ADOPTED RULES An agency may take final action on a section 30 days after a proposal has been published in the Texas Register. The section becomes effective 20 days after the agency files the correct document with the Texas Register, unless a later date is specified or unless a federal statute or regulation requires implementation of the action on shorter notice. If an agency adopts the section without any changes to the proposed text, only the preamble of the notice and statement of legal authority will be published. If an agency adopts the section with changes to the proposed text, the proposal will be republished with the changes. TITLE 1. ADMINISTRATION PART X. Department of Information Resources CHAPTER 201. Planning and Management of Information Resources Technologies 1 TAC sec.201.13 The Department of Information Resources adopts an amendments to sec.201.13, concerning information resource standards, with changes to the proposed text as published in the June 25, 1996, issue of the Texas Register (21 TexReg 5817). The effect of the section is to establish a date standard for electronic data interchange purposes, to establish Year 2000 readiness criteria, and to require state agencies to include Year 2000 issues in technology risk assessments. The department received three comments regarding the proposed rule. One comment noted a discrepancy between the wording of the proposed amendment and the wording contained in a related publication issued by the department pertaining to the Year 2000 (Standards Review and Recommendation Publication 09, or "SRRPUB 09"). Specifically, the commenter noted that the phrase "absence of value" contained in proposed subsection (e)(2)(A), pertaining to the "general integrity" readiness criterion, was less inclusive than the version appearing in SRRPUB 09, and suggested that the rule be changed to be more inclusive. The department agrees with this comment and has modified the language of the rule accordingly. Another comment requested the addition of the "Julian format" for dates as an acceptable date format, suggested combining sec.201.13(e)(2)(C), "explicit century," with sec.201.13(e)(2)(D), "implicit century," and suggested that the "windowing technique" of date processing where centuries are not present be specifically mentioned as being acceptable as valid implicit unambiguous date manipulation. The department agrees with the comment regarding the acceptability of the Julian format, which represents dates as CCYYDDD with "DDD" as the day of the year stated as a number between 001 (representing January 1) and 365 (or 366 in leap years) (representing December 31), and has modified the rule to permit the use of this format in specified circumstances. The department disagrees with the suggestion that the readiness criteria pertaining to explicit and implicit century date elements be combined, because they are not mutually exclusive and applications within a system may employ both, providing that each application conform to the specific readiness criteria. The department disagrees with the suggestion that the "windowing technique" of date processing be specifically mentioned as valid implicit unambiguous date manipulation, because the long term solution to date related problems is the conversion to four-digit year formats. However, the department acknowledges that a "windowing technique" may provide the only viable solution in a given set of circumstances within the limited time remaining. In considering a "windowing technique" each organization must consider data portability, interoperability with other applications, third-party products, access to archived data, and data exchange with external entities. Another comment supported the adoption of subsection (e) of sec.210.13, but suggested that the language proposed for inclusion within the "policy" subsection of the rule (subsection (b)) be stricken from that section and moved to the new subsection (e). The department agrees with this suggestion and has modified the rule accordingly. Names of groups or associations making comments for and against the rule: For: Comptroller of Public Accounts Texas Department of Human Services Security Issues Group The amendment is adopted pursuant to the provisions of Texas Government Code sec.2054.051(b), which requires the department to develop and publish standards relating to information resource management by state agencies, and Texas Government Code sec.2054.052(a), which permits the department to adopt rules as necessary to implement its responsibilities. sec.201.13. Information Resource Standards. (a) (No change.) (b) Information security standards. (1)-(2) (No change.) (3) Policy. It is the policy of the state of Texas that: (A)-(K) (No change.) (4)-(12) (No change.) (c)-(d) (No change.) (e) Date Standard. Because the Year 2000 could have an impact on virtually all computer systems due to the use of only the last two digits of a date field, all state agencies and institutions of higher education will adhere to the following standard, and will observe the Year 2000 readiness criteria and complete the Year 2000 risk assessment described in paragraphs (1)-(4) of this subsection. (1) Interchange Standard. Four-digit year elements will be used for the purposes of electronic data interchange in any recorded form among state agencies, institutions of higher education and the public. The year shall encompass a two- digit century that precedes, and is contiguous with, a two-digit year-of-century (e.g., 1999, 2000, etc.). Applications that require day and month information will be coded in the following format: CCYYMMDD. Additional representations for week, hour, minute, and second, if required, will comply with the international standard ISO 8601:1988, "Data elements and interchange formats - Information interchange - Representation of dates and times." If two or more state agencies or institutions of higher education agree to exchange month and day information based on ordinal dates, the ISO standard format of CCYYDDD will be used. (2) Year 2000 Readiness Criteria. Any data-processing asset must meet the following four criteria to be century-compliant: (A) General integrity: No value for current date will cause interruptions in desired operation -- especially from 20th to 21st centuries. (B) Date integrity: All manipulations of time-related data (dates, durations, days of week, etc.) will produce desired results for all valid date values within the application domain. (C) Explicit century: Date elements in interfaces and data storage permit specifying century to eliminate date ambiguity. (D) Implicit century: For any date element represented without century, the correct century is unambiguous for all manipulations involving that element. (3) Implementation. State agencies and universities shall complete a Year 2000 risk assessment of all computer based systems, telecommunications equipment and data networks in 1996. Specific dates for completing conversion and reprogramming fixes will depend on each organization's risk assessment. All new systems acquired shall use four-digit year elements. Contracts for software and/or hardware shall include Year 2000 protection and warranty language. (4) As of January 1, 1997, all products and services purchased by state agencies shall meet the requirements of paragraphs (1) and (2) of this subsection. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be within the agency's legal authority to adopt. Issued in Austin, Texas on September 6, 1996. TRD-9612989 C.J. Brandt, Jr. General Counsel Department of Information Resources Effective date: September 25, 1996 Proposal publication date: June 25, 1996 For further information, please call: (512) 475-1715 TITLE 4. AGRICULTURE PART III. Texas Feed and Fertilizer Control Service CHAPTER 65. Commercial Fertilizer Rules Permitting and Registration 4 TAC sec.65.11 The Office of the Texas State Chemist, Feed and Fertilizer Control Service adopts an amendment to sec.65.11, concerning registration, without changes to the proposed text as published in the July 12, 1996, issue of the Texas Register (21 TexReg 6400) effective September 30, 1996. The rule is being amended as a part of a comprehensive revision of the rules done to ensure that labeling requirements for fertilizer allow the consumer to determine whether a given product is suitable for its intended use. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Agriculture Code, Chapter 63, sec.63.004, which provides the Texas Feed and Fertilizer Control Service with the authority to adopt rules relating to the distribution of commercial fertilizers. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in College Station, Texas on September 6, 1996. TRD-9613014 George W. Latimer, Jr. Texas State Chemist Texas Feed & Fertilizer Control Service Effective date: September 30, 1996 Proposal publication date: July 12, 1996 For further information, please call: (409) 845-1121 Labeling 4 TAC sec.65.21 The Office of the Texas State Chemist, Feed and Fertilizer Control Service, adopts an amendment to sec.65.21, concerning listing of plant nutrients with changes to the proposed text as published in the July 19, 1996, issue of the Texas Register (21 TexReg 6747). The rule is being amended as a part of a comprehensive revision of the rules done to ensure that labeling requirements for fertilizer allow the consumer to determine whether a given product is suitable for its intended use. The changes are adopted to harmonize with those of the Association of American Plant Food Control Officials as required by sec.63.004 and/or to free fertilizer manufacturers to guarantee levels of nutrients they feel suitable for specialized applications. Only one comment from The Scotts Co. was received. The comment noted that a portion of the text sec.65.21(a)(2)(C) should be deleted along with (A) and (B) to be consistent with the Association of American Plant Food Control Officials. The Service agrees and the text is so amended. The amendment is adopted under the Texas Agriculture Code, Chapter 63, sec.63.004, which provides the Texas Feed and Fertilizer Control Service with the authority to adopt rules relating to the distribution of commercial fertilizers. sec.65.21. Plant Nutrients. (a) Nitrogen, phosphorus and potassium shall be guaranteed on the label of a commercial fertilizer in either of the following forms: (1) Figure 1: 4 TAC sec.65.21(a)(1) (2) Figure 2: 4 TAC sec.65.21(a)(2) (b) Plant nutrients other than nitrogen, phosphorus, and potassium, when mentioned in any form or manner on the label of a fertilizer product, shall be guaranteed. (1) Guarantees other than nitrogen, phosphorus, and potassium shall be expressed on an elemental basis as a percentage by weight. (2) Any guarantees or claims for plant nutrients shall appear in the order given, shall immediately follow the guarantees for the nitrogen, phosphorus, and potassium and shall be the only guarantees acceptable to the Service absent evidence that an unlisted nutrient (element) fulfills the requirements of sec.65.21(c): Calcium (Ca), Magnesium (Mg), Sulfur (S), Boron (B), Chlorine (Cl), Cobalt (Co), Copper (Cu), Iron (Fe), Manganese (Mn), Molybdenum (Mo), Sodium (Na), Zinc (Zn). (c) The registrant of a fertilizer shall furnish to the Service upon request: (1) the source of the elements guaranteed; (2) proof of the availability and efficacy of the plant nutrients and other additives guaranteed or claimed on the label; (3) the proposed label and directions for use of the fertilizer; (4) a method acceptable to the Service for determining the nutrient at 50% of the level guaranteed on the label. (d) Sources of nutrients, when shown on the label, shall be listed below the completed guaranteed analysis statement. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in College Station, Texas on September 6, 1996. TRD-9613015 George W. Latimer, Jr. Texas State Chemist Texas Feed & Fertilizer Control Service Effective date: September 30, 1996 Proposal publication date: July 19, 1996 For further information, please call: (409) 845-1121 4 TAC sec.65.22 The Office of the Texas State Chemist, Feed and Fertilizer Control Service, adopts the repeal of sec.65.22, concerning plant nutrients in addition to nitrogen, phosphorus, and potassium, and moves a portion of the text to be part of sec.65.21 as subsections (b) to (d), effective September 30, 1996. The repeal is adopted without changes to the proposed text as published in the July 12, 1996, issue of the Texas Register (21 TexReg 6401). The change is adopted as part of a comprehensive revision of the rules done to ensure that labeling requirements for fertilizer allow the consumer to decide whether a given product is suitable for use in an organic food or fiber production program. No comments were received concerning repeal and relocation or on the text revisions. The repeal is adopted under the Texas Agriculture Code, Chapter 63, sec.63.004, which provides the Texas Feed and Fertilizer Control Service with the authority to adopt rules relating to the distribution of commercial fertilizers. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in College Station, Texas on September 6, 1996. TRD-9613016 George W. Latimer, Jr. Texas State Chemist Texas Feed & Fertilizer Control Service Effective date: September 30, 1996 Proposal publication date: July 12, 1996 For further information, please call: (409) 845-1121 4 TAC sec.65.26 The Office of the Texas State Chemist, Feed and Fertilizer Control Service, adopts the repeal of sec.65.26, relating to organic and organic base nitrogen fertilizer, without changes to the proposed text as published in the July 12, 1996, issue of the Texas Register (21 TexReg 6401) such repeal to take effect September 30, 1996. With revision of the rules done to ensure that labeling requirements for fertilizer allow the consumer to decide whether a given product is suitable for use in an organic food or fiber production program, this section is obsolete. No comments were received concerning repeal of this section. The repeal is adopted under the Texas Agriculture Code, Chapter 63, sec.63.004, which provides the Texas Feed and Fertilizer Control Service with the authority to adopt rules relating to the distribution of commercial fertilizers. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in College Station, Texas on September 6, 1996. TRD-9613017 George W. Latimer, Jr. Texas State Chemist Texas Feed & Fertilizer Control Service Effective date: September 30, 1996 Proposal publication date: July 12, 1996 For further information, please call: (409) 845-1121 The Office of the Texas State Chemist, Feed and Fertilizer Control Service, adopts new sec.65.26, concerning requirements for fertilizers suitable for use in organic production programs, without changes to the proposed text as published in the July 12, 1996, issue of the Texas Register (21 TexReg 6402), to become effective September 30, 1996. The new rule is adopted as part of a comprehensive revision of the rules done to ensure that labeling requirements for fertilizer allow the consumer to decide whether a given product is suitable for use in an organic food or fiber production program. No comments were received regarding adoption of the new rule. The new rule is adopted under the Texas Agriculture Code, Chapter 63, sec.63.004, which provides the Texas Feed and Fertilizer Control Service with the authority to adopt rules relating to the distribution of commercial fertilizers. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in College Station, Texas on September 6, 1996. TRD-9613018 George W. Latimer, Jr. Texas State Chemist Texas Feed & Fertilizer Control Service Effective date: September 30, 1996 Proposal publication date: July 12, 1996 For further information, please call: (409) 845-1121 4 TAC sec.65.30 The Office of the Texas State Chemist, Feed and Fertilizer Control Service, adopts an amendment to sec.65.30, concerning slow-release fertilizer, with changes to the proposed text as published in the July 12, 1996, issue of the Texas Register (21 TexReg 6402) to take effect September 30, 1996. The amendments are adopted to clarify the section. Only one comment from The Scotts Company was received. The comment urged retention of sec.65.30(c) since the Office has chosen not to adopt sec.65.21(e) pending action of the USDA's National Organic Standards Board. The Office concurs, but notes that retention of this section requires a further addition (sec.65.30(c)(2)) to define the requirements for nitrogen-containing compounds. The amendment is adopted under the Texas Agriculture Code, Chapter 63, sec.63.004, which provides the Texas Feed and Fertilizer Control Service with the authority to adopt rules relating to the distribution of commercial fertilizers. sec.65.30. Slow Release Fertilizer. (a) No fertilizer label shall bear a statement that connotes or implies that certain plant nutrients contained in a fertilizer are released slowly over a period of time, unless the slow release components are identified and guaranteed at a level of at least 15% of the total guarantee for that nutrient(s). (b) The terms, "water insoluble," "coated slow release," "slow release," "controlled release," "slowly available water soluble," and "occluded slow release" are accepted as descriptive. However, the Service may require the manufacturer to provide data substantiating the claim (from tests carried out under guidance of a recognized reputable researcher acceptable to the Service). A laboratory procedure, acceptable to the Service for evaluating the release characteristics of the product(s), may also be required. (c) If an amount of nitrogen is designated as slow release "nitrogen-containing organic" or "organic nitrogen," then (1) that amount must be water-insoluble and coated urea may not be included in meeting the 60% requirement; (2) at least 15% of total nitrogen guaranteed -- not just that designated "nitrogen-containing organic" or "organic nitrogen" -- must be water-insoluble. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in College Station, Texas on September 6, 1996. TRD-9613019 George W. Latimer, Jr. Texas State Chemist Texas Feed & Fertilizer Control Service Effective date: September 30, 1996 Proposal publication date: July 12, 1996 For further information, please call: (409) 845-1121 TITLE 25. HEALTH SERVICES PART II. Texas Department of Mental Health and Mental Retardation CHAPTER 409.Medicaid Programs SUBCHAPTER I.Rehabilitative Services for Persons with Mental Illness 25 TAC sec.sec.409.351-409.357 The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts the repeal of sec.sec.409.351-409.357 of Chapter 409, Subchapter I, governing rehabilitative services for persons with mental illness. The repeal is adopted contemporaneously with the adoption of new sections of Chapter 409, Subchapter I, in this issue of the Texas Register. Sections 409.351-409.357 are repealed without changes to the proposed text as published in the June 7, 1996, issue of the Texas Register (21 TexReg 5135) and will not be republished. The repeal would allow for the proposal of new sections governing rehabilitative services for persons with mental illness. Ernest McKenney, director, Medicaid Administration, has determined the public benefit is the adoption of new rules that will enable the department to better manage the public funding of services for persons with mental illness. A public hearing was held on June 26, 1996, with no oral or written testimony presented. There was no written public comment received regarding the repeal. The repeals are adopted under the Health and Safety Code, sec.532.015(a), which provides the Texas Department Mental Health and Mental Retardation Board with broad rulemaking authority; and under the provisions of Texas Government Code, Chapter 531, sec.531.021, which provides the Texas Health and Human Services Commission with the authority to administer federal medical assistance funds. 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. Issued in Austin, Texas, on 5, 1996. TRD-9612939 Ann Utley Chairman Texas Board of Mental Health and Mental Retardation Effective date: January 1, 1996 Proposal publication date: June 7, 1996 For further information, please call: (512) 206-4516 25 TAC sec.sec.409.351-409.365 The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts new sec.sec.409.351-409.365 of Chapter 409, Subchapter I, concerning rehabilitative services for persons with mental illness. Sections 409.351-409.365 are adopted with changes to the proposed text as published in the June 7, 1996, issue of the Texas Register (21 TexReg 5135). The new sections would replace existing sec.sec.409.351-409.357 of Chapter 409, Subchapter I, governing rehabilitative services for persons with mental illness, which are repealed in this issue of the Texas Register. The new sections of Chapter 409, Subchapter I, are adopted to more clearly define the services reimbursable under the Medicaid Rehabilitative Services program; to eliminate duplication of services; to more clearly define the population eligible for rehabilitative services; to expand the licensure categories of persons recognized as qualified to recommend and approve the provision of rehabilitative services; and to redefine the reimbursable unit of service and set limits on the amount of services that will be reimbursed. Language in sec.409.351 and sec.409.352 is changed to parallel language in the Code of Federal Regulations. Several definitions in sec.409.353 are modified. Language in sec.409.354 is modified to indicate that eligibility requirements are aligned with the department's definition of the priority population and to provide additional clarification. Language in sec.409.355 is changed to clarify the role of paraprofessionals in the delivery of rehabilitative services. Language in sec.409.356 is changed to indicate that collateral contacts with legal guardians of adults should be included as direct services; that Community Support Services are available to eligible individuals with persistent symptoms of mental illness; and that registered pharmacists and other appropriately trained and qualified persons are included among those persons eligible to deliver medication training and medication monitoring services. Language in sec.409.357 is modified to clarify the protocols and level of need criteria associated with the approval process for treatment beyond the initial ten days in Day Programming for Acute Needs; to clarify that crisis management services must be available at all times in Day Program Services for Acute Needs; to indicate that registered pharmacists and other appropriately trained and qualified persons are included among those persons eligible to deliver medication training and medication monitoring services; and to clarify that professional assessment is an ongoing activity incorporated into the independent daily living skills component of Day Program Services for Acute Needs. Language in sec.409.358 is changed to indicate that registered pharmacists and other appropriately trained and qualified persons are included among those persons eligible to deliver medication training and medication monitoring services; to clarify that professional assessment is an ongoing activity incorporated into the independent daily living skills component of Day Program Services for Skills Training; to address public comment expressing a concern that clubhouse services would no longer be available; and to clarify that professional staff who are on- site and who are counted in the minimum staffing requirements may also provide program direction. Language in sec.409.359 is changed to indicate that registered pharmacists and other appropriately trained and qualified persons are included among those persons eligible to deliver medication training and medication monitoring services and to provide additional clarification; and to provide consistency with regard to the role of licensed vocational nurses in day programs for skills training. New sec.409.359(f) is added to clarify the responsibilities of enrolled providers with regard to assessment and modification of the plan of care and in response to public comment expressing concern as to how and by whom effectiveness of training objectives and skills attainment will be determined. Language in sec.409.360 is modified to specify documentation requirements for Plan of Care Oversight services and to clarify the requirements necessary to extend Day Program Services for Acute Needs beyond the established 10-day limit. Language in sec.409.361 is modified to remove confusion concerning the nature of the role of physicians in day programs; to indicate that direct physician services should be separately reimbursed; to indicate that direct contacts should also include collateral contacts with legal guardians of adults; to allow for an increase in the total number of hours of small group services in certain areas where day program services cannot be provided due either to staffing shortages or low consumer demand; to provide additional clarification on the limitations on day programming; to provide limitations on Plan of Care Oversight services; and to clarify the requirements necessary to extend Day Program Services for Acute needs beyond the established 10-day limit. Language in sec.409.362 is modified to note that the Texas Department of Human Services is responsible for PASARR assessments. Language in sec.409.363 is modified to delete individual certification of each day program. Language in sec.409.364 is modified to extend the implementation date to January 1, 1997; to correct a reference to Texas Administrative Code; and to clarify record retention requirements. As a result of the revisions to the subchapter on adoption, including the addition of a new service (plan of care oversight services), the total fiscal impact for FY 1997 is $55,470,645, of which $34,702,436 is federal and $20,768,209 is state. For FY 1998, the total fiscal impact is $57,634,000, of which $36,182,625 is federal and $21,451,375 is state. For FY 1999, the total fiscal impact is $59,881,726, of which $37,689,558 is federal and $22,192,168 is state. For FY 1000, the total impact is $62,097,350, of which $39,108,911 is federal and $22,988,439 is state. For FY 2001, the total impact is $64,457,049, of which $40,595,050 is federal and $23,862,000 is state. The difference in the addition of one service for FY 1997 is $2,648,460, of which $1,656,877 is federal and $991,583 is state. For FY 1998, the differences if $3,718,153, of which $2,334,256 is federal and $1,383,897 is state. For FY 1999, the difference is $3,593,582, of which $2,351,861 is federal and $1,241,721 is state. For FY 2000, the difference is $3,613,968, of which $2,393,044 is federal and $1,220,924 is state. For FY 2001, the difference is $3,692,816, of which $2,447,264 is federal and $1,245,552 is state. A public hearing was held on June 26, 1996, with no oral or written testimony presented. Written comments were received from one state senator; the Texas Department of Mental Health and Mental Retardation; the Texas Rehabilitation Commission; the Texas State Board of Pharmacy; and the Texas Council on Offenders with Mental Impairments. Written comments were also received from two citizens; Advocacy, Inc., Austin; and Concerned Pharmacists, Houston. Written comments were received from state-operated community services, community mental health and mental retardation centers, and related entities as follows: Andrews Center, Tyler; Access Community Enrichment Services, Jacksonville; Austin-Travis County MHMR, Austin; Burke Center, Lufkin; Center for Health Care Services, San Antonio; Heart of Texas MHMR Center, Waco; Life Management Center, El Paso; Life Resource Center, Beaumont; MHMR Authority of Harris County, Houston; MHMR Services for the Concho Valley, San Angelo; Permian Basin Community MHMR, Midland; Sabine Valley Center, Longview; Sabine Valley CSU, Midland; Sabine Valley Center-Helping Hands, Longview; Sunrise Canyon, Lubbock; Tarrant County MHMR, Fort Worth; and West Texas State Operated Community Services, Big Spring. Comments were also received from Abilene State School; San Antonio State Hospital; and Wichita Falls State Hospital. Written comments were also received from a large number of mental health consumers affiliated with the Wichita Fall State Hospital Community Programs at the following locations: Archer County Mental Health Center, Archer (one commenter); Wichita Falls State Hospital Community Programs (two commenters); Clay County Mental Health Center, Henrietta (one commenter); Headstream Memorial Mental Health Center (nine commenters); Lake Country Connection, Young County Mental Health Center, Graham (thirteen commenters); Lamar County Mental Health Center (seven commenters). Comments were also received from Rolling Plains State- Operated Community Services at Wise County Mental Health Center, Decatur (23 commenters). With the exception of one commenter who supported the proposed rule with no qualifications, all commenters expressed concerns and made suggestions for improvements to the new subchapter. Written comment was received from several commenters pertaining to the definition of "licensed practitioner of the healing arts.' One commenter applauded the definition of this term, another indicated that the rule makes a distinction between "professional" and "licensed practitioner of the healing arts," and several commenters noted that registered nurses (RNs) should be included as licensed practitioners of the healing arts. Another commenter asked if registered pharmacists would be considered licensed practitioners of the healing arts. The department responds that registered nurses and registered pharmacists were not included in the definition of licensed practitioner of the healing arts because they are not eligible for enrollment as individual providers of Medicaid reimbursed mental health services. The definition of a licensed practitioner of the healing arts in the rule is in congruence with the definition of eligible individual Medicaid mental health providers, found in the Texas Department of Health's Texas Medicaid Providers Procedures Manual. In order to be eligible to authorize the delivery of Medicaid reimbursable mental health services, the licensed practitioner must be an enrolled authorized Medicaid provider. Additionally, the department responds that there is a difference between a professional and a licensed practitioner of the healing arts. The qualifications for a professional reflect those qualifications for qualified mental health professionals outlined in the Mental Health Community Services Standards. Registered nurses and registered pharmacists qualify as professionals under these standards. Licensed practitioners of the healing arts are required to authorize services specified in the individual's treatment plan as stated in sec.409.355(b) of the rule. One commenter expressed support for the proposed staffing requirements. The commenter asked if state funding would be available to support the extra staffing requirements established in the proposed rule to assure equal treatment for all. This commenter expressed concern that the proposed changes would create a two-tier system. The department responds that the proposed rule governs Medicaid funding for Rehabilitative Services for Persons with Mental Illness. The availability of general revenue to fund services for persons who are not Medicaid-eligible is not affected by this rule. The commenter further stated that consumers and families had no input into the changes in these rules until they were published and that a major service change needs more time and consideration. The department responds that the proposed rule is based on best practices as determined by the department and is consistent with the department's Strategic Plan. The development of best practices has been a collaborative effort between the department, advocacy groups, and consumers. Additionally the department has taken public comment into consideration for the rule as submitted to the board for adoption. The implementation date for these changes has been extended to January 1, 1997. Several commenters stated proposed rule does not reimburse for telephone contacts. Commenters related that in rural areas often telephone contacts are the only method available to assist individuals in a timely manner and questioned if the department is prepared to furnish state general revenue funds for this service. The department agrees that telephone contacts are a necessary part of providing services. Although telephone contacts are no longer a distinct component of the service array with an associated direct reimbursement, the indirect costs of telephone contacts have been included in the development of the reimbursement for rehabilitative services. Several commenters contend that the GAF score requirement in the proposed rule appears to establish a new definition of the priority population. The department responds that the priority population definition in the final version of the proposed rule will be clarified to be in congruence with departmental policy pertaining to priority population. Another commenter stated that there was no mention of Community Support Services (crisis services) being available 24 hours a day and asked if the intent was that these services be offered 24 hours a day. One commenter asked how these services would be offered to new members of the priority population. The department responds that all enrolled providers of rehabilitative services must provide 24-hour crisis services in accordance with the Texas Health and Safety Code sec.534.053. These unscheduled services are covered under Community Support Services (Symptom Management and Support) which includes the delivery of interventions provided on an emergency basis. There are no restrictions limiting these interventions to a particular time of day. The commenter further asked if services can be provided only for managing "acute" symptoms and inquired as to how the consumer will be able to take advantage of "employment related support and skills training." The commenter questioned if the suggestion being made that supports can be initiated only when the symptoms become acute. The department responds that enrolled providers must be in compliance with sec.532.053 of the Texas Health and Safety Code which mandates the delivery of numerous core and essential services. In addition, all providers must comply with sec.409.364(7) which mandates that enrolled providers ensure that rehabilitative services are delivered through a system with written standards and procedures which ensure there is an overall coordination of services. Comments were received regarding the fact that determinations for specialized services through OBRA Preadmission Screening and Annual Resident Review (PASARR) are being done by the Department of Human Services (DHS) not by the department. The department responds that the final version of the proposed rule will be revised to indicate that the need for specialized services will be determined by the Department of Human Service through the PASARR process. One commenter stated that this proposal will further isolate services for clinic and case management. The department responds that the proposed rule is intended to eliminate overlap between services in order to increase efficiency of service delivery. No provisions were made in the rule to preclude coordination of services. The department responds that enrolled providers must be in compliance with sec.534.053 of the Texas Health and Safety Code which mandates the delivery of core and essential services. In addition, all providers must comply with sec.409.364(7) which mandates that enrolled providers ensure that Rehabilitative Services are delivered through a system with written standards and procedures which ensure there is an overall coordination of services. Several commenters stated that the direct contacts should include collateral contacts as well. The department responds that the proposed rule provides for collateral contact with the primary caregiver of a minor child and the final version of the rule has been modified to include collateral contacts with the legal guardian of the person of an adult. The indirect costs of these collateral contacts have been included in the development of the reimbursement for rehabilitative services. One commenter requested clarification as to whether physician appointments are covered as Rehabilitative Services. The department responds that physician appointments reimbursed through the outpatient benefit are not covered as Rehabilitative Services. The proposed rule has been modified to remove the reference to physician services in sec.409.361(a). The reimbursement for rehabilitative day program services includes reimbursement for the costs associated with maintaining physician availability for staff consultation and to provide direction to staff in emergency situations. One commenter related that a licensed vocational nurse (LVN) should not be allowed the same privilege as a registered nurse (RN) in day programming. The commenter felt that the acuity level of the clients was too high. The department responds that for nursing services in day programming for acute needs, an RN is required to be on-site during hours of program operation. The department recognizes that client needs differ among other day programs and the proposed rule allows the provider the flexibility to make the determination of the need for an LVN or RN based on client needs in the specific program. This commenter stated that the start date of the changes was too aggressive and that the changes should be coordinated with the provider's fiscal year. The department responds that in order to facilitate the coordination of the various federal funding sources, the department will implement this program at the beginning of a federal fiscal quarter. Two commenter requested clarification on the certification of day programs. The department responds that the final version of the rule will be modified to reflect the deletion of the requirement that individual day programs must be certified. Each provider of services will be certified to deliver rehabilitative services. Several commenters requested clarification of the protocols and level of need criteria associated with the approval process for treatment beyond the initial ten days in Day Programming for Acute Needs. One commenter also asked if there was a maximum number of days to be contemplated for Day Programming for Acute Needs. The department responds that a licensed practitioner of the healing arts must authorize each extension and documentation must be provided. The final version of the rule has been modified to clarify that adequate documentation of medical necessity is required for extension of these services beyond the initial 10-day period. Additionally, there currently is no limit on the maximum number of days an individual may be served in Day Programming for Acute Needs. Several commenters expressed general support for the concept of eliminating the duplication of services and the clarification of service definitions, but expressed concern that centers and clubhouses in rural areas would be adversely affected by these changes. These commenters also expressed concern that the proposed changes would result in increased costs and staffing cuts. The department responds that the newly designed service array provides flexibility that allows service providers to develop a menu of services that is most appropriate to the needs of the eligible individuals whom they serve by allowing service providers to offer combinations of individual, small group, and day program services tailored to meet individual needs. This flexibility should allow rural service providers serving small numbers of individuals to address the needs of those individuals in a cost efficient manner. Proposed rates are believed to be sufficient to meet the costs of the provision of services in both urban and rural areas. One commenter expressed concern that the proposed changes would result in homelessness and lack of medication for individuals with schizophrenia. The department responds that funding for residential services and medication has never been included in the Rehabilitative Services for Persons with Mental Illness service array. The Medicaid Vendor Drug program is administered by the Texas Department of Health and is unaffected by these changes. Several commenters expressed concern that the proposed changes would result in an elimination of day program clubhouse services for persons who are not "assessed acute." The department responds that the proposed service array includes three types of day program services: day program services for acute needs, day program services for skills training, and day program services for skills maintenance. The day programs for skills training and skills maintenance fit very well with the training services offered under the clubhouse model. The inclusion of specific day programming services for persons with acute needs does not eliminate the availability of services to individuals who are served in a "clubhouse" setting. Several commenters expressed concern that the proposed changes would adversely affect individuals who attend clubhouse activities. Specific concern was expressed that the proposed changes would split up the clubhouses and that some individuals that spend a lot of time at clubhouses would be at home with time on their hands and would lose opportunities for socialization. Additional concern was expressed that the staffing ratio requirements for day programs would result in increased costs. The department responds that the proposed changes are designed to provide an array of services that can be tailored to the needs of individuals needing those services. Under the new service array, individuals who are experiencing more severe symptoms of mental illness can participate in day programming, small group activities, or individual services that specifically focus on the management of acute symptoms. Individuals experiencing less severe symptoms can participate in day programs, small group activities, or individual services that are focused on skills acquisition or maintenance (as appropriate). The proposed rule does not mandate attendance in a particular type of programming. Instead this decision is to be made collaboratively by the individual and the individual's treatment team. Additionally, the department responds that the minimum staffing ratios established for day programming services represent best practices and will provide sufficient staff to address the needs of individuals receiving services. One commenter suggested that wording relating to reimbursement calculation methodology was unclear and suggested changes in wording. The department agrees and the final version of the rule will be amended to provide clarification on this issue. Several commenters expressed concern over the limitation of day programming to six hours per day. One commenter stated that by standardizing the number of allowable daily services regardless of the individual consumer's needs, this proposal appears to contradict the efforts of the treatment team and the determination of medical necessity by the licensed practitioner of the healing arts. The department responds that in addition to the six hours of day programming, the proposed rule allows for up to six hours of individual programming and up to three hours of small group programming in a calendar day. Treatment teams are provided with a broad service array and flexible service delivery modalities from which to choose including day programming, individual or small group services, professional or paraprofessional services as well as utilization of physicians and therapists from the community. The department expresses support for the delivery of individualized services and services in small groups. One commenter stated that the 10-calendar-day limitation on Day Program Services for Acute Needs was arbitrary and not fitted to the needs of the consumer and asked what criteria would the department accept for extension of the 10-day limit for Day Program services for Acute Needs other than the already required medical necessity. The department responds that Day program Services for Acute Needs is designed to stabilize symptomatology and intervene in the deterioration of functioning with training and support addressing the most fundamental skills necessary to avoid institutionalization. Once stabilized, the client could possibly be better served in a level of programming designed to support skill training aimed at increasing tenure in the community. The 10-day limit is a benchmark used to ensure the best utilization of resources. It is not intended to bypass consumer need. A consumer's continuation in day programming for acute needs requires a determination that it is medically necessary for the consumer to continue to receive that level of care and that it cannot be provided in a less restrictive setting. If the continuation in day programming for acute needs is determined to be medically necessary, the provider agency has the option to authorize continued stay. The level of programming is designed for intensive medical and behavioral intervention. One commenter inquired as to whether limiting eligibility for rehabilitative services to the priority population definition will adversely affect some offenders with mental illness who are currently served under the rehabilitative services program and who do not meet the definition. The commenter further stated that this change would have severe costs and safety ramifications for the State of Texas. The department shares the concern of this commenter and will work with other state agencies to resolve this issue prior to the January 1, 1997, implementation date. Another commenter related concern for the lack of reimbursable day programs for individuals who experience chronic and severe psychotic symptomatology. The department responds that most individuals who experience chronic and severe psychotic symptomatology are, by definition, members of the priority population. Day program services that target the needs of persons with chronic and severe symptomology are included in the service array. Further the commenter relates that the proposed changes represent a major paradigm shift from a psychosocial model marked by empowerment and control to an educational model marked by a pupil/educator relationship. The department responds that the proposed rule does not eliminate the need to include the consumer in treatment planning and other treatment decisions. Treatment planning and treatment decisions are to be collaborative endeavors that include the individual, family members, significant others as appropriate, and the individual's treatment team. Additionally the department responds that the proposed rule will allow for programming within a variety of options/modalities including not only day programming, but also individual or small group services aimed at individual treatment planning. These changes are based on best practices as determined by the department. The development of best practices has been a collaborative effort between the department, advocates, and consumers. Another commenter stated that sec.409.359 states that nursing services are provided by an RN or an LVN and then specifies an RN only in the minimum staffing requirements. The commenter asked if an LVN may provide this service. The department responds that an LVN may provide these services. The final version of the rule has been modified to clarify that an LVN may be utilized to fulfill the minimum staffing requirement specified in sec.409.359(d)(1) of the rule. Several commenters expressed concern that the proposed changes restricted effectiveness and contradicted the concept of community integration. Specifically the commenters questioned how skills maintenance or training in such areas as home maintenance, employment, security, mobility, accessing services, and social appropriateness could be accomplished if training for such services was restricted to freestanding sites or 16-bed facilities. The department responds that training in areas of community integration are not restricted to the day programming modality and day programs are permitted to deliver programming in natural settings. Thus, community integration skills training may be offered as Community Support Services in small groups or individually (one- on-one) in the consumer's home or other location appropriate to the training. This allows for flexibility with an emphasis on personalized training in natural environments. One commenter expressed concern that there was not a clear distinction between the skills training and skills maintenance modalities of day programming. Additionally this commenter expressed concern that a differentiation between skills training and skills maintenance was contradictory to philosophical and practical applications and artificially restrictive. Furthermore this commenter indicated that the distinction between skills maintenance and skills training was not clinically useful and of questionable validity. The department responds that skills training activities focus on the acquisition and restoration of skills that are essential to the restoration of functioning while skills maintenance activities focus on retaining (or slowing the loss of) existing functional skills that would deteriorate without on-going interventions. Certain individuals may be more appropriate for activities that have as their focus the arrest (or slowing) of deterioration of existing functional skills. The lack of ability to acquire new skills should not preclude these individuals from participating in day programming nor should these individuals be offered day programming that has the acquisition of new skills as its sole focus. Although the majority of individuals participating in day programming will benefit from the more active skills-acquisition programming, the department believes that offering an alternative to the skills acquisition program would be appropriate for certain individuals who might become frustrated in attempting to acquire new skills while struggling to maintain existing skills. The proposed changes provide for flexibility that allows the individual's treatment team to make the decision as to the type of programming that would best suit the individual's needs. One commenter stated that the requirements surrounding staffing ratio's was unclear with regard to the requirement for additional staff on as-needed basis. The department responds that the language "based on consumer need, additional staffing must be provided and documented to ensure safety and adequacy of programming" acknowledges that providing staff in the required minimum ratios does not guarantee sufficient staff to assure safety and adequacy of programming in all instances. In situations in which certain individuals may require very close levels of supervision, the provider of services must increase the staffing level above the minimum ratios stated in the rule to a level that ensures safety and preserves the integrity of programming for all participants. The number and type of staff to be utilized in these situations is contingent on the needs of the individuals being served and will vary from situation to situation. Specific staffing requirements can not be prescribed in a rule that will cover each unique situation. The provider will have the responsibility of increasing staffing above the minimum ratios to meet the needs of the individuals served in each program. One commenter stated that requirement that counseling and therapy be provided by licensed practitioners will result in a revenue loss, specifically noting that there are few professionals in rural service areas and that it will be costly to hire professional staff in rural areas. The department responds that the new service array does not include therapy or counseling because those services are duplicative of services that are offered to all Medicaid recipients provided by practitioners enrolled as individual Medicaid providers of mental health services. One comment was made suggesting that the definition of the term "medically necessary" be broadened to include progress toward the optimal level of functioning or "best functioning level." The department responds that the definition of the term "medically necessary" is within the scope of the department's charge to direct mental health services to those persons most in need. One commenter suggested that the use of brief, intermediate, and extended descriptions for the unit of service are unnecessary. The department agrees with this comment and has eliminated the use of these terms. Two commenters expressed concern that it would be difficult for providers in rural areas to meet the minimum staffing requirements in general and particularly the requirement that an RN be able to respond within 30 minutes for persons receiving skills maintenance day programming. The commenter noted that services are dispersed across several counties in rural areas and are usually provided to less than five participants. The department responds that the minimum staffing requirements for day programming represent best practices and are intended to ensure safety and program adequacy in all settings (rural and urban). The proposed reimbursements supporting this service array is adequate to cover the costs of service delivery in both rural and urban areas. Additionally, services provided in certain areas may be delivered as small group services. Another commenter supports the efforts of the department to secure reimbursement for certain services and the ability to provide continued support to clients in need, in employment settings. The department acknowledges the commenter's support. Several commenters expressed concern over the difference in staffing ratios for day programs for skills maintenance and skills training. One commenter stated the staffing ratio for day program services for skills maintenance requires a higher staff to client ratio and requires an RN who has a 30-minute response time. If the programs are listed from most restrictive to least restrictive- acute needs, skills training and skills maintenance-the skills maintenance program should require a lower staff-to-client ratio. The department responds that the three types of day programming are not designed to be on a continuum ranging from most to least restrictive. Each is designed to provide a unique array of services based on client need. The design of day programming for skills maintenance is intended to be for individuals who, due to age or the nature of their mental illness, may not benefit from more active skill-based programming, but may require more frequent interventions to maintain skill levels, assistance with meeting individual needs and safety. Recipients of day programming for skills training should be capable of managing self-care tasks, should not be aggressive, should demonstrate an awareness of the impact of their behavior on others, should be capable of increasing functional levels with guidance and support, and should not require the level of intervention of the other day programs. A commenter requested the inclusion of a registered pharmacist as a professional as defined in Chapter 408, Subchapter B. The department responds that a registered pharmacist would meet the definition of a professional as defined in the rule. The commenter also suggested the inclusion of pharmacy services in sec.409.356 with specific activities included under this service to include training related to self-administration of medication and the identification and management of side-effects of medication. Additional comments were received that suggested the addition of psychiatric pharmaceutical care as a service to include retrospective and prospective DUR and treatment outcome measures, monitoring and evaluation of medications for effectiveness, medication training, information pertaining to the purpose of the medication, potential side-effects, contraindications, overdose precautions, self-administration of medications, and other pharmaceutical services. The department responds that sec.409.356(B) of the proposed rule allows for the provision of this service by a professional or a paraprofessional. This would include a registered pharmacist. Additionally the final version of the rule has been modified to specify that medication training and medication monitoring as services which may be delivered by registered pharmacists; however, no new service was added to the overall service array. Another commenter identified language in sec.409.356 related to nursing services, provided by a RN or LVN include monitoring the efficacy of medication and monitoring the side-effects of medication and related that these duties are being limited to RNs and LVNs. The department responds that the rule has been modified to allow pharmacists and other qualified and appropriately trained persons working under appropriate supervision as provided under state law or within the scope of the person's license to provide these monitoring services. The commenter cited services in sec.409.358 that included medication training provided by an RN or an LVN that included information related to the purpose of the medication, potential side-effects, contraindications overdose precautions and self- administration of medications and expressed concern that this service is limited to RNs and LVNs. The department responds that the rule has been modified to include registered pharmacists as allowed to perform monitoring of medications for effectiveness as well as medication training. However these services will remain as activities included in psychiatric nursing care services. One commenter also was concerned as to the limiting the monitoring of medications by an RN or LVN as found in sec.409.359. The department responds that the final version of the rule has been modified to include registered pharmacists as allowed to perform monitoring of medications for effectiveness as well as medication training. However these services will remain as activities included in psychiatric nursing care services. Several commenters recommended that the unit of service definition for Community Support Services be redefined to read "1 to 30 minutes." The department agrees with this comment and has revised the unit of service definition in the final version of the rule. The "brief," "intermediate," and "extended" unit of service categories have been replaced by a single definition of "up to 30 minutes." The commenter noted that approval of the treatment plan is required before the delivery of rehabilitative services unless an emergency situation requires immediate intervention and questioned if this meant treatment plan development is no longer a covered service. The department responds that treatment plan development, while no longer a distinct rehabilitative service, is covered under other funding sources. Several commenters requested that persistent symptoms in adults be included in sec.409.356(b)(1). The department agrees and will modify the language in the final rule to include acute and persistent symptoms of mental illness in adults in sec.409.356(b)(1). One commenter requests clarification of the services provided by a nurse as related to sec.409.361(j) regarding services incidental to another Medicaid service including an office visit with a physician. The commenter requests that nursing services continue to be reimbursed separately including when services are provided on the same day as a doctor's service. The department responds that nursing services must be directly related to the services prescribed in the individual's treatment plan for rehabilitation. Nursing services provided in conjunction with physician's services (such as office visits) are not covered. Several commenters expressed concern about multiple types of day programming. One commenter related that the rationale for "segregating" individuals with mental illness by levels of disability is not understood and that the interaction of individuals with varying levels of functioning is fundamental to the therapeutic milieu of psychiatric rehabilitation. The commenter further stated that the structure of the day program services as proposed appears to relieve the participants of the opportunities they have at present to seek services, socialization, and friendship in a manner consistent with the unimpaired population. One commenter also related that separate and distinct service sites with professional staff dedicated to each site may prove impossible to implement to serve relatively small numbers of consumers. One commenter stated that the establishment of levels would create a hospital-like environment. The department responds that services may be provided to individuals through any appropriate service modality (e.g. small group, one-on- one, and/or day programming). To facilitate community integration and to increase efficiency in service delivery, the new service array gives the provider of services the flexibility to design and fund programming based on individual needs. The new service array represents a movement away from generic or unidimensional service model which does not take individual differences into account. The needs and desires of each individual should be the determining factors in the selection of programming, not the fact that only one type of programming is offered. The department fully supports the delivery of medically necessary rehabilitative services in integrated natural community settings whenever possible. When there are insufficient numbers of participants, individual and small group services may be utilized to meet the needs of consumers. The commenter also suggested the need to address the treatment of "negative symptoms" of schizophrenia, which are the real barriers to community integration and employment, rather than absence of skills. The commenter requested that sec.409.358 be reconsidered. The department responds that the skills training included in day programming is not limited to skills associated with daily living, but includes skills targeting in program and natural settings addressing social interaction, social appropriateness, symptom management, and techniques for dealing with stressful situations. The commenter relates that the current standard of practice is for the consumer to be "checked out" of the day program if an appointment with the physician is scheduled during program hours and questioned whether a physician associated with an HMO is considered as being reimbursed outside the scope of the day program. The department responds that direct physician's services are not covered under rehabilitative services. Individuals, whether or not they reside in an area providing Medicaid managed care services, must receive direct services separately from day program services. Duplication of Medicaid reimbursement is prohibited. Thus, the individual must be "checked out" if an appointment with a physician is scheduled during program hours. The commenter requested clarification of the sec.409.361(i) which states staff providing day program services cannot provide individual or small group services during program hours. If an RN comes to the day program to give a brief service, is that RN not allowed to provide community support services elsewhere? The department responds that an RN providing a brief service in a day program would be allowed to provide services elsewhere. Several commenters also related that the six-hour daily limitation on day programming was an unreasonable limitation on individuals in residential facilities and that services beyond six hours in these residential units would have to be scaled back. The department responds that in addition to the six hours of day programming, three hours of small group programming and up to six hours of individual programming can be scheduled in a calendar day. The focus on individualized and small group services represents best practices as determined by the department. One commenter questions the requirement that rehabilitative services provided in residential facilities must be conducted in a part of the facility that is separate and distinct from the recipient's sleeping quarters. The commenter asked "Does this mean not in the bedroom or in a separate physical location? And if in a separate physical location how would this benefit the recipient?" The department responds that services must be delivered in an area outside of the individual's sleeping quarters. There is no requirement that services be delivered in a separate building, but services cannot be delivered in the individual's bedroom. Another commenter requested clarification of the face-to-face contact including the primary caregiver of a minor child as defined in sec.409.353 by substituting "and" for the word "or," to read "...recipient of rehabilitative services and the primary caregiver of a child." The department responds that the final version of the rule will be modified to read "...recipient of rehabilitative services and/or the primary caregiver of a child." The commenter further requested the use of the word "single" rather than "sole," referring to the diagnosis of mental retardation or substance abuse in sec.409.354, to be consistent with language in the community standards and this rule. The department responds that the final version of the rule has been modified to reflect the department's policy regarding "priority population." One commenter stated that individuals deteriorate prior to meeting commitment criteria used by institutions and asked if rehabilitative services are intended to impact the deterioration process. The commenter suggested that the rule should include language clarifying that in the absence of these services the individual would be at risk of deterioration, not just institutionalization. The department responds that the reference to risk of institutionalization has been removed from sec.409.354(4) in the final version of the rule. One commenter related that services are required to be reasonable and medically necessary and expressed concern that the word "reasonable" could be prohibitive in that a service may be preventive but not medically necessary. Similarly the word "reasonable" might preclude the use of a service which might be considered unreasonable solely due to cost despite its medical necessity. The department responds that Medicaid does not pay for services that are not medically necessary. The term "reasonable" addresses those medically necessary interventions that represent the most effective and efficient method of addressing individual needs. One commenter relates that sec.409.356 does not adequately define day programming, support services, community living skills, and community support services and requested clarification of the service definitions. The department responds that day programming is described in sec.sec.409.357- 409.359 of the rule. These sections provide definitions with sufficient flexibility to allow the service provider to tailor services to individual needs and are consistent with best practices as determined by the department. One commenter requested that the definition of vocational services be modified to state services related to the preparation of an individual for employment including but not limited to training in specific job task skills. The department responds that the definition as stated in the rule is provided to clarify those services that are not covered under the rehabilitative services program. Services other than those directly relating to specific job task training (e.g., training to assist an individual to cope with stressful issues in an employment setting) are covered under this option. One commenter requested clarification to the language in sec.409.355(f) which requires that services for adults and children be provided separately. The department responds that the intention of this requirement is that the programs are separate in location (or if at the same location are provided at different times). Programming for children and adults will not be combined whether offered in a fixed location or in natural settings. Language will be included in the final version of the rule to clarify this issue. One commenter referenced sec.409.356(a), which states treatment and training objectives and skills attainment will be monitored for effectiveness and modified as needed. One commenter asked how and by whom will effectiveness of training objectives and skills attainment be determined. The department responds that ongoing daily monitoring of the individual's response to treatment will be carried out by all providers of the service, however, formal monitoring, which will be provided under Plan of Care Oversight by a licensed practitioner of the healing arts must be completed on a quarterly basis (or more often in some instances). The final version of the rule has been modified to include Plan of Care oversight as a reimbursable service. One commenter referenced sec.409.356(b)(1) which states, in part, that unscheduled interventions may be provided on an emergency basis and requested that the word "may" be replaced with the word "shall." The department responds that the reference to "unscheduled interventions" has been removed from sec.409.356(b)(1) of the rule; however, all providers of Rehabilitative Services for Persons with Mental Illness are required to provide 24-hour emergency services in accordance with sec.534.053 of the Texas Health and Safety Code One commenter stated that sec.409.356(b)(3)(B) references a number of programs targeted at developing skills related to the acquisition of employment; however this service does not provide for assisting the individual in the actual acquisition of employment, e.g., obtaining and completing an application, scheduling of job interviews, etc. The commenter requests the inclusion of these activities in this service. The department responds services such as those suggested by the commenter do not meet the federal definition of Rehabilitative Services and as such are not included in the service array. Concerning sec.409.357(a), a commenter requested that the language be modified to change the term "may be granted" to "shall be granted" so that extensions granted on the basis of medical necessity are obligatory, not discretionary. The department responds that intent of the language is permissive. This allows enrolled provider to extend acute care day program services beyond the 10-day limit in certain instances and specifies the circumstances under which the extension may be granted. The commenter also requested clarification of what is meant by "florid occurrences" as found in sec.409.357(b)(2)(B). The department responds that the term "florid occurrences" is a clinical term used to describe a complete and clinically typical display of symptoms. With reference to sec.409.357(b)(3), a commenter noted that many of the programs described were applicable to both children and adults, e.g., personal hygiene, food preparation, etc. The commenter would like the section to reflect that services would be based on individual need, not on age. The department responds that the language in the referenced section states that, the services "include but are not limited to..." the specified array of services. The services mentioned in the rule are to be used as guidelines to assist in the design of appropriate programming for children and adults and are not intended to be all inclusive of the specific activities offered in a particular day program setting. One commenter referenced sec.409.358(a) which states adults served in this program should be able to manage self-care tasks and the commenter requested the inclusion of language making specific accommodations for consumers with physical limitations. The department responds that all Medicaid providers must comply with the Americans with Disabilities Act of 1990 and other applicable federal laws assuring access to individuals with physical limitations. One commenter requested the inclusion of consumer feedback, i.e., consumer satisfaction, to the list of required documentation. The department responds that it supports the solicitation of consumer feedback and satisfaction surveys; however, it is not required as part of the clinical documentation required for Medicaid reimbursement. One commenter further expressed support of the department's endeavor to institute best practices in terms of individualized services provided at a location which is most effective and logical for the individual. The commenter expressed opposition to the tying the service to a specific location which might reduce individualization and creative interventions. The commenter related that if the intent was to allow this type of flexibility the language should be modified. The department responds that training in areas of community integration are not restricted to the day programming modality and day programs are permitted to deliver programming in natural settings. This allows for flexibility with an emphasis on personalized training in natural environments. One commenter concurred with the entire subchapter as written. The department acknowledges the commenter's support. One commenter expressed a belief that overall the proposal was good, but also expressed concern that the proposed changes would cause major cuts in programs and staff. The commenter also expressed a concern that present programs would be dismantled. The department responds that rates will be proposed that will be sufficient to meet the costs of the provision of services. The proposed changes focus limited resources on those services that represent best practices determined by the department to be effective in ameliorating the symptoms of severe and persistent mental illness. One commenter stated that the rule should be clear that services are to be based on need and not on age. The department responds that there are no age limits established in the eligibility criteria. One commenter asked if a licensed practitioner of the healing arts may diagnose on all five axes. The commenter stated that a physician must diagnose on discharge summaries according the Mental Health Community Standards. The department responds that licensed practitioners of the healing arts (as defined in the proposed rule who are not physicians) may only provide diagnosis within the scope of their licensure. Diagnoses on Axis 3 are limited to physicians. Two commenters referenced sec.409.356(b)(1)(B) which allows a paraprofessional to provide symptom management and support services to adults but not to children and noted that this appears to be in conflict with the requirement for day programming for acute needs for children which allows training to be provided by paraprofessionals. The department responds that the final version of the proposed rule has been revised to allow paraprofessionals to deliver symptom management and support services to children. One commenter stated that sec.409.356(b)(3) allows for the provision of employment related support and skills training for adults but not adolescents. The department responds that in the final draft of the proposed rule, adolescents will be included in sec.409.356(b)(3) as eligible to receive employment-related support and skills training. One commenter referenced sec.409.357(a) which states day programming for acute needs may not exceed ten consecutive calendar days for adults and noted that there is not a similar limitation for children. The department responds that the proposed rule does not place a limit on access to medically necessary treatment in Day Programming for Acute Needs for children. The limitation on adult services may be extended if deemed medically necessary by a licensed practitioner of the healing arts. One commenter objected to a 1:4 staffing ratio in Day Programs for Acute needs, noting that this 1:4 requirement is higher than for inpatient services. The department responds that day programs for acute needs are intended to provide short term services to individuals who are experiencing symptoms of mental illness or emotional disturbance that are of sufficient severity to place these individuals at risk for placement in a more restrictive setting. Although inpatient settings also provide services to individuals experiencing this level of symptomology, those settings also continue to provide services to individuals as symptomology lessens over a period of weeks or months. The short term, intensive focus of day programs services require the greater 1:4 minimum staffing ratio. Two commenters suggested the addition of schizoaffective disorder to the eligibility requirements found in sec.409.354(1) of the rule. The department responds that the priority population definition in the final version of the proposed rule will be modified to be in congruence with departmental policy pertaining to the priority population. One commenter suggested additional requirements for supervision be added to the rule. The department responds that the term supervision is broadly defined to allow individual providers the flexibility of designing systems of supervision that maximize efficiency. At a later date the department will review the efficacy of the various systems of supervision and will add additional requirements if deemed necessary. One commenter asked if the 61-90 minute unit of service definition implies that direct contacts are limited to 90 minutes? The department responds that direct contacts are not limited to 90 minutes. The department has altered the unit of service definitions in the final version of the rule to eliminate this source of possible confusion. One commenter noted that nursing functions as defined for Community Support Services differ and that they do not specify assessment, coordination of medical activities, medication training, specimen collection, crisis medical intervention and general nursing care. The commenter also noted that these nursing functions do not include the qualifier "psychiatric" and questioned the reason for not specifying these nursing functions as community support services? The department responds that the nursing functions listed in the rule are not intended to be comprehensive, but rather to serve as general guidelines for the types of nursing services provided. Any nursing service that is prescribed in the treatment plan that meets the definition of rehabilitative services can be reimbursed so long as it is provided within the service limitations specified in sec.409.361. One commenter asked if a nurse (LVN or RN) was required to be on site at all times for Skills Training Day Programming? The department responds that there is no requirement for a nurse to be on site at all times in Day Programs for Skills Training. However, the provider must provide appropriate staff to meet the needs of the individuals served in the program. Two commenters noted that there appeared to be an inconsistency between the various programs with regard to who may perform medication training. The department has revised the final version of the rule to eliminate this inconsistency and to allow for the provision of this service by qualified individuals. One commenter suggested that skills maintenance documentation be completed monthly. The department disagrees and notes that documentation guidelines in the rule conform with federal requirements. One commenter asked if the six-hour service limitation for individual services would preclude billing for in-home respite services longer than six hours in duration. The department responds that the federal definition of rehabilitative services does not cover in-home respite services. If rehabilitative services are offered to an individual receiving in- home respite services, the six-hour limitation would apply to these rehabilitative services. One commenter expressed opposition to the elimination of drop-in center type services and suggested a transition period if services are to be eliminated in order to avoid abrupt termination of services. The department responds that reimbursement is available for rehabilitative services that are provided to eligible individuals in "drop in" settings. The services provided must be in accordance with the individual's treatment plan as approved by a licensed practitioner of the healing arts. One commenter expressed concern about the issues pertaining to persons with a dual diagnosis of substance abuse and mental illness. The commenter noted that symptom management refers to mental illness only, not to substance abuse. The commenter asked if coverage of substance abuse was included in the definitions and whether consideration had been given to costs associated with training and retaining licensed chemical dependency counselors (LCDCs). The commenter expressed concern that mental illness is specified in the language but not dual diagnosis. The department responds that reimbursement is available for services provided to persons who have a diagnosis of both substance abuse and mental illness. The service array is inclusive of a variety of services that may be provided to these individuals. The department also notes that LCDCs are included in the category of "professionals" who may deliver these services. The proposed reimbursements supporting this service array is adequate to cover the costs of service delivery to this population. Two commenters asked for clarification as to whether treatment planning and assessment will continue to be covered services under the new program option and noted that they appear to be covered in sec.409.356. The department responds that initial assessment and treatment planning are not reimbursable services under the rehabilitative services option but are covered by other Medicaid funding sources. Additionally, ongoing daily monitoring and assessment of the individual's response to treatment will be carried out by all providers of the service and is a general function of service provision. Formal monitoring of progress and ongoing approval or amendment of existing treatment plans is covered under "Plan of Care Oversight" which may be provided by a licensed practitioner of the healing arts. One commenter asked if the limits on day programming are per client, per program, or per service setting. The department responds that the limits are on reimbursable units of service per person per calendar day. One commenter requested clarification regarding services that are associated with the proper and efficient administration of the state plan. The department responds that activities associated with the proper and efficient administration of the Texas Medicaid plan are reimbursed through Medicaid administrative claiming. A commenter requested clarification about the issue of services to persons in public institutions and questioned if this why services to persons in local jails are not reimbursable. The department responds that federal regulations prohibit the availability of Medicaid reimbursement for services provided to persons who are inmates of public institutions. This does include individuals who are inmates of local jails. One commenter asked that the work be done toward allowing persons who are licensed psychological associates becoming licensed practitioners of the healing arts. The department responds that the definition of a licensed practitioner of the healing arts is in congruence with the licensure requirements for individuals authorized to provide Medicaid mental health services. Eligibility for enrollment to provide these services is established by the Texas Department of Health and is published in the Texas Department of Health's Texas Medicaid Providers Procedures Manual. One commenter asked if there was a total limit on the number of admissions to acute services? The department responds that the number of admissions is based on medical necessity and is not limited. The new reimbursement rate for physician services greatly reduces reimbursement levels for mental health authorities and does not reflect the cost of providing this services to the "priority population." The department responds that elimination of the overlap between rehabilitative services and physician services available under the general Medicaid outpatient benefit will not reduce reimbursement levels for the mental health authorities but will allow the mental health authorities to utilize general revenue funds previously used as match for these services in the provision of services to persons ineligible for Medicaid or as match to provide additional Medicaid services. The cost of physician services is not contingent on the population served. One commenter asked how "crisis services" would be provided to new members of the priority population. The department responds that a person with a mental illness who is experiencing serious functional impairment would qualify as a member of the priority population and would be eligible to receive symptom management and support services under community support services in sec.409.355, providing that the individual meets the general eligibility requirements specified in sec.409.354 and is not subject to applicable limitations as set forth in sec.409.362 of the rule. Additionally, short term counseling provided by a licensed practitioner of the healing arts is covered under the regular outpatient Medicaid benefit for members of the priority population as well as persons in the general population. One commenter stated that the proposed rules limit individual program development. For the state to authorize and pay the cost for an individual in an institution and disallow the same amount of need in the community at less cost is ill advised. The department responds that the rule allows for the provision of a flexible array of services which can include up to six hours of individual services, three hours of small group services, and six hours of day programming per person, per calendar day. In instances in which individuals were to receive the maximum amount of services, the reimbursement would significantly exceed Medicaid costs of institutional programs. A commenter stated that the rules call for reimbursement of day program services to be inclusive of physician services. This contradicts general reimbursement practices of both inpatient and partial hospitalization programs. In private practice as well as Medicare the cost of the physician services are separately reimbursed. The department responds that direct physician services are not included in the service array. Physician services are available under the general Medicaid outpatient benefit and are separately reimbursed. The reimbursement for rehabilitative day program services includes reimbursement for the costs associated with maintaining physician availability for staff consultation and to provide direction to staff in emergency situations. The commenter also stated that not all services excluded by the new rehabilitation rules are covered by Medicaid administrative claiming. The department responds that Medicaid administrative claiming is not intended as a source of funding for the provision of direct services. Certain overhead costs previously associated with the administrative services associated with Rehabilitation Services are no longer captured in the reimbursement for these services. It is only those costs that may be captured through administrative claiming. One commenter stated that the new rule reflected a shift from a consumer run and ownership model to a model controlled by professional staff. The commenter stated that the rule appears to be based on staff assessing, staff establishing baselines, staff setting up programs, and staff determining when sufficient progress has been achieved. The commenter expressed concern that this made inclusion less likely. The department responds that the inclusion of the consumer in all aspects of programming is essential. The rule places no limit on consumer involvement but assumes that professional and paraprofessional staff also play a critical role in the rehabilitative process. One commenter stated that the rule needs to more clearly define the approval process, including determination of need. The department responds that the rule provides general requirements for eligibility for rehabilitative services; however, the determination of need for rehabilitative services is made by the treatment team based on diagnosis and individual assessment via the uniform assessment process. A licensed practitioner of the healing arts must also concur with the need for rehabilitative services and approve the treatment plan. The new sections are adopted under the Texas Health and Safety Code, sec.532.015, which provides the Texas Department of Mental Health and Mental Retardation Board with broad rule rulemaking authority, and under the provisions of the Texas Government Code, Chapter 531, sec.531.021, which provide the Texas Health and Human Services Commission with the authority to administer federal medical assistance funds. The section affects Texas Human Resources Code, sec.sec.32.001-322.040, and Texas Government Code, Chapter 531, sec.531.021. sec.409.351.Purpose. The purpose of this subchapter is to define rehabilitative services for persons with mental illness; describe documentation and reimbursement for rehabilitative services for persons with mental illness; and to describe the methods by which eligibility is established and reimbursement for covered services is accomplished. sec.409.352.Application. This subchapter applies to Medicaid reimbursed rehabilitative services for persons with mental illness. sec.409.353.Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise: Arrangement-A contract executed between the enrolled Medicaid provider of rehabilitative services and a qualified person or entity for the provision of rehabilitative services to eligible recipients. Department-The Texas Department of Mental Health and Mental Retardation (TDMHMR) or its designee. Direct contact-Face-to-face interaction with the Medicaid-eligible recipient of rehabilitative services (and/or the primary care giver of a minor child who is receiving rehabilitative services or the legal guardian of the person of an adult who is receiving rehabilitative services) for the purpose of ameliorating the symptoms of the eligible individual's mental illness. Individual-Medicaid-eligible recipient of rehabilitative services. Institution for mental diseases-A hospital, nursing facility, or other institution of more than 16 beds, that is primarily engaged in providing diagnosis, treatment, or care of persons with mental illness, including medical attention, nursing care, and related services. Emergency-A situation in which an individual is at immediate risk of causing harm to self or others. Licensed practitioner of the healing arts-An individual who is: (A) a physician (MD or DO) licensed to practice medicine in Texas; (B) a licensed professional counselor (LPC) as defined in Texas Civil Statutes,sec.4512g; (C) a licensed masters social worker (LMSW) -Advanced Clinical Practitioner (ACP) as defined in the Human Resources Code, Chapter 50; or (D) a licensed or certified psychologist as defined in Texas Civil Statutes,sec.4495b. Medically necessary services-Those services which: (A) are reasonable and necessary for the treatment of a mental health or chemical dependency disorder or to improve, maintain, or prevent deterioration of functioning resulting from such a disorder; (B) are in accordance with accepted standards of practice in behavioral health care; (C) are furnished in the most appropriate and least restrictive setting in which services can be safely provided; (D) are the most appropriate level or supply of service which can be safely provided; and (E) could not have been omitted without adversely affecting the individual's mental and/or physical health or the quality of care rendered. On site-Services provided at a site operated by the provider such as a clinic, clubhouse, or day treatment setting. Paraprofessional-All staff providing direct care, other than those designated as qualified mental health professionals (as defined in Chapter 408, Subchapter B of this title, governing Mental Health Community Services Standards), who have received training appropriate to their area of responsibility. The work of all mental health paraprofessionals is supervised by qualified mental health professionals. Plan of care (i.e., treatment plan)-The plan which an individual and his/her provider develop, based on assessments, to address the identified needs of the individual. At a minimum, the plan includes measurable outcomes targeted to identified symptoms/needs, individual functioning, treatment intervention, time frames, and responsible staff. Professional-An individual who possesses the qualifications of a qualified mental health professional as defined in Chapter 408, Subchapter B of this title, governing Mental Health Community Services Standards. Rehabilitative services-Any medical or remedial services recommended by a licensed practitioner of the healing arts, practicing within the scope of his/her license, for maximum reduction of an individual's mental disabilities and restoration to his/her best functional level. Texas Department of Mental Health and Mental Retardation (TDMHMR) -The Texas Department of Mental Health and Mental Retardation or its designee. Treatment plan (i.e., plan of care)-The plan which an individual and his/her provider develop, based on assessments, to address the identified needs of the individual. At a minimum, the plan includes measurable outcomes targeted to identified symptoms/needs, individual functioning, treatment intervention, time frames, and responsible staff. Unit of service- (A) Community support services-The reimbursable unit of service for community support services is a direct contact lasting up to 30 minutes. Time spent by a service provider in traveling to and from an off-site location of an eligible individual in order to provide a face-to-face service with the eligible individual is included in the total number of units for which reimbursement may be claimed. (B) Day program-The reimbursable unit of service for day programming is one hour. Vocational services-Services related to the preparation of an individual for employment including, training in job task specific skills and job development or placement. sec.409.354.Eligible Individuals. To be eligible for Medicaid reimbursement of rehabilitative services under this subchapter: (1) if the individual is under the age of 18, the individual must: (A) have a diagnosis of a mental illness (other than or in addition to a diagnosis of substance abuse, mental retardation, autism, or pervasive developmental disorder); and have a functional impairment (Global Assessment of Functioning, or GAF, score of 50 or less either currently or within the past year); or (B) have a diagnosis of a mental illness (other than a diagnosis of substance abuse, mental retardation, autism, or pervasive developmental disorder) and have been determined by the school system to have a serious emotional disturbance; or (C) have a diagnosis of a mental illness (other than to a diagnosis of substance abuse, mental retardation, autism, or pervasive developmental disorder) and have been determined to be at risk of disruption of the preferred living situation due to psychiatric symptoms. (2) if the individual is 18 years of age or older, the individual must: (A) have a diagnosis of schizophrenia, major depression, or bipolar disorder; or (B) have a diagnosis other than those listed in subparagraph (A) of this paragraph except a sole diagnosis of substance abuse or mental retardation and have a Global Assessment of Functioning (GAF) score of 50 or less either currently or within the past year; (3) be assessed according to the department's uniform assessment protocol and, based on that assessment, be at a level determined to need rehabilitative services; (4) be enrolled as a Medicaid recipient; (5) be residing in a living arrangement other than an institution for mental diseases as defined in sec.409.353 of this title (relating to Definitions) or, if residing in a nursing facility, have been determined through a preadmission screening and annual resident review (PASARR) assessment to require specialized services; and (6) except for medically necessary services to ameliorate an emergency situation, have a current treatment plan that specifies and describes in writing the treatment and rehabilitative services which are reasonable and medically necessary to ameliorate the effects of mental illness. sec.409.355.Rehabilitative Services: General Requirements. (a) A licensed practitioner of the healing arts working under the auspices of the enrolled Medicaid provider and practicing within the scope of his or her license must personally evaluate each eligible individual and prescribe, or approve by signature, a treatment plan based on the findings of the assessments and other information in the individual's medical record. (b) The treatment plan must be developed and reviewed/updated in accordance with Chapter 408, Subchapter B of this title, governing Mental Health Community Services Standards. (c) Approval of the treatment plan is required before the delivery of rehabilitative services unless an emergency situation requires immediate intervention. The rationale for emergency interventions must be documented in the individual's medical record. (d) Services must be provided by professional or paraprofessional staff, trained in accordance with Chapter 408, Subchapter B of this title, governing Mental Health Community Services Standards. (e) Services for adults and children must be provided separately and may not be combined. (f) In areas where staffing shortages or consumer demand prevent the economic and efficient operation of a particular type of day program, as defined in sec.sec.409.357-409.359 of this title (relating to Reimbursable Rehabilitative Service Definitions: Day Program Services for Acute Needs; Reimbursable Rehabilitative Service Definitions: Day Program Services for Skills Training; and Reimbursable Rehabilitative Service Definitions: Day Program Services for Skills Maintenance; Plan of Care OversightAdults and Children) an enrolled provider may offer comparable services in either a one-on-one or small group modality. sec.409.356.Reimbursable Rehabilitative Service Definitions: Community Support Services. (a) Definition. Community support services are provided in a one- on-one modality or in a small group modality. Community support services are provided by professionals or paraprofessionals, either on site or in the community (including in the home of an eligible child or adult), but not as part of a day program. Services include assessment by professional staff and training provided by professional or paraprofessional staff. Treatment and training objectives and skills attainment are monitored for effectiveness and modified as needed. (b) Service components. Service components provided under this definition include: (1) Symptom management and support services. Services focus on managing, reducing, or eliminating acute or persistent symptoms of mental illness in adults and acute or persistent symptoms of emotional disturbance in children. The assessment includes gathering baseline information on the manifestation of the psychiatric symptomatology, designing interventions, including interventions for children, and monitoring outcomes. (A) Nursing services are provided by an RN or LVN and include: (i) administration of medication; (ii) monitoring of the efficacy of medication; (iii) monitoring of the side-effects of medication; (iv) nursing services relating to detoxification; and (v) other nursing services which enable adults with mental illness and children who are severely emotionally disturbed to attain or maintain an optimal level of functioning. (B) Medication training and monitoring by a registered pharmacist, registered nurse, licensed vocational nurse, or other qualified and appropriately trained person working under appropriate supervision as provided under state law or within the scope of the person's license. Medication training includes, but is not limited to, information pertaining to the purpose of the medication, potential side-effects of the medication, contraindications, overdose precautions, and self administration of medication. (C) Other symptom management and support services are provided to adults by a professional or paraprofessional to assist in the identification and management of symptoms of mental illness. Other symptom management and support services are provided to children by a professional or paraprofessional to assist in the identification and management of severe emotional disturbance. Services may include but are not limited to: (i) instruction in methods of managing stress; (ii) instruction in strategies or behavioral techniques for coping with and managing the symptoms of mental illness in adults and emotional disturbance in children; (iii) reality orientation; (iv) training related to self-administration of medication; (v) identification and management of side-effects of medication; or (vi) supportive services during times of crisis or episodes of acute symptomatology. (2) Community living skills. Services focus on ameliorating mental and functional disabilities by focusing on the effect of the psychiatric symptomatology on community integration. Assessments by professional staff include gathering baseline information on the skill strengths and deficits, determining the impact of the individual's symptomatology on community integration, designing interventions, and monitoring outcomes. Services may include but are not limited to: (A) problem solving and training which assists, supports or enables individuals to gain or better utilize skills necessary to attain or maintain community tenure, (e.g., personal hygiene, household tasks, money management, etc.); (B) training and support that will enable the adult or child to access needed services in the community (e.g., medical care, dental care, legal services, transportation services, living accommodations, etc.); (C) training to improve communication, increase interpersonal interactions, and enhance appropriate interpersonal behaviors; and (D) interventions to develop natural supports in the adult or child's living, social, and learning environments. (3) Employment-related support and skills training. Services focus on reducing or managing behaviors or symptoms of mental illness that interfere with an adolescent's or adult's ability to obtain or retain employment. Assessments by professional staff include gathering baseline information on the individual's skill strengths and deficits, determining the impact of the individual's symptomatology on employment, designing interventions, and monitoring outcomes. Services may include but are not limited to: (A) instruction in dress, grooming, socially acceptable behaviors, and etiquette necessary to obtain or retain employment; (B) instruction in arranging transportation, utilizing public transportation, accessing and utilizing available resources related to the acquisition of employment, and accessing employment-related programs and benefits such as unemployment, workers compensation, and social security; (C) interventions or supportive contacts provided on or off the job site to reduce behaviors and symptoms of mental illness that interfere with job performance; and (D) interventions designed to develop natural supports on or off the job site to compensate for skill deficits that interfere with job performance. sec.409.357.Reimbursable Rehabilitative Service Definitions: Day Program Services for Acute Needs. (a) Definition. Day program services for acute needs include short- term, intensive treatments, provided by professionals, and paraprofessionals to adults with severe and persistent mental illness or children with severe emotional disturbance, who require multidisciplinary treatment in order to stabilize acute psychiatric symptomatology and prevent admission to a more restrictive setting, including a psychiatric hospital, or similar setting. Contacts with staff will be frequent, activities and services, including crisis management, will be available at all times, and development of social supports will be encouraged and facilitated. Activities will be goal oriented, focusing on improving peer interaction, appropriate social behavior, experience in the community, and stress tolerance. The initial prescribed length of stay per episode may not exceed ten consecutive calendar days for adults. The enrolled provider may extend an episode of care when documented evidence of symptoms indicate that such an extension would be medically necessary to improve the individual's current condition or to prevent admission to a more restrictive setting, including a psychiatric hospital, or similar setting. (b) Service components include: (1) Psychiatric nursing care. Continuous on-site services are provided by an RN and may include assessment, supervision, and coordination of medical activities administration of medication, specimen collection, crisis medical interventions (as ordered by a physician), and general nursing care. (2) Medication training and monitoring by a registered pharmacist, registered nurse, licensed vocational nurse, or other qualified and appropriately trained person working under appropriate supervision as provided under state law or within the scope of the person's license. Medication training includes, but is not limited to, information pertaining to the purpose of the medication, potential side-effects of the medication, contraindications, overdose precautions, and self administration of medication. (3) Behavior skills training. Skills, strengths, and deficits are assessed by professional staff. Training provided by professional or paraprofessional staff focuses on minimizing the effect of the individual's mental illness on his/her level of functioning. The assessment component includes gathering baseline information on the manifestation of the acute psychiatric symptomatology, designing interventions and monitoring outcomes. Training objectives and skills attainment will be monitored. Modifications will be made as needed. Topics addressed by training may include: (A) symptomatology; (B) ways to avoid florid occurrences; (C) the identification of signs of reoccurrence of symptomatology; and (D) techniques for developing internal locus of control in regard to symptomatology and developing new coping mechanisms associated with the symptomatology. (4) Independent daily living skills training. Skills, strengths, and deficits are assessed by professional staff. Training provided by professional or paraprofessional staff focuses on assisting the child or adult to acquire the most immediate, fundamental functional skills needed to enable the individual to reside in the community and avert more restrictive levels of treatment. The assessment component includes gathering baseline information pertaining to current functional skill levels, identifying those skills that the adult will need to increase community tenure or the child will need to be maintained at home or in the preferred living situation, developing an individualized skill acquisition program, and evaluating outcomes. The training component for children may include, but is not limited to, training in self-care, social skills, and other developmentally appropriate skills. For adults the training component may include, but is not limited to, the development of skills in the areas of personal hygiene, nutrition, food preparation, exercise, and integration into activities in the community. (c) Location of services. Services will be provided in a highly structured and safe environment with constant supervision. Day programs for acute needs may be provided in a free-standing program serving persons residing elsewhere in the community or within a 16- bed (or smaller) short-term, crisis resolution- oriented residential treatment setting. (d) Staffing ratios. Minimum staffing ratios for day programs for acute needs are as follows (Note: minimum requirements are not to be construed as absolutes. Based on consumer need, additional staffing as needed to ensure safety and adequacy of programming must be provided): (1) one RN on site at all times during all hours of program operation for each 16 individuals; (2) one additional professional staff available, with a response time not to exceed 30 minutes, during all hours of program operation; (3) one physician available, with a response time not to exceed 30 minutes during all hours of day program operation; (4) a minimum of two staff must be on site at all times of program operation; and (5) additional staff as required to maintain a ratio of one staff member to four individuals. (e) Supervision. Day programs for acute needs must be under the direction of a professional other than the on-site RN required to meet the minimum staffing ratios. sec.409.358.Reimbursable Rehabilitative Service Definitions: Day Program Services for Skills Training. (a) Definition. Day programs for skills training are program-based services, including school-based services for children, provided by professionals or paraprofessionals to adults with severe and persistent mental illness or children with severe emotional disturbance who, with instruction, guidance, and structure or support, may be capable of increasing their level of functioning and who do not require more intensive short-term treatment. Adults served in this program should be able to manage self-care tasks, demonstrate awareness of impact on others, demonstrate a measurable degree of goal orientation, and not exhibit either threatening or extremely disruptive behaviors. Program components focus on the amelioration of mental and functional deficits through skills training and supportive interventions. (b) Service components. Service components include: (1) Nursing services. On-site services are provided by an RN or LVN, including: (A) administration of medication; (B) specimen collections (as ordered by a physician); and (C) general nursing care. (2) Medication training and monitoring by a registered pharmacist, registered nurse, licensed vocational nurse, or other qualified and appropriately trained person working under appropriate supervision as provided under state law or within the scope of the person's license. Medication training includes, but is not limited to, information pertaining to the purpose of the medication, potential side-effects of the medication, contraindications, overdose precautions, and self administration of medication. (3) Community integration skills training. Skills, strengths, and deficits are assessed by professional staff. Training provided by professional or paraprofessional staff, focuses on assisting the child or adult to acquire skills necessary to function appropriately in the community. The assessment component includes gathering baseline information pertaining to current functional skill levels; identifying skills necessary for the adult to increase community integration and for the child to function effectively in his/her social environment (family, peers, school); developing a skills acquisition program, and evaluating outcomes. For children, the training component may include, but is not limited to, instruction in behavioral skills necessary for the child to be maintained in his/her usual community and school setting, socialization, stress management, and other developmentally appropriate skills. For adults, the training component relates to community integration (including but not limited to safety, home maintenance, employment, security, mobility, accessing services, and social appropriateness), and instruction in self-care tasks (i.e., personal hygiene, health, nutrition, dress, grooming, manners, etc.). (4) Symptom management skills training. Training is provided by professionals and paraprofessionals to assist the child in the identification and management of symptoms of emotional disturbance or to assist adults in the identification and management of symptoms of mental illness. Training may include methods of managing stress and behavioral strategies and techniques for coping with and managing the symptoms of mental illness. (c) Location of services. Day programs for skills training may be offered either at freestanding sites in the community, including clubhouses, or within a 16-bed (or smaller) residential treatment/training facility. (d) Staffing ratios. Minimum staffing ratios for day programs for skills training are as follows (Note: minimum requirements are not to be construed as absolutes. Based on consumer need, additional staffing as needed to ensure safety and adequacy of programming must be provided): (1) one professional staff must be on site during all hours of program operation; (2) additional staff sufficient to maintain a ratio of one staff to six children and one staff to eight adults during all hours of program operation; (3) one additional professional available during all hours of program operation with a response time not to exceed 30 minutes (this professional may not be someone assigned full time to another day program); and (4) a minimum of two staff must be on site during all hours of program operation. (e) Supervision. Day programs for skills training must be under the direction of a professional. sec.409.359.Reimbursable Rehabilitative Service Definitions: Day Program Services for Skills Maintenance;Plan of Care Oversight - Adults and Children (a) Definition. Day programs for skills maintenance are program- based, long- term services provided to adults with a severe and persistent mental illness who are in need of day program services to ensure personal well being and to reduce the risk of or duration of placement in a more restrictive setting, including a psychiatric hospital, or similar facility. The provision of skills maintenance day program services is limited to individuals who, due to age or the nature of the mental illness, are unable to benefit from a more active skills-based training program. Services provided under this program have as their primary focus the maintenance of functional skills, symptom reduction, and the provision of assistance and training in activities of daily living. Professional or paraprofessional staff will be present at all times in order to meet individual needs, provide support, and ensure individual safety. (b) Service components include: (1) Nursing services. Care is provided by an RN or LVN to: (A) manage physical medical conditions; (B) coordinate treatment with the primary care physician and psychiatrist as necessary; and (C) administer medication. (2) Medication training and monitoring by a registered pharmacist, registered nurse, licensed vocational nurse, or other qualified and appropriately trained person working under appropriate supervision as provided under state law or within the scope of the person's license. Medication training includes, but is not limited to, information pertaining to the purpose of the medication, potential side-effects of the medication, contraindications, overdose precautions, and self administration of medication. (3) Skill maintenance programming. Services provided by professional or paraprofessional staff are aimed at utilizing existing functional skills in order to maintain those skills or slow their deterioration. These services include, but are not limited to, personal care skills, social integration skills, relaxation exercise skills and movement activities. (4) Services to increase community integration. This service focuses on the development of socially valued, age-appropriate activities aimed at providing life enriching experiences. These services include training to increase involvement in community activities and may involve visiting community focal points, and development of recreational interests. (c) Location. Day programs for skill maintenance may be offered either at freestanding sites in the community, within a 16-bed (or smaller) assisted living facility, or within facilities of 17 or more beds when persons receiving the services are 65 or more years of age and services are not otherwise Medicaid reimbursed. (d) Staffing ratios. Minimum staffing ratios for day programs for skill maintenance are as follows (Note: minimum requirements are not to be construed as absolutes. Based on consumer need, additional staffing as needed to ensure safety and adequacy of programming must be provided); (1) one RN or an LVN available during all hours of program operation with a response time not to exceed 30 minutes and who is not assigned full time to another day program; (2) additional staff must be present to maintain a ratio of one staff to five individuals during all hours of program operation; (3) one additional professional staff must be available with a response time not to exceed 30 minutes during all hours of program operation and who is not concurrently assigned full-time to another day program; and (4) a minimum of two staff must be on site at all times of program operation. (e) Supervision. Day programs for skill maintenance must be under the direction of a professional. (f) Plan of Care OversightAdults and Children. Face-to-face assessment and/or evaluation of the eligible individual, performed by a licensed practitioner of the healing arts, working under the auspices of the enrolled provider of Rehabilitative Services for Persons with Mental Illness and practicing within the scope of his/her license, for the purpose of determining the individual's continued need for and the appropriateness of the rehabilitative services prescribed in the individual's plan of care. The licensed practitioner of the healing arts will amend or approve the plan of care. The signature of the licensed practitioner of the healing arts on the plan of care is evidence of concurrence with and approval of the plan of care. This service is provided as medically necessary, but not less than once every 90 days. Arrangements for this service are limited to individual practitioners, professional associations, and institutions of higher learning. sec.409.360.Documentation Requirements. (a) Rehabilitative services for which Medicaid reimbursement is sought must be documented prior to submitting a claim for service at the following intervals: (1) community support servicesafter each direct contact; (2) day programming for acute needdaily; (3) day programming for skills training and day programming for skills maintenance: (A) daily for documentation elements in subsection (b)(1)-(5) of this section; (B) weekly for documentation elements in subsection (b)(6)-(7) of this section; and (C) at the time of occurrence for any pertinent clinical events. (4) plan of care oversightafter each direct contact (b) Documentation must include: (1) type of service provided; (2) date and actual time the service was provided; (3) amount of time spent in the delivery of the service; (4) who provided the service; (5) setting in which the service was provided; (6) goal or objective of the treatment plan addressed by the service; and (7) progress or lack of progress in achieving treatment goals/objectives. (c) Documentation of medical necessity is required for the provision of day programming for acute needs in excess of the 10-day limit specified in sec.409.357 (a) of this title (relating to Reimbursable Rehabilitative Service Definitions: Day Program Services for Acute Needs). Documentation for each extension beyond the initial ten days must include: (1) a description of the specific symptoms that indicate a need for continued day programming for acute needs; (2) the recommended number of days that programming be extended (not to exceed ten calendar days per authorization); (3) a statement that continued day programming for acute needs is medically necessary; and (4) the signature of the licensed practitioner of the healing arts making the determination of medical necessity for extension of the service. sec.409.361.Service Limitations. (a) Reimbursement is inclusive of all services provided within the day program. (b) Individual or small group services provided to an individual on the same day as day programming must not duplicate training or services that are offered within the day program or must be of an emergency nature, the need for which occurred outside the hours of the day program. Similar community support service contacts by staff not assigned to the day program with the primary care givers of minor children enrolled in day programs or with the legal guardians- of-the- person of adults enrolled in a day program may occur while the child or adult recipient of day program services is in the day program. (c) Emergency services may not be provided in a small group setting. (d) Reimbursement will not be provided for services in excess of: (1) six hours of individual services per person, per calendar day; (2) three hours of small group services per person, per calendar day, except in those areas where an enrolled provider, due to staffing shortages or low consumer demand, does not offer a particular category of day program services. In these areas, comparable services may be provided in a small group modality and the provider may receive reimbursement for up to six hours of small group services per person, per calendar day; and (3) six hours of day programming per person, per calendar day. (4) one unit of plan of care oversight per person, per calendar month. (e) Individuals must be present, awake, and participating during the time for which a claim is submitted. (f) Rehabilitative services provided in residential facilities must be conducted in a part of the facility that is separate and distinct from the recipient's sleeping quarters in that facility. (g) Small group services are limited to a maximum of eight individuals. (h) Services must be delivered in accordance with the applicable standards as described in Chapter 408, Subchapter B of this title, governing Mental Health Community Services Standards. (i) Staff providing day program services cannot provide individual or small group community support services during program hours. (j) Nursing services that are incidental to another Medicaid service, including an office visit with a physician, are not covered as rehabilitative services. (k) The provision of day program services for acute needs beyond the initial 10- day period must be authorized by a licensed practitioner of the healing arts working under the auspices of the enrolled provider of Rehabilitative Services for Persons with Mental Illness. Each extension is valid for up to ten calendar days. (l) Multiple day programs occurring at the same time, at a single facility must be separate and distinct both in staff and location. sec.409.362.Program Limitations. (a) Services are not reimbursable by Medicaid as rehabilitative services if they are duplicative or if they are associated with the proper and efficient administration of the state plan. Services associated with the following are not reimbursable: (1) Medicaid eligibility determinations and redetermination; (2) Medicaid eligibility intake processing; (3) Prior authorization for Medicaid services; (4) Medicaid preadmission screening; (5) Medicaid utilization review; (6) Early Periodic Screening, Diagnosis, and Treatment (EPSDT) administration; and (7) Medicaid "lock-in" provided for under sec.1915 (a) of the Social Security Act. (b) Specifically, reimbursement will not be made for the following: (1) services that are an integral and inseparable part of another Medicaid service; (2) outreach activities that are designed to locate individuals who are potentially Medicaid eligible; (3) any medical evaluation, examination, or treatment billable as a distinct Medicaid covered benefit except as otherwise specified in this subchapter; or (4) any rehabilitative services provided to an individual residing in a nursing facility, unless the individual has been determined by the Texas Department of Human Services, through a preadmission screening and annual resident review (PASARR) assessment, to require specialized services in a nursing facility. Documentation of the PASARR determination must be maintained with the individual's treatment plan. (c) In addition to the services described in subsection (a) and (b) of this section, rehabilitative services do not include the following: (1) room and board residential costs; (2) educational or vocational services; (3) services provided in inpatient hospital settings; (4) services to individuals with developmental disabilities that are non- psychiatric in nature; (5) services in excess of the established benefit limits; (6) services to inmates of a public institution (e.g., penal institutions) as defined in 42 CFR, sec.435.1009; (7) services to individuals under 65 years of age who are patients of an institution of mental diseases, as described in 42 CFR, sec.435.1009 (2), regardless of where the services are provided; and (8) services to individuals who are residents of ICF-MR facilities. sec.409.363. Provider Participation Requirements. To participate in the Texas Medical Assistance Program and receive state and federal reimbursements for services to eligible individuals, a provider agency which provides directly or under arrangement rehabilitative services for persons with mental illnesses must: (1) have an approved application on file with the department to participate as a provider of rehabilitative services for persons with mental illnesses in the Title XIX Texas Medical Assistance Program; (2) be certified by the department to provide rehabilitative services; (3) meet the following criteria: (A) meet the requirements of Chapter 408, Subchapter B of this title, governing Mental Health Community Services Standards; (B) be a community-based agency provided for under sec.534.054 of the Texas Health and Safety Code; (C) have a service delivery system that provides or insures the provision of the required services as outlined in sec.534.053 of the Texas Health and Safety Code and by the department; and (D) be in compliance with the Guidelines for Annual Financial and Compliance Audits of Community MHMR Centers and/or other state policies and procedures as determined by the state auditor and the TDMHMR Office of Internal Audit; (4) comply with all applicable federal, state, and local laws and regulations pertaining to rehabilitative services for persons with mental illnesses; (5) sign a written provider agreement with the department. By signing the agreement, the provider of rehabilitative services for persons with mental illnesses agrees to comply with the terms of the agreement and all regulations, rules, handbooks, standards, and guidelines published by the department; (6) bill for services covered by the Texas Medical Assistance Program in the manner and format prescribed by the department; (7) ensure that rehabilitative services are delivered through a system with written standards and procedures which ensure there is an overall coordination of rehabilitative services for eligible Medicaid recipients; (8) ensure that when services are provided under arrangement that the provider delivering those services under arrangement: (A) complies with all applicable federal, state, and local laws and regulations relating to rehabilitative services for persons with mental illnesses; (B) has in effect an agreement with the provider agency stipulating that the provider delivering services under arrangement complies with all requirements of the Texas Medical Assistance Program including regulations, rules, handbooks, standards, and guidelines; and (C) meets the requirements of Chapter 408, Subchapter B of this title, governing Mental Health Community Services Standards applicable for the service(s) being delivered; (9) retain the full responsibility for rehabilitative services whether delivered directly or under arrangement. sec.409.364.Rehabilitative Services Reimbursement Methodology. (a) General information. (1) The department will reimburse qualified providers for rehabilitative services provided to Medicaid-eligible persons with mental illness. (2) The Texas Mental Health and Mental Retardation Board determines reimbursement according to Chapter 409, Subchapter A of this title, governing General Reimbursement Methodology for all Medical Assistance Programs. The reimbursement is uniform and determined prospectively and at least annually. Reimbursement may be determined more often if the Texas Mental Health and Mental Retardation Board determines it to be necessary. (b) Reimbursement during initial reimbursement period. (1) For the initial reimbursement period beginning January 1, 1997 and until such time as the department determines that cost data collected as described in subsection (d) of this section are reliable, providers will be reimbursed utilizing estimated costs to determine pro forma rates. The pro forma rates will be developed based on the most recent salary data obtained from the Texas Medical Association and the National Survey of Hospital and Medical School Salaries. Salaries will be based on median salary rates and adjusted as appropriate for Texas-specific salaries. The Implicit Price Deflator for Personal Consumption Expenditures (IPD-PCE) will be used to inflate the 1994 salaries to the rate period. Rates are cost based using staffing requirements as specified in sec.409.356 of this title (relating to Reimbursable Rehabilitative Service Definitions: Community Support Services); sec.409.357 of this title (relating to Reimbursable Rehabilitative Service Definitions: Day Program Services for Acute Needs); sec.409.358 of this title (relating to Reimbursable Rehabilitative Service Definitions: Day Program Services for Skills Training); and sec.409.359 of this title (relating to Reimbursable Rehabilitative Service Definitions: Day Program Services for Skills Maintenance; Plan of Care Oversight - Adults and Children). (2) The department will collect cost data as described in subsection (d) of this section. (3) The department will calculate rates using the process described in subsection (e) of this section when reliable provider cost data becomes available. (c) Reimbursement during subsequent periods. At such time that reliable cost data become available the reimbursement will be developed via the department's cost report process as described in subsections (d) and (e) of this section. (d) Reporting of Costs. (1) Cost reporting. Providers must submit information quarterly, unless otherwise specified, on a cost report formatted according to the department's specifications. From the data, the department will develop and implement cost- based, statewide, uniform reimbursements for rehabilitative services. Providers must complete the cost report according to the rules and specifications set forth in this section. (2) Reporting period and due date. Provider agencies must prepare the cost report to reflect rehabilitative services provided during the designated cost report reporting period. The cost reports must be submitted to the department no later than 45 days following the end of the designated reporting period unless otherwise specified by the department. (3) Extension of the due date. The department may grant extensions of due dates for good cause. A good cause is one that the provider agency could not reasonably be expected to control. Provider agencies must submit requests for extensions in writing to the department before the cost report due date. The department will respond to requests within 10 workdays of receipt. (4) Failure to file an acceptable cost report. If a provider agency fails to file a cost report according to all applicable rules and instructions, the department may withhold all provider payments until the provider agency submits an acceptable cost report. (5) Allocation method. If allocations of cost are necessary, provider agencies must use and be able to document reasonable methods of allocation. The department adjusts allocated costs if the department considers the allocation method to be unreasonable. The provider agency must retain work papers supporting allocations for a period of three years or until all audit exceptions are resolved (whichever is longer). (6) Cost report certification. Provider agencies must certify the accuracy of cost reports submitted to the department in the format specified by the department. Provider agencies may be liable for civil and/or criminal penalties if they misrepresent or falsify information. (7) Cost data supplements. The department may require additional financial and statistical information other than the information contained on the cost report. (8) Review of cost reports. The department staff review each cost report to ensure that financial and statistical information submitted conforms to all applicable rules and instructions. The review of the cost report includes a desk audit. The department reviews all cost reports according to the criteria specified in sec.409.003 of this title (relating to Basic Objectives and Criteria for Desk Review of Cost Reports). If a provider agency fails to complete the cost report according to instructions or rules, the department returns the cost report to the provider agency for proper completion. The department may require information other than that contained in the cost report to substantiate reported information. (9) On-site audits. The department may perform on-site audits on all provider agencies that participate in the Medicaid program for rehabilitative services. The department determines the frequency and nature of such audits but ensures that they are not less than that required by federal regulations related to the administration of the program. (10) Notification of exclusions and adjustments. The department notifies providers of exclusions and adjustments to reported expenses made during desk reviews and on-site audits of cost reports as specified in sec.409.005 of this title (relating to Notification). (11) Access to records. Each provider agency must allow access to all records necessary to verify cost report information submitted to TDMHMR. Such records include those pertaining to related-party transactions and other business activities engaged in by the provider agency. If a provider agency does not allow inspection of pertinent records within 14 days following written notice from the department, a hold is placed on vendor payments until access to the records is allowed. If the provider agency continues to deny access to records, the department may terminate the provider agreement with the provider agency. (12) Record keeping requirements. Provider agencies must maintain service delivery records and eligibility determination for a period of five years or until any audit exceptions are resolved (whichever is later). Provider agencies must ensure that records are accurate and sufficiently detailed to support the financial and statistical information contained in cost reports. (13) Failure to maintain adequate records. If a provider agency fails to maintain adequate records to support the financial and statistical information reported in cost reports, the department allows 30 days for the provider to bring record keeping into compliance. If a provider agency fails to correct deficiencies within 30 days from the date of notification of the deficiency, the department may terminate the provider agreement with the provider agency. (e) Reimbursement determination. The department determines reimbursement in the following manner: (1) Inclusion of certain reported expenses. Provider agencies must ensure that all requested costs are included in the cost report. (2) Data collection. The department collects several different kinds of data. These include the number of units of rehabilitative services that individuals receive and the number of direct care service minutes by staff. The cost data will include direct costs, programmatic indirect costs, and general and administrative overhead costs. These costs include salaries, benefits, and other costs. Other costs include nonsalary related costs such as building and equipment maintenance, repair, depreciation, amortization, and insurance expenses; employee travel and training expenses; utilities; plus material and supply expenses. (A) Server time is reported by the type of service delivered. These services are specified in sec.409.356 of this title (relating to Reimbursable Rehabilitative Service Definitions: Community Support Services); sec.409.357 of this title (relating to Reimbursable Rehabilitative Service Definitions: Day Program Services for Acute Needs); sec.409.358 of this title (relating to Reimbursable Rehabilitative Service Definitions: Day Program Services for Skills Training); and sec.409.359 of this title (relating to Reimbursable Rehabilitative Service Definitions: Day Program Services for Skills Maintenance; Plan of Care OversightAdults and Children). (B) Server time can be given by professionals and paraprofessionals. These include, but are not necessarily limited to physicians, psychologists, nurses, social workers, counselors, therapists, therapy associates, and paraprofessionals. The department collects the wages, salaries, benefits, and other costs to determine reimbursement. (C) Programmatic indirect costs include salaries, benefits, and other costs of the rehabilitative service programs that are indirectly related to the delivery of rehabilitative services to individuals. General administrative overhead includes the salaries, benefits, and other costs of operations of the provider that, while not directly part of the rehabilitative program, constitute costs which support the operations of the rehabilitative program. (3) Reimbursement methodology. The department determines the recommended reimbursement using the following method: (A) Projected and adjusted costs. Reported costs are projected and adjusted prior to calculations for determining reimbursement. The department uses reasonable methods for projecting costs from the historical reporting period to the prospective reimbursement period. The historical reporting period is the time period covered by the cost report. Cost projections adjust the allowed historical costs for significant changes in cost related conditions anticipated to occur between the historical cost period and the prospective reimbursement period. Significant conditions include, but are not necessarily limited to, wage and price inflation or deflation, changes in program utilization and occupancy, modification of federal or state regulations and statutes, and implementation of federal or state court orders and settlement agreements. The department determines reasonable and appropriate economic adjusters, as specified in sec.409.004 of this title (relating to Determination of Inflation Indices), to calculate the projected expenses. The Implicit Price Deflator for Personal Consumption Expenditures (IPD-PCE), which is based on data from the U.S. Department of Commerce, is the most general measure of inflation and is applied to most salaries, materials, supplies, and services when other specific inflators are not appropriate. The three payroll tax inflators, FICA (Social Security), FUTA/SUTA (federal and state unemployment), and WCI (Workers' Compensation) are based on data obtained from the Statistical Abstract of the United States, the Texas Employment Commission, and the Texas Board of Insurance, respectively. For non- state operated providers, wage inflation factors are based on wage and hour survey information submitted on cost reports or special surveys or the IPD-PCE, when wage and hour survey information is unavailable. For state-operated providers, the inflation factor is based on wage increases approved by the Texas Legislature. The department adjusts reimbursement if new legislation, regulations, or economic factors affect costs, as specified in sec.409.006 of this title (relating to Adjusting Rates when New Legislation, Regulations, or Economic Factors Affect Costs). (B) Reimbursement determination. For each type of rehabilitative service each provider's projected cost per unit of service is calculated. The mean provider cost per unit of service is calculated, and the statistical outliers (those providers whose unit costs exceed plus or minus () two standard deviations of the mean provider cost) are removed. After removal of the statistical outliers, the mean cost per unit of service is calculated. This mean cost per unit of service becomes the recommended reimbursement per unit of service. (C) Reimbursement setting authority. The Texas Mental Health and Mental Retardation Board establishes the reimbursement in an open meeting after consideration of financial and statistical information and public testimony. The board sets reimbursements that, in its opinion, are within budgetary constraints, adequate to reimburse the cost of operations for an economic and efficient provider, and justifiable given current economic conditions. (D) Reviews of cost report disallowances. A provider agency may request notification of the exclusions and adjustments to reported expenses made during either desk reviews or on-site audits, according to sec.409.005 of this title (relating to Notification). Providers may request an informal review and, if necessary, an administrative hearing to dispute the action taken by the department under sec.409.007 of this title (relating to Reviews and Administrative Hearings). (E) Requirements for allowable costs. Allowable costs must be: (i) necessary and reasonable for the proper and efficient administration of rehabilitative services for which TDMHMR has contracted; (ii) authorized or not prohibited under state or local laws or regulations; (iii) consistent with any limitations or exclusions described in this section, federal or state laws, or other governing limitations as to types or amounts of cost items; (iv) consistent with policies, regulations, and procedures that apply to both rehabilitative services and other activities of the organization of which the contracted provider agency is a part; (v) treated consistently using generally accepted accounting principles appropriate to the circumstances; (vi) not allowable to or included as a cost of any other program in either the current or a prior period; and (vii) net of all applicable credits. (F) Reasonableness. A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by an ordinarily prudent person in the conduct of competitive business. In determining the reasonableness of a given cost, the department considers the following: (i) whether the cost is of a type generally recognized as ordinary and necessary for the provision of rehabilitative services or the performance under the contract; (ii) the restraints or requirements imposed by generally accepted sound business practices, arm's length bargaining, federal and state laws and regulations, and contract terms and specifications; and (iii) the action that a prudent person would take in the circumstances, considering his/her responsibilities to the public, the government, employees, clients, shareholders, and/or members, and the fulfillment of the purpose for which the business was organized. (G) Allowable costs. Costs associated with rehabilitative services for persons with mental illness for which a claim is submitted must be found to be allowable as described in federal Circular OMB-A87, with the following exceptions: (i) Equipment is defined as having a useful life of more than one year and a value of $2500 or more. (ii) Legal expense to prosecute claims against the state of Texas or the United States are unallowable. sec.409.365.Right to Appeal. Applicants have the right to appeal the department's decisions as described in sec.409.007 of this title (relating to Reviews and Administrative Hearings). Requests for hearings should be submitted to the department. 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. Issued in Austin, Texas, on 5, 1996. TRD-9612940 Ann Utley Chairman Texas Board of Mental Health and Mental Retardation Effective date: January 1, 1996 Proposal publication date: June 7, 1996 For further information, please call: (512) 206-4516 TITLE 34. PUBLIC FINANCE PART IV. Employees Retirement System CHAPTER 73.Benefits 34 TAC sec.73.39 The Employees Retirement System of Texas, adopts new sec.73.39, concerning a 12 1/2% annuity increase for retirees pursuant to sec.32, Senate Bill 1231, 74th Legislature, without changes to the proposed text as published in the June 18, 1996, issue of the Texas Register (21 TexReg 5551). This new section provides a 12 1/2% annuity increase for retirees with service credited in the employee class of membership and whose retirement occurred after August 31, 1995 and before September 1, 1996. This new section will enable state employees who have retired during the applicable time period to receive annuity increases which shall apply to the first payment payable after the first anniversary of the effective date of the retirement. No comments were received regarding adoption of the new section. The new section is adopted under Government Code sec.815.102 which provides the Employees Retirement System of Texas the authority to promulgate 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. Issued in Austin, Texas, on September 5, 1996. TRD-9612907 James A. Adkins Acting Executive Director Employees Retirement System Effective date: September 26, 1996 Proposal publication date: June 18, 1996 For further information, please call: (512) 867-3336 TITLE 40. SOCIAL SERVICES AND ASSISTANCE PART I. Texas Department of Human Services CHAPTER 48.Community Care fore Aged and Disabled In-Home and Family Support Program 40 TAC sec.48.2703 The Texas Department of Human Services (DHS) adopts an amendment to sec.48.2703, without changes to the proposed text as published in the August 6, 1996, issue of the Texas Register (21 TexReg 7364). The justification for the amendment is to revise the In-Home and Family Support Program copayment schedule based on updated state median income figures compiled by the United States Department of Health and Human Services. The amendment will function by providing public access to the new copayment schedule. No comments were received regarding adoption of the amendment. The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 and 35, which provides the department with the authority to administer public assistance and support services for persons with disabilities programs. The amendment implements sec.sec.22.001-22.030 and sec.sec.35.001-35.012 of the Human Resources Code. 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. Issued in Austin, Texas, on 6, 1996. TRD-9613036 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: October 1, 1996 Proposal publication date: August 6, 1996 For further information, please call: (512) 438-3765 TITLE 43. TRANSPORTATION PART I. Texas Department of Transportation CHAPTER 1.Management SUBCHAPTER F.Advisory Committees 43 TAC sec.1.85 The Texas Department of Transportation adopts an amendment to sec.1.85, concerning department advisory committees without changes to the text as published in the June 28, 1996, issue of the Texas Register (21 TexReg 5954). Transportation Code, sec.203.002 authorizes the commission to lay out, construct, maintain, and operate a modern state highway system. Transportation Code, Chapter 223 requires the department to submit for competitive bids each contract for the improvement of a highway that is part of the state highway system, or materials to be used in the construction or maintenance of that highway. Transportation Code, sec.223.007 provides that the commission shall prescribe the form of a highway improvement contract. The department's preliminary internal assessment of the state's transportation needs for 1997-2006 has revealed that current funding levels will result in substantial deterioration of the state highway system's pavement quality, bridges, and urban mobility. The Texas Sunset Advisory Commission's 1996 Staff Report on the department identified a funding crisis for highway system improvements that endangers the department's ability to address its responsibilities under Transportation Code, Section 203.002. Paragraph 18 of sec.1.85 creates the Transportation Systems Efficiency Advisory Committee which will provide a mechanism for the department and the commission to solicit input from the private sector in identifying innovative methods to reduce department costs in the construction and maintenance of the state highway system, thereby providing some relief to the funding crisis. A comment deadline of July 31, 1996, was published and no comments were received. The amendment is adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation, and more specifically Texas Civil Statutes, Article 6252-33, which provides that a state agency that is advised by an advisory committee shall adopt rules that state the purpose of the committee and describe the task of the committee and the manner in which the committee will report to the agency. 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. Issued in Austin, Texas, on September 5, 1996. TRD-9612978 Bob Jackson Deputy General Counsel Texas Department of Transportation Effective date: September 26, 1996 Proposal publication date: June 28, 1996 For further information, please call: (512) 463-8630 SUBCHAPTER G.Access to Official Records 43 TAC sec.sec.1.500-1.503 The Texas Department of Transportation adopts the repeal of sec.sec.1.500-1.503, concerning access to official records without changes to the proposed text as published in the June 28, 1996, issue of the Texas Register (21 TexReg 5954). These sections are no longer necessary due to the simultaneous adoption of the re-enacted subject matter in Chapter 3, Public Information, as new sec.sec.3.10- 3.14, concerning access to official records, in an amended form. On July 23, 1996, a public hearing was held to receive comments, views, or testimony regarding the proposed amendments. No oral or written comments were received. The repeal is adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation, and Government Code, sec.552.2611 which requires each agency by rule to specify the charges the agency will make for copies of public records. 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. Issued in Austin, Texas, on September 5, 1996. TRD-9612981 Bob Jackson Deputy General Counsel Texas Department of Transportation Effective date: September 26, 1996 Proposal publication date: June 28, 1996 For further information, please call: (512) 463-8630 CHAPTER 3.Finance Division 43 TAC sec.3.3 The Texas Department of Transportation adopts the repeal of sec.3.3, concerning county participation trust and suspension fund number 927 without changes to the proposed text as published in the June 11, 1996, issue of the Texas Register (21 TexReg 5256). This section is no longer necessary due to the contemporaneous adoption of the re-enacted subject matter in Chapter 15, Transportation Planning and Programming, as new sec.sec.15.52-15.56 concerning federal, state and local participation, in an amended form. On June 24, 1996, the department conducted a public hearing on the proposed repeal and no comments were received. The repeal is adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation. 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. Issued in Austin, Texas, on September 5, 1996. TRD-9612974 Bob Jackson Deputy General Counsel Texas Department of Transportation Effective date: September 26, 1996 Proposal publication date: June 11, 1996 For further information, please call: (512) 463-8630 CHAPTER 3.Public Information SUBCHAPTER B.Access to Official Records 43 TAC sec.sec.3.10-3.14 The Texas Department of Transportation adopts new sec.sec.3.10-3.14, concerning access to official records. Section 3.12 is adopted with changes, to the proposed text as published in the June 28, 1996, issue of the Texas Register (21 TexReg 5954). Sections 3.10, 3.11, 3.13, and 3.14 are adopted without changes and will not be republished. Transportation Code, sec.201.501 authorizes the department to furnish certified copies of records. Transportation Code, sec.502.008 requires release of vehicle registration Information to governmental agencies. Government Code, sec.552.2511 requires each agency by rule to specify the charges the agency will make for copies of public records. Adoption of new sec.sec.3.10-3.14 is necessary to re-enact the subject matter with changes of sec.sec.1.500-1.503, concerning access to official records and sec.17.26 concerning public access to vehicle registration records which are being contemporaneously repealed. Section 3.10 establishes the department's policy to facilitate and maximize public access to public information. Section 3.11 defines terms applicable to this undesignated head. Section 3.12 provides a procedure for requesting, producing, and examining records. This section also provides that if the department considers it is not required to produce the requested records, the department will ask for a decision from the attorney general as to production. The department will not provide records considered to be confidential, copies of information subject to intellectual property protection, access to social security numbers contained in the department's records. Upon receipt of a court order the department will block access to information pertaining to a specific motor vehicle record. A legislative member, agency, or committee may request confidential information if the public information requested is for legislative purposes and the department may require a confidentiality agreement. This section also establishes a list of officials who may certify records; and provides that the department will provide a written statement to the requestor if the information will require programming, the request is not feasible, or will result in substantial interference with the department's operations. If the requestor still requires the information, the department will provide it according to the cost and time parameters set out in the statement. Section 3.13 provides a list of charges for copies and related services, personnel, and overhead; establishes a time of payment; and authorizes the department to waive or reduce fees. Section 3.14 provides that general, travel-related, and transportation-related information will be available via the Internet. Public information requests will not be accepted via Internet. It also provides for the department to make files of motor vehicle registration, title, and vehicle ownership information available electronically through agreements and for electronic access by other state and federal agencies. On July 23, 1996, a public hearing was held to receive comments, views, or testimony regarding the proposed new sections. No oral or written comments were received. Paragraph (3) has been added to sec.3.12(a). The text of the paragraph corresponds to the contents of repealed sec.17.26 subsections (c) and (d) which incorporated the requirements of Transportation Code, sec.502.008. This portion of sec.17.26 was inadvertently omitted when the subject matter was incorporated into new sec.sec.3.10-3.14. New paragraph (3) provides who may obtain vehicle registration information by vehicle identification number and license number and how to request the information. The mandate of House Bill 1863, 74th Legislature, 1995, which amended Transportation Code, sec.502.008 also has been added to new paragraph (3). The addition provides that the department will furnish vehicle registration information by license number by telephone to a state agency for the purpose of determining eligibility for a state supported assistance program. The new sections are adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation, Government Code, sec.552.2611 which requires each agency by rule to specify the charges the agency will make for copies of public records, and Transportation Code, sec.502.008 requires release of vehicle registration information to governmental agencies. sec.3.12.Public Access. (a) Request for records. (1) Submittal of request. A person seeking public information shall submit a request in writing to the department. A request should be submitted to: (A) the department's Director of Public Information; or (B) the district engineer or division director for the district or division of the department responsible for the information. (2) Information required. A request for official records shall include the name, address, and telephone number of the requestor, and a description of the records in sufficient detail to permit efficient gathering of the requested items. (3) Vehicle title and registration information. (A) The department will furnish vehicle registration information by vehicle identification number. The department will not furnish vehicle registration information by license number by telephone, unless requested: (i) by a peace officer acting in an official capacity; (ii) by an official of the state, city, town, county, special district, or other political subdivision, utilizing the obtained information for tax purposes or for the purpose of determining eligibility for a state public assistance program. (B) The department will release vehicle registration information by license number upon receipt of a written request. Each request shall be accompanied by payment of the applicable fee in the form of cash, cashier's check, or money order, and shall include the following: (i) the name and address of requestor; (ii) the Texas license number; (iii) a statement that the use of the information is for a lawful and legitimate purpose; and (iv) the applicable fee. (b) Production of records. Except as provided in subsections (d) and (e) of this section, the department will provide copies or promptly produce official department records for inspection, duplication, or both. If the requested information is unavailable for inspection at the time of the request because it is in active use or otherwise not readily available, the department will certify this fact in writing within ten calendar days after the date the information is requested to the applicant and specify a date and hour within a reasonable time when the record will be available for inspection or duplication. (c) Examination of information. (1) A person requesting to examine official records in the offices of the department must complete the examination without disrupting the normal operations of the department and not later than the 10th day after the date the records are made available to the person. Upon written request, the department will extend the examination period by increments of ten days, not to exceed a total of 30 days. (2) The inspection of records may be interrupted by the department if the records are needed for use by the department. The period of interruption will not be charged against the requestor's ten-day period to examine the records. (3) A person may not remove an original copy of an official department record from the offices of the department. (d) Request for opinion. If the department considers that requested records fall within an exception under the Code, and that the records should be withheld, by the 10th calendar date after the date of receiving the written request, the department will ask for a decision from the attorney general about whether the records are within that exception if there has not been a previous determination about whether the records fall within one of the exceptions. (e) Confidential information and privacy protection. (1) The department will not provide records considered to be confidential by law or otherwise prohibited from release under the Code or other provisions of law, and will not provide copies of information subject to intellectual property protection. (A) The department will not provide access to social security numbers contained in the department's records except to governmental entities that demonstrate authority to obtain the information. (B) Upon receipt of a court order to prevent release of information, the department will prevent access to all information pertaining to an individual's specific motor vehicle record. (2) A legislative member, agency, or committee may request confidential information if the public information requested is for legislative purposes. The department may require the requesting legislative agency or committee, or the member or employee of the requesting entity to sign a confidentiality agreement that requires the following: (A) the information shall not be disclosed outside the requesting entity, or within the requesting entity for purposes other than the purpose for which it was received; (B) the information shall be labeled confidential; (C) the information shall be kept securely; and (D) the number of copies of the information or the notes taken from the information that are not destroyed or returned to the department remain confidential and subject to the confidentiality agreement. (f) Certified records. In accordance with Transportation Code, sec.201.501, the following officials shall serve as the executive director's authorized representatives for the purpose of certifying official department records. (1) The Department's chief minute clerk may certify commission minute orders. In his or her absence, minute orders may be certified by the executive assistant to the executive director. The executive director may delegate certification authority to other officials to assure sufficient availability of authorized certifying officials. (2) Other official records of the department may be certified by the district engineer, division director, or other department officials having official custody of the records. A district engineer or division director may delegate certification authority to other officials to assure sufficient availability of authorized certifying officials. (g) Programming and manipulation of data. (1) If responding to a request for information will require programming or manipulation of data and compliance with the request is not feasible or will result in substantial interference with the department's ongoing operations, or the information could be made available in the requested form only at a cost that covers the programming and manipulation of data, then the department will provide a written statement within 20 days after the date of the receipt of the request. The statement will include: (A) the information is not available in the requested form; (B) a description of the form in which the information is available; (C) a description of any contract or services that would be required to provide the information in the requested form; (D) a statement of the estimated cost of providing the information; and (E) a statement of the anticipated time required to provide the information. (2) If the department gives written notice within 20 days after the date of receipt of the request to the person making the request that additional time is needed, the department may have an additional ten days to issue the statement in paragraph (1) of this subsection. (3) The department will not provide the information until the person making the request states in writing that he or she: (A) wants the department to provide the information according to the cost and time parameters set out in the statement; or (B) wants the information in the form in which it is available. 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. Issued in Austin, Texas, on September 5, 1996. TRD-9612979 Bob Jackson Deputy General Counsel Texas Department of Transportation Effective date: September 26, 1996 Proposal publication date: June 28, 1996 For further information, please call: (512) 463-8630 CHAPTER 15.Transportation Planning and Programming SUBCHAPTER E.Federal, State, and Local Participation 43 TAC sec.15.50, sec.15.51 The Texas Department of Transportation adopts amendments to sec.15.50 and sec.15.51, and new sec.sec.15.52-15.56, concerning federal, state and local participation without changes to the proposed text as published in the June 11, 1996, issue of the Texas Register (21 TexReg 5257). These amended and new sections are necessary to update and clarify the applicable rules to carry out the provisions of state and federal laws and regulations pertaining to funding of construction projects and to update and clarify participation ratios of governmental units in the development of construction projects to be used as the basis of agreement between the department and the local government. Section 15.50 is amended to describe federal, state, and local responsibilities for cost participation in highway improvement projects. Section 15.51 is amended to supplement and clarify definitions. New sec.15.52 specifies the requirement of an agreement between the department and the local government when the local government is responsible for providing funds for a proposed project. New sec.15.53 defines the responsibilities of local governments for preliminary engineering and construction engineering expenses associated with the development of construction projects and establishes the amount of the state, local, and federal participation in preliminary and construction engineering expenses. New sec.15.54 describes the conditions under which state, federal, and local financing of transportation project construction costs are to be shared in a construction project and establishes the amount of the state, local, and federal participation in construction expenses; specifies that the local government shall be responsible for the total cost of work included which is ineligible for federal or state participation; specifies the requirement of an agreement with the local government outlining construction responsibilities; establishes the criteria for the department to provide for sidewalk construction on the designated state highway system; establishes the criteria for construction of frontage roads and the construction costs responsibilities; and describes the responsibilities of the department and local government in the construction of a drainage system within the state highway right-of-way and their respective costs responsibilities. New sec.15.55 specifies the federal, state and local cost participation ratios for the various types of projects in the form of a chart. New sec.15.56 describes the method by which a local government can finance a project on the state highway system and request reimbursement. On June 24, 1996, the department conducted a public hearing on the proposed amendments and new sections and no comments were received. The amendments and new sections are adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation. 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. Issued in Austin, Texas, on September 5, 1996. TRD-9612976 Bob Jackson Deputy General Counsel Texas Department of Transportation Effective date: September 26, 1996 Proposal publication date: June 11, 1996 For further information, please call: (512) 463-8630 43 TAC sec.sec.15.52-15.54 The Texas Department of Transportation adopts the repeal of sec.sec.15.52-15.54, concerning federal, state and local participation without changes to the proposed text as published in the June 11, 1996, issue of the Texas Register (21 TexReg 5259). These sections are no longer necessary due to the contemporaneous adoption of the re-enacted subject matter in Chapter 15, Transportation Planning and Programming, as new sec.sec.15.52-15.56 concerning federal, state and local participation, in an amended form. On June 24, 1996, the department conducted a public hearing on the proposed repeal and no comments were received. The repeals are adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation. 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. Issued in Austin, Texas, on September 5, 1996. TRD-9612975 Bob Jackson Deputy General Counsel Texas Department of Transportation Effective date: September 26, 1996 Proposal publication date: June 11, 1996 For further information, please call: (512) 463-8630 43 TAC sec.sec.15.52-15.56 The Texas Department of Transportation adopts amendments to sec.sec.15.50-15.51, and new sec.sec.15.52-15.56, concerning federal, state and local participation without changes to the proposed text as published in the June 11, 1996, issue of the Texas Register (21 TexReg 5257). These amended and new sections are necessary to update and clarify the applicable rules to carry out the provisions of state and federal laws and regulations pertaining to funding of construction projects and to update and clarify participation ratios of governmental units in the development of construction projects to be used as the basis of agreement between the department and the local government. Section 15.50 is amended to describe federal, state, and local responsibilities for cost participation in highway improvement projects. Section 15.51 is amended to supplement and clarify definitions. New sec.15.52 specifies the requirement of an agreement between the department and the local government when the local government is responsible for providing funds for a proposed project. New sec.15.53 defines the responsibilities of local governments for preliminary engineering and construction engineering expenses associated with the development of construction projects and establishes the amount of the state, local, and federal participation in preliminary and construction engineering expenses. New sec.15.54 describes the conditions under which state, federal, and local financing of transportation project construction costs are to be shared in a construction project and establishes the amount of the state, local, and federal participation in construction expenses; specifies that the local government shall be responsible for the total cost of work included which is ineligible for federal or state participation; specifies the requirement of an agreement with the local government outlining construction responsibilities; establishes the criteria for the department to provide for sidewalk construction on the designated state highway system; establishes the criteria for construction of frontage roads and the construction costs responsibilities; and describes the responsibilities of the department and local government in the construction of a drainage system within the state highway right-of-way and their respective costs responsibilities. New sec.15.55 specifies the federal, state and local cost participation ratios for the various types of projects in the form of a chart. New sec.15.56 describes the method by which a local government can finance a project on the state highway system and request reimbursement. On June 24, 1996, the department conducted a public hearing on the proposed amendments and new sections and no comments were received. The amendments and new sections are adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation. 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. Issued in Austin, Texas, on September 5, 1996. TRD-9612977 Bob Jackson Deputy General Counsel Texas Department of Transportation Effective date: September 26, 1996 Proposal publication date: June 11, 1996 For further information, please call: (512) 463-8630 CHAPTER 17.Vehicle Titles and Registration SUBCHAPTER A.Motor Vehicle Certificates of Title 43 TAC sec.17.8 The Texas Department of Transportation adopts an amendment to sec.17.8, concerning certificates of title for salvage vehicles, with changes to the text as published in the June 28, 1996, issue of the Texas Register (21 TexReg 5958). The amended section is necessary to ensure the department's proper administration of the laws concerning the issuance of salvage vehicle certificates of title. Texas Civil Statutes, Article 6687-1, sec.37A, requires the department to develop and implement policies regarding the issuance of motor vehicle certificates of title for salvage and nonrepairable motor vehicles. Amended sec.17.8 is revised to provide an exemption from the inspection by the Department of Public Safety for vehicles for which the evidence of ownership is a Texas Salvage Certificate or Salvage Certificate or Salvage Certificate of Title issued by another state or jurisdiction prior to March 1, 1996. The amendments also clarify which supporting documents are required with an application for certificate of title for a rebuilt salvage vehicle when the evidence of motor vehicle ownership is a Salvage Certificate or Salvage Certificate of Title issued by another state or jurisdiction on or after March 1, 1996. On July 15, 1996, a public hearing was held to receive comments, views, or testimony regarding the proposed amendments. Insurance Auto Auctions presented oral and written comments. Farmers Insurance Group submitted written comments and expressed their support of the written comments presented by Insurance Auto Auctions. Regarding sec.17.8, Certificates of Title for Salvage Vehicles, Insurance Auto Auctions commented that the procedure for obtaining a Texas Certificate of Title for a rebuilt vehicle with a Texas Salvage Certificate is confusing due to the proposed amendment to sec.17.8(b)(2) which eliminated a Texas Salvage Certificate as a form of evidence of vehicle ownership on a rebuilt salvage. The commenter suggested that the option of using a Texas Salvage Certificate be reinstated in subsection (b)(2). Farmers Insurance Group commented that the elimination of Texas Salvage Certificate as a form of evidence of ownership from subsection (b)(2) is unnecessary and unjustifiable as a Texas Salvage Certificate is a valid ownership document for a motor vehicle in Texas. Texas Salvage Certificate was removed because as originally proposed sec.17.8(b)(2) addressed evidence of ownership for rebuilt salvage vehicles which required certification of the vehicle identification numbers, as well as compliance with applicable safety standards, by the Texas Department of Public Safety. An application for certificate of title for a vehicle with a Texas Salvage Certificate does not require such certification from the Texas Department of Public Safety when rebuilt and so Texas Salvage Certificate was removed from that section. The department now realizes that the need exists to address both the evidence of ownership for rebuilt salvage which may or may not require the Texas Department of Public Safety Certificate of Inspection. The department has modified proposed subsection (a)(1)(C) and (a)(3)(B)(vi) to clarify the types of evidence that are required as evidence of ownership for rebuilt salvage which must meet the Texas Department of Public Safety certification requirements. With this clarification of evidence of ownership for new or late model rebuilt salvage vehicles added to subsections (a)(1)(C) and (a)(3)(B)(iv), the exception of Texas Salvage Certificates is no longer necessary in subsection (b)(2) and has been reinstated under sec.17.8(b)(2)(D). In addition, subsection (b)(2)(E) has been added to clarify that evidence of ownership on a rebuilt salvage may also include a comparable Salvage Certificate or Salvage Certificate of Title issued prior to March 1, 1996, by another state or jurisdiction. Insurance Auto Actions suggested that the definition of "Rebuilt Vehicle" in sec.17.2 be amended to clarify that it includes vehicles with Texas salvage certificates or comparable ownership documents issued by other jurisdictions. The department has not proposed a change to sec.17.2, so it cannot consider amending sec.17.2 on final adoption. However, changes have been made to sec.17.8 to clarify the types of vehicles which may be rebuilt and the documents required to accompany an application for certificate of title for a rebuilt salvage. Regarding the proposed amendments to sec.17.8 (b)(2)(C), which identifies what documents will be accepted as evidence of ownership for rebuilt salvage, Insurance Auto Auctions suggested that the use of a term other than "Salvage Certificate" or "Salvage Certificate of Title" on an ownership document issued by another state or jurisdiction may cause improper rejection of such ownership documents. The department has reviewed this subsection and has determined that use of the word "comparable" before the use of these terms encompasses other such ownership documents which may not be named "Salvage Certificate" or "Salvage Certificate of Title" and would prevent improper rejection. However, subparagraphs (C) and (E) have been amended to clarify that an ownership document issued by another state or jurisdiction which indicates the vehicle may not be rebuilt will not be accepted as evidence of ownership for a rebuilt salvage. Regarding sec.17.8(a)(2)(A)(ix), Information to be included on application, Insurance Auto Auctions suggested the addition of the term "adjusted" in order to clarify that it is the "adjusted" cost of repair parts and labor, which will determine the status of the vehicle, as opposed to the estimated cost of repair parts and labor. Farmers Insurance Group also requested the addition of "adjusted" to subsection (a)(2)(A)(ix). The department agrees with the suggested addition of the term "adjusted" to clause (ix) and has added language to further clarify the method for determining the adjusted estimated cost of repairs. Regarding sec.17.62(b)(10), Exemptions, Insurance Auto Auctions has questioned whether "a location approved by the department as provided by this section" includes each "licensed salvage vehicle dealer's business location which has been approved by the department," as provided for in proposed section sec.17.63(c). The department has amended subsection (b)(10) to be consistent with the proposed amendments to sec.17.63(c), regarding off-site sales, and to clarify that such auction may be conducted at a location approved by the department as provided by sec.17.63(a)(1). Regarding sec.17.64(b)(12), Suspension or revocation, Insurance Auto Auctions suggested that it also be amended to be consistent with the proposed amendments to sec.17.63(c), regarding off-site sales. The department agrees with the suggested change and has amended subsection (b)(12). A citation correction has been made in sec.17.64(b)(1). The amendment is adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation, and more specifically Texas Civil Statutes, Article 6687-1a, which authorizes the department to adopt rules to administer the licensing of salvage vehicle dealers and agents. sec.17.8.Certificates of Title for Salvage Vehicles. (a) Certificate of title applications for salvage vehicles. (1) Place of application. (A) When ownership of a new or late model salvage motor vehicle or nonrepairable motor vehicle, which has not been issued a salvage motor vehicle certificate of title, a nonrepairable motor vehicle certificate of title, or a comparable ownership document issued by another state or jurisdiction is transferred, and the vehicle will not be dismantled, scrapped, or destroyed, the person who acquires ownership must submit a salvage or nonrepairable motor vehicle certificate of title application to the department along with the applicable fee within ten days of receiving the title document which transfers ownership. (B) A person who acquires ownership of a motor vehicle other than a new or late model salvage motor vehicle or a nonrepairable motor vehicle may voluntarily submit a salvage or nonrepairable motor vehicle certificate of title application to the department along with the applicable fee for issuance of a salvage or nonrepairable motor vehicle certificate of title. (C) When a new or late model salvage or nonrepairable motor vehicle has been rebuilt and the vehicle's and parts' identification numbers, as well as compliance with state safety standards, have been certified to by a specially trained commissioned officer of the Texas Department of Public Safety, the owner shall file a certificate of title application with the county tax assessor- collector in the county in which the applicant resides, or the county in which the motor vehicle was purchased or encumbered supported by the evidence required by subsection (b)(2) (A), (B), or (C) of this section. (2) Information to be included on application. (A) An applicant for a salvage or nonrepairable motor vehicle certificate of title shall submit an application on a form prescribed by the department. The form, in addition to any other information required by the department, shall at a minimum include: (i) the name and current address of the owner; (ii) a description of the vehicle, including, the motor vehicle's model year, make, model, identification number, body style, manufacturer's rated carrying capacity in tons for commercial motor vehicles, and empty weight; (iii) a description of the damage to the vehicle; (iv) the predamaged actual cash value of the vehicle; (v) odometer reading and brand, or the word "exempt" if the motor vehicle is exempt from federal and state odometer disclosure requirements; (vi) previous owner's name and city and state of residence; (vii) name and mailing address of any lienholder and the date of lien (applicable only in instances of salvage motor vehicle certificate of title issuance); (viii) the signature of the applicant or the applicant's authorized agent and the date the certificate of title application was signed; and (ix) the adjusted estimated cost of repair parts and labor (for the purpose of this section, the estimated cost of repair parts shall be determined by using a manual of repair costs or other instrument that is generally recognized and commonly used in the motor vehicle insurance industry to determine those costs or an estimate of the actual cost of the repair parts and the estimated labor costs shall be computed by using the hourly rate and time allocations that are reasonable and commonly assessed in the repair industry in the community in which the repairs are performed. The adjusted estimated cost of repairs is equal to the estimated cost of repairs, less any applicable deductions as defined in sec.17.2 of this title (relating to Definitions), for "late model salvage vehicle" or "nonrepairable motor vehicle"). (B) An applicant for a certificate of title involving a transaction for a rebuilt salvage motor vehicle shall submit an application on a form prescribed by the department, and shall present such to the tax assessor-collector in the county in which the applicant resides, or the county in which the motor vehicle was purchased or encumbered. The form, in addition to any other information required by the department, shall at a minimum require or include in the transaction: (i) the name and current address of the owner; (ii) a description of the vehicle, which includes, but is not limited to, the motor vehicle's model year, make, model, identification number, body style, manufacturer's rated carrying capacity in tons for commercial motor vehicles, and empty weight; (iii) description of each major component part used to repair the vehicle and shows the identification number required by federal law to be affixed to or inscribed on the part; (iv) the description or disclosure of the vehicle's former condition in a manner that is understandable to a potential purchaser of the vehicle; (v) license plate number, if the motor vehicle is subject to registration under Transportation Code, Chapter 501; (vi) odometer reading and brand, or the word "exempt" if the motor vehicle is exempt from federal and state odometer disclosure requirements; (vii) previous owner's name and city and state of residence; (viii) name and mailing address of any lienholder and the date of lien, if applicable; (ix) signature of the seller of the motor vehicle or the seller's authorized agent and the date the certificate of title application was signed; and (x) the signature of the applicant or the applicant's authorized agent and the date the certificate of title application was signed. (3) Accompanying documentation. (A) The salvage and nonrepairable motor vehicle certificate of title applications shall be supported by, at a minimum, the following documents: (i) evidence of vehicle ownership, as described in subsection (b)(1) of this section; (ii) odometer disclosure statement properly executed by the seller of the motor vehicle and acknowledged by the purchaser, if applicable; and (iii) release of any liens. (B) The application for certificate of title for a transaction involving a rebuilt salvage shall be supported by, at a minimum, the following documents: (i) evidence of vehicle ownership, as described in subsection (b)(2) of this section; (ii) odometer disclosure statement properly executed by the seller of the motor vehicle and acknowledged by the purchaser, if applicable; (iii) proof of financial responsibility in the title applicant's name, as required by Transportation Code, sec.502.153; (iv) the identification certificate required by Transportation Code, sec.548.256, and Transportation Code, sec.501.030, if the vehicle was last registered in another state or country; (v) release of any liens or, if not released, an out-of-state lien (recorded on out-of-state evidence as described in subsection (b)(2) of this section) cannot be carried forward to a Texas title involving a rebuilt salvage when there is a transfer of ownership, unless a release of lien or authorization from the lienholder is attached. (A lien is not required to be released when there is no transfer of ownership from an out-of-state title and the same lienholder is being recorded on the Texas application as is recorded on the out-of-state title); and (vi) a written statement signed by a specially trained commissioned officer of the Texas Department of Public Safety certifying to the department that the vehicle identification numbers and parts identification numbers are accurate, the applicant has proof that the applicant owns the parts used to repair the vehicle, the vehicle may be safely operated, and the vehicle complies with all applicable motor vehicle safety standards of this state (Texas Salvage Certificates or comparable Salvage Certificates or Salvage Certificates of Title issued by another state or jurisdiction prior to March 1, 1996, are exempt from this requirement. However, if the supporting evidence of ownership is one of these documents, an affidavit for rebuilt motor vehicle, as prescribed by the department, must be submitted with the application for certificate of title, and the rebuilt salvage vehicle must comply with all applicable motor vehicle safety standards of this state). (b) Evidence of salvage motor vehicle ownership. (1) Evidence of salvage motor vehicle ownership properly assigned to the applicant shall accompany the salvage or nonrepairable motor vehicle certificate of title application. Evidence shall include, but is not limited, to the following documents: (A) an Original Texas Certificate of Title; (B) a Certified Texas Certificate of Title; (C) a Texas Salvage Certificate; or (D) a comparable ownership document issued by another state or jurisdiction. (2) Evidence of motor vehicle ownership on a rebuilt salvage properly assigned to the applicant shall accompany the certificate of title application involving the transaction. Evidence shall include the following documents: (A) a Texas Salvage Motor Vehicle Certificate of Title; (B) a Texas Nonrepairable Motor Vehicle Certificate of Title; (C) a comparable Salvage Certificate or Salvage Certificate of Title issued on or after March 1, 1996, by another state or jurisdiction; (However, such ownership documents issued by another state or jurisdiction indicating the vehicle cannot be rebuilt in the state or jurisdiction which issued the ownership document, shall not be accepted as evidence of ownership for purposes of this subsection); (D) a Texas Salvage Certificate; or (E) a comparable Salvage Certificate or Salvage Certificate of Title issued prior to March 1, 1996, by another state or jurisdiction (However, such ownership documents issued by another state or jurisdiction indicating the vehicle cannot be rebuilt in the state or jurisdiction which issued the ownership document, shall not be accepted as evidence of ownership for purposes of this subsection). (c) Certificate of title issuance for salvage vehicles. (1) Upon receipt of a completed salvage and nonrepairable motor vehicle certificate of title application, along with the prescribed fee of $3.00 and the required documentation, the department shall, before the sixth business day after the date of receipt, issue the applicant a salvage or nonrepairable motor vehicle certificate of title, as appropriate. If the condition of salvage is caused exclusively by flood, a "Flood Damage" notation shall be reflected on the face of the document and shall be carried forward upon subsequent title issuance. (A) Texas Civil Statutes, Article 6687-1, sec.37A(j) provides that a person who holds a salvage motor vehicle certificate of title is entitled to record a lien on the vehicle. If a salvage or nonrepairable motor vehicle certificate of title application records a lien, such lien is only applicable with the issuance of a salvage motor vehicle certificate of title. Presentation of the application with the lien disclosed therein and surrender of the current salvage motor vehicle certificate of title, along with the applicable fee, to the department shall constitute the notation of a lien on a salvage motor vehicle certificate of title. When a salvage motor vehicle certificate of title recording a lien is issued, the original will be mailed to the lienholder. For proof of ownership purposes, the applicant will be mailed a receipt or printout of the newly established motor vehicle record, which records the lien. (B) A nonrepairable motor vehicle certificate of title must state on its face that, except as provided by Texas Civil Statutes, Article 6687-1, sec.37A(n) and (p), the vehicle: (i) may not be issued a regular certificate of title or registered in this state; and (ii) may only be used for parts or scrap metal. (2) Upon receiving a completed certificate of title application for a rebuilt salvage transaction, along with the applicable fees and required documentation, the department or its designated agent will process and issue a certificate of title, which includes a "Rebuilt Salvage" remark on its face and describes or discloses the vehicle's former condition in a manner that is understandable to a potential purchaser of the vehicle. If the transaction is on a new or late model salvage vehicle that has been assembled from component parts or a new or late model salvage vehicle for which a Texas Salvage Certificate is being surrendered, only the "Rebuilt Salvage" remark will be reflected on the face of the certificate of title. (3) On proper application by the owner of a vehicle brought into this state from another state or jurisdiction that has on any certificate of title issued by the other state or jurisdiction a "Rebuilt," "Salvage," "Nonrepairable," or analogous notation, the department shall issue the applicant a certificate of title or other appropriate document for the vehicle. A certificate of title or other appropriate document issued under this subsection must, in addition to other information required by the department, show on its face: (A) the date of issuance; (B) the name and address of the owner; (C) any registration number assigned to the vehicle; (D) a description of the vehicle as determined by the department; and (E) any notation the department considers necessary or appropriate. (d) Replacement of certificates of title for salvage vehicles. The owner or lienholder of a lost or destroyed certificate of title for a salvage vehicle may obtain a certified copy of that title upon proper application and applicable fee being submitted to the department. The appropriate certificate of title for a salvage vehicle will be issued and shall reflect "Certified Copy" and the date issued. The appropriate motor vehicle record will be noted accordingly until such time that ownership of the vehicle is transferred, when the notation will be eliminated from the new certificate of title. (e) Transfer of ownership. (1) New or late model salvage motor vehicles. (A) Transfer of a salvage or nonrepairable motor vehicle without a salvage or nonrepairable motor vehicle certificate of title. A person who owns a new or late model salvage motor vehicle may not sell, transfer, or release the vehicle to a person other than a salvage vehicle dealer, the former owner of the vehicle, a governmental entity, an out-of-state licensed buyer, a buyer in a casual sale at auction, or a person described by Texas Civil Statutes, Article 6687-2b, sec.(g), and shall deliver to that person a properly assigned certificate of title for the vehicle. If the assigned certificate of title is not a salvage motor vehicle certificate of title, a nonrepairable motor vehicle certificate of title, or a comparable ownership document issued by another state or jurisdiction, the purchaser shall follow the procedures described in subsections (a)(1)(A), (a)(2)(A), (a)(3)(A), and (b)(1) of this section. (B) Transfer of a salvage or nonrepairable motor vehicle by assignment of a salvage or nonrepairable motor vehicle certificate of title. An owner, other than an insurance company, may sell a new or late model salvage motor vehicle by assignment of a salvage or nonrepairable motor vehicle certificate of title for the vehicle only to a salvage vehicle dealer in this state, an out-of-state licensed buyer, a buyer in a casual sale at auction, or a person described by Texas Civil Statutes, Article 6687-2b, sec.(g). (C) Transfer of a salvage or nonrepairable motor vehicle by an insurance company. An insurance company may sell a new or late model salvage motor vehicle by assignment of a salvage or nonrepairable motor vehicle certificate of title for the vehicle only to a salvage vehicle dealer, an out-of-state licensed buyer, a buyer in a casual sale at auction, or a person described by Texas Civil Statutes, Article 6687-2b, sec.(g). (D) Exemption. The owner of a new or late model salvage motor vehicle or a nonrepairable motor vehicle so classified solely because of water damage caused by flood conditions is not prohibited from selling the vehicle to any person. (2) Motor vehicle other than a new or late model salvage or nonrepairable motor vehicle. (A) If an insurance company acquires ownership of this type of vehicle through payment of a claim, the company shall, on delivery of the vehicle to a buyer of the vehicle, deliver to the buyer a properly assigned certificate of title for the vehicle. (B) An insurance company or other person who acquires ownership of this type of vehicle may voluntarily and upon proper application obtain a salvage or nonrepairable motor vehicle certificate of title. (f) Notification required of an insurance company. An insurance company shall submit to the department, before the 31st day after the date of the payment of the claim, on the form prescribed by the department, a report stating that: (1) the insurance company has paid a total loss claim on the late model salvage motor vehicle or nonrepairable motor vehicle; and (2) the insurance company has not acquired ownership of the late model salvage motor vehicle or nonrepairable motor vehicle. (g) Noting of motor vehicle record with total loss claim information. Upon receipt of the report described in subsection (f) of this section, the department shall note the appropriate motor vehicle record accordingly to prevent transfer of ownership prior to the issuance of a salvage or nonrepairable motor vehicle certificate of title. (h) Acquisition of salvage vehicles for the purpose of dismantling, scrapping, or destruction. (1) A salvage vehicle dealer that acquires ownership of a new or late model salvage or nonrepairable motor vehicle for such purposes shall, before the 31st day after the date the dealer acquires the vehicle, submit to the department, on the form prescribed by the department, a report stating that the vehicle will be dismantled, scrapped, or destroyed, accompanied by a properly assigned regular certificate of title, salvage or nonrepairable motor vehicle certificate of title, or a comparable ownership document issued by another state or jurisdiction for the vehicle. (2) A salvage vehicle dealer that acquires an older model vehicle for such purposes shall submit the report addressed in paragraph (1) of this subsection and shall keep on the dealer's business premises a record of the vehicle, until the third anniversary of the date the report on the vehicle is submitted to the department. (i) Receipt of the report and the ownership documents by the department. On receipt of the report and the ownership documents, the department shall issue the salvage vehicle dealer a receipt for the certificate of title, salvage or nonrepairable motor vehicle certificate of title, or a comparable ownership document issued by another state or jurisdiction. (j) Noting of motor records on which ownership documents have been surrendered to the department. The department will note applicable motor records on which ownership documents have been surrendered to the department by salvage vehicle dealers with an appropriate notation. 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. Issued in Austin, Texas, on September 5, 1996. TRD-9612971 Bob Jackson Deputy General Counsel Texas Department of Transportation Effective date: September 26, 1996 Proposal publication date: June 28, 1996 For further information, please call: (512) 463-8630 SUBCHAPTER B.Motor Vehicle Registration 43 TAC sec.17.26 The Texas Department of Transportation adopts the repeal of sec.17.26, concerning public access to vehicle registration records without changes to the proposed text as published in the June 28, 1996, issue of the Texas Register (21 TexReg 5960). This section is no longer necessary due to the simultaneous adoption of the re-enacted subject matter in Chapter 3, Public Information, as new sec.sec.3.10-3.14, concerning access to official records, in an amended form. On July 23, 1996, a public hearing was held to receive comments, views, or testimony regarding the proposed repeal. No oral or written comments were received. The repeal is adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation, Government Code, sec.552.2611 which requires each agency by rule to specify the charges the agency will make for copies of public records, and Transportation Code, sec.502.008 which requires release of vehicle registration information to governmental agencies. 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. Issued in Austin, Texas, on September 5, 1996. TRD-9612980 Bob Jackson Deputy General Counsel Texas Department of Transportation Effective date: September 26, 1996 Proposal publication date: June 28, 1996 For further information, please call: (512) 463-8630 SUBCHAPTER D.Salvage Vehicle Dealers 43 TAC sec.sec.17.60-17.64 The Texas Department of Transportation adopts amendments to sec.sec.17.60-17.64, concerning salvage vehicle dealers' and agents' licenses. Section 17.62 and sec.17.64 are adopted with changes to the proposed text as published in the June 28, 1996, issue of the Texas Register (21 TexReg 5960). Sections 17.60, 17.61 and 17.63 are adopted without changes and will not be republished. Texas Civil Statutes, Article 6687-1a, authorizes the department to issue licenses to salvage vehicle dealers and agents. Section 17.60 and sec.17.61 are revised to provide for the change of this undesignated head to a subchapter. Section 17.62 is amended to require an affidavit that states that the applicant has not been convicted of a felony or that it has been at least three years since the applicant's termination of the sentence, parole, mandatory supervision, or probation for a felony conviction on the applications for salvage vehicle dealer and agent licenses. Section 17.63 is amended to clarify that a salvage vehicle dealer operating at more than one location in a county may not authorize more than five salvage dealer agents per license, rather than per business location. The amendments require notification to the department of any change of ownership status and the termination of an agent operating under a salvage vehicle dealer license. This section also allows off-site sales at any licensed salvage vehicle dealer business location. Section 17.64 is amended to allow for denial of a salvage vehicle dealer or agent license, if the applicant has been convicted of a felony, and if it has not been at least three years since an applicant's termination of the sentence, parole, mandatory supervision, or probation for a felony conviction. This section provides for suspension or revocation of a salvage vehicle dealer's license, if the dealer fails to notify the department of the termination of an agent operating under such dealer's license within ten days of the date of termination. On July 15, 1996, a public hearing was held to receive comments, views, or testimony regarding the proposed amendments. Insurance Auto Auctions presented oral and written comments. Regarding sec.17.62(b)(10), Exemptions, Insurance Auto Auctions has questioned whether "a location approved by the department as provided by this section" includes each "licensed salvage vehicle dealer's business location which has been approved by the department," as provided for in proposed sec.17.63(c). The department has amended subsection (b)(10) to be consistent with the proposed amendments to sec.17.63(c), regarding off-site sales, and to clarify that such auction may be conducted at a location approved by the department as provided by sec.17.63(a)(1). Regarding sec.17.64(b)(12), Suspension or revocation, Insurance Auto Auction suggested that it also be amended to be consistent with the proposed amendments to sec.17.63(c), regarding off-site sales. The department agrees with the suggested change and has amended subsection (b)(12). A citation correction has been made in sec.17.64(b)(1). The amendments are adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation, and more specifically Texas Civil Statutes, Article 6687-1a, which authorizes the department to adopt rules to administer the licensing of salvage vehicle dealers and agents. sec.17.62.Salvage Vehicle Dealer and Agent Licenses. (a) Applicability. A person who acts as an automobile recycler, salvage vehicle agent, or salvage vehicle dealer, including a person who stores or displays vehicles as an agent or escrow agent of an insurance company, must obtain a salvage vehicle dealer or an agent license in accordance with Texas Civil Statutes, Article 6687-1a, and the provisions of this subchapter. (b) Exemptions. The provisions of this subchapter do not apply to: (1) a person who purchases a nonrepairable or salvage vehicle from a salvage pool operator in a casual sale; (2) an insurance company authorized to engage in the business of insurance in this state; (3) a person predominantly engaged in the business of obtaining ferrous or nonferrous metals; (4) a person who sells or offers for sale less than five new or late model salvage motor vehicles of the same type in a calendar year when such vehicles are owned, and registered and titled in the name of such person; (5) a person who sells or offers to sell a new or late model salvage motor vehicle acquired for personal or business use if the person does not sell or offer to sell to a retail buyer and the transaction is not held for the purpose of avoiding the provisions of Texas Civil Statutes, Article 6687-1a; (6) an agency of the United States, this state, or local government; (7) a financial institution or other secured party selling a vehicle in which it holds a security interest, in the manner provided by law for the forced sale of that vehicle; (8) a receiver, trustee, administrator, executor, guardian, or other person appointed by or acting pursuant to the order of a court; (9) a person selling an antique passenger car or truck that is at least 25 years old or a collector selling a special interest motor vehicle as defined in the Transportation Code, sec.683.077, if the special interest vehicle is at least 12 years old; and (10) a licensed auctioneer who, as a bid caller, sells or offers to sell property to the highest bidder at a bona fide auction if neither legal nor equitable title passes to the auctioneer and if the auction is not held for the purpose of avoiding a provision of Texas Civil Statutes, Article 6687-1a, and this subchapter; and provided that if an auction is conducted of vehicles owned, legally or equitably, by a person who holds a salvage dealer's license, the auction may be conducted at any location for which a salvage dealer's license has been issued to that person or at a location approved by the department as provided by 17.63(a)(1) of this title (relating to Place of Business). (c) Classification of licenses. The department will classify salvage vehicle dealers according to the type of activity performed by the dealer. A salvage vehicle dealer may not engage in activities of a particular classification as indicated in this subsection unless the salvage vehicle dealer holds a license authorizing business under that classification. An applicant may apply for a salvage vehicle dealer license in one or more of the following classifications: (1) new automobile dealer; (2) used automobile dealer; (3) used vehicle parts dealer; (4) salvage vehicle pool operator; (5) salvage vehicle broker; or (6) salvage vehicle rebuilder. (d) Application for salvage vehicle dealer or agent license. (1) Application for salvage vehicle dealer license. An applicant for a salvage vehicle dealer license must apply on a form prescribed by the department. An applicant who will operate as a salvage vehicle dealer under a name other than the name of that applicant shall use the name under which that applicant is authorized to do business, as filed with the secretary of state or county clerk, and the assumed name of such legal entity shall be recorded on the application form using the letters "DBA." (A) Form of application. The application form must be signed by the applicant, be accompanied by the application fee of $95, and include: (i) the name, business address(es), and business telephone number(s) of the applicant; (ii) the name under which the applicant will do business; (iii) the location, by number, street, and municipality, of each office from which the applicant will conduct business; (iv) a statement indicating whether the applicant has previously applied for a salvage dealer vehicle license under this section, the result of the previous application, and whether the applicant has ever been the holder of a salvage vehicle dealer license that was revoked or suspended; (v) an affidavit containing a statement that the applicant has never been convicted of a felony or that it has been at least three years since the applicant's termination of the sentence, parole, mandatory supervision, or probation for a felony conviction; (vi) three business association references; (vii) the applicant's federal tax identification number, if any; (viii) the applicant's state sales tax number; (ix) the applicant's social security number, if the applicant is an individual; and (x) the classification(s) of license(s) for which the form is being submitted. (B) Verification of assumed name. The department will require verification of the assumed name, if applicable, in the form of an assumed name certificate on file with the secretary of state or county clerk at the time the application form is submitted. (2) Application for salvage vehicle agent license. An applicant, who is authorized to operate as an agent for a salvage vehicle dealer must apply on a form prescribed by the department. The application form must be signed by the applicant, be accompanied by the application fee, and include: (A) the name of the applicant; (B) the name, business address, and business telephone number of the salvage vehicle dealer authorizing the applicant as a salvage vehicle agent; (C) the name under which the salvage vehicle dealer will do business; (D) the location, by number, street, and municipality, of each office from which the applicant will conduct business; (E) a statement indicating whether the applicant has previously applied for a salvage vehicle dealer or agent license under this section, the result of the previous application, and whether the applicant has ever been the holder of a salvage vehicle dealer or agent license that was revoked or suspended; (F) an affidavit containing a statement that the applicant has never been convicted of a felony or that it has been at least three years since the applicant's termination of the sentence, parole, mandatory supervision, or probation for a felony conviction; (G) three business association references; (H) the applicant's federal tax identification number, if any; (I) the applicant's state sales tax number; and (J) the applicant's social security number. (3) Application for corporate salvage vehicle dealer license. If a salvage vehicle dealer license applicant intends to engage in business through a corporation, the applicant must apply on a form prescribed by the department. (A) Form of application. The form must indicate the name of the corporation, as it appears on file with the secretary of state, be signed by the applicant, be accompanied by the application fee, and include: (i) the name, business address(es), and business telephone number(s) of the corporation; (ii) the name under which the corporation will do business; (iii) the location, by number, street, and municipality, of each office from which the corporation will conduct business; (iv) the state of incorporation; (v) a statement indicating whether an employee, officer, or director has previously applied for a salvage vehicle dealer license under this section, the result of the previous application, and whether an employee, officer, or director has ever been the holder of a salvage dealer vehicle license that was revoked or suspended; (vi) an affidavit containing a statement that each officer and director has never been convicted of a felony or that it has been at least three years since the termination of the sentence, parole, mandatory supervision, or probation for a felony conviction of each officer and director; (vii) three business association references; (viii) the applicant's federal tax identification number, if any; (ix) the applicant's state sales tax number; (x) the name, address, date of birth, and social security number of each of the principal officers and directors of the corporation; (xi) the classification(s) of license(s) for which the form is being submitted. (B) Verification of corporate franchise taxes. The corporation must also provide verification that all corporate franchise taxes required under the Texas Business Corporation Act, Article 2.45, have been paid at the time the application form is submitted to the department. (4) Partnerships. If the license applicant intends to engage in business through a partnership, the applicant must apply on a form prescribed by the department. The form must be signed by the applicant, be accompanied by the application fee, and include: (A) the name, business address(es), and business telephone number(s) of the partnership; (B) the name under which the partnership will do business; (C) the location, by number, street, and municipality, of each office from which the partnership will conduct business; (D) a statement indicating whether an owner, partner, or employee, has previously applied for a salvage vehicle dealer license under this section, the result of the previous application, and whether an owner, partner, or employee, has ever been the holder of a salvage vehicle dealer license that was revoked or suspended; (E) an affidavit containing a statement that each owner or partner has never been convicted of a felony or it has been at least three years since the termination of the sentence, parole, mandatory supervision, or probation for a felony conviction of each owner or partner; (F) three business association references; (G) the partnership's federal tax identification number, if any; (H) the partnership's state sales tax number; (I) the name, address, date of birth, and social security number of each owner and partner; (J) the classification(s) of license(s) for which such form is being submitted. (e) Issuance, investigation, and report by the department. The department will not grant a salvage vehicle dealer or an agent a license until the department completes an investigation of the applicant's qualifications and references in accordance with Texas Civil Statutes, Article 6687-1a. Such investigation shall be conducted not later than the 15th day after the date the application is received by the department. Upon completion of the investigation, the results of the investigation shall be reported to the applicant(s) by written notification from the department. If the applicant is denied, the applicant may appeal the decision as specified in sec.17.64 of this title (relating to Denial, Suspension, or Revocation). (f) License issuance. The department will issue a license to an applicant who meets the license qualifications of subsection (d) of this section and pays the required fees described in this subsection. (1) The license fee for each salvage vehicle dealer or agent license issued for a period of less than one year shall be prorated and only that portion of the $95 license fee allocable to the number of months for which the license is issued shall be payable by the licensee. The amount of such license fees will be rounded off to the nearest dollar. (2) A license may not be issued in a fictitious name that may be confused with or is similar to that of a governmental entity or that is otherwise deceptive or misleading to the public. (3) A person whose license has been revoked in accordance with sec.17.64 of this title (relating to Denial, Suspension, or Revocation) may not be issued a new license before the first anniversary of the date of the revocation. (g) Use of agents by salvage vehicle dealers. The holder of a salvage vehicle dealer license may authorize not more than five persons to operate as salvage vehicle agents under the dealer's license. An agent may acquire, sell, or otherwise deal in new or late model salvage or nonrepairable vehicles or salvage parts as directed by the dealer. An agent authorized to operate for a salvage vehicle dealer is entitled to a salvage vehicle agent license on application to the department and payment of the required $95 fee as provided by subsection (e) of this section. (h) License renewal. (1) A salvage vehicle dealer or agent license expires on the first anniversary of the date of issuance and may be renewed annually on or before the expiration date on payment of the required renewal fee of $85. (2) If the license is not renewed prior to the expiration date, the license holder may renew the license on payment of the renewal fee and a late fee of $10, provided such fees are submitted within one year of expiration. (3) If the license has been expired for a period of one year or longer, the license holder must apply for a new license in the same manner as an applicant for an initial license. (i) Licensee duties. (1) Proper assignment of ownership. (A) If a salvage vehicle dealer acquires ownership of a new or late model salvage vehicle from an owner, the dealer must receive a properly assigned certificate of title. If the assigned certificate of title is not a salvage or nonrepairable motor vehicle certificate of title or comparable ownership document issued by another state or jurisdiction, the licensed salvage vehicle dealer shall, not later than the 10th day after the date of receipt of the title, surrender the assigned certificate of title to the department and apply for a salvage or nonrepairable motor vehicle certificate, as appropriate as provided by sec.17.8 of this title (relating to Certificates of Title for Salvage Vehicles). (B) If a new or late model salvage or nonrepairable vehicle is to be dismantled, scrapped, or destroyed, the salvage vehicle dealer shall surrender the assigned ownership document to the department in the manner prescribed by the department not later than the 30th day after the date the vehicle is acquired and report to the department that the vehicle was dismantled, scrapped, or destroyed. (C) If the holder of a salvage vehicle dealer license acquires ownership of an older model vehicle from an owner and receives an assigned certificate of title and the vehicle is to be dismantled, scrapped, or destroyed, the license holder shall surrender the assigned certificate of title to the department on a form prescribed by the department not later than the 30th day after the date on which the title is received. Evidence that the vehicle was dismantled, scrapped, or destroyed must also be presented. (D) As required by Texas Civil Statutes, Article 6687-2, a salvage vehicle dealer licensed as a used vehicle parts dealer may not receive a motor vehicle unless the dealer first obtains a certificate of authority, sales receipt, or transfer document in accordance with Transportation Code, Chapter 683, or a certificate of title showing that there are no liens on the vehicle or that all recorded liens have been released. (2) Unique inventory number. (A) As required by Texas Civil Statutes, Article 6687-2, a salvage vehicle dealer shall assign a unique inventory number to each transaction in which the dealer purchases or takes delivery of one or more component parts. The unique inventory number shall contain the: (i) salvage vehicle dealer's license number; (ii) day, month, and year of the purchase or delivery; and (iii) sequential log number for that day. (B) The unique inventory number shall then be attached to each component part the dealer obtains in the transaction. The unique inventory number may not be removed from the component part while the part remains in the inventory of the salvage vehicle dealer. (C) Each component part shall be retained in its original condition on the business premises of the salvage vehicle dealer who originally purchased the part for at least three calendar days, excluding Sundays, after the date on which the dealer obtains the part. (D) The provisions of subsection (i)(2)(A) and (B) do not apply to a nonoperable engine, transmission, or rear axle assembly purchased by one salvage vehicle dealer from another salvage vehicle dealer or an automotive-related business. (E) The provisions of subsection (i) do not apply to: (i) interior used component parts or special accessory parts on a motor vehicle more than ten years of age; or (ii) used component parts delivered by commercial freight lines or commercial carriers. (j) Record of purchases, sales, and inventory. (1) Each holder of a salvage vehicle dealer license shall maintain records of each salvage or nonrepairable vehicle and any salvage parts purchased, sold, or being held in inventory by the license holder. Such records, except as specified in paragraph (2)(C) of this subsection, shall be maintained for a five-year period. These records shall include the: (A) date of purchase; (B) name and address of the person selling the vehicle or part to the dealer; (C) a description of the vehicle or part to include the year model, make, and vehicle identification or component part number, if applicable; (D) ownership document number and state of issuance, if applicable; (E) copy of the front and back of the ownership document for the vehicle or salvage part purchased by the dealer unless the year model exceeds ten or more years; (F) date the ownership document was surrendered to the department; (G) evidence indicating that an older model salvage vehicle was dismantled, scrapped, or destroyed; (H) date of sale; (I) name and address of the person purchasing the vehicle or part from the dealer; and (J) copy of the front and back of the ownership document for the vehicle or salvage part sold by the dealer unless the year model exceeds ten or more years. (2) As required by Texas Civil Statutes, Article 6687-2, a salvage vehicle dealer licensed as a used vehicle parts dealer shall keep an accurate and legible inventory of each used component part purchased by or delivered to the dealer. (A) Such parts inventory shall include: (i) the date of purchase or delivery; (ii) the name, age, address, sex, and driver's license number of the seller and a legible photocopy of the seller's driver's license; (iii) the license number of the motor vehicle used to deliver the used component part; (iv) a complete description of the item purchased, including the type of material and, if applicable, the make, model, color, and size of the item; and (v) the vehicle identification number of the motor vehicle from which the used component part was removed. (B) In lieu of the information required in subparagraph (A) of this paragraph, a salvage vehicle dealer may record the name of the business from which the motor vehicle or motor vehicle part is purchased and the Texas certificate of inventory number or federal taxpayer identification number of the business. (C) A salvage vehicle dealer is not required to keep records under this subsection for: (i) interior used component parts or special accessory parts on a motor vehicle more than ten years of age; or (ii) used component parts delivered by commercial freight lines or commercial carriers. (D) As required by Texas Civil Statutes, Article 6687-2, a salvage vehicle dealer shall maintain two copies of each record for used component parts addressed by paragraph (2) of this subsection on a form prescribed by the department for one year after the date of sale or disposal of the item. (k) Authorized sale. (1) New or late model water damaged salvage motor vehicles. The owner of a new or late model salvage motor vehicle or a nonrepairable motor vehicle so classified solely caused by flood conditions is exempt from the provisions of this subsection, and is not prohibited from selling such vehicle to any person. (2) Sales, transfer or release of new or late model salvage or nonrepairable motor vehicle. A salvage vehicle dealer or agent may not sell, transfer, or release a new or late model salvage or nonrepairable motor vehicle to anyone other than: (A) a governmental entity; (B) the vehicle's former owner; (C) a licensed salvage vehicle dealer; (D) an out-of-state buyer; (E) a buyer in a casual sale at auction; or (F) a person described by Texas Civil Statutes, Article 6687-2b, sec.(g). (l) Determination of estimated cost of repair. If it is necessary for a salvage vehicle dealer or agent to determine the estimated cost of repair, which includes parts and labor, for completion of an application for Texas salvage or nonrepairable motor vehicle certificate of title, the estimated cost of repair parts shall be determined as follows: (1) by using a manual of repair costs or other instrument that is generally recognized and commonly used in the motor vehicle insurance industry to determine those costs or an estimate of the actual cost of the repair parts; and (2) the estimated labor costs shall be computed by using the hourly rate and time allocations that are reasonable and commonly assessed in the repair industry in the community in which the repairs are performed. sec.17.64.Denial, Suspension, or Revocation. (a) Denial of salvage vehicle dealer or agent license. The department shall deny issuance of a salvage vehicle dealer or agent license if: (1) all the information required on the application is not complete; (2) the affidavit and business references required by sec.17.62 of this title (relating to Salvage Vehicle Dealer and Agent Licenses) are inadequate; (3) the applicant has been convicted of a felony for which less than three years have elapsed since the termination of the sentence, parole, mandatory supervision, or probation; or (4) the applicant's previous salvage vehicle dealer or agent license was revoked and the first anniversary of the date of revocation has not occurred. (b) Suspension or revocation. The department may suspend or revoke a salvage vehicle dealer or agent license if the dealer or agent: (1) fails to maintain purchase, sales, and inventory records as provided in sec.17.62 (j) of this title (relating to Salvage Vehicle Dealer and Agent Licenses); (2) refuses to permit or fails to comply with a request by a representative of the department or a peace officer to examine, during normal working hours, or while the premises are occupied, the purchase, sales, and inventory records and ownership documents for salvage or nonrepairable vehicles or salvage parts owned by that dealer or under that dealer's control; (3) holds one or more classifications of salvage vehicle dealer or agent license(s) and is found to be dealing in another classification for which a license has not been issued to the dealer or agent; (4) fails to notify the department of a change of address within ten days after such change; (5) fails to notify the department of a dealer's name or ownership change within ten days after such change; (6) fails to notify the department of the termination of an agent who was authorized to operate under the salvage vehicle dealer's license within ten days after such termination; (7) fails to follow the restriction of the sale, transfer, or release of a late model salvage or nonrepairable motor vehicle as provided in sec.17.62(k) of this title (relating to Authorized Sale); (8) fails to meet the time frames and requirements provided in sec.17.63 of this title (relating to Place of Business); (9) fails to remain regularly and actively engaged in the business for which such salvage vehicle dealer or agent license is issued; (10) sells more than one new or late model salvage or nonrepairable motor vehicle to the same person in a casual sale during a calendar year; (11) uses or allows use of the dealer's or agent's license or location for the purpose of avoiding the provisions of the salvage vehicle dealer law; (12) sells or offers for sale salvage or nonrepairable vehicles or salvage vehicle parts from any location other than a licensed salvage vehicle dealer's business location, which has been approved by the department; (13) is convicted of a felony after initial issuance or renewal of the salvage vehicle dealer or agent license or less than three years have elapsed since the termination of the sentence, parole, mandatory supervision, or probation for a felony conviction of the applicant; (14) makes a material misrepresentation in any application or other information filed with the department; (15) fails to remit payment for civil penalties assessed by the department; or (16) violates any of the provisions of Transportation Code, Chapter 501, or any provisions of this subchapter. (c) Suspension due to failure to pay court ordered child support. (1) On receipt of a final order suspending license, issued under Family Code, sec.232.008, the department will suspend a dealer or agent's certificate of registration. (2) The department will charge an administrative fee of $10 to a dealer or agent who is the subject of an order suspending license. (d) Proceedings relating to the denial, suspension, or revocation of a salvage dealer's or agent's license. (1) Upon determination that a dealer or agent license should be denied, suspended, or revoked, the director will mail a notice of the denial, suspension, or revocation to the last known address of the dealer or agent by certified mail. (A) The notice shall clearly state: (i) the reason for the denial, suspension, or revocation; (ii) the effective date of the denial, suspension, or revocation; (iii) the right of the dealer or agent to request an administrative hearing on the question of denial, suspension, or revocation; and (iv) that the notice of suspension or revocation shall also apply to licensed salvage vehicle dealer agents authorized by such dealer. (B) A request for an administrative hearing under this section must be made in writing to the director within ten days of the receipt of notice of denial, suspension, or revocation. (2) If timely requested, an administrative hearing shall be conducted in accordance with sec.sec.1.21-1.61 of this title (relating to Contested Case Procedure). (e) Re-application after revocation of license. A person whose license is revoked may not apply for a new license before the first anniversary of the date of the revocation. (f) Refund of fees. The department will not refund fees paid by a salvage vehicle dealer or agent, if the license is revoked or suspended. 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. Issued in Austin, Texas, on September 5, 1996. TRD-9612972 Bob Jackson Deputy General Counsel Texas Department of Transportation Effective date: September 26, 1996 Proposal publication date: June 28, 1996 For further information, please call: (512) 463-8630 CHAPTER 28.Oversize and Overweight Vehicles and Loans SUBCHAPTER B.General Permits 43 TAC sec.28.13 The Texas Department of Transportation adopts an amendment to sec.28.13, concerning time permits without changes to the text as published in the June 11, 1996, issue of the Texas Register (21 TexReg 5264). The amended section is necessary to ensure the department's proper administration of the laws concerning the issuance of time permits for the movement of overwidth and overlength loads, and the movement of overlength vehicles. Transportation Code, Chapter 623, authorizes the department to carry out the provisions of those laws governing the issuance of oversize and overweight permits. Section 28.13 is amended to: allow vehicles permitted with time permits to travel in eight adjoining districts; provide for the transport of any allowable load on vehicles permitted with an overwidth time permit; require permitees to be responsible for obtaining information regarding load restrictions, highway construction or maintenance areas, and weather restrictions prior to movement of the permitted load; and require that permitted loads shall not be moved during hazardous weather conditions. The department is also replacing the references to Texas Civil Statutes with the appropriate Transportation Code citations, which were re-codified by Senate Bill 971, 74th Legislature, 1995. On June 26, 1996, the department conducted a public hearing on the proposed new section. Written comments supporting the amendments were received from Walton Transportation Company and Texas Motor Transportation Association. The amendment is adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation, and more specifically, Transportation Code, Chapter 623, which authorizes the department to carry out the provisions of those laws governing the issuance of oversize and overweight permits. 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. Issued in Austin, Texas, on September 5, 1996. TRD-9612973 Bob Jackson Deputy General Counsel Texas Department of Transportation Effective date: September 26, 1996 Proposal publication date: June 11, 1996 For further information, please call: (512) 463-8630