living Assistance and Support Services
(CLASS)--Direct Service Agency; Community Based Alternatives (CBA)--Home
and Community Support Services (HCSS);
Integrated Care Management
(ICM)-HCSS;
Deaf-Blind Multiple Disabilities Waiver (DBMD);
[
and
] CBA--Assisted Living/Residential Care (AL/RC) programs;
and ICM AL/RC
are eligible to participate in the attendant compensation
rate enhancement.
References in this section to CBA program services
also apply to the parallel services offered under the ICM program.
(b) Definition of attendant. An attendant is the unlicensed caregiver providing direct assistance to the clients with Activities of Daily Living (ADL) and Instrumental Activities of Daily Living (IADL).
(1) In the case of DAHS, RC, and CBA AL/RC programs, the attendant may perform some nonattendant functions. In such cases, the attendant must perform attendant functions at least 80% of his or her total time worked. Staff in these settings not providing attendant services at least 80% of their total time worked are not considered attendants. Time studies must be performed in accordance with §355.105(b)(2)(B)(i) for staff in the DAHS, RC, and CBA AL/RC programs that are not full-time attendants but perform attendant functions to determine if a staff member meets this 80% requirement. Failure to perform the time studies for these staff will result in the staff not being considered to be attendants.
(2) Attendants do not include the director, administrator, assistant director, assistant administrator, clerical and secretarial staff, professional staff, other administrative staff, licensed staff, attendant supervisors, cooks and kitchen staff, maintenance and groundskeeping staff, activity director, and laundry and housekeeping staff. In the case of PHC, CLASS, CBA HCSS, and DBMD staff other than attendants may deliver attendant services and be considered an attendant if they must perform attendant services that cannot be delivered by another attendant to prevent a break in service.
(3) An attendant also includes a driver in the DAHS, RC, and CBA AL/RC programs.
(4) An attendant also includes medication aides in the RC and CBA AL/RC programs.
(c) Attendant compensation cost center. This cost center will include employee compensation, contract labor costs, and personal vehicle mileage reimbursement for attendants as defined in subsection (b) of this section.
(1) Attendant compensation is the allowable compensation for attendants defined in §355.103(b)(1) of this title (relating to Specifications for Allowable and Unallowable Costs) and required to be reported as either salaries and/or wages, including payroll taxes and workers' compensation, or employee benefits. Benefits required by §355.103(b)(1)(A)(iii) of this title (relating to Specifications for Allowable and Unallowable Costs) to be reported as costs applicable to specific cost report line items, except as noted in paragraph (3) of this subsection, are not to be included in this cost center.
(2) Contract labor refers to personnel for whom the contracted provider is not responsible for the payment of payroll taxes, such as FICA, Medicare, and federal and state unemployment insurance, and who perform tasks routinely performed by employees where allowed by program rules. Allowable contract labor costs are defined in §355.103(b)(2)(C) of this title (relating to Specifications for Allowable and Unallowable Costs).
(3) Mileage reimbursement paid to the attendant for the use of his or her personal vehicle and which is not subject to payroll taxes is considered compensation for this cost center.
(d) Rate year. The rate year begins on the first day of September and ends on the last day of August of the following year.
(e) Open enrollment. Open enrollment begins on the first day of July and ends on the last day of that same July preceding the rate year for which payments are being determined, unless the Texas Health and Human Services Commission (HHSC) notified providers before the first day of July that open enrollment has been postponed or cancelled. Should conditions warrant, HHSC may conduct additional enrollment periods during a rate year.
(f) Enrollment contract amendment. An initial enrollment contract amendment is required from each provider choosing to participate in the attendant compensation rate enhancement. On the initial enrollment contract amendment, the provider must specify for each contract a desire to participate or not to participate. The participating provider must specify for each program the desire to have all participating contracts be considered as a group or as individuals for purposes related to the attendant compensation rate enhancement. For the PHC program, the participating provider must also specify if he wishes to have priority, nonpriority, or both priority and nonpriority services participating in the attendant compensation rate enhancement. If the PHC provider selects to have their contracts participating as a group, then the provider must select to have priority, nonpriority, or both priority and nonpriority services participate for the entire group of contracts. For providers delivering services to both RC and CBA AL/RC clients in the same facility, participation includes both the RC and CBA AL/RC programs. After initial enrollment, participating and nonparticipating providers may request to modify their enrollment status during any open enrollment period. A nonparticipant can request to become a participant; a participant can request to become a nonparticipant; a participant can request to change its participation level; a provider whose participating contracts are being considered as a group can request to have them considered as individuals; and a provider whose participating contracts are being considered as individuals can request to have them considered as a group. Providers whose prior year enrollment was limited by subsection (u) of this section who request to increase their enrollment levels will be limited to increases of three or fewer enhancement levels during any single open enrollment period. Requests to modify a provider's enrollment status during an open enrollment period must be received by HHSC Rate Analysis by the last day of the open enrollment period as per subsection (e) of this section. If the last day of open enrollment is on a weekend day, state holiday, or national holiday, the next business day will be considered the last day requests will be accepted. Providers from which HHSC Rate Analysis has not received an acceptable request to modify their enrollment by the last day of the open enrollment period will continue at the level of participation and group or individual status in effect during the open enrollment period within available funds until the provider notifies HHSC in accordance with subsection (x) of this section that it no longer wishes to participate or until the provider's enrollment is limited in accordance with subsection (u) of this section. To be acceptable, an enrollment contract amendment must be completed according to instructions, signed by an authorized signatory as per the Texas Department of Aging and Disability Services (DADS) Corporate Board of Directors Resolution applicable to the provider's contract or ownership type, and legible.
(g) New contracts. For the purposes of this section, for each rate year a new contract is defined as a contract delivering its first day of service to a DADS client on or after the first day of the open enrollment period, as defined in subsection (e) of this section, for that rate year. Contracts that underwent a contract assignment are not considered new contracts. For purposes of this subsection, an acceptable contract amendment is defined as a legible enrollment contract amendment that has been completed according to instructions, signed by an authorized signator as per the DADS Corporate Board of Directors Resolution applicable to the provider's contract or ownership type, and received by HHSC Rate Analysis within 30 days of the mailing of notification to the provider that such an enrollment contract amendment must be submitted. If the 30th day is on a weekend day, state holiday, or national holiday, the next business day will be considered the last day requests will be accepted. New contracts will receive the nonparticipant attendant compensation rate as specified in subsection (l) of this section with no enhancements. For new contractors specifying their desire to participate in the attendant compensation rate enhancement on an acceptable enrollment contract amendment, the attendant compensation rate is adjusted as specified in subsection (r) of this section, effective on the first day of the month following receipt by HHSC of an acceptable enrollment contract amendment. If the granting of newly requested enhancements was limited by subsection (p)(2)(B) of this section during the most recent enrollment, enrollment for new contracts will be subject to that same limitation. If the most recent enrollment was cancelled by subsection (e) of this section, new contracts will not be permitted to be enrolled.
(h) Attendant Compensation Report submittal requirements. Attendant Compensation Reports must be submitted as follows.
(1) Annual Attendant Compensation Report. All participating contracted providers will provide HHSC Rate Analysis, in a method specified by HHSC Rate Analysis, an annual Attendant Compensation Report reflecting the activities of the provider while delivering contracted services from the first day of the rate year through the last day of the rate year. This report must be submitted for each participating contract if the provider requested participation individually for each contract; or, if the provider requested participation as a group, the report must be submitted as a single aggregate report covering all contracts participating at the end of the rate year within one program of the provider. A participating contract that has been terminated in accordance with subsection (v) of this section or that has undergone a contract assignment in accordance with subsection (w) of this section will be considered to have participated on an individual basis for compliance with reporting requirements for the owner prior to the termination or contract assignment. This report will be used as the basis for determining compliance with the spending requirements and recoupment amounts as described in subsection (s) of this section. Contracted providers failing to submit an acceptable annual Attendant Compensation Report within 60 days of the end of the rate year will be placed on vendor hold until such time as an acceptable report is received and processed by HHSC Rate Analysis.
(A) When a participating provider changes ownership through a contract assignment, the prior owner must submit an Attendant Compensation Report covering the period from the beginning of the rate year to the effective date of the contract assignment as determined by HHSC or its designee. This report will be used as the basis for determining any recoupment amounts as described in subsection (s) of this section. The new owner will be required to submit an Attendant Compensation Report covering the period from the day after the date recognized by HHSC or its designee as the contract-assignment effective date to the end of the rate year.
(B) Participating providers whose contracts are terminated voluntarily or involuntarily must submit an Attendant Compensation Report covering the period from the beginning of the rate year to the date recognized by HHSC or its designee as the contract termination date. This report will be used as the basis for determining recoupment as described in subsection (s) of this section.
(C) Participating providers who voluntarily withdraw from participation, as described in subsection (x) of this section, must submit an Attendant Compensation Report within 60 days from the date of withdrawal as determined by HHSC. This report must cover the period from the beginning of the rate year through the date of withdrawal as determined by HHSC and will be used as the basis for determining any recoupment amounts as described in subsection (s) of this section.
(D) Participating providers whose cost report year, as defined in §355.105(b)(5) of this title (relating to General Reporting and Documentation Requirements, Methods and Procedures), coincides with the state of Texas fiscal year, are exempt from the requirement to submit a separate annual Attendant Compensation Report. For these contracts, their cost report will be considered their annual Attendant Compensation Report.
(2) Other reports. HHSC may require other reports from all contracts as needed.
(3) Vendor hold. HHSC or its designee will place on hold the vendor payments for any participating contractor who does not submit an Attendant Compensation Report completed in accordance with all applicable rules and instructions by the due dates described in this subsection. This vendor hold will remain in effect until HHSC Rate Analysis receives an acceptable Attendant Compensation Report. Participating contracts that do not submit an Attendant Compensation Report completed in accordance with all applicable rules and instructions within 60 days of the due dates described in this subsection will become nonparticipants retroactive to the first day of the reporting period in question and will be subject to an immediate recoupment of funds related to participation paid to the facility for services provided during the reporting period in question. These contracts will remain nonparticipants and recouped funds will not be restored until they submit an acceptable report and repay to HHSC or its designee funds identified for recoupment from subsection (s) of this section. If an acceptable report is not received within 365 days of the due date, the recoupment will become permanent and, if all funds associated with participation during the reporting period in question have been recouped by HHSC or its designee, the vendor hold associated with the report will be released. In addition, participating contracts that have terminated or undergone a contract assignment from one legal entity to a different legal entity that do not submit an Attendant Compensation Report within 60 days of the contract assignment or contract termination effective date will become nonparticipants retroactive to the first day of the reporting period in question. These contracts will remain nonparticipants and recouped funds will not be restored until they submit an acceptable report and repay to HHSC or its designee funds identified for recoupment under subsection (s) of this section. If an acceptable report is not received within 365 days of the contract assignment or contract termination effective date, the recoupment will become permanent and, if all funds associated with participation during the reporting period in question have been recouped by HHSC or its designee, the vendor hold associated with the report will be released.
(4) Provider-initiated amended Attendant Compensation Reports. Provider-initiated amended Attendant Compensation Reports must be received prior to the date the provider is notified of compliance with spending requirements for the report in question in accordance with subsection (s) of this section.
(i) Attendant Compensation Report contents. Each Attendant Compensation Report will include any information required by HHSC to implement this attendant compensation rate enhancement.
(j) Completion of compensation reports. All Attendant Compensation Reports must be completed in accordance with the provisions of §§355.102 - 355.105 of this title (relating to General Principles of Allowable and Unallowable Costs, Specifications for Allowable and Unallowable Costs, Revenues, and General Reporting and Documentation Requirements, Methods, and Procedures) and may be reviewed or audited in accordance with §355.106 of this title (relating to Basic Objectives and Criteria for Audit and Desk Review of Cost Reports). Beginning with the rate year that starts September 1, 2002, all Attendant Compensation Reports must be completed by preparers who have attended the required cost report training for the applicable program under §355.102(d) of this title (relating to General Principles of Allowable and Unallowable Costs). For Attendant Compensation Reports for even numbered state fiscal years, preparers must have attended the cost report training for that same even numbered year. For Attendant Compensation Reports for odd numbered state fiscal years, preparers must have attended the most recent cost report training sessions provided prior to the due date of the Attendant Compensation Report.
(k) Enrollment. Providers choosing to participate in the attendant compensation rate enhancement must submit to HHSC a signed enrollment contract amendment as described in subsection (f) of this section. Participation is determined separately for each program specified in subsection (a) of this section, except that for providers delivering services to both RC and CBA AL/RC clients in the same facility, participation includes both the RC and CBA AL/RC programs. For PHC, participation is also determined separately for priority and nonpriority services. Participation will remain in effect, subject to availability of funds, until the provider notifies HHSC, in accordance with subsection (x) of this section, that it no longer wishes to participate or until HHSC excludes the contract from participation for reasons outlined in subsection (u) of this section. Contracts voluntarily withdrawing from participation will have their participation end effective with the date of withdrawal as determined by HHSC. Contracts excluded from participation will have their participation end effective on the date determined by HHSC.
(l) Determination of attendant compensation rate component for nonparticipating contracts. For each of the programs identified in subsection (a) of this section, HHSC will calculate an attendant compensation rate component for nonparticipating contracts as follows.
(1) Determine for each contract included in the cost report data base used in determination of rates in effect on September 1, 1999, the attendant compensation cost center from subsection (c) of this section.
(2) Adjust the cost center data from paragraph (1) of this subsection in order to account for inflation utilizing the inflation factors used in the determination of the September 1, 1999 rates.
(3) For each contract included in the cost report database used to determine rates in effect on September 1, 1999, divide the result from paragraph (2) of this subsection by the corresponding units of service. Provider projected costs per unit of service are rank-ordered from low to high, along with the provider's corresponding units of service. For DAHS, the median cost per unit of service is selected. For all other programs, the units of service are summed until the median unit of service is reached. The corresponding projected cost per unit of service is the weighted median cost component. The result is multiplied by 1.044 for all programs in subsection (a) of this section except for RC and CBA AL/RC, which is multiplied by 1.07. The result is the attendant compensation rate component for nonparticipating contracts.
(4) The attendant compensation rate component for nonparticipating contracts will remain constant over time, except for adjustments necessitated by increases in the minimum wage. In such cases, adjustments to the nonparticipating rates are limited to ensuring that these rates are adequate to cover mandated minimum wage levels.
(m) Determination of attendant compensation base rate for participating contracts.
(1) For each of the programs identified in subsection (a) of this section except for CBA AL/RC, the attendant compensation base rate is equal to the attendant compensation rate component for nonparticipating contracts from subsection (l) of this section.
(2) For CBA AL/RC, the attendant compensation base rate will be determined by taking into consideration quality of care, labor market conditions, economic factors, and budget constraints.
(n) Determination of attendant compensation rate enhancements. HHSC will determine a per diem add-on payment for each enhanced attendant compensation level using data from sources such as cost reports, surveys, and/or other relevant sources and taking into consideration quality of care, labor market conditions, economic factors, and budget constraints. The attendant compensation rate enhancement add-ons will be determined on a per-unit-of-service basis applicable to each program or service. Add-on payments may vary by enhancement level.
(o) Enhanced attendant compensation. Contracts desiring to participate in the enhanced attendant compensation rate may request attendant compensation levels from an array of enhanced attendant compensation options and associated add-on payments determined in subsection (n) of this section during open enrollment. Participating providers who select to have all of their contracts participate in a program as a group must request a single attendant compensation level for the entire group of contracts. PHC providers participating as a group must select a single attendant compensation level for their entire group of contracts for the priority and/or nonpriority services they have selected for participation.
(p) Granting attendant compensation rate enhancements. HHSC divides all requested enhancements, after applying any enrollment limitations from subsection (u) of this section, into two groups: pre-existing enhancements, which providers request to carry over from the prior year, and newly-requested enhancements. Newly-requested enhancements may be enhancements requested by providers who were nonparticipants in the prior year or by providers who were participants in the prior year who seek additional enhancements. Using the process described herein, HHSC first determines the distribution of carry-over enhancements. If funds are available after the distribution of carry-over enhancements, HHSC determines the distribution of newly-requested enhancements. HHSC may not distribute newly-requested enhancements to providers owing funds identified for recoupment under subsection (s) of this section.
(1) For all programs and levels except for CBA AL/RC Level 1, HHSC determines projected units of service for contracts requesting each enhancement level and multiplies this number by the enhancement rate add-on amount associated with that enhancement level as determined in subsection (n) of this section. For CBA AL/RC Level 1, HHSC determines projected units of service for CBA AL/RC contracts requesting Level 1 and multiplies this number by the sum of the difference between the base rate and the nonparticipant rate and the enhancement add-on amount associated with enhancement Level 1 as follows: (Base Rate - Nonparticipant Rate) + Level 1 add-on amount.
(2) HHSC compares the sum of the products from paragraph (1) of this subsection to available funds.
(A) If the sum of the products is less than or equal to available funds, all requested enhancements are granted.
(B) If the sum of the products is greater than available funds, enhancements are granted beginning with the lowest level of enhancement and granting each successive level of enhancement until requested enhancements are granted within available funds. Based upon an examination of existing compensation levels and compensation needs, HHSC may grant certain enhancement options priority for distribution.
(q) Notification of granting of enhancements. Participating contracts are notified, in a manner determined by HHSC, as to the disposition of their request for attendant compensation rate enhancements.
(r) Total attendant compensation rate for participating providers. Each participating provider's total attendant compensation rate will be equal to the attendant compensation base rate from subsection (m) of this section plus any add-on payments associated with enhanced attendant compensation levels selected by and awarded to the provider during open enrollment.
(s) Spending requirements for participating contracts. HHSC will determine from the Attendant Compensation Report, as specified in subsection (h) of this section and other appropriate data sources, the amount of attendant compensation spending per unit of service delivered. The provider's compliance with the spending requirement is determined based on the total attendant compensation spending as reported on the Attendant Compensation Report for each participating contract if the provider requested participation individually for each contract. A participating contract that has been terminated in accordance with subsection (v) of this section or that has undergone a contract assignment in accordance with subsection (w) of this section will be considered to have participated on an individual basis for compliance with the spending requirement for the owner prior to the termination or contract assignment. In all other cases, if the provider specified that he wished to have all participating contracts be considered as a group for purposes related to the attendant compensation rate enhancement (as specified in subsection (f) of this section) compliance with the spending requirement is based on the total attendant compensation as reported on the single aggregate Attendant Compensation Report described in subsection (h) of this section. Compliance with the spending requirement is determined separately for each program specified in subsection (a) of this section, except for providers delivering services to both RC and CBA AL/RC clients in the same facility whose compliance is determined by combining both programs. HHSC will calculate recoupment, if any, as follows.
(1) For the rate years beginning September 1, 2003 and September 1, 2004, the attendant compensation spending per unit of service is multiplied by 1.10 to determine the adjusted attendant compensation per unit of service. The adjusted attendant compensation per unit of service will be subtracted from the accrued attendant compensation revenue to determine the amount to be recouped. If the adjusted attendant compensation per unit of service is greater than or equal to the accrued attendant compensation revenue per unit of service, there is no recoupment.
(2) For the rate year beginning September 1, 2005, and thereafter, the accrued attendant compensation revenue per unit of service is multiplied by 0.90 to determine the spending requirement per unit of service. The unadjusted accrued attendant compensation spending per unit of service will be subtracted from the spending requirement per unit of service to determine the amount to be recouped. If the unadjusted accrued attendant compensation spending per unit of service is greater than or equal to the spending requirement per unit of service, there is no recoupment.
(3) The amount paid for attendant compensation per unit of service after adjustments for recoupment must not be less than the amount determined for nonparticipating contracts in subsection (l) of this section.
(t) Notification of recoupment. Providers will be notified in a manner specified by HHSC of the amount to be repaid to HHSC or its designee. If a subsequent review by HHSC or audit results in adjustments to the annual Attendant Compensation Report, as described in subsection (h)(1) of this section, that change the amount to be repaid, the provider will be notified in writing of the adjustments and the adjusted amount to be repaid. HHSC or its designee will recoup any amount owed from a provider's vendor payment(s) following the date of the notification letter.
(u) Enrollment limitations. A provider will not be enrolled in the attendant compensation rate enhancement at a level higher than the level it achieved on its most recently available, audited Attendant Compensation Report. HHSC will issue a notification letter that informs a provider in writing of its enrollment limitations (if any) prior to the first day of the open enrollment period.
(1) Requests for revision. A provider may request a revision of its enrollment limitation if the provider's most recently available audited Attendant Compensation Report does not represent its current attendant compensation levels.
(A) A request for revision of enrollment limitation must include the documentation specified in subparagraph (B) of this paragraph and must be received by HHSC Rate Analysis by hand delivery, United States mail, or special delivery mail no later than 30 calendar days from the date on the notification letter. If the 30th calendar day is a weekend day, national holiday, or state holiday, the first business day following the 30th calendar day is the final day the receipt of the written request will be accepted. A request for revision that is not received by the stated deadline and that is not submitted on the form specified by HHSC will not be accepted, and the enrollment limitation specified in the notification letter will apply.
(B) A provider that requests a revision of its enrollment limitation must submit documentation, in the form specified by HHSC in the notification letter, which shows that, for the period beginning September 1 of the current rate year and ending April 30 of the current rate year, the provider met a higher attendant compensation level than the notification letter indicates. In such cases, the provider's enrollment limitation will be established at the level supported by its request for revision documentation. It is the responsibility of the provider to render all required documentation at the time of its request for revision. Requests not in the form specified by HHSC in the notification letter and requests that fail to support an attendant compensation level different from what is indicated in the notification letter will result in a rejection of the request, and the enrollment limitation specified in the notification letter will apply.
(C) A request for revision must be signed by an individual legally responsible for the conduct of the provider or legally authorized to bind the provider, such as the sole proprietor, a partner, a corporate officer, an association officer, a governmental official, a limited liability company member, a person authorized by the applicable DADS Form 2031 for the interested party on file at the time of the request, or a legal representative for the interested party. A request for revision that is not signed by an individual legally responsible for the conduct of the interested party will not be accepted, and the enrollment limitation specified in the notification letter will apply.
(D) If the provider's Attendant Compensation Report for the rate year that included the open enrollment period described in subsection (e) of this section shows the provider compensated attendants below the level it presented in its request for revision, HHSC will immediately recoup all enhancement payments associated with the request for revision documents, and the provider will be limited to the level supported by the report for the remainder of the rate year.
(2) Informal reviews and formal appeals. The filing of a request for an informal review or formal appeal relating to a provider's most recently available, audited Attendant Compensation Report under §355.110 of this title (relating to Informal Reviews and Formal Appeals) does not stay or delay implementation of an enrollment limitation applied in accordance with the requirements of this subsection. If an informal review or formal appeal relating to a provider's most recently available, audited Attendant Compensation Report is pending at the time the enrollment limitation is applied, the result of the informal review or formal appeal shall be applied to the provider's enrollment retroactively to the beginning of the rate year to which the enrollment limitation was originally applied.
(3) New owners after a contract assignment that is an ownership change from one legal entity to a different legal entity. Enhancement levels for a new owner after a contract assignment that is an ownership change from one legal entity to a different legal entity will be determined in accordance with subsection (w) of this section. A new owner after a contract assignment that is an ownership change from one legal entity to a different legal entity will not be subject to enrollment limitations based upon the prior owner's performance.
(4) New providers. A new provider's enrollment will be determined in accordance with subsection (g) of this section.
(v) Contract terminations. For contracted providers required to submit an Attendant Compensation Report due to a contract termination as described in subsection (h)(1)(B) of this section, HHSC or its designee will place a vendor hold on the payments of the contracted provider until HHSC receives an acceptable Attendant Compensation Report, as specified in subsection (h)(2)(A) of this section, and funds identified for recoupment from subsection (s) of this section are repaid to HHSC or its designee. Informal reviews and formal appeals relating to these reports are governed by §355.110 of this title (relating to Informal Reviews and Formal Appeals). HHSC or its designee will recoup any amount owed from the provider's vendor payments that are being held. In cases where funds identified for recoupment cannot be repaid from the held vendor payments, the responsible entity from subsection (cc) of this section will be jointly and severally liable for any additional payment due to HHSC or its designee. Failure to repay the amount due or submit an acceptable payment plan within 60 days of notification will result in the recoupment of the owed funds from other HHSC and/or DADS contracts controlled by the responsible entity, placement of a vendor hold on all HHSC and/or DADS contracts controlled by the responsible entity, and will bar the responsible entity from enacting new contracts with HHSC and/or DADS until repayment is made in full. The responsible entity for these contracts will be notified as described in subsection (t) of this section prior to the recoupment of owed funds, placement of vendor hold on additional contracts, and barring of new contracts.
(w) Contract assignments. The following applies to contract assignments.
(1) Definitions. The following words and terms have the following meanings when used in this subsection.
(A) Assignee--A legal entity that assumes a Community Care contract through a legal assignment of the contract from the contracting entity as provided in 40 TAC §49.15 (relating to Contract Assignment).
(B) Assignor--A legal entity that assigns its Community Care contract to another legal entity as provided in 40 TAC §49.15 (relating to Contract Assignment).
(C) Contract assignment--The transfer of a contract by one legal entity to another legal entity as provided in 40 TAC §49.15 (relating to Contract Assignment).
(i) Type One Contract Assignment--A contract assignment by which the assignee is an existing Community Care contract.
(ii) Type Two Contract Assignment--A contract assignment by which the assignee is a new Community Care contract.
(2) Participation and group status after a contract assignment. Participation and group status after a contract assignment are determined as follows:
(A) Type One Contract Assignments. For Type One contract assignments, the assignee's level of participation and group status remains the same while the assignor's level of participation and grouping status changes to the assignee's.
(B) Type Two Contract Assignments. For Type Two contract assignments the following applies:
(i) In cases where the assignee is controlled by a legal entity that controls other contracts participating in the attendant compensation rate enhancement, the following applies:
(I) If the assignee's participating contracts are participating as a group as subsection (f) of this section.
(-a-) If the assignor was a participating contract, the new contract becomes part of the assignee's group at the level of participation of the assignee's group.
(-b-) If the assignor was not a participating contract, the new contract remains a nonparticipating contract.
(II) If the assignee's participating contracts are participating as individuals as provided subsection (f) of this section, the following applies:
(-a-) If the assignor was a participating contract, the new contract continues participation at the assignor's level as an individual contract whether or not the assignor contract was part of a group.
(-b-) If the assignor was not a participating contract, the new contract remains a nonparticipating contract.
(ii) In cases where the assignee is controlled by a legal entity that does not control any contracts participating in the attendant compensation rate enhancement, the level of participation and individual or group status of the assignor contract(s) will continue unchanged under the assignee contract(s).
(3) The assignee is responsible for the reporting requirements in subsection (h) of this section for any reporting period days occurring after the contract assignment effective date. If the contract assignment occurs during an open enrollment period as defined in subsection (e) of this section, the owner recognized by HHSC or its designee on the last day of the enrollment period may request to modify the enrollment status of the contract in accordance with subsection (f) of this section.
(4) For contracted providers required to submit an Attendant Compensation Report due to contract assignment, as described in subsection (h)(1)(A) of this section, HHSC or its designee will place a vendor hold on the payments of the existing contracted provider until HHSC receives an acceptable Attendant Compensation Report, as specified in subsection (h)(2)(B) of this section, and until funds identified for recoupment from subsection (s) of this section are repaid to HHSC or its designee. HHSC or its designee will recoup any amount owed from the provider's vendor payments that are being held. In cases where funds identified for recoupment cannot be repaid from the held vendor payments, the responsible entity from subsection (cc) of this section will be jointly and severally liable for any additional payment due to HHSC or its designee. Failure to repay the amount due within 60 days of notification will result in the recoupment of the owed funds from other HHSC and/or DADS contracts controlled by the responsible entity, placement of a vendor hold on all HHSC and/or DADS contracts controlled by the responsible entity, and will bar the responsible entity from enacting new contracts with HHSC and/or DADS until repayment is made in full. The responsible entity for these contracts will be notified, as described in subsection (t) of this section, prior to the recoupment of owed funds, placement of vendor hold on additional contracts, and barring of new contract.
(x) Voluntary withdrawal. Participating contracts wishing to withdraw from the attendant compensation rate enhancement must notify HHSC Rate Analysis in writing by certified mail. The requests will be effective the first of the month following the receipt of the request. Contracts voluntarily withdrawing must remain nonparticipants for the remainder of the rate year. Providers whose contracts are participating as a group must request withdrawal of all the contracts in the group.
(y) Adjusting attendant compensation requirements. Providers that determine that they will not be able to meet their attendant compensation requirements may request to reduce their attendant compensation requirements and associated enhancement payment to a lower participation level by submitting a written request to HHSC Rate Analysis by certified mail. These requests will be effective the first of the month following the receipt of the request. Providers whose contracts are participating as a group must request the same reduction for all of the contracts in the group.
(z) All other rate components. All other rate components will continue to be calculated as specified in the program-specific reimbursement methodology and will be uniform for all providers.
(aa) Failure to document spending. Undocumented attendant compensation expenses will be disallowed and will not be used in the determination of the attendant compensation spending per unit of service in subsection (s) of this section.
(bb) Appeals. Subject matter of informal reviews and formal appeals is limited as per §355.110 of this title (relating to Informal Reviews and Formal Appeals).
(cc) Responsible entities. The contracted provider, owner, or legal entity which received the attendant compensation rate enhancement is responsible for the repayment of the recoupment amount.
(dd) Reinvestment. HHSC will reinvest recouped funds in the attendant compensation rate enhancement to the extent there are qualifying contracts.
(1) Identify qualifying contracts. Contracts that meet the following criteria during the most recently completed reporting period are qualifying contracts for reinvestment purposes.
(A) The contract was a participant in the attendant compensation rate enhancement.
(B) The contract's attendant compensation spending per unit of service was greater than the total attendant compensation rate per unit of service granted to the contract.
(C) An acceptable Attendant Compensation Report for the reporting period completed in accordance with all applicable rules and instructions was received by HHSC Rate Analysis at least 30 days prior to the date on which HHSC determined how available reinvestment funds would be distributed.
(D) The DADS contract that was in effect during the reinvestment reporting period is still in effect as an active contract when reinvestment is determined and there has been no ownership change from one legal entity to a different legal entity.
(2) Distribution of available reinvestment funds. Available funds are distributed as follows:
(A) For each qualifying report, HHSC subtracts the attendant compensation revenue per unit of service from the attendant compensation spending per unit of service and determines the number of full levels by which attendant compensation costs exceeded attendant compensation revenues. This number is multiplied by the add-on value of a level during the reporting period and the product is multiplied by the units of service provided during the reporting period as determined by HHSC.
(B) HHSC compares the sum of the products from subparagraph (A) of this paragraph to funds available for reinvestment.
(i) If the product is less than or equal to available funds, all enhancements for qualifying contracts are retroactively awarded for the reporting period.
(ii) If the product is greater than available funds, retroactive enhancements are granted beginning with the lowest level of enhancement and granting each successive level of enhancement until enhancements are granted within available funds.
(3) Non-qualification as pre-existing enhancements. Retroactively awarded enhancements do not qualify as pre-existing enhancements for enrollment purposes.
(4) Notification of reinvested enhancements. Qualifying facilities are notified of the award of reinvested enhancements in a manner determined by HHSC.
(ee) Disclaimer. Nothing in these rules should be construed as preventing providers from compensating attendants at a level above that funded by the enhanced attendant compensation rate.
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 July 30, 2007.
TRD-200703313
Steve Aragón
Chief Counsel
Texas Health and Human Services Commission
Earliest possible date of adoption: September 9, 2007
For further information, please call: (512) 424-6900
Statutory Authority
The amendments are proposed under the Texas Government Code, §531.033, which provides the Executive Commissioner of HHSC with broad rulemaking authority, and 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.
§355.503.Reimbursement Methodology for the Community-Based Alternatives Waiver Program and the Integrated Care Management-Home and Community Support Services and Assisted Living/Residential Care Programs .
(a) General requirements. The Texas Health and Human Services Commission (HHSC) applies the general principles of cost determination as specified in §355.101 of this title (relating to Introduction). Unless specifically stated otherwise, references in this section to the Community-Based Alternatives (CBA) waiver program services also apply to the parallel services offered under the Integrated Care Management (ICM) waiver program.
(b) General. Texas Medicaid contracted providers will be reimbursed for waiver services provided to individuals who meet the criteria for alternatives to nursing facility care. Additionally, non-ICM Texas Medicaid contracted providers will be reimbursed for a pre-enrollment assessment of potential waiver participants. The pre-enrollment assessment covers care planning for the participant and is reimbursed by a one-time administrative expense fee which is not included in the waiver services but will be paid from Medicaid administrative funds.
(c) Other sources of cost information. If HHSC has determined that there is not sufficient reliable cost report data from which to determine reimbursements and reimbursement ceilings for waiver services, reimbursements and reimbursement ceilings will be developed by using data from surveys; cost report data from other similar programs, consultation with other service providers and/or professionals experienced in delivering contracted services; and other sources.
(d) Waiver reimbursement determination. Recommended reimbursements are determined in the following manner.
(1) Unit of service reimbursement. Reimbursement for personal assistance services, nursing services provided by a registered nurse (RN), nursing services provided by a licensed vocational nurse (LVN), physical therapy, occupational therapy, speech pathology, and in-home respite care services will be determined on a fee-for-service basis in the following manner.
(A) Total allowable costs for each provider will be determined by analyzing the allowable historical costs reported on the cost report.
(B) Total allowable costs are reduced by the amount of the pre-enrollment expense fee and requisition fee revenues accrued for the reporting period.
(C) Each provider's total reported allowable costs, excluding depreciation and mortgage interest, are projected from the historical cost-reporting period to the prospective reimbursement period as described in §355.108 of this title (relating to Determination of Inflation Indices). The prospective reimbursement period is the period of time that the reimbursement is expected to be in effect.
(D) Payroll taxes and employee benefits are allocated to each salary line item on the cost report on a pro rata basis based on the portion of that salary line item to the amount of total salary expense for the appropriate group of staff. Employee benefits will be charged to a specific salary line item if the benefits are reported separately. The allocated payroll taxes are Federal Insurance Contributions Act (FICA) or Social Security, Medicare Contributions, Workers' Compensation Insurance (WCI), the Federal Unemployment Tax Act (FUTA), and the Texas Unemployment Compensation Act (TUCA).
(E) Allowable administrative and facility costs are allocated or spread to each waiver service cost component on a pro rata basis based on the portion of each waiver service's units of service to the amount of total waiver units of service.
(F) For nursing services provided by an RN, nursing services provided by an LVN, physical therapy, occupational therapy, speech pathology, and in-home respite care services, an allowable cost per unit of service is calculated for each contracted provider for each service. The allowable costs per unit of service for each contracted provider are arrayed. The units of service for each contracted provider in the array are summed until the median unit of service is reached. The corresponding expense to the median unit of service is determined and is multiplied by 1.044. The allowable costs per unit of service may be combined into an array with the allowable cost per unit of service of similar services provided by other programs in determining the weighted median cost per unit of service.
(G) For personal assistance services two cost areas are created:
(i) The attendant cost area includes salaries, wages, benefits, and mileage reimbursement calculated as specified in §355.112 of this title (relating to Attendant Compensation Rate Enhancement).
(ii) Another attendant cost area is created which includes the other personal attendant services costs not included in subparagraph (G)(i) of this paragraph as determined in subparagraphs (A) - (E) of this paragraph. An allowable cost per unit of service is determined for each contracted provider for the other attendant cost area. The allowable costs per unit of service for each contracted provider are arrayed. The units of service for each contracted provider in the array are summed until the median unit of service is reached. The corresponding expense to the median unit of service is determined and is multiplied by 1.044.
(iii) The attendant cost area and the other attendant cost area are summed to determine the personal assistance services cost per unit of service.
(2) Per day reimbursement.
(A) The reimbursement for Adult Foster Care (AFC) and out-of-home respite care will be determined as a per day reimbursement using a method based on modeled projected expenses which are developed by using data from surveys; cost report data from other similar programs, consultation with other service providers and/or professionals experienced in delivering contracted services; and other sources. The room and board payments for AFC Services are not covered in these reimbursements and will be paid to providers from the client's Supplemental Security Income, less a personal needs allowance.
(B) The reimbursement for Assisted Living/Residential Care (AL/RC) will be determined as a per day reimbursement in accordance with §355.509(a) - (c)(2)(F)(iii) of this title (relating to Reimbursement Methodology for Residential Care). The per day reimbursement for attendant care will be determined, based upon client need for attendant care into six levels of care. A total reimbursement amount will be calculated and the proposed reimbursement is equal to the total reimbursement less the client's room and board payments. The room and board payment is paid to the provider by the client from the client's Supplemental Security Income (SSI), less a personal needs allowance. When the SSI is increased or decreased by the Federal Social Security Administration, the reimbursement for AL/RC will be adjusted in amounts equal to the increase or decrease in SSI received by clients.
(C) The reimbursement for out-of-home respite care provided in a Nursing Facility will be based on the amount determined for the Texas Index of Level of Effort (TILE) for the CBA participant.
(3) Monthly reimbursement ceilings. The reimbursement for Emergency Response Services will be determined as monthly reimbursement ceiling, based on the ceiling amount determined in accordance with 40 TAC §52.504 (relating to Reimbursement Methodology for Emergency Response Services (ERS)). The reimbursement for Home-Delivered Meals will be determined on a per meal basis, based on the ceiling amount determined in accordance with 40 TAC §55.45 (relating to Reimbursement Methodology for Home-Delivered Meals).
(4) Requisition fees. Requisition fees are reimbursements paid to the CBA home and community support services contracted providers for their efforts in acquiring adaptive aids and minor home modifications for CBA participants. Reimbursement for adaptive aids and minor home modifications will vary based on the actual cost of the adaptive aid and minor home modification. Reimbursements are determined using a method based on modeled projected expenses which are developed by using data from surveys; cost report data from similar programs; consultation with other service providers and/or professionals experienced in delivering contracted services; and/or other sources.
(5) Pre-enrollment expense fee. Reimbursement for pre-enrollment assessment is determined using a method based on modeled projected expenses that are developed by using data from surveys; cost report data from other similar programs; consultation with other service providers and/or professionals experienced in delivering contracted services; and other sources.
(6) Specialized nursing reimbursement add-on. A specialized nursing reimbursement add-on will be paid in addition to the unit-of-service reimbursements for skilled nursing services provided by an RN or by an LVN. The specialized nursing reimbursement add-on is paid when a client requires, as determined by a physician, daily skilled nursing to cleanse, dress, and suction a tracheostomy or daily skilled nursing assistance with ventilator or respirator care. The client must be unable to do self-care and require the assistance of a nurse for the ventilator, respirator, or tracheostomy care. This specialized nursing reimbursement add-on will be determined in accordance with subsection (c) of this section.
(7) Exceptions to the reimbursement determination methodology. HHSC may adjust reimbursement if new legislation, regulations, or economic factors affect costs, according to §355.109 of this title (relating to Adjusting Reimbursement When New Legislation, Regulations, or Economic Factors Affect Costs).
(e) Authority to determine reimbursement. The authority to determine reimbursement is specified in §355.101 of this title (relating to Introduction).
(f) Reporting of cost.
(1) Cost reporting guidelines. If HHSC requires a cost report for any waiver service in this program, providers must follow the cost-reporting guidelines as specified in §355.105 of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures).
(2) Excused from submission of cost reports. If required by HHSC, all contracted providers must submit a cost report unless the number of days between the date the first Texas Department of Aging and Disability Services (DADS) client received services and the provider's fiscal year end is 30 days or fewer. The provider may be excused from submitting a cost report if circumstances beyond the control of the provider make cost-report completion impossible, such as the loss of records due to natural disasters or removal of records from the provider's custody by any regulatory agency. An AL/RC provider may also be excused from submitting a cost report if the total number of days serving AL/RC or Residential Care residents is 366 or fewer during its fiscal year. Requests to be excused from submitting a cost report must be received by HHSC before the due date of the cost report.
(3) Reporting and verification of allowable cost.
(A) Providers are responsible for reporting only allowable costs on the cost report, except where cost report instructions indicate that other costs are to be reported in specific lines or sections. Only allowable cost information is used to determine recommended reimbursements. HHSC excludes from reimbursement determination any unallowable expenses included in the cost report and makes the appropriate adjustments to expenses and other information reported by providers; the purpose is to ensure that the database reflects costs and other information which are necessary for the provision of services, and are consistent with federal and state regulations.
(B) Individual cost reports may not be included in the database used for reimbursement determination if:
(i) there is reasonable doubt as to the accuracy or allowability of a significant part of the information reported; or
(ii) an auditor determines that reported costs are not verifiable.
(C) When material pertinent to proposed reimbursements is made available to the public, the material will include the number of cost reports eliminated from reimbursement determination for the reason stated in subparagraph (B)(i) of this paragraph.
(4) Allowable and unallowable costs. Providers must follow the guidelines in determining whether a cost is allowable or unallowable as specified in §355.102 and §355.103 of this title (relating to General Principles of Allowable and Unallowable Costs, and Specifications for Allowable and Unallowable Costs), in addition to the following.
(A) Client room and board expenses are not allowable, except for those related to respite care.
(B) The actual cost of adaptive aids and home modifications are not allowable for cost reporting purposes. Allowable labor costs associated with acquiring adaptive aids and home modifications should be reported in the cost report. Any item purchased for participants in this program and reimbursed through a voucher payment system is unallowable for cost reporting purposes. Refer to §355.103(17)(K) of this title (relating to Specifications for Allowable and Unallowable Costs).
(g) Reporting revenue. Revenues must be reported on the cost report in accordance with §355.104 of this title (relating to Revenues).
(h) Reviews and field audits of cost reports. Desk reviews or field audits are performed on cost reports for all contracted providers. The frequency and nature of the field audits are determined by HHSC to ensure the fiscal integrity of the program. Desk reviews and field audits will be conducted in accordance with §355.106 of this title (relating to Basic Objectives and Criteria for Audit and Desk Review of Cost Reports), and providers will be notified of the results of a desk review or a field audit in accordance with §355.107 of this title (relating to Notification of Exclusions and Adjustments). Providers may request an informal review and, if necessary, an administrative hearing to dispute an action taken under §355.110 of this title (relating to Informal Reviews and Formal Appeals).
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 July 30, 2007.
TRD-200703314
Steve Aragón
Chief Counsel
Texas Health and Human Services Commission
Earliest possible date of adoption: September 9, 2007
For further information, please call: (512) 424-6900
The Texas Health and Human Services Commission (HHSC) proposes to amend §355.311, concerning Medicaid Reimbursement Rates for State Veterans Homes in Title 1, Subchapter C, Chapter 355, Reimbursement Rates.
Background and Purpose
The purpose of the proposed amendment is to update outdated agency references and to bring the rule into compliance with §202 of Public Law 108-422.
The Veterans Administration (VA) pays a per diem to State homes providing nursing home care to eligible veterans under 38 C.F.R. Part 51. The payment system is intended to ensure that veterans receive high quality care in State homes.
The Medicaid program by law is intended to be the payer of last resort; that is, all other available third party resources must meet their legal obligation to pay claims before the Medicaid program pays for the care of an individual eligible for Medicaid. Prior to the passage of Public Law 108-422, the VA's per diem payments were considered third-party resources. Public Law 108-422 clarified that per diem payments made by the VA for care of veterans in State veterans homes should not be used to offset or reduce other payments made to assist veterans.
Fiscal Note
Thomas M. Suehs, Deputy Executive Commissioner for Financial Services, has determined that, for the first five-year period the proposed amendment is in effect, there are foreseeable fiscal implications for state government as a result of enforcing or administering the amended section. There are no foreseeable fiscal implications for local governments as a result of enforcing or administering the amended section.
The effect on state government for the first five years the proposed amendment is in effect is an estimated additional cost of $1,272,120 in fiscal year (FY) 2008; $1,285,045 in FY 2009; $1,286,331 in FY 2010; $1,286,331 in FY 2011; and $1,289,855 in FY 2012.
Small Business and Micro-business Impact Analysis
Mr. Suehs has also determined that there will be no adverse economic effect on small or micro-businesses as a result of enforcing or administering the proposed amended section. There is no anticipated economic cost to persons who are required to comply with the proposed amendment. There is no anticipated effect on local employment in geographic areas affected by this proposed amended section.
Public Benefit and Costs
Carolyn Pratt, Director of Rate Analysis, has determined that, during the first five years the proposed amended section is in effect, the public benefits anticipated as a result of enforcing the section include: (1) greater provider understanding of the rule and (2) compliance with Public Law 108-422.
Regulatory Analysis
HHSC has determined that this proposal is not a "major environmental rule" 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 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 proposal may be submitted to Cilla Hammer in the Rate Analysis Department, Texas Health and Human Services Commission, P.O. Box 85200, Austin, TX 78708-5200; by fax (512) 491-1983 or by e-mail at Cilla.Hammer@hhsc.state.tx.us within 30 days of publication of this proposal in the Texas Register.
Statutory Authority
The amendment is 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 amendment affects the Human Resources Code, Chapter 32, and the Texas Government Code, Chapter 531. No other statutes, articles, or codes are affected by this proposal.
§355.311.Medicaid Reimbursement Rates for State Veterans Homes.
(a) The following definitions apply to this section:
(1) Health and Human Services Commission (HHSC)--The state administrative agency authorized to adopt standards and rules to govern reimbursement rates and methodologies for Medicaid nursing facility services pursuant to Government Code §531.021.
(2) Rate period--The state fiscal year.
(3) State veterans home--A nursing facility as defined
in Title 40, Texas Administrative Code (TAC) §176.1 (relating
to Definitions) that is contracted with
the Department of Aging
and Disability Services (DADS)
[
DHS
] under 40 TAC §19.2322
(relating to Medicaid Bed Allocation Requirements) to provide nursing
facility services to eligible Medicaid recipients who reside in a
state veterans home.
(4)
Department of Aging and Disability Services
(DADS)
[
Texas Department of Human Services (DHS)
]--The
state administrative agency authorized to contract for nursing facility
services to Medicaid recipients pursuant to Chapter 32, Human Resources
Code.
(5) Veterans Land Board (VLB)--The state administrative agency authorized under Chapter 164, Natural Resources Code, to establish and operate state veterans homes.
(b)
DADS
[
DHS
] reimburses the
VLB for nursing facility services provided by the VLB to Medicaid
clients in state veterans homes.
(c) HHSC determines reimbursement rates for state veterans homes to provide nursing facility services.
(d) Interim reimbursement rates for state veterans homes are determined prospectively for each home based on the state veterans home semi-private basic daily rate in effect on the first day of the rate period. Rates are reconciled retrospectively based on actual cost in accordance with subsection (j) of this section.
(e) The facility-specific payment rate, as determined in subsection (d) of this section, will be paid for all Medicaid eligible residents of a state veterans home regardless of the Texas Index for Level of Effort (TILE) level of the resident
(f) Veterans Administration (VA) per diem payments
to the State of Texas VLB for nursing home care as defined in 38 Code
of Federal Regulations (CFR) §51.40 (relating to monthly payment)
[
are considered third-party resources under 40 TAC §15.215
(relating to Third-party Resources (TPRs)). These payments
]
are
not
offset against per diem payment rates for Medicaid-eligible
residents of a state veterans home.
(g) Residents of a state veterans home are not eligible to receive the supplemental reimbursements authorized under §355.307(b)(3)(E) and (F) of this title (relating to Reimbursement Setting Methodology).
(h) State veterans homes are not eligible to participate in §355.308 of this title (relating to Direct Care Staff Rate Component).
(i) The VLB submits financial and statistical information in a format designated by HHSC. The financial and statistical information must be completed in accordance with the provisions of §355.102 and §355.103 of this title (relating to General Principles of Allowable and Unallowable Costs; and Specifications for Allowable and Unallowable Costs). This information may be reviewed or audited in accordance with §355.106 of this title (relating to Basic Objectives and Criteria for Audit and Desk Review of Cost Reports). Financial and statistical information submitted by the VLB is not included in the cost report databases used in the reimbursement determination process for the Texas Medicaid Nursing Facility program.
(j) For each state veterans home, the interim reimbursement rate is adjusted retrospectively based on actual costs accrued during the rate period.
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 July 30, 2007.
TRD-200703315
Steve Aragón
Chief Counsel
Texas Health and Human Services Commission
Earliest possible date of adoption: September 9, 2007
For further information, please call: (512) 424-6900
The Texas Health and Human Services Commission (HHSC) proposes to amend §355.312, Reimbursement Setting Methodology--Liability Insurance Costs in Title 1, Part 15, Subchapter C, Reimbursement Rates. The rule and related proposed rate change will be effective upon adoption.
Background and Justification
The purpose of the proposed amendment is to correct an error in the due date for captive insurance premium taxes to be paid to the Texas Comptroller of Public Accounts (the Comptroller). This correction will make HHSC's due date equal to the Comptroller's due date and will bring HHSC in compliance with the Comptroller's requirements.
Fiscal Note
Thomas M. Suehs, Deputy Executive Commissioner for Financial Services, has determined that, for the first five-year period the proposed amendment is in effect, there are no fiscal implications for state government as a result of enforcing or administering the section. There are no fiscal implications for local governments as a result of enforcing or administering the proposed amended section.
Small Business and Micro-business Impact Analysis
Mr. Suehs has also determined that there will be no adverse economic effect on small or micro-businesses as a result of enforcing or administering the proposed amended section. There is no anticipated economic cost to persons who are required to comply with the proposed amendment. There is no anticipated effect on local employment in geographic areas affected by this proposed amended section.
Public Benefit and Costs
Carolyn Pratt, Director of Rate Analysis, has determined that, during the first five years the proposed amended section is in effect, the public benefits anticipated as a result of enforcing the section include: (1) greater understanding of the rule and (2) continuity of deadlines between the Texas Comptroller of Public Accounts and 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. 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 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 proposal may be submitted to Cilla Hammer in the Rate Analysis Division, Texas Health and Human Services Commission, P.O. Box 85200, Austin, TX 78708-5200; by fax (512) 491-1983 or by e-mail at Cilla.Hammer@hhsc.state.tx.us within 30 days of publication of this proposal in the Texas Register.
Statutory Authority
The amendment is 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 amendment affects the Human Resources Code, Chapter 32, and the Texas Government Code, Chapter 531. No other statutes, articles, or codes are affected by this proposal.
§355.312.Reimbursement Setting Methodology--Liability Insurance Costs.
(a) Definitions.
(1) Purchased commercial liability insurance--Either general or professional liability insurance from a commercial carrier or a non-profit service corporation in an arm's-length transaction that provides for the shifting of risk to the unrelated party. The commercial carrier or non-profit service corporation must meet the requirements as set by the Texas Department of Insurance (TDI) for authorized insurance.
(2) Self-insurance--Self-insurance is a means whereby a contracted provider undertakes the risk to protect itself against anticipated liabilities by providing funds equivalent to liquidate those liabilities. If a contracted provider enters into an arrangement with an unrelated party that does not provide for the shifting of risk to the unrelated party, such an agreement shall be considered self-insurance. Self-insurance is not purchased liability insurance.
(3) Independently procured insurance--an insurance transaction involving an insurance contract independently procured from an insurance company not licensed in Texas through negotiations occurring entirely outside the state of Texas that is reported and on which premium tax is paid.
(4) Purchased captive insurance--A company providing either general or professional liability insurance purchased from a nonadmitted captive insurance company that insures solely directors and officer's liability insurance for the directors and officers of the company's parent and affiliated companies and/or the risks of the company's parent and affiliated companies.
(b) Payment rates for purchased general and professional liability insurance will be determined as follows:
(1) Determine the portion of the general/administration rate component from 1 TAC §355.307 (relating to Reimbursement Setting Methodology) attributable to allowable liability insurance costs.
(2) Determine the amount of total dollars that would be expended if the liability rate component from paragraph (1) of this subsection were paid uniformly to all providers during the rate effective period.
(3) Estimate the number of days of service that will be covered by purchased liability insurance during the rate period.
(4) Divide the total dollars available for liability insurance from paragraph (2) of this subsection by the estimated number of days of service that will be covered by purchased liability insurance during the rate period from paragraph (3) of this subsection. Estimate the proportion of this per diem amount accruing from general liability insurance and the proportion accruing from professional liability insurance to determine the payment rate for each day of purchased general liability insurance and the payment rate for each day of purchased professional liability insurance.
(5) Payment rates for purchased general and professional liability insurance may be adjusted as often as HHSC determines is necessary to ensure that the total dollars expended during the rate period do not exceed the amount appropriated for this purpose.
(6) Since these payment rates are determined through an allocation of available appropriations among estimated units of service covered by purchased liability insurance, a public rate hearing is not required when adjustments are made to the payment rates.
(7) Contracted providers will be notified, in a manner determined by HHSC, of adjustments to the payment rates for purchased general and professional liability insurance.
(8) Contracted providers who purchase general liability insurance without professional liability insurance are only eligible to receive payment of the rate for purchased general liability insurance. Contracted providers who purchase professional liability insurance without general liability insurance are only eligible to receive payment of the rate for purchased professional liability insurance. Contracted providers who purchase both general and professional liability insurance are eligible to receive payment of both rates.
(c) Purchased liability insurance issued through entities meeting any one of the following criteria will be determined automatically to qualify for the payment rates for purchased general and/or professional liability insurance as appropriate. These entities have been determined by the TDI to be authorized to issue liability insurance policies in the State of Texas.
(1) An insurance company identified as an admitted, licensed, insurer authorized to write liability insurance in Texas. This type of insurance company is designated as "active" on the TDI website. This includes risk retention groups chartered inside the state of Texas.
(2) An insurance company that is an eligible surplus lines insurer which requires that there be a Texas licensed surplus lines agent placing the coverage with the insurance company. This type of insurance company is designated as "eligible" on the TDI website.
(3) The Texas Medical Liability Insurance Underwriting Association (JUA). This insurance arrangement is designated as "active" on the TDI website.
(4) A risk retention group chartered outside the state of Texas that is registered with the TDI and which is designated as "registered" on the TDI website.
(d) Independently procured insurance will not be determined automatically to qualify for the payment rates for purchased general and/or professional liability insurance. To qualify for the purchased general and/or professional liability insurance payment rates, the coverage must have been purchased through an independently procured insurance arrangement. The liability insurance payment rates will not be paid to any nursing facility contracted provider until HHSC Rate Analysis has received from the contracted provider a signed and notarized affidavit in the form provided by HHSC regarding the circumstances of the solicitation and procurement of coverage. An authorized signatory for the contracted provider as per the Department of Aging and Disability Services (DADS) Form 2031 must sign the affidavit. HHSC may request additional information to support the contents of the affidavit. The affidavit and supporting information will be reviewed by HHSC to determine if the information supplied is correct and complete to authorize payment of rates for purchased general and/or professional liability insurance. Upon receipt and review of the affidavit and supporting information and a determination that the information is correct and complete to authorize payments, payments will be made as identified in subsection (h) of this section. HHSC may refer any questionable case to the TDI to determine if a violation of the Texas Insurance Code has occurred. The liability insurance payment rates will continue to be paid if evidence that taxes on the premiums of independently procured insurance were paid to and received by the Texas Comptroller for the calendar year in which the policy is procured, continued or renewed. Evidence of the annual taxes paid to and received by the Texas Comptroller for the independently procured insurance in which the policy has been procured, continued or renewed must be received by HHSC Rate Analysis no later than the end of the business day on June 15 following the applicable calendar year. Failure to provide HHSC by June 15 with evidence that premium taxes have been paid will result in the discontinuation of the liability insurance rate add-on. If June 15 falls on a weekend, a national holiday, or a state holiday, then the first business day following June 15 of that year is the due date for the evidence of taxes paid. If acceptable evidence that taxes have been paid has not been received by HHSC within 60 days after the June 15 deadline, HHSC will recoup any add-on payments made to the contracted provider for the period in which taxes are unpaid. Once HHSC Rate Analysis receives evidence of taxes paid to the Texas Comptroller, HHSC will restore any add-on payments for that period previously withheld or recouped. Any vendor hold placed under 40 TAC §19.2308 (relating to Change of Ownership) will remain in place until evidence that all taxes on the premiums are paid to and received by the Texas Comptroller for all time periods for which the liability insurance add-on rate was paid to the contracted provider.
(e) Insurance purchased through a captive insurance
company will not be determined automatically to qualify for the payment
rates for purchased general and/or professional liability insurance.
The liability insurance payment rates will not be paid to any nursing
facility contracted provider until HHSC Rate Analysis has received
from the contracted provider a signed and notarized affidavit in the
form provided by HHSC and any requested supporting information regarding
the financial arrangements and affiliation between the contracted
provider and the captive insurance company. An authorized signatory
for the contracted provider as per DADS Form 2031 must sign the affidavit.
HHSC may request additional information to support the contents of
the affidavit. The affidavit and supporting information will be reviewed
by HHSC to determine if the information supplied is correct and complete
to authorize payment of rates for purchased general and/or professional
liability insurance. Payments will be made as identified in subsection
(h) of this section. Insurance purchased through an "active" or "eligible"
insurance company will automatically qualify for the payment rate
for purchased general an/or professional liability insurance, regardless
of whether such risk has been reinsured by a captive insurance company.
It is the responsibility of the nursing facility to obtain any requested
information from the captive insurance company or affiliates. HHSC
may refer any questionable cases to TDI to determine if a violation
of the Texas Insurance Code has occurred. The liability insurance
payment rates will continue to be paid if evidence that taxes on the
premiums of captive insurance were paid to and received by the Texas
Comptroller for the calendar year in which the policy is procured,
continued or renewed. Evidence of the annual taxes paid to and received
by the Texas Comptroller for the captive insurance in which the policy
has been procured, continued or renewed must be received by HHSC Rate
Analysis no later than the end of the business day on April 1 following
the applicable calendar year. Failure to provide HHSC by
April
1
[
June 15
] with evidence that premium taxes paid
have been will result in the discontinuation of the liability insurance
rate add-on. If April 1 falls on a weekend, a national holiday, or
a state holiday, then the first business day following April 1 of
that year is the due date for the evidence of taxes paid. If acceptable
evidence that taxes have been paid has not been received by HHSC within
60 days after the April 1 deadline, HHSC will recoup any add-on payments
made to the contracted provider for the period in which taxes are
unpaid. Once HHSC Rate Analysis receives evidence of taxes paid to
the Texas Comptroller, HHSC will restore any add-on payments for that
period previously withheld or recouped. Any vendor hold placed under
40 TAC §19.2308 (relating to Change of Ownership) will remain
in place until evidence that all taxes on the premiums are paid to
and received by the Texas Comptroller for all time periods for which
the liability insurance add-on rate was paid to the contracted provider.
(f) Liability insurance payments will not be made to facilities that obtain insurance from an insurer or person engaged in unauthorized insurance as set forth in Chapter 101 of the Texas Insurance Code, Unauthorized Insurance. Providers will be notified by certified mail that the liability insurance payments are being stopped and of the provider's right to appeal the stoppage of payment with HHSC under 1 TAC §§357.481-357.490. It is the responsibility of the nursing facility contracted provider to ensure that liability insurance submitted for payment is authorized. Liability insurance payments made on insurance that is later determined by the Texas Department of Insurance to be unauthorized insurance under Chapter 101, Texas Insurance Code will be recouped. If the determination by TDI that the insurance is unauthorized is successfully appealed with TDI and the insurance is determined to be authorized, the liability insurance payments that were stopped will be paid to the provider.
(g) To qualify for the purchased liability insurance payment rates each contracted entity must submit the following to HHSC Rate Analysis:
(1) A completed liability insurance coverage certification form provided by HHSC Rate Analysis, signed by an authorized signatory for the contracted provider as per DADS Form 2031.
(2) A copy of evidence of coverage to include a certificate of insurance, the ACORD 25-S or similar document provided by the insurance company or agent that includes the type of coverage, effective and expiration dates of coverage, insurer, policy, and form number of policy contract, agent/producer, and claims made/occurrences. For catastrophic or excess liability coverage, the evidence of coverage must also include the sum that the catastrophic or excess coverage must exceed to become payable. A binder is not acceptable as evidence of insurance.
(3) For independently procured liability insurance, the information identified in subsection (d) of this section.
(4) For insurance purchased through a captive insurance company, the information identified in subsection (e) of this section.
(h) If an insurance policy effective date is not the first day of the month, then the liability insurance payment rates will become effective the first day of the following month. If an insurance policy expiration date is not the last day of the month, then the liability insurance payment rates will be paid for the full month that includes the expiration date.
(i) It is the contracted provider's responsibility to notify HHSC Rate Analysis of any changes to liability insurance coverage including cancellation of coverage, change of insurance and renewal of coverage within 15 calendar days of the effective date of the change. Failure to notify HHSC Rate Analysis of cancellation of coverage or change of insurance could constitute Medicaid fraud. Renewals of coverage not received within 15 calendar days of the effective date of the renewal could result in the liability insurance payment rates being stopped until documentation of the renewal per subsection (f) of this section is received by HHSC Rate Analysis.
This agency hereby certifies that the 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 July 30, 2007.
TRD-200703316
Steve Aragón
Chief Counsel
Texas Health and Human Services Commission
Earliest possible date of adoption: September 9, 2007
For further information, please call: (512) 424-6900
Subchapter A. CHILD AND ADULT CARE FOOD PROGRAM (CACFP)
The Texas Health and Human Services Commission (HHSC) proposes to amend §§378.281, 378.381, 378.447, 378.451, and 378.455, and to repeal §§378.282 - 378.290, to its Special Nutrition Programs (SNP) chapter, Child and Adult Care Food Program (CACFP) subchapter, concerning advance payments, to clarify that the state will no longer issue advance payments to CACFP contractors.
Background and Justification
Pursuant to the National School Lunch Act (42 U.S.C. §1766(f)(4)) and Title 7, Code of Federal Regulations (CFR) §226.10(a), advance payments may be provided to an institution (referred to as "contractor" in Texas) for its program costs prior to the month those costs will be incurred. The law provides that it is the state's option to issue Child and Adult Care Food Program (CACFP) advance payments to all or some of the participating contractors in the state. Currently, HHSC does offer advance payments (other than for the months of September and October). An advance payment is recouped against the reimbursement claim for the month in which the advance payment was issued (or from subsequent reimbursement claims if necessary). Contractors remain responsible for repayment of overissued payments.
If HHSC is unable to collect all or part of overissued payments, HHSC is responsible for reimbursing the United States Department of Agriculture Food and Nutrition Service (FNS) for outstanding advance payments and claims as part of the annual closeout process. In recent years, over half of HHSC's liability for reconciling the statement of account with FNS was due to unrecovered advance payments.
Since it is a state option to issue advance payments, HHSC is recommending repeal and amendment of these CACFP rules to eliminate advance payments for Texas to alleviate the financial liability the state incurs for unrecouped advance payments.
In May 2007, the 80th Texas Legislature passed House Bill 4062 authorizing the transfer of certain child and adult nutrition programs from HHSC to the Texas Department of Agriculture (TDA). There is a concern that the financial liability incurred with advance payments, proportionately, will have even more of an adverse impact on TDA, once administration of these programs is transferred. The transfer is anticipated to be effective in October 2007.
Section-by-Section Summary
As amended, §378.281 states that HHSC does not issue advance payments to any CACFP contractors. Due to the amendment of §378.281; §§378.282 - 378.290 become moot and as such are repealed in their entirety. Sections 378.381, 378.447, 378.451, and 378.455 are amended to remove any reference to advance payments.
Fiscal Note
Thomas M. Suehs, Deputy Executive Commissioner for Financial Services, has determined that during the first five-year period the proposal is in effect there will be a savings to state government but that savings cannot be determined. The proposal 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 significant effect on small businesses or micro businesses to comply with the proposal, except potential cash flow issues. CACFP contractors will continue to receive the same reimbursement for services and continue to be responsible for repaying any overpayments. Only the timing of the payment is changing as a result of the proposal. There are no other anticipated economic costs to persons who are required to comply with the proposal. There is no anticipated negative impact on local employment.
Public Benefit
Joanne Molina, Associate Commissioner for HHSC's Office of Family Services, has determined that for each year of the first five years the proposal is in effect, the public will benefit because HHSC will no longer be issuing CACFP advance payments and as such there will be no general revenue that will be returned to FNS for unrecouped advance payments.
Regulatory Analysis
HHSC has determined that this proposal is not a "major environmental rule" 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 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 rule may be submitted to Rose Duncan, by mail to Texas Health and Human Services Commission, P.O. Box 149030, MC Y906, Austin, Texas 78714-9030, by fax to (512) 371-9315, or by e-mail to rose.duncan@hhsc.state.tx.us within 30 days of publication of this proposal in the Texas Register.
Statutory Authority
The amendment is proposed under the Texas Government Code §531.033, which provides the Executive Commissioner of HHSC with broad rulemaking authority; and the National School Lunch Act (42 U.S.C. §1766(f)(4)) and Title 7, Code of Federal Regulations (CFR), §226.10(a), which give the state the option as to whether it will issue advance payments in its CACFP.
No other statutes, articles, or codes are affected by this proposal.
§378.281.Does HHSC [ DHS ] issue [ and monitor ] advance payments [ to contractors according to a specific procedure ]?
No. According to the National School Lunch Act (42 U.S.C. §1766(f)(4))
and Title 7, Code of Federal Regulations (CFR), §226.10(a) it
is a State agency option to issue advance payments to all or some
of the participating contractors. HHSC has chosen to issue no advance
payments to any CACFP contractors.
[
Yes. DHS issues and
monitors advance payments to eligible contractors according to 7 CFR §§226.2,
226.6, 226.7, 226.10, and 226.16.
]
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 July 30, 2007.
TRD-200703321
Steve Aragón
Chief Counsel
Texas Health and Human Services Commission
Earliest possible date of adoption: September 9, 2007
For further information, please call: (512) 424-6900
(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.)
Statutory Authority
The repeals are proposed under the Texas Government Code §531.033, which provides the Executive Commissioner of HHSC with broad rulemaking authority; and the National School Lunch Act (42 U.S.C. §1766(f)(4)) and Title 7, Code of Federal Regulations (CFR), §226.10(a), which give the state the option as to whether it will issue advance payments in its CACFP.
No other statutes, articles, or codes are affected by this proposal.
§378.282.How must a contractor account for advance funds?
§378.283.How does DHS issue advance payments to a contractor that has a claim history?
§378.284.How does DHS issue advance payments to a contractor that does not have a claim history?
§378.285.How does DHS estimate advance payment amounts?
§378.286.Does DHS issue retroactive advances?
§378.287.What happens if USDA does not provide sufficient funds for DHS to pay both advance payments and claims for reimbursement in full?
§378.288.How does DHS recoup advance payments?
§378.289.What happens if the advance payment exceeds the reimbursement earned in the month for which the advance is issued?
§378.290.What happens if a contractor who sponsors day care homes does not comply with program requirements?
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 July 30, 2007.
TRD-200703322
Steve Aragón
Chief Counsel
Texas Health and Human Services Commission
Earliest possible date of adoption: September 9, 2007
For further information, please call: (512) 424-6900
Statutory Authority
The amendment is proposed under the Texas Government Code §531.033, which provides the Executive Commissioner of HHSC with broad rulemaking authority; and the National School Lunch Act (42 U.S.C. §1766(f)(4)) and Title 7, Code of Federal Regulations (CFR), §226.10(a), which give the state the option as to whether it will issue advance payments in its CACFP.
No other statutes, articles, or codes are affected by this proposal.
§378.381.How does HHSC [ DHS ] manage overpayment of claims for reimbursement, [ advance payments, ] start-up, and expansion fund payments?
HHSC
[
DHS
] manages overpayments according
to 7 CFR §§226.6 - 226.8, 226.10, and 226.12 - 226.14; and
40 TAC §69.131
[
§69.209 of this title (relating
to Recoupment of Improper Payments)
].
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 July 30, 2007.
TRD-200703323
Steve Aragón
Chief Counsel
Texas Health and Human Services Commission
Earliest possible date of adoption: September 9, 2007
For further information, please call: (512) 424-6900
1 TAC §§378.447, 378.451, 378.455
Statutory Authority
The amendments are proposed under the Texas Government Code §531.033, which provides the Executive Commissioner of HHSC with broad rulemaking authority; and the National School Lunch Act (42 U.S.C. §1766(f)(4)) and Title 7, Code of Federal Regulations (CFR), §226.10(a), which give the state the option as to whether it will issue advance payments in its CACFP.
No other statutes, articles, or codes are affected by this proposal.
§378.447.What happens if HHSC [ DHS ] determines during the follow-up review that the day care home sponsor has not corrected all program non-compliances [ noncompliances ] compliances identified in the initial review?
(a)
If
HHSC
[
DHS
] determines
during the follow-up review that the day care home sponsor has not
corrected all instances of program
non-compliance
[
noncompliance
] identified in the initial review,
HHSC
[
DHS
]:
(1) denies administrative reimbursements beginning the months following the month of the initial review through the month of the follow-up review for any provider who was not monitored or trained according to program requirements;
(2) establishes a cap on the number of day care homes the contractor may sponsor, not to exceed the number of day care homes sponsored at the time of review; and
[(3) rescinds or denies approval for advance payments; and]
(3)
[
(4)
] continues the Serious
Deficiency Process by notifying the sponsor that if the contractor
fails to demonstrate at the second follow-up review that all serious
deficiencies
HHSC
[
DHS
] identified have been
or will be corrected,
HHSC
[
DHS
] proposes to:
(A) terminate its agreement;
(B) disqualify the organization, responsible principals, and responsible individuals;
(C) release the contractor's eligible providers to transfer to another approved sponsor; and
(D) debar individuals responsible for the deficiencies.
(b)
HHSC
[
DHS
] conducts a second
follow-up review no later than 45 days after notifying the contractor
of the findings of the initial follow-up review to determine if the
sponsor complies with requirements for paying providers according
to program requirements.
§378.451.What happens if HHSC [ DHS ] determines during the follow-up review that 10% or more of the meals sampled and claimed for reimbursement for the test month fail to meet program requirements?
(a)
HHSC
[
DHS
]:
(1) denies administrative reimbursements for the months following the month of the initial review through the month of the follow-up review for any day care home that does not have eligibility or enrollment forms containing required information;
(2) establishes a cap on the number of day care homes the contractor may sponsor, not to exceed the number of day care homes sponsored at the time of the review; and
[(3) rescinds or denies approval for advance payments; and]
(3)
[
(4)
] continues the Serious
Deficiency Process by notifying the sponsor that if the contractor
fails to demonstrate at the second follow-up review that all serious
deficiencies
HHSC
[
DHS
] identified have been
or will be corrected,
HHSC
[
DHS
] proposes to:
(A) terminate its agreement;
(B) disqualify the organization, responsible principals, and responsible individuals;
(C) release the contractor's eligible providers to transfer to another approved sponsor; and
(D) debar individuals responsible for the deficiencies.
(b) If the contractor fails to demonstrate at the second
follow-up review that all serious deficiencies identified by
HHSC
[
DHS
] have been or will be corrected,
HHSC
[
DHS
]
conducts a second follow-up review no later than 45 days after notifying
the contractor of the findings of the initial follow-up review to
determine if the sponsor complies with requirements ensuring that
claims are submitted only for eligible meals served to eligible children.
§378.455.What happens if HHSC [ DHS ] determines during the follow-up review that the day care home sponsor has not corrected all instances of program non-compliances [ noncompliance ] identified in the initial review?
(a)
HHSC
[
DHS
]:
(1) denies administrative reimbursements for the months following the month of the initial review through the month of the follow-up review for any provider that was not issued program funds according to program requirements;
(2) establishes a cap on the number of day care homes the contractor may sponsor, not to exceed the number of day care homes sponsored at the time of the review; and
[(3) rescinds or denies approval for advance payments; and]
(3)
[
(4)
] continues in the Serious
Deficiency Process by notifying the sponsor that if the contractor
fails to demonstrate at the second follow-up review that all serious
deficiencies identified by
HHSC
[
DHS
] have been
or will be corrected,
HHSC
[
DHS
] proposes to:
(A) terminate its agreement;
(B) disqualify the organization, responsible principals, and responsible individuals;
(C) release the contractor's eligible providers to transfer to another approved sponsor; and
(D) debar individuals responsible for the deficiencies.
(b) If the contractor fails to demonstrate at the second
follow-up review that all serious deficiencies identified by
HHSC
[
DHS
] have been or will be corrected,
HHSC
[
DHS
]
conducts a second follow-up review no later than 45 days after notifying
the contractor of the findings of the initial follow-up review to
determine if the sponsor complies with requirements for paying providers
according to program requirements.
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 July 30, 2007.
TRD-200703324
Steve Aragón
Chief Counsel
Texas Health and Human Services Commission
Earliest possible date of adoption: September 9, 2007
For further information, please call: (512) 424-6900