Part 10. DEPARTMENT OF INFORMATION RESOURCES
The Department of Information Resources (department) adopts TexasOnline Texas E-Grants rules at 1 TAC §210.3, concerning applicability, purpose and agency responsibilities; §210.4, concerning data elements and format; and §210.5, concerning waivers and blanket exemptions. The new rules are adopted without changes from the proposed text as published in the December 22, 2006, issue of the Texas Register (31 TexReg 10221).
Section 210.3 requires all state agencies, except institutions of higher education, state agencies defined in §531.001(4), Government Code, and state agencies granted an exemption from the requirements by the department, to post a synopsis of all funding opportunities under financial assistance programs at www.dir.state.tx.us/approvals/index, the central website designated by the department. The rule also establishes the responsibilities of each state agency associated with the requirement. Section 210.4, concerning data elements and format, requires state agencies to use the data elements and funding opportunity announcement format posted by the department at www.dir.state.tx.us/approvals/index. Section 210.5, concerning waivers and blanket exemptions, sets forth the waiver requirements for requesting a waiver from the rules from the department.
No comments were received regarding the new sections.
The new sections are adopted under Chapter 2055, Government Code, Subchapter E, Grants Assistance Project, which requires the department to establish an electronic government project to develop an Internet website accessible through TexasOnline through which state agencies post electronic summaries of grant assistance opportunities. The rules are also adopted under §2054.052(a), Government Code, which authorizes the department to adopt rules to implements its responsibilities under Chapter 2054, Government Code; §2054.262, Government Code, which requires the department to adopt rules to implement TexasOnline; and §2054.252(a), Government Code, which requires the department to implement TexasOnline.
No other statutes are affected by these rules.
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 March 8, 2007.
TRD-200700919
Renée Mauzy
General Counsel
Department of Information Resources
Effective date: March 28, 2007
Proposal publication date: December 22, 2006
For further information, please call: (512) 475-4700
Chapter 355. REIMBURSEMENT RATES
Subchapter A. COST DETERMINATION PROCESS
The Health and Human Services Commission (HHSC) adopts the amendment to §355.110, concerning Informal Reviews and Formal Appeals without changes to the proposed text as published in the December 29, 2006, issue of the Texas Register (31 TexReg 10460) and will not be republished.
The amended §355.110 allows the update of legacy agency references, update of outdated citations related to legacy agencies rule references which have been incorporated into HHSC rules and correction of erroneous formatting.
HHSC did not receive any comments regarding the proposed rule during the 30-day comment period.
The amendment is adopted 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.
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 March 12, 2007.
TRD-200700937
Steve Aragón
Chief Counsel
Texas Health and Human Services Commission
Effective date: April 1, 2007
Proposal publication date: December 29, 2006
For further information, please call: (512) 424-6900
DIVISION 4. MEDICAID HOSPITAL SERVICES
The Health and Human Services Commission (HHSC or Commission) adopts amendments to §355.8061 and §355.8063, related to implementation of the private hospital upper payment limit (UPL) program. The amendments to §355.8061 are adopted without changes to the proposed text as published in the January 19, 2007, issue of the Texas Register (32 TexReg 223) and will not be republished. The amendments to §355.8063 are adopted with changes to the proposed text as published in the January 19, 2007, issue of the Texas Register (32 TexReg 223). The text of the rule will be republished.
Amended §355.8061 establishes the methodology HHSC will use to distribute UPL supplemental payments for outpatient services to private hospitals. Amended §355.8063 establishes the methodology HHSC will use to distribute UPL supplemental payments for inpatient services to private hospitals.
The amended rules will implement Medicaid UPL supplemental payments to privately-owned hospitals in Hidalgo, Webb, Maverick, Montgomery, Travis, and Bexar counties effective June 11, 2005, and to privately-owned hospitals in all other Texas counties effective November 12, 2005.
Regarding §355.8063, HHSC has determined that it will begin making quarterly supplemental payments sooner than June 1, 2007. Accordingly, in subsection (t)(4)(G), HHSC has replaced June 1, 2007, with April 1, 2007. HHSC also made a nonsubstantive, grammatical change to subsection (t)(4)(D)(iv), replacing "All affiliation agreement" with "All affiliation agreements..."
HHSC received comments regarding proposed §355.8063 during the 30-day comment period, which included a public hearing on February 1, 2007, from Gjerset & Lorenz L.L.P., Shannon Medical Center, Texas Health Resources, Brown McCarroll L.L.P., Baylor Health Care System, Methodist Health Care System and the Texas Hospital Association. During the public hearing on February 1, 2007, HHSC also received comments from an individual representing the Texas Association of Public and Nonprofit Hospitals and an individual representing the Travis County Healthcare District. No comments were received on §355.8061. A summary of comments on §355.8063 and HHSC's responses follow.
Comment:
HHSC received comments from Baylor Health Care System, Gjerset & Lorenz, Methodist Health System, Texas Health Resources, and the Texas Association of Public and Nonprofit Hospitals addressing the language in subsection (t)(4)(F), which relates to repayment of CMS recoupments. The suggestions ranged from deleting subsection (t)(4)(F) entirely to deleting only the indemnification provision, clause (ii), as it relates to the hospital district or state or local governmental entity. The commenters stated that clause (ii) conflicts with provisions in the Texas Constitution.
HHSC Response:
HHSC acknowledges the comment and agrees to delete the liability for indemnification of a private hospital's recoupment by the hospital district, or state or local governmental entity. HHSC has reworded subsection (t)(4)(F) to assign the risk associated with a recoupment to the individual hospital to which the overpayment finding is related or to the other hospitals that are members of the hospital district or state or local governmental entity affiliation group.
Comment:
HHSC received comments from Baylor Health Care System, Gjerset & Lorenz, Methodist Health System, and Texas Health Resources concerning language in subsection (t)(4) that expresses the purpose of the affiliations. As proposed the rule states that "[t]he purpose of the affiliation is that private hospitals will use the supplemental funds to provide additional indigent health care." The comments suggest that this language is in conflict with the U.S. Department of Health and Human Services Centers for Medicare and Medicaid Services' (CMS) restrictions on Medicaid funding.
HHSC Response:
HHSC acknowledges the comment and has modified the language in subsection (t)(4) to clarify that the purpose of the supplemental payments is to reimburse a hospital's unreimbursed Medicaid costs for services to the Medicaid population to ensure the continued viability of a community's Medicaid providers.
Comment:
HHSC received comments from Brown McCarroll, Gjerset & Lorenz, the Texas Association of Public and Nonprofit Hospitals, and the Travis County Healthcare District related to language in subsection (t)(4)(G)(iii). This subsection concerns the policy of processing one supplemental payment for services provided on or before August 31, 2006, for hospitals that: (a) submit the required documentation to HHSC no later than May 31, 2007; and (b) have intergovernmental transfers made to HHSC no later than December 1, 2007. The comments suggest that HHSC either make two supplemental payments before December 1, 2007, or allow hospitals to receive payments in installments for FY 2007 in FY 2008.
HHSC Response:
HHSC acknowledges the comment but believes that the extension to December 1, 2007, is adequate to allow hospital districts and state or local governmental entities time to transfer funds to take advantage of the retroactive funds available for services provided on or before August 31, 2006. No change was made in response to this comment.
Comment:
HHSC received comments from Baylor Health Care System, Methodist Health System, and Texas Health Resources on subsection (t)(4)(F), asking if participating hospitals would be invited to participate directly in appeals of any recoupment actions by CMS. The commenters note that the current language does not specify who will be the point of contact with CMS in such appeals. The comments reference the hospitals' rights of due process under the 14th Amendment to the United States Constitution as the basis for allowing them the opportunity to appeal any recoupment action levied against a particular hospital by CMS.
HHSC Response:
HHSC believes the requested language is unnecessary and declines to add language addressing providers' involvement in appeals or reconsiderations or in preliminary discussions or negotiations with CMS related to recovery of overpayments. Federal law already addresses participation of interested third parties in appeals and reconsiderations of state disallowances. See 45 C.F.R. §16.16. No change was made in response to this comment.
Comment:
HHSC received comments from Baylor Health Care System, Methodist Health System, and Texas Health Resources related to subsection (t)(4)(F). The commenters noted that the language does not specify which hospitals receiving supplemental payments will be subject to recoupment. The comment stated that the current language would allow HHSC to recoup from a hospital other than the one for which the recoupment was levied.
HHSC Response:
HHSC feels the language currently proposed in subsection (t)(4)(F)(i), that "HHSC will recoup from the hospital against which the disallowance was directed;?" gives clear notice as to which hospital HHSC expects will refund the amount of a federal recoupment. No change was made in response to this comment.
Comment:
HHSC received comments from Shannon Medical Center related to subsection (t)(4)(G)(ii) asking that language be added to allow the hospital district or state or local entity to prescribe the distribution of its supplemental payment among their affiliated hospitals instead of the pro-rata methodology currently referenced in the rule. The commenters asked for additional discretion in distributing funds among affiliated hospitals, with the qualification that the prescribed distribution could not exceed an individual hospital's calculated UPL limit.
HHSC Response:
HHSC appreciates the commenters' concern but cannot delegate to hospital districts or any state or local entity the authority to prescribe the distribution of the supplemental payment among their affiliated hospitals. As the single state agency under section 1902(a)(5) of the Social Security Act, and 42 C.F.R. §431.10(e), HHSC is responsible for the administration and oversight of the medical assistance program in Texas and is prohibited by federal law from delegating, other than to its own officials, authority to exercise administrative discretion. HHSC believes that the decision on how to distribute the supplemental payment within the affiliated hospital groups is an exercise of administrative discretion and rests solely with the Commission. No change was made in response to this comment.
Comment:
HHSC received comments from Gjerset & Lorenz concerning subsection (t)(4)(G) that would add language requiring HHSC Rate Analysis staff to perform a year-end reconciliation calculation and make additional proportional supplemental payments based on each hospital's UPL limit if it did not exceed the aggregate private hospital UPL cap and if supported by an intergovernmental transfer from its affiliated public partner.
HHSC Response:
HHSC acknowledges the comment and has included in subsection (t)(4)(G) language that directs HHSC to begin a yearly reconciliation of the Private Hospital UPL program beginning with dates of service from September 1, 2006 through August 31, 2007. The reconciliation must take into account the requirement that HHSC cannot reimburse private hospitals more than the CMS aggregate cap for the affected class of hospitals.
The amendments are adopted 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.
§355.8063.Reimbursement Methodology for Inpatient Hospital Services.
(a) Introduction. Except as otherwise specified in subsection (q) of this section, the Texas Medical Assistance Program (Medicaid) reimburses hospitals, except in-state children's hospitals, for covered inpatient hospital services using a prospective payment system. In-state children's hospitals are reimbursed for covered inpatient hospital services using the methodology described in subsection (o) of this section. For hospitals other than in-state children's hospitals, the Health and Human Services Commission (HHSC) or its designee groups hospitals into payment divisions using the average base year payment per case in each hospital after adjusting each hospital's base year payment per case by a case mix index and a cost-of-living index. The payment divisions are separated into $100 increments. If a payment division has less than ten observations for Medicaid data, the HHSC or its designee considers that payment division to be statistically invalid. Hospitals within that payment division are placed into the nearest valid payment division.
(b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.
(1) Diagnosis-related group (DRG)--The taxonomy of diagnoses as defined in the Medicare DRG system or as otherwise specified by the HHSC or its designee.
(2) Case mix index--The hospital-specific average relative weight.
(3) Relative weight--The arithmetic mean of the dollars for a specific DRG divided by the arithmetic mean of the dollars for all cases.
(4) Standard dollar amount--The weighted mean base year payment for all hospitals in a payment division after adjusting each hospital's base year payment per case by a case mix index, and a cost-of-living index. The HHSC or its designee establishes a minimum standard dollar amount of $1,600 and applies it to those hospitals whose standard dollar amount is less than the minimum. The HHSC or its designee applies cost-of-living indexes to the standard dollar amounts established for the base year to calculate standard dollar amounts for prospective years. A cost-of-living index is not applied to the minimum standard dollar amount.
(5) Base year--A 12-consecutive-month period of claims data selected by the HHSC or its designee as the basis for establishing the payment divisions, standard dollar amounts, and relative weights. The HHSC or its designee selects a new base year at least every three years.
(6) Base year payment per case--The payment that would have been made to a hospital if the HHSC or its designee reimbursed the hospital under similar methods and procedures used in Title XVIII of the Social Security Act, as amended, effective October 1, 1982, by Public Law 97-248. In calculating the base year payment per case, the HHSC or its designee uses the interim rate established at tentative or final settlement, if applicable, of the most recent cost reporting period up to and including the cost reporting period associated with the base year.
(7) Interim rate--Total reimbursable Title XIX inpatient costs, as specified in paragraph (6) of this subsection, divided by total covered Title XIX inpatient charges per tentative or final cost reporting period. The interim rate established at tentative settlement includes incentive/penalty payments to the extent that they continue to be permitted by federal law and regulation and continue to be included on Title XVIII cost reports.
(8) New hospital--A facility that has been in operation under present and previous ownership for less than three years and that initially enrolls as a Title XIX provider after the current base year. A new hospital must have been substantially constructed within the five previous years from the effective date of the prospective rate period.
(9) Children's hospital--A hospital within Texas that is recognized by Medicare as a children's hospital and is exempted by Medicare from the Medicare prospective payment system.
(10) Out-of-state children's hospital--A hospital outside of Texas that is recognized by Medicare as a children's hospital and is exempted by Medicare from the Medicare prospective payment system.
(c) Calculating relative weights and standard dollar amounts. The HHSC or its designee uses recent Texas claims data to calculate both the relative weights and standard dollar amounts. A relative weight is calculated for each DRG and applied to all payment divisions. A separate standard dollar amount is calculated for each payment division. Except for border hospitals with a Texas Medicaid provider number beginning with an H and out-of-state children's hospitals, the HHSC or its designee uses the overall arithmetic mean base year payment per case, including the cost of living update as specified in subsection (n) of this section, as the standard dollar amount to reimburse out-of-state hospitals. The overall arithmetic mean base year payment per case, including the cost of living update as specified in subsection (n) of this section, is also used as the standard dollar amount to reimburse military hospitals providing inpatient emergency services for admissions on or after October 1, 1993. The calculation of the standard dollar amount for out-of-state children's hospitals is described in subsection (r) of this section. Except for new hospitals, the overall arithmetic mean base year payment per case, including the cost of living update as specified in subsection (n) of this section, is also used as the standard dollar amount to reimburse hospitals that initially enroll as a Title XIX provider after the current base year. The standard dollar amount for new hospitals is the lesser of the overall arithmetic mean base year payment per case plus three percentile points, including the cost of living update as specified in subsection (n) of this section, or the hospital's average Medicaid cost per Medicaid discharge based on the tentative or final settlement, if applicable, of the hospital's first 12-month cost reporting period occurring after the hospital's enrollment as a Title XIX provider. In the event that the new hospital is a replacement facility for a hospital that is currently enrolled as a Title XIX provider, the hospital is reimbursed by using either the standard dollar amount of the existing provider or the standard dollar amount for new hospitals, whichever is greater. The use of the hospital's average Medicaid cost per Medicaid discharge, after adjusting for case-mix intensity, as its standard dollar amount is applied prospectively to the beginning of the next prospective year and is applicable only if the tentative or final settlement is completed and available at least 60 days before the beginning of the prospective year. The hospital's Medicaid costs are determined using similar methods and procedures used in Title XVIII of the Social Security Act, as amended, effective October 1, 1982, by Public Law 97-248. When two or more Title XIX participating providers merge, the HHSC or its designee combines the Medicaid inpatient costs, as described in this subsection, of each of the individual providers to calculate a standard dollar amount, effective at the start of the next prospective period, to be used to reimburse the merged entity. Acquisitions and buyouts do not result in a recalculation of the standard dollar amount of the acquired provider unless acquisitions or buyouts result in the purchased or acquired hospital becoming part of another Medicaid participating provider. When the HHSC or its designee determines that the HHSC or its designee has made an error that, if corrected, would result in the standard dollar amount of the provider for which the error was made changing to a new payment division, either higher or lower, the HHSC or its designee moves the provider into the correct payment division, and the HHSC or its designee reprocesses claims paid using the initial, incorrect standard dollar amount that was in effect for the current state fiscal year by using the existing standard dollar amount of the payment division in which the provider was moved. In the determination of the corrected payment division, the HHSC or its designee uses the relative weights that are currently in effect for the state fiscal year. The correction of this error condition only applies to the current state fiscal year payments. No corrections are made to payment rates for services provided in previous state fiscal years. If a specific DRG has less than ten observations for Medicaid data, the HHSC or its designee uses the corresponding Medicare relative weight, except for DRGs relating to organ transplants. Relative weights for organ transplant DRGs with less than ten observations may be developed using Medicaid-specific data. The relative weights include organ procurement costs for both solid and nonsolid organs. The HHSC or its designee makes no distinction between urban and rural hospitals and there is no federal/national portion within the payment.
(d) Add-on payments. There are no separate add-on payments. The HHSC or its designee:
(1) includes capital costs in the standard dollar amount for each payment division;
(2) includes the cost of indirect medical education in the standard dollar amount for each payment division;
(3) includes the cost of malpractice insurance in the standard dollar amount for each payment division; and
(4) includes return on equity in the standard dollar amount for each payment division.
(e) Calculating the payment amount. The HHSC or its designee reimburses each hospital for covered inpatient hospital services by multiplying the standard dollar amount established for the hospital's payment division by the appropriate relative weight. The patient's DRG classification is primarily based on the patient's principal diagnosis. The resulting amount is the payment amount to the hospital.
(f) Patient transfers. If a patient is transferred, the HHSC or its designee establishes payment amounts as specified in paragraphs (1) - (4) of this subsection. If appropriate, the HHSC or its designee manually reviews transfers for medical necessity and appropriate payment.
(1) If the patient is transferred to a skilled nursing facility or intermediate care facility, the HHSC or its designee pays the transferring hospital the total payment amount of the patient's DRG.
(2) If the patient is transferred to another hospital, the HHSC or its designee pays the receiving hospital the total payment amount of the patient's DRG. The HHSC or its designee pays the transferring hospital a DRG per diem. The DRG per diem is based on the following formula: (DRG relative weight x standard dollar amount)/DRG mean length of stay (LOS) x LOS. The LOS is the lesser of the DRG mean LOS, the claim LOS, or 30 days. The 30-day factor is not used in establishing a DRG per diem amount for a medically necessary stay of a recipient less than age one in a Title XIX participating hospital or a recipient less than age six in a disproportionate share hospital as defined by the HHSC.
(3) If the HHSC or its designee determines that the transferring hospital provided a greater amount of care than the receiving hospital, the HHSC or its designee reverses the payment amounts. The transferring hospital is paid the total payment amount of the patient's DRG and the receiving hospital is paid the DRG per diem.
(4) The HHSC or its designee makes multiple transfer payments by applying the per diem formula to the transferring hospitals and the total DRG payment amount to the discharging hospital.
(g) Split billing. The HHSC or its designee does not allow interim billings by providers. The hospital may bill the HHSC or its designee when the patient exceeds his 30-day inpatient hospital limit or is discharged. The HHSC or its designee bases payment on the diagnosis codes known at billing. The payment is final.
(h) Rebasing the standard dollar amounts. The HHSC or its designee rebases the standard dollar amount for each payment division at least every three years. HHSC will not rebase or recalculate the standard dollar amounts for each payment division for admissions during the period September 1, 2003 through August 31, 2007. The relative weights are recalibrated whenever the standard dollar amounts are recalculated. The standard dollar amounts are not rebased on an interim basis unless the HHSC or its designee determines that special circumstances warrant rebasing.
(i) Recalibrating the relative weights. The HHSC or its designee recalibrates the relative weights whenever the standard dollar amounts are rebased.
(j) Revising the diagnosis related groups. The HHSC or its designee parallels the taxonomy of diagnoses as defined in the Medicare DRG prospective payment system unless a revision is required based on Texas claims data or other factors as determined by the HHSC or its designee.
(k) Appeals.
(1) A hospital may appeal individual claims as specified in other HHSC rules. As specified in subparagraphs (A) - (C) of this paragraph, a hospital may also appeal mechanical, mathematical, and data entry errors in base year claims data and incorrectly computed subsequent adjustments to the hospital's base year claims data because of the base year's tentative or final settlement.
(A) If a hospital believes that the HHSC or its designee made a mechanical, mathematical, or data entry error in computing the hospital's base year claims data, the hospital may request a review of the disputed calculation by the HHSC or, at the HHSC direction, its designee. A hospital may not request a review if the disputed calculation is the result of the hospital's submittal of incorrect data or the result of the HHSC or its designee's application of an interim rate to the base year claims data derived from a cost reporting period occurring before the base year. Upon the provider hospital's request, the HHSC or its designee provides the applicable available data used in calculating the hospital's base year claims data to the provider hospital. The hospital must submit a specific written request for review and appropriate specific documentation supporting its contention that there has been a mechanical, mathematical, or data entry error to the HHSC or its designee. Except as specified in subparagraph (C) of this paragraph, the request must be submitted within 60 days after the hospital receives initial notification of its payment division and standard dollar amount. The HHSC or its designee conducts the review as quickly as possible and notifies the hospital of the results. If the hospital is dissatisfied with the results of the review, the hospital may request a formal hearing under the procedures, including the expedited processing provisions, except that, in the event of any conflict, the procedures contained in this section apply. Except as specified in subparagraph (C) of this paragraph, if the review or appeal is completed at least 60 days before the beginning of the next prospective year, any adjustment required after the completion of the review or appeal is applied to that next prospective year. If the review or appeal is not completed at least 60 days before the beginning of the next prospective year, any adjustment required after the completion of the review or appeal is applied only to the subsequent prospective year. The base year claims data used by the HHSC or its designee pending the review or appeal is the base year claims data established by the HHSC or its designee.
(B) If a hospital believes that the HHSC or its designee incorrectly computed subsequent adjustments to the hospital's base year claims data because of the base year's tentative or final settlement, the hospital may request a review of the disputed calculation related to the tentative or final settlement by the HHSC or, at the HHSC direction, its designee. The hospital's request may also include a request to review the tentative or final settlement. The hospital must submit a specific written request for review and appropriate specific documentation supporting its contention that the tentative or final settlement is incorrect to the HHSC or its designee. Except as specified in subparagraph (C) of this paragraph, the request must be submitted within 60 days after the hospital receives notification of a tentative or final settlement of the base year data. The HHSC or its designee conducts the review as quickly as possible and notifies the hospital of the results. If the hospital is dissatisfied with the results of the review, the hospital may request a formal hearing under the procedures, including the expedited processing provisions, contained in Chapter 1 of this title (relating to the Texas Board of Health), except that, in the event of any conflict, the procedures contained in this section apply. Except as specified in subparagraph (C) of this paragraph, if the review or appeal is completed at least 60 days before the beginning of the next prospective year, any adjustment required after the completion of the review or appeal is applied to that next prospective year. If the review or appeal is not completed at least 60 days before the beginning of the next prospective year, any adjustment required after the completion of the review or appeal is applied only to the subsequent prospective year. The interim rate applied to the base year claims data pending the review or appeal is the interim rate established by the HHSC or its designee.
(C) If a hospital believes that the HHSC or its designee incorrectly computed the hospital's 1985 base year claims data as specified in subparagraph (A) of this paragraph, the hospital may submit a specific written request for review and appropriate specific documentation supporting its contention within 60 days after the effective date of this section. If a hospital believes that the HHSC or its designee incorrectly computed the tentative or final settlement of the cost reporting period associated with the 1985 base year as specified in subparagraph (B) of this paragraph, the hospital may submit a specific written request for review and appropriate specific documentation supporting its contention within 60 days after the effective date of this section. The hospital must follow the process described in subparagraph (A) or (B) of this paragraph, as appropriate. If the review or appeal is completed by December 31, 1987, any adjustment required after the completion of the review or appeal is applied to the March 1, 1988, adjustment described in subsection (n) of this section. If the review or appeal is not completed by December 31, 1987, any adjustment required after the completion of the review or appeal is applied to the next prospective year.
(2) A hospital may not appeal the prospective payment methodology used by the HHSC or its designee, including:
(A) the payment division methodologies;
(B) the DRGs established;
(C) the methodology for classifying hospital discharges within the DRGs;
(D) the relative weights assigned to the DRGs; and
(E) the amount of payment as being inadequate to cover costs.
(l) Cost reports. Each hospital must submit a cost report at periodic intervals as prescribed by Medicare or as otherwise prescribed by the HHSC or its designee. The HHSC or its designee uses data from these reports in rebasing years, in making adjustments as described in subsections (n) and (q) of this section, and in completing cost settlements for children's hospitals.
(m) Cost settlements. If a hospital has already begun its fiscal year on September 1, 1986, cost settlement for that portion of the hospital's fiscal year which occurs before September 1, 1986, is based on reimbursement for covered inpatient hospital services under similar methods and procedures used in the Social Security Act, Title XVIII, as amended, effective October 1, 1982, by Public Law 97-248. Except as otherwise specified in subsection (q) of this section, there are no cost settlements for services provided to recipients admitted as inpatients to hospitals reimbursed under the prospective payment system on or after the implementation date of the prospective payment system.
(n) Adjustments to base year claims data.
(1) Beginning with 1985 hospital fiscal year cost reporting periods, the HHSC or its designee adjusts each hospital's base year claims data and resulting payment division and standard dollar amount to reflect the interim rate established at tentative and final settlement, if applicable, of the cost reporting period associated with the base year. The adjustments are applied only to claims data for months within the base year that coincide with months within the hospital's cost reporting period. The claims data for months within the base year that do not coincide with months within the hospital's cost reporting period remain unchanged until the tentative or final settlement of the cost reporting period containing those months has been completed. The adjustments are applied to the next prospective year beginning September 1, 1988, except as specified in subparagraphs (A), (B), and (C) of this paragraph.
(A) If the tentative or final settlement is not completed and available at least 60 days before the beginning of the next prospective year, any adjustment required because of the settlement is applied to the subsequent prospective year.
(B) If a review or appeal of a tentative or final settlement is not completed at least 60 days before the beginning of the next prospective year, the interim rate applied to the claims data on which the hospital's payment division and standard dollar amount are established is the interim rate established at tentative or final settlement by the department or its designee. Any adjustment required after the completion of the review or appeal is applied only to the subsequent prospective year.
(C) The HHSC or its designee makes a March 1, 1988, adjustment.
(2) The HHSC or its designee updates the standard dollar amount each year for each payment division by applying a cost-of-living index to the standard dollar amount established for the base year. The cost-of-living index for state fiscal years 2003, 2004, 2005, 2006 and 2007 will not be applied to the standard dollar amount for admissions during the period September 1, 2003 through August 31, 2007. The index used to update the standard dollar amounts is the greater of:
(A) the Health Care Financing Administration's (HCFA) Market Basket Forecast (PPS Hospital Input Price Index) based on the report issued for the federal fiscal year quarter ending in March of each year, adjusted for the state fiscal year by summing one-third of the annual forecasted rate of the index for the current calendar year and two-thirds of the annual forecasted rate of the index for the next calendar year; or
(B) an amount determined by selecting the lesser of the following two measures:
(i) the change in total charges per case for the latest year available compared to total charges per case for the previous year; or
(ii) the change in the Texas medical consumer price index-urban (that is, the arithmetic mean of the Houston and Dallas/Fort Worth medical consumer price indices for urban consumers) for the latest year available compared to the Texas medical consumer price index-urban for the previous year.
(o) Reimbursement to in-state children's hospitals and freestanding psychiatric facilities. The HHSC or its designee reimburses in-state children's hospitals and freestanding psychiatric facilities under similar methods and procedures used in the Social Security Act, Title XVIII, as amended, effective October 1, 1982, by Public Law 97-248, Tax Equity and Fiscal Responsibility Act (TEFRA) except for the cost of direct graduate medical education (DGME). For cost reporting periods beginning on or after September 1, 2003, children's hospitals with allowable DGME costs as determined under TEFRA principles will receive a pro rata share of their annual TEFRA DGME cost based on appropriations or allocations from appropriations made specifically for this purpose. The amount and frequency of interim payments will also be subject to the availability of appropriations made specifically for this purpose. Interim payments are subject to settlement at both tentative and final audit of a hospital's cost report. The HHSC or its designee establishes target rates and stipulates payments per discharge, incentives, and percentage of payments. The HHSC or its designee uses each hospital's 1987 final audited cost reporting period (fiscal year ending during calendar year 1987) as its target base period. The target base period for hospitals recognized by Medicare as children's hospitals after the implementation of this subsection is the hospital's first full 12-month cost reporting period occurring after its recognition by Medicare. The HHSC or its designee annually increases each hospital's target amount for the target base period by the cost-of-living index described in subsection (n) of this section. The HHSC or its designee selects a new target base period at least every three years. The HHSC or its designee bases interim payments to each hospital upon the interim rate derived from the hospital's most recent tentative or final Medicaid cost report settlement. If a Title XIX participating hospital is subsequently recognized by Medicare as a children's hospital after the implementation of this subsection, the hospital must submit written notification to the HHSC or its designee and include adequate documentation and claims data. Upon receipt of the written notification from the hospital, the HHSC or its designee reserves the right to take 90 days to convert the hospital's reimbursement to the reimbursement methodology described in this subsection.
(p) Day and cost outliers. Effective for inpatient hospital services provided on or after July 1, 1991, the HHSC or its designee pays day or cost outliers for medically necessary inpatient services provided to clients less than age one in all Title XIX participating hospitals and clients less than age six in disproportionate share hospitals, as defined by the HHSC, that are reimbursed under the prospective payment system. For purposes of outlier payment adjustments, disproportionate share hospitals are defined as those hospitals identified by the HHSC during the previous state fiscal year as disproportionate share hospitals. If an admission qualifies for both a day and a cost outlier, only the outlier resulting in the highest payment to the hospital is paid. (Note: This subsection does not address reimbursement for the provision of other necessary inpatient hospital services under the Early and Periodic Screening, Diagnosis, and Treatment Program, as required by the Omnibus Budget and Reconciliation Act of 1989.)
(1) To establish day outliers, the HHSC or its designee first removes from the current base year data those admissions whose actual lengths of stay are greater than or equal to plus or minus three standard deviations from the arithmetic mean length of stay for each DRG. The HHSC or its designee then recomputes the arithmetic mean length of stay and the standard deviations for each DRG. Inpatient days, which exceed two standard deviations beyond the arithmetic mean length of stay for the DRG are eligible for a day outlier. Payment is based on 70% of a per diem amount of a full DRG payment. The per diem amount is established by dividing the full DRG payment amount by the arithmetic mean length of stay for the DRG.
(2) To establish cost outliers, the HHSC or its designee first determines what the amount of reimbursement for the admission would have been if the HHSC or its designee reimbursed the hospital under similar methods and procedures used in the Social Security Act, Title XVIII, as amended, effective October 1, 1982, by Public Law 97-248, Tax Equity and Fiscal Responsibility Act (TEFRA). The HHSC or its designee then determines the outlier threshold by using the greater of the full DRG payment amount multiplied by 1.5 or an amount determined by selecting the lesser of the universe mean of the current base year data multiplied by 11.14, or the hospital's standard dollar amount multiplied by 11.14. The hospital's standard dollar amount is the amount that the HHSC or its designee uses to reimburse the hospital under the prospective payment system. The outlier threshold is subtracted from the amount of reimbursement for the admission established under the TEFRA principles. The HHSC or its designee multiplies any remainder by 70% to determine the actual amount of the cost outlier payment.
(3) If a recipient less than age one is admitted to and remains in a hospital past his or her first birthday, medically necessary inpatient days and hospital charges after the child reaches age one are included in calculating the amount of any day or cost outlier payment.
(q) Hospitals with 100 or fewer licensed beds and certain hospitals with more than 100 licensed beds. The policies in this subsection apply only to hospital fiscal years beginning on or after September 1, 1989 for hospitals with 100 or fewer licensed beds at the beginning of the hospital's fiscal year or hospital fiscal years beginning on or after September 1, 2003 for hospitals with more than 100 licensed beds at the beginning of the hospital's fiscal year, located in a county that is not in a metropolitan statistical area (MSA) as defined by the U.S. Office of Management and Budget (OMB) and designated by the Center for Medicare & Medicaid Services as a Sole Community Provider (SCH) or Rural Referral Center RCC. At tentative cost settlement of the hospital's fiscal year (with subsequent adjustment at final cost settlement, if applicable), the HHSC or its designee determines what the amount of reimbursement during the fiscal year would have been if the HHSC or its designee reimbursed the hospital under similar methods and procedures used in Title XVIII of the Social Security Act, as amended, effective October 1, 1982, by Public Law 97-248, Tax Equity and Fiscal Responsibility Act (TEFRA). This determination is made without imposing a TEFRA cap. If the amount of reimbursement under the TEFRA principles is greater than the amount of reimbursement received by the hospital under the prospective payment system, the HHSC or its designee reimburses the difference to the hospital.
(r) Reimbursement to out-of-state children's hospitals. For admissions on or after September 1, 1991, the standard dollar amount for out-of-state children's hospitals is calculated as specified in this subsection. The HHSC or its designee calculates the overall average cost per discharge for in-state children's hospitals based on tentative or final settlement of cost reporting periods ending in calendar year 1990. The overall average cost per discharge is adjusted for intensity of service by dividing it by the average relative weight for all admissions from in-state children's hospitals during state fiscal year 1990 (September 1, 1989 through August 31, 1990). The adjusted cost per discharge is updated each year by applying the cost-of-living index described in subsection (n) of this section. The resulting product is the standard dollar amount to be used for payment of claims as described in subsection (e) of this section. The HHSC or its designee selects a new cost reporting period and admissions period from the in-state children's hospitals at least every three years for the purpose of calculating the standard dollar amount for out-of-state children's hospitals.
(s) Reimbursement of inpatient direct graduate medical education (GME) costs. The Medicaid allowable inpatient direct graduate medical education cost, as specified under similar methods and procedures used in the Social Security Act, Title XVIII, as amended, effective October 1, 1982, by Public Law 97-248, is calculated for each hospital having inpatient direct graduate medical education costs on its tentative or final audited cost report. Those inpatient direct medical education costs are removed from the calculation of the interim rate described in subsection (b)(7) of this section and not used in the calculation of the provider's standard dollar amount described in subsection (c) of this section. Those allowable inpatient direct graduate medical education costs for services delivered to Medicaid eligible patients with inpatient admission dates on or after September 1, 1997, will be subject to the cost determination and settlement provisions as described in this subsection. No Medicaid inpatient direct graduate medical education cost settlement provisions are applied to inpatient hospital admissions prior to September 1, 1997. For cost reporting periods beginning on or after September 1, 2003, providers with Medicaid allowable direct graduate medical education costs as described in this subsection will receive a pro rata share of their annual GME cost based on appropriations or allocations from appropriations made specifically for this purpose. The amount and frequency of interim payments will also be subject to the availability of appropriations made specifically for this purpose. Interim payments are subject to settlement at both tentative and final audit of a provider's cost report.
(t) Non-State Owned Hospital Supplemental Inpatient Payments. Notwithstanding other provisions of this chapter, supplemental payments will be made each state fiscal year in accordance with this subsection to eligible hospitals that serve high volumes of Medicaid and uninsured patients.
(1) Supplemental payments are available under this subsection for inpatient hospital services provided by a publicly-owned hospital or hospital affiliated with a hospital district in Bexar, Dallas, Ector, El Paso, Harris, Lubbock, Nueces, Midland, Potter, Randall, Tarrant, and Travis counties. Supplemental payments will be made for inpatient services on or after July 6, 2001, for Bexar, Dallas, Ector, El Paso, Harris, Lubbock, Nueces, Tarrant, and Travis counties. Supplemental payments will be made for inpatient services on or after February 7, 2004, for Midland County. Supplemental payments will be made for inpatient services on or after May 29, 2004 for Potter and Randall counties.
(2) State funding for supplemental payments authorized under this paragraph will be limited to and obtained through intergovernmental transfers of local or hospital district funds. The supplemental payments described in this paragraph will be made in accordance with the applicable regulations regarding the Medicaid upper limit provisions codified at 42 C.F.R. §447.272.
(3) In each county listed in paragraph (1) of this subsection, the publicly-owned hospital or hospital affiliated with a hospital district that incurs the greatest amount of cost for providing services to Medicaid and uninsured patients, will be eligible to receive supplemental high volume payments. The supplemental payments authorized under this paragraph are subject to the following limits:
(A) In each state fiscal year the amount of any inpatient supplemental payments and outpatient supplemental payments may not exceed the hospital's "hospital specific limit," as determined under §355.8065(f)(2)(E) of this chapter (relating to Reimbursement to Disproportionate Share Hospitals (DSH)) for DSH hospitals; and
(B) The amount of inpatient supplemental payments and fee-for-service Medicaid inpatient payments the hospital receives in a state fiscal year may not exceed Medicaid inpatient billed charges for inpatient services provided by the hospital to fee-for-service Medicaid recipients in accordance with 42 CFR §447.271.
(4) Notwithstanding the provisions of paragraphs (1) - (3) of this subsection, a privately-operated hospital that executes an indigent care affiliation agreement (as defined in this subsection) with a hospital district or state or local governmental entity is eligible to receive supplemental payments under this paragraph. The purpose of the affiliation is to pay for unreimbursed care to the Medicaid population to ensure the continued viability of the communities' Medicaid providers.
(A) Supplemental payments will be made for inpatient services on or after June 11, 2005, for eligible hospitals in Hidalgo, Maverick, Montgomery, Travis, Bexar, and Webb counties. Supplemental payments will be made for inpatient services on or after November 12, 2005, for eligible hospitals in all other counties in the State of Texas.
(B) A hospital that is eligible to receive supplemental payments under this paragraph must provide a copy of the fully executed indigent care affiliation agreement to HHSC prior to payment of any supplemental funds under this paragraph.
(C) An eligible hospital must certify, on a form prescribed by HHSC and prior to payment of any supplemental funds under this paragraph, the following:
(i) No part of any supplemental payment paid to the hospital under this paragraph will be returned or reimbursed to the hospital district or state or local governmental entity;
(ii) No part of any supplemental payment paid to the hospital under this paragraph will be used to pay a contingent fee, consulting fee, or legal fee associated with the hospital's receipt of the supplemental funds; and
(iii) The person signing the certification on behalf of the hospital is legally authorized to bind the hospital and to certify the matters described in the certification.
(D) A hospital district or state or local governmental entity must certify, on a form prescribed by HHSC and prior to payment of any supplemental funds under this paragraph, the following:
(i) The hospital district or state or local governmental entity has not received and has no agreement to receive, any portion of the funds paid to an eligible hospital that has executed an affiliation agreement with the hospital district or state or local governmental entity;
(ii) The hospital district or state or local governmental entity has not entered into a contingent fee arrangement related to the hospital district's or state or local governmental entity's participation in the supplemental payment program authorized under this paragraph;
(iii) The hospital district or state or local governmental entity is authorized to participate in the supplemental payment program authorized under this paragraph pursuant to a vote of the hospital district's or state or local governmental entity's governing body in a public meeting preceded by public notice published in accordance with the hospital district's or state or local governmental entity's usual and customary practices or the Texas Open Meetings Act, as applicable;
(iv) All affiliation agreements, consulting agreements, or legal services agreements executed by the hospital district or state or local governmental entity related to the hospital district's or state or local governmental entity's participation in the supplemental payment program authorized under this paragraph are available for public inspection upon request.
(E) Beginning August 31, 2008, each participating hospital and hospital district or state or local governmental entity must submit a fully executed indigent care affiliation agreement as well as certification forms on or before August 31st of each fiscal year to be eligible to receive supplemental payments under this paragraph during the following fiscal year.
(F) If the federal Centers for Medicare and Medicaid Services (CMS), the United States Department of Health and Human Services, or other responsible legal authority recoups federal financial participation related to an eligible hospital's receipt and/or use of supplemental payments authorized under this paragraph, HHSC may recoup an amount equivalent to the amount of supplemental payments recouped by CMS. Supplemental payments under this paragraph may be subject to any adjustments for payments made in error, including, without limitation, adjustments under §371.1703 of this title (relating to recovery of overpayments), 42 C.F.R. part 455, and chapter 403, Texas Government Code. HHSC will send a notice of recoupment to the hospital and will recoup from any current or future Medicaid payments as follows:
(i) HHSC will recoup from the hospital against which the disallowance was directed;
(ii) If, within 30 days of the hospital's receipt of HHSC's written notice of recoupment, the hospital has not paid the full amount of the recoupment or entered into an agreement, in writing, with HHSC, HHSC may withhold any or all Medicaid payments from the hospital until such time as HHSC has recovered an amount equal to the hospital's disallowance. If HHSC determines that recovery through a withhold is not feasible, HHSC may recover the amount of the CMS recoupment from the other affiliated hospitals that are a party to the same indigent care affiliation under this paragraph through a withhold of any or all Medicaid payments until such time as HHSC has recovered an amount equal to the hospital's disallowance unless the recoupment is prohibited by law.
(G) Funding of supplemental payments under this paragraph shall be disbursed as follows:
(i) Supplemental payments available under this paragraph shall be payable to a hospital affiliated with a hospital district or state or local governmental entity in proportion to the amount transferred by the hospital district or state or local governmental entity affiliated with the private hospital, subject to legislative appropriation. Such supplemental payments will be based on calculations made by HHSC and will be made quarterly, beginning April 1, 2007.
(ii) If a hospital district or state or local governmental entity does not transfer to HHSC sufficient funding for the time period specified to generate the full amount allowable under this paragraph, each hospital affiliated with that hospital district or state or local governmental entity will receive a portion of the supplemental payment under paragraph (5) of this subsection based on that hospital's percentage of the full entitlement for all hospitals affiliated with that hospital district or state or local governmental entity.
(iii) HHSC will issue one supplemental payment for a hospital for inpatient services the hospital provided on or before August 31, 2006, if the hospital meets the criteria of subparagraphs (A) - (C) of this paragraph no later than May 31, 2007, and if a sufficient amount of funds (as determined by HHSC) are transferred to HHSC to support the one-time supplemental payment no later than December 1, 2007. A hospital district or state or local governmental entity must notify HHSC in a manner prescribed by HHSC of the date it intends to transfer funds related to the supplement payment authorized under this subparagraph. The supplemental payment will be processed for each participating hospital based on the amount of funds transferred to HHSC up to the calculated maximum payment for the applicable retroactive time period. A hospital that satisfies the criteria of subparagraphs (A) - (C) of this paragraph after May 31, 2007, will not be eligible for the supplemental payment authorized under this subparagraph but will be eligible to receive regular supplemental payments under paragraph (5) of this subsection. If the full amount of the calculated intergovernmental transfer (IGT) transfer is not made by the transfer deadlines specified by HHSC, the supplemental payment for that time period will be calculated based on the amount of the funds transferred. Regular quarterly supplemental payments for state fiscal year 2007 for which IGT funds are received will be made, beginning in April 2007, to each participating hospital for which a copy of the fully executed indigent care affiliation agreement, as well as any required certification forms, have been timely received.
(iv) Annual retroactive supplemental payments will be processed once for each state fiscal year, beginning with state fiscal year 2007, in September of the following calendar year (September 2008 for state fiscal year 2007) provided HHSC determines there is sufficient room available for funding under the applicable aggregate upper payment limit for private hospitals. Hospital districts or state or local governmental entities must notify HHSC Rate Analysis in a manner prescribed by HHSC if they intend to transfer funds related to the annual retroactive payments. If HHSC determines that the retroactive funding claimed pursuant to this clause will exceed the applicable aggregate upper payment limit for private hospitals, HHSC will reduce the amount of the transfer for the retroactive payment under this clause proportionately for each participating private hospital in an amount sufficient to ensure compliance with the applicable aggregate upper payment limit. If the retroactive supplemental payment calculation results in the verification that a specific hospital or hospitals were overpaid for the retroactive time period, HHSC will initiate the same process as outlined in subparagraph (F)(i) - (ii) of this paragraph to recover the amount of the overpayment.
(H) State funding for supplemental payments authorized under this paragraph will be limited to and obtained through intergovernmental transfers of local governmental entity or hospital district funds or transfer of State General Revenue. The supplemental payments described in this subsection will be made in accordance with the applicable regulations regarding the Medicaid upper limit provisions codified at 42 C.F.R. §447.272.
(5) An eligible hospital under this subsection will receive quarterly supplemental payments. The quarterly payments will be limited to one-fourth of the lesser of:
(A) The difference between the hospital's Medicaid inpatient billed charges and Medicaid payments the hospital receives for services provided to fee-for-service Medicaid recipients. Medicaid billed charges and payments will be based on a twelve consecutive-month period of fee-for-service claims data selected by HHSC; or
(B) The difference between the hospital's "hospital specific limit," as determined under §355.8065(f)(2)(E) of this chapter relating to Reimbursement to Disproportionate Share Hospitals (DSH)) for DSH hospitals and the hospital's DSH payments as determined by the most recently finalized DSH reporting period.
(6) For purposes of calculating the "hospital specific limit" in paragraph (5)(B) of this subsection, the "cost of services to uninsured patients, " as defined by §355.8065(b)(5) of this chapter and "Medicaid shortfall," as defined by §355.8065(b)(16) of this chapter, will be adjusted as follows:
(A) The amount of Medicaid payments (including inpatient and outpatient supplemental payments) that exceed Medicaid cost will be subtracted from the "Medicaid shortfall."
(B) The amount of the "Medicaid shortfall," as adjusted in accordance with subparagraph (A) of this paragraph, will be subtracted from the "cost of services to uninsured patients" to ensure that, during any state fiscal year, a hospital does not receive more in total Medicaid payments (inpatient and outpatient rate payments, graduate medical education payments, supplemental payments and disproportionate share hospital payments) than its cost of serving Medicaid patients and patients with no health insurance.
(u) High-volume payments recognize the higher medical assistance costs and indigent care cost of hospitals that treat higher levels of low-income and indigent patients. Eligible hospitals are defined as non-state owned or operated, non-public, hospitals located in urban counties with Medicaid days greater than 160% of the mean Medicaid days. High-volume payments not exceeding $26,400,000 shall be allocated in proportion to uncompensated care loss for eligible hospitals participating in the current year DSH program. Payments under this provision will be made annually based on current year finalized Medicaid DSH claims data. The state shall adjust the high volume payments in accordance with applicable Medicaid charge upper limit regulations. Any adjustment shall be made on a proportional basis in order to allow eligible hospitals to participate to the fullest extent possible within the limits on disproportionate share hospital payments. HHSC shall use current year DSH data to determine Medicaid days. County population will be based on the 2000 United States census.
(v) State Owned Hospital Supplemental Inpatient Payments. Notwithstanding other provisions of this attachment, supplemental payments will be made each state fiscal year in accordance with this subsection to state government-owned or operated hospitals for inpatient services provided to Medicaid patients.
(1) Supplemental payments are available under this subsection for inpatient hospital services provided by state government-owned or operated hospitals on or after December 13, 2003. To qualify for a supplemental payment, the hospital must be owned or operated by the state of Texas.
(2) The aggregate supplemental payment amount will be the annual difference between the aggregate upper payment limit and the inpatient fee-for-service Medicaid payments made to the state government-owned or operated hospitals under this attachment. The aggregate upper payment limit will be calculated, based on Medicare payment principles and in accordance with the federal upper limit regulations at 42 CFR §447.272, using the most recent cost report data available.
(3) The amount of the supplemental payment made to each state government-owned or operated hospital will be determined by:
(A) dividing each hospital's fee-for-service Medicaid payments by the sum of the Medicaid fee-for-service payments of all state government-owned of operated hospitals;
(B) multiplying the percentage calculated in subparagraph (A) of this paragraph by the aggregate supplemental payment calculated in paragraph (2) of this subsection.
(4) Supplemental payments determined under this subsection will be calculated annually and paid quarterly.
(5) Supplemental payments made under this subsection when combined with other inpatient payments made under this section shall not exceed the maximum amounts allowable under applicable federal regulations at 42 CFR §447.271.
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 March 12, 2007.
TRD-200700938
Steve Aragón
Chief Counsel
Texas Health and Human Services Commission
Effective date: April 1, 2007
Proposal publication date: January 19, 2007
For further information, please call: (512) 424-6900
Subchapter G. APPLICATION FOR MEDICAID
Pursuant to the federal Deficit Reduction Act of 2005 (DRA), PL 109-171, the Texas Health and Human Services Commission (HHSC) adopts amendments to §358.610 relating to Medicaid Coverage without changes to the proposed text as published in the January 5, 2007, issue of the Texas Register (32 TexReg 12) and will not be republished.
These amendments are adopted to incorporate the mandatory provision under section 1902(a)(10)(A)(i)(II) of the Social Security Act (SSA) as amended by the Deficit Reduction Act of 2005, Section 6065 of Public Law 109-171.
Background and Justification
On February 8, 2006, the DRA was signed into law. The DRA made changes to certain Medicaid eligibility provisions of the SSA, necessitating the change to the Texas rules. HHSC proposes to amend its Medicaid Eligibility chapter by amending a rule in Title 1, Subchapter G to, Chapter 358 of the TAC.
Rule Change Summary
Currently in Texas, Medicaid eligibility for Supplemental Security Income (SSI) recipients is effective the month of application or the first month of eligibility. Where retroactive eligibility is applicable, such eligibility is counted backwards for up to three months from the first month of SSI payment. SSI payment begins the month after application for SSI or the first month after eligibility criteria are met to receive SSI. The first month of Medicaid eligibility in Texas is referred to as the "gap" month. States have not been required to begin Medicaid eligibility for the "gap" month.
Section 6065 of P.L. 109-171 eliminates the "gap" month by amending section 1902(a)(10)(A)(i)(II) of the SSA to deem individuals under 21 found eligible for and receiving SSI payment to be receiving SSI without regard to the delay imposed under section 1611(c)(7) of the SSA. Therefore, an SSI recipient under age 21 becomes Medicaid eligible in the month before the first month of SSI payment, rather than the month of SSI payment. Effective February 8, 2007, SSI recipients must be eligible for Medicaid beginning with the "gap" month. When computing retroactive Medicaid eligibility, SSI recipients under 21 will have retroactive Medicaid eligibility counted backwards for up to three months from the "gap" month rather than the first month of SSI payment.
In all other respects, retroactive Medicaid eligibility will be computed in accordance with the policy the State employs for all other SSI recipients.
This provision is effective for all SSI applications filed on behalf of children on or after February 8, 2007. However, the full effect of section 6065 will not be realized until all months of potential Medicaid eligibility, including any retroactive months under section 1902(a)(34), is after February 8, 2007. Until that time, rules in effect before enactment of the Deficit Reduction Act of 2005 for computing retroactive Medicaid eligibility will continue to be applicable for Medicaid recipients under age 21 who also receive SSI.
HHSC received no comments on the amendments. The Medical Care Advisory Committee voted to support these amendments at its November 9, 2006 meeting. The HHSC Council voted to support these amendments at its November 30, 2006 meeting.
The amendment is adopted 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.
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 March 12, 2007.
TRD-200700939
Steve Aragón
Chief Counsel
Texas Health and Human Services Commission
Effective date: July 1, 2007
Proposal publication date: January 5, 2007
For further information, please call: (512) 424-6900