Part 1. DEPARTMENT OF AGING AND DISABILITY SERVICES
Chapter 19. NURSING FACILITY REQUIREMENTS FOR LICENSURE AND MEDICAID CERTIFICATION
The Health and Human Services Commission (HHSC), on behalf of the Department of Aging and Disability Services (DADS), adopts amendments to §§19.201, 19.204, 19.209, 19.210, 19.214, and 19.2106; and new §19.1919 and §19.1925 in Chapter 19, Nursing Facility Requirements for Licensure and Medicaid Certification. The adopted amendments to §19.204 and §19.2106 and new §19.1925 are adopted with changes to the proposed text published in the December 22, 2006, issue of the Texas Register (31 TexReg 10253). The amendments to §§19.201, 19.209, 19.210, and 19.214; and new §19.1919 are adopted without changes to the proposed text.
The amendments and new sections are adopted to define financial solvency, minimum standards of financial condition, and a significant change in financial condition, to assist DADS in determining the financial viability of a nursing facility. The long-term services industry experienced a rise in bankruptcy filings in the late 1990s. In response, the Texas Legislature granted DADS authority to address financial solvency in Texas Health and Safety Code, §242.032(c) and (e) and §242.074; and this statutory language was incorporated into DADS' rule base. However, DADS rules did not define financial solvency, minimum standards of financial condition, or a significant change in financial condition. The amendments and new sections are adopted to help DADS staff obtain and analyze financial information from nursing facility applicants and license holders and to take appropriate licensure actions that will help ensure the health and safety of residents of nursing facilities in Texas.
The amendments are also adopted to replace references to the Texas Department of Human Services (DHS) with references to DADS, update rule cross-references, and update the section name for DADS' licensing section.
DADS received written comments from the Texas Health Care Association. A summary of the comments and the agency's responses follows.
Comment: Concerning §19.214, the commenter stated that DADS' focus for an initial or renewal license should be whether a nursing facility has the financial resources to ensure the delivery of essential care and services. The commenter stated that the failure of a nursing facility to notify DADS of an adverse change in financial condition, when viewed alone, should not be the basis to deny a license or renewal of a license.
Response: Health and Safety Code, §242.074, requires a facility to notify DADS of a significant change in the facility's financial position, cash flow, or results of operation that could adversely affect the facility's delivery of essential services, including nursing services, dietary services, and utilities to residents of the facility. Under Health and Safety Code, §242.061, DADS may deny, suspend, or revoke a license if DADS finds that the applicant, the license holder, or any other person described by §242.032(d) has failed to comply with §242.074. Under §242.061(a)(3), the Texas Legislature has explicitly given DADS the authority to deny an application for a license based on a facility's failure to comply with the notification requirements in §242.074. The list in proposed §19.1925(b) provides specific examples of significant adverse changes in financial condition that must be reported. If a facility does not report one of these examples, it could be a basis to deny a license or renewal of a license under §242.061 as a failure to comply with §242.074. The agency did not change the proposed rule in response to the comment.
Comment: Concerning §19.1925(b), the commenter asked DADS to modify the proposed language so that the focus of the rule is on the license holder's ability to deliver essential services. The commenter stated that, when viewed alone, the examples in the proposed rule do not necessarily mean that a license holder is unable to deliver essential services. The commenter asserted that mandating a license holder to notify DADS each time one of the events listed in the examples occurs fails to recognize business realities that often occur in any profession or industry.
Response: Regarding the commenter's concerns that the examples listed in §19.1925(b), when viewed alone, may not necessarily result in an adverse financial condition, the agency responds that the proposed rule language at §19.1925(d) addresses this concern and makes part of the notice requirement that the nursing facility provide information regarding the impact to essential care and services, and actions the facility has taken. This information is for DADS' review so DADS can consider the materiality and actual impact on the nursing facility's ability to deliver essential services. The agency did not change the proposed rule in response to the comment.
Comment: Concerning §19.1925(b)(1), (2), (4), and (10), the commenter requested that the monetary examples have a dollar threshold. The commenter asserted that contracting disputes with a vendor, a bank's refusal to honor a check, or the license holder's failure to pay taxes could be for reasons that have no impact on the delivery of essential services or the license holder's funds.
Response: The agency has added dollar thresholds to the monetary examples in §19.1925(b)(1), (2), (4), and (10).
Comment: The commenter stated that the bankruptcy and receiver examples in §19.1925(b)(5) - (7) can have a positive impact on the delivery of essential services and that bankruptcy protections allow an entity time to restructure debt in order to meet obligations, which in turn improves the delivery of essential services.
Response: The agency did not change the proposed language in response to the comment. However, the agency revised the proposed language in §19.1925(b)(5) to more accurately reflect the process by which a voluntary or involuntary bankruptcy petition is filed.
Comment: The commenter disagreed with the proposed example in §19.1925(b)(8) and asserted that failure to meet loan agreement debt covenants does not necessarily imply financial difficulties.
Response: The agency has added qualifying language at §19.1925(b)(8) to establish conditions under which a facility's inability to meet the conditions of a loan or debt covenant would be an issue of financial concern and would require notification to DADS.
Comment: The commenter requested that §19.1925(b)(9) be removed and stated that notice of intent to litigate is given for many types of litigation and the risk to delivery of essential services is difficult to evaluate at the onset.
Response: The agency has removed the provision requiring a facility to notify DADS if the facility receives a notice of intent to litigate. The removal of §19.1925(b)(9) caused the agency to renumber proposed §19.1925(b)(10) as §19.1925(b)(9).
In addition, the agency:
(1) in §19.204(c), changed "requested by DADS" to "DADS requests" and changed "within 30 days of the request" to "within 30 days after the request" to clarify the required time frame;
(2) in §19.1925(a), changed "April 1, 2008" to "December 1, 2008" to allow time for the development of a new business process and for employee training;
(3) revised §19.1925(f) to use language about requests for additional information that is consistent with the language in §19.204(c); and
(4) in §19.2106, changed "financial conditions" to "financial condition" in subsection (a)(3) and changed "informal reconsideration" to "opportunity to show compliance" in subsection (c) to correct terminology.
Subchapter C. NURSING FACILITY LICENSURE APPLICATION PROCESS
40 TAC §§19.201, 19.204, 19.209, 19.210, 19.214
The amendments are adopted under Texas Government Code, §531.0055, which provides that the HHSC executive commissioner shall adopt rules for the operation and provision of services by the health and human services agencies, including DADS; Texas Human Resources Code, §161.021, which provides that the Aging and Disability Services Council shall study and make recommendations to the HHSC executive commissioner and the DADS commissioner regarding rules governing the delivery of services to persons who are served or regulated by DADS; and Texas Health and Safety Code, Chapter 242, which authorizes DADS to license and regulate nursing facilities.
§19.204.Application Requirements.
(a) Applications. All applications must be made on forms prescribed by and available from DADS.
(1) Each application must be completed in accordance with DADS instructions, and it must be signed and notarized.
(2) Changes to information required in the application must be reported to DADS, as required by §19.1918 of this title (relating to Disclosure of Ownership).
(b) General information required. An applicant must file with DADS an application which contains:
(1) for initial applications and change of ownership only, evidence of the right to possession of the facility at the time the application will be granted, which may be satisfied by the submission of applicable portions of a lease agreement, deed or trust, or appropriate legal document. The names and addresses of any persons or organizations listed as owner of record in the real estate, including the buildings and grounds, must be disclosed to DADS;
(2) a certificate of good standing issued by the Comptroller of Public Accounts; and
(3) for initial applications and change of ownership only, the certificate of incorporation issued by the secretary of state for a corporation or a copy of the partnership agreement for a partnership; and
(4) for a facility which advertises, markets, or otherwise promotes that it provides services to residents with Alzheimer's disease and related disorders, a disclosure statement, using the departmental form, describing the nature of its care or treatment of residents with Alzheimer's disease and related disorders, as required by the Texas Health and Safety Code, §242.202.
(A) Failure to submit the required disclosure statement will result in an administrative penalty in accordance with §19.2112 of this title (relating to Administrative Penalties).
(B) The disclosure statement must contain the following information:
(i) the facility's philosophy of care for residents with Alzheimer's disease and related disorders;
(ii) the preadmission, admission, and discharge process;
(iii) resident assessment, care planning, and implementation of the care plan;
(iv) staffing patterns, such as resident to staff ratios, and staff training;
(v) the physical environment of the facility;
(vi) resident activities;
(vii) program charges;
(viii) systems for evaluation of the facility's program;
(ix) family involvement in resident care; and
(x) the telephone number for DADS' toll-free complaint line.
(C) The disclosure statement must be updated and submitted to DADS as needed to reflect changes in special services for residents with Alzheimer's disease or a related condition.
(c) Requested information. An applicant or license holder must provide any information DADS requests within 30 days after the request.
(d) Exemptions. The provisions of this section do not apply to a bank, trust company, financial institution, title insurer, escrow company, or underwriter title company to which a license is issued in a fiduciary capacity.
This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on June 21, 2007.
TRD-200702580
Kenneth L. Owens
General Counsel
Department of Aging and Disability Services
Effective date: September 1, 2007
Proposal publication date: December 22, 2006
For further information, please call: (512) 438-3734
The new sections are adopted under Texas Government Code, §531.0055, which provides that the HHSC executive commissioner shall adopt rules for the operation and provision of services by the health and human services agencies, including DADS; Texas Human Resources Code, §161.021, which provides that the Aging and Disability Services Council shall study and make recommendations to the HHSC executive commissioner and the DADS commissioner regarding rules governing the delivery of services to persons who are served or regulated by DADS; and Texas Health and Safety Code, Chapter 242, which authorizes DADS to license and regulate nursing facilities.
§19.1925.Financial Condition.
(a) Effective December 1, 2008, minimum standards of financial condition require the applicant or license holder to have sufficient financial resources to:
(1) satisfy obligations at the time they come due; and
(2) ensure at all times the delivery of essential care and services, such as nursing or dietary services, or utilities.
(b) A license holder must notify DADS of significant adverse changes in financial condition, which include changes in financial position, cash flow, results of operation, or other events that could adversely affect the delivery of essential care and services, such as nursing or dietary services, or utilities. The following are examples of significant adverse changes in financial condition that must be reported:
(1) The license holder, operator, administrator, manager, or other controlling person receives notice that a judgment or tax lien of at least $50,000 has been filed, recorded, or levied against the facility or any of the assets of the facility or the license holder and the judgment or tax lien is not satisfied, or an appropriate extension has not been obtained, within three working days after receipt of the notice.
(2) A financial institution refuses to honor facility-operation-related checks or other financial instruments issued by the license holder, operator, administrator, manager, or other controlling person or agent of the license holder, operator, administrator, manager, or other controlling person and:
(A) the cumulative amounts of the checks or financial instruments are $50,000 or more; and
(B) the checks or financial instruments are not honored or replaced to the satisfaction of the holders of the instruments within five working days after the holders have notified the license holder, operator, administrator, manager, or the person authorized to issue the instrument of the dishonored items.
(3) The facility fails to maintain the facility's utilities or a sufficient quantity of supplies, including nursing, dietary, pharmaceutical, or other care and service supplies, to meet the needs of the residents.
(4) The license holder, operator, administrator, manager, or other controlling person fails to make timely payments of any facility-related tax of at least $10,000 and fails to satisfy such tax within five working days after the date the tax becomes due.
(5) The license holder, operator, administrator, manager, or other controlling person files a voluntary bankruptcy petition, or a creditor files an involuntary bankruptcy petition against the license holder or controlling person, under the United States Code or any other laws of the United States.
(6) A court appoints a bankruptcy trustee for the facility.
(7) A person seeking appointment of a receiver for the facility files a petition in any jurisdiction.
(8) The license holder, operator, administrator, manager, or other controlling person is unable to meet conditions of a facility-operation-related loan or debt covenant unless the loan or debt covenant has been waived, and that inability leads to:
(A) the imposition of a fine or penalty;
(B) restructuring;
(C) a change in terms or conditions of the loan or debt covenant; or
(D) a recall by the issuing entity.
(9) The license holder, operator, administrator, manager, or other controlling person is delinquent on more than $50,000 of facility-related contractual obligations or vendor contracts and has not cured the delinquency within five working days after receipt of notice from the creditor or creditors to pay the debt.
(c) The license holder must notify DADS in writing of a significant adverse change in its financial condition as required by subsection (b) of this section within 72 hours after the license holder becomes aware of or should have become aware of the change.
(d) The license holder's notice required by subsection (b) of this section must include a description of:
(1) the specific significant adverse change in financial condition;
(2) how the significant adverse change in financial condition affects the license holder's ability to deliver essential care and services; and
(3) the actions the license holder has taken to address the significant adverse change in financial condition.
(e) The license holder must fax the notice required in subsection (b) of this section to (512) 438-2730 or (512) 438-2728, and the notice must be kept on file with a copy of the fax confirmation.
(f) The license holder must provide any other information DADS requests to substantiate continued compliance with the requirements of this section within 30 days after the request.
This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on June 21, 2007.
TRD-200702582
Kenneth L. Owens
General Counsel
Department of Aging and Disability Services
Effective date: September 1, 2007
Proposal publication date: December 22, 2006
For further information, please call: (512) 438-3734
Division 2. LICENSING REMEDIES
The amendment is adopted under Texas Government Code, §531.0055, which provides that the HHSC executive commissioner shall adopt rules for the operation and provision of services by the health and human services agencies, including DADS; Texas Human Resources Code, §161.021, which provides that the Aging and Disability Services Council shall study and make recommendations to the HHSC executive commissioner and the DADS commissioner regarding rules governing the delivery of services to persons who are served or regulated by DADS; and Texas Health and Safety Code, Chapter 242, which authorizes DADS to license and regulate nursing facilities.
§19.2106.Revocation of a License.
(a) DADS may revoke a facility's license when the license holder, or any other person described in §19.201(f) of this title (relating to Criteria for Licensing), has:
(1) violated the requirements of the Health and Safety Code, Chapter 242, or the rules adopted under that chapter, in either a repeated or substantial manner;
(2) committed any act described in §19.2112(a)(2) - (6) of this title (relating to Administrative Penalties); or
(3) failed to notify DADS of a significant adverse change in financial condition, as required under §19.1925(b) of this title (relating to Financial Condition).
(b) Revocation of a license may occur simultaneously with any other enforcement provision available to DADS.
(c) The license holder will be notified by certified mail of DADS' intent to revoke the license, including the facts or conduct alleged to warrant the revocation, with a copy being sent to the facility. The license holder has an opportunity to show compliance with all requirements of law for the retention of the license as provided in §19.215 of this title (relating to Opportunity to Show Compliance). If the license holder requests an opportunity to show compliance, DADS gives the license holder a written affirmation or reversal of the proposed action.
(d) The license holder will be notified by certified mail of DADS' revocation of the facility's license, with a copy being sent to the facility. The license holder has 15 days from receipt of the certified mail notice to request a hearing in accordance with the Health and Human Services Commission's formal hearing procedures in 1 TAC, Chapter 357, Subchapter I. The revocation will take effect when the deadline for appeal of the revocation passes, unless the license holder appeals the revocation. If the license holder appeals the revocation, the status of the license holder is preserved until final disposition of the contested matter. Upon revocation, the license must be returned to DADS.
This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on June 21, 2007.
TRD-200702583
Kenneth L. Owens
General Counsel
Department of Aging and Disability Services
Effective date: September 1, 2007
Proposal publication date: December 22, 2006
For further information, please call: (512) 438-3734