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 25. HEALTH SERVICES
PART I. Texas Department of Health
CHAPTER 143.Medical Radiologic Technologists
The Texas Department of Health (department) adopts amendments to sec.sec.143.2, 
143.4-143.9, and new sec.sec.143.16, 143.19 and 143.20, concerning the 
regulation of persons performing radiologic procedures. Sections 143.2, 143.4, 
143.7, 143.8, 143.9, 143.16, 143.19 and 143.20 are adopted with changes to the 
proposed text as published in the October 1, 1996, issue of the Texas Register 
(21 TexReg 9399). Section 143.5 and sec.143.6 are adopted without changes and 
therefore will not be republished.
The amendments add a definition for cardiovascular; add fees for limited 
curriculum programs offered by accredited education programs and amendments to 
training programs; clarify the applicability of the rules and hardship 
exemptions; establish new and clarify existing application requirements and 
procedures; establish a new type of certificate and applicant eligibility; add a 
limited examination for the cardiovascular category; set out new procedures and 
strengthen the existing standards for the approval of curricula and instructors; 
identify dangerous or hazardous radiologic procedures; establish hardship 
exemption criteria and procedures; and establish alternative training 
requirements for registered nurses (RNs), physician assistants (PAs), and 
podiatric medical assistants (PMAs) who perform radiologic procedures. 
The amendments add a new limited certificate category for cardiovascular, 
provide administrative procedures that allow general certificate programs to 
qualify as limited curriculum programs, strengthen the rules related to limited 
certificate programs, provide an administrative procedure and require submission 
of fees for amending education programs, and update and clarify the existing 
rules. The sections as amended update the existing rules so they are consistent 
with new sections and new legislation, to provide pathways for qualified persons 
to obtain limited certificates in medical radiologic technology, to strengthen 
the regulation of limited certificate education programs and to recover the cost 
of administering the limited certificate education programs. 
New sec.143.16 covers dangerous or hazardous radiologic procedures which may be 
performed only by a practitioner or medical radiologic technologist (MRT), 
unless otherwise stated in the rule. This will assure that the public is 
protected from the harmful effects of radiation used for medical purposes by 
regulation specifying that certain procedures should only be performed by 
persons, such as practitioners, MRTs, limited medical radiologic technologists 
(LMRTs), RNs, PAs or PMAs who have additional medical or health care training 
and/or licensure over and above that of a non-certified technician (NCT).
New sec.143.19 sets out the administrative procedures for applying for and 
granting hardship exemptions for hospitals, federally qualified health centers 
and practitioners. The criteria is intended to reflect the statutory language. 
By providing a procedure for approving bona-fide hardship exemptions from the 
regulations, this section should minimize the effect of the new regulations on 
access to care. It is important to note that a person or entity with an approved 
hardship exemption may not employ a person who is not a practitioner or MRT to 
perform the procedures listed as dangerous or hazardous in sec.143.16. 
New sec.143.20 establishes training requirements for RNs, PAs and PMAs which are 
an alternative to existing sec.143.17, Mandatory Training Programs for Non-
Certified Technicians, adopted in June 1996. This section recognizes the post-
secondary school education of RNs and PAs and specifies unique training 
requirements for persons who will x-ray only the foot and ankle. The particular 
training requirements for these groups are intended to minimize the possibility 
of redundant or unnecessary training. 
New sec.sec.143.16, 143.19 and 143.20 implement Acts 1995, 74th Legislature, 
Chapter 613 (House Bill 1200), which amends the Medical Radiologic Technologist 
Certification Act (Act), Texas Civil Statutes, Article 4512m. 
A summary of the comments received and the department's responses are as 
follows. 
Comment: Concerning sec.143.2, a comment was received indicating that the 
definition of "cardiovascular" was too broad, and speculated that cardiovascular 
technologists may expand their scope of practice to cover other parts of the 
circulatory system if the definition was adopted as proposed. 
Response: The department agrees and has amended the definition to clearly 
indicate that the cardiovascular category is limited to the coronary vessels, 
atria, ventricula, ascending aorta and aortic arch. 
Comment: Concerning sec.143.2, several comments were received in support of the 
definition of "cardiovascular" and the new limited certificate category of 
"cardiovascular" in sec.143.7, the recognition of the invasive cardiovascular 
technology exam in sec.143.8, and recognition of the cardiovascular curriculum 
in sec.143.9. 
Response: The department agrees and appreciates the support of the commenters.
Comment: Concerning sec.143.2, a comment was received stating that pediatric 
radiologic procedures should be removed from sec.143.16 regarding dangerous or 
hazardous procedures, and the definition of "pediatric" should be removed from 
the rules. 
Response: The department has agreed to remove the definition of "pediatric" from 
sec.143.2. Future rule-making will be needed to address pediatric radiography 
training for NCTs in sec.143.17. 
Comment: Concerning sec.143.2, a comment was received stating that the wording 
of the definition of "pediatric" could be improved. 
Response: The department agrees. No changes were made based on the comment. The 
definition was removed from the rule altogether. 
Comment: Concerning sec.143.4, a comment was received asking if there was a fee 
for a currently approved training program which adds the new training 
requirements set out in sec.143.20. 
Response: The department agrees that a fee is needed and has amended sec.143.4, 
to add a training program amendment fee. 
Comment: Concerning sec.143.6(c)(2)(B)(iii)(I) and (II) which was proposed for 
deletion, a commenter questioned the prudence of deleting the subclauses. 
Response: The department agrees with the commenter and will retain the language. 
Comment: Concerning sec.143.7(f)(3), a comment was received indicating that 
there could be confusion as to the meaning of the first sentence. 
Response: The department agrees and has changed the wording of the first 
sentence in the paragraph. 
Comment: Concerning sec.143.8(d), a comment was received stating that a limited 
certificate is not issued upon successful completion of an examination. Rather, 
it is issued upon payment of a fee which is determined after the person passes 
an examination. 
Response: The department agrees and wording has been added to clarify the 
administrative procedure for issuing a limited certificate after a person passes 
the examination. 
Comment: Concerning sec.143.9(h) regarding instructor qualifications, a comment 
was received objecting to the new requirement for only classroom teaching 
experience as qualifying a person to be an approved limited curriculum 
instructor. 
Response: The department agrees with the commenter and has added wording to 
clarify that classroom or clinical instruction experience qualifies the person 
to be an approved instructor. 
Comment: Regarding sec.143.9, a comment was received questioning why the 
department had proposed the new limited category for cardiovascular technology 
because the preamble of the essentials and guidelines for the Joint Review 
Committee in Cardiovascular Technology (JRCCVT) stated it was not the intent 
that a cardiovascular technologist (CVT) expose patients to ionizing radiation.
Response: No changes were made as a result of the comment. Testimony was 
provided to the department by the chairman of the JRCCVT explaining that in 1985 
when the essentials and guidelines were developed, a representative of the 
American College of Radiology strongly advocated that the language be added to 
clarify that the professional education of CVTs was not intended to make 
radiologic technologists of them. In the intervening 12 years since the 
essentials were written, the technology had advanced and proliferated 
dramatically. Often the CVT makes the exposures in a cardiac catheterization 
laboratory, rather than the cardiologist or an MRT. Furthermore, the department 
will only issue a limited certificate in the cardiovascular category to CVTs. 
The department does not intend to make general radiographers out of CVTs. The 
department, however, acknowledges the formal training and credentialing 
examination for the cardiovascular category only. The limited medical radiologic 
technologist (LMRT) certificate issued in CVT does not authorize the performance 
of radiologic procedures of other anatomical parts. In order to do so, the 
person must complete the educational requirements for another LMRT category, or 
complete the educational requirements for the general certificate, or complete 
the training described in sec.143.17, relating to mandatory training programs 
for NCTs. 
Comment: Regarding sec.143.16, a comment was received asking whether chest 
radiography, which constitutes 20-45% of all radiographs taken according to the 
commenter, could be performed by anyone. 
Response: No changes were made based on the comment. Chest radiography may be 
performed by an NCT, MRT or LMRT-chest. 
Comment: Concerning sec.143.16, a commenter stated that the rules relating to 
all radiologic procedures should be the same as the rules relating to 
mammography. 
Response: The department disagrees and no changes were made to the rules as a 
result of the comment. Section 2.05(g) and (j) of the Act clearly indicate that 
the Texas Legislature intended for the department to recognize that there were 
radiologic procedures which could be performed by non-certified persons. 
Comment: Concerning sec.143.16, a comment was received recommending that 
dangerous or hazardous procedures be classified as Class A or Class B 
procedures, respectively, to avoid the perceived alarm at the terms "dangerous" 
and "hazardous."
Response: The department agrees that the terms may have an undesirable 
connotation but did not accept the comments for changes to the rules. The 
classification suggested may further complicate or obfuscate the rules. The 
terms dangerous or hazardous are taken from the statutory language in 
sec.2.05(g).
Comment: A comment was received regarding sec.143.16(b) indicating that NCTs 
should be permitted to perform dangerous procedures in JCAHO accredited or 
Medicare certified hospitals. Absent that allowance the commenter stated that 
the list should be reconsidered so that RNs and PAs be allowed to perform 
specific dangerous procedures, as they are today under the direction and 
supervision of a physician. 
Response: The department disagrees and no changes were made as a result of the 
first comment. Changes were made to sec.143.16(c)(5), (7), and (8) allowing an 
RN or PA to perform shoulder girdle radiography, sternum radiography and 
radiographs involving contrast media, while under the direction and supervision 
of a practitioner. Corresponding training will be required for the RNs and PAs 
who will perform the procedures. The additional training will be addressed in 
future rule-making. Training must be completed by January 1, 1998, or before 
performing the procedure after January 1, 1998. 
Comment:Concerning sec.143.16(b)(1), a comment was received requesting that 
diagnostic and therapeutic nuclear medicine procedures be separated so that 
diagnostic nuclear medicine procedures would be identified as "dangerous," and 
therapeutic nuclear procedures would be identified as "hazardous." 
Response: The department disagrees and no changes were made to the rules based 
on the comment. There appeared to be no benefit to separating the types of 
nuclear medicine procedures because procedures identified as either dangerous or 
hazardous may only be performed by a practitioner or MRT. There are specific 
dangerous or hazardous procedures which may be performed by LMRTs, RNs and PAs. 
Comment:Concerning sec.143.16(b)(2), a commented asked that the qualifier, "who 
is appropriately trained," be deleted. The commenter stated that the required 
training for RNs, and PAs is set out in sec.143.20 and is crossreferenced in 
sec.143.16(a). 
Response: The department disagrees and no changes were made to the rules based 
on the comment. The training specified in sec.143.20 does not cover dangerous or 
hazardous radiologic procedures identified in sec.143.16. The appropriate 
training for persons handling radioactive materials is determined by the 
department's Bureau of Radiation Control (BRC) and language was added to clarify 
this. 
Comment: Concerning sec.143.16(b)(4), a comment was received indicating that the 
rules should be changed to allow NCTs to perform, under physician direction and 
supervision, superficial radiotherapy (80 kilovolts) and grenz ray procedures 
(14 kilovolts) for dermatologic treatments. 
Response: The department disagrees and no changes were based on the comment. The 
rules of the Texas State Board of Medical Examiners (BME) do not authorize such 
procedures to be performed by registrants under 22 Texas Administrative Code 
(TAC), sec.193.7, adopted in 1989. These procedures may only be performed by 
practitioners, RNs or certified MRTs. The voltage mentioned in the comment for 
superficial radiotherapy is more than double mammographic voltage of 27 to 38 
kVp. Mammography is a radiologic procedures which is regulated by the 
Mammography Quality Standards Act, and may only be performed by MRTs who have 
met additional qualifications. It is the training of the operators which impacts 
the safe administration to patients, not just the low voltages as emphasized by 
the commenter. 
Comment: Regarding sec.143.16(b)(6), a comment was received indicating that 
since RNs and PAs in the field today are performing fluoroscopy and 
fluorography, the rules should be changed to allow this to continue. 
Response: The department agrees with the comments as long as the procedures are 
performed under the direction and supervision of a practitioner. Changes were 
made to sec.143.16(c)(5), (7), and (8) allowing an RN or PA to perform shoulder 
girdle radiography, sternum radiography and radiographs involving contrast 
media, while under the direction and supervision of a practitioner. 
Corresponding training will be required for the RNs and PAs who will perform the 
procedures. The additional training will be addressed in future rule-making. 
Training must be completed by January 1, 1998, or before performing the 
procedure after January 1, 1998. 
Comment:A similar comment was received regarding sec.143.16(c) indicating that 
NCTs should be permitted to perform some hazardous procedures in JCAHO 
accredited or Medicare certified hospitals. Absent that allowance the list 
should be reconsidered so that RNs and PAs be allowed to perform specific 
procedures such as sternum radiographs, as they are today under the direction 
and supervision of a physician. 
Response: The department disagrees and no changes were made as a result of the 
first comment. Changes to the rules allowing RNs and PAs to perform sternum 
radiographs has already been covered. 
Comment: Concerning sec.143.16(c), a comment was received indicating that NCTs 
should be allowed to perform pediatric chest radiography and KUB's (kidney-
urinary bladder) in JCAHO accredited hospitals because JCAHO makes sure that all 
radiographers have competency for "all age groups..." 
Response: The department partially disagrees and no changes were made as a 
result of the comments. Pediatric radiography was removed from the hazardous 
list; thus, pediatric chest radiography may be performed by NCTs. KUBs are 
radiologic procedures which require the use of contrast media. Sometimes 
sedation is required to obtain a good radiograph. Because of the potential of 
patient harm due to these additional requirements, contrast media procedures 
should remain on the list of hazardous procedures. 
Comment: Concerning sec.143.16(c), two commenters asked why oblique spine views 
could not be performed by NCTs when the rules allowed flexion and extension 
spine radiography. One commenter wanted oblique spines taken off the list of 
hazardous procedures and the other wanted flexion and extension views added to 
the list of hazardous procedures. 
Response: The department did not accept the comments for rule changes. Oblique 
spines are on the list of hazardous procedures due to the high degree of 
difficulty with positioning and technique, and the high exposure potential of 
this spinal radiograph. 
Comment: Concerning sec.143.16(c), a commenter asked why portable x-rays of the 
hand and chest were identified as hazardous. 
Response: Portable x-ray machines have a high potential for exposure of persons 
other than the patient or the technician. Portable x-ray machines, due to the 
fact that they are mobile, have a higher potential for needed adjustments and 
maintenance, which minimally trained personnel may not be aware of or may 
overlook. More training in radiation protection for the patients, self and 
others and equipment operation and maintenance is required for persons who 
perform mobile or portable radiography, and should only be performed by an MRT. 
Comment: Concerning sec.143.16(c)(3), a comment was received indicating that 
some physicians use hand-held, low voltage x-ray units for imaging the hand, 
forearm and elbow. The commenter stated that NCTs should be allowed to operate 
the specific model mentioned under the instruction and direction of a 
practitioner, and that the training should be minimal. 
Response: The department partially agrees. No changes were made as a result of 
the comment. Rules addressing specific types of equipment did not appear to be 
prudent as they might become quite lengthy, tedious and outdated repeatedly when 
new models are introduced and others are discontinued. In other words, the issue 
appears to be a "moving target." Should the U.S. Food and Drug Administration or 
the department's BRC determine a new classification for these devices or exempt 
these devices from state regulation, the issue could be addressed through future 
rule-making. However, the department agreed, on a trial basis, to add a 
"hardship exemption" to sec.143.19 for the specific unit used by the commenter 
for imaging upper extremities only. 
Comment: Several comments were received requesting that pediatric procedures be 
removed from the hazardous procedures list at sec.143.16(c)(4). The commenters 
asked that the restrictions for pediatric procedures match the restrictions for 
adult procedures. 
Response: The department agrees and has removed pediatric radiography, excluding 
extremities, from the rule identifying hazardous procedures. It is important to 
note here that future rule-making will be needed to address pediatric 
radiography training for NCTs in sec.143.17. 
Comment: A comment was received asking that all shoulder girdle radiographs be 
deleted from the list of hazardous procedures in proposed sec.143.16(c)(6).
Response: The department disagrees and no changes were made to the rules as a 
result of the comments. There are significant difficulties in positioning for 
imaging the articulation of the shoulder girdle. The rule now found at 
sec.143.16(c)(5) allows four views of the shoulder at the present time: 
anterior-posterior (AP) and lateral shoulder views, AP scapula and AP clavicle. 
The rule as specified is necessary to protect the public from the hazardous of 
excessive radiation used for medical purposes. 
With reports indicating repeat exposure rates as high as 67% due to technical 
errors made by non-certified personnel, the department is very concerned about 
the impact on the public health. The department continues to receive concerns 
and complaints about radiographs of non-diagnostic quality which indicate the 
use of no collimation, wrong film size and poor positioning. Poor quality 
radiographs predispose physicians to misinterpretations and misdiagnoses. 
Furthermore, repeated x-rays result in higher costs and more radiation to the 
patients. The department urges the complainants to file complaints with the BME. 
Comments and responses have noted the RNs and PAs may perform shoulder girdle 
radiography. 
Comment: A commenter requested that proposed sec.143.16(c)(8) be changed to 
allow RNs and PAs to perform sternum radiographs under the instruction and 
direction of a practitioner. 
Response: The department agrees and has changed the rule now at sec.143.16(c)(7) 
to allow RNs and PAs to perform sternum radiographs under the direction and 
supervision of a practitioner. Caution must be exercised because the sternum is 
a major blood forming bone. The mammary glands are exposed during sternum 
radiography. Correct sternum radiography poses a high degree of difficulty in 
projections and in positioning the patient. Excessive radiation to this part of 
the body would be hazardous and has the potential of increasing morbidity and 
mortality. 
Comment: A commenter requested that proposed sec.143.16(c)(9) be changed to 
allow RNs and PAs to perform radiographic procedures which utilize contrast 
media if the procedure were performed under the instruction and direction of a 
physician certified in a medical specialty which utilized the procedure.
Response: The department disagrees. No changes were made to the rule as proposed 
based on the comments. The suggested verbiage would create problems for 
radiation control inspectors, complaint investigations, and state-agency 
administrative staff. Furthermore, the verbiage could be misunderstood by 
physicians and their staff. The department does not plan to adopt rules which 
require checking or validating physicians' credentials. 
The department agreed to allow RNs and PAs to perform radiographic procedures 
utilizing contrast media under the direction and supervision of a practitioner 
in the rule now at sec.143.16(c)(8). 
Comment: A commenter suggested adding a new subsection to sec.143.16 which 
addresses the administrative procedure for identifying a dangerous or hazardous 
radiologic procedure. 
Response: The department disagrees and no changes were made to the rules as a 
result of the comment. The department believes there is no reason to reiterate 
statutory language from sec.sec.2.04(d), 2.05(g) and 2.05(k) in the 
administrative rules. 
Comment: Concerning the effective date of sec.143.16(i), a commenter recommended 
postponement of the effective date to allow a transition period for those who 
are required to comply. 
Response: The department agrees and has extended the effective date until June 
1, 1997 in sec.143.16(i)(1). 
Comment: Regarding sec.143.16(i), a comment was received suggesting that 
additional wording was needed to address the effective date for the section as 
it applied to RNs or PAs before and after January 1, 1998. 
Response: The department agrees and added wording as to procedures performed 
before January 1, 1998, and those performed after that date. Before performing 
radiologic procedures on or after January 1, 1998, RNs or PAs must either 
complete training under sec.143.17 or sec.143.20, or a hardship exemption must 
be granted under sec.143.19. See sec.143.16(i)(2). 
Comment: Concerning sec.143.16(i), many comments were received asking that the 
effective date of the section be delayed as long as possible due to concerns 
about Attorney General Letter Opinion 96-077, issued in July 1996 regarding 
students performing dangerous or hazardous procedures as a part of the 
educational program approved under sec.2.05(f) of the Act.
Response: The department disagrees. Following the issuance of another letter 
opinion on November 5, 1996, indicating the department could issue student 
certificates which would allow students to perform dangerous or hazardous 
procedures as a part of an educational program, further clarification was 
obtained from the Office of the Attorney General. The department added language 
in sec.143.16(j) which clarifies the specific circumstances in which students 
may perform dangerous or hazardous procedures. The department does not 
anticipate issuing student certificates at this time. 
Comment: Concerning sec.143.19(c)(4)(B), a comment was received indicating that 
a distance of 50 miles from a school of radiologic technology did not constitute 
a hardship and that a hardship existed only if the distance was in excess of 200 
miles. 
Response: No changes were made as a result of the comment. In its original 
proposal published in the December 22, 1995, issue of the Texas Register, the 
department proposed a distance of 100 miles. Based on comments received in 
response to the earlier proposal supporting a lesser number of miles, the 
department reduced the distance for this subsequent proposal. 
Comment: A comment was received stating that the hardship exemption in 
sec.143.19(c)(4)(B) would not permit an applicant located less than 50 miles 
from a school to present extenuating circumstances as to why the distance is a 
hardship, when "the applicant and the school are separated by urban density of 
suburban sprawl so as to make travel between them a hardship."
Response: The department disagrees and no changes were made to the rules on the 
basis of the comments. Fifty miles is an appropriate distance for a hardship. 
Comment: Concerning sec.143.19, comments were received indicating that there 
should be no hardship exemptions adopted. 
Response: No changes were made to the rules as a result of the comments. The 
department is adopting the rules relating to hardship exemptions in response to 
the statutory language in HB 1200. 
Comment: A comment was received concerning the language in sec.143.19(c)(4)(A). 
The commenter noted that the terms "comparable" and "area" were not defined. The 
commenter stated that entities will be unsure of their meaning. The commenter 
stated that the terms are unnecessary in rule-making. 
Response: The department disagrees with the comments and no changes were made to 
the rules based on the comments. Without the terminology, the department feels 
that entities could be jeopardized because a salary for an urban area is not a 
comparable salary for a rural area. Likewise, a comparable salary in rural west 
Texas might not be comparable for a rural area in south Texas. Should the terms 
be applied illogically once the department begins granting hardship exemptions, 
then perhaps the terminology will need to be revisited in future rule-making 
Comment: A comment was received asking that the last sentence in 
sec.143.19(c)(4)(A) be deleted. Otherwise, an applicant which needed to hire an 
MRT would have to submit an affidavit stating its inability to hire an LMRT. 
Response: The department disagrees with the rationale and no changes have been 
made as a result of the comment. The department believes that the language "or 
LMRT" is appropriate. The ability of the applicant to describe in narrative form 
its attempts to fill a vacancy may certainly include information relative to the 
duties to be performed, if pertinent. The department emphasizes that if granted 
a hardship exemption, the persons at that location could not perform radiologic 
procedures identified as dangerous or hazardous in sec.143.16.
Comment: Regarding sec.143.19, several comments were received concerning the 
appropriate training requirements for persons performing bone densitometry 
utilizing x-radiation. The commenters asked that these procedures be exempt from 
the training requirements in sec.143.17. 
Response: The department agrees with the concerns and has added new language in 
sec.143.19(c)(4)(G) to address hardship exemptions for persons operating bone 
densitometry units. 
Comment: Regarding sec.143.19, a commenter stated the reasons why the training 
requirements in sec.143.17 were not appropriate for a particular hand-held 
fluoroscope utilized for imaging the upper extremities only. 
Response: The department agrees, on a trial basis, to consider granting a 
hardship exemption in this case, but is concerned that the rule will lead to 
future rule-making burdens addressed in sec.143.16. Language was added in 
sec.143.19(c)(4)(H) to address hardship exemptions for persons operating certain 
hand-held fluoroscopes for imaging upper extremities only. 
Comment: Comments were received asking that additional criteria be included in 
sec.143.19, which would allow for a hardship exemption to be granted due to the 
cost of the mandatory training (tuition, travel expenses, overtime pay and time 
away from practice), as set out in sec.143.17 adopted in June 1996, if a 
practitioner has determined the NCT to be competent. 
Response: The department agrees and two additional hardships (I) and (J) were 
added to sec.43.19(c)(4) as a result of the comments. 
Comment: Concerning sec.143.16 and sec.143.19, several commenters raised 
concerns about access to care. 
Response: The department partially agrees with the commenters. The impact on 
access to care is expected to be minimized by adjusting or rearranging job 
duties for non-certified persons who perform radiologic procedures identified as 
dangerous or hazardous in sec.143.16; practitioners performing radiologic 
procedures, as necessary, whenever a certified technologist, RN or PA is 
unavailable; allowing a variety of exemptions in documented hardship situations; 
and adopting specific training requirements for RNs, PAs, and PMAs. It is 
important to note that a practitioner or entity with an approved hardship 
exemption may not employ a person who is not a practitioner or MRT to perform a 
procedure listed in sec.143.16. There are specific radiologic procedures 
identified in sec.143.16 which an appropriately trained RN or PA may perform 
under the direction and supervision of a physician. 
Comment: Several commenters had questions concerning costs and accessibility of 
training programs. 
Response: The department agrees and strongly recommends the exercise of 
responsible consumer choice when selecting the training program which will best 
fulfill the needs of the trainee. The department is unable to offer or provide 
the training for RNs, PAs, PMAs or NCTs. The department urges practitioners, 
medical schools, educational programs, and technologists to proactively respond 
to the need for cost-effective training programs by setting up innovative 
training programs using distance learning vehicles. In addition, there are new 
hardship exemptions in sec.143.19(c)(4)(G)-(J). 
Minor editorial changes were made throughout the rules for clarification 
purposes and to improve grammar and style. 
The following provided comments on the proposed rules: Texas Academy of Family 
Physicians; Texas Academy of Physician Assistants; Texas Hospital Association; 
Texas Medical Association; Texas Nurses Association; Texas Osteopathic Medical 
Association; Texas Society of Radiologic Technologists; Texas Society of Plastic 
Surgeons; Texas Orthopedic Association; Texas Dermatological Society: El Centro 
College, Health and Legal Studies Division, Dallas County Community College 
District; Tyler Junior College; MASI Healthcare Services; Methodist Medical 
Center- Dallas; Houston Community College; Odessa College, Advanced Healthcare 
Education Center (AHEC); Austin Community College; Baylor College of Medicine; 
Blinn College; Houston Area Radiologic Technologist Society; Scott and White 
Clinic; Thomas Consulting; Baptist Hospital of Southeast Texas, School of 
Radiologic Technology; Del Mar College; Irving Healthcare System; Texas 
MedClinic; Scenic Mountain Medical Center, School of Radiologic Technology; 
Amarillo College; Midwestern State University; Texas Hand Center; Lakeland 
Medical Center; Marshall Regional Medical Center; The Family Doctors; Methodist 
Hospital-Lubbock; South Plains College; East Texas Society of Radiologic 
Technologists; Kilgore College; Presbyterian Hospital-Winnsboro; University of 
Texas Health Science Center - San Antonio; GSMC Medical Imaging; Medical Physics 
Consultants; and department staff. While none of the commenters were against the 
rules in their entirety, they expressed concerns, questions and made 
recommendations. 

25 TAC sec.sec.143.2, 143.4-143.9, 143.19, 143.20
The amendments and new sections are adopted under the Medical Radiologic 
Technologist Certification Act, Texas Civil Statutes, Article 4512m, 
sec.2.05(e), which provide the Texas Board of Health (board) with the authority 
to adopt rules necessary to implement the Act; sec.2.05(a), concerning rules on 
certificates, education programs, instructors, and the registry; sec.2.05(f), 
concerning minimum standards for mandatory training; sec.2.09, concerning rules 
on applications for certificates and approval of curricula, training programs, 
and instructors; and the Texas Health and Safety Code, sec.12.001, which 
provides the board with the authority to adopt rules for the performance of 
every duty imposed by law on the board, the department, and the commissioner of 
health.

sec.143.2.Definitions.
The following words and terms, when used in this chapter, shall have the 
following meanings, unless the context clearly indicates otherwise. 
Cardiovascular (CV)-Limited to the coronary vessels, atria, ventricula, 
ascending aorta and aortic arch.

sec.143.4.Fees.
(a) (No change.) 
(b) The schedule of fees is as follows: 
(1)-(16) (No change.) 
(17) training program application fee-$350; 
(18) training program amendment fee-$40; 
(19) training program renewal fee-$150; 
(20) limited curriculum amendment fee-$40; and 
(21) annual limited curriculum approval fee for general certificate programs - 
$225. 

sec.143.7.Types of Certificates and Applicant Eligibility. 
(a)-(c) (No change.) 
(d) Minimum eligibility requirements for certification. The following 
requirements apply to all individuals applying for certification who do not meet 
the requirements of subsections (b) or (c) of this section:
(1)-(5) (No change.) 
(6) eligibility for the specific certificate requested as set out in subsections 
(e), (f), (g), (h), or (i) of this section. 
(e) (No change.) 
(f) Limited medical radiologic technologist. To qualify for a limited 
certificate, an applicant shall meet the requirements in paragraph
(4) of this subsection and subsection (d) of this section. 
(1) The limited categories shall be as follows: skull; chest; spine; 
extremities; chiropractic; podiatry; and cardiovascular. 
(2) (No change.) 
(3) Persons holding a limited certificate in one or more categories may not 
perform radiologic procedures involving the use of contrast media, utilization 
of fluoroscopic equipment, mammography, tomography, bedside radiography, nuclear 
medicine, and/or radiation therapy procedures. However, a person holding a 
limited certificate in the cardiovascular category may perform radiologic 
procedures involving the use of contrast media and fluoroscopic equipment for 
the purposes of diagnosing or treating a disease or condition of the 
cardiovascular system. 
(4) To qualify for a certificate as an LMRT an applicant must provide 
documentary evidence satisfactory to the department of the following:
(A) (No change.) 
(B) current licensure or registration as an LMRT by another state, District of 
Columbia, or territory of the United States of America whose requirements are 
more stringent than or substantially equal to the requirements for the Texas 
limited certificate at the time of application to the department; or 
(C) current general certification as an MRT issued by the department. The MRT 
must surrender the general certificate and submit a written request for a 
limited certificate indicating the limited categories requested. The request 
shall be postmarked on or before the certificate expiration date and shall be 
accompanied by the general certificate and the certificate and/or identification 
card replacement fee. 
(g) Temporary medical radiologic technologist (general). To qualify as a 
temporary medical radiologic technologist (general), an applicant shall meet at 
least one of the following requirements. These are in addition to those listed 
in subsection (d) of this section. For the general temporary certificate, an 
applicant must: 
(1) have successfully completed or be within 28 calendar days of successful 
completion of a course of study in radiography, radiation therapy technology, or 
nuclear medicine technology which is accredited by the Committee on Allied 
Health Education and Accreditation (CAHEA); 
(2) be approved by the ARRT as examination eligible; 
(3) be approved by the NMTCB as examination eligible; or 
(4) be currently licensed or otherwise registered as an MRT by another state, 
District of Columbia, or territory of the United States whose requirements are 
not substantially equal to the Texas requirements for certification at the time 
of application to the department. 
(h) Temporary limited medical radiologic technologist. The applicant shall meet 
at least one of the following requirements. These are in addition to those 
listed in subsection (d) of this section. The applicant must: 
(1) have successfully completed or be within 28 calendar days of successful 
completion of a limited certificate program in the categories of skull, chest, 
spine, abdomen or extremities, which is approved in accordance with sec.143.9(c) 
of this title (relating to Standards for the Approval of Curricula and 
Instructors); 
(2) be currently enrolled in a course of study in a general certificate program 
approved in accordance with sec.143.9(b) of this title (relating to Standards 
for the Approval of Curricula and Instructors) and have been issued a 
certificate of completion by the program signifying that the person has 
completed classroom instruction, clinical instruction, evaluations and 
competency testing in all areas included in the limited curriculum, as set out 
in sec.143.9(e) of this title; or 
(3) be licensed or registered as an LMRT by another state, District of Columbia, 
or territory of the United States whose requirements are not substantially equal 
to the Texas requirements for certification at the time of application to the 
department. 
(i) Special provisions for technologists on active military duty. An MRT or LMRT 
whose certificate has expired and was not renewed under sec.143.10(h) of this 
title (relating to Certificate Issuance, Renewals, and Late Renewals) may file a 
complete application for another certificate of the same type as that which 
expired. 
(1) The application shall be on official department forms and be filed with the 
application processing fee. 
(2) An applicant shall be entitled to a certificate of the same type as that 
which expired based upon the applicant's previously accepted qualification and 
no further qualifications or examination shall be required except payment of the 
certification fee. 
(3) The application must include a copy of the official orders or other official 
military documentation showing that the holder was on active duty during any 
portion of the period for which the applicant was last certified. 
(4) An application is subject to disapproval in accordance with sec.143.6(e) of 
this title (relating to Application Requirements and Procedures). 
(5) An applicant for a different type of certificate than that which expired 
must meet the requirements of this chapter generally applicable to that type of 
certificate. 
(j) Alternate eligibility. An individual who does not qualify under subsections 
(a)-(i) of this section may qualify under sec.143.15 of this title (relating to 
Alternate Eligibility Requirements). 

sec.143.8.Examinations. 
(a)-(c) (No change.) 
(d) Approved examination for the limited certificate. An approval letter 
requesting the limited certification fee shall be issued upon successful 
completion of the appropriate examination, as follows: 
(1)-(4) (No change.) 
(5) chiropractic-the ARRT examinations for the limited scope of practice in 
radiography (spine and extremities); 
(6) podiatric-the ARRT examination for the limited scope of practice in 
radiography (podiatry); or 
(7) cardiovascular-the Cardiac Credentialing International invasive registry 
examination. 
(e)-(i) (No change.) 

sec.143.9.Standards for the Approval of Curricula and Instructors.
(a)-(b) (No change.) 
(c) Limited certificate programs. All curricula and programs to train 
individuals to perform limited radiologic procedures must: 
(1) be accredited by the JRCERT to offer a limited curriculum in radiologic 
technology; 
(2) be accredited by the Joint Review Committee for Cardiovascular Technology 
(JRCCVT) to offer a curriculum in invasive cardiovascular technology;
(3) be accredited by JRCERT under subsection (b) of this section; or 
(4) be approved by the department and be offered within the geographic limits of 
the State of Texas. Subsections (d)-(h) of this section apply only to 
department-approved programs. 
(d) Application procedures for limited certificate programs which are not 
accredited by JRCERT or JRCCVT. An application shall be submitted to the 
department at least ten weeks prior to the starting date of the program to be 
offered by a sponsoring institution. Official application forms are available 
from the department and must be completed and signed by the program director of 
the sponsoring institution's program. Program directors shall be responsible for 
the curriculum, the organization of classes, the maintenance and availability of 
facilities and records, and all other policies and procedures related to the 
program or course of study. 
(1)-(5) (No change.) 
(6) The application shall include: 
(A)-(D) (No change.) 
(E) a list of clinical facilities, written agreements on forms prescribed by the 
department from clinical facilities signed by the program director and the chief 
executive officer(s) of each facility, and clinical schedules, including the 
following items identified for each clinical site utilized. A clinical facility 
which is not listed on the application may not be utilized for a student's 
clinical practicum until the department has accepted the additional clinical 
facility in accordance with paragraph (10) of this subsection. The items are: 
(i)-(v) (No change.) 
(vi) copies of the current identification cards issued by the department to the 
LMRTs or MRTs who will supervise the students at all times while performing 
radiologic procedures; 
(vii) an acknowledgement that the students in a limited curriculum program in 
the categories of skull, chest, spine, abdomen, extremities, chiropractic or 
podiatric shall not perform procedures utilizing contrast media, mammography, 
fluoroscopy, tomography, nuclear medicine studies, radiation therapy or other 
procedures beyond the scope of the limited curriculum; and 
(viii) an acknowledgement that the students in a limited curriculum program in 
the cardiovascular category shall not perform mammography, tomography, nuclear 
medicine studies, radiation therapy or other procedures beyond the scope of the 
limited curriculum. Such students may only perform radiologic procedures of the 
cardiovascular system which involve the use of contrast media and fluoroscopic 
equipment. 
(F) clearly defined and written policies regarding admissions, costs, refunds, 
attendance, disciplinary actions, dismissals, re-entrance, and graduation which 
are provided to all prospective students prior to registration and by which the 
program director shall administer the program. The admission requirements shall 
include the minimum eligibility requirements for certification in accordance 
with sec.143.7(c)(1)-(2) of this title (relating to Types of Certificates and 
Applicant Eligibility). 
(G)-(J) (No change.) 
(7) (No change.) 
(8) In making application to the department, the program director shall agree in 
writing to: 
(A)-(E) (No change.) 
(F) keep an accurate record of each student's attendance and participation, 
evaluation instruments and grades, clinical experience including radiation 
exposure history, and subjects completed for not less than five years from the 
last date of the student's attendance. Such records shall be made available to 
examining boards, regulatory agencies, and other appropriate organizations, if 
requested; 
(G)-(J) (No change.) 
(9) (No change.) 
(10) Following program approval, a written request(s) for amendment(s) shall be 
submitted to and approved by the department in advance of taking the anticipated 
action. The request to add or drop an instructor, clinical site, category of 
instruction, program director or other change, shall be accompanied by the 
limited curriculum program amendment application and fee in accordance with 
sec.143.4 of this title (relating to Fees).
(e)-(f) (No change.) 
(g) Instructor approval for limited certificate programs. 
(1) All persons who plan to or who will provide instruction and training in the 
limited certificate courses of study or programs shall:
(A)-(C) (No change.) 
(2)-(4) (No change.) 
(h) Instructor qualifications for limited certificate programs.
(1) An instructor(s) shall have education and not less than six months classroom 
or clinical experience teaching the subjects assigned, shall meet the standards 
required by a sponsoring institution, if any, and shall meet at least one or 
more of the following qualifications: 
(A)-(C) (No change.) 
(2) (No change.) 
(i) Transition. Limited certificate programs approved as of June 28, 1996, shall 
have one year to comply with the requirements adopted on June 28, 1996. Limited 
certificate programs approved after June 28, 1996, shall comply with the 
requirements in effect at the time of application to the department. 
(j) Application procedures for limited certificate programs accredited by JRCERT 
or JRCCVT. 
(1) Application shall be made by the program director on official forms 
available from the department. 
(2) The application must be notarized and shall be accompanied by the following 
items: 
(A) the limited curriculum application fee, in accordance with sec.143.4 of this 
title (relating to Fees); 
(B) a copy of the current accreditation issued to the program by the JRCERT; 
(C) a description in narrative and/or table format clearly indicating that the 
curriculum of the general certificate program and the sequencing of the 
curriculum are equal to the limited certificate curriculum; and 
(D) an agreement to allow the department to conduct an administrative audit of 
the program to determine compliance with this section. 

sec.143.19.Hardship Exemptions.
(a) Purpose. The purpose of this section is to set out the procedure for 
applying for a hardship exemption under the Medical Radiologic Technologist 
Certification Act (Act), sec.2.05(i) and (j) for a hospital, federally qualified 
health center (FQHC), or practitioner. 
(b) General. 
(1) A hospital, FQHC or practitioner may apply to the Texas Department of Health 
(department) for an exemption from employing a medical radiologic technologist 
(MRT), limited medical radiologic technologist (LMRT), or non-certified 
technician (NCT). 
(2) The applicant must demonstrate a hardship as described in subsection (c)(4) 
of this section in employing an MRT, LMRT, or NCT. 
(3) The applicant shall not allow a person who is not an MRT, LMRT, or NCT to 
perform a radiologic procedure until the department grants a hardship exemption. 
(4) A hardship exemption granted by the department does not constitute 
licensure, certification, registration, or authorization to perform a dangerous 
or hazardous radiologic procedure or mammography. 
(c) Required application materials. 
(1) The applicant must apply for a hardship on the forms prescribed by the 
department. The date of application shall be the date the application is 
postmarked. If there is no visible postmark, or if the application is hand-
delivered, the application date shall be the date the administrator received the 
application. 
(2) The application must be accompanied by documentation clearly indicating that 
the applicant is a licensed hospital, FQHC or licensed practitioner. A copy of 
the current hospital license, certificate of qualification issued to the FQHC, 
or current license of the practitioner shall be acceptable documentation. 
(3) If the application is from a hospital or FQHC, the administrator or chief 
executive officer of the hospital or FQHC must sign the application form. If the 
applicant is a practitioner, the practitioner must sign the application form. 
(4) The application shall be accompanied by one or more of the following: 
(A) if the applicant is unable to attract or retain an MRT or LMRT, a sworn 
affidavit describing in narrative form the applicant's attempts to attract and 
retain an MRT or LMRT at a comparable salary for the area;
(B) if the applicant is located more than 50 highway miles from the nearest 
school of medical radiologic technology approved in accordance with sec.143.9 of 
this title (relating to Standards for the Approval of Curricula and 
Instructors), a sworn affidavit describing in narrative form the physical 
address of the nearest school of medical radiologic technology; the physical 
address of the applicant hospital, FQHC, or primary practice location of the 
practitioner; and the actual distance in highway miles between the school and 
the applicant hospital, FQHC, or practitioner's primary practice. The applicant 
shall include a map of the area clearly indicating the locations of each entity; 
(C) if the nearest school of medical radiologic technology approved in 
accordance with sec.143.9 of this title (relating to Standards for the Approval 
of Curricula and Instructors) has a waiting list of school applicants due to a 
lack of faculty or space, a sworn affidavit from the applicant indicating that 
admissions to the school are pending because of a lack of faculty or space; 
(D) if the need for graduates in medical radiologic technology of the applicant 
exceeds the number of graduates from the nearest school of medical radiologic 
technology approved in accordance with sec.143.9 of this title, a sworn 
affidavit from the applicant indicating that the number of graduates from the 
nearest school does not meet the applicant's needs for radiologic technologists; 
(E) if emergency conditions have occurred during the 90 days prior to making 
application for the hardship exemption, a sworn affidavit from the applicant 
describing the emergency conditions, the hardship(s) the emergency conditions 
have created and how long the hardship(s) is anticipated to continue. For the 
purposes of this subparagraph, emergency conditions may include a disaster, 
epidemic, or other catastrophic event; 
(F) documentation that the United States government has declared a state of war; 
(G) if the equipment operated is a bone densitometry unit(s) which utilizes x-
radiation, a sworn affidavit from the applicant indicating the name of the 
person operating the equipment and proof that the person has completed at least 
20 hours of training as follows: 
(i) specific bone densitometry equipment utilizing x-radiation to be used by the 
operator-16 hours presented by a medical radiologic technologist (MRT) or an 
equipment applications specialist knowledgeable of the specific equipment to be 
utilized; and 
(ii) radiation safety and protection for the patient, self and others - 4 hours 
presented by an MRT or a licensed medical physicist within the 24-month period 
prior to application or reapplication for a hardship exemption; 
(H) if the applicant uses only a hand-held fluoroscope with a maximum operating 
capability of 65 kilovolts and 1 milliampere, or a similar type of x-ray unit 
for imaging upper extremities only, at the location indicated on the application 
form and the applicant believes that the radiation produced by the radiographic 
equipment represents a minimal threat to the patient and the operator of the 
equipment, the following is required to be submitted:
(i) a copy of the current certificate of registration issued by the Bureau of 
Radiation Control; and 
(ii) a sworn affidavit describing the equipment used; the types of radiographs 
performed; the training completed by the operator of the equipment within the 
24-month period prior to application or reapplication for a hardship exemption; 
the date(s) the training was completed by the operator; the radiation safety 
measures taken for the patient, operator and others; the level or amount of 
supervision provided by an MRT or a practitioner(s) to the operator while 
performing the radiographic procedure; and the equipment manufacturer's 
specifications for the diagnostic radiographic equipment utilized at the 
location indicated on the application form, including the maximum operating 
capability; 
(I) if the applicant employs, for the purpose of performing radiologic 
procedures, a person registered in accordance with rules adopted under sec.2.08 
of the Act on or before January 1, 1998, a sworn affidavit indicating the 
name(s) of the person(s) and proof that the person(s) was registered on or 
before January 1, 1998. Such affidavit shall be on a form attesting that the 
training under sec.143.17 or sec.143.20 of this title (relating to Medical 
Radiologic Technologists) causes a fiscal hardship for the applicant. The 
affidavit shall include a statement that the person(s) performing radiologic 
procedures is adequately supervised and trained for the procedures being 
performed. If the applicant is a practitioner or FQHC, the person who will 
perform radiologic procedures must be registered in accordance with rules 
adopted under sec.2.08 of the Act at the time of application for the hardship 
exemption. If the person who will perform radiologic procedures is not an RN, 
the name of the practitioner for whom the radiologic procedures are performed, 
as named on the current registration permit, shall match the name or location of 
the applicant for whom the hardship is granted; or 
(J) if the applicant is a hospital accredited by the Joint Commission on the 
Accreditation of Health Care Organizations or which participates in the federal 
Medicare cost reimbursement program, an original letter on hospital letterhead 
stating the name(s) of the person(s) performing radiologic procedures in 
compliance with sec.2.07(d) of the Act on or before January 1, 1998. The letter 
shall be accompanied by a sworn affidavit from the applicant attesting that the 
training under sec.143.17 or sec.143.20 of this title causes a fiscal hardship 
for the applicant. The affidavit shall include a statement that the person(s) 
performing radiologic procedures is adequately supervised and trained for the 
procedures being performed. 
(5) All application materials and information are subject to verification by the 
department. 
(6) The department shall send a written notice listing the additional materials 
required to an applicant whose application is incomplete. An application not 
completed within 30 days after the date of the written notice shall be invalid 
unless the applicant has advised the department of a valid reason for the delay. 
(d) Application approval. 
(1) The administrator shall be responsible for reviewing all applications. The 
administrator shall approve any application which is in compliance with this 
section and which properly documents applicant eligibility.
(2) If granted by the department, a letter of exemption shall be issued for a 
period of one year. 
(e) Disapproved applications. 
(1) The department shall disapprove the application if the applicant has not met 
the application requirements set out in this section or has failed or refused to 
complete or submit any form or documentation required by the department to 
verify the eligibility for the exemption. 
(2) If the administrator determines that the application should not be approved, 
the administrator shall give the applicant written notice of the reason for the 
disapproval. The applicant may appeal the decision to the associate commissioner 
over the administrator by submitting a written request within ten days after 
receipt of the written notice of the reason(s) for the disapproval. 
(3) Based upon the application and any additional information submitted by the 
applicant or the administrator, the associate commissioner shall approve or 
disapprove the application. 
(4) An applicant whose application has been disapproved under this subsection 
shall be permitted to reapply after a period of not less than one year from the 
date of the disapproval and shall submit a new application and supporting 
information. The applicant may reapply for an exemption anytime the basis for 
the exemption application changes. 
(f) Application processing. The department shall use the same process as 
described in sec.143.6(f) of this title (relating to Application Requirements 
and Procedures), except the time periods are as follows: 
(1) letter of acceptance-30 days; 
(2) letter of application deficiency-30 days; 
(3) letter of approval-42 days; and 
(4) letter of denial of exemption-42 days. 
(g) Reapplication for hardship exemption. 
(1) The hospital, FQHC, or a practitioner must reapply annually for the 
exemption and meet the then current requirements for a hardship exemption.
(2) A hospital, FQHC, or a practitioner who does not reapply for an exemption 
shall not allow a person to perform a radiologic procedure unless the person is 
a practitioner, MRT, LMRT, or NCT. 

sec.143.20.Alternate Training Requirements.
(a) Purpose. The purpose of this section is to set out the minimum standards for 
registered nurses (RNs), physician assistants (PAs) and podiatric medical 
assistants (PMAs). 
(b) Instructor direction required. All hours of the training program completed 
for the purposes of this section must be live and interactive and directed by an 
approved instructor. Distance learning activities and audiovisual 
teleconferencing may be utilized, provided these include two-way, interactive 
communications which are broadcast or transmitted at the actual time of 
occurrence. Appropriate on-site supervision of persons participating in the 
distance learning activities or teleconferencing shall be provided by the 
approved training program. No credit will be given for training completed by 
self-directed study or correspondence. 
(1) Effective January 1, 1998, before an RN or PA performs a radiologic 
procedure, the RN or PA must complete the hours stated in subsection (d) of this 
section, or the hours stated in sec.143.17 of this title (relating to Mandatory 
Training Programs for Non-Certified Technicians). 
(2) Effective January 1, 1998, before a PMA performs a radiologic procedure, the 
PMA must complete the hours stated in subsection (e) of this section, or the 
hours stated in sec.143.17(d) of this title (relating to podiatric radiologic 
procedures). 
(3) Individuals who complete training approved under this section may not use 
that training toward the educational requirements for a general or limited 
certificate as set out in sec.143.7 of this title (relating to Types of 
Certificates and Eligibility). 
(c) Approved instructors. 
(1) For purposes of this section, an individual is approved by the Texas 
Department of Health (department) to teach in a training program if the 
individual meets the requirements of sec.143.9(h)(1)-(2) of this title (relating 
to Standards for the Approval of Curricula and Instructors). The application for 
the training program must demonstrate that the instructors meet the 
qualifications. No application for individual instructor approval is required. 
(2) A limited medical radiologic technologist (LMRT) may not teach, train, or 
provide clinical instruction in a portion of a training program which is 
different from the LMRT's level of certification. For example, an LMRT holding a 
limited certificate in the chest and extremities categories may not participate 
in the portion of a training program relating to radiologic procedures of the 
spine. The LMRT may participate in the portions of the training program which 
are of a general nature and those specific to the specific categories on the 
limited certificate. 
(d) Training requirements for registered nurses and physician assistants. A 
training program preparing RNs and PAs to perform radiologic procedures shall be 
designed to build on the health care knowledge base and skills acquired through 
completion of an educational program that qualifies the person for licensure as 
an RN or PA. The training shall consist of: 
(1) a minimum of 32 classroom hours of coursework that are fundamental to 
diagnostic radiologic procedures covering all of the following items: 
(A) radiation safety and protection for the patient, self, and others-10 
classroom hours; 
(B) radiologic equipment-10 classroom hours; 
(C) image production and evaluation-10 classroom hours; and
(D) methods of patient care and management essential to radiologic procedures, 
excluding CPR, BCLS, ACLS and similar subjects-two classroom hours; and 
(2) one or more of the following units of classroom instruction in radiologic 
procedures: 
(A) chest and abdomen (non-pediatric)-eight classroom hours;
(B) spine (non-pediatric)-eight classroom hours; 
(C) skull (non-pediatric)-eight classroom hours; 
(D) extremities (including pediatric)-eight classroom hours; and 
(3) if the RN or PA will perform pediatric radiologic procedures other than 
extremities, a minimum of two classroom hours for each of the areas identified 
in paragraph (2)(A)-(C) of this subsection. 
(e) Training requirements for podiatric medical assistants.
(1) In order to successfully complete a program, a PMA must complete the 
following training: 
(A) radiation safety and protection for the patient, self, and others-10 
classroom hours; 
(B) radiographic equipment used in podiatric medicine, including safety 
standards, operation, and maintenance-3 classroom hours; 
(C) podiatric radiologic procedures, imaging production and evaluation - 5 
classroom hours; and 
(D) methods of patient care and management essential to radiologic procedures, 
excluding CPR, BCLS, ACLS and similar subjects-2 classroom hours.
(2) Successful completion of PMA training allows the PMA to perform radiologic 
procedures only under the instruction or direction of a podiatrist. 
(f) Application procedures for training programs. The Texas Department of Health 
(department) shall use the same process as described in sec.143.17(e) of this 
title.
(g) Application materials. The department shall require the same materials as 
described in sec.143.17(f) of this title. 
(h) Application approval. The department shall use the same process as described 
in sec.143.17(g) of this title. 
(i) Application processing. The department shall use the same process as 
described in sec.143.17(h) of this title. 
(j) Renewal. The department shall use the same process as described in 
sec.143.17(i) of this title. 
(k) Previously completed training. A person who has completed part or all of the 
training described in subsections (d) or (e) of this section shall be considered 
to have completed an approved training program for part or all of the training 
but shall be required to complete the remainder of the training program 
described in subsections (d) or (e) of this section prior to the person's 
placement on the registry, as set out in sec.143.18 of this title (relating to 
Registry of Non-Certified Technicians). 
(1) Unless the person is an RN or PA, the previously completed training shall be 
acceptable only if completed within two years of the time of the person's 
initial placement on the registry. 
(2) Previously completed training shall be acceptable only if it was: 
(A) completed at an education program approved under sec.143.9 of this title 
(relating to Standards for the Approval of Curricula and Instructors) or 
sec.143.17 of this title; 
(B) live, inter-active, and instructor-directed and meets the requirements for 
acceptance as continuing education credit for medical radiologic technologists 
or LMRTs as set out in sec.143.11 of this title (relating to Continuing 
Education Requirements); or 
(C) accepted for continuing education credits by the Board of Nurse Examiners. 
(3) If a person has completed part of the training described in subsections (d) 
or (e) of this section, the program director of the training program shall 
verify that the previously completed hours comply with this section. 
(4) If a person has completed all of the training described in subsections (d) 
or (e) of this section, the department shall verify that the previously 
completed hours comply with this section at the time of the person's placement 
on the registry. 
(5) Verification of previously completed training shall be made by reviewing 
only original certificates, official transcripts, printed course curriculum, 
syllabi, outlines or other documentation acceptable to the department issued in 
the name of the person who is seeking credit for previously approved training. 
Photocopied certificates or transcripts will be not accepted for review. 
(6) This subsection shall expire on January 1, 1998.
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 March 4, 1997.
TRD-9703011
Susan K. Steeg
General Counsel
Texas Department of Health
Effective date: March 24, 1997
Proposal publication date: October 1, 1996
For further information, please call: (512) 458-7236

25 TAC sec.143.16
The new section is adopted under the Medical Radiologic Technologist 
Certification Act, Texas Civil Statutes, Article 4512m, sec.2.05(e), which 
provide the Texas Board of Health (board) with the authority to adopt rules 
necessary to implement the Act; sec.2.05(a), concerning rules on certificates, 
education programs, instructors, and the registry; sec.2.05(f), concerning 
minimum standards for mandatory training; sec.2.09, concerning rules on 
applications for certificates and approval of curricula, training programs, and 
instructors; and the Texas Health and Safety Code, sec.12.001, which provides 
the board with the authority to adopted rules for the performance of every duty 
imposed by law on the board, the department, and the commissioner of health.

sec.143.16.Dangerous or Hazardous Procedures. 
(a) Purpose. The purpose of this section is to identify the radiologic 
procedures which are dangerous or hazardous and may only be performed by a 
practitioner, medical radiologic technologist (MRT) or limited medical 
radiologic technologist (LMRT). There are specific procedures identified in 
subsections (b) and (c) of this section which may be performed by a registered 
nurse (RN) or a certified physician assistant (PA) trained under sec.143.17 of 
this title (relating to Mandatory Training Programs for Non-Certified 
Technicians) or sec.143.20 of this title (relating to Alternative Training 
Programs). A person trained under sec.143.17 or sec.143.20 of this title 
(relating to Medical Radiologic Technologies) and placed on a registry under 
sec.143.18 of this title (relating to Registry of Non-Certified Technicians) is 
not an MRT, LMRT or otherwise certified under the Medical Radiologic 
Technologist Certification Act (Act) and shall not perform a dangerous or 
hazardous procedure identified in this section unless expressly permitted under 
this section.
(b) Dangerous procedures identified. Unless otherwise noted, the list of 
dangerous procedures which may only be performed by a practitioner or MRT are: 
(1) nuclear medicine studies; 
(2) administration of radio-pharmaceuticals, unless performed by an RN or PA who 
is appropriately trained as authorized by the department's Bureau of Radiation 
Control for licensure of radioactive materials; 
(3) radiation therapy, including brachytherapy; 
(4) computed tomography (CT) or any variation thereof;
(5) interventional radiographic procedures, including angiography, unless 
performed by an LMRT with a certificate issued in the cardiovascular category; 
(6) fluoroscopy and/or fluorography, unless performed by an LMRT with a 
certificate issued in the cardiovascular category, or by an RN or PA who 
performs the procedure under the direction and supervision of a practitioner; 
and 
(7) cineradiography, unless performed by an LMRT with a certificate issued in 
the cardiovascular category. 
(c) Hazardous procedures identified. Unless otherwise noted, the list of 
hazardous procedures which may only be performed by a practitioner or MRT are: 
(1) conventional tomography; 
(2) skull radiography, excluding anterior-posterior/posterior-anterior (AP/PA), 
lateral, Townes, Caldwell, and Waters views; 
(3) mobile radiography; 
(4) spine radiography, excluding AP/PA, lateral and lateral flexion/extension 
views; 
(5) shoulder girdle radiographs, excluding AP and lateral shoulder views, AP 
clavicle and AP scapula, unless performed by an RN or PA who performs the 
procedure under the direction and supervision of a practitioner;
(6) pelvic girdle radiographs, excluding AP or PA views;
(7) sternum radiographs, unless performed by an RN or PA who performs the 
procedure under the direction and supervision of a practitioner; and 
(8) radiographic procedures which utilize contrast media, unless performed by an 
RN or PA who performs the procedure under the direction and supervision of a 
practitioner. 
(d) Performance of a hazardous procedure by an LMRT. An LMRT may perform a 
radiologic procedure listed in subsection (c) of this section only if the 
procedure is within the scope of the LMRT's certification, as described in 
sec.143.7(f) of this title (relating to Types of Certificates and Applicant 
Eligibility). 
(e) Performance of a dangerous or hazardous procedure by a practitioner. This 
section does not authorize a practitioner to perform a radiologic procedure 
which is outside the scope of the practitioner's license.
(f) Dental radiography. This section does not apply to a radiologic procedure 
involving a dental x-ray machine, including panarex or other equipment designed 
and manufactured only for use in dental radiography. 
(g) Mammography. In accordance with the Health and Safety Code, sec.401.421 et 
seq, mammography is a radiologic procedure which may only be performed by an MRT 
(not an LMRT) who meets the qualifications set out in sec.289.230(d)(2) of this 
title (relating to Mammography). Mammography shall not be performed by a 
practitioner, an LMRT, an NCT, or any other person.
(h) Prohibited act. A person who performs a dangerous or hazardous procedure in 
violation of the Act, sec.2.13(a)(1) commits a Class B misdemeanor, punishable 
by up to 180 days in jail or a fine up to $2,000, or both. 
(i) Effective date. 
(1) This section shall become effective on June 1, 1997. 
(2) Until January 1, 1998, an RN or PA may perform procedures listed in 
subsections (b)(2), (b)(6), (c)(5), (c)(7), or (c)(8) of this section under the 
direction and supervision of a practitioner. On or after January 1, 1998, an RN 
or PA must be trained under sec.143.17 or sec.143.20 of this title, or have been 
approved to perform radiologic procedures under a hardship exemption granted 
under sec.143.19 of this title (relating to hardship exemptions), in addition to 
performing the listed procedure under the direction and supervision of a 
practitioner. 
(j) Student performance of dangerous or hazardous procedures. The procedures 
identified in this section are not considered dangerous and hazardous for 
purposes of sec.2.05(g) of the Act if the person performing the procedures is a 
student enrolled in a program which meets the minimum standards adopted under 
sec.2.05 of the Act and if the person is performing radiologic procedures in an 
academic or clinical setting as part of the program. Therefore, such students 
may perform these procedures in such settings. Students may not perform 
procedures in an employment setting. 
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 March 4, 1997.
TRD-9703010
Susan K. Steeg
General Counsel
Texas Department of Health
Effective date: March 24, 1997
Proposal publication date: October 1, 1996
For further information, please call: (512) 458-7236

PART II. Texas Department of Mental Health and Mental Retardation 
CHAPTER 406.ICF/MR Programs
SUBCHAPTER B.Contracting Requirements
25 TAC sec.sec.406.51-406.67
The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts the 
repeal of existing sec.sec.406.51-406.67 of Chapter 406, Subchapter B, governing 
Contracting Requirments . The repeal accommodates the contemporaneous proposal 
of new sec.sec.406.51-406.67 in this issue of the Texas Register. Existing 
sec.sec.406.51-406.67 are repealed without changes to the proposed text as 
published in the December 24, 1996, issue of the Texas Register (21 TexReg 
12362). 
The repeals would enable the addition of new sections to Chapter 406, Subchapter 
B. 
There was no oral or written testimony regarding the repeal at a public hearing 
held on January 13, 1997. 
The repeals are adopted under the Health and Safety Code, sec.532.015(a), 
relating to Rules and Policies, which provides the Texas Mental Health and 
Mental Retardation Board with broad rulemaking authority; and under the 
provisions of Texas Government Code, sec.531.021, relating to Administration of 
Medicaid Programs, which provides the Texas Health and Human Services Commission 
with the authority to administer federal medical assistance funds. 
The repealaffects Texas Human Resources Code, sec.sec.32.001- 32.040, relating 
to General Provisions, and Texas Government Code, sec.531.021, relating to 
Administration of Medicaid Programs. 
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 March 5, 1997.
TRD-9703057
Ann Utley
Chairman, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Effective date: March 25, 1997
Proposal publication date: December 24, 1997
For further information, please call: (512) 206-4516

The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts new 
sec.sec.406.51-406.67 of Chapter 406, Subchapter B, governing Contracting 
Requirements. Sections 406.51, 406.53, 406.57 and 406.61-406.67 are adopted with 
changes to the proposed text as published in the December 24, 1996, issue of the 
Texas Register (21 TexReg 12362). Sections 406.52, 406.54-406.56, and 406.58-
406.60 are adopted without changes. Existing sec.sec.406.51-406.67 are 
contemporaneously repealed in this issue of the Texas Register. 
The new sections remove the one-half mile location requirement for ICFs/MR and 
delete programmatic requirements that are no longer applicable to the ICF/MR 
provider application process. 
Minor changes were made throughout the subchapter to consolidate information, 
provide or correct references, and correct grammatical usage. In 
sec.406.51(c)(5), clarifying language was added and the term "individual's 
guardian" was changed to "guardian of the estate." In sec.406.51(c)(10), 
clarifying language was added addressing an individual's right to make decisions 
concerning his/her medical care and formulate advance directives. In 
sec.406.53(d), clarifying language was added addressing an extensions for 
applicants in obtaining certification. In sec.406.61, language was deleted which 
allowed contract termination if the department determined it was in its best 
interest. 
A public hearing was held on January 13, 1997, no testimony was presented. 
Written comments were received from Private Provider Association of Texas, 
Austin and the Reimbursement Advisory Panel of TDMHMR, Austin. 
Two commenters requested that all references to "resident" be changed to 
"consumer." The department responds by making the requested modifications. 
Regarding sec.406.51(c)(5), two commenters suggested replacing the term 
"individual's guardian" to "guardian of the estate" to avoid conflict with 
program standards. The department responds by making the requested 
modifications. Regarding sec.406.51(c)(6) and (8), two commenters stated that 
the department previously made assurances it would add clarifying language to 
the paragraph. The department responds that it is actively seeking clarifying 
language in the form of federal guidelines. The department, however, was unable 
to identify the federal guidelines cite before the subchapter was scheduled to 
be adopted. Federal employees are currently researching the Social Security 
regulations in an attempt to locate the guidelines necessary for clarification. 
The rule will be amended when the federal guidelines are identified. 
Regarding sec.406.57, two commenters suggested adding language clarifying that 
providers are not expected to seek approval of consultant subcontracts commonly 
used in the provision of professional services. The department responds by 
adding clarifying language. 
Regarding sec.406.61(a), two commenters requested that language indicate 
contract termination occurs only for cause, i.e., significant contract 
violations that remain uncorrected. The department responds by deleting language 
allowing contract termination if it is in the department's best interest. 
Regarding sec.406.62(g), two commenters questioned if this subsection is 
consistent with Home and Community-based Services rules on the same issue and 
with the new level-of-need rules. The department responds by ensuring 
consistency in affected rules. 
Regarding sec.406.64(a)(3)(B), two commenters suggested including a reference to 
materiality and intent to ensure that the rules are not used unfairly. The 
department responds that if an administrative hearing is requested to appeal the 
issue, then the administrative law judge will determine materiality and intent. 
Two commenters identified several references to Chapter 409 which should be 
Chapter 406. The department responds by correcting the references. 
The new sections are adopted under the Health and Safety Code, sec.532.015(a), 
which provides the Texas Mental Health and Mental Retardation Board with broad 
rulemaking authority; and under the provisions of Texas Government Code, which 
provides the Texas Health and Human Services Commission with the authority to 
administer federal medical assistance funds. 

sec.406.51.Participation Requirements.
(a) To participate in the Title XIX Texas Medical Assistance Program and receive 
state and federal reimbursements for services to eligible individuals, 
Intermediate Care Facilities for the Mentally Retarded (ICFs/MR) must satisfy 
the following conditions. 
(1) The facility must have an approved application on file with the Medicaid 
Administration section of the Texas Department of Mental Health and Mental 
Retardation (TDMHMR) or its designated agent to participate as an ICF/MR in the 
Title XIX Texas Medical Assistance Program, as specified in sec.406.52 of this 
title (relating to Application for Enrollment (General Provisions)) and 
sec.406.53 of this title (relating to Provider Application Requirements Specific 
to ICF/MR). 
(2) The Texas Department of Human Services (TDHS) must have furnished TDMHMR or 
its designated agent with a valid certification for the facility. 
(3) The facility's owner or authorized representative must have a written 
contract with the department to provide services to eligible individuals. 
(4) When applicable, the facility must be currently licensed under TDHS minimum 
licensing standards for facilities serving people with mental retardation or a 
related condition. 
(b) Each facility must comply with federal and state standards for participation 
on an ongoing basis as stated in its contract. To continue participating, 
facilities must immediately correct deficiencies affecting the health and safety 
of clients. Failure to correct deficiencies under the contract or under federal 
or state standards within specified time periods is cause for immediate 
suspension of vendor payments and may result in contract suspension, 
cancellation, or other actions including, but not limited to:
(1) requesting payment of valid audit exceptions, and 
(2) requiring contract compliance by a specified date.
(c) No participating facility may engage in any of the following restrictive 
practices: 
(1) requiring an individual to make a will designating the facility as a legatee 
or devisee; 
(2) requiring an individual to assign life insurance to the facility; 
(3) requiring an individual to transfer property to the facility; 
(4) requiring an individual to pay a lump-sum entrance fee or make any other 
payment or concession to the facility beyond TDMHMR or its designated agent's 
recognized rates for room, board, and care;
(5) inappropriately restricting an individual, the guardian of the estate, or 
any other responsible party in the use of the individual's personal needs 
allowance; 
(6) prohibiting an individual from leaving the facility at will except as 
provided by state law; 
(7) preventing an individual from applying for Medicaid for a specified period 
of time; 
(8) withholding services from an individual solely because the individual has 
refused to accept a particular dosage of medication or a particular method of 
administering it; 
(9) denying appropriate care to an individual because of the individual's race, 
religion, color, national origin, sex, age, handicap, marital status, or source 
of payment; and (10)preventing an adult from exercising the right to make 
decisions concerning the individual's medical care, or to formulate advance 
directives. 
(d) Each contracting facility must comply with the Civil Rights Act of 1964, 
Title VI (Public Law 88-352); the Rehabilitation Act of 1973, sec.504 (Public 
Law 93-112); the Americans with Disabilities Act of 1990 (Public Law 101-336); 
and all amendments to these acts and all requirements imposed by the regulations 
issued under these acts. These acts and regulations prohibit persons in the 
United States from being excluded from participation in, or denied, any aid, 
care, service, or other benefits provided by federal and/or state funding, or 
otherwise being subjected to any discrimination on the basis of race, color, 
national origin, sex, age, disability, or religion. In addition, each facility 
must comply with Chapters 81 and 85 of the Texas Health and Safety Code 
(relating to workplace and confidentiality guidelines regarding human 
immunodeficiency virus (HIV) and acquired immune deficiency syndrome (AIDS)), 
and Texas Administrative Code, Title 40, Chapter 73. 
(e) Each contracting facility must comply with applicable TDMHMR contracting 
rules in Chapter 401, Subchapter E, of this title (relating to Contracts 
Management) and Chapter 401, Subchapter D of this title (relating to Contracts 
Management for Community- Based Services). If there is a conflict between the 
applicable sections of those subchapters and the provisions of this subchapter, 
the provisions of this subchapter will prevail. 

sec.406.53.Provider Application Requirements Specific to ICF/MR.
(a) The words and terms in paragraphs (1)-(3) of this subsection, when used in 
this section, shall have the following meanings, unless the context clearly 
indicates otherwise: 
(1) Applicant-The individual(s) and/or entities specified on TDMHMR's or its 
designated agent facility ownership information form who:
(A) operate a for-profit organization, 
(B) serve as the authorizing entity for a nonprofit organization, or 
(C) have management or ownership control. 
(2) Affiliate-An individual or entity associated with either the applicant or 
the facility so that any one of them directly or indirectly controls or has the 
power to control one another in whole or in part. 
(3) Designated representative-The chief executive officer, the chief financial 
officer, the president or executive director, or other individual who serves in 
an upper management, decision- making capacity and has financial responsibility 
for the proposed facility. 
(b) All applicants for participation in the ICF/MR program must submit an 
application to the TDMHMR or its designated agent for review and approval. The 
application must include documentation to verify the applicant's ability to 
ensure the delivery of quality care and services. 
(1) The documentation submitted must indicate that the following persons will 
have completed the ICF/MR preapplication training course prior to approval of 
the application: 
(A) the applicant and/or a designated representative, other than a consultant; 
and/or 
(B) the individual who will be responsible for the direct management of the 
facility; or 
(C) those who, at the time of application, are not owners of an ICF/MR facility 
in the Texas ICF/MR program. 
(2) If the employment status of the persons specified in paragraph (1) of this 
subsection changes prior to approval of the application, approval of the 
application will be postponed until the appropriate persons complete the 
training. 
(c) All applications must meet the requirements specified in paragraphs (1)-(3) 
of this subsection. 
(1) Requested certification is limited to a maximum of six beds per facility. 
This includes new facilities seeking initial certification and currently 
certified facilities seeking to increase the certified bed capacity. 
(2) The proposed facility is in compliance with applicable special use permit 
requirements, local zoning, and/or occupancy code requirements, and sec.406.51 
of this title (relating to Participation Requirements).
(3) The proposed facility must submit documentation to verify that the mental 
retardation authority (MRA) in whose catchment area the proposed facility is 
located has been notified of the development of the proposed facility and the 
proposed facility's admission criteria. 
(d) The applicant has 270 calendar days from the date an application for 
participation in the ICF/MR program has been approved by TDMHMR or its 
designated agent to obtain certification by TDHS. If, at the end of the 270 
calendar day period, the provider is unable to obtain certification, the request 
for program participation will be withdrawn by TDMHMR or its designated agent 
and the application will be returned to the applicant. 
(1) TDMHMR or its designated agent may grant applicants one 90- calendar-day 
extension for new construction delayed by inclement weather, natural disaster, 
construction strike, requirements of governmental entities other than the survey 
agency, or other causes beyond the provider's control. New construction does not 
include renovations or modifications to existing structures. The request for the 
extension must: 
(A) be submitted in writing to TDMHMR or its designated agent prior to the end 
of the 270 calendar day period, and 
(B) include documentation to support the circumstance which caused the delay. 
(2) If there is a delay by the survey agency that is not the fault of the 
applicant which results in failure to obtain certification within the 270-
calendar-day period, TDMHMR will grant an extension an to enable completion of 
the process. The extension will continue until the date of the scheduled survey. 
A copy of the notification granting an extension will be forwarded to the 
provider and other governmental entities as appropriate.
(3) Extension periods due to litigation may be granted:
(A) until litigation is resolved, plus 270 days if construction was stopped 
because of a court order, but in no event will the extension period be longer 
than two years; or 
(B) for a length of time at TDMHMR's discretion, if: 
(i) there was no construction; or 
(ii) construction was not stopped as provided in subparagraph (A) of this 
paragraph. 
(4) If an applicant must change locations following application approval by 
TDMHMR or its designated agent, the change in location must: 
(A) be requested within the first 30 days from the date of the original 
application approval and include the relocation information required by TDMHMR 
or its designated agent; 
(B) meet all requirements set forth in this section and be approved by TDMHMR 
Medicaid Administration or its designated agent; 
(C) remain within the same general geographic region as the previously approved 
location; and 
(D) not alter the applicant's ability to obtain certification within the 270-
calendar-day period set forth in this subsection. 
(e) TDMHMR will approve applications that meet all requirements set forth in 
this section and are within the service capacity set forth in The Plan on Long-
Term Care for People with Mental Retardation or Related Conditions. Applications 
that have not received approval from TDMHMR or its designated agent within a 90-
calendar-day period from the date submitted will be withdrawn from the review 
process and returned to the applicant. 
(1) TDMHMR or its designated agent reserves the right to deny the approval of 
any application if the applicant or an affiliate has been excluded from Medicaid 
program participation under Chapter 409, Subchapter C of this title (relating to 
Fraud and Abuse and Recovery of Benefits) or debarred from contracting with 
TDMHMR in accordance with this subchapter. TDMHMR or its designated agent also 
reserves the right to postpone the approval of any application if the applicant 
or an affiliate is currently under investigation or review for potential fraud, 
abuse, or misuse of Medicaid funds or for any violation for which a sanction 
could be taken under Chapter 409, Subchapter C of this title (relating to Fraud 
and Abuse and Recovery of Benefits). 
(2) As necessary, staff from TDMHMR or its designated agent will contact the 
applicant to facilitate completion of the application process. Upon approval, 
TDMHMR or its designated agent will notify TDHS that the facility can begin the 
certification survey process. If a facility's license is revoked, then the: 
(A) facility's certification will be revoked; and 
(B) the facility's provider contract will be canceled. 
(3) The contract for services is dependent on compliance with the provisions of 
this section. 

sec.406.57.Subcontracts.
(a) Subcontracts are contracts for providing a part or all of the program 
components. Such contracts are between the party contracting with the department 
and the subcontractor. 
(b) Each subcontract, except those for ancillary or support services, such as 
janitorial services, must contain a provision that the subcontractor agrees to 
accept and abide by all terms and conditions imposed on subcontractors under the 
primary contract between the department and the contractor. 

sec.406.61.Notice of Termination.
(a) If TDMHMR intends to terminate a facility provider agreement for contract 
violations, it will notify the provider. The notice at minimum must include the 
effective date of the termination and a notice of the contractor's right to 
appeal the adverse action in accordance with Chapter 409, Subchapter B of this 
title (relating to Adverse Actions). 
(b) The department may immediately terminate a contract for cause if not 
disallowed by law. 

sec.406.62.Sanction Provisions for Violations of Title XIX ICF/MR Contractual 
Agreements.
(a) The following words and terms, when used in this section, shall have the 
following meanings, unless the context clearly indicates otherwise.
(1) Direct or immediate adverse effect-A situation in which a significant, 
unfavorable risk or source of danger exists. Direct or immediate adverse effect 
does not include remote or minimal risk or effect. 
(2) Immediate jeopardy-A situation in which a facility's noncompliance with one 
or more standards for participation poses a serious threat to the health and 
safety of an individual(s) residing in the facility, making immediate corrective 
action necessary. 
(3) New admission-The admission of an individual who has never been previously 
admitted to the facility or who, if previously admitted, was discharged or 
voluntarily left the facility. New admissions do not include:
(A) individuals who lived in the facility before the effective date of denial of 
payment for new admissions, even if the individuals become eligible for Medicaid 
after that date; and 
(B) individuals who, after a temporary absence from the facility for a 
therapeutic visit or extended therapeutic visit as described in sec.406.211 of 
this title (relating to Payment for Absences from the Facility), are readmitted 
to beds reserved for them. 
(b) TDMHMR takes the following action(s) when a Title XIX contracted facility 
fails to meet the requirements specified in this chapter, as cited in writing by 
TDHS, which is the state survey agency. 
(1) When TDHS notifies TDMHMR in writing that TDHS is terminating the facility's 
certification because cited deficiencies pose immediate jeopardy to the health 
and safety of its consumers, TDMHMR: 
(A) does not offer a compliance period; 
(B) imposes an immediate vendor hold on state Medicaid payments to the facility; 
and 
(C) cancels the facility's contract. TDMHMR normally makes no payment for 
services provided by the facility after the effective date of TDHS's termination 
of the facility's certification. However, in certain instances, TDMHMR may 
continue payments for as many as 30 days after the date that TDMHMR cancels or 
fails to renew the provider contract. Specifically, TDMHMR may continue payments 
if TDHS notifies TDMHMR in writing that: 
(i) the facility is making reasonable efforts to transfer its consumers to 
another facility or into alternate care, and 
(ii) additional time is needed to effect an orderly transfer of the facility's 
consumers. 
(2) When TDHS recommends a vendor hold on state Medicaid payments to the 
facility and notifies TDMHMR in writing that cited deficiencies do not pose 
immediate jeopardy, but do constitute health or safety hazards that have a 
direct or immediate adverse effect on the facility's consumers' health, safety, 
security, or training as outlined in their individualized plans of care, TDMHMR 
takes the following actions. 
(A) TDMHMR imposes an immediate vendor hold on state Medicaid payments to the 
facility. 
(B) If the cited deficiencies are not corrected within 60 days from the date 
that TDHS finds the facility in noncompliance after an on-site visit, TDMHMR 
cancels the facility's contract for breach of contract. If the facility appeals 
an adverse action by TDMHMR and the adverse action is sustained by a contract 
appeals committee or judicial proceeding, the effective date of the contract 
cancellation is the date specified in the notice of contract cancellation. 
Except as otherwise provided in this paragraph, TDMHMR makes no payment for 
services provided by the facility after the effective date of the facility's 
contract termination. In certain instances, TDMHMR may continue payments for as 
many as 30 days after the date that TDMHMR terminates or fails to renew the 
provider contract. Specifically, TDMHMR may continue payments if TDHS notifies 
TDMHMR in writing that: 
(i) the facility is making reasonable efforts to transfer its consumers to 
another facility or into alternate care, and 
(ii) additional time is needed to effect an orderly transfer of the facility's 
consumers. 
(C) When TDMHMR cancels a facility's contract as specified in this paragraph, 
the department may enter into a probationary contract with the facility, as 
specified in sec.406.55(4) of this title (relating to Duration of the Contract). 
TDMHMR may enter into this contract only after TDHS conducts an on-site, follow-
up visit and notifies TDMHMR that: 
(i) all previously cited deficiencies have been corrected,
(ii) no other deficiencies have been found that pose immediate jeopardy to the 
consumers, and 
(iii) no other deficiencies have been found that constitute health or safety 
hazards or that relate to the provision of training as outlined in the 
consumers' individualized plans of care. 
(D) After the probationary contract period, TDMHMR may enter into a 
nonprobationary contract as specified in sec.406.55(1), (2), (3), or (5) of this 
title (relating to Duration of the Contract). TDMHMR may enter into this 
contract only after TDHS conducts an on-site, follow-up visit and notifies 
TDMHMR that: 
(i) no deficiencies have been found that pose immediate jeopardy to the 
consumers, and 
(ii) no deficiencies have been found that constitute health or safety hazards or 
that relate to the provision of training as outlined in the consumers' 
individualized plans of care. 
(3) If a facility is placed on vendor hold three times in any 18-month period 
for deficiencies in consumer care, as specified in subsection (b)(1) and (2) of 
this section, TDMHMR takes the following actions. 
(A) TDMHMR cancels the facility's contract for breach of contract. If the 
facility appeals an adverse action by TDMHMR and the adverse action is sustained 
by a contract appeals committee or judicial proceeding, the effective date of 
the contract cancellation is the date specified in the notice of contract 
cancellation. Except as otherwise provided in this paragraph, TDMHMR makes no 
payment for services provided by the facility after the effective date of the 
facility's contract termination. In certain instances, TDMHMR may continue 
payments for as many as 30 days after the date that TDMHMR terminates or fails 
to renew the provider contract. Specifically, TDMHMR may continue payments if 
TDHS notifies TDMHMR in writing that: 
(i) the facility is making reasonable efforts to transfer its consumers to 
another facility or into alternate care, and 
(ii) additional time is needed to effect an orderly transfer of the consumers. 
(B) When TDMHMR cancels a facility's contract as specified in this paragraph, 
the department may enter into a probationary contract with the facility, as 
specified in sec.406.55(4) of this title (relating to Duration of the Contract). 
TDMHMR may enter into this contract only after TDHS conducts an on-site, follow-
up visit and notifies TDMHMR that: 
(i) all previously cited deficiencies have been corrected,
(ii) no other deficiencies have been found that pose immediate jeopardy to the 
consumers, and 
(iii) no other deficiencies have been found that constitute health or safety 
hazards or that relate to the provision of training as outlined in the 
consumers' individualized plans of care. 
(C) After the probationary contract period, TDMHMR may enter into a 
nonprobationary contract as specified in sec.406.55(1), (2), (3), or (5) of this 
title (relating to Duration of the Contract). TDMHMR may enter into this 
contract only after TDHS conducts an on-site, follow-up visit and notifies 
TDMHMR that: 
(i) no deficiencies have been found that pose immediate jeopardy to the 
consumers, and 
(ii) no deficiencies have been found that constitute health or safety hazards or 
that relate to the provision of training as outlined in the consumers' 
individualized plans of care. 
(c) TDMHMR takes the following action(s) when a Title XIX contracted facility 
fails to meet applicable agency rules or contractual provisions that are not 
specified in this chapter, as cited in writing by TDMHMR or TDHS. 
(1) TDHS citations result in the following actions. 
(A) At its discretion, TDHS may grant the facility a compliance period of no 
more than 30 days to correct cited deficiencies. If TDHS finds on a follow-up 
visit that the cited deficiencies have not been corrected, but the facility has 
made substantial progress towards correcting them, TDHS may extend the 
compliance period for a maximum of 15 days. No more than one compliance 
extension can be granted. 
(B) If the cited deficiencies are not corrected within the compliance period, 
TDMHMR imposes a vendor hold on state Medicaid payments to the facility. 
(C) If the cited deficiencies are not corrected within 60 days after the date 
the facility is placed on vendor hold, TDMHMR cancels the facility's contract 
for breach of contract. If the facility appeals an adverse action by TDMHMR and 
the adverse action is sustained by a contract appeals committee or judicial 
proceeding, the effective date of the contract cancellation is the date 
specified in the notice of contract cancellation. Except as otherwise provided 
in this paragraph, TDMHMR makes no payment for services provided by the facility 
after the effective date of the facility's contract termination. In certain 
instances, TDMHMR may continue payments for as many as 30 days from the date 
that TDMHMR terminates or fails to renew the provider contract. Specifically, 
TDMHMR may continue payments if TDHS notifies TDMHMR in writing or TDMHMR 
determines that: 
(i) the facility is making reasonable efforts to transfer consumers to another 
facility or into alternate care, and 
(ii) additional time is needed to effect an orderly transfer of the consumers. 
(2) TDMHMR administrative citations result in the following actions. 
(A) At its discretion, TDMHMR may grant the facility a compliance period of no 
more than 30 days to correct deficiencies cited by TDHS. If TDMHMR determines 
during the compliance period that the cited deficiencies have not been 
corrected, but the facility has made substantial progress towards correcting 
them, TDMHMR may extend the compliance period for a maximum of 15 days. No more 
than one compliance extension can be granted. 
(B) If the deficiencies cited by TDHS are not corrected within the compliance 
period, TDMHMR imposes a vendor hold on state Medicaid payments to the facility. 
(C) If the cited deficiencies are not corrected within 60 days after the date 
the facility is placed on vendor hold, TDMHMR cancels the facility's contract 
for breach of contract. If the facility appeals an adverse action by TDMHMR and 
the adverse action is sustained by a contract appeals committee or judicial 
proceeding, the effective date of the contract cancellation is the date 
specified in the notice of contract cancellation. Except as otherwise provided 
in this paragraph, TDMHMR makes no payment for services provided by the facility 
after the effective date of the facility's contract termination. In certain 
instances, TDMHMR may continue payments for as many as 30 days from the date 
that TDMHMR terminates or fails to renew the provider contract. Specifically, 
TDMHMR may continue payments if TDHS notifies TDMHMR in writing or TDMHMR 
determines that: 
(i) the facility is making reasonable efforts to transfer consumers to another 
facility or into alternate care, and 
(ii) additional time is needed to effect an orderly transfer of the consumers. 
(d) The facility must not charge Title XIX consumers, their families, guardians, 
or other responsible parties to recoup vendor payments not received because of 
the imposition of sanctions against the facility. The facility is entitled to 
collect only the applied income established in the individual's payment plan. 
(e) If a facility charges a Title XIX consumer any member of his family, or any 
other party in order to supplement TDMHMR payments or to secure payment for 
services that TDMHMR disallows, TDMHMR is entitled to cancel the facility's 
existing contract or to deny its application to participate in the Title XIX 
Texas Medical Assistance program, unless the department's policies and 
regulations explicitly permit the charge(s) in question. 
(f) A provider may request an administrative hearing in accordance with Chapter 
409, Subchapter B of this title (relating to Adverse Actions) if TDMHMR takes or 
proposes to take the following adverse action: 
(1) vendor hold; 
(2) contract termination; 
(3) recoupment of payments made to the provider; or 
(4) denial of a provider's request for payment. 
(g) If the basis of an administrative hearing requested under subsection (a) of 
this section is a dispute regarding a level-of- need assignment, the provider 
may receive an administrative hearing only if reconsideration was requested by 
the provider in accordance with sec.406.214(e) of this title (relating to 
Reconsideration of Level of Need).  

sec. 406.63.Debarment and Suspension of Current and Potential Contractor's 
Rights.
(a) Applicability. Requirements in this section are applicable to all types of 
Medicaid contracts with TDMHMR. These requirements are in addition to, and do 
not supersede, rules in Chapter 409, Subchapter C of this title (relating to 
Fraud or Abuse and Recovery of Benefits.) 
(b) Definitions. The following words and terms when used in sec.sec.406.63-
406.67 of this title relating to (Contracting Requirements) shall have the 
following meanings, unless the context clearly indicates otherwise: 
(1) Contractor and subcontractor-Individuals or legal entities who have existing 
TDMHMR contracts or are otherwise participating providers, including managers of 
contractors' operations, such as managers and administrators of ICF/MR 
facilities. 
(2) Debarment-Termination of rights to continue an existing contract, to receive 
a new contract, to participate as a provider or manager, or to make a bid, 
offer, application or proposal for a TDMHMR contract. The debarment is for a 
specified time commensurate with the seriousness of the violation, the extent of 
the violation, prior impositions of sanctions or penalties, willingness to 
comply with program rules and directives, and other pertinent information. The 
maximum period of debarment is six years, unless a longer time is mandated by 
requirements other than those in this subchapter.
(3) Potential contractor-Individuals or legal entities who wish to submit a bid, 
offer, application, or proposal for a TDMHMR contract or subcontract, or 
otherwise request participation as a provider, including managers of 
contractors' operations, such as managers and administrators of ICF/MR. 
(4) Suspension of contractual rights-Temporary suspension of a contractor's or 
potential contractor's right to conduct business with TDMHMR. A suspension is in 
effect until an investigation, hearing, or trial is concluded and TDMHMR can 
make a determination about: 
(A) the contractor's future right to contract or subcontract, or 
(B) a potential contractor's future right to have TDMHMR consider its offer, 
bid, proposal, or application. 
(c) Scope. For purposes of both suspension of contractual rights and debarment, 
TDMHMR may impute the conduct of an individual, corporation, partnership, or 
other association to the contractor, potential contractor, or the responsible 
component or entity of the contractor or potential contractor with whom the 
individual, corporation, partnership, or other association is employed or 
otherwise associated. Even though the underlying conduct may have occurred while 
an individual, corporation, partnership, or other association was not associated 
with the contractor or potential contractor, suspension of contractual rights or 
debarment may be imposed. Remedial actions taken by the responsible officials of 
the contractor or potential contractor will be considered in determining whether 
either suspension of contractual rights or debarment is warranted. 
(d) Choice of sanction. Severe violations of the type specified in sec.406.64 of 
this title (relating to Causes and Conditions for Debarment) may be the basis 
for suspension of contract rights or debarment even if there is only a single 
occurrence. However, isolated and less severe violations of TDMHMR contract 
provisions do not necessarily lead to suspension and/or debarment. Sanctions for 
isolated and less severe violations may be found in TDMHMR's rules governing the 
specific program area in which the violations occurred.  

sec.406.64.Causes for and Conditions of Debarment. 
(a) Causes for debarment. TDMHMR may remove contractual rights from an 
individual or legal entity for causes including, but not limited to, the 
following: 
(1) being found guilty, pleading guilty, pleading nolo contendere, or receiving 
a deferred adjudication in a criminal court, relating to: 
(A) obtaining, attempting to obtain, or performing a public or private contract 
or subcontract; 
(B) embezzlement, theft, forgery, bribery, falsification or destruction of 
records, any form of fraud, receipt of stolen property, or any other offense 
indicating moral turpitude or a lack of business integrity or honesty; 
(C) dangerous drugs, controlled substances, or other drug-related offense; 
(D) federal antitrust statutes arising from the submission of bids or proposals; 
or 
(E) any physical or sexual abuse or neglect offense; 
(2) being debarred from contracting by any unit of the federal government or any 
unit of a state government; 
(3) violating TDMHMR contract provisions including failing to perform according 
to the terms, conditions, and specifications or within the time limit(s) 
specified in the TDMHMR contract, including, but not limited to, the following: 
(A) failing to abide by applicable federal and state statutes, such as those 
regarding persons with disabilities and those regarding civil rights; 
(B) having a record of failure to perform or of unsatisfactory performance 
according to the terms of one or more contracts or subcontracts, if that failure 
or unsatisfactory performance has occurred within five years preceding the 
determination to debar. Application of this subsection will be made only for 
actions occurring after the effective date of these rules. Failure to perform 
and unsatisfactory performance includes, but is not limited to, the following: 
(i) failing to correct contract performance deficiencies after receiving written 
notice about them from TDMHMR or its authorized agents;
(ii) failing to repay or make and follow through with arrangements satisfactory 
to the Department to repay identified overpayments or other erroneous payments, 
or assessed liquidated damages or penalties; 
(iii) failing to meet standards that are required for licensure or 
certification, or that are required by state or federal law, TDMHMR rule, or 
TDMHMR policy concerning TDMHMR contractors; 
(iv) failing to execute amendments required by TDMHMR; 
(v) billing for services or merchandise not provided to the consumer or TDMHMR; 
(vi) submitting cost reports containing costs not associated with and/or not 
covered by the contract or TDMHMR rules and instructions. Intent to increase 
individual or statewide rates or fees by submission of unallowable costs must be 
shown for a single cost report, but intent may be inferred when a pattern of 
submitting cost reports with unallowable costs is shown; 
(vii) submitting a false statement or misrepresentation which, if used, may 
increase individual or statewide rates or fees; 
(viii) charging consumer or patient fees contrary to TDMHMR rules or policy; 
(ix) failing to notify and reimburse TDMHMR or its agents for services TDMHMR 
paid for when the contractor received reimbursement from a liable third party; 
(x) failing to disclose or make available, upon demand, to TDMHMR or its 
representatives (including appropriate federal and state agencies) any records 
the contractor is required to maintain; 
(xi) failing to provide and maintain services within standards required by 
statute, regulation, or contract; or 
(xii) violating the TDMHMR provisions applicable to the contract or any rule or 
regulation issued by TDMHMR; 
(4) submitting an offer, bid, proposal or application that contains a false 
statement or misrepresentation or omits pertinent facts or documents that are 
material to the procurement; 
(5) engaging in any abusive or neglectful practice that results in or could 
result in death or injury to the consumers served by the contractor; or 
(6) violating any of the provisions outlined in sec.409.055 of this title 
(relating to Grounds for Fraud Referral and Administrative Sanction). For 
purposes of this subsection, any reference in Chapter 409, Subchapter C of this 
title (relating to Fraud and Abuse and Recovery of Benefits), to a violation of 
the Medicaid (Title XIX), Medicare (Title XVIII), or Title XX programs is 
expanded to include an identical violation within any programs of federal or 
state governments; 
(7) knowingly and willingly using a debarred person or entity as an employee, 
independent contractor, or agent to perform a contract with TDMHMR. 
(b) Conditions of debarment. Individuals, parts of entities, and entities that 
have been debarred may not: 
(1) receive a contract; 
(2) be allowed to retain a contract which has been awarded before debarment; 
(3) bid or otherwise make offers to receive a contract or subcontract; 
(4) participate in TDMHMR programs which do not require the provider to sign a 
contract or agreement; or 
(5) either personally or through a clinic, group, corporation or other 
association bill to or receive payment from TDMHMR for any services or supplies 
provided by the debarred entity on or after the effective date of the debarment. 
Additionally, TDMHMR will not pay for any services ordered, prescribed, or 
delivered by the debarred entity for TDMHMR recipients after the date of 
debarment. No costs associated with a debarred entity, including the salary, 
fringe benefits, overhead, payments to, or any other costs associated with an 
employee, owner, officer, director, board member, independent contractor, 
manager, or agent who was debarred may be included in a TDMHMR cost report or 
any other document which will be used to determine an individual payment rate, a 
statewide payment rate, or a fee. 
(c) Entities that may be debarred. Debarment may be applied against an 
individual, an entire legal entity, or a specified part of a legal entity. 

sec.406.65.Causes for and Conditions of Suspension.
(a) Causes for suspension. TDMHMR may place a contractor or potential 
contractor's contractual rights in suspension whenever TDMHMR finds that there 
is a reasonable basis to believe that grounds for debarment as specified in 
sec.406.64 of this title (relating to Conditions for and Conditions of 
Debarment) exists. Suspension may be imposed immediately following TDMHMR's 
notification to a contractor or potential contractor. In addition, suspension 
may be imposed on a potential contractor or subcontractor if he has an 
outstanding indictment or the department has information about an offense that 
is grounds for debarment. 
(b) Conditions of suspension. 
(1) TDMHMR may withhold payments, in whole or in part, to the affected 
contractor during the period of suspension. 
(2) TDMHMR may refuse to accept a bid, offer, application, or proposal from, or 
to award a contract to, the affected potential contractor during the period of 
suspension. 
(3) TDMHMR may cease referrals of additional consumers to the suspended entity. 
(4) If TDMHMR determines that the underlying reasons for the suspension have 
been resolved in favor of the contractor, TDMHMR must, if applicable: 
(A) pay the withheld payments for any services that may have been provided 
during the suspension and which meet the terms of an existing contract, and 
(B) resume contract payments. 
(5) If TDMHMR determines that underlying reasons for the suspension have not 
been resolved in favor of the contractor, TDMHMR will institute debarment 
proceedings. 
(6) Individuals and entities whose contractual rights have been placed in 
suspension may not: 
(A) receive a contract; or 
(B) submit an offer, bid, application or proposal for a contract.
(c) Entities that may be suspended. A suspension may be applied against an 
individual, an entire legal entity, or a specified part of a legal entity.  

sec.406.66.Proof Required for Debarment and Suspension. 
(a) Causes identified in sec.406.64(a)(1) of this title (relating to Causes for 
and Conditions of Debarment) are established by proof of pleading guilty or nolo 
contendere, or of the issuance of a deferred adjudication of guilt. If an appeal 
results in a reversal, contractual rights must be restored upon written request, 
unless another cause for their removal exists. 
(b) Causes identified in sec.406.64(a)(2) of this title (relating to Causes for 
and Conditions of Debarment) are based entirely upon the other state or federal 
agency's official notice that the contractor or potential contractor's rights 
have been removed. 
(c) The existence of all other causes for debarment or suspension must be 
established by a preponderance of the evidence.  

sec.406.67.Notice Requirements for Debarment and for Suspension.
(a) Contractors' right of notice and appeal. Contractors who have been placed in 
suspension or who have been debarred or who have been notified of proposed 
debarment have the appeal rights provided in Chapter 409, Subchapter B of this 
title (relating to Adverse Actions), governing provider appeal processes for 
adverse actions. 
(b) Potential contractors' rights of notice and appeal. Potential contractors 
who are placed in suspension or who have been debarred have all the notice and 
appeal rights provided in Chapter 409, Subchapter B of this title (relating to 
Adverse Actions), governing provider appeal processes for adverse actions. 
(c) Required content for notices of suspension and debarment. In addition to 
information required in the notice of adverse actions specified in Chapter 409, 
Subchapter B of this title (relating to Adverse Actions), notices must include 
the following, when applicable: 
(1) the grounds for the action (if an indictment or information is pending or 
has been returned, the nature of the irregularities is described in general 
terms without disclosing evidence); 
(2) the length of the suspension or debarment; 
(3) a statement explaining the effect of the suspension or debarment; and 
(4) a statement of whether the suspension or debarment is in effect throughout 
TDMHMR. 
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 March 5, 1997.
TRD-9703056
Ann Utley
Chairman, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Effective date: March 25, 1997
Proposal publication date: December 24, 1997
For further information, please call: (512) 206-4516

SUBCHAPTER C.Vendor Payments
25 TAC sec.sec.406.101-406.103
The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts the 
repeal of existing sec.sec.406.101-406.103 of Chapter 406, Subchapter C, 
governing Vendor Payments. The repeal accommodates the contemporaneous adoption 
of new sec.sec.406101-406103 in this issue of the Texas Register. Existing 
sec.sec.406.101-406.103 are repealed without changes to the text as published in 
the December 24, 1996, issue of the Texas Register (21 TexReg 12372). 
The repeal would enable the addition of new sections to Chapter 406, Subchapter 
C. 
There was no oral or written testimony regarding the repeal at a public hearing 
held on January 13, 1997. 
The repeals are adopted under the Health and Safety Code, sec.532.015(a), which 
provides the Texas Mental Health and Mental Retardation Board with broad 
rulemaking authority; and under the provisions of Texas Government Code, 
sec.531.021, which provides the Texas Health and Human Services Commission with 
the authority to administer federal medical assistance funds. 
The repeal affects Texas Human Resources Code, sec.sec.32.001- 322.040, and 
Texas Government Code, sec.531.021. 
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 March 5, 1997.
TRD-9703055
Ann Utley
Chairman, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Effective date: March 25, 1997
Proposal publication date: December 24, 1997
For further information, please call: (512) 206-4516

The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts new 
sec.sec.406.101-406.103 of Chapter 406, Subchapter C, governing Vendor Payments. 
Existing sec.sec.406.101-406.103 are contemporaneously repealed in this issue of 
the Texas Register. Sections 406.101-406.103 are adopted with changes to the 
proposed text as published in the December 24, 1996, issue of the Texas Register 
(21 TexReg 12373). 
The adopted new sec.sec.406.101-406.103 revise the formula for the applied 
income daily reimbursement rate for Title XIX consumers by including the daily 
rate for an individual's level of need (LON); and revise the special provisions 
regarding reduced, denied, and incorrect vendor payments and the prohibition of 
charging or penalizing a Medicaid consumer, a Medicaid consumer's family 
members, or a Medicaid consumer's representatives for provider claims denied or 
reduced as the result of the change of an individual's level of need. 
Language in sec.406.101 is modified to reference the ICF/MR program rather than 
Title XIX Texas Medical Assistance Program. Language in sec.406.102 is modified 
to include the process by which ICF/MR consumers may be responsible for paying a 
portion of the cost of their care, and to delete references to the Texas 
Department of Human Services. Language in sec.406.103 is modified to correct 
references. 
Written comments were received from three respondents regarding adoption of the 
rule, with several commenters offering recommendations for revision. Those 
respondents offering comment on the rule include: Private Provider Association 
of Texas; Develocepts; and, Reimbursement Advisory Panel of TDMHMR. Concerning 
proposed sec.406.102(c), two commenters state that the language needs to be more 
clear and flexible. 
The department responds that it agrees with the comment and has clarified the 
language. 
Concerning proposed sec.406.102(e), two commenters stated the language in this 
section needs to be clarified and should include language referencing 
materiality and intent to commit fraud as critical to the determination of a 
violation. 
The department responds that it is not appropriate to include in this rule all 
of the elements necessary to prove a violation of the referenced federal 
statute. The department has changed the rule language to clarify that collection 
of certain amounts may constitute a violation of the referenced federal statute.
The new sections are adopted under the Health and Safety Code, sec.532.015(a), 
which provides the Texas Mental Health and Mental Retardation Board with broad 
rulemaking authority; and under the provisions of Texas Government Code, 
sec.531.021, which provides the Texas Health and Human Services Commission with 
the authority to administer federal medical assistance funds. 
The new section affects Texas Human Resources Code, sec.sec.32.001-32.040, and 
Texas Government Code, sec.531.021. 

sec.406.101.Vendor Payments. 
(a) The Texas Department of Mental Health and Mental Retardation (TDMHMR) or its 
authorized agent makes vendor payments only for periods of time in which all of 
the following conditions are met: 
(1) TDMHMR or its designated agent has approved the facility's application to 
participate in the ICF/MR Program; 
(2) the state survey agency, the Texas Department of Human Services (TDHS), has 
licensed, if applicable, and certified the facility for operation; 
(3) the facility has a signed contract with TDMHMR or its designated agent to 
provide services to eligible consumers; and 
(4) the state survey agency has determined that the facility is in compliance 
with federal regulations and state standards for participation.
(b) The state survey agency determines the effective date of eligibility for 
participation. 

sec.406.102.Applied Income and the Daily Reimbursement Rate.
(a) ICF/MR consumers may be responsible for paying for a portion of the cost of 
their care, depending on their income. The amount a consumer pays, called 
"applied income," is established by their Medicaid eligibility worker. The 
Medicaid eligibility worker then develops a payment plan that the facility uses 
to determine the amount of applied income to be collected from the consumer. 
TDMHMR pays providers the portion of the daily reimbursement rate that is not 
billed as applied income. 
(b) A Medicaid eligibility worker calculates the daily reimbursement rate paid 
to the provider by TDMHMR for each ICF/MR consumer by: 
(1) multiplying the rate established by TDMHMR for the individual's level of 
need (LON) times the number of days in the month, 
(2) subtracting the individual's applied income for the month, and 
(3) dividing the result by the number of days in the month.
(c) The facility is entitled to collect from the individual only the monthly 
amount of applied income specified on the individual's payment plan. 
(d) When an individual's payment plan requires correction or revision, the 
facility contacts the Medicaid eligibility worker to request a plan change. The 
facility may not collect an increased amount of applied income from the 
individual unless and until the Medicaid eligibility worker changes the payment 
plan. 
(e) If an individual does not have a payment plan, the facility contacts the 
Medicaid eligibility worker to determine how much applied income the individual 
must pay. If the Medicaid eligibility worker subsequently determines that the 
individual's correct payment amount is lower than initially specified, the 
facility must immediately return the amount overpaid and notify the Medicaid 
eligibility worker of the refund. 
(f) No facility may collect applied income payments that exceed the payment 
plan. A violation of this requirement may be a violation of 42 USC Section 
1320a-7b, which makes solicitation of supplementation a felony punishable by a 
fine of up to $25,000 or imprisonment for up to five years or both. Texas 
Department of Human Services regional staff must report all apparent violations 
of this requirement. If an investigation verifies an apparent violation, TDMHMR 
is entitled to recoup or withhold vendor payments, terminate or suspend the 
contract, take other contract actions, and/or refer the matter to the 
appropriate legal authority. 

sec.406.103.Special Provisions Regarding Reduced, Denied, and Incorrect Vendor 
Payments.
(a) If the department or its authorized agent makes vendor payments for services 
performed during a period in which a facility is not participating in the Title 
XIX Texas Medical Assistance Program, the facility must refund the payments or 
the department will recoup the funds. 
(b) Providers of Title XIX services may not charge or penalize Medicaid 
consumers, their family members, or their representatives for any claim that the 
department denies or reduces as a result of a change of LON or the provider's 
failure to comply with the department rules, regulations, or procedures. 
(c) Payments may be adjusted by TDMHMR due to the provider's submission of any 
false statement, misrepresentation, or omission of facts, as indicated in 
Chapter 409, Subchapter C of this title (relating to Fraud and Abuse and 
Recovery of Benefits). 
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 March 5, 1997.
TRD-9703054
Ann Utley
Chairman, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Effective date: March 25, 1997
Proposal publication date: December 24, 1997
For further information, please call: (512) 206-4516

SUBCHAPTER D.Reimbursement Methodology
25 TAC sec.sec.406.151-406.152, 406.154-406.160
The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts the 
repeal of existing sec.sec.406.151-406.152 and sec.sec.406.154-406.160 of 
Chapter 406, ICF/MR Programs, Subchapter D, governing reimbursement methodology. 
The repeal accommodates the contemporaneous adoption of new sec.sec.406.151-
406.152 and sec.sec.406.154-406.158 in this issue of the Texas Register. 
Existing sec.sec.406.151-406.152 and sec.sec.406.154-406.160 are repealed 
without changes to the proposed text as published in the December 24, 1996, 
issue of the Texas Register (21 TexReg 12374).
The repeal would enable the adoption of new sections to Chapter 406, Subchapter 
D. 
There was no oral or written testimony regarding the repeal at a public hearing 
held on January 13, 1997. 
The repeals are adopted under the Health and Safety Code, sec.532.015(a), which 
provides the Texas Mental Health and Mental Retardation Board with broad 
rulemaking authority; and under the provisions of Texas Government Code, 
sec.531.021, which provides the Texas Health and Human Services Commission with 
the authority to administer federal medical assistance funds. 
The repeal affects Texas Human Resources Code, sec.sec.32.001- 322.040, and 
Texas Government Code, sec.531.021. 
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 March 5, 1997.
TRD-9703053
Ann Utley
Chairman, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Effective date: March 25, 1997
Proposal publication date: December 24, 1997
For further information, please call: (512) 206-4516

25 TAC sec.sec.406.151, 406.152, 406.154-406.158
The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts new 
sec.sec.406.151-406.152 and sec.sec.406.154-406.158 of Chapter 406, Subchapter 
D, governing reimbursement methodology, with changes to the proposed text as 
published in the December 24, 1996, issue of the Texas Register (21 TexReg 
12375). Existing sec.sec.406.151-406.152 and sec.sec.406.154- 406.160 are 
contemporaneously repealed in this issue of the Texas Register. 
The adopted new sections create a new reimbursement methodology that will target 
funding to provide more supports for persons with greater needs for staff 
supervision and intervention. 
Minor changes were made throughout the subchapter to consolidate information; to 
provide or correct references; and to correct grammatical usage. Language in 
sec.406.151 is modified to incorporate definitions of terms used in the 
subchapter and to identify the two types of facilities: state-operated and non- 
state operated. Language in sec.406.152 is modified to indicate the time lines 
for submitting direct services surveys and cost reports; to indicate that 
requests for extension of due dates must be in writing; and to indicate the 
department will respond within ten days to a request for an extension. Language 
was added to sec.406.153(m) clarifying that the records are directly or 
indirectly related to the provision of contracted services. Clarifying language 
was added to sec.406.153(n) and (o) regarding exclusions and adjustments of cost 
reports and notification of such exclusions and adjustments. Language in 
sec.406.154 is modified to indicate submission time lines for full cost reports 
and direct cost data. Language in sec.406.155 is modified regarding the 
conditions under which the actual cost of durable medical equipment is 
reimbursed and language was deleted regarding the types of services provided. 
Language in sec.406.156 is modified to identify classes of non-state operated 
facilities and to outline reimbursement rate determination procedures for non-
state operated facilities. Language in sec.406.157 is modified to indicate that 
fiscal accountability gauges financial performance and to direct service cost 
survey procedures. Language in sec.406.158 is modified to indicate that the 
department will seek to obtain a consultant to conduct an independent analysis 
of cost and operational information for a sample of service providers throughout 
the state. 
A public hearing was held on January 13, 1997. No testimony was presented. 
Written comment was received from Private Provider Association of Texas (PPAT), 
Austin; Develocepts; Educare; and the Reimbursement Advisory Panel of TDMHMR, 
Austin. 
Regarding sec.406.152(e), two commenters suggested language be deleted or 
modified to address materiality, intent, and opportunity to remedy. The 
department responds that it is not appropriate to include in this rule all of 
the elements necessary to establish liability for civil or criminal penalties. 
The department notes that sec.406.152(j) allows a provider an opportunity to 
properly complete its cost report. 
Regarding sec.406.152(f), two commenters suggested the language be modified to 
allow at least 60 days for quarterly direct cost "surveys" and at least 90 days 
for full cost reports. The department responds that it believes 45 days is 
sufficient for direct cost surveys; language has been changed allowing 90 days 
for full cost reports. 
Regarding sec.406.152(m), two commenters suggested adding "that are directly or 
indirectly related to the provision of contracted services" to the end of the 
second sentence. The department responds by adding the suggested language.
Regarding sec.406.152(o), two commenters suggested adding language which 
required the department to notify a provider of all adjustments to its costs, 
including any caps. The commenter stated that notifications should not be 
limited to the desk review and on-site audit processes. The department responds 
by adding language addressing the commenters' concern. 
Regarding sec.406.154(b)(1), two commenters suggested adding language exempting 
those providers that are selected to file a full cost report for the same 
reporting period. The department responds by adding language addressing the 
commenters' concern. 
Regarding 406.154(b)(1), one commenter stated that the department should be 
careful in its use of the term "facilities" so as to not restrict unnecessarily 
its ability to collect costs on a provider agency basis. The commenter also 
stated that if individual cost reports or surveys are required of each separate 
facility, then the 45-day requirement in sec.406.152(f) is totally unreasonable. 
The department responds that the commenter's concern is unclear. The department 
does not believe the use of the term "facility" will restrict its ability to 
collect cost information from any facility or provider. The 45-day requirement 
only applies to direct services cost surveys; the time frame for submitting a 
full cost report is 90 days regardless of the number of facilities. 
Regarding sec.406.155(d), two commenters suggested modifying the language for 
clarification regarding the model rate calculation components. The department 
responds by deleting the subsection. 
Regarding sec.406.156(b), one commenter expressed dissatisfaction with the way 
in which facility sizes are defined. Regarding the same section, another 
commenter expressed concern that the proposed rules would allow ICF/MR providers 
to manipulate their capacities solely to put their facilities in classes with 
higher rates, thereby resulting in fewer people receiving ICF/MR services at a 
higher cost than the current certification configuration would yield. 
The department responds that the classes of facilities were determined based on 
data collected by an independent consultant and resulting estimates of the cost 
of operating various sized facilities. The department further responds that the 
definitions regarding facility size have been clarified to provide that the size 
will be determined as of the first day of the full month immediately preceding a 
rate's effective date in order to avoid the suggested manipulation of certified 
capacity, to avoid displacement of ICF/MR residents, and to more accurately 
project program costs during the rate setting process. 
Regarding sec.406.156(d), two commenters recommended deleted the next to the 
last sentence in the subsection since the language relates to fiscal 
accountability and should not be used to rebase rates. The department agrees 
with the commenters' concerns about this sentence but instead of simply deleting 
the sentence the department has rewritten the subsection to clarify the fiscal 
accountability process for this methodology. 
Regarding sec.406.157(a), two commenters suggested replacing the term "validity" 
with "financial performance." The department responds by replacing the term. 
Regarding sec.406.157(b) and (c), two commenters suggested replacing the 
subsections with language developed by the Reimbursement Advisory Panel in 
cooperation with department Medicaid staff which more clearly describes fiscal 
accountability procedures and is consistent with rules governing the Home and 
Community-based Services Program (HCS). The department degrees and has modified 
the language as requested. 
Regarding sec.406.156, one commenter disagreed with the category of facility 
sizes that placed 14- and 15-bed group homes in the large facility category. The 
department responds that after outside consultants completed a thorough study of 
costs associated with facility size, data indicated that costs of 14- and 15-bed 
facilities should be covered in the new large category. 
Regarding sec.406.158(a), two commenters suggested deleting the term "at least." 
The department responds that the intent is to establish the minimum frequency 
for rebasing the model rates and not to restrict the Texas MHMR Board's ability 
to manage the program. 
The new sections are adopted under the Health and Safety Code, sec.532.015(a), 
which provides the Texas Mental Health and Mental Retardation Board with broad 
rulemaking authority; and under the provisions of Texas Government Code, Chapter 
531 which provides the Texas Health and Human Services Commission with the 
authority to administer federal medical assistance funds.

sec.406.151.Definitions and General Reimbursement Information.
(a) The following words and terms, when used in this subchapter, shall have the 
following meanings, unless the context clearly indicates otherwise:
Cost Report-Any cost data or financial information submitted by a provider to 
TDMHMR.
Direct Services Cost Survey-Annual survey conducted by TDMHMR in which cost data 
related to direct care services is submitted by providers.
Full Cost Report-Cost data required by TDMHMR that includes all costs of 
providing services including direct services costs, administration, facility 
costs, and all other operating costs relevant to the provision of services.
GAAP-Generally accepted accounting principles.
GAAS-Generally accepted auditing standards.
ICF/MR-An intermediate care facility for persons with mental retardation and 
related conditions.
Person-An individual, partnership, corporation, association, governmental 
subdivision or agency, or a public or private organization of any character. 
Provider-Any person with whom TDMHMR has an ICF/MR provider agreement.
Provider agreement-Any written agreement that obligates TDMHMR to pay money to a 
person for goods or services under the Title XIX Medical Assistance Program.
Rebase-The revision to the underlying assumptions on which the modeled rates are 
calculated, including revisions to staffing ratios, pay structure, the 
composition of direct care staff, or other cost factors used in the formula for 
modeling the rates.
State-operated facility-An ICF/MR for which a facility or division of TDMHMR is 
the provider.
TDMHMR-The Texas Department of Mental Health and Mental Retardation or its 
designee. 
(b) TDMHMR reimburses providers for services provided to eligible recipients in 
ICFs/MR. The Texas MHMR Board determines reimbursement rates at least annually 
in accordance with Chapter 409, Subchapter A of this title (relating to General 
Reimbursement Methodology for all Medical Assistance Programs) and this 
subchapter. There are two types of facilities: non-state operated and state-
operated. 
(1) Non-state operated facilities. 
(A) Except for demonstration or pilot projects involving experimental classes as 
specified in sec.406.156 of this title (relating to Rate Setting Methodology), 
reimbursement rates for levels-of-need are uniform statewide for the same class 
of non- state operated facilities. Rates are set prospectively with no annual 
settlement. 
(B) Classes of non-state operated facilities. Classes of non- state operated 
facilities are based upon facility size. 
(2) State-operated facilities. Rates for state-operated facilities are set 
prospectively based on each facility's historical cost pattern with adjustments 
for inflation. There is no differentiation based on client level-of-need 
categories. 

sec.406.152.Cost Reporting Procedures. 
(a) Reporting costs. Each provider must submit financial and statistical 
information on forms provided by TDMHMR on facsimiles which are formatted 
according to TDMHMR's specifications and are preapproved by TDMHMR.
(b) Record keeping requirements. Each provider must retain records according to 
the requirements in Chapter 406, Subchapter G of this title (relating to 
Additional Facility Responsibilities). Providers must ensure that records are 
accurate and sufficiently detailed to support the legal, financial, and 
statistical information provided to TDMHMR. 
(c) Noncompliance with record keeping requirements. Failure to retain records 
that support the information submitted to TDMHMR constitutes an administrative 
contract violation. In the case of an administrative contract violation, 
penalties are applied as specified in sec.406.62(c)(2) of this title (relating 
to Sanction Provisions for Violations of Title XIX ICF/MR Contractual 
Agreements). 
(d) Allowable and unallowable costs. Providers must complete cost reports in 
accordance with sec.406.153 of this title (relating to Allowable and Unallowable 
Costs) and sec.409.008 of this title (relating to Allowable and Unallowable 
Costs). 
(e) Certification. Providers must certify the accuracy of cost reports submitted 
to TDMHMR. Providers may be liable for civil and/or criminal penalties if the 
cost report is not completed according to TDMHMR requirements.
(f) Due date. Providers must submit direct services cost surveys no later than 
45 calendar days after the end of the reporting period or 45 days after the date 
that TDMHMR mails the form to the provider, whichever is later. Providers must 
submit full cost reports no later than 90 days after the reporting period or 90 
days after the date that TDMHMR mails the form to the provider, whichever is 
later. 
(g) Extension of due date. TDMHMR may grant extensions of due dates for good 
cause. Good cause is defined as one that the provider could not reasonably be 
expected to control. A provider must submit a written request for extension to 
TDMHMR before the cost report due date. TDMHMR will respond to a request for 
extension within 10 working days of its receipt. 
(h) Cost data. TDMHMR may at times require additional financial and statistical 
information to ensure the fiscal integrity of the Texas Medicaid ICF/MR Program. 
Each provider must submit additional information to TDMHMR upon request, unless 
the information is not at the provider's disposal. 
(i) Failure to submit requested data. Failure to submit acceptable cost data by 
the due date constitutes an administrative contract violation. In the case of an 
administrative contract violation, penalties are applied as specified in 
sec.406.62(c)(2) of this title (relating to Sanction Provisions for Violations 
of Title XIX ICF/MR Contractual Agreements). 
(j) Review of cost data. TDMHMR reviews each provider's cost data to ensure that 
the financial and statistical information submitted conforms to all applicable 
rules and instructions. Forms that are not completed according to TDMHMR's 
instructions or rules may be returned to the provider for proper completion. 
(k) On-site audits. TDMHMR performs a sufficient number of on-site financial 
audits to ensure the fiscal integrity of the TDMHMR Medicaid Programs. The 
number of on-site audits performed may vary. 
(l) On-site audit standards. TDMHMR performs on-site financial audits in a 
manner consistent with the generally accepted auditing standards (GAAS) approved 
by the American Institute of Certified Public Accountants and included in 
Standards for Audit of Governmental Organizations, Programs, Activities and 
Functions, issued by the United States Comptroller General.
(m) Access to records. Each provider must allow access to any and all records 
necessary to verify cost data submitted to TDMHMR. This requirement includes 
records pertaining to related-party transactions and other business activities 
engaged in by the provider that are directly or indirectly related to the 
provision of contracted services. Failure to allow inspection of pertinent 
records within 10 working days following written notice from TDMHMR constitutes 
an administrative contract violation. In the case of an administrative contract 
violation, penalties are applied as specified in sec.406.62 (c)(2) of this title 
(relating to Sanction Provisions for Violations of Title XIX ICF/MR Contractual 
Agreements). If a central office or other entity pertaining to a multi-facility 
operation refuses access to records, then the penalties are extended to all of 
the provider's entities having Medicaid contracts with TDMHMR. Additional rules 
regarding access to records that are out-of-state are in sec.409.002 of this 
title (relating to Methods for Cost Determination).
(n) Reviews of exclusions or adjustments. A provider who disagrees with TDMHMR's 
exclusion or adjustment of items in cost reports may request an informal review 
and, when necessary, an administrative hearing as specified in sec.409.007 of 
this title (relating to Reviews and Administrative Hearings).
(o) Notification of exclusions and adjustments. TDMHMR will notify a provider of 
exclusions and any adjustments including caps applied to reported costs made 
during TDMHMR's desk reviews and on-site audits. 

sec.406.154.Frequency of Reporting Costs.
(a) All state-operated provider agencies must annually submit full cost reports 
as directed by TDMHMR in accordance with Chapter 409, Subchapter A of this title 
(relating to General Reimbursement Methodology for all Medical Assistance 
Programs) and sec.406.152 of this title (relating to Cost Reporting Procedures). 
(b) Non-state operated facilities must submit cost report information as 
directed by TDMHMR in accordance with Chapter 409, Subchapter A of this title 
(relating to General Reimbursement Methodology for all Medical Assistance 
Programs). 
(1) Except for facilities selected to file a full cost report for the same 
reporting period, all non-state operated facilities will annually submit direct 
service cost surveys according to sec.406.152 of this title (relating to Cost 
Reporting Procedures) and sec.406.157 of this title (relating to Fiscal 
Accountability). 
(2) Every three years, a sample of non-state operated facilities will be 
required to submit full cost reports according to sec.406.152 of this title 
(relating to Cost Reporting Procedures) and sec.406.158 of this title (relating 
to Rebasing the Non-State Operated Facility Modeled Rates).  

sec.406.155.Payments to Non-State Operated Facilities. 
(a) TDMHMR will pay to non-state-operated facilities modeled rates that will 
vary by class of facility and a client's level- of-need.
(b) The non-state operated facility modeled rates include payment for both 
residential and day program services. Individuals receive medical and dental 
services through the Medicaid identification card. Any medical expenses other 
than covered services are the responsibility of the provider.
(c) With a limit of $5,000 per client per year, TDMHMR will pay a provider for 
the actual cost of a client's durable medical equipment if: 
(1) the cost of the equipment exceeds $1,000; 
(2) the facility receives approval from TDMHMR to purchase the equipment; 
(3) the provider submits a voucher to TDMHMR for the cost of the equipment; and 
(4) the client is eligible for Medicare benefits and the provider has submitted 
a Medicare claim and received a response to the claim prior to requesting 
payment from TDMHMR. 
(d) There are modeled rates for each level of need for each class of non-state 
operated facilities. 

sec.406.156.Rate Setting Methodology.
(a) Types of facilities. There are two types of facilities for purposes of rate 
setting: state-operated and non-state operated. Non-state operated facilities 
are further divided by classes that are determined by the size of the facility. 
(b) Classes of non-state operated facilities. There is a separate set of 
reimbursement rates for each class of non-state operated facilities, which are 
as follows. 
(1) Large facility-A facility with a Medicaid certified capacity of 14 or more 
as of the first day of the full month immediately preceding a rate's effective 
date or, if certified for the first time after a rate's effective date, as of 
the date of initial certification. 
(2) Medium facility-A facility with a Medicaid certified capacity of nine 
through 13 as of the first day of the full month immediately preceding a rate's 
effective date or, if certified for the first time after a rate's effective 
date, as of the date of initial certification.
(3) Small facility-A facility with a Medicaid certified capacity of eight or 
fewer as of the first day of the full month immediately preceding a rate's 
effective date or, if certified for the first time after a rate's effective 
date, as of the date of initial certification. 
(c) State-operated facilities. There are no classes of state-operated 
facilities. State-operated facilities are reimbursed on a facility-based per 
diem rate which is determined by each facility's allowable costs, inflated 
forward to the rate period. The reimbursement rates include residential, day, 
and comprehensive medical services. 
(d) Reimbursement rate determination for non-state operated facilities effective 
January 1, 1997. The Texas MHMR Board determines reimbursement for non-state 
operated facilities in accordance with Chapter 409, Subchapter A of this title 
(relating to General Reimbursement Methodology for all Medical Assistance 
Programs) and this subchapter. 
(1) The initial modeled rates for calendar year 1997 are set according to 
paragraph (7) of this subsection. 
(2) Annual rates for the time period between the years that modeled rates are 
rebased are set by inflating the previous year's direct cost rates by the IPD-
PCE as defined in Chapter 409, Subchapter A of this title (relating to General 
Reimbursement Methodology for all Medical Assistance Programs). These rates are 
uniform by class of facility and client level-of-need, and determined 
prospectively and annually. There is no cost settlement.
(3) Every three years, the models from which the rates are based are analyzed to 
determine if rebasing is necessary. 
(4) Reimbursement rates combine residential and day program services, i.e., 
payment for the full 24-hours of daily service. 
(5) Reimbursement rates are differentiated based on client level- of-need as 
outlined in Chapter 406, Subchapter E of this title (relating to Eligibility and 
Review). The levels of need are intermittent, limited, extensive, pervasive, and 
pervasive plus. 
(6) Modeled rates are rebased according to sec.406.158 of this title (relating 
to Rebasing the Non-State Operated Facility Modeled Rates). 
(7) The modeled rates are based on cost components deemed appropriate for 
economically and efficiently operated services. The determination of these 
components is based on a combination of data including, but not limited to, 
historical costs and operational information collected from a representative 
sample of ICF/MR providers. Every three years an advisory panel consisting of 
service providers, advocates, and department personnel, and an independent 
consultant retained by TDMHMR analyzes available information regarding 
historical cost and operational data and level-of-need assessment to determine 
if revisions to the models are necessary. TDMHMR will use the analysis to make 
recommendations to the Texas MHMR Board regarding rates. 
(e) Rate determination for state-operated facilities. The Texas MHMR Board 
determines reimbursement rates for state-operated facilities in accordance with 
Chapter 409, Subchapter A of this title (relating to General Reimbursement 
Methodology for all Medical Assistance Programs) and this subchapter. Rates are 
facility specific, determined prospectively, and cost related. A per diem rate 
for each facility, which is based on the total projected allowable costs for 
selected cost centers, is divided by the total days of service the facility 
delivered either in the rate period or in the cost reporting period. 
(1) Reimbursement rates for state-operated ICFs/MR are based on the most current 
costs reported on their cost reports. 
(2) Costs for each facility are divided into three groups: salaries and 
benefits, comprehensive medical, and other. These costs are inflated by the 
factors identified in sec.409.004 of this title (relating to Determination of 
Inflation Indices). Each facility will have its own per diem rate. 
(3) Reimbursement rates for newly certified state-operated ICFs/MR facilities 
are based on a pro forma model. The pro forma rate is the average of all 
available similarly sized state- operated facilities' per diem rates for that 
particular rate year. Newly certified facilities will be required to submit 
three-month cost reports to reflect costs incurred during the first 90 days of 
certified operation. These costs will be used to determine the facility's 
specific per diem rate within 180 days of certification. 
(f) Experimental class. TDMHMR may define experimental classes of service to be 
used in research and demonstration projects on new reimbursement methods. 
Demonstration or pilot projects based on experimental classes may be implemented 
on a statewide basis or may be limited to a specific region of the state or to a 
selected group of providers. Reimbursement for an experimental class is not 
implemented, however, unless the Texas MHMR Board and the Health Care Financing 
Administration (HCFA) approve the experimental methodology.

sec.406.157.Fiscal Accountability.
(a) General principles. Fiscal accountability is a process used to gauge the 
ongoing financial performance under the non-state operated facility 
reimbursement rates. 
(b) Fiscal accountability will consist of the annual reporting of direct service 
costs including wages, benefits, staffing, and supervisory span-of-control 
information from all non-state operated providers. The data will be collected on 
a cost survey designed by TDMHMR. 
(c) In 1997, providers are required to submit direct services costs on a survey 
during a uniform three month period of the year, as selected by the department. 
The survey will reflect the provider's actual direct costs for the three month 
period. The direct service costs will be compared to the "direct service cost" 
component of the modeled rates. In instances where a provider's actual direct 
service costs, as captured by the quarterly cost surveys, are less than 85% of 
the direct service revenues in the model, TDMHMR will require additional 
reporting of costs and other information from the provider. 
(d) TDMHMR will review the results obtained from the direct services cost 
surveys submitted for 1997 with representatives of provider associations and 
advocacy groups to further refine the fiscal accountability process. Direct 
services cost surveys will be collected for each rate year and in instances 
where a provider's actual direct service costs are less than 85% of the direct 
service revenues in the model, TDMHMR may require the provider to: 
(1) report more detailed financial information; 
(2) submit to a quality assurance survey and review; 
(3) submit to a utilization review of all services provided; and/or 
(4) submit to a detailed audit of all relevant financial records. 

sec.406.158.Rebasing the Non-State Operated Facility Modeled Rates.
At least every three years TDMHMR will assess the viability of the non-state-
operated modeled rates using the following process: 
(1) TDMHMR will seek to obtain a consultant to conduct an independent, detailed 
analysis of cost and operational information for a sample of ICF/MR service 
providers throughout the state in accordance with Texas Government Code, Chapter 
2254. 
(2) Site visits will be made to each of the sample providers to collect cost 
data and discuss operations. 
(3) An advisory panel consisting of service providers, advocates, and department 
personnel will analyze available information regarding historical cost and 
operational data and level-of-need assessment. TDMHMR will use the analysis to 
make recommendations to the Texas MHMR Board for adjusting the rates or rebasing 
model-based rates. 
(4) TDMHMR will recommend adjustments to rate factors if required, based on the 
results of the analysis of the sample of cost and operational information. 
(5) Revised rates, as well as the rationale supporting the rates, will be 
presented to the Texas MHMR Board for final approval and implementation. 
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 March 5, 1997.
TRD-9703052
Ann Utley
Chairman, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Effective date: March 25, 1997
Proposal publication date: December 24, 1997
For further information, please call: (512) 206-4516

SUBCHAPTER G.Additional Facility Responsibilities
25 TAC sec.406.302
The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts the 
repeal of existing sec.406.302, of Chapter 406, ICF/MR Programs, Subchapter G, 
relating to additional facility responsibilities. The repeal accommodates the 
contemporaneous adoption of new sec.406.302 in this issue of the Texas Register. 
Existing sec.406.302 is repealed without changes to the text as published in the 
December 24, 1996, issue of the Texas Register (21 TexReg 12379). 
The repeal would enable the adoption of a new section to Chapter 406, Subchapter 
G. 
There was no oral or written testimony regarding the repeal at a public hearing 
held on January 13, 1997. 
The repeal is adopted under the Health and Safety Code, sec.532.015(a), which 
provides the Texas Mental Health and Mental Retardation Board with broad 
rulemaking authority; and under the provisions of Texas Government Code, 
sec.531.021, which provides the Texas Health and Human Services Commission with 
the authority to administer federal medical assistance funds. 
The repeal affects Texas Human Resources Code, sec.sec.32.001- 32.040, and Texas 
Government Code, sec.531.021. 
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 March 5, 1997.
TRD-9703050
Ann Utley
Chairman, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Effective date: March 25, 1997
Proposal publication date: December 24, 1997
For further information, please call: (512) 206-4516

The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts new 
sec.406.302 of Chapter 406, Subchapter G, governing Additional Facility 
Responsibilities. Existing sec.406.302 is contemporaneously repealed in this 
issue of the Texas Register. Section 406.302 is adopted with changes to the 
proposed text as published in the December 24, 1996, issue of the Texas Register 
(21 TexReg 12379). 
The adopted new sec.406.302 clarifies services reimbursed under day services 
(e.g., community integration supports and supported employment). 
The language in sec.406.302 is modified to more fully outline the service 
components of day services and to enhance grammar and readability. 
Written comments were received from three respondents regarding adoption of the 
rule, with several commenters offering recommendations for revision. Those 
respondents offering comment on the rule include: Private Provider Association 
of Texas; Reimbursement Advisory Panel of TDMHMR; and, Parents of the Retarded 
in Texas. 
Concerning proposed sec.406.302(d)(1), two commenters stated that the phrase 
"unless contraindicated by the interdisciplinary team (IDT)" should be added to 
the text, or the entire last sentence should be deleted. 
The department responds that it agrees with the comment and has deleted the last 
sentence in 406.302(d)(1). 
Concerning proposed sec.406.302.(d)(2), one commenter stated that it is not 
clear whether supported employment is a service that can be billed in addition 
to day habilitation or whether the two services are mutually exclusive. 
The department responds that it agrees with the comment regarding the wording 
and has reorganized the section for reading clarity. There were no changes to 
the meaning of the text. Supported employment remains a type of day services and 
there will be no additional funding beyond the day services rate. 
The new section is adopted under the Health and Safety Code, sec.532.015(a), 
which provides the Texas Mental Health and Mental Retardation Board with broad 
rulemaking authority; and under the provisions of Texas Government Code, 
sec.531.021, which provides the Texas Health and Human Services Commission with 
the authority to administer federal medical assistance funds. 
The new section affects Texas Human Resources Code, sec.sec.32.001- 32.040, and 
Texas Government Code, sec.531.021. 

sec.406.302.Day Services.
(a) In accordance with the requirements of 42 Code of Federal Regulations (CFR) 
sec.483.410(d)(3) and sec.483.440(a), each facility must ensure that day 
services furnished by an outside source meet the needs of each client and are 
integrated with the other components of the client's active treatment program. 
(b) When an outside source furnishes services to a client, the client's facility 
must establish and maintain a written agreement with the outside source in 
accordance with 42 CFR sec.483.410(d)(1)-(3). 
(c) If subminimum wages are paid to a client, the service provider must maintain 
the appropriate certification required by the United States Department of Labor. 
(d) Day services include day habilitation and supported employment.
(1) Day habilitation assists individuals in the acquisition, retention, and/or 
improvement of self-help, socialization, cognitive, and adaptive skills 
necessary to be successful in the community. Day habilitation provides 
individuals with opportunities to participate in activities that increase 
attendance to task, elicit appropriate social and emotional interaction, relieve 
isolation, and encourage independent utilization of community resources. These 
opportunities may include enclaves, mobile crews, and other congregate training 
sites. Day habilitation services include individual assessments, career 
development, other person-centered services, transportation to and from day 
services, and attendant care for individuals who are unable to manage their 
personal care needs away from the residential setting. Whenever possible, public 
transportation will be utilized. Day habilitation must be designed to provide 
individuals with opportunities for meaningful activities that enhance their 
self-esteem, maximize their functioning level, and increase their level of 
independence. 
(2) Supported employment is individualized employment in an integrated setting 
with on-going support services. Employment is work performed by the individual 
for which the individual is compensated by an employer in accordance with the 
Fair Labor Standards Act. An integrated setting is a job site away from the 
individual's place of residence, in which generally no more than one employee or 
three percent of the employees, whichever is more, have mental retardation or a 
related condition. Supported employment includes activities that are necessary 
to sustain paid work by an individual with developmental disabilities. Supported 
employment is intended to assist individuals in maintaining employment in the 
community. 
(A) Reimbursement for supported employment services is available only if 
documentation verifies that supported employment services have been denied or 
are otherwise unavailable to the client through either the Texas Rehabilitation 
Commission or the public school system. 
(B) All clients receiving supported employment services must have an identified 
need and desire for employment. 
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 March 5, 1997.
TRD-9703051
Ann Utley
Chairman, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Effective date: March 25, 1997
Proposal publication date: December 24, 1997
For further information, please call: (512) 206-4516

CHAPTER 409.Medicaid Programs
SUBCHAPTER A.General Reimbursement Methodology for all Medical Assistance 
Programs
25 TAC sec.sec.409.1-409.7
The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts the 
repeal of existing sec.sec.409.1-409.7 of Chapter 409, Medicaid Programs, 
Subchapter A, governing reimbursement methodology for all Medicaid assistance 
programs. New sections would replace existing sec.sec.409.1-409.7 of Chapter 
409, Medicaid Programs, Subchapter A, which are adopted contemporaneously in 
this issue of the Texas Register. Existing sec.sec.409.1-409.7 are repealed 
without changes as published in the December 24, 1996, issue of the Texas 
Register (21 TexReg 12380). 
The repeals would allow for the adoption of new sections governing eligibility 
and review. 
There was no oral or written testimony regarding the repeal at a public hearing 
held on January 13, 1997. 
The repeals are adopted under the Health and Safety Code, sec.532.015(a), which 
provides the Texas Mental Health and Mental Retardation Board with broad 
rulemaking authority; and under the provisions of Texas Government Code, which 
provides the Texas Health and Human Services Commission with the authority to 
administer federal medical assistance funds. 
The repeal affects Texas Human Resources Code, sec.sec.32.001- 32.040, relating 
to General Provisions, and Texas Government Code, sec.531.021.
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 March 5, 1997.
TRD-9703049
Ann Utley
Chairman, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Effective date: March 25, 1997
Proposal publication date: December 24, 1997
For further information, please call: (512) 206-4516

25 TAC sec.sec.409.1-409.9
The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts new 
sec.sec.409.1-409.9 of Chapter 409, Subchapter A, governing general 
reimbursement methodology for all medical assistance programs. Existing 
sec.sec.409.1-409.7 of Chapter 409, Subchapter A, are contemporaneously repealed 
in this issue of the Texas Register. Sections 409.1-409.5 and sec.sec.409.7-
409.8 are adopted with changes to the proposed text as published in the December 
24, 1996, issue of the Texas Register (21 TexReg 12381). Section 409.006 and 
409.009 are adopted without changes.
The new sections provide a uniform cost reporting process for all Medicaid 
programs administered by TDMHMR; outline general allowable and unallowable 
Medicaid costs and reporting practices; and require compliance with federal 
circular OMB A-87, with additional clarifying information. 
Language in sec.409.001 was modified to add several definitions. Language in 
sec.409.2 was modified to identify the sources for cost determination rules. 
Language in sec.409.3 was modified to incorporate procedures regarding cost of 
out-of- state audits, which was moved from sec.409.3. Language in sec.409.007 
was modified to state informal reviews of exclusions or adjustments will be made 
by persons not involved in prior reviews of the cost report. Language in 
sec.sec.409.004- 409.006 and sec.409.008 were modified to correct grammatical 
usage. 
A public hearing was convened on January 13, 1997; no testimony was presented. 
Written comments were received from the Private Provider Association of Texas 
(PPAT), Austin; Volunteers of America, Arlington; Develocepts, Austin; Educare, 
Austin; and the Reimbursement Methodology Advisory Panel consisting of 
representatives of provider agencies, provider associations, advocates, and 
community mental health and mental retardation centers. 
Five commenters said they could not support the rules without having an 
opportunity to review the final versions. The department responds that staff 
have attempted to provide all interested parties with working drafts of 
revisions. The response to comments included below reflect an evolving set of 
rules crafted by numerous interested parties. 
One commenter expressed concern that massive changes to the computer system 
would result in disruptions in billing. The department responds that it has 
attempted to anticipate billing problems and has worked closely with the Texas 
Department of Human Services (TDHS) to ensure that providers will be paid 
accurately and on a timely basis. It is anticipated that minor billing edits 
will occur throughout the spring. 
Two commenters recommended that generally accepted accounting principles (GAAP) 
should be referenced in sec.409.001 as the primary standard for determining the 
cost of services. The department responds that GAAP is used as the accounting 
methodology used in the rules, and has reorganized the GAAP references to 
clarify this point. The method of determining the allowability of costs is 
contained in federal circular OMB A-87. 
Two commenters requested that sec.409.002(b) should specify that the department 
will provide adequate notice and reasonable timelines for the completion of 
requested reports and surveys. The department responds that the proposed rules 
provide for adequate notice and reasonable deadlines for reports and surveys and 
has not altered the text as proposed. 
Two commenters requested that "may" be changed to "will" in the last line of 
sec.409.002(d). The department agrees with the commenter and has reorganized the 
section for reading clarity. In subsection (e) of the same section, two 
commenters requested the addition of language requiring that providers be 
notified of any exclusions or adjustments made under this section. The 
department agrees and has revise the language accordingly. In subsection (i) of 
the same section, two commenters requested that language be included which 
requires the department to include any data used to determine the payment rates 
in the rate packet provided to the public prior to a public hearing. The 
department responds that the material to be provided prior to a public hearing 
is defined in the state law which requires a public hearing for Medicaid rates. 
All other data used for rate analysis are available through an open records 
request and is usually too voluminous to include in a rate packet. In subsection 
(j) of the same section two commenters requested "cost report based rates" be 
replaced with "methodology based rates." The department responds that the rule 
states "may", not "will", so the department does not agree with the comment and 
has made no changes to the proposed text. 
Concerning sec.409.003(a), two commenters recommended that "or its designee" be 
added after the reference to TDMHMR to allow flexibility. The department agrees 
and has developed new language that provides more specificity regarding the 
responsibilities of the department. 
Concerning sec.409.005(c), two commenters requested that on- site audit reports 
and notices of desk review exclusions and adjustments be mailed to the address 
provided by the provider on the cost report. The department agrees with the 
suggestion and modified the language 
Concerning sec.409.006(a) and (b), two commenters recommended that "may" be 
change to "shall" and that the sentence referencing a 2.0% threshold be deleted. 
The department responds that the suggested language would restrict the Texas 
MHMR Board's decision making ability and would require board action for minor 
shifts in cost and declines to make the recommended revisions.
Concerning sec.409.007(b)(4), two commenters recommended that the membership of 
the review panel assembled to hear informal reviews should be clearly spelled 
out and should ensure at least some measure of objectivity by utilizing 
individuals from outside of the Medicaid Office or from outside of the 
department. The department concurs with the recommendation and has revised the 
language accordingly. 
Concerning sec.409.008(a), two commenters stated that GAAP should provide the 
primary standard for determining costs and should be mentioned in this section 
in that context. The commenters further suggested that OMB A-87 should be only a 
supplementary guide. The department responds that GAAP is used as the accounting 
methodology used in the rules, and has reorganized the GAAP references to 
clarify this point. In addition, the department notes that the definitive 
authority for determining the allowability of costs is federal circular OMB A-
87. In subsection (c) of the same section, two commenters recommended that the 
last sentence of the first paragraph is unnecessary and confusing. The 
department concurs and has deleted the sentence. 
Concerning sec.409.008(c)(3) and (4), two commenters stated that the definitions 
of direct and indirect costs are inconsistent with those used in the model based 
rates for ICF/MR and HCS. The department agrees and has clarified the language. 
In sec.409.008(e)(1), two commenters requested the addition of language 
describing circumstances under which expenses related to preparation of tax 
forms and audit/management reports are allowable. The department concurs with 
the suggestion and has revised the language accordingly. In paragraph (e)(2) of 
the same subsection, two commenters requested that the second sentence be 
deleted as unnecessary and inappropriate. The department has clarified the 
language but declines to delete the language as requested. Still in the same 
subsection but concerning paragraph (10), two commenters recommended revising 
the definition of related party and stated that a provider automatically should 
be limited to the lessor of costs. The department disagrees with the 
recommendations and declines to revise the language as proposed. 
The new sections are adopted under the Health and Safety Code, sec.532.015(a), 
which provides the Texas Mental Health and Mental Retardation Board with broad 
rulemaking authority; and under the provisions of Texas Government Code, 
sec.531.021, which provides the Texas Health and Human Services Commission with 
the authority to administer federal medical assistance funds. 

sec.409.1.Definitions and General Specifications. 
(a) The following words and terms, when used in this chapter, shall have the 
following meanings, unless the context clearly indicates otherwise:
Cost Report-any cost data or financial information submitted by a provider to 
TDMHMR.
Direct Services Cost Survey-annual survey conducted by TDMHMR in which cost data 
related to direct services is submitted by providers.
Full Cost Report- cost data required by TDMHMR that includes all costs of 
providing services including direct care costs, administration, facility costs, 
and all other operating costs relevant to the provision of services.
GAAP-Generally accepted accounting principles. GAAS-Generally accepted auditing 
standards.
Person-An individual, partnership, corporation, association, governmental 
subdivision or agency, or a public or private organization of any character.
Provider-Any person with whom TDMHMR has a provider agreement.
Provider agreement-Any written agreement that obligates TDMHMR to pay money to a 
person for goods or services under the Title XIX Medical Assistance Program.
Related Party-Two or more individuals or organizations constitute related 
parties whenever they are affiliated or associated in a manner that entails some 
degree of legal control or practical influence of one over the other.
TDMHMR-The Texas Department of Mental Health and Mental Retardation or its 
designee. 
(b) The Texas Department of Mental Health and Mental Retardation (TDMHMR) 
reimburses Texas Medicaid contracted providers for medical assistance provided 
to Medicaid recipients. The Texas Mental Health and Mental Retardation Board 
determines prospective uniform reimbursement rates at least annually. When 
program specific rules are in conflict with sections of this subchapter, the 
program specific rules shall prevail. 

sec.409.2.Method For Cost Determination.
(a) Cost determination rules. Except when otherwise specified under this title, 
the TDMHMR follows the requirements set forth in the Generally Accepted 
Accounting Principles (GAAP), the Generally Accepted Auditing Standards (GAAS), 
and federal circular OMB A-87, Attachment B, and in subsections (b) through (j) 
of this section as the cost determination rules for providers of services to 
Medicaid recipients. In cases in which cost reporting rules differ from GAAP, 
GAAS, IRS, or other authorities, the individual program rules take precedence 
for provider cost-reporting purposes. 
(b) Cost reports and cost surveys. Cost reports, when used in this subchapter, 
will include all types of cost data requested by the TDMHMR including, but not 
limited to, the Time and Financial Information (TAFI), cost surveys of direct 
service costs, cost reports, and special cost studies. Cost report due dates 
will be included with the request for cost data or on the report form. 
(c) Cost report due dates. 
(1) Cost Reports. All contracted providers must submit cost reports to the Texas 
Department of Mental Health and Mental Retardation (TDMHMR) in a manner 
prescribed by the department. The Department will provide adequate notice and 
reasonable time lines for the completion of requested reports. The due date of 
the cost report is included in the cost report instructions. Failure to submit 
cost reports by the deadline could result in administrative penalties against 
the provider. 
(2) Amended Cost Reports. TDMHMR accepts amended cost reports submitted on the 
request of the provider until 45 days after the due date. Since this is a 
prospective reimbursement system without a provision for reconciliation, amended 
cost reports filed after this 45 day extension have no effect on the rate and 
are not accepted. Amended cost report information that cannot be verified within 
ten working days of receipt will not be used in rate determination. 
(d) Exclusions and adjustments. In addition to the exclusions and adjustments 
made during desk reviews and on-site audits, TDMHMR may exclude or adjust 
certain expenses in the cost report data base in order to base rates on the 
reasonable and necessary costs that an economical and efficient provider must 
incur. These adjustments include, but are not necessarily limited to, revenue 
offsets, fixed capital asset cost limits, percentile cap limits on 
administration and facility costs, occupancy adjustments, and cost projections. 
As specified in sec.409.005 of this title (relating to Notification), providers 
will be notified about exclusions and adjustments to their reported expenses. 
(e) Cost inflation. TDMHMR projects expenses in the cost report data base to 
account for cost inflation between the reporting period and the prospective rate 
period. The department's procedures for determining inflation indices to account 
for cost inflation between the reporting period and the prospective rate period 
are specified in sec.409.004 of this title (relating to Determination of 
Inflation Indices) 
(f) Other adjustments. TDMHMR may also adjust rates when 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). 
(g) Projecting cost per unit for programs that are cost-based. After making 
appropriate exclusions and adjustments, TDMHMR uses the adjusted cost report 
data to project the cost per unit of service during the prospective rate period. 
(h) Public hearing. TDMHMR must hold a public hearing before the Texas Mental 
Health and Mental Retardation Board sets payment rates. The purpose of the 
hearing is to give interested persons an opportunity to comment on the 
department's proposed rates. The department must provide notice of the hearing 
to the public; and at least ten days before the hearing takes place, the 
department must make material pertinent to the proposed rates available to the 
public. At a minimum, this material must include the department's proposed 
rates, the inflation rates used to determine them, and the impact on rates of 
the major cost limits applied under the provisions of subsection (d) of this 
section. TDMHMR must furnish this material to anyone who requests it from the 
TDMHMR division responsible for rate recommendations. After the hearing, TDMHMR 
must provide the Texas Mental Health and Mental Retardation Board with a written 
summary of the comments made during the public hearing. 
(i) Pro forma analysis. If, in the professional opinion of TDMHMR staff, an 
insufficient number of accurate, full-year cost reports is submitted or there is 
information that causes doubt about the accuracy or applicability of the 
available data, the Texas Mental Health and Mental Retardation Board may 
promulgate payment rates based on a pro forma analysis by TDMHMR. A pro forma 
analysis is defined as an item-by-item calculation of the essential expenses 
necessary for an economic and efficient provider to operate. The pro forma 
analysis must be based on all the information available, including valid cost 
report data and survey data, in a way that ensures that the resultant rates are 
sufficient to support an economical and efficient provider. The analysis may 
involve assumptions about the salary of the administrator, staff salaries, 
employee benefits and payroll taxes, facility depreciation, mortgage interest, 
dietary expenses, and other facility and administration expenses. To determine 
the cost per unit of service, TDMHMR adds all the pro forma expenses and divides 
the total by the estimated number of units of service that a fully operational 
provider is likely to provide. When TDMHMR determines that sufficient and 
reliable cost report data have become available, the Texas Mental Health and 
Mental Retardation Board may replace pro forma rates with cost report based 
rates. 

sec.409.3.Basic Objectives and Criteria for Review of Cost Reports.
(a) TDMHMR conducts desk reviews of all provider cost reports to ensure that the 
financial and statistical information submitted in the cost reports conforms to 
all applicable rules and instructions. 
(b) The basic objective of TDMHMR desk reviews is to verify that each provider's 
cost reports: 
(1) display financial and statistical information in the format required by 
TDMHMR, 
(2) report expenses in conformity with TDMHMR's lists of allowable and 
unallowable costs, and 
(3) follow generally accepted accounting principles except as otherwise 
specified in TDMHMR's lists of allowable and unallowable costs, or as otherwise 
permitted in the case of governmental entities operating on a cash basis. 
(c) TDMHMR verifies the information specified in subsection (b) of this section 
by: 
(1) comparing each provider's reported costs to: 
(A) past patterns of expenditures for similar services; 
(B) the results of previous on-site audits; 
(C) normal operating cost relationships; and 
(D) industry average costs; 
(2) reviewing each provider's reported costs to search for: 
(A) reported unallowable costs; 
(B) omitted allowable costs; and 
(C) overstated or understated allowable costs; 
(3) checking for completion of required information;
(4) checking the format for proper cost classification;
(5) checking for mathematical accuracy; and 
(6) adjusting improperly prepared reports. 
(d) TDMHMR may conduct on-site audits of cost reports. 
(e) Cost of out-of-state audits. As specified in sec.409.003(a) of this title 
(relating to Basic Objectives and Criteria for Desk Review of Cost Reports), 
TDMHMR conducts desk reviews of all the cost reports that it receives. The 
department also conducts on- site audits of provider records and cost reports. 
Although the number of on-site audits performed each year may vary, the 
department seeks to maximize the number of on-site audited cost reports 
available for use in its cost projections. Whenever possible, the records 
necessary to verify information submitted to TDMHMR on Medicaid cost reports, 
including related party transactions and other business activities engaged in by 
the provider, must be accessible to TDMHMR audit staff in the state of Texas. 
When records are not available to TDMHMR audit staff within the state, the 
provider must pay the actual costs for TDMHMR staff to travel and review the 
records out of state. If a provider fails to reimburse TDMHMR for these costs 
within 60 days of the request for payment, TDMHMR will place a hold on the 
vendor payments until the costs are paid in full. As specified in sec.409.005 of 
this title (relating to Notification), providers will be notified about 
exclusions and adjustments to reported expenses made during desk reviews and on-
site audits. 

sec.409.4.Determination of Inflation Indices.
(a) Function and types of indices. To account for cost inflation between the 
reporting period and the prospective rate period as specified in sec.409.002 of 
this title (relating to Methodology), the Texas Department of Mental Health and 
Mental Retardation (TDMHMR) uses a general cost inflation index and several 
item- specific and program-specific inflation indices.
(b) General cost inflation index. For all medical assistance programs TDMHMR 
uses the Implicit Price Deflator-Personal Consumption Expenditures (IPD-PCE) as 
its general cost inflation index. The IPD-PCE is a nationally recognized measure 
of inflation published by the Bureau of Economic Analysis of the U.S. Department 
of Commerce. To project or inflate costs from the reporting period to the 
prospective rate period, TDMHMR uses the lowest feasible IPD-PCE forecast 
consistent with the forecasts of nationally recognized sources available to 
TDMHMR at the time rates are prepared for public dissemination and comment. 
(c) Item-specific and program-specific inflation indices. When TDMHMR can obtain 
item-specific or program-specific inflation indices for cost report line items 
such as wages, facility depreciation, and lease appreciation, the department 
uses these specific indices in place of the general cost inflation index 
specified in subsection (b) of this section. The specific indices that the 
department uses include the following: 
(1) Wage and benefit inflation rates for state school ICF-MR employees are 
determined by the Texas Legislature and Department merit policy.
(2) The inflation index for facility depreciation and lease appreciation is 
limited by federal regulations (OBRA 1984, COBRA 1985) that require the use of 
no more than one-half of the Consumer Price Index For All Urban Consumers (CPI-
U) for depreciated ICF-MR facilities that change ownership after July 18, 1984. 
All leased ICF-MR facilities are inflated by no more than one-half of the CPI-U 
compounded annual rate of change for the most recent consecutive two year period 
for which information is available at the time reimbursement rates are 
determined. Other medical assistance programs use the IPD-PCE inflation index to 
project facility lease costs. 
(3) The medical care CPI-U is used as the inflation index for the state school 
ICFs/MR comprehensive medical cost center. To project costs from the reporting 
period to the prospective rate period, TDMHMR uses the lower of the two medical 
care CPI-U forecasts reported by Data Resources Incorporated and Wharton 
Econometric Forecasting Associates. 

sec.409.5.Notification.
(a) TDMHMR mails notification of the exclusions and adjustments to reported 
expenses. TDMHMR mails notices of desk review exclusions and adjustments within 
ten working days after entering them in the cost report data base. The notice 
consists of a letter to the provider and a one page desk review adjustment sheet 
that specifies:
(1) the line items on the cost report that have been adjusted or excluded; 
(2) the amount of each adjustment or exclusion; and 
(3) the principal reason for each adjustment, capitation, or exclusion. 
(b) TDMHMR also furnishes providers with written reports of the results of on-
site audits. TDMHMR mails each on-site audit report within 30 days after the 
final exit interview with the provider. An exit interview is final when TDMHMR 
has received, reviewed, and analyzed all documentation from the provider 
pertinent to the scope of the audit. The on-site audit report consists of a 
multiple page professional report prepared by TDMHMR to enumerate the results of 
an on-site audit. Each on-site audit report includes a specification of: 
(1) cost report line items that have been adjusted or excluded;
(2) the amount of each adjustment or exclusion; and 
(3) the principal reason for each adjustment or exclusion.
(c) TDMHMR mails on-site audit reports and notices of desk review exclusions and 
adjustments to the address provided by the provider on their cost report. 
(d) A provider may also submit a written request for TDMHMR to provide 
additional information about exceptions and adjustments to the provider's cost 
reports, including citations of the laws or regulations that constitute the 
grounds for the exceptions and adjustments. TDMHMR must respond to such requests 
in writing within 30 calendar days of receiving the request.

sec.409.7.Reviews and Administrative Hearings.
(a) General requirements. A provider who disagrees with an exclusion or 
adjustment made during a desk review or on-site audit of that provider, the 
determination of an inflation index, or a rate adjustment made in response to 
new legislation, regulations or economic factors under the provisions of this 
subchapter (relating to General Reimbursement Methodology for Medical Assistance 
Programs) must follow the procedures for informal reviews and administrative 
hearings set forth in this section to appeal the action. 
(b) Informal review. An informal review is conducted according to the following 
procedures: 
(1) If a provider disagrees with an exclusion or adjustment made during a desk 
review or on-site audit of that provider and the provider wants to appeal the 
exclusion or adjustment, the provider must submit a written request for an 
informal review within 30 calendar days of receiving TDMHMR's written 
notification of the exclusion or adjustment. 
(2) If a provider disagrees with TDMHMR's determination of an inflation index or 
with a rate adjustment made in response to legislation, regulations or economic 
factors, and the provider wants to appeal the inflation index or rate 
adjustment, the provider must submit a written request for an informal review 
within 30 calendar days of the setting of rates by the TDMHMR Board. An informal 
review requested under the provisions of this paragraph may only consider 
whether the requirements of this chapter were followed in developing the rates. 
(3) A written request for an informal review must be submitted to TDMHMR 
Medicaid Administration. 
(4) On receipt of a timely request for an informal review, TDMHMR will appoint a 
review panel, to be composed of no less than two persons not involved in prior 
reviews of the cost report. The panel will arrange a meeting at the earliest 
possible date convenient to both the provider and the panel members. At the 
meeting, the provider may present any information it considers pertinent to its 
position. The review panel will consider information presented by the provider 
and any information from TDMHMR that the panel deems necessary to reach a 
decision. Within 30 calendar days from the meeting, the panel will send the 
provider the panel's written decision. The decision will be sent by certified 
mail, return receipt requested. 
(c) Administrative hearings. If a provider disagrees with the decision reached 
in an informal review and the provider wants to appeal the decision, the 
provider must request an administrative hearing in accordance with Chapter 409, 
Subchapter B of this title (relating to Adverse Actions) within 15 days after 
receiving the review panel's decision. 
(d) Rate not stayed. An informal review or administrative hearing requested 
under the provisions of this section will not stay the determination, adoption, 
or implementation of reimbursement rates by TDMHMR. 

sec.409.8.Allowable and Unallowable Costs.
(a) General principles. Allowable and unallowable costs, both direct and 
indirect, identify expenses which are reasonable and necessary to provide 
contracted services and are consistent with federal and state laws and 
regulations. If a particular type of expense is classified as unallowable, then 
the classification means only that the expense will not be included in the 
database for reimbursement determination purposes because the expense is not 
considered reasonable and/or necessary. The classification does not mean that 
individual contracted providers may not make the expenditure. The description of 
allowable and unallowable costs is designed to be a general guide and to clarify 
certain key expense areas. The primary determinant of allowability is whether or 
not the cost is consistent with the criteria set forth in GAAP and federal 
circular OMB A-87, Attachment B. This circular is not comprehensive, and the 
failure to identify a particular cost does not necessarily mean that the cost is 
an allowable or unallowable cost. 
(b) Generally accepted accounting principles. Except as otherwise specified by 
the cost determination rules of this chapter, cost report instructions, or 
policy clarifications, cost reports should be prepared consistent with generally 
accepted accounting principles (GAAP) which are those principles approved by the 
American Institute of Public Accountants (AICPA). Internal Revenue Service (IRS) 
laws and regulations do not necessarily apply in the preparation of the cost 
report. In cases in which cost reporting rules differ from GAAP, IRS, or other 
authorities, TDMHMR rules take precedence for provider cost reporting purposes. 
(c) Allowable costs. Allowable costs are expenses, both direct and indirect, 
that are reasonable and necessary, as defined in paragraphs (1) and (2), of this 
subsection, and which are required in the normal conduct of operations to 
provide contracted client services meeting all pertinent state and federal 
requirements. 
(1) "Reasonable" refers to the amount expended. The test of reasonableness 
includes the expectation that the provider seeks to minimize costs and that the 
amount expended does not exceed what a prudent and cost-conscious buyer pays for 
a given item or service. 
(2) "Necessary" refers to the relationship of the cost, direct or indirect, 
incurred by a provider in the provision of client care. Necessary costs are 
direct and indirect costs appropriate in developing and maintaining the required 
standard of operation for providing client care in accordance with the contract, 
and with state and federal regulations. 
(3) Direct service costs are those costs which are incurred by a provider which 
are definitely attributable to the operation of providing contracted client 
services. Whether or not a cost is considered a direct service cost depends upon 
the specific rules that define the methodology for each program and the 
contracted client services covered by the program. 
(4) Indirect costs are those shared costs which benefit, or contribute to, the 
operation of providing contracted services, other business components, or the 
overall entity with which the TDMHMR has contracted. Unless defined otherwise in 
program methodology rules, indirect costs must be allocated, directly or as a 
pool of costs, across those business components sharing in the benefits of those 
costs. 
(d) Unallowable costs. Unallowable costs are expenses that are not reasonable or 
necessary to the provision of contracted services. The placement as an allowable 
cost on a cost report of a cost which has been determined to be unallowable may 
constitute an administrative contract violation and/or may constitute fraud. 
(e) Specifications for allowable and unallowable costs. The primary criteria of 
allowability is whether or not the cost meets the definitions as set forth in 
the federal circular OMB A-87, Attachment B. Except where specific exceptions 
are noted, the allowability of all costs is subject to the general principles in 
subsections (a) and (b) of this section and/or in circular OMB A- 87, Attachment 
B. The following are exceptions, or elaborations, to circular OMB A-87, 
Attachment B and subsection (b): 
(1) Accounting and audit fees. Except for Schedule C or Partnership returns 
related to a contracted provider, expenses for preparation of personal tax 
returns, and production and/or distribution of annual reports for stockholders 
or investors are not allowable. Expenses for the preparation of audit/management 
reports for use by management staff or board members in directing or managing 
provider operations are allowable. 
(2) Legal expenses. Legal retainers are not allowable in and of themselves. 
Legal costs associated with the provision of client services are allowable. 
Legal costs associated with litigation between the provider and a governmental 
entity are unallowable. Legal costs associated with any other unallowable cost 
are also unallowable. 
(3) Depreciation and use allowances/equipment and other capital expenditures. 
Purchases of equipment with an asset value at, or more than, $2,500 and an 
estimated useful life of more than one year must be depreciated or amortized, 
using the straight line method. In determining whether to expense or depreciate 
a purchased item, a contracted provider may expense any single item costing less 
than $2,500 or having a useful life of one year or less. Depreciation and 
amortization expenses for unallowable assets and costs are also unallowable, 
including amounts in excess of those resulting from the straight line method, 
capitalized lease expenses in excess of actual lease payments, and goodwill or 
any excess above the actual value of physical assets at the time of purchase. 
(4) Tax expense and credits. Income taxes (federal, state and local) are not 
allowable. Taxes in connection with financing, refinancing, or refunding 
operations, such as taxes on the issuance of bonds, property transfers, issuance 
or transfer of stocks are unallowable as a tax expense. Expenses based on tax 
fines or tax penalties, and any associated interest, are not allowable. 
(5) Grants, gifts, and income from the endowments and operating revenue. 
(A) Grants and contracts from federal government such as transportation grants, 
United States Department of Agriculture grants, education grants, Housing and 
Urban Development grants, and Community Service Block Grants, should be offset, 
prior to reporting on the cost report, against the particular cost or group of 
costs for which the grant was intended. 
(B) Contracts, grants, gifts, and income from endowments from private sources, 
or state and/or local governments, used to purchase allowable program items 
should not be offset by the contracted provider prior to reporting on the cost 
report. All such funds which are properly allocable to the cost report should be 
reported on a contracted provider's cost report, as well as any allowable costs 
to which the unrestricted funds were applied.
(C) Nonroutine revenues such as income from operations not associated with 
providing contracted services should be offset or reduced by the related 
expenses prior to reporting the revenue on the cost report. Expenses related to 
providing these types of non-contracted operations are unallowable costs. If 
nonroutine operating expenses, (including overhead costs) generate nonroutine 
operating revenue, in excess of nonroutine operating revenues, the net 
nonroutine operating expenses are not allowable costs. 
(6) Losses resulting from theft or embezzlement. Losses resulting from theft or 
embezzlement of property or funds of clients held in trust by the contracted 
provider are not allowable costs. 
(7) Direct reimbursement. Any expenses directly reimbursable to the contracted 
provider which are considered outside the reimbursement payment system are not 
allowable costs. 
(8) Charity or courtesy allowance. A charity allowance is a reduction in normal 
charges due to the indigence of the client or resident. A courtesy allowance is 
a reduction in charges granted as a courtesy to certain individuals, such as 
physicians and clergy. These allowances themselves are not costs since the costs 
of the services rendered are already included in the contracted provider's 
costs. 
(9) Partial allocation of expenses for items not used entirely in the provision 
of contracted services. Whenever otherwise allowable expenses for facilities, 
materials, supplies, or services are attributable partially to personal or other 
business interests and partially to contracted services, the latter portion may 
be allowed on a pro rata basis if the proportion used for contracted services is 
well-documented. 
(10) Related-party transactions. Allowable costs are those which result from 
arm's length transactions involving unrelated parties. In related-party 
transactions, the allowable cost is limited to the cost to the related party, 
either the actual purchase prices paid by the related party or to the usual and 
customary charges for comparable goods and services, whichever is less. Two or 
more individuals or organizations constitute related parties whenever they are 
affiliated or associated in a manner that entails some degree of legal control 
or practical influence of one over the other. This can be based on common 
ownership, past or present mutual interests in any type of enterprise, or family 
ties. 
(11) Fines assessed as administrative penalties and costs or interest associated 
with such penalties are unallowable. 
(f) Medicaid as payor of last resort. Medicaid is the payor of last resort. 
Costs for which a recipient had Medicare Part A or B benefits, third-party payor 
benefits, vendor drug coverage, or any other benefits available are not 
allowable unless the provider can document that a provider of services was not 
accessible. At a minimum, the documentation must include a list of the providers 
contacted, date(s) of contact, person to whom spoken, telephone number, and 
reason for rejection. 
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 March 5, 1997.
TRD-9703048
Ann Utley
Chairman, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Effective date: March 25, 1997
Proposal publication date: December 24, 1997
For further information, please call: (512) 206-4516

SUBCHAPTER D.Home and Community-based Services
25 TAC sec.sec.409.100, 409.101, 409.103, 409.106, 409.107, 409.118, 409.120
The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts 
amendments to sec.409.101 and new sec.sec.409.100, 409.103, 409.106, 409.107, 
409.118, and 409.120 of Chapter 409, Subchapter D, relating to home and 
community-based services (HCS). Existing sec.sec.409.103, 409.106, 409.107, and 
409.118 are contemporaneously repealed in this issue of the Texas Register. 
Sections 409.100-409.101, 409.103, 409.106, 409.107, 409.118, and 409.120 are 
adopted with changes to the proposed text as published in the December 24, 1996, 
issue of the Texas Register (21 TexReg 12386). 
New sec.409.100 specifies the service components provided by the HCS program, 
with any associated exclusions or limitations, and the service delivery units 
for each component. The amendments to sec.409.101 revise the current rule 
language to indicate the specific conditions under which an applicant or 
participant may request a fair hearing. New sec.409.103 defines a process and 
criteria for the initial assignment and annual reevaluation of a payment 
category assignment for a program participant based on a determination of an 
individual's level of need. This section replaces the current per diem 
reimbursement methodology with a fee-for-service methodology and defines the 
general and specific conditions for payment of program provider claims for 
reimbursement for each HCS service component. New sec.409.106 delineates the 
specific circumstances under which an HCS program provider may request an 
administrative hearing from the department. New sec.409.107 revises the cost 
reporting process and requirement to conform to the proposed reimbursement and 
rate setting methodology. New sec.409.118 implements a model-based rate setting 
methodology by which the fee-for-service reimbursement rates are established for 
each HCS service component. New sec.409.120 provides criteria and processes for 
departmental review and approval of revisions to level-of-need assignments and 
of specified individual plans of care. 
Language in sec.409.100 has been revised from the proposal to include the basis 
for selecting HCS Program service components, to remove references to billable 
service units and to include requirements for documenting an individual's need 
for services. This section was also modified to clarify what respite care is 
reimbursable under HCS when provided to individuals living in their family homes 
and to indicate that supported employment is provided in conjunction with day 
habilitation and may be provided to individuals without a previous history of 
institutionalization with general revenue funding. Section 409.101(c) was 
revised to allow greater flexibility in determining program eligibility with 
regard to maximum estimated service costs. Language in sec.409.103 was revised 
to clarify the level of need assignment process and to remove inconsistencies in 
terminology. Section 409.107 was revised to exclude providers submitting full 
cost reports from requirements to submit a direct service cost survey for the 
same reporting period, to change the cost reporting period to the state fiscal 
year, and to remove inconsistencies in terminology. Reporting and record keeping 
requirements included in this section were revised to parallel the requirements 
for the intermediate care facilities for the mentally retarded (ICF/MR) program. 
Section 409.107 was modified to include a section addressing fiscal 
accountability. Section 409.118 was revised to change the term "model-based 
rates" to modeled rates, to specify that relevant historical and operation cost 
information will be used in determining modeled rates and to specify that an 
independent firm will be included on the reimbursement advisory panel. Other 
terminology in sec.409.118 was revised to correct inconsistencies with Chapter 
409, Subchapter A of this title (relating to General Reimbursement Methodology 
for all Medical Assistance Programs) and sec.409.107 of this title (relating to 
Reporting Costs). Section 409.120 was reorganized and revised to delineate the 
department's authority to conduct utilization and review activities, to specify 
the responsibilities of the department and of providers in the utilization 
review process, the conditions for reimbursement approval, and procedures 
providers must use to request the department to reconsider its decision. 
A public hearing regarding the proposed rules was held January 13, 1997, at 
which no comments were received. Written comment was received from the 
Reimbursement Methodology Advisory Panel consisting of representatives of 
provider agencies, provider associations, advocates, and community mental health 
and mental retardation centers; Central Gulf State-Operated Community MHMR 
Services, Richmond; Educare, Austin; and the Private Providers Association of 
Texas (PPAT), Austin. 
Several commenters requested the inclusion of clarifications of specific billing 
units and billing procedures in the sec.409.100. The department responds that in 
order to retain the original purpose of the section and avoid misunderstanding 
of the actual billing process, references to the billable service delivery units 
in the section have been removed and detailed instructions and explanations are 
being included in the billing procedures distributed to HCS Program providers. 
The section will retain the reimbursement limits for supported employment, 
adaptive aids, minor home modifications, and dental treatment. The billing and 
reimbursement procedures also will be revised to address the following concerns 
expressed by commenters: clarification of billing for case management services 
in the event a consumer transfers between program providers mid-month; and the 
need for definitions of the allowable full and partial billing units for each 
service component. 
One commenter expressed concern that the term "supported home living" in the HCS 
service array may cause confusion with another service term "supported living" 
which is used by the department. The department appreciates the commenter's 
concern and will track and respond to any confusion that may result from the use 
of the two terms. The HCS waiver request and the provider instructions will 
contain a specific definition of the services covered under the supported home 
living service component and the qualifications of eligible service providers.  
Two commenters suggested that the proposed description of respite care implied 
that individuals receiving HCS residential support or HCS foster care could not 
receive respite through a source other than the HCS program. The department has 
revised sec.409.100(a)(5) to clarify that respite care provided to individuals 
receiving residential support or HCS foster care is not reimbursable through the 
HCS program. This service could be included on the portion of the individual 
plan of care detailing community services provided through other resources. 
One commenter urged the department to allow up to six program participants to 
receive respite in the same setting. The capacity of HCS respite settings is 
outside the purview of this proposed rule and the rule will not be revised to 
address the capacity of these settings. However, the department is studying this 
recommendation and, if a decision is made to change the capacity of respite 
settings, the change will be reflected in a revision to the HCS Consumer 
Principles for Evidentiary Certification. 
Two commenters recommended that the department clarify the distinction between 
the supported home living component and the respite care component as soon as 
possible. The department agrees this distinction requires clarification and will 
distribute guidelines to providers in the near future. 
Two commenters recommended that sec.409.100(a)(6) specify that documentation of 
a denial of services for day habilitation is not required in order to provide 
these services through the HCS Program. The department appreciates the 
commenters' concern but declines to revise the rule as recommended. In most 
cases, the department does not intend to require documentation of a denial of 
day habilitation services through another source in order for day habilitation 
to be initially approved as part of an individual plan of care. The department 
needs to retain the option to review such documentation and to challenge a 
provider's billing for day habilitation when the service is provided free of 
cost to the provider or is clearly available through and the responsibility of 
another source.  
Two commenters requested that the department revise sec.409.100(a)(7) to clearly 
state that supported employment may be provided as a billable service in 
addition to day habilitation services for an individual. Three commenters 
additionally recommended that this section clearly include the department's 
intent to reimburse providers for supported employment provided to individuals 
who had not been previously institutionalized in an ICF/MR or nursing facility. 
The department has revised the language to stipulate that supported employment 
may be provided in conjunction with day habilitation and that supported 
employment may be provided as a state fund reimbursed, but not Medicaid 
reimbursed, service to individuals without a history of such 
institutionalization, contingent on availability of state funding. 
Two commenters stated that the allowable lifetime maximum expenditure specified 
in sec.409.100(a)(9) for minor home modifications of $7,500 per individual was 
too restrictive and did not allow for changes in an individual's choice of 
residence or extenuating circumstances requiring a change in a living setting. 
It was recommended that a special review and approval process be available when 
additional minor home modifications were needed. The department appreciates the 
commenters' concerns but declines to make adjustments to this maximum 
expenditure. The department will investigate the alternative processes for 
review and approval suggested by the commenters. 
One commenter recommended that the department eliminate the requirement for day 
habilitation services to be provided six hours per day since it will be possible 
to bill for this service in partial units. The department responds that although 
providers were not reimbursed through the HCS program, they historically have 
been required to assure that six hours of age appropriate day services be 
available to program participants. Inclusion of day habilitation as a 
reimbursable service does not change this program standard and, therefore, 
sec.409.100(6) will not be revised as recommended. 
A commenter asked for clarification in this subchapter that consumers can pay 
for services in excess of the yearly or lifetime maximum HCS reimbursement 
amounts for services. The department responds that while the commenter is 
correct that consumers may pay for additional services in excess of the 
allowable maximum, the department does not agree this should be stipulated in 
this rule.  
One commenter urged the department to examine the impact of the new fee-for-
service reimbursement methodology on continued eligibility of currently enrolled 
consumers and to consider an alternative to the current criteria limiting the 
annual cost of services for an individual to a maximum of 125% of the average 
annualized per capita cost of ICF/MR services. The commenter recommended more 
flexibility in the criteria while continuing to place limits on the maximum cost 
of services for an individual. The department agrees and has revised 
sec.409.101(c) to allow flexibility to approve service plans with an estimated 
cost exceeding the average ICF/MR cost of services based on the demonstration of 
an individual's need for more extensive services. The revised section 
incorporates the program standard requiring services to be necessary to prevent 
an individual's institutionalization, to supplement rather than replace the 
individual's natural supports, and to be based on needs identified through 
assessment of the individual's condition. The revised section limits the cost of 
HCS program services to a maximum cost equal to 125% of the cost of services 
delivered in a small ICF/MR facility to an individual having a comparable level 
of need or equal to 125% of the average annualized per capita cost for ICF/MR 
services, whichever is greater. In addition, the process and criteria for 
approving individual service plans exceeding the average annual ICF/MR cost has 
been included in sec.409.120. Two commenters recommended that, in the future, 
the department consider including definitions of services and billing units 
within sec.409.103. The department appreciates the commenters' remarks and will 
consider their recommendation in future rule revisions. 
Two commenters requested that sec.409.103(b) be modified to define the 
terminology "at cost" to include reimbursement for a "nominal administrative 
fee" as part of the cost for providing adaptive aids, minor home modifications 
and dental treatment. The department does not agree that an additional 
administrative charge over and above that in the case management rate should be 
included in the reimbursement for provision of these services. 
Two commenters recommended that sec.409.103(c)(1)(B) be revised to allow the 
department some discretion in reviewing level of need assignments that do not 
directly correspond to the Inventory for Client and Agency Planning (ICAP) 
service level scores. The department agrees and has revised this section to 
indicate that levels of need not directly corresponding to the ICAP service 
level score are subject to utilization review. 
Two commenters pointed out an apparent error in sec.409.103 regarding the Form 
3650 documentation related to the intervention code designating the staff 
intervention necessary to classify an individual as having a pervasive plus 
level of need. The department has corrected the language to state "an 
intervention code of 2 on at least one of the Items 70-73" and thanks the 
commenters. 
Two commenters specified that timelines for billing stated in sec.409.103(g)(4) 
appeared to be acceptable but asked for clarification on how the timelines were 
determined and documented. The department has reviewed this section and believes 
the explanation of timelines to be clear and consistent with the billing 
instructions for other Medicaid programs operated by the department. A commenter 
recommended that the department modify language in sec.409.103(g)(3) to provide 
a mechanism to remedy situations in which payment for services is denied when an 
individual plan of care has expired but services continued to be provided. The 
department responds that the existence of a current individual plan of care is 
an eligibility requirement and the department cannot make a payment for an 
ineligible individual. 
A commenter stated that the timelines for billing for service contained in 
sec.409.103(g)(4) were not acceptable for billing for adaptive aids or minor 
home modifications due to the process being more cumbersome than for other 
services. The commenter also requested that the rule be modified to require the 
department to process claims for adaptive aids and home modifications on a 
timely basis. The department responds that adaptive aids and home modifications 
are considered to be provided on the date they are delivered or completed. The 
department believes that 95 days from the date the aid or modification is 
provided is an adequate amount of time for a provider to submit the 
reimbursement request. 
A commenter recommended that sec.409.103(g)(5) be revised to allow opportunities 
for providers to retroactively revise individual plans of care to include, and, 
therefore, allow billing for services which were delivered based on an 
individual's legitimate need but were not listed on the plan at the time the 
services were delivered. The department appreciates the commenter's concern but 
declines to allow this exception until the implications can be studied in light 
of the new policies concerning approvals of IPC service cost maximums and the 
new fee-for-service methodology. 
Two commenters recommended that sec.409.107 parallel the comparable section in 
ICF/MR program. The department has revised appropriate portions of sec.409.107 
to parallel the reporting process for the ICF/MR program. 
Two commenters recommended the addition of a new subsection to sec.409.107 
regarding fiscal accountability. The department agrees with the recommendation 
and has added sec.409.107(s) to address fiscal accountability. 
Two commenters recommended that sec.409.118(d) specify that the model rates are 
based on relevant information. The department revised the subsection as 
requested. 
Two commenters recommended that sec.409.118(f) be revised to specify the 
inclusion of an independent consultant in the development of model rate 
recommendations. The department has revised this section to specify the 
inclusion of an independent firm along with service providers, advocates and 
department personnel in the development of model rate recommendations. 
Two commenters suggested that proposed language in sec.409.118(g)(1) be revised 
to be consistent with new language included in sec.409.107 relating to fiscal 
accountability. The department agrees and has removed language inconsistent with 
the new language regarding fiscal accountability. 
Two commenters requested that the reference in sec.409.118(g)(2) to the 
department's analysis of the model rates "at least every three years" be changed 
to "every three years." The department declines the revised the language as 
requested, and explains that the intent of the rule is to establish the minimum 
frequency for rebasing the model rates and not to restrict the ability of the 
Texas MHMR Board to manage the program. 
Two commenters recommended that the process used to adjust the model rates 
parallel the ICF/MR process for non-stated operated ICF/MRs. The department 
responds that language in sec.409.118(g)(2) parallels the process used to adjust 
the model rates for non-state operated ICF/MRs with the exception that the HCS 
process will be based on a state fiscal year cycle. 
Two commenters recommended that the requirement for a written request for 
approval of a plans of care would be unnecessarily burdensome and bureaucratic 
since the department is able to identify plans which exceed the specified cost 
threshold. The commenters recommended that provider initiated requests for 
approval be limited to instances of increases in levels of need. The department 
revised the proposed section on utilization review to indicate instances 
requiring utilization review prior to authorization of reimbursement and to 
clarify provider and departmental responsibilities for completing the process. 
The revised section incorporates the proposed process for reconsideration of 
departmental decisions. 
The new sections and amendments are adopted under the Healthand Safety Code, 
sec.532.015(a), which provides the Texas Mental Health and Mental Retardation 
Board with broad rulemaking authority; and under the provisions of Texas 
Government Code, which provides the Texas Health and Human Services Commission 
with the authority to administer federal medical assistance funds. 

sec.409.100.Service Components of Home and Community-based Services (HCS) 
Program. 
(a) HCS service components are selected for inclusion in an applicant's or 
program participant's Individual Plan of Care (IPC) to supplement rather than 
replace that individual's natural community supports. HCS service components are 
selected based on assessments which identify specific services and supports 
necessary for the individual to continue living in the community and prevent the 
individual's admission to institutional based services. The following service 
components are available to all individuals enrolled in the HCS Program unless 
indicated otherwise: 
(1) Case management is provided to all individuals enrolled in the HCS Program. 
(2) Counseling and therapies, consisting of physical therapy, occupational 
therapy, speech and language pathology, audiology, social work, psychology, and 
dietary services may be provided according to the IPC. 
(3) Nursing care may be provided in accordance with the IPC by licensed nurses. 
(4) Residential assistance does not include payments for room and board and may 
be provided in accordance with the IPC in one of the following three ways: 
(A) Supported home living is provided to individuals who are living in their own 
homes or the homes of their natural families; 
(B) HCS foster care is provided to individuals who are living in the home of a 
foster family provider or paid companion; or 
(C) Residential support is provided to individuals who reside in homes in which 
residential assistance is provided by staff who share the residence or who 
provide assistance on a scheduled shift basis. 
(5) Respite care may be provided to individuals who are living in the homes of 
their natural or adoptive family. Respite care is not an HCS reimbursable 
service for individuals who are receiving HCS foster care or residential 
support. Respite care may be provided in the individual's residence or in an 
approved setting outside of the individual's residence. Reimbursement for over- 
night respite care provided in a setting other than the individual's residence 
includes payment for room and board. The maximum annual reimbursement per IPC 
year (an IPC year is defined by the begin and end dates of an individual's IPC, 
which encompasses a 12-month period of time)is equal to 30 multiplied by the 
daily reimbursement rate for respite care. 
(6) Day habilitation may be provided to all enrolled individuals participating 
in day habilitation program activities which are exclusive of any other 
separately funded service including but not limited to, public school 
educational services, rehabilitative services for persons with mental illness, 
or programs funded by the Texas Department of Human Services or the Texas 
Rehabilitation Commission. Day habilitation is normally provided outside the 
individual's residence six or more hours per day five days per week. 
(7) Supported employment is provided in conjunction with day habilitation and 
may be provided up to an annual maximum of $3,000 per individual. Supported 
employment reimbursement is available only if documentation verifies that 
supported employment services have been denied or are otherwise unavailable to 
the individual through either the Texas Rehabilitation Commission or the public 
school system. Medicaid-reimbursed supported employment may be provided only if 
the participant has a documented previous history of institutionalization in a 
nursing facility or an intermediate care facility for persons with mental 
retardation or a related condition. Supported employment may be provided as a 
state-funded, non-Medicaid reimbursed HCS service component for individuals 
without a prior history of institutionalization subject to the availability of 
state funding. Any person receiving supported employment must have an identified 
need and desire for employment. 
(8) Adaptive aids may be provided for each individual up to a maximum of $10,000 
per IPC year. The individual's interdisciplinary team must approve the provision 
of all adaptive aids. Provision of adaptive aids outside the scope of those 
specified in the HCS waiver as approved by the Health Care Financing 
Administration (HCFA) must be preapproved by TDMHMR Medicaid Administration. 
(9) Minor home modifications may be provided to each individual up to a life-
time maximum of $7,500, after which $300 per IPC year may be provided for 
maintenance or additional modifications. Provision of minor home modifications 
outside the scope of those specified in the HCS waiver as approved by HCFA must 
be preapproved by TDMHMR Medicaid Administration. 
(10) Dental services may be provided to each individual according to the IPC up 
to a maximum of $1,000 per IPC year. Dental services outside those specified in 
the HCS waiver as approved by HCFA will not be reimbursed. 
(b) The provider must retain in the individual's record results and 
recommendations of individualized assessments documenting the current need for 
each service component included in the IPC. IPCs must be developed and updated 
in accordance with the Consumer Principles for Evidentiary Certification and 
with sec.409.101(4) of this title (relating to Client Eligibility Criteria.)

sec.409.101.Client Eligibility Criteria.
(a)-(b) (No change.) 
(c) An individual will be determined eligible for HCS Program services if the 
estimated annual cost of services in the individual's IPC (IPC cost) does not 
exceed 100% of the estimated annualized per capita cost for ICF/MR services. If 
an individual's IPC cost exceeds 100% of the estimated annualized per capita 
cost for ICF/MR services, the individual will be eligible for HCS Program 
services if TDMHMR approves reimbursement, in accordance with sec.409.120 of 
this subchapter, and the IPC cost does not exceed 125% of the annual ICF/MR 
reimbursement rate paid to a small ICF/MR, as defined in sec.406.156 of this 
title (relating to Rate Setting Methodology) for the individual's level of need 
as it would be assigned under sec.406.204(b) of this title (relating to Level-
of-Care Determination and Level-of-Need Assignment) or 125% of the estimated 
annualized per capita cost for ICF/MR services, whichever is greater. Services 
included in the IPC must be based on the individual's condition and environment, 
must be necessary to prevent institutionalization and must supplement rather 
than replace the individual's natural supports in the community. 
(d) (No change) 
(e) Any individual whose request for eligibility for the HCS Program is denied 
or is not acted upon with reasonable promptness, or whose HCS Program services 
have been terminated, suspended or reduced by TDMHMR is entitled to a fair 
hearing, conducted by TDHS, in accordance with 40 TAC sec.79.1101 et seq, except 
that a request for a fair hearing must be submitted to the TDMHMR Office of 
Medicaid Administration and received within 90 days from the date of the notice 
of denial of eligibility for the HCS Program or notice of termination, 
suspension, or reduction of HCS Program services.

sec.409.103.Payment Category Assignment and Provider Claims Payment.
(a) Reimbursement to providers for case management, supported home living, 
counseling and therapies, nursing, and respite care is based upon the unit 
reimbursement rate for the specific service component. 
(b) TDMHMR will reimburse providers the actual cost of minor home modifications, 
adaptive aids, and dental services in accordance with waiver request as approved 
by HCFA, the HCS provider contract, the individual's IPC, and provider manual 
requirements. 
(c) Reimbursement for HCS foster care, residential supports, and day 
habilitation is based upon the program participant's payment category assignment 
and the reimbursement rate for the specific service component provided. 
(1) The payment category for a program participant is based upon a level-of-need 
(LON) assignment completed by TDMHMR or its designee as part of the level-of-
care determination according to 25 TAC sec.406.203. LON assignments are derived 
from the service level score obtained from the administration of the Inventory 
for Client and Agency Planning (ICAP) to the program applicant/participant and 
from selected items on the Level-of-Care Assessment Form (TDHS Form 3650). 
(A) An HCS Program applicant or participant is assigned one of the following 
five levels of need; 
(i) An intermittent LON (LON 1) is assigned if the ICAP service level score 
equals 7, 8, or 9; 
(ii) A limited LON (LON 5) is assigned if the ICAP service level score equals 
4,5, or 6; 
(iii) An extensive LON (LON 6) is assigned if the ICAP service level score 
equals 2 or 3; 
(iv) A pervasive LON (LON 8) is assigned if the ICAP service level score equals 
1. 
(v) A "pervasive plus" LON (LON 9) is assigned when the TDHS Form 3650 documents 
an intervention code of 2 on at least one of Items 70-73.
(B) The LON assignment may be modified to take into account extraordinary 
service needs that result from unusual behavioral challenges. The LON for these 
individuals combines ICAP service level scores and needs identified on selected 
items on the TDHS Form 3650. A LON that does not directly correspond to the ICAP 
service level score will be subject to utilization review by TDMHMR or its 
designee. 
(i) Individuals who have very challenging behaviors that require a behavior 
intervention program that includes constant preventive actions by additional 
provider staff will be assigned the next higher LON from the original level. 
Additional staff may assist in the supervision of other individuals. Individuals 
originally assigned a pervasive LON will retain that assignment. Very 
challenging behaviors have the following characteristics: 
(I) The behavior presents a danger to the individual or to others; 
(II) The behavior warrants individualized objectives which include written 
intervention procedures; 
(III) The frequency of the behavior is reduced only with constant staffing and a 
highly structured environment; 
(IV) The behavior is difficult or impossible for a single staff person to 
control when it occurs; 
(V) The behavior precludes some activities and an environment that cannot be 
structured. The interventions used to control the behavior require regular 
documentation, monitoring, and revisions as needed to meet the needs of the 
individual; and 
(VI) TDHS Form 3650 indicates an intervention code of 1 on at least one of Items 
70-73. 
(ii) Individuals who have extremely challenging behaviors which pose a risk of 
harm to themselves or others and who require constant one-to-one staff 
supervision, 16 hours per day, will be assigned a pervasive plus LON. Extremely 
challenging behaviors have the following characteristics: 
(I) The behavior may be life-threatening; 
(II) The behavior warrants the highest priority of individualized objectives 
which include a written record of every occurrence of the behavior;
(III) The frequency of the behavior is difficult to reduce;
(IV) The consequences of the behavior are difficult to minimize; and 
(V) TDHS Form 3650 indicates an intervention code of 2 on at least one of the 
Items 70-73. 
(2) The provider completes the ICAP, enters the resulting service level score on 
the TDHS Form 3650, and completes the remainder of Form 3650. Information 
entered on the Form 3650 must represent the applicant's/participant's current 
status. Completed Form 3650 is submitted to TDHS for initial program enrollment 
or to TDMHMR for annual eligibility reevaluation. 
(3) TDMHMR reviews LON assignments and, if made in accordance with criteria in 
this subsection, approves the LON assignment. 
(A) If TDMHMR determines that information submitted for a LON was not correct or 
if information previously submitted has changed, the LON assignment is 
reevaluated and may be changed by TDMHMR. If the LON assignment is changed, 
reimbursement paid to providers will be adjusted back to the date of the 
original LON assignment in order to reflect the appropriate LON assignment. 
(B) The provider in disagreement with an individual's changed LON assignment may 
request reconsideration by TDMHMR or its designee. Providers must submit written 
requests for reconsideration of a changed LON assignment in accordance with 
sec.409.120 to TDMHMR or its designee within ten calendar days of notification 
of a changed LON assignment. 
(4) TDMHMR performs annual reevaluations of LON assignments in conjunction with 
annual reevaluations of ICF-MR LOC. 
(A) If a higher LON assignment is requested at the time of the annual 
eligibility reevaluation, the provider must submit supporting documentation to 
TDMHMR describing the changes in the individual's needs in accordance with 
sec.409.120 relating to Utilization Review. 
(B) A provider in disagreement with TDMHMR's denial to increase an individual's 
LON assignment may request reconsideration by TDMHMR. The provider must submit 
written requests for reconsideration of the denial in accordance with 
sec.409.120 to TDMHMR or its designee within ten calendar days of notification 
of the denial. 
(5) Providers requesting a change to a higher LON at times other than the annual 
reevaluation must submit TDHS Form 3650 with supporting documentation describing 
the changes in the individual's needs to TDMHMR in accordance with sec.409.120, 
relating to Utilization Review. A provider in disagreement with TDMHMR's denial 
to increase an individual's LON assignment may request reconsideration by TDMHMR 
or its designee. The provider must submit written requests for reconsideration 
of the denial in accordance with sec.409.120 to TDMHMR within ten calendar days 
of notification of the denial. 
(d) Units of service must be provided and documented according to the individual 
plan of care. 
(e) The provider must submit reimbursement requests in accordance with TDMHMR 
procedures and accept TDMHMR's payment as payment in full for waiver services. 
(f) Room and board are not included in the reimbursement rate to providers 
except in the case of overnight respite care provided in a residence other than 
the participant's own home or family home. 
(g) The provider is not entitled to payment if: 
(1) the client is ineligible for the HCS program, Medicaid benefits, or is an 
inpatient of a hospital, nursing facility, or ICF-MR;
(2) TDMHMR has not authorized client enrollment on the Approval of Application 
for Enrollment form; 
(3) services were delivered during gaps in the coverage period for the IPC for 
HCS form. Coverage periods are defined by the begin and end dates on the IPC for 
HCS form; 
(4) the initial claim for service is not received by TDMHMR within 95 calendar 
days from the end of the month of service or within 30 days of notification of 
approval of enrollment by TDMHMR, whichever is later;
(5) the provider bills for services not included in the IPC during the time the 
services were provided; 
(6) the service billed was not provided; 
(7) the client is discharged from the HCS program. Payment is not made for the 
day of discharge from the HCS program.  

sec.409.106.Provider's Right to Administrative Hearing. 
(a) A provider may request an administrative hearing in accordance with 25 TAC, 
Chapter 409, Subchapter B of this title, relating to Adverse Actions, if TDMHMR 
takes or proposes to take the following action: 
(1) vendor hold; 
(2) contract termination; 
(3) recoupment of payments made to the provider; or 
(4) denial of a provider's request for payment. 
(b) If the basis of an administrative hearing requested under subsection (a) is 
a dispute regarding a level-of-need assignment, the provider may receive an 
administrative hearing only if reconsideration was requested by the provider in 
accordance with sec.409.103, of this title (relating to Payment Category 
Assignment and Provider Claims Payment).  

sec.409.107.Reporting Costs. 
(a) On an annual basis, all state-operated providers must submit cost reports as 
directed by TDMHMR or its designee in accordance with Chapter 409, Subchapter A 
of this title (relating to General Reimbursement Methodology for all Medicaid 
Assistance Programs). 
(b) Non-state operated providers must report direct service costs as specified 
in this subsection and in accordance with Chapter 409, Subchapter A of this 
title (relating to General Reimbursement Methodology for all Medicaid Assistance 
Programs). 
(1) On an annual basis, non-state operated providers will submit direct service 
cost data except for providers selected to file a full cost report for the same 
reporting period. 
(2) Providers must report the following costs: 
(A) Staff wages related to the delivery of direct services including residential 
assistance, and day habilitation services; and the direct supervision of the 
delivery of these services. 
(B) These costs may be either the provider's actual expense or contracted 
expenditures. 
(c) At least every three state fiscal years beginning September 1, 1997, TDMHMR 
will select a sample of non-state operated providers which will be required to 
submit a full and accurate account of all costs related to the provision of 
services for a provider's fiscal year. 
(d) TDMHMR will conduct desk audits of all cost reports and/or direct service 
cost surveys, and will conduct on-site reviews of a sample of providers 
submitting cost reports and/or cost surveys. 
(e) Record keeping requirements. Each provider must retain records according to 
the department's requirements. Providers must ensure that records are accurate 
and sufficiently detailed to support the legal, financial, and statistical 
information provided to TDMHMR. 
(f) Noncompliance with record keeping requirements. Failure to maintain records 
that support the information submitted to TDMHMR constitutes a violation of the 
HCS provider contract. 
(g) Allowable and unallowable costs. Providers must complete cost reports in 
accordance with sec.409, Subchapter A of this title (relating to General 
Reimbursement Methodology for all Medical Assistance Programs).
(h) Certification. Providers must certify the accuracy of cost reports submitted 
to TDMHMR. Providers may be liable for civil and/or criminal penalties if the 
cost report is not completed according to TDMHMR requirements.
(i) Due date. Providers must submit direct service cost surveys no later than 45 
calendar days after the end of the reporting period or 45 days after the date 
that TDMHMR mails the form to the provider, whichever is later. Providers must 
submit full cost reports no later than 90 days after the reporting period or 90 
days after the date that TDMHMR mails the form to the provider, whichever is 
later. 
(j) Extension of due date. TDMHMR may grant extensions of due dates for good 
cause. Good cause is defined as one that the provider could not reasonably be 
expected to control. A provider must submit a request for extension in writing 
to TDMHMR before the cost survey/cost report due date. TDMHMR will respond to a 
request for extension within ten working days of its receipt. 
(k) Cost data. TDMHMR may at times require additional financial and statistical 
information to ensure the fiscal integrity of the HCS Program. Each provider 
must submit additional information to TDMHMR upon request, unless the 
information is not at the provider's disposal. 
(l) Failure to submit requested data. Failure to submit acceptable cost data by 
the due date constitutes a violation of the HCS provider contract.
(m) Review of cost data. TDMHMR or its designee reviews each provider's cost 
data to ensure that the financial and statistical information submitted conforms 
to all applicable rules and instructions. Forms that are not completed according 
to TDMHMR's instructions or rules may be returned to the provider for proper 
completion. 
(n) On-site audits. TDMHMR or its designee performs a sufficient number of on-
site financial audits to ensure the fiscal integrity of the HCS Programs. The 
number of on-site audits performed may vary. 
(o) On-site audit standards. TDMHMR or its designee performs on-site financial 
audits in a manner consistent with the generally accepted auditing standards 
(GAAS) approved by the American Institute of Certified Public Accountants and 
included in Standards for Audit of Governmental Organizations, Programs, 
Activities and Functions, issued by the United States Comptroller General. 
(p) Access to records. Each provider must allow access to TDMHMR or its designee 
to any and all records necessary to verify cost data submitted to TDMHMR or its 
designee. This requirement includes records pertaining to related-party 
transactions and other business activities engaged in by the provider that are 
directly or indirectly related to the provision of contracted services. Failure 
to allow inspection of pertinent records within ten working days following 
written notice from TDMHMR constitutes a violation of the HCS provider contract. 
If the administrative office or other entity pertaining to a multi-contract 
operation refuses access to records, then the penalties are extended to all of 
the provider's entities having Medicaid contracts with TDMHMR. Additional rules 
regarding access to records that are out-of-state may be found in Chapter 409, 
Subchapter A, sec.409.002 (relating to Methods for Cost Determination). 
(q) Reviews of exclusions or adjustments. A provider who disagrees with TDMHMR's 
exclusion or adjustment of items in cost reports may request an informal review 
and, when appropriate, an administrative hearing as specified in sec.409.007 of 
this title (relating to Reviews and Administrative Hearings).
(r) Notification of exclusions and adjustments. TDMHMR will notify a provider of 
exclusions and any adjustments, including caps applied, to reported costs in 
accordance with sec.409.005 of this title (relating to Notification). 
(s) Fiscal Accountability. 
(1) General principles. Fiscal accountability is a process used to gauge the 
ongoing financial performance under the non-state operated reimbursement rates. 
(2) Fiscal accountability will consist of the annual reporting of direct service 
costs including wages, benefits, staffing, and supervisory span-of-control 
information from all non-state operated providers. The data will be collected on 
a cost survey designed by TDMHMR. 
(3) In the initial rate period, providers are required to submit direct services 
costs on a survey during a uniform three month period of the year, as selected 
by the department. The survey will reflect the provider's actual direct costs 
for the three month period. The direct service costs will be compared to the 
"direct service cost" component of the modeled rates. Instances where a 
provider's actual direct service costs, as captured by the quarterly cost 
surveys, are less than 85% of the direct service revenues in the model, will 
require additional reporting of costs and other information from the provider. 
(4) TDMHMR will review the results obtained from the direct services cost 
surveys submitted for 1997 with representatives of provider associations and 
advocacy groups to further refine the fiscal accountability process. Direct 
services cost surveys will be collected in each fiscal year and instances where 
a provider's actual direct service costs are less than 85% of the direct service 
revenues in the model, TDMHMR may require the provider to: 
(A) Report more detailed financial information; 
(B) Submit to a quality assurance survey and review; 
(C) Submit to a utilization review of all services provided, and/or; 
(D) Submit to a detailed audit of all relevant financial records.

sec.409.118.Reimbursement Methodology for Home and Community-Based Services 
(HCS). 
(a) TDMHMR determines reimbursement rates according to Chapter 409, Subchapter A 
of this title (relating to General Reimbursement Methodology for all Medicaid 
Assistance Programs). 
(b) Reimbursement rates apply to all non-state operated providers uniformly by 
type of service component provided and the individual's level-of-need. 
Reimbursements for state-operated providers are adjusted based on allowed costs 
reported at the end of the state fiscal year, in accordance with Chapter 409, 
Subchapter A of this title (relating to General Reimbursement Methodology for 
all Medicaid Assistance Programs). The state- operated cost adjustment will not 
exceed allowable federal maximums. 
(c) Rates are adopted annually by the board and are prospective in nature. 
(d) Modeled rates are based on relevant cost information including a sample of 
historical cost information and operational experience of service providers in 
Texas. The modeled rates are reasonable and adequate to meet the costs that must 
be incurred by efficiently and economically operated providers to provide 
services in conformity with applicable state and federal laws, regulations, and 
quality and safety standards. 
(e) Rates for service components may also take into account the individual's 
level of need as defined in sec.409.103 of this title (relating to payment 
category assignment and provider claims payment). Rates vary by level of need 
for residential support, HCS foster care, and day habilitation.
(f) The modeled rates effective January 1, 1997, are based on cost components 
deemed appropriate for a provider. The determination of these components is 
based on historical cost and operational information collected from a 
representative sample of providers. An advisory panel consisting of service 
providers, advocates, an independent firm and department personnel, will analyze 
available information regarding historical cost and operational data and level-
of-need assessment. The analysis will result in recommendations to the board for 
rates which are reasonable and adequate. 
(g) The rates are derived for each type of service and, when appropriate, each 
level-of-need and include the following cost factors: direct service staffing 
costs (wages for direct care, direct care supervisors, benefits, modeled 
staffing ratios); non- personnel operating costs; facility costs (for respite 
care only); room and board costs for overnight, out-of-home respite care; 
administrative costs; and professional consultation and program support costs. 
(1) Annual rates for the time period between the years that modeled rates are 
rebased are set by inflating the direct cost portion of the previous year's 
rates by the IPD-PCE as defined in Chapter 409, Subchapter A of this title, 
(relating to General Reimbursement Methodology for All Medical Assistance 
Programs.) TDMHMR will collect the direct costs on a survey during a three month 
period of the current rate year. The data will reflect the provider's actual 
costs for the fiscal quarter ending during the three-month period. The direct 
service costs will be compared to the direct service cost component of the 
modeled rates. 
(2) Beginning September 1997, the modeled rates will be analyzed at least every 
three state fiscal years to determine if rebasing is necessary, using the 
following process: 
(A) TDMHMR will seek to retain an independent firm in accordance with Texas 
Government Code, Chapter 2254, to perform a detailed analysis of cost and 
operational information for a sample of providers throughout the state. 
(B) Site visits will be made to each of the sample providers to collect cost 
data and discuss operations. 
(C) An advisory panel will be formed consisting of service providers, advocates, 
and department personnel who will analyze available information regarding 
historical cost and operational data and level-of-need assessment. TDMHMR will 
use the analysis to make recommendations to the board for rates which are deemed 
appropriate. 
(D) The advisory panel, TDMHMR, and the independent firm will recommend 
adjustments to rate factors if required, based on the results of the analysis of 
the sample of cost and operational information. 
(E) Revised rates, as well as the rationale supporting the rates, will be 
presented to the TDMHMR Board for final approval and implementation.
(3) Refinement/adjustment of the cost factors and model assumptions will be 
considered, as appropriate, by the TDMHMR Board based on the overall industry 
results and recommendations of department staff.

sec.409.120.Utilization Review.
(a) TDMHMR or its designee may conduct a utilization review prior to 
authorization for HCS reimbursement in any circumstance including but not 
limited to the following: 
(1) The provider submits an initial, revised or renewal IPC having an annual 
cost exceeding 100% of the estimated annualized average per capita cost for 
ICF/MR services; 
(2) The provider reports an increase in an individual's LON either at the time 
of the annual eligibility reevaluation or at any other time; 
(3) The HCS provider reports the consumer's LON is 9 (Pervasive Plus); and/or; 
(4) The provider reports a LON for the consumer which appears inconsistent with 
other clinical or service provision evidence/history about the consumer. 
(b) TDMHMR or its designee will not approve reimbursement in the circumstances 
included in subsection (a)(1)-(3) of this section until the provider has 
submitted documentation supporting the level of service delivery included in the 
IPC, an increase in a previous LON assignment or the assignment of an LON 9. 
Providers should send this documentation to TDMHMR, Medicaid Administration, at 
the same time as the electronic submission of the IPC or the TDHS Form 3650. 
(1) In order for reimbursement to be approved, providers must submit 
documentation to TDMHMR which demonstrates the following, as appropriate:
(A) that the IPC services proposed for the individual are derived from 
assessments of the individual's needs, are necessary to prevent the individual 
from being institutionalized, and support rather than replace the individual's 
natural community supports and; 
(B) that the proposed initial or revised LON assignment reflects the 
individual's current service level need which is expected to continue for at 
least 12 months. 
(2) Information submitted by providers must include the Individual Service Plan 
containing the interdisciplinary team deliberations and conclusions and, as 
applicable, documentation of assessments or interventions by qualified 
psychologists or other professional staff/consultants, staff requirements to 
conduct behavioral intervention plans, medical and physical assessment results 
and recommendations; time sheets of assigned service providers, and any other 
documentation providing support of the LON assignment or the level of IPC 
services. 
(3) Within ten working days of receiving the supporting documentation, TDMHMR or 
its designee will notify the provider in writing of the approval or disapproval 
of the requested LON or the level of service delivery. TDMHMR will establish the 
effective date of approved requests.
(A) If additional documentation is requested by TDMHMR, the provider must 
respond to the request within five working days of receipt of the request. 
(B) Within five working days of receipt of the additional information, TDMHMR 
will inform the provider in writing of the approval or disapproval of the 
requested LON or the level of service delivery. 
(c) The provider may request a reconsideration of TDMHMR's decision by 
submitting a written request to TDMHMR, Medicaid Administration within ten days 
of the date of notification of the department's decision. The request will be 
considered and the provider will be notified in writing of the results of 
TDMHMR's reconsideration within ten working days of receipt of the request. 
(d) Providers in disagreement with a reconsideration decision related to a LON 
assignment may request an administrative hearing in accordance with sec.409.106 
of this title (relating to Provider's Right to Administrative Hearing). 
(e) TDMHMR Medicaid Utilization Review Department, or its designee, will conduct 
periodic retrospective reviews. Based on such reviews, TDMHMR may recoup or deny 
payment to a provider.  
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 March 5, 1997.
TRD-9703046
Ann Utley
Chairman, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Effective date: March 25, 1997
Proposal publication date: December 24, 1997
For further information, please call: (512) 206-4516

25 TAC sec.sec.409.103, 409.106, 409.107, 409.118
The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts the 
repeal of existing sec.sec.409.103, 409.106, 409.107, and 409.118 of Chapter 
409, Subchapter D, relating to home and community-base services. The repeal 
accommodates the contemporaneous adoption of new sec.sec.409.103, 409.106, 
409.107, and 409.118 in this issue of the Texas Register. Existing 
sec.sec.409.103, 409.106, 409.107, and 409.118 are repealed without changes as 
published in the December 24, 1996, issue of the Texas Register (21 TexReg 
12390). The repeals would enable the adoption of new sections to Chapter 409, 
Subchapter D. 
There was no oral or written testimony regarding the repeal at a public hearing 
held on January 13, 1997. 
The repeals are adopted under the Health and Safety Code, sec.532.015(a), which 
provides the Texas Mental Health and Mental Retardation Board with broad 
rulemaking authority; and under the provisions of Texas Government Code, which 
provides the Texas Health and Human Services Commission with the authority to 
administer federal medical assistance funds. 
The repeal affects Texas Human Resources Code, sec.sec.32.001- 32.040, relating 
to General Provisions, and Texas Government Code, sec.531.021.
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 March 5, 1997.
TRD-9703047
Ann Utley
Chairman, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Effective date: March 25, 1997
Proposal publication date: December 24, 1997
For further information, please call: (512) 206-4516

TITLE 40. SOCIAL SERVICES AND ASSISTANCE
PART VI. Texas Commission for the Deaf and Hard of Hearing 
CHAPTER 181. General Rules of Practice and Procedures
SUBCHAPTER F. Fees
40 TAC sec.181.830
The Texas Commission for the Deaf and Hard of Hearing adopts an amendment to 
sec.181.830, concerning Recommended Fees Schedule for the Payment of Certified 
Interpreters for the Deaf and Hard of Hearing without changes to the proposed 
text as published in the September 24, 1996, issue of the Texas Register (21 
TexReg 9155). 
This amendment will clarify the issues of minimum assignment time, portal to 
portal calculation, and cancellation of assignment pay. 
No comments were received regarding adoption of the amendment.
This amendment is adopted under the Human Resources Code, sec.81.006(b) (3), 
which provides the Texas Commission for the Deaf and Hard of Hearing with the 
authority to adopt rules for administration and programs.
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 February 21, 1997.
TRD-9702530
David W. Myers
Executive Director
Texas Commission for the Deaf and Hard of Hearing
Effective date: March 13, 1997
Proposal publication date: September 24, 1996
For further information, please call: (512) 451-8494