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 7. BANKING AND SECURITIES
PART VII. State Securities Board
CHAPTER 105.Rules of Practice in Contested Cases
7 TAC sec.105.22, sec.105.23
The State Securities Board adopts new rules sec.105.22 and sec.105.23, 
concerning contested cases. Section 105.23 is adopted with changes to the 
proposed text as published in the April 1, 1997, issue of the Texas Register (22 
TexReg 3184). The word "individually" was added in sec.105.23(b) to clarify that 
an individual Board member may communicate ex parte with members of the Agency 
who did not participate in the contested case hearing. Section 105.22 is adopted 
without changes and will not be republished.
The rules allow the Board to act in place of the Securities Commissioner in 
contested case decisions when the Board deems it appropriate to do so. Such 
intervention is entirely within the discretion of the Board, and the Board 
cannot be compelled to do so. The rules also extend to Board members existing 
Agency practice regarding ex parte communications. 
The rules provide a mechanism for the Board to intervene in contested case 
decisions at the Board's option and detail ex parte communication policies to be 
followed by the Securities Commissioner, Board, or other decision maker during 
contested case proceedings. 
One comment letter was received regarding adoption of the new rules. That 
letter, from Kuperman, Orr, Mouer & Albers, supported adoption of the new rules. 
The Board agreed and adopted the rules substantially as published.
The new rules are adopted under Texas Civil Statutes, Article 581-28-1. Section 
28-1 provides the Board with the authority to adopt rules and regulations 
necessary to carry out and implement the provisions of the Texas Securities Act, 
including rules and regulations governing registration statements and 
applications; defining terms; classifying securities, persons, and matters 
within its jurisdiction; and prescribing different requirements for different 
classes.

sec.105.23.Ex Parte Communications.
(a) Upon the issuance of a Notice of Hearing in a contested case and continuing 
until a Motion for Rehearing is ruled on or the time for ruling on such a Motion 
has expired, the Securities Commissioner (or other person assigned to render a 
decision in a contested case) and members of the Board may not communicate 
directly or indirectly with any party or a representative of a party in a 
contested case in connection with any issue of fact or law in the proceeding 
except on notice and opportunity for all parties to participate.
(b) The Securities Commissioner (or other person assigned to render a decision 
in a contested case) and members of the Board, individually, may communicate ex 
parte with employees of the Agency who did not participate in any hearing in the 
case in order to utilize special skills or knowledge of the Agency's staff in 
evaluating the record in the case. Prohibited ex parte communications shall not 
include any written communication if the communicator contemporaneously serves 
copies of the communication on all parties to the proceeding.
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 August 1, 1997.
TRD-9709983
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Effective date: August 21, 1997
Proposal publication date: April 1, 1997
For further information, please call: (512) 305-8300

CHAPTER 107.Terminology
SUBCHAPTER 
7 TAC sec.107.2
The State Securities Board adopts an amendment to sec.107.2, concerning 
definitions, with changes to the proposed text as published in the April 18, 
1997, issue of the Texas Register (22 TexReg 3567). The word "investment" was 
inserted before "adviser," in the definition of "solicitor," to clarify that the 
definition applies to a person or entity functioning as a solicitor for an 
investment adviser. The rule formalizes an existing agency policy requiring 
registration by a person or entity receiving compensation for soliciting clients 
for an investment adviser. 
The rule identifies persons and entities, compensated for soliciting clients on 
behalf of an investment adviser, required to be registered as an agent of an 
investment adviser. 
One comment letter was received on the proposal. The letter, from Kuperman, Orr, 
Mouer & Albers ("KOMA"), opposed adoption of the rule and commented: that 
defining the term "solicitor" serves no purpose; that requiring registration of 
a person who solicits clients for an investment adviser adds a "new" layer of 
unnecessary regulatory burden and cost; and that the Securities and Exchange 
Commission ("SEC") has not required such persons to register. In that letter, 
KOMA also noted that the investment adviser's client would receive appropriate 
disclosures (of the solicitor's compensation arrangement with the investment 
adviser) under current Board rules and stated that the SEC does not require 
registration of solicitors. The Board disagreed and adopted the definition 
substantially as proposed. 
In the open meeting, the Staff of the State Securities Board explained that 
established agency practice has been to consider a person or entity, compensated 
for soliciting clients for a dealer or investment adviser, as a "link in the 
chain" of sale of a security or in the rendering of investment advice. A person 
or entity engaging in such an activity would be operating as an "agent," as 
defined in sec.4.D of the Texas Securities Act, and is required to be registered 
as such. Registration of solicitors as "agents" has long been required by the 
agency and is documented in the investment adviser registration package provided 
by staff to new applicants. Adding the proposed definition for "solicitor" would 
provide clear guidance on this practice to industry and practitioners. Other 
Board rules provide an exclusion from the registration requirements for certain 
types of professionals who refer clients to an investment adviser when such a 
referral is solely incidental to the professional's practice of his or her 
profession. Likewise, a person would not fall within the parameters of the 
proposed definition of a solicitor unless the person was compensated for the 
referral. The SEC does require firms that solicit for multiple investment 
advisers to be registered. The agency's current position, requiring registration 
of a person or entity compensated for soliciting clients for an investment 
adviser, is consistent with the SEC position and the agency's treatment of 
parties performing a similar function on behalf of dealers. 
The amendment is adopted under Texas Civil Statutes, Article 581-28-1. Section 
28-1 provides the Board with the authority to adopt rules and regulations 
necessary to carry out and implement the provisions of the Texas Securities Act, 
including rules and regulations governing registration statements and 
applications; defining terms; classifying securities, persons, and matters 
within its jurisdiction; and prescribing different requirements for different 
classes.

sec.107.2.Definitions.
The following words and terms, when used in Part VII of this title (relating to 
the State Securities Board), shall have the following meanings, unless the 
context clearly indicates otherwise. 
Solicitor - Any person or entity who, for compensation, acts as an agent of an 
investment adviser in referring potential clients. 
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 August 1, 1997.
TRD-9709984
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Effective date: August 21, 1997
Proposal publication date: April 18, 1997
For further information, please call: (512) 305-8300

CHAPTER 111.Securities Exempt from Registration
7 TAC sec.111.2
The State Securities Board adopts an amendment to sec.111.2, concerning listed 
and designated securities, with changes to the proposed text as published in the 
April 1, 1997, issue of the Texas Register (22 TexReg 3186). A comma was added 
after "dealer" in subsection (c). 
The amendment modernizes the rule by updating terminology to current usage and 
conforming the format to current standards. 
The rule notes that the Midwest Stock Exchange has been renamed the Chicago 
Stock Exchange and utilizes updated terminology. 
One comment letter was received regarding the amendment. That letter, from 
Kuperman, Orr, Mouer & Albers, supported adoption of the amendment. The Board 
agreed and adopted the rule as published. 
The amendment is adopted under Texas Civil Statutes, Article 581-28-1. Section 
28-1 provides the Board with the authority to adopt rules and regulations 
necessary to carry out and implement the provisions of the Texas Securities Act, 
including rules and regulations governing registration statements and 
applications; defining terms; classifying securities, persons, and matters 
within its jurisdiction; and prescribing different requirements for different 
classes.

sec.111.2.Listed and Designated Securities.
(a) Fully listed. As used in the Texas Securities Act, sec.6.F, "fully listed" 
includes any security listed or approved for listing upon notice of issuance on 
an exchange specified in the Act, sec.6.F, or on an exchange listed in 
subsection (b) of this section. The Midwest Stock Exchange, referenced in the 
Act, sec.6.F, has been renamed the Chicago Stock Exchange; thus, securities 
which at the time of sale have been fully listed upon the Chicago Stock Exchange 
fall within the exemption provided in the Act, sec.6.F.
(b) Approved exchanges. The Securities Commissioner has approved the following 
exchanges, by written order, as satisfying the requirements of the Texas 
Securities Act, sec.6.F, for eligibility: 
(1) Pacific Stock Exchange; 
(2) Chicago Board Options Exchange. 
(c) Warrants for listed securities. In addition to sales made under the Texas 
Securities Act, sec.6.F, the Board, pursuant to the Act, sec.5.T, exempts from 
the registration requirements of the Act, sec.7, the offer and sale by the 
issuer itself, or by a registered dealer, of warrants to purchase securities of 
the issuer which at the time of sale of the warrants are exempt pursuant to the 
Act, sec.6.F. 
(d) Recognized and responsible stock exchange. In order to implement the general 
purposes of the Texas Securities Act declared in sec.10-1.A to maximize 
coordination with federal and other states law and administration, particularly 
with respect to exemptions, the Board hereby defines the term "recognized and 
responsible stock exchange," as used in the Act, sec.6.F, not to include any 
organization which is not registered with the United States Securities and 
Exchange Commission as a national securities exchange pursuant to the Securities 
Exchange Act of 1934, sec.6. 
(e) Who may sell. Securities described in the Act, sec.6.F, may be sold by or 
through a registered securities dealer acting either as a principal or agent.
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 August 1, 1997.
TRD-9709985
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Effective date: August 21, 1997
Proposal publication date: April 1, 1997
For further information, please call: (512) 305-8300

CHAPTER 133.Forms
7 TAC sec.sec.133.15, 133.17, 133.19, 133.20, 133.24, 133.25
The State Securities Board adopts the repeal of six forms concerning dealer 
registration. Specifically, the forms repealed are: sec.133.15, the form for 
Application for Registration as an Individual Securities Dealer or Investment 
Adviser; sec.133.17, the form for Multiple Registration-Undertaking to Disclose 
Affiliations; sec.133.19, the form for Application for Registration of a 
Corporation or Partnership as a Securities Dealer or Investment Adviser; 
sec.133.20, the form for Application for Registration of an Officer or Partner; 
sec.133.24, the form for Application for Registration as a Securities Salesman 
or Agent; and sec.133.25, the form for Application for Transfer of Securities 
Salesman's Registration. The repeals are adopted without changes to the proposed 
text as published in the April 1, 1997, issue of the Texas Register (22 TexReg 
3186). 
The repeals eliminate unique Texas forms. Section 133.33 allows the use of 
uniform forms ADV, BD, and U-4 in lieu of the repealed forms. The requirements 
in sec.133.17 are covered by another rule in Chapter 115. 
The repeals eliminate unnecessary forms. 
No comments were received regarding adoption of the repeals. 
The repeals are adopted under Texas Civil Statutes, Article 581-28-1. Section 
28-1 provides the Board with the authority to adopt rules and regulations 
necessary to carry out and implement the provisions of the Texas Securities Act, 
including rules and regulations governing registration statements and 
applications; defining terms; classifying securities, persons, and matters 
within its jurisdiction; and prescribing different requirements for different 
classes.
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 August 1, 1997.
TRD-9709986
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Effective date: August 21, 1997
Proposal publication date: April 1, 1997
For further information, please call: (512) 305-8300

TITLE 22. EXAMINING BOARDS
PART XXII. Texas State Board of Public Accountancy
CHAPTER 511.Certification as a CPA
Educational Requirements
22 TAC sec.511.57
The Texas State Board of Public Accountancy adopts an amendment sec.511.57, 
without changes to the proposed text as published in the June 20, 1997, issue of 
the Texas Register, (22 TexReg 5884). 
The amendment allows the Board to recognize accounting courses which are 
accepted by educational institutions toward a baccalaureate degree or its 
equivalent. 
The amendment will function by easing the restrictions on accounting courses 
which are acceptable to the Board. 
No comments were received concerning adoption of the rule. 
The rule is adopted under Texas Civil Statutes, Article 41a-1, sec.6, which 
provides the Texas State Board of Public Accountancy with the authority to make 
such rules as may be necessary or advisable to carry in effect the purposes of 
the law; and sec.12 which authorizes the Board to issue rules regarding 
undergraduate courses. 
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 July 24, 1997.
TRD-9710013
William Treacy
Executive Director
Texas State Board of Public Accountancy
Effective date: August 21, 1997
Proposal publication date: June 20, 1997
For further information, please call: (512) 505-5566

22 TAC sec.511.58
The Texas State Board of Public Accountancy adopts an amendment sec.511.58, 
without changes to the proposed text as published in the June 20, 1997, issue of 
the Texas Register, (22 TexReg 5884). 
The amendment creates a pool of applicants who completed courses the board 
considers necessary for a well-rounded CPA education. 
The amendment will function by allowing the board to limit to 20 hours the 
number of hours of related business subjects the board will accept but expands 
the definition to also include those courses which the educational institution 
would accept. 
No comments were received concerning adoption of the rule. 
The rule is adopted under Texas Civil Statutes, Article 41a-1, sec.6, which 
provides the Texas State Board of Public Accountancy with the authority to make 
such rules as may be necessary or advisable to carry in effect the purposes of 
the law, and sec.12 which authorizes the board to issue rules regarding under-
graduate courses. 
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 July 24, 1997.
TRD-9710014
William Treacy
Executive Director
Texas State Board of Public Accountancy
Effective date: August 21, 1997
Proposal publication date: June 20, 1997
For further information, please call: (512) 505-5566

CPA Examination
22 TAC sec.511.60
The Texas State Board of Public Accountancy adopts an amendment sec.511.60, 
without changes to the proposed text as published in the June 20, 1997, issue of 
the Texas Register, (22 TexReg 5885). 
The amendment allows the rule to use the correct name of the examination. The 
amendment will function by changing the name of the examination to agree with 
the actual name of the current examination. 
No comments were received concerning adoption of the rule. 
The rule is adopted under Texas Civil Statutes, Article 41a-1, sec.6, which 
provides the Texas State Board of Public Accountancy with the authority to make 
such rules as may be necessary or advisable to carry in effect the purposes of 
the law. 
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 July 24, 1997.
TRD-9710015
William Treacy
Executive Director
Texas State Board of Public Accountancy
Effective date: August 21, 1997
Proposal publication date: June 20, 1997
For further information, please call: (512) 505-5566

22 TAC sec.511.73
The Texas State Board of Public Accountancy adopts an amendment to sec.511.73, 
without changes to the proposed text as published in the June 20, 1997, issue of 
the Texas Register, (22 TexReg 5885). 
The amendment allows the rule to use the correct name of the examination. The 
amendment will function by changing the name of the examination to agree with 
the actual name of the current examination. 
No comments were received concerning adoption of the rule. 
The rule is adopted under Texas Civil Statutes, Article 41a-1, sec.6, which 
provides the Texas State Board of Public Accountancy with the authority to make 
such rules as may be necessary or advisable to carry in effect the purposes of 
the law. 
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 July 24, 1997.
TRD-9710016
William Treacy
Executive Director
Texas State Board of Public Accountancy
Effective date: August 21, 1997
Proposal publication date: June 20, 1997
For further information, please call: (512) 505-5566

Certification
22 TAC sec.511.173
The Texas State Board of Public Accountancy adopts new sec.511.173, without 
changes to the proposed text as published in the June 20, 1997, issue of the 
Texas Register, (22 TexReg 5886). The new rule allows the board to receive 
complaints or initiate investigations and to conduct hearings regarding 
eligibility of a candidate for a certificate based upon certain occurrences 
including the ones listed in this section. The new rule will function by 
enabling the board to perform investigations and conduct hearings regarding the 
eligibility of a candidate for a certificate. No comments were received 
concerning adoption of the rule. 
The rule is adopted under Texas Civil Statutes, Article 41a-1, sec.6, which 
provides the Texas State Board of Public Accountancy with the authority to make 
such rules as may be necessary or advisable to carry in effect the purposes of 
the law; and sec.12 which requires the board to ensure that applicants satisfy a 
moral character review. 
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 July 24, 1997.
TRD-9710017
William Treacy
Executive Director
Texas State Board of Public Accountancy
Effective date: August 21, 1997
Proposal publication date: June 20, 1997
For further information, please call: (512) 505-5566

22 TAC sec.511.174
The Texas State Board of Public Accountancy adopts new sec.511.174, without 
changes to the proposed text as published in the June 20, 1997, issue of the 
Texas Register, (22 TexReg 5886). The new rule allows the board the ability to 
screen and exclude ineligible CPA applicants. 
The new rule will function by listing the possible resolutions of an eligibility 
hearing and by describing the post-hearing procedure. 
No comments were received concerning adoption of the rule. 
The rule is adopted under Texas Civil Statutes, Article 41a-1, sec.6, which 
provides the Texas State Board of Public Accountancy with the authority to make 
such rules as may be necessary or advisable to carry in effect the purposes of 
the law; and sec.12 which requires the board to ensure that applicants satisfy a 
moral character review. 
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 July 24, 1997.
TRD-9710018
William Treacy
Executive Director
Texas State Board of Public Accountancy
Effective date: August 21, 1997
Proposal publication date: June 20, 1997
For further information, please call: (512) 505-5566

22 TAC sec.511.175
The Texas State Board of Public Accountancy adopts new sec.511.175, without 
changes to the proposed text as published in the June 20, 1997, issue of the 
Texas Register, (22 TexReg 5887). The new rule allows for the extension of the 
board's statutory investigative file confidentially to eligibility 
investigations.
The new rule will function by extending confidentiality coverage to this new 
investigative area. 
No comments were received concerning adoption of the rule. 
The rule is adopted under Texas Civil Statutes, Article 41a-1, sec.6, which 
provides the Texas State Board of Public Accountancy with the authority to make 
such rules as may be necessary or advisable to carry in effect the purposes of 
the law; and sec.12 which requires the board to ensure that applicants satisfy a 
moral character review and sec.25 which makes the board's investigative files 
and investigations of candidates and licensees confidential. 
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 July 24, 1997.
TRD-9710019
William Treacy
Executive Director
Texas State Board of Public Accountancy
Effective date: August 21, 1997
Proposal publication date: June 20, 1997
For further information, please call: (512) 505-5566

22 TAC sec.511.176
The Texas State Board of Public Accountancy adopts new sec.511.176, without 
changes to the proposed text as published in the June 20, 1997, issue of the 
Texas Register, (22 TexReg 5887). The new rule allows for a clearer 
understanding of which activities will make an applicant's moral character 
unacceptable to the board. 
The new rule will function by describing those activities which will make an 
applicant's moral character unacceptable to the Board. 
No comments were received concerning adoption of the rule. 
The rule is adopted under Texas Civil Statutes, Article 41a-1, sec.6, which 
provides the Texas State Board of Public Accountancy with the authority to make 
such rules as may be necessary or advisable to carry in effect the purposes of 
the law; and sec.12 which requires the board to ensure that applicants satisfy a 
moral character review. 
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 July 24, 1997.
TRD-9710020
William Treacy
Executive Director
Texas State Board of Public Accountancy
Effective date: August 21, 1997
Proposal publication date: June 20, 1997
For further information, please call: (512) 505-5566

TITLE 25. HEALTH SERVICES
PART XVI. Texas Health Care Information Council
CHAPTER 1301.Health Care Information
Collection and Release of Hospital Discharge Data
25 TAC sec.sec.1301.11-1301.19
The Texas Health Care Information Council (Council) adopts new sec.sec.1301.11-
1301.19, relating to the collection and release of hospital discharge data. 
Section 1301.11 and sec.sec.1301.13-1301.19 are adopted with changes to the 
proposed text as published in the February 11, 1997, issue of the Texas Register 
(22 TexReg 1560). New sec.1301.12 is adopted without changes and will not be 
republished. 
The changes in the proposed sections respond to public comments. The Council's 
representative from the Office of the Attorney General has advised that the 
changes made in the sections as adopted affect no new persons, entities, or 
subjects other than those given notice and that compliance with the adopted 
sections will be less burdensome than under the proposed sections. Accordingly, 
republication of the adopted sections as new proposed rules is not required. The 
Council's initial proposed Hospital Discharge Data (HDD) rules were published in 
the August 23, 1996, issue of the Texas Register (21 TexReg 7939). The Council 
received numerous comments, requiring considerable analysis. Because the Council 
determined that the initial comments warranted substantial revisions to the 
proposed sections, the Council withdrew the initial proposed sections. After 
incorporating many suggestions from the public comments, the Council proposed 
this revised version of the HDD rules in February 11, 1997, issue of the Texas 
Register (22 TexReg 1560) along with a preamble responding to public comments 
received on the first version of the proposed sections.
The new sections facilitate implementation of the statewide health care data 
collection system recommended by the Committee on Public Health in the Interim 
Report to the 74th Texas Legislature, November 1994 and mandated in House Bill 
(H.B.) Number 1048, of the 74th Legislature, codified in Title 2, Health and 
Safety Code, sec.sec.108.001-108.015. Subsequent to the date that the new 
sections were proposed the 75th Legislature enacted Senate Bill (S.B.) 802, 
effective September 1, 1997. The Council recognizes that S.B. 802 necessitates 
amendments to the new sections and intends to propose the necessary amendments 
at its August 1997 meeting.
Hospital discharge data is an integral part of the statewide health care data 
collection system the Council is charged to develop by Health and Safety Code, 
sec.108.006(a) "to facilitate the promotion and accessibility of cost-effective, 
good quality health care." The data to be collected by the Council pursuant to 
the new sections may be used by consumers, employers, health insurance plans, 
public health officials and health care providers for many purposes. For 
example, with proper risk and severity adjustments, the data supports reasonable 
comparisons of hospital charges, mortality rates and lengths of stay. The data 
allows employers and health insurance plans to make better informed choices when 
building provider panels. The data also provides information on the incidence 
and prevalence rates of certain diagnoses and procedures that require inpatient 
treatment. From a public health perspective the data can help identify high 
incidence geographic areas or at risk populations meriting public action and can 
help identify those hospitals delivering the best results so that other 
facilities can be encouraged to adopt "best practices".
The Council has designed the process for data collection to meet the explicit 
requirements of the enabling statute, to obtain data that is as complete and 
accurate as possible, and to impose only a reasonable burden on the reporting 
hospitals. In designing the process the Council has consulted with the National 
Association of Health Data Organizations, studied the approaches and experiences 
of other state health data systems, and received extensive input from Texas 
hospitals. As required by Health and Safety Code, sec.108.006(a)(2), the Council 
will contract for data collection with the Texas Department of Health (TDH). 
New sec.1301.11 defines terms used elsewhere in the adopted sections.
New sec.1301.12 requires reporting on all inpatients, describes the proper 
reporting of mother and newborn data, as well as multiple unit stays within the 
same hospital, describes reporting procedures for both insured and uninsured 
patients, notifies hospitals of the manner by which they will be advised of the 
address to send data, allows hospitals to designate an agent for data reporting 
purposes, and informs hospitals of the procedures to be followed for data 
verification by the Council through audit. The following paragraphs describe the 
details of sec.1301.12 and the Council's rationale in developing this section. 
The data elements hospitals are required to submit under the new sections are 
those defined by the National Uniform Billing Committee. This set of data 
elements is commonly referred to as the UB-92 data set. In addition to the 
minimum data set (MDS), hospitals are required to submit any other UB-92 data 
elements that were submitted to the payer(s) for a particular patient. 
The new section requires reporting on insured and uninsured patients. This 
requirement is consistent with the purpose of the data: to provide a complete 
view of patients treated in Texas hospitals. Because an estimated 27% of Texans 
have no health insurance, to collect data only on insured patients would not 
provide a complete or accurate picture of the incidence of diagnoses or 
procedures. Included in the Council's statutory charge is the duty to report to 
the legislature, the governor, and the public on "the quality and effectiveness 
of health care and access to health care for all citizens of this state." 
Without reliable data on the uninsured segment of the Texas population, the 
Council will be unable to comply with its complete statutory mandate. 
The Council has attempted to reduce the administrative burden on hospitals by 
not requiring them to submit a single comprehensive discharge record for each 
patient. Instead the new sections allow hospitals to submit interim and 
supplemental bills just as they do for third party reimbursement. The Council 
takes the responsibility for consolidating multiple records on a single 
discharge. This procedure allows hospitals to submit interim, revised, final and 
other types of bills as they are generated and eliminates the need for them to 
"warehouse" bills prior to submitting them to the Council. 
A data format is the way data elements are physically arranged on a paper or 
electronic record. Section 108.009(h) of the Council's enabling legislation 
requires it to accept data "in universally accepted standardized forms approved 
by the Council". The only universally accepted standardized paper form of which 
the Council is aware is the Health Care Finance Administration (HCFA) Form 1450; 
commonly referred to as the UB-92. Providers that do not possess electronic data 
processing capacity may submit data using this form. 
New sec.1301.13 requires data to be submitted at least quarterly. If, however, 
hospitals wish to submit data more frequently, they may do so. The exemption 
process is designed to require hospitals to give notice of their submission 
schedules to allow the Council to ensure reporting systems are working properly.
The statute requires, and the new section provides for the creation of a public 
use data tape. The rule attempts to balance the public's right to the data with 
the public's interest in the validity of the data and protection of patient 
confidentiality. The Council's goal is to release public use data quarterly; 
about six months after the end of the reporting period. 
Creation of the public use data tape from the data submitted by hospitals 
requires several steps. First, discharge records must be consolidated so there 
is one record covering each discharge. Second, uniform patient, uniform 
physician, uniform provider and uniform payer codes must be added by Council 
staff. Third, any data elements that could be used to identify a patient or 
physician must be deleted. Fourth, zip codes must be converted to multi-zip code 
areas and rural data must be aggregated. Hospitals and other providers are 
allowed to attach comments to the data. The discharge records will then be run 
through software to assign risk and severity scores to each record. 
The Council has decided that no public use data will be released without risk 
and severity scores. The software to be used will be selected by the Council 
following the report of its Technical Advisory Committee September 1, 1997. The 
purpose of these scores is to allow a fair comparison of hospital outcomes, 
charges and lengths of stay. The Council has also decided not to release any 
data until it has six months of data available. This is to prevent erroneous 
conclusions from being drawn from data based on a small sample. New sec.1301.15 
sets out the specific process for requesting and obtaining an exemption from the 
requirement for electronic filing of discharge reports. S.B. 802 directs the 
Council to accept electronic filings not only in the UB 92 format but also in 
"other universally accepted standardized forms" that hospitals "use for other 
complementary purposes." Accordingly, after adopting the new sections requiring 
electronic filings on the HCFA UB-92 Electronic Format (Versions 004.1 and 
004.0), the Council intends to amend the new sections to authorize filings using 
the ANSI-X12 837 Format developed by the American National Standards Institute 
and to create a process whereby hospitals may be granted authority to file using 
another format if they can demonstrate that the formats are "universally 
accepted standardized forms." New sec.1301.15(b) clarifies how a hospital is to 
initiate a request for exemption. 
New sec.1301.16 describes the process to be established for acceptance of 
discharge reports by the Council's executive director and for the correction of 
reporting deficiencies or errors. Specifically sec.1301.16(c) addresses errors 
in the data elements in individual patient bills. All bills received, regardless 
of medium, will be input to the Council's vendor's system. This is the same 
system on which hospitals now submit bills to Medicare, Blue Cross and other 
payers. Thus many hospitals are already familiar with this edit and correction 
process. Each bill will be edited on-line and either accepted or rejected for 
errors. If accepted, the discharge file will be deposited in the Council's 
electronic mailbox. If rejected, a notice with error messages will be placed in 
the hospital's electronic mailbox. Any discharge file that is rejected is 
deleted from the system and must be resubmitted. Hospitals that submit by modem 
will normally know immediately which records have been accepted and which 
rejected. The turnaround time for error reports for hospitals that submit bills 
on paper, tape or diskette will be longer because of the additional data entry 
or data conversion steps. The Council anticipates that full documentation of the 
edits to be applied will be provided to hospitals during hospital training 
sessions to be offered by or at the direction of the Council. 
The edits performed in the vendor's system are at the level of individual bills. 
In combining multiple bills on the same discharge, in tracking individual 
patients across multiple discharges and in looking at the overall pattern of 
data received from a hospital, the Council will compare the data received to 
data on the hospital from other sources and perform additional logic and 
consistency checks on the data. 
New sec.1301.17 provides time lines for an editing process. The vendor provides 
on-line editing and error notification of electronically submitted discharge 
records. The section provides that definitions of all data edits will be made 
available to hospitals to allow them to pre-edit their data. This is intended to 
reduce the cost and the time required to obtain accurate data. The section 
requires that hospitals give physicians and other health professionals the 
opportunity to review, correct, and comment on any discharge records on which 
they are shown as an admitting or treating the patient.
The rule requires that a hospital's chief executive officer or the officer's 
designee certify the completeness and accuracy of the data submitted to the 
Council each quarter. The section delegates authority to the Council's executive 
director to determine when the data is complete and accurate enough for public 
use. The section is structured so that Council review of hospital medical 
records is an exception rather than routine occurrence. 
To facilitate physician, hospital, and other health professional review and 
certification of data, the Council will provide quarterly an electronic data 
file to each reporting hospital containing the consolidated record for each 
patient discharged from that hospital that will allow physicians and other 
health professionals to view and append notes to records for which they are 
shown as the admitting or treating physician. 
The process for certification of quarterly hospital data in the adopted version 
of sec.1301.17 varies from the proposed version. As adopted the executive 
director will provide each reporting hospital with a file of its data each 
quarter. The data file will have one record for each patient discharged by that 
hospital during the reporting quarter based on all discharge files the hospital 
has submitted regarding that patient. The hospital is responsible for reviewing 
the quarterly file and certifying it as complete and accurate, subject to any 
comments or corrections of data the hospital wishes to make. The hospital must 
afford its physicians or other health professionals the opportunity to review 
records of patients they admitted or are shown as treating. This change has 
required the creation of new subsections (a) and (b) and the renumbering of the 
previous subsections. 
The adopted sec.1301.18 contains language authorizing the executive director to 
establish the process and procedures necessary to create the various codes and 
identifiers required by the statute and by other sections of these rules.
sec.1301.19:
The Council is required to prescribe by rule the process for providers to submit 
data consistent with sec.108.009. The components of a process to submit data 
includes a definition of the data elements to be submitted for coded data 
elements (e.g. diagnosis and procedure codes), a definition of the coding 
systems to be used, a definition of the format(s) in which the data will be 
submitted, a definition of the media on which data will be submitted, a schedule 
for submission and a location for submission. The National Uniform Billing 
Committee defines data elements and codes for certain of these elements. It does 
not define a data format for paper or electronic submission of hospital bills. 
The paper format for submission of inpatient hospital bills, commonly referred 
to as a "UB-92" is defined by the Health Care Finance Administration (HCFA) of 
the United States Department of Health and Human Services (DHHS). This paper 
format is also known as a "HCFA 1450," and is the only universally (or at least 
nationally) accepted paper format. In instances where the Council allows 
hospitals to use paper bills as the medium for data submission, the Council 
requires this format. 
The Council has determined that the electronic format used for the most hospital 
bills is the HCFA electronic version of the form 1450 (HCFA UB-92 Electronic 
Format (Versions 004.1 and 004.0)); also known as the National Standard Format 
(NSF). Virtually all hospitals submit Medicare bills to HCFA electronically 
because it speeds payment and reduces billing costs. More than 40% of all 
inpatient hospital bills are for Medicare patients. The proposed section allowed 
hospitals to submit data in this format and that has not changed. Records will 
be accepted in the current and immediately preceding version of the format. 
The data format maps the UB-92 data elements and provides unused fields for 
additional data elements. The Council recognizes that some hospital personnel 
who work with the UB-92s are unfamiliar with the HCFA UB-92 Electronic Format 
(Versions 004.1 and 004.0). The Council will make available to anyone requesting 
it a crosswalk between the UB-92 elements and the HCFA UB-92 Electronic Format 
(Versions 004.1 and 004.0). 
sec.1301.19(f): 
The Council has deleted this section because these specifications are part of 
the HCFA UB-92 Electronic Format (Versions 004.1 and 004.0) and do not need to 
be separately presented. 
The Council has carefully considered all comments received on both versions of 
the proposed sections. The Council has considered the costs and benefits of 
various alternatives for all elements of the data collection process and 
believes the arrangements embodied in the adopted sections represent a cost-
effective approach to meeting the requirements of the authorizing legislation. 
As with any new state program, the Council expects to find opportunities to 
improve the process as experience is gained. 
Representatives of the following interested entities, groups, or associations 
presented testimony, citing one or more references, against the proposed 
sections published in the February 11, 1997, issue of the Texas Register (22 
TexReg 1560) at the Public Hearings listed hereafter: March 3, 1997-HCIA; Texas 
Department of Mental Health and Mental Retardation; Baylor Health Care Systems; 
Parkland [Memorial] Health and Hospital System; Memorial Health System; 
Healthcare America, Inc.; Baylor Health Care System; March 10, 1997-South Austin 
Medical Center and Columbia St. David's Healthcare Systems; Columbia Mainland 
Medical Center; Columbia Doctor's Regional Medical Center; Hendrick Medical 
Center; Presbyterian Healthcare System; Scott and White Integrated Healthcare 
Delivery System and Texas Health Information Management Association; Providence 
Health Center; Park Plaza Hospital-Houston; Texas Hospital Association; Seton 
Healthcare Network; Daughters of Charity Information Services Entity. 
Each of the following interested entities, groups or associations presented 
written comments, citing one or more references against the proposed sections 
published in the February 11, 1997, issue of the Texas Register (22 TexReg 
1560): 3M Health Information Systems; Baylor Center for Extended Care, Abilene; 
Baylor College of Medicine; Baylor Health Care System; Baylor Institute for 
Rehabilitation; Baylor University Medical Center; Baylor/Richardson Medical 
Center; Citizens Medical Center; Columbia Doctor's Regional Medical Center; 
Columbia Mainland Medical Center; Columbia Spring Branch Medical Center; 
Columbia St. David's Healthcare System; Consumers Union; Cypress Fairbanks 
Medical Center, Inc.; Daughters of Charity National Health System; Driscoll 
Children's Hospital, Corpus Christi; Friend and Associates, L.L.P.; Gonzales 
County Hospital District; GranCare Specialty Hospital of Houston; Greater San 
Antonio Hospital Council; HBO and Company; Harris Methodist, Fort Worth; Health 
Care Information Association; Healthcare America Incorporated; Hendrick Medical 
Center; Hermann Hospital, Houston; Houston Columbia/ HCA and Columbia Mainland 
Medical Center; Irving Healthcare System; Jenkins and Gilchrist; Memorial 
Healthcare System; Methodist Hospitals of Dallas; Methodist Hospital, Houston; 
Methodist Hospital, Lubbock; Park Plaza Hospital, Houston; Parkland Memorial 
Health and Hospital System; Presbyterian Healthcare System; Providence Health 
Center; Quest Hospital, Amarillo; Scott and White Hospital; Seton Healthcare 
Network; Seton Healthcare Network, Austin; Sisters of Charity of the Incarnate 
Word Health Care System; St. Luke's Episcopal Hospital; Summit Hospital of 
Central Texas; Texas Children's Hospital, Houston; Texas Department of Mental 
Health and Mental Retardation; Texas Health Information Management Association; 
Texas Hospital Association; Texas Medical Association; Texoma Medical Center, 
Denison; Titus Region Medical Center.
General Comments Unrelated to Specific Sections. 
Costs to Hospitals of Compliance with the Rule. 
Numerous comments expressed concerns regarding the costs that the hospitals 
would incur to comply with the February 11, 1997 version, specifically 
referencing the preamble statement of the estimated total cost to all the 
hospitals that are required to submit data to the Council. Concerns over costs, 
and the Council's responses, fall into the following categories: 
1. Quarterly submission of data. Several comments indicated that hospitals did 
not today retain all UB-92 data for an entire quarter, and to do so would 
require them to incur substantial programming costs and hardware to build data 
repositories to store data for later submission to the Council. While the 
statute does not allow the Council to require hospitals to submit data more 
often than quarterly, the new sections allow hospitals to submit bills daily if 
desired. No additional data storage at the hospital level is needed to comply 
with the section as adopted. 
2. Standard data format. Several comments indicated that hospitals would incur 
substantial costs from having to reprogram their billing systems to produce 
bills in the HCFA UB-92 Electronic Format (Versions 004.1 and 004.0). The 
Council has met with information systems managers representing large and small 
hospitals on this issue and believes these costs need not be incurred to comply 
with these rules. The Council will accept bills in the HCFA UB-92 Electronic 
Format (Versions 004.1 and 004.0) . Almost all hospitals, and all those that 
submitted comments, bill Medicare electronically to reduce reimbursement lag and 
billing expense. All Medicare and Medicaid bills must be submitted 
electronically in the HCFA UB-92 Electronic Format (Versions 004.1 and 004.0). 
These bills represent a significant portion of the total number of bills a 
hospital produces. Therefore, either the hospital's billing system can already 
generate bills in the HCFA UB-92 Electronic Format (Versions 004.1 and 004.0), 
or the hospital is sending a print image file to a data conversion firm. If the 
hospital is generating its own HCFA UB-92 Electronic Format, there should be no 
significant reprogramming necessary to generate a file of all bills in that 
format. 
The Council is aware of several firms that currently take print image billing 
files from Texas hospitals and convert them to the HCFA UB-92 Electronic Format 
(Versions 004.1 and 004.0) for Medicare, Medicaid and to this or other formats 
for other payers. These firms have the capability of generating a complete 
billing file in the HCFA UB-92 Electronic Format (Versions 004.1 and 004.0) for 
their hospital clients and forwarding it to the Council. Hospital information 
systems managers advise the Council that these firms charge hospitals from $0.25 
to $0.50 per bill for converting the hospital's print image file and forwarding 
it to payers. 
Hospitals that utilize these companies are already paying the per bill 
conversion cost for their bills that go to Medicare or Medicaid. If the bill is 
to go to a payer using a different format, or if the bill is for an uninsured 
patient and is only being submitted to the Council for reporting purposes, the 
hospital may have to incur a charge of $0.25 to $0.50 per bill for the 
conversion to the HCFA UB-92 Electronic Format (Versions 004.1 and 004.0). In 
1995 there were total of 2.24 million admissions/discharges from Texas hospitals 
based on the 1996/1997 AHA Hospital Statistics. The Council is advised that an 
average of two bills per discharge is reasonable for planning purposes. This 
means a total of 4.48 million bills annually. Assuming 50% of Texas hospital 
bills are currently submitted to Medicare or Medicaid in the HCFA UB-92 
Electronic Format (Versions 004.1 and 004.0), the cost for submitting these 
bills to the Council in this format will range from nothing to a few cents per 
bill. For planning purposes we will assume a cost of $.10-$0.25 per bill whether 
the hospital does the work itself or uses a conversion company.
For the other 50% of hospital bills, the cost will range from nothing to $0.50 
per bill depending on whether: (1) the hospital already has the capability to 
convert and transmit the bill itself; (2) the bill is already being converted to 
the HCFA format for that payer; and (3) hospitals and the Council can work 
together to convince data conversion firms to send a copy of the data in the 
HCFA UB-92 Electronic Format to the Council's vendor at no or a small cost to 
the hospital. For planning purposes the Council assumes a cost of $0.50 per 
bill.
This leads to the following calculations: 
4.48 million bills x 50% x $0.25 = $560,000; 
4.48 million bills x 50% x $0.50 = $1,120,000; 
Total Estimated Conversion Cost = $1,680,000. 
Therefore the Council estimates annual conversion costs for hospitals to submit 
bills to the Council in the HCFA format will not exceed $1,680,000. The Council 
has used a worst case scenario in developing these costs and believes that 
actual costs will be less than calculated. Hospital admissions have declined 
since 1995. Additionally, the Council notes that Public Law 104-191 enacted by 
Congress in 1996 directs the development of a single U.S. standard all payers 
must accept by 1998. When this standard is developed the Council will accept 
data filings in the standard format, thus eliminating billed claim conversion 
costs altogether. 
3. Submission of minimum data set on uninsured patients. Some comments suggested 
that hospitals may incur substantial costs to generate the Council's minimum 
data set in the HCFA UB-92 Electronic Format (Versions 004.1 and 004.0) for 
those uninsured patients for whom the hospital would not normally have generated 
a bill. The Council agrees that hospitals will incur costs to provide data on 
uninsured patients. The Council is required by sec.108.006(9)(D) of its enabling 
legislation, however, to make reports to the legislature, governor, and the 
public on "the quality and effectiveness of health care and access to health 
care for all citizens of this state." If hospitals do not report discharge data 
on uninsured patients, then an information gap will exist for a significant 
population of this state's citizens. The Council believes that its statutory 
duties require the collection of discharge data on uninsured patients. 
4. Submission of social security numbers, race and ethnicity. Many hospitals 
commented that the requirement that they collect and submit each patient's 
social security number, race and ethnicity would generate costs for 
reprogramming systems and training staff. The Council agrees that certain costs 
will be attributable to the collection of this data and has omitted collection 
of this information in the adopted sections. The Council is required by S.B. 
802, however, to collect patient race and ethnicity information after September 
1, 1997, and will publish a proposed amendments to these sections for the 
collection of this information in the future. The Council is also directed to 
develop uniform patient identifiers. The Council may determine that amendments 
providing for the reporting of patient social security numbers are needed for 
this purpose. 
Comments and Changes Related to Specific Sections: 
sec.1301.11, Definitions: 
One comment suggested the definitions for "discharge file" and "discharge 
report" need to be clarified to say they represent a "snapshot of the patient at 
discharge". The Council disagrees with the suggested clarification. A discharge 
file corresponds to a single patient bill. There will be one or more bills for 
each patient, except as noted. If the hospital issues an interim bill for a 
patient prior to discharge, or a revised bill for a patient several weeks after 
discharge, there will be a separate discharge file corresponding to each bill. 
The discharge report is a group of discharge files for various patients 
submitted by a hospital at least quarterly, but as often as each hospital 
wishes. 
One comment expressed concern whether the definitions of "facility identifier" 
and "uniform payer identifier" implied that the names of the facilities 
(hospitals) and payers associated with the identifiers would not be made public. 
The Council agrees and has added language to both definitions to clarify that 
the relationship of the identifiers and the names of the facilities and payers 
is public information. 
One comment suggested the definition of "Uniform Physician Identifier" should be 
limited to persons licensed to practice medicine under the Medical Practice Act 
(Article 4495b, Vernon's Texas Civil Statutes). The comment recommended that a 
separate identifier be created to identify other health care professionals who 
are reported by a hospital to be admitting or treating a hospital inpatient. The 
Council agrees and has modified the definition of "uniform physician identifier" 
and created a new definition for "uniform other health professional identifier". 
sec.1301.12. Collection of Hospital Discharge Data. 
One comment indicated that the Veterans Administration, for example, provides 
services to so many inpatients within the state that failure to include their 
data could leave gaps in health information on Texas residents. To the extent 
that military hospitals treat Texas residents (as opposed to military personnel 
temporarily stationed at Texas bases), they should also be encouraged to 
participate to get an accurate picture within the state. The Council agrees and 
has added language authorizing the executive director to work with exempted 
providers to encourage them to voluntarily participate. 
sec.1301.12(b): 
One hospital asked how hospitals were to report patients who were served in the 
acute care portion of a hospital and were then transferred to a diagnosis-
related group (DRG)-exempt unit of that hospital. Such units could be skilled 
nursing units, psychiatric units, comprehensive medical rehabilitation units or 
long-term care units. The answer depends upon the payer. The majority of these 
patients are Medicare patients. Medicare requires that the hospital bill 
separately for the patient's acute care admission and for the admission to the 
DRG-exempt unit. The hospital should therefore submit to the Council a separate 
discharge record for the admission to each unit or facility. The Council will 
use the data elements on both records to assign a unique patient identifier to 
provide a clear picture of the overall inpatient episode. Other payers may 
require the hospital to provide a single bill for the total stay. If so, the 
hospital would provide the Council with one discharge record. The Council 
believes the data elements on the record (e.g., revenue codes, conditions and 
occurrence codes, etc.) will allow proper interpretation of the data for 
analytical purposes. This approach will minimize any data processing burdens on 
the hospitals. The Council has also provided that on each patient record on the 
public data tapes that acute and subacute care days will be reported separately.
Several comments were received offering differing opinions of how the rule 
should handle newborns. Several comments indicated that they believed the 
proposed section requires hospitals to report all newborns consistently, either 
all on separate bills or all on the same bill with the mother. The Council 
disagrees with these comments. This new section instructs hospitals to report 
newborns as they were actually billed to the insurance carrier and requires 
separate records for births only where there is no third party coverage. The 
Council believes this approach minimizes incremental work for hospitals to 
satisfy the reporting requirements. Another comment expressed concern as to 
whether the Council could perform the processing necessary to separate newborns 
on joint bills. The Council plans to study this issue using the test data 
hospitals are to submit and determine if a change to the rule is needed. 
One hospital commented that it should be allowed to submit interim bills rather 
than having to consolidate all bills into one discharge record. Subsection 
(b)(2) allows interim submissions. Another hospital commented that the new 
section should allow the option to combine all bills related to a single patient 
discharge into one discharge file. The adopted section allows but does not 
require this practice. 
One hospital commented that inpatients frequently have a series of multiple 
payers, each requiring the previous payers' payment information to be included 
with their claim so they can calculate the remaining balance to be paid. The 
hospital believes this required additional payer information will cause 
hospitals to frequently and continuously update previously submitted claims data 
to the Council leading to additional incurred cost. The Council disagrees with 
this analysis. The adopted section does not require hospitals to develop an 
archival data base. The section authorizes hospitals to send the Council copies 
of the bills as they are sent to payers. This includes revised and resubmitted 
bills whenever they occur. The adopted section does not require hospitals to 
maintain the earlier bills sent to the Council and update them.
Numerous hospitals commented that hospitals should not be required to submit 
discharge records on self-pay and charity care patients for whom a UB-92 had not 
been sent to any payer. Some hospitals indicated that such patients are 15% to 
25% of their total patients. One hospital commented that it currently uses a 
vendor to take its data and process the data to the HCFA UB-92 Electronic Format 
(Versions 004.1 and 004.0). The hospital pays the vendor a charge per record 
reformatted. At present only records to be billed electronically are sent to the 
vendor. Using the vendor to prepare records for the Council on patients not 
currently billed electronically will increase payments to the vendor and hence 
increase hospital costs. The particular hospital indicates this would increase 
the number of records processed by its vendor by 20-25%. The Council agrees that 
to the extent the furnishing of discharge data on self-pay and uninsured 
patients will cause the generation of additional record keeping, hospitals will 
incur increased costs. Section 108.006 of the Council's enabling legislation 
directs the Council to "develop a statewide health care data collection system 
to collect health care charges, utilization data, provider quality data, and 
outcome data to facilitate the promotion and accessibility of cost-effective, 
good quality health care." Additionally, the Council is required by 
sec.108.006(9)(D) of its enabling legislation to make reports to the 
legislature, governor, and the public on "the quality and effectiveness of 
health care and access to health care for all citizens of this state." The 
Council cannot carry out these mandates by looking only at the health services 
delivered to insured patients. If hospitals do not report discharge data on 
self-pay and charity patients, then an information gap will exist for a 
significant population of this state's citizens. The Council believes that its 
statutory duties require the collection of discharge data on uninsured patients. 
The Texas Department of Mental Health and Mental Retardation (TDMHMR) objected 
to being required to submit UB-92 data on its patients because most are indigent 
and are not billed. The Council is unable to find a reporting exemption for 
TDMHMR facilities in its enabling legislation. 
1301.12(g): 
One comment suggested that the Council pay the cost of copying any hospital 
records it requested pursuant to this section. Another comment suggested that 
this section more closely track the statutory language in sec.108.007(a) 
regarding the role of the Texas Department of Health (TDH). Another comment 
noted that any reviews of medical records could be costly to the hospital and 
impose an administrative burden. The Council disagrees with these comments. The 
adopted section closely tracks sec.108.007 of the Council's statute. Any review 
of records by the Council is in the nature of an audit of the hospital for the 
enforcement of the statute and the verification of the data. The Council does 
not believe it is customary for the State to pay for copies of records in this 
situation. Additionally, the Council notes that the legislature did not 
authorize the Council to pay for the costs of the records. The Council believes 
the proposed rule provides the "reasonable rules and guidelines" mentioned in 
sec.108.007. 
1301.13(a): 
One comment recommended that the Council predicate the start date of the 
program, meaning the first day of data collection on required elements for all 
inpatients, upon the contingent effective date of the rule allowing for the 
passage of a minimum of 90 days between the two. The Council agrees that some 
delay is appropriate and notes that S.B. 802 provides that a rule which requires 
the submission of new data elements may not take effect sooner than 90 days 
after the day that the rules are adopted. Accordingly, although the new sections 
are effective 20 days after they are filed with the Office of the Secretary of 
State, the Council has moved back the date for data collection and reporting to 
begin with discharges occurring January 1, 1998.
Numerous comments indicated that 60 days might be inadequate for the hospitals 
to file discharge reports if they reported only on a quarterly basis. The 
Council would like to clarify that hospitals may report more frequently than 
quarterly, if they choose to do so. In arriving at the requirement that 
hospitals submit and certify their discharge records by 60 days after the end of 
the quarter, the Council consulted with the National Association of Health Data 
Organizations regarding the practices in other states operating similar hospital 
discharge collection systems. The 60-day period appears reasonable, and the 
Council declines to make any change. Hospitals are only responsible for 
submitting bills that have been issued by 60 days after the end of the quarter 
in which the discharge occurred. The Council notes that there may be revised 
bills submitted for a patient later than 60 days after the end of the quarter in 
which the discharge occurred. The Council will process these bills in the 
subsequent quarter and update its data base. 
1301.13(b): 
Because of delays in final adoption of these rules, the Council has moved the 
period for test data to the first quarter of 1998. This action responds to 
numerous comments received from hospitals and coincides with the Council's 
schedule for the development of a data warehouse. 
One comment requested that data on psychiatric patients be excluded from the 
test phase because the risk of unauthorized disclosure during the test phase was 
higher. The Council disagrees with this comment. Patient identifying data 
elements will not be submitted on any patient. Therefore there is no reason to 
treat bills for psychiatric patients differently. 
1301.13(d): 
Several commenters said the mention of civil penalties in the rules was harsh 
and not consistent with the cooperative environment that the Council seeks to 
develop with health care providers. Another commenter requested a delay in the 
effective date for the assessment of civil penalties to reflect the spirit of 
the Council's cooperation with hospitals. The comment recommended a concluding 
sentence be added to proposed sec.1301.18(c)(1)(C) to read: "During this testing 
period, no civil penalties will be assessed," and adding a concluding sentence 
to proposed sec.1301.18(c)(1)(D) to read: "During the last two quarters of 1997 
and the first two quarters of 1998, no civil penalties will be assessed." The 
Council disagrees with these comments. The Council included these references to 
civil penalties to give fair notice to all concerned of the Legislature's 
action. The application of such penalties is not automatic. The statute provides 
that the Attorney General would seek such penalties only at the request of the 
Council. The Council has no intention of resorting to enforcement actions except 
as a last resort when all other efforts to obtain cooperation and compliance 
with the rules have failed. The Council is mindful that there is much trial and 
error at the start of every data collection program. 
sec.1301.14: 
One commenter objected to the limitations on the number of tapes or diskettes 
per submission because it estimates its quarterly submission would cover 16,000 
discharges requiring a large number of tapes or diskettes. The Council declines 
to remove the restriction. Submitting hospital bill data on magnetic media is 
intended primarily for use by small hospitals. The Council expects hospitals of 
this size to transmit bills by electronic data interchange (modem) or to have a 
vendor do it for them. The Council strongly encourages data submissions of this 
size to be by modem. 
One comment noted that proposed sec.1301.14(a)(4) and (b) state that the Council 
will notify hospitals 90 days prior to changes in the instructions for filing 
discharge reports on magnetic media or by electronic data interchange, and 
recommended the method of communicating these changes to hospitals be included. 
The Council agrees and has added language requiring the executive director to 
give notice directly in writing to hospitals and their agents. Writing may be by 
mail or facsimile. 
Another comment said the 90-day time frame is unrealistic given the time 
required to rewrite hard coded computer programs. The comment recommended at 
least 120 to 180 business days be allowed for the process of changing the 
computer program, test verification and live product production testing. The 
Council disagrees with this comment. The lead time given should be reasonably 
related to the magnitude of change in the process. The adopted section gives the 
executive director discretion to give more than 90 days' notice when necessary. 
sec.1301.16(b): 
Several comments indicated that hospitals would need more than ten days for 
refiling when discharge reports are rejected for failing to satisfy minimum 
criteria for processing. The Council disagrees with these comments. This section 
deals only with improper media, physically damaged media or problems with the 
file structure of the submission. These are errors that would be corrected by 
the hospital generating and re-sending a replacement file. This would normally 
be done in a few days from the files used to prepare the original.
Several comments suggested that the Council should establish an acceptable error 
rate and/or error rate threshold. The Council disagrees. The new section 
delegates to the executive director the authority to determine when a hospital's 
data is sufficiently complete and accurate. The Council expects the executive 
director to take a reasonable approach to this question and expects hospital 
performance to improve over time. 
Two comments suggested that hospitals would incur the greatest cost correcting 
errors in inactive accounts, due to manpower and processing. This cost would 
occur if the hospital holds all discharge files for a quarter and submits them 
all at once. While the Council cannot require hospitals to submit data more 
often than quarterly, hospitals may submit data more frequently, even daily if 
they choose to do so. Once data is transmitted to the vendor's system, edits 
occur immediately and the hospital will know of any errors immediately. This 
will eliminate the need to retrieve archived data. This arrangement gives 
hospitals the ability to submit data on schedules they determine will produce 
optimal efficiency. 
One comment asked that hospitals be able to resubmit a rejected discharge file 
rather than submit corrections to individual data fields. The Council agrees and 
has made provisions for this to occur. 
Comments and responses to comments refer to the numbering in the February 11 
proposed rule. 
sec.1301.17(a): 
Several comments recommended that a "designated person" selected by the CEO or 
CFO be added to the list of who should be allowed to sign for certification of 
discharge reports. The Council agrees and has modified this section, deleting 
reference to the chief financial officer and allowing the chief executive 
officer to sign the certification or to designate an agent. 
sec.1301.17 (b): 
One comment expressed concern over the practicality of having physicians review 
the accuracy of the data. The comment noted that hospital records to be 
submitted are not maintained in a format that allows complete review by either 
the hospital or physicians and that the billing system is a very dynamic 
database. The comment fears that physician review would require either printing 
a hard copy of the UB-92 or creation of a system for on-line review. The Council 
has addressed these concerns by requiring the executive director to supply each 
hospital quarterly an electronic data file designed to facilitate review by 
hospitals, physicians, and other health professionals. 
Comments also expressed concern that the proposed section directs hospitals to 
require physicians to review and verify the data. The Council disagrees. The 
adopted section requires only that the admitting physicians have the opportunity 
to review, request corrections of, and comment on the data. 
Other comments expressed concern that physicians would violate patient 
confidentiality by reviewing records in which they have no legitimate interest. 
The Council disagrees and believes that the system will contain adequate 
safeguards to protect patient confidentiality by limiting physician access only 
to records of patients for whom they are the admitting or treating physicians.
sec.1301.17 (c): 
One commenter expressed concern that data will not be available to the public 
until seven months after the end of each quarter, which means data from the 
first part of the quarter will be ten months old when released. The comment 
noted that the data is due at the THCIC two months after the end of the quarter 
and giving the facility four more months to "check" it seems excessive. The 
comment recommended that the rules clearly state that any data not certified 
within this period of time is deemed acceptable and will be released to the 
public. The commenter hopes after the system at the Council has been up and 
running for a while, this time frame will be shortened. The comment is concerned 
that due to the lag time of public dissemination, the Council's data will not be 
attractive and possibly irrelevant to those seeking Texas information. A review 
of the data release schedules in other states suggests that six months is 
typical. The Council agrees that it would be desirable to make the data 
available more quickly and this may be possible in the future. At the initiation 
of the program, however, the Council believes the schedule in the new section is 
reasonable. 
sec.1301.17(d): 
Comments were received asking that the Council waive in advance all civil 
penalties during initial implementation. The Council disagrees with this comment 
but has no intention of asking for such penalties unless extreme situations 
should arise. 
sec.1301.18: 
One commenter opposed the release of public use data files or statistical 
compilations based on those files. The objections to release of the public use 
data file to the public in this comment apply whether or not the records include 
quality adjustment factors. The Council disagrees with this comment. The 
provisions of the statute concerning confidentiality and general access to data 
reinforce the view that the Council has the obligation to create a public use 
data file from the hospital discharge data and make this file available to the 
public. The Council is required to use data received by the Council for the 
benefit of the public and to make determinations on requests for information in 
favor of access. The Council's enabling legislation, sec.108.013(a) makes 
information received by the Council, once modified to protect patient and 
physician confidentiality, subject to the Open Record's Act.
Several commenters questioned whether the release of a public use data file 
would lead to correct perceptions of the comparative quality of various 
hospitals. The Council believes that by providing risk and severity adjustment 
scores which will then be applied to the data by users, the risk of incorrect 
perceptions of comparative quality should be minimized. 
Several comments questioned the release of hospital gross charges because few 
patients actually pay gross charges. The Council believes gross charge data 
should be included on the public use data file. Charge data in conjunction with 
data such as Medicare cost reports and the TDH/THA/AHA annual hospital survey 
can be analyzed to produce reasonable comparative estimates of hospital costs 
and net reimbursement for various services. 
One comment disagreed with the Council's determination that the statute did not 
permit inclusion of the uniform patient identifier on the public use data file. 
We believe the question has been clarified by S.B. 802 which requires the 
Council to include uniform patient, physician and other provider identifiers on 
the public use data file. The public use data file will not, however, reveal the 
name of any patient or physician. 
Several comments asked for some "adjustment in the data itself." The Council 
disagrees with these comments. The addition of risk and severity scores is the 
professionally accepted approach to providing meaningful comparisons of health 
care providers. 
Several comments asked that the public use data file indicate whether a hospital 
is a children's specialty hospital or a teaching hospital. The Council agrees it 
would be helpful to have this information on each patient record, and the 
adopted section provides for the inclusion of this information.
sec.1301.19:
Comments were received from many hospitals that the format for data submission 
was nonstandard and would require substantial reprogramming of computer systems 
on the part of Texas hospitals, require extensive lead time and subject them to 
great expense. The commenters generally requested that hospitals be able to 
submit data in whatever form they choose, leaving it to the Council to translate 
the data to a standard format. The Council disagrees with these comments. As 
stated previously in this preamble, the Council has determined that the 
electronic format used for the most hospital bills is the HCFA UB-92 Electronic 
Format (Versions 004.1 and 004.0), the electronic version of the form 1450. Any 
hospital that submits Medicare bills to HCFA electronically must use the HCFA 
UB-92 Electronic Format UB-92 (Versions 004.1 and 004.0). Most hospitals have 
the capability to submit data in this format. The Council does not interpret 
sec.108.009(h) of its enabling legislation as authority for hospitals to file 
data in whatever form they choose. 
One comment indicated that its hospital policy was to redact patient names and 
replace them with patient account numbers or medical record numbers before 
releasing data. Adopted sec.1301.19(e) removes the requirement that hospitals 
furnish patient names. 
Several commenters stated that federal statutes and regulations restricting the 
release of information on psychiatric and substance abuse patients might prevent 
hospitals from supplying information on these patients, and thus require changes 
in the definition of "Inpatient." The Council has removed from these rules the 
requirement that patient identifying data elements be submitted on any patient. 
Some hospitals objected to the requirement that hospitals collect and report the 
patient's Social Security Number. They further objected to identifying the 
reason no Social Security Number was available for patients without one. Some 
said this would require additional work by hospital staff. Others said that 
requesting it might be offensive to the patient for various reasons, including 
it as an attempt to screen out aliens. Hospitals also said the Social Security 
Number should not be collected because it was not part of the UB-92 data set. 
The Council understands that Social Security Numbers are not always available or 
reliable. The Council agrees that it is not necessary to assign codes for 
reasons the social security number is missing from a given discharge. The 
adopted sections do not require the reporting of Social Security Numbers. The 
absence of this information will prevent the Council from initially assigning a 
Uniform Patient Number as required by S.B. 802. The reporting of Social Security 
Numbers may be the subject of a future rule-making proceeding. 
Some commenters questioned the statutory authority of the Council to collect 
data on patient race and ethnicity because these data elements are not part of 
the UB92 data set. The Council has omitted the requirement that hospitals report 
patient race and ethnicity data from sec.1301.19 as adopted. 
Some hospitals objected to the source of payment codes that hospitals would be 
required to use. One commenter indicated that the category for Blue Cross 
transcends other categories listed such as HMO's and PPO's and further noted 
that other unusual hybrid combinations of HMO's and PPO's exist in the 
marketplace. Another hospital questioned how to code when a patient is covered 
by multiple payers. The Council, through its training sessions, will provide 
direction on how to appropriately categorize these unique situations to ensure 
consistency across reporting hospitals and data accuracy. 
One commenter cited problems with the "self-insured" category noting that "there 
is no way to look at an insurance card and determine if an individual's company 
is self-insured." The Council agrees and has omitted this category. One comment 
requested a clarification between the categories of "charity/self pay" and 
"other self pay." The Council recognizes the confusion and has omitted the 
"other self pay" category. 
One hospital indicated they would incur increased costs to comply with the 
Council's source of payment codes. The Council disagrees. The source of payment 
code list follows the codes and categories already in place as determined by the 
National Uniform Billing Committee with four additional categories. These four 
categories are also already used by a large group of Texas hospitals in other 
data reporting programs. Therefore, the Council adopts the proposed source of 
payment code list with the two omissions noted previously.
The new sections are adopted under the Health and Safety Code, sec.108.006(a) 
and sec.108.009. The Councils interprets sec.108.006(a) as authorizing it to 
adopt rules necessary to carry out Chapter 108, including rules concerning data 
collection requirements, to prescribe by rule the process for providers to 
submit data. The Council interprets sec.108.009 as authorizing it to adopt rules 
for the implementation of data submission in stages to allow for the development 
of systems for the collection and submission of data and as requiring it to 
develop data submission procedures for providers lacking electronic submission 
capabilities.

sec.1301.11.Definitions.
The following words and terms, when used in this chapter, shall have the 
following meanings, unless the context clearly indicates otherwise. 
Batch file-A set of computer records as specified in sec.1301.19 of this title 
(relating to Discharge Reports-Records, Data Fields and Codes) which contains 
one or more discharge files and other required header and trailer records. A 
batch contains discharge files for only one hospital.
Charge-The amount billed by a provider for specific procedures or services 
provided to a patient before any adjustment for contractual allowances, 
government mandated fee schedules or write-offs for charity care, bad debt or 
administrative courtesy. The term does not include co-payments charged to health 
maintenance organization enrollees by providers paid by capitation or salary in 
a health maintenance organization.
Council-The Texas Health Care Information Council. 
Discharge-The formal release of a patient by a hospital; that is, the 
termination of a period of hospitalization by death or by disposition to a 
residence or another health care provider.
Discharge file-A set of computer records as specified in sec.1301.19 of this 
title (relating to Discharge Reports-Records, Data Fields and Codes) relating to 
a specific patient. Except for some normal newborn infants there will be one or 
more discharge files for each inpatient.
Discharge report-A computer file as defined in sec.1301.19 of this title 
(relating to Discharge Reports-Records, Data Fields and Codes) periodically 
submitted on or on behalf of a Hospital in compliance with the provisions of 
this chapter. 
Electronic filing-The submission of computer records in machine readable form by 
modem transfer from one computer to another or by recording the records on a 
nine track magnetic tape, computer diskette or other magnetic media acceptable 
to the executive director.
Error-Data submitted on a discharge report which are not consistent with the 
format and data standards contained in this section or with editing criteria 
established by the executive director, or the failure to submit required data.
Executive director-The chief administrative officer of the Council, or, in the 
event the Council is without an executive director, the person designated by the 
chairperson of the Council to perform the functions and exercise the authority 
of the executive director.
Health care facility-A hospital, an ambulatory surgery center licensed under 
Chapter 243 of the Health and Safety Code, a chemical dependency treatment 
facility licensed under Chapter 464 of the Health and Safety Code, a renal 
dialysis center, a birthing center, a rural health clinic or a federally 
qualified health center as defined by 42 United States Code, sec.1396(1)(2)(B).
Hospital-A public, for-profit, or nonprofit institution licensed or owned by 
this state that is a general or special hospital, private mental hospital, 
chronic disease hospital or other type of hospital.
Geographic identifier-A set of codes and accompanying maps prepared by the 
Council covering Texas and adjacent states with each code consisting of two or 
more zip codes, a set of codes and accompanying maps prepared by the Council 
covering the rest of the United States consisting of three digit zip codes, a 
set of codes and accompanying maps prepared by the Council covering Canada and 
Mexico consisting of a separate code for each state or province and a set of 
codes for each of the other countries.
Inpatient-A patient, including a newborn infant, who is formally admitted to the 
inpatient service of a hospital and who is subsequently discharged, regardless 
of status or disposition. Inpatients include patients admitted to 
medical/surgical, intensive care, nursery, subacute, skilled nursing, long-term, 
psychiatric, substance abuse, physical rehabilitation and all other types of 
hospital units.
Other health professional-a person licensed to provide health care services 
other than a physician. An individual other than a physician who admits patients 
to hospitals or who provides diagnostic or therapeutic procedures to inpatients. 
The term will encompass persons licensed under various Texas practice statutes, 
such as psychologists, chiropractors, dentists and podiatrists who are 
authorized to admit or treat patients.
Patient control number-A number assigned to each patient by the hospital which 
appears on each computer record in a patient discharge file. This number is not 
consistent for a given patient from one hospital to the next, or from one 
admission to the next in the same hospital. The Council deletes or encrypts this 
number to protect patient confidentiality prior to release of data.
Physician-An individual licensed under the laws of this state to practice 
medicine under the Medical Practice Act (Article 4495b, Vernon's Texas Civil 
Statutes).
Provider-A physician, health care facility or health maintenance organization.
Public use data file-A data file composed of discharge files with risk and 
severity adjustment scores which have been altered by the deletion, encryption 
or other modification of data fields to protect patient and physician 
confidentiality and to satisfy other restrictions on the release of hospital 
discharge data imposed by statute.
Required minimum data set-The data elements which hospitals are required to 
submit in a discharge file for each inpatient regardless of whether or not the 
hospital would have prepared a bill for the inpatient. The required minimum data 
set is specified in sec.1301.19(d) of this title (relating to Discharge Reports-
Records, Data Fields and Codes). 
Rural provider-A provider located in a county with a population of not more than 
35,000 according to the most recent United States Bureau of the Census estimate, 
those portions of extended cities that the United States Bureau of the Census 
has determined to be rural, or an area that is not delineated as an urbanized 
area by the United States Bureau of the Census.
Submission-A set of computer records as specified in sec.1301.19 of this title 
(relating to Discharge Reports-Records, Data Fields and Codes) that constitutes 
the discharge report for one or more hospitals.
Submitter-The person or organization which physically prepares discharge reports 
for one or more hospitals and submits them to the Council. A submitter may be a 
hospital or an agent designated by a hospital or its owner.
Uniform facility identifier-A unique number assigned by the Council to each 
health care facility in the state. For hospitals this will be the hospital's 
state license number. Where a hospital operates multiple facilities under one 
license number, the Council will assign a suffix for each separate facility. The 
relationship between facility identifier and the name, license number, and 
assigned suffix of the facility is public information.
Uniform other health professional identifier-A unique number assigned by the 
Council to an individual other health professional who is reported as admitting 
or treating a hospital inpatient, and composed of numeric, alpha, or 
alphanumeric characters, which remains constant across hospitals. The 
relationship of the identifier to the health professional-specific data elements 
used to assign it is confidential.
Uniform patient identifier-A random number assigned to an individual patient 
which remains constant across hospitals and inpatient admissions. 
Uniform payer identifier-A unique number assigned by the Council to every third 
party payer of UB-92 bills. Whenever possible the Council will use established 
numbering systems such as that maintained by the National Association of 
Insurance Commissioners. The relationship between payer identifier and the name 
of the payer is public information.
Uniform physician identifier-A unique number assigned by the Council to any 
physician or other health professional who is reported as admitting or treating 
a hospital inpatient which remains constant across hospitals. The relationship 
of the identifier to the physician-specific data elements used to assign it is 
confidential.

sec.1301.13.Schedule for Filing Discharge Reports. 
(a) For discharges occurring on or after January 1, 1998, hospitals shall file 
discharge reports according to the following schedule as shown in paragraphs 
(1)-(4) of this subsection unless a hospital has received an exemption letter 
from the Council. 
(1) Each discharge report covering inpatient discharges occurring between 
January 1 and March 31, inclusive, shall be submitted no later than June 1 of 
the calendar year in which the discharge occurred. 
(2) Each discharge report covering inpatient discharges occurring between April 
1 and June 30, inclusive, shall be submitted no later than September 1, of the 
calendar year in which the discharge occurred. 
(3) Each discharge report covering inpatient discharges occurring between July 1 
and September 30, inclusive, shall be submitted no later than December 1 of the 
calendar year in which the discharge occurred.
(4) Each discharge report covering inpatient discharges occurring between 
October 1 and December 31, inclusive, shall be submitted no later than March 1 
of the year following the year in which the discharge occurred. 
(b) On or before May 31, 1998, hospitals shall submit a discharge report drawn 
from inpatient discharges occurring between January 1, 1998 and March 31, 1998, 
inclusive. This discharge report shall be used for test and certification 
purposes only. The discharge report may include all discharges for the quarter, 
but the hospital is only required to submit discharge files covering discharges 
for any consecutive 30 days of the quarter. 
(c) Extensions to processing due dates may be granted by the executive director 
for a maximum of ten working days in response to a written request signed by the 
hospital's chief executive officer. Requests must be in writing, must be 
received at least five working days prior to the due date and must be 
accompanied by adequate justification for the delay. 
(d) Failure to file a discharge report on or before the due date without an 
extension, is punishable by a civil penalty pursuant to Health and Safety Code, 
sec.108.014. Discharge Reports. 

sec.1301.14.Instructions for Filing.
(a) Magnetic Media-A discharge report may be filed on computer diskettes, nine 
track tapes or other magnetic media approved by the executive director. All 
discharges shall be reported using the same file and record formats specified in 
sec.1301.19 of this title (relating to Discharge Reports-Records, Data Fields 
and Codes) regardless of medium. 
(1) Media specifications are: 
(A) Diskette: MS-DOS formatted; PC Text file (ASCII); Record length = 192 
characters, fixed; 3.5 inch diskette, 1.4 megabyte, high density.
(B) Nine track tape: Density = 1600 or 6250 BPI, nine track; Collating sequence 
= EBCDIC or ASCII; Record length = 192 characters, fixed; Blocking = unblocked; 
Labeling = no label. 
(C) Other magnetic media: Discharge reports may be filed on other magnetic media 
only with the prior written approval of the executive director. The executive 
director will not normally approve any medium which the Council is not currently 
equipped to read. 
(2) Hospitals shall submit no more than one tape or two diskettes per 
submission, with the following external identification affixed as listed in 
subparagraphs (A)-(G) of this paragraph: 
(A) hospital name; 
(B) facility identifier; 
(C) reporting period for discharges; 
(D) number of records by record type; 
(E) tape density: 1600/6250 BPI (if applicable); 
(F) collating sequence for tapes (if applicable); 
(G) the description: "DISCHARGE DATA". 
(3) Data for more than one hospital may be submitted on a single tape if the 
submitter provides external identification items
(A) through (D) for each hospital. 
(4) In addition to the provisions of this section, the Council shall document 
instructions for filing discharge reports on magnetic media and shall make this 
documentation available to hospitals at no charge and to the public for the cost 
of reproduction. The Council shall notify hospitals or their designated agents 
directly in writing at least 90 days in advance of any change in instructions 
for filing discharge reports on magnetic media. The Council's instructions shall 
follow Department of Information Resources standards for magnetic media 
established under Chapter 201 of this Title. 
(b) Electronic Data Interchange: Discharge reports may be filed by modem using 
electronic data interchange (EDI). All discharges shall be reported using the 
same file and record formats specified in sec.1301.19 of this title (relating to 
Discharge Reports-Records, Data Fields and Codes) regardless of the medium of 
transmission. Record length is 192 characters for all records. The Council shall 
document instructions for filing discharge reports by EDI and shall make this 
documentation available to hospitals at no charge and to the public for the cost 
of reproduction. The Council shall notify hospitals and their designated agents 
directly in writing at least 90 days in advance of any change in instructions 
for filing discharge reports by EDI. The Council's instructions shall follow 
Department of Information Resources standards for EDI. 
(c) Paper Forms: Only hospitals granted an exemption from electronic filing of 
discharge reports may file discharge reports using paper UB-92 billing forms. 
Hospitals using paper forms are required to provide all data elements specified 
in sec.1301.19 of this title (relating to Discharge Reports-Records, Data Fields 
and Codes). 
(1) All UB-92 forms filed shall be on the form currently approved by the federal 
Health Care Finance Administration. Photocopies are not acceptable.
(2) Hospitals shall submit no more than one batch of paper forms per submission, 
with the following external identification affixed as listed in subparagraphs 
(A)-(E) of this paragraph: 
(A) hospital name; 
(B) facility identifier; 
(C) reporting period for discharges; 
(D) number of forms; and 
(E) the description: "DISCHARGE DATA". 
(3) In addition to the provisions of this section, the Council shall document 
instructions for filing paper UB-92 forms and shall make this documentation 
available to hospitals at no charge and to the public for the cost of 
reproduction. The Council shall notify hospitals or their designated agents at 
least 90 days in advance of any change in instructions for filing paper forms. 

sec.1301.15.Exemptions from Filing Requirements. 
(a) Types of Exemptions. 
(1) Exemption as a Rural Provider. All hospitals except those owned by the 
federal government shall submit discharge reports to the Council unless the 
Council determines that the hospital is a rural provider. The executive director 
shall make a determination of which hospitals are entitled to this exemption at 
least annually and shall notify qualifying hospitals by publication in the Texas 
Register and by regular United States mail. Hospitals which are not initially 
given an exemption may apply for an exemption. This exemption, if granted, may 
be revoked by the Council should the hospital cease to meet the criteria for 
exemption based upon the most current data issued by the United States Bureau of 
the Census. Hospitals that cease to be exempted as rural providers shall be 
responsible for submitting discharge files on all discharges that occur 30 days 
after notice is given. The initial discharge report shall not be due until 90 
days after notice is given. Subsequent discharge reports are due as specified in 
sec.1301.13(a) of this title (relating to Schedule for Filing Discharge 
Reports). 
(2) Exemptions from Quarterly Filing of Discharge Reports. Hospitals that wish 
to submit discharge reports to the Council more often than quarterly may do so 
by requesting an exemption to the standard submission schedule. The Council may 
also issue general exemptions based on the processing arrangements for data 
collection. Exemption requests meeting the following criteria as shown in 
subparagraphs (A)-(D) of this paragraph will normally be approved. 
(A) The exemption request includes the specific schedule on which the hospital 
will make its discharge reports which will usually be daily, weekly or monthly. 
(B) The exemption request states the medium in which submissions will be made. 
(C) The exemption request will not result in data on any discharge being 
submitted to the Council at a later date than it would have been if the standard 
schedule had been followed. 
(D) The hospital agrees to adhere to the schedule specified in the exemption 
request until the hospital notifies the executive director in writing that it 
wishes to end the exemption and report according to the standard schedule, or 
until a new exemption letter is issued. 
(3) Exemption from Electronic Filing of Discharge Reports. The Council will 
grant exemptions from electronic filing of discharge reports only when a 
hospital can demonstrate that it lacks electronic data processing capacity. If 
granted, the exemption is valid for one year and must be renewed annually by the 
hospital. The exemption from electronic filing of discharge reports does not 
change the data the hospital is required to file on each discharge as specified 
in sec.1301.19 of this title (relating to Discharge Reports-Records, Data Fields 
and Codes), nor the schedule for submission specified in sec.1301.14 of this 
title (relating to Instructions for Filing Discharge Reports). Exemptions from 
electronic reporting to the Council will not normally be granted unless the 
hospital shows that it does not currently electronically file UB-92 bills with 
any payer, or has not done so in the last 12 months prior to the request for 
exemption. 
(b) Requests for exemptions shall be submitted and processed using the following 
procedures as shown in paragraphs (1)-(4) of this subsection.
(1) A hospital requesting an exemption shall submit to the executive director a 
letter requesting the exemption and providing all information necessary to 
establish the hospital's entitlement to the exemption. The exemption request 
shall be signed by the chief executive officer of the hospital who shall certify 
that all information contained in the request is true and correct.
(2) The executive director shall review the request for exemption. The executive 
director may request additional information from the hospital relevant to the 
exemption request. Within 30 days of receipt of a request, the executive 
director shall issue a letter granting or denying the exemption. If denied, the 
letter shall state in detail the reasons for the denial. The executive director 
shall notify Council members of exemptions requested and the disposition of 
these requests for information only. 
(3) If the executive director denies an exemption request the hospital may: 
(A) resubmit the request along with any additional information or analysis the 
hospital deems relevant to the executive director. The resubmission shall be 
considered in the same manner as an initial submission; or 
(B) appeal the executive director's decision to the Council. The hospital may 
make an appeal directly to the Council. In making its determination, the Council 
will consider only those facts and issues which have been previously presented 
to the executive director. The Council will decide exemption appeals by majority 
vote of members present. 
(4) The executive director may revoke any type of exemption if facts indicate 
that a hospital no longer meets the criteria required for an exemption. The 
executive director shall give the hospital written notice of the revocation at 
least 30 days prior to the effective date of the revocation. The notice shall 
include a detailed statement of the facts on which the revocation is based. A 
hospital may challenge the revocation of its exemption by: 
(A) requesting the executive director to reconsider the revocation by submitting 
any information or analysis the hospital deems relevant to the executive 
director in writing at least ten days prior to the effective date of the 
revocation; and 
(B) by appealing to the Council if the executive director does not grant the 
request for reconsideration. In making its determination, the Council will 
consider only those facts and issues which have been previously presented to the 
executive director. The Council will decide exemption appeals by majority vote 
of members present. 

sec.1301.16.Acceptance of Discharge Reports and Correction of Errors.
(a) To verify the accuracy of all discharge files prior to public release, the 
executive director shall establish procedures for the review of all discharge 
reports to determine whether the report is acceptable, as required by Health and 
Safety Code, sec.108.011. 
(b) Upon receipt of a discharge report, the executive director shall determine 
if it satisfies minimum criteria for processing. If it does not, the executive 
director shall return the report and state the deficiencies in writing within 
ten days of receipt. The hospital shall resubmit the report within ten days of 
notification by the executive director. A discharge report does not meet minimum 
standards for processing under the following circumstances as shown in 
paragraphs (1)-(3) of this subsection. 
(1) The physical media and labeling do not conform to the specifications in 
sec.1301.14 of this title (relating to Instructions for Filing Discharge 
Reports). 
(2) The physical media are unreadable due to physical damage. 
(3) The file structure does not conform to the specifications in sec.1301.19 of 
this title (relating to Discharge Reports-Records, Data Fields and Codes). 
(c) Correction of Errors. 
(1) The executive director shall review all discharge reports accepted for 
processing and will process all discharge files against the editing criteria 
established by the this section and by the executive director. Within 30 days of 
receipt of an accepted discharge report the executive director shall notify the 
hospital in detail of all errors detected in the discharge report. 
(2) Within 30 days of receiving initial notice of errors in a discharge report, 
the hospital shall correct all discharge files containing errors, add any 
discharge files determined to be missing from the initial discharge report and 
resubmit the discharge files. If the hospital disagrees with any identified 
error, the hospital shall submit written justification of the correctness or 
completeness of its data. Each hospital shall submit such modified and/or 
additional discharge files as may be required to allow the chief executive 
officer or the chief executive officer's agent to certify the discharge report 
as required by sec.1301.17 of this title (relating to Certification of Discharge 
Reports). Corrections to a discharge report shall be submitted in the same 
medium and format as the original discharge report unless the executive director 
approves another medium. 
(3) Within ten days of receiving corrections to a discharge report from a 
hospital, the executive director shall notify the hospital of any remaining 
errors. The hospital shall have ten days from receipt of this notice to correct 
the errors noted or submit a written explanation of why the data should be 
deemed correct and complete. This process shall be repeated until the executive 
director is satisfied that the data submitted by the hospital is substantially 
accurate and until the hospital is able to certify the discharge report as 
required by sec.1301.17 of this title (relating to Certification of Discharge 
Reports). 
(d) The executive director will document and the Council will approve all 
acceptance and editing criteria utilized in reviewing discharge reports. If 
acceptance and editing criteria are incorporated into computer software, and if 
the software is the property of the Council, the executive director will make 
copies of the portions of the software containing the criteria available on 
paper or magnetic media. The executive director shall make this information 
available to submitters without charge and to others for the cost of 
reproduction. 
(e) Failure to correct a discharge report which has been filed but contains 
errors or omissions within the due dates in sec.1301.13 of this title (relating 
to Schedule for Filing Discharge Reports) is punishable by a civil penalty 
pursuant to Health and Safety Code, sec.108.014. 

sec.1301.17. Certification of Discharge Reports. 
(a) Within 120 days after the end of each reporting quarter the executive 
director shall compile an electronic data file for each reporting hospital using 
all discharge files received from each hospital. The file shall have one record 
for each patient discharged during the reporting quarter and one record for any 
patient discharged during a previous reporting quarter for whom additional 
discharge files have been received. This file will include all data submitted by 
the hospital which the executive director intends to use in the creation of the 
public use data file. The data file will provide physicians and other health 
professionals the opportunity to review, request correction of, and comment on 
records of patients for whom they are shown as admitting or treating. The 
executive director shall determine the format and medium in which the quarterly 
file will be delivered to hospitals. 
(b) The chief executive officer of each hospital shall certify that the 
discharge report for each quarter is accurate using forms supplied by the 
Council. The certification form may be signed by a person designated by the 
chief executive officer and acting as the officer's agent. Designation of an 
agent does not relieve the chief executive officer of personal responsibility 
for the certification. If the chief executive officer does not believe the 
quarterly file is accurate, the officer shall provide the executive director 
with detailed comments and data necessary to correct any inaccuracy and certify 
the file subject to those corrections being made. 
(c) The certification shall represent that a complete review of hospital records 
was accomplished to assure the accuracy of the discharge report and any 
corrections submitted, that all errors and omissions known to the hospital have 
been corrected, and that to the best of their knowledge and belief, the data 
submitted is accurate and complete. The certification shall also represent that 
the hospital has provided physicians and other health professionals on its 
medical staff a reasonable opportunity to review the discharge files for which 
they were the admitting or treating physician or other health professional prior 
to certification, have corrected any errors brought to the hospital's attention 
and have included with the discharge report any comments on the accuracy of the 
data submitted by physicians or other health professionals. Written explanation 
of any unresolved disagreements with the executive director concerning the 
accuracy and completeness of the data at the time of the certification shall be 
attached to the certification form. 
(d) Each hospital must file its certification of each quarter's data with the 
Council within six months following the last day of the reporting quarter. 
Extensions to this period will not be granted. 
(e) Failure to timely file a certification of discharge data previously 
submitted is punishable by a civil penalty pursuant to Health and Safety Code, 
sec.108.014. 

sec.1301.18.Hospital Discharge Data Release. 
(a) Council records are public records under Government Code, Chapter 552, 
except as specifically exempted by Health and Safety Code, sec.108.010 and 
sec.108.013, and are available for public inspection during normal business 
hours. Copies of such records may be obtained upon request and upon payment of 
user fees established by the Council. Discharge files in the original format as 
submitted to the Council are exempt from disclosure pursuant to Health and 
Safety Code, sec.108.010 and sec.108.013, and shall not be released. Likewise, 
patient specific data collected by the Council through audits of hospital data 
shall not be released. 
(b) Creation of public use data file. The executive director will create a 
public use data file by creating a single record for each inpatient discharge 
and adding, modifying or deleting data elements in the following manner as 
listed in paragraphs (1)-(10) of this subsection: 
(1) convert patient birth date to age; 
(2) convert admission and discharge dates to a length of stay measured in days 
and a code for the day of the week of the admission;
(3) convert procedure and occurrence dates to day of stay values; 
(4) delete physician and other health professional names and numbers: assign 
uniform identifiers; 
(5) convert payer names and identification numbers to uniform payer identifiers: 
assign codes indicating the primary source of payment; 
(6) convert employer name and address data to a Standard Industrial 
Classification Code; 
(7) convert facility name, address and identification numbers to a facility 
identifier; 
(8) convert all procedure codes to ICD-9-CM; 
(9) add risk and severity adjustment scores utilizing an algorithm approved by 
the Council; 
(10) add indicators of whether the hospital is a children's specialty hospital 
and whether the hospital is a teaching hospital. 
(c) Release of files and statistical compilations based on the public use data 
file. The Council shall promptly provide data to those requesting it, subject to 
restrictions imposed by Health and Safety Code, sec.108.010 and sec.108.013 as 
interpreted by the Council's rules. 
(1) The executive director will make available a public use data file on 
magnetic media for each quarter not later than seven months after the end of the 
quarter. 
(A) The executive director shall release public use data from hospitals that 
have certified the data as required by sec.1301.17 of this title (relating to 
Certification of Discharge Reports). A hospital's failure to execute the 
certification form after six months shall not prevent the executive director 
from releasing the hospital's data if the director believes the data submitted 
is reasonably accurate and complete. The executive director shall not include in 
the public use data file records derived from hospital discharge files which 
contain material errors. The executive director will include with the public use 
data file information on the number of discharge files received from each 
hospital and the number of discharge files from each hospital included on the 
public use data file. 
(B) If additional discharge files become available after the initial release of 
the public use data file for any quarter, the executive director will add these 
records to the public use data file and make the additional records available to 
the public. 
(C) The other sections of these rules not withstanding, the executive director 
shall not create a public use data file from the discharge reports covering 
discharges occurring in the first quarter of 1998. It is the intent of the 
Council to utilize this data only for testing and calibration of its data 
processing systems and to allow hospitals the opportunity to test and calibrate 
their own data reporting systems. 
(D) The other sections of these rules not withstanding, the executive director 
shall not create or release a public use data file from discharge reports 
covering discharges for the second quarter of 1998 until a public use data file 
covering discharges for the third quarter of 1998 is created and released. The 
Council will initially release six months of data in order to provide a more 
reliable body of data for analysis and decision-making and to make available 
public use data files on a quarterly schedule thereafter.
(2) The Council shall not charge Texas state agencies a fee for data requested 
solely for the internal use of the agency to comply with Health and Safety Code, 
sec.108.012(b). Prior to filling the request of a state agency without fee, the 
executive director shall secure an interagency agreement imposing restrictions 
on distribution, republication or reuse of the data in ways that would diminish 
user fees to the Council. 
(3) The executive director shall establish procedures for screening all requests 
to assure that filling the request will not violate the provisions of Health and 
Safety Code, sec.108.013(c). 
(d) The data elements specified for discharge reports in sec.1301.19 of this 
title (relating to Discharge Reports-Records, Data Fields and Codes) do not 
constitute "Provider Quality Data" as discussed in Health and Safety Code, 
sec.108.010. Statistical compilations compiled from public use data files may be 
released with or without either discharge-specific or aggregate provider quality 
data. Statistical compilations without provider quality data are not subject to 
the restrictions imposed on the Council by Health and Safety Code, sec.108.010. 
Public use data files and statistical compilations compiled from public use data 
files with provider quality data may only be released subject to the 
restrictions in Health and Safety Code, sec.108.010, and rules adopted by the 
Council to implement this section of the statute.
(e) A public use data file or a statistical compilation compiled from public use 
data files which is specified by the requestor shall not be considered a "report 
issued by the Council" as referenced in Health and Safety Code, sec.108.011(f). 
(f) Requests for data files and statistical compilations based on public use 
data files including data on one or more provider are matters of public record 
and copies of all requests shall be maintained by the Council for two years from 
the date of receipt. The executive director will transmit monthly a summary of 
all requests received to all hospitals submitting discharge data to comply with 
Health and Safety Code, sec.108.011(e). 
(g) With any public use data file or any statistical compilation prepared by the 
Council, the executive director shall attach all comments submitted by providers 
which relate to any data included in the file or compilation.

sec.1301.19.Discharge Reports-Records, Data Fields and Codes. 
(a) Discharge reports shall be submitted electronically in the national standard 
flat file format for inpatient hospital bills defined by the United States 
Department of Health and Human Services, Health Care Finance Administration 
(HCFA); commonly known as the HCFA UB-92 Electronic Format (Versions 004.1 and 
004.0). HCFA updates this format from time to time by issuing new versions. The 
Council will accept discharge reports in the latest version or in the 
immediately preceding version. At the effective date of these rules, the latest 
version was version 004.1 and the immediately preceding version was version 
004.0. The Council will make detailed specifications for these formats available 
to submitters and to the public. 
(b) Except as otherwise provided in this section, discharge reports shall be 
submitted using the national uniform billing data element specifications as 
developed by the National Uniform Billing Committee (NUBC) as published by the 
State Uniform Billing Committee (SUBC) with instructions specific to Texas third 
party fiscal intermediaries in the Texas UB-92 Manual. The NUBC revises these 
data element specifications from time to time and the SUBC publishes revisions 
showing the effective date for changes to each data element. Hospitals shall 
submit discharge reports using the data element specifications in effect as of 
the date of the discharge. The Council will make detailed specifications for 
these data elements available to submitters and to the public. 
(c) In addition to the data elements contained in the Texas UB-92 Manual, the 
Council has defined the following data elements shown is in this subsection and 
has defined the location in the HCFA UB-92 Electronic Format (Versions 004.1 and 
004.0) where each element is to be reported.
(1) Source of Payment Code-This data element shall be reported at Record 30, 
Field 04, Beginning Position 25 as an alphanumeric value. Acceptable codes are: 
_ = Charity/Self pay 
_ = Workmen's Compensation 
_ = Medicare 
_ = Medicaid 
_ = Other Federal Programs (includes Veterans Administration) 
_ = Commercial 
_ = Blue Cross 
_ = Champus 
_ = Other 
_ = State or Local Government Programs 
_ = Commercial PPO 
_ = Medicare Managed Care 
_ = Medicaid Managed Care
_ = Commercial HMO 
(2) Submission Purpose Code-This data element shall be reported at Record 01, 
Field 20.8, Beginning Position 183 As an alphanumeric value. Acceptable codes 
are C = Claim, D = Discharge Statement, and B = Both. This code is required if a 
hospital bill clearinghouse is utilized in the data collection effort. 
(d) Data may be numeric or alphanumeric. All numeric data shall be right 
justified and zero-filled. All alphanumeric data shall be left justified. The 
length of all records is 192 characters. Conditional data fields shall be filled 
with spaces when other data is not present. 
(e) Hospitals shall submit the required minimum data set for all patients for 
which a discharge file is required by this title. For patients with any form of 
insurance, hospitals shall submit to the Council all data elements submitted to 
any third party payer in addition to data elements in the required minimum data 
set. The required minimum data set includes the following data elements as 
listed in paragraphs (1)-(40) of this subsection:
(1) Patient control number; 
(2) Patient last name; 
(3) Patient first name; 
(4) Patient middle initial; 
(5) Patient sex; 
(6) Patient birth date; 
(7) Type of admission; 
(8) Source of admission; 
(9) Source of Payment Code; 
(10) Patient city; 
(11) Patient state; 
(12) Patient zip; 
(13) Admission/start of care date; 
(14) Statement covers period from; 
(15) Statement covers period through; 
(16) Patient status; 
(17) Medical record number; 
(18) Type of bill; 
(19) Accommodations revenue codes (all applicable); 
(20) Accommodations rates (all applicable); 
(21) Accommodation days (all applicable); 
(22) Accommodation total charges (all applicable); 
(23) Inpatient ancillary revenue code (all applicable);
(24) Units of service (all applicable); 
(25) Ancillary charges total (all applicable); 
(26) Principal diagnosis code; 
(27) Other diagnosis codes (all applicable); 
(28) Principal surgical procedure code (if applicable);
(29) Principal surgical procedure date (if applicable);
(30) Other surgical procedure codes (all applicable);
(31) Other surgical procedure dates (all applicable);
(32) Admitting diagnosis; 
(33) External cause of injury (if applicable); 
(34) Procedure coding method used; 
(35) Attending physician number; 
(36) Operating or other physician number (if applicable);
(37) Other physician number (all applicable); 
(38) Attending physician name; 
(39) Operating or other physician name (if applicable);
(40) Other physician name (all applicable); 
(f) A submission will consist of a set of the following types of records from 
the HCFA UB-92 Electronic Format (Versions 004.1 and 004.0) specification as 
shown in paragraphs (1)-(13) of this subsection. 
(1) Processor Label Data (Record 01). Files will be formatted so that this is a 
data record, not a conventional label. From a system standpoint, this will be a 
"labelless" file. This record will be the first record in the file. 
(2) Provider Data (Record 10). The provider's batch record describes the types 
of claims submitted for a specific provider. Field 02 of this record identifies 
the specific type of claim. A provider may be authorized to submit more than one 
claim type. In that case, more than one batch will be required to identify each 
claim type. Each claim in the batch will be edited for claim type. Record 40, 
Field 04 identifies claim type and will be matched to the batch record for claim 
type. Each batch record must be followed by claim records and then Provider 
Batch Control Record (Record 95). This record is required at the beginning of 
each batch. 
(3) Patient Data (Record 20). The patient record is the first record of a claim. 
It is required for all claim types as it contains the patient's demographic 
data. 
(4) Third Party Payer Data (Record 30). The third party payer record identifies 
the insurance information for each payer. If the patient has other insurance, 
two or more records must be submitted, one for each carrier. If the patient has 
no third party payer, submit one Record 30 with Field 04 = A. NOTE: Records must 
be in the correct payer priority sequence. The '01' Record determines which 
source payment code will be considered as primary. 
(5) Claim Data (Record 40). The claim data record identifies miscellaneous data 
needed to process a claim. 
(6) Claim Data Conditions and Values (Record 41). This record is used to report 
condition and value codes. If none are needed, this record is not necessary. 
(7) Inpatient Accommodations (Record 50). This record identifies the room 
charges (revenue codes 100-219) for an inpatient claim.
(8) Inpatient Ancillary Services (Record 60). This record identifies the 
inpatient ancillary services (revenue codes 220-999). Revenue code '001' (total) 
is required for all lines of business. It must be the last revenue code listed 
and must contain the correct totals. 
(9) Medical Data (Record 70). This record identifies the diagnosis and surgical 
procedure code requirements. 
(10) Physician Data (Record 80). This record is for the physician license number 
and name. 
(11) Discharge Totals (Record 90). This record is the final record for each 
discharge and is required for all discharge types. The record count and charges 
associated with the discharges will be edited to this record. The discharge will 
be rejected when the counts or totals do not agree to those accumulated while 
processing the individual records of each discharge. If a record is not 
submitted for a discharge, enter '0' for that record count. 
(12) Provider Batch Control (Record 95). The provider's batch control record 
contains information for all the claims of a specific claim type. The system 
will accumulate totals as it processes each claim. The totals are then edited to 
the batch totals record. When the totals are out of balance, the batch will be 
rejected. 
(13) File Control Totals (Record 99). The processor's file control record 
contains control information for all the claims in the file. 
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 July 30, 1997.
TRD-9709885
Jim Loyd
Director of Program Planning
Texas Health Care Information Council
Effective date: August 19, 1997
Proposal publication date: February 11, 1997
For further information, please call: (512) 424-6492

TITLE 34. PUBLIC FINANCE
PART I. Comptroller of Public Accounts
CHAPTER 3. Tax Administration
SUBCHAPTER O. State Sales and Use Tax
34 TAC sec.3.294
The Comptroller of Public Accounts adopts an amendment to sec.3.294, concerning 
the rental and lease of tangible personal property, with changes to the proposed 
text as published in the March 25, 1997, issue of the Texas Register (22 TexReg 
3030).
The Tax Code, sec.151.006 and sec.151.152, was amended by Senate Bill 982, 74th 
Legislature, 1995, effective September 1, 1995, to exempt sales for resale in 
Mexico. The amendment provides information concerning the acceptance of valid 
and properly completed resale certificates from Mexican retailers. The amendment 
also clarifies policy regarding the sale for resale exemption under Tax Code, 
Chapter 151, for accessories and equipment attached to motor vehicles that are 
held for sale, lease, or rental.
In addition, a change was made to the proposed text of subsection (c)(3)(B) to 
correct the reference to subsection (i). The correct reference is to subsection 
(j) of this section.
No comments were received regarding adoption of the amendment.
This amendment is adopted under the Tax Code, sec.111.002, which provides the 
comptroller with the authority to prescribe, adopt, and enforce rules relating 
to the administration and enforcement of the provisions of the Tax Code, Title 
2.
The amendment implements the Tax Code, sec.sec.151.006, 151.152, and 151.302.

sec.3.294. Rental and Lease of Tangible Personal Property.
(a) Definitions. The following words and terms, when used in this section, shall 
have the following meanings, unless the context clearly indicates otherwise.
(1) Financing lease.
(A) A written lease contract containing either of the following provisions or 
conditions at the inception of the contract:
(i) title to the property must be transferred to the lessee at the end of the 
lease; or
(ii) an option to purchase the property at a nominal price is available to the 
lessee at the end of the lease (a price is nominal which is, at the time the 
contract is executed, estimated to be less than 10% of the fair market value of 
the property at the time the option is to be exercised).
(B) A written lease contract containing either of the following provisions or 
conditions at the inception of the contract will be presumed to be a financing 
lease:
(i) the lease term is equal to 75% or more of the estimated economic life of the 
property and the contract makes no provisions for the return of the property to 
the lessor. For used property, this section does not apply if the beginning of 
the lease term falls within the last 25% of the total estimated economic life of 
the lease property; or
(ii) the residual value of the leased property is less than 10% of the 
property's fair market value at the inception of the lease and the contract 
makes no provisions for the return of the property to the lessor.
(C) The presumption outlined in subparagraph (B) of this paragraph that the 
contract is a financing lease may be rebutted by showing that the contract is 
not merely a security device, that the property will be usable for its intended 
purpose at the end of the lease term, and that the lessor in good faith intends 
to reclaim possession of the property at the end of the lease term or to sell 
the property at the fair market value or to lease it for its fair market rental 
value.
(2) Lease or rental - A transaction, by whatever name called, in which 
possession but not title to tangible personal property is transferred for a 
consideration. In this section, the words lease and rental are used 
interchangeably.
(3) Operator - A person who actively guides, drives, pilots, or steers tangible 
personal property. A person who provides maintenance, repair, or supervision 
only is not an operator for the purposes of this section.
(4) Operating lease - A lease contract which gives the lessee use of the leased 
property for a certain period. For the purposes of the sales and use taxes, a 
written contract in the legal form of a lease will be treated as an operating 
lease unless it meets the definition of a financing lease. All oral leases will 
be treated as operating leases.
(b) Leases. Tax must be collected from the lessee on all charges contained in 
the lease unless the charge is separately stated and is nontaxable as provided 
by this section. See subsection (f) of this section for imposition of tax and 
time for reporting.
(c) Tangible personal property leased with and without an operator.
(1) Receipts from the lease of tangible personal property without an operator 
are taxable.
(2) The furnishing of tangible personal property with an operator for which a 
single charge is made to the customer shall be presumed to be the performance of 
a service and no tax may be charged to the customer, unless the service is 
taxable under other provisions of the Tax Code, Chapter 151. Sales or use taxes 
will be due on the original purchase price of the tangible personal property.
(A) The presumption set forth in subsection (c)(2) of this section may not be 
rebutted solely by one party to the transaction. The presumption may be rebutted 
by the following criteria which establish a lease of tangible personal property:
(i) the customer exercised direct control or supervision over the operator of 
the tangible personal property; and
(ii) the intent of the agreement was to lease a piece of tangible personal 
property and separately furnish an operator.
(B) If it is established that a lessor who made a single charge to customers did 
in fact make a lease of tangible personal property, the tax will be due on the 
fair market rental value of the tangible personal property. If this cannot be 
determined, the tax will be due on the total charge reduced by the charge 
attributable to the operator determined from lessor's records. If the charge for 
the operator cannot be determined from the lessor's records or if it seems 
unreasonable, the comptroller will make a determination of a reasonable operator 
charge.
(3) A transaction in which tangible personal property is furnished with an 
operator, and the customer is charged separately for tangible personal property 
and operator, shall be presumed to be the lease of tangible personal property 
and the separate furnishing of an operator; the receipts from the separate 
charge for the tangible personal property are taxable. The separate charge for 
the operator will not be taxable unless a taxable service is being provided.
(A) If a nontaxable service is being provided and it is established that the 
separate charge for the lease of tangible personal property is lower than the 
tangible personal property's fair market rental value, sales tax will be 
assessed on the fair market rental value unless the lessor presents convincing 
evidence to the comptroller as to why the rental charge should be lower than 
fair market rental value.
(B) If it is established that a lessor who separated charges for tangible 
personal property and operator nevertheless used the tangible personal property 
to perform a service, sales tax will be assessed on the fair market rental value 
if the property was purchased under a valid resale certificate. See subsection 
(j) of this section.
(d) Other charges related to lease agreements. Operating and financing lease 
agreements and related billings may contain a variety of charges in addition to 
the basic rental/lease charges, including charges that occur subsequent to the 
rental. All charges related to a lease agreement are taxable unless excluded 
from tax by this section. Some of these charges and their tax consequences are 
as follows.
(1) Separately stated charges for labor or services rendered in installing, 
applying, remodeling, servicing, maintaining, or repairing the item being leased 
are subject to tax.
(2) Damage waiver fees are subject to tax. A charge after the rental for repair 
to the damaged rental item is subject to tax as a taxable service. See sec.3.292 
of this title (relating to Repair, Remodeling, Maintenance, and Restoration of 
Tangible Personal Property). Charges for items destroyed or lost by a lessee are 
not taxable. However, if a lessee is required to purchase an item damaged by the 
lessee, the charge for the damaged item is taxable.
(3) All transportation charges billed by the lessor to the lessee related to the 
leased property are taxable. Charges for transportation billed directly to the 
lessee by third-party carriers are not taxable. See sec.3.303 of this title 
(relating to Transportation and Delivery Charges).
(4) Charges in the lease agreement for labor, such as charges for supervision, 
set-up, hook-up, assembly or disassembly, erection, and dismantling, are 
included in the lease price and are taxable.
(5) A charge imposed for the early termination of the lease is included in the 
lease price and is taxable.
(6) Under an operating lease, any interest charges will be taxable whether or 
not separately stated unless the interest charge is clearly imposed for late 
payment or other defaults under the lease.
(7) Under a financing lease, charges for interest by the lessor to the lessee 
will be taxable unless the rate of interest or the actual interest charged is 
separately stated in a contract, invoice, billing, sales slip, or ticket to the 
customer.
(e) Tangible personal property rented for use on residential and nonresidential 
jobs.
(1) Persons renting equipment for use in the performance of contracts to 
construct new nonresidential real property or to construct, repair, or remodel 
residential real property owe tax to the equipment rental company. Tax may not 
be collected from their customers on a separately stated charge for this 
reimbursable expense item even if the equipment charges to the customer are 
separately stated from operator charges. See sec.3.291 of this title (relating 
to Contractors).
(2) Persons renting equipment for use in the performance of contracts to repair 
or remodel nonresidential real property owe tax to the equipment rental company. 
Tax must also be collected from their customers on the total charge for the job 
including the amount paid for the equipment rental.
(3) When both remodeling and new construction are being performed under the same 
contract, the tax to be collected from customers on the rental charges should be 
determined as provided by sec.3.357(b)(7) of this title (relating to Labor 
Relating to Nonresidential Real Property Repair, Remodeling, Restoration, 
Maintenance, New Construction, and Residential Property).
(f) Imposition of taxes; time for filing; credits.
(1) Leases subject to sales tax.
(A) An operating lease executed while the property is within the state is 
subject to sales tax. Tax will be due on the total lease amount for the entire 
term of the lease regardless of where the property is used if the lessee takes 
delivery in the state. Any renewal of the contract, extensions, or options 
exercised while the tangible personal property is outside the state will not be 
subject to Texas tax unless the property reenters the state.
(B) A financing lease executed while the property is within the state is subject 
to sales tax if the lessee takes delivery in the state. Tax will be due on the 
total amount of the contract regardless of where the property received in Texas 
is used during the lease.
(2) Leases subject to use tax. Property brought or shipped into the state for 
use under the terms of a financing lease or an operating lease will be presumed 
to be subject to use tax. See sec.3.346 of this title (relating to Use Tax). The 
use tax will be due on the lease price for the entire term of an operating lease 
regardless of where the initial contract was executed. Credit will be allowed 
against any sales or use tax legally imposed and paid to another state. See 
sec.3.338 of this title (relating to Multistate Tax Credits and Allowance of 
Credit for Tax Paid to Suppliers).
(3) Method and time for filing reports.
(A) Under an operating lease, a lessor must report the rental charges in the 
period in which they are considered income under the lessor's method of 
reporting. Under the accrual method of reporting, the rental charges are 
considered income when the lease amount becomes due under the rental agreement. 
If the lessor does not collect the tax, the lessee must report the tax in the 
period in which each lease amount becomes due under the rental agreement.
(B) Under a financing lease, the lessor must collect all tax due under the lease 
at the time the lessee takes possession of the property or when first payment is 
due from the lessee, whichever is earlier. Tax must be reported on or before the 
20th day of the month following the reporting period in which the tax is 
collected. If the lessor does not collect the tax, the lessee must report the 
tax due when the lessee takes possession of the property or when first payment 
is due, whichever is earlier.
(C) An out-of-state lessor deriving rental receipts from tangible personal 
property located in Texas is engaged in business in Texas and is required to 
collect Texas use tax. Under an operating lease, the use tax must be reported by 
the lessee if the lessor fails to collect it. The tax must be reported by the 
lessee based upon the lessee's accounting method used for regular books and 
records. Under a financing lease, the use tax must be reported by the lessee 
when the lessee takes possession of the property or when the first payment is 
due, whichever is earlier.
(g) Sales of leased property under operating leases; credit allowed.
(1) When a lessee buys the property that the lessee was renting under the terms 
of an operating lease and the lessor allows credit against the sales price for 
all or part of the lease payments previously made by the lessee on the same 
property, tax is not due on the amount allowed as credit if the lessor has 
collected and remitted tax on the prior rental payments. The lessor must collect 
the tax on the balance of the sales price based on its method of accounting for 
sales and use tax purposes.
(2) When the lessor sells property to a third party who was not the lessee of 
that property and allows the third party credit against the sales price for all 
or part of the lease payments previously made by the former lessee, tax may not 
be refunded on the amount allowed as credit. The lessor must also collect and 
report the tax on the sales price of the property to the third party based on 
its method of accounting for sales and use tax purposes.
(h) Assignment of lease payments under operating leases. A lessor may factor or 
assign to a third party the lessor's right to receive all lease payments due 
under the agreement with the lessee. At the time the lease agreement is factored 
or assigned, tax is due on all lease amounts not yet reported. The lessor is 
responsible for reporting the tax to the comptroller's department in the report 
period the lease agreement is assigned or factored. No deduction in the amount 
of tax due and payable by the lessor is allowed if a transfer at a discount is 
made to a third party. No tax liability is incurred by the purchaser of the 
lease agreement. This section does not apply to the pledge of lease contracts by 
a lessor to a third party as loan collateral under the terms of a bona fide loan 
agreement.
(i) Assignment of lease payments and property under operating leases. A lessor 
may assign to a third party the lessor's right to receive all lease payments due 
under an agreement with the lessee and, in the same transaction, transfer title 
to the property covered by the lease. At the time the operating lease contract 
is assigned and title to the property is transferred to the third party, the 
third party purchaser must begin collecting and remitting tax on the full amount 
of the taxable rental charges remaining in the lease. The third party purchaser 
may issue a resale certificate to the lessor as provided by subsection (j) of 
this section. Tax must be reported by the third party purchaser as provided by 
subsection (f)(3)(A) of this section.
(j) Sales for resale; resale certificates.
(1) The purchaser of property which is to be held for lease within the United 
States of America, its territories and possessions, or within the United Mexican 
States may issue a resale certificate in lieu of the sales or use tax at the 
time of purchase. Mexican retailers who purchase for resale must show their 
Federal Taxpayers Registry (RFC) identification number for Mexico on the resale 
certificate and give a copy of their Mexican Registration Form to the Texas 
seller. However, if the lessor subsequently uses the property in any manner 
other than the leasing of it, or display or demonstration of it, the lessor 
becomes liable at the time of the use for sales tax based on the fair market 
rental value for the period of time used. The fair market rental value is the 
amount that a lessee would pay on the open market to rent the item for use. If 
the fair market rental value of the property cannot be ascertained, tax is due 
on the original purchase price of the property.
(2) At any time, the lessor using the property purchased under a resale 
certificate may stop paying tax on the fair market rental value and instead pay 
sales tax on the original purchase price. When the lessor elects to pay sales 
tax on the purchase price, credit will not be allowed for taxes previously paid 
on the fair market rental value. See sec.3.285 of this title (relating to Resale 
Certificate; Sales for Resale).
(3) A resale certificate may be issued by a retailer for a repair or replacement 
part, accessory, or equipment that will be attached to a motor vehicle to be 
rented or leased under the provisions of the Tax Code, Chapter 152. In this 
paragraph, the terms "rental" and "lease" are defined by the Tax Code, Chapter 
152, rather than by subsection (a)(2) of this section.
(k) Lease of real property with tangible personal property.
(1) If a contract for the lease or rental of real property includes the lease or 
rental of tangible personal property (such as furniture) as part of the 
agreement, no sales tax is due on the amount charged the tenant for the lease or 
rental of the tangible personal property. A resale certificate may not be issued 
and sales or use tax must be paid at the time the tangible personal property is 
purchased.
(2) Sales or use tax is due on the separate lease or rental of tangible personal 
property by a person or entity not owning or managing the real property in which 
the tangible personal property is or will be situated. A resale certificate may 
be issued in lieu of paying the tax at the time of purchase of the tangible 
personal property for subsequent lease or rental.
(l) Other taxes. For information pertaining to tax on motor vehicle rental 
receipts, refer to sections promulgated under the Motor Vehicle Sales and Use 
Tax Act.
(m) Local tax. For proper collection and allocation of city and transit sales 
taxes, see sec.3.374 of this title (relating to Collection and Allocation of the 
City Sales Tax) and sec.3.424 of this title (relating to Collection and 
Allocation of Transit Sales Tax). 
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 August 1, 1997.
TRD-9710025
Martin Cherry
Chief, General Law
Comptroller of Public Accounts
Effective date: April 21, 1997
Proposal publication date: March 25, 1997
For further information, please call: (512) 463-3699

TITLE 43. TRANSPORTATION
PART I. Texas Department of Transportation
CHAPTER 1. Management
SUBCHAPTER F. Advisory Committees
43 TAC sec.sec.1.82, 1.83, 1.85
The Texas Department of Transportation adopts amendments to sec.1.82, sec.1.83, 
and sec.1.85, concerning statutory and department advisory committees. Section 
1.85 is adopted with changes to the proposed text as published in the June 10, 
1997, issue of the Texas Register (21 TexReg 5657). Section 1.82 and section 
1.83 are adopted without changes and will not be republished. 
Texas Civil Statutes, Article 6252-33, provides that a state agency which is 
advised by an advisory committee shall adopt rules that state the purpose of the 
committee and describe the task of the committee and the manner in which the 
committee will report to the agency. Texas Civil Statutes, Article 6252-33, 
further provides that a state agency shall establish by rule a date on which the 
committee will automatically be abolished unless the governing body of the 
agency affirmatively votes to continue the committee in existence. House Bill 
1418, 75th Legislature, 1997, requires the creation of a Household Goods Carrier 
Advisory Committee to provide a forum for household goods carriers and the 
general public to make recommendations on modernizing and streamlining the rules 
to effect an efficient registration process for businesses and individuals, 
conduct a study of the feasibility and necessity of requiring any vehicle 
liability insurance for household goods carriers required to register under 
Texas Civil Statutes, Article 6675c, sec.8, and recommend a maximum level of 
liability for loss or damage of motor carriers. 
In accordance with House Bill 1418, amendments to sec.1.82 and sec.1.83 are 
proposed to create the Household Goods Carrier Advisory Committee.
Section 1.83 and sec.1.85 presently mandate that the department's statutory and 
department advisory committees shall be abolished on September 1, 1997, unless 
continued in existence by affirmative vote of the commission. These sections are 
amended to reflect the department advisory committees will continue in existence 
until September 1, 1999, and the statutory advisory committees will continue 
until September 1, 2001. 
The amendments to sec.1.83 authorize the Public Transportation Committee to 
create issue subcommittees and continue the following statutory advisory 
committees: Aviation Advisory Committee, Public Transportation Advisory 
Committee, and Vehicle Storage Facility/Tow Truck Rules Advisory Committee. 
To comply with Texas Civil Statutes, Article 6252-33, sec.1.85 has various 
proposed amendments. One proposed amendment to sec.1.85 abolishes the 
Registration and Title System Liaison Committee and Dealer Advisory Board, 
County Tax Assessor-Collector Review Team, El Paso District Citizen's Advisory 
Committee, Hydraulics and Erosion Control Laboratory Industry Advisory 
Committee, Transportation Systems Efficiency Advisory Committee, and Transit 
Operators' Advisory Committee because these committees have fulfilled their 
mission. The amendment also abolishes the Consultant Engineering Advisory 
Committee, Quality Control/Quality Assurance Specification Development 
Committee, and the Quality Control/Quality Assurance Certification Advisory 
Committee because these committees merely exchange information and do not advise 
the department. 
Another amendment to sec.1.85 changes the names of the Tow Truck Rules Advisory 
Committee to the Vehicle Storage Facility/Tow Truck Rules Advisory Committee, 
the Local Intelligent Vehicle Highway Systems (IVHS) Steering Committee to 
Intelligent Transportation Systems Steering Committee, and the Safety Management 
System to the Partners in Texas Transportation Safety Committee to more 
accurately reflect the tasks of the committees. 
An additional amendment to sec.1.85 also continues the Bicycle Advisory 
Committee, Intelligent Transportation Systems Committee, Motor Transportation 
Advisory Committee, Partners in Texas Transportation Safety Committee, Statewide 
Transportation Policy Committee, and Traffic Records Council. 
The amendments were published in the June 10, 1997, issue of the Texas Register 
(22 TexReg 5657) and comments were received from the Comptroller of Public 
Accounts, Central Transportation Systems, and Southwest Movers Association. 
Central Transportation Systems, and Southwest Movers Association suggested that 
due to the size of the industry, the Household Goods Carriers Committee created 
by sec.1.82(b)(2) should not be limited to three carrier members. They 
recommended that the advisory committee be composed of three household goods 
motor carriers for each of the equipment size categories. 
Texas Civil Statutes, Article 6252-33, provides that an advisory committee must 
be composed of a reasonable number of members not to exceed 24 members. The 
committee must also have a balanced representation between the industry 
regulated and the consumers of services of that industry. To add six additional 
motor carriers to the committee would necessitate an increase in the numbers of 
consumers on the committee as well. It would be difficult to coordinate meetings 
and actions for a committee that large. If, at a future date, the department 
determines that more input is necessary, it will consider adding additional 
members. Therefore, no changes will be made concerning this comment. The 
Comptroller of Public Accounts commented on sec.1.85(a)(2)(E) and (8)(E), 
concerning the reimbursement of expenses for the Statewide Transportation Policy 
Committee and the Bicycle Advisory Committee. 
The commenter questioned whether the members of the Statewide Transportation 
Policy Committee are entitled to receive travel expenses. Since the General 
Appropriations Act for fiscal years 1998 and 1999 did not specifically authorize 
reimbursement for this committee, the department has deleted the reimbursement 
provision from 1.85(a)(2)(E). 
The commenter also stated that it was unaware of any statute that authorized the 
department to establish and continue the Bicycle Advisory Committee. In addition 
to authority under Transportation Code, sec.201.101, sec.201.103, and 
sec.201.601, Transportation Code sec.202.902 mandates that the commission adopt 
bicycle rules. The rules must include the specific duties of a statewide bicycle 
coordinator. One of the bicycle coordinator's duties is to obtain comments from 
bicyclists on department policies affecting bicycle use of state highways. The 
commission has created the committee under the broad authority of this statute 
to obtain those comments. The legislature has recognized the legitimacy of the 
committee by appropriating funds for its expenses in Article VII, sec.32 of the 
General Appropriations Act, 74th Legislature, 1997.
The amendments are adopted under Transportation Code, sec.201.101, which 
provides the Texas Transportation Commission with the authority to establish 
rules for the conduct of the work of the Texas Department of Transportation, and 
Texas Civil Statutes, Article 6252-33 which requires a state agency to adopt 
rules that state the purpose and task of the committees. 

sec.1.85. Department Advisory Committees.
(a) Creation. 
(1) Project advisory committees. 
(A) Purpose. The executive director may authorize a district engineer to create, 
by written order, an ad hoc project advisory committee composed of the following 
members as may be deemed appropriate by the district engineer: department staff; 
affected property owners and business establishments; technical experts; 
professional consultants representing the department; and representatives of 
local governmental entities, the general public, chambers of commerce, and the 
environmental community. A project advisory committee shall serve the purpose of 
facilitating, evaluating, and achieving support and consensus from the affected 
community and governmental entities in the initial stages of a highway 
improvement project. Advice and recommendations of a committee provide the 
department with an enhanced understanding of public, business, and private 
concerns about a project from the development phase through the implementation 
phase, thus facilitating the department's communications and traffic management 
objectives, resulting in a greater cooperation between the department and all 
affected parties during project development and construction.
(B) Duties. A project advisory committee shall: 
(i) maintain community and local government communication; and 
(ii) respond in a timely fashion to affected parties' concerns about project 
development and construction. 
(C) Manner of reporting. A project advisory committee shall report its advice 
and recommendations to the district engineer. 
(D) Duration. A project advisory committee may be abolished at any stage of 
project development, but in no event may a committee continue beyond completion 
of the project. 
(2) Statewide Transportation Policy Committee. 
(A) Purpose. Transportation Code, sec.201.601, and 23 United States Code sec.135 
require the department to develop a statewide multimodal transportation plan 
that encompasses all modes of transportation. Federal law further provides that 
in developing the plan the department must seek public input from interested 
parties. To comply with these requirements, the Statewide Transportation Policy 
Committee, to be composed of private transportation providers and other 
governmental agencies and individuals concerned with transportation, will advise 
the department on its statewide transportation plan. The committee will provide 
a forum for identifying issues to be addressed by the planning process and for 
providing input into the department's planning process. The committee members 
represent a constituency of interests and in this way broaden input into the 
planning process. 
(B) Duties. The committee shall: 
(i) review and comment on issue papers prepared as part of developing 
recommended goals for Texas' transportation system; 
(ii) review and comment on the draft statewide transportation plan; 
(iii) have its members serve as chairs of issue committees to develop and 
explore issues that pertain to the statewide transportation planning process; 
and 
(iv) provide logistical assistance such as furnishing data and existing planning 
materials. 
(C) Manner of reporting. The committee shall report its advice and 
recommendations to the commission. 
(D) Statewide transportation policy issue committees. 
(i) The Statewide Transportation Policy Committee may appoint one or more issue 
committees to advise it on specific planning issues, such as environmental, 
intermodal, financial, and special transportation needs.
(ii) An issue committee shall report its advice and recommendations to the 
Statewide Transportation Policy Committee. 
(3) Ad hoc transit advisory panels. 
(A) Purpose. In order to provide for effective and timely input from affected 
public transportation providers and riders, the commission, by minute order, may 
create an ad hoc transit advisory panel. 
(B) Duties. An ad hoc advisory panel shall advise the Public Transportation 
Division on a single issue or program that only affects a specific segment of 
the public transportation industry or of the public. An example of an ad hoc 
panel would be a committee created to advise the division on the funding 
allocation rules for a particular grant program.
(C) Manner of reporting. An ad hoc advisory panel shall report its advice and 
recommendations to the Public Transportation Division director.
(D) Duration. An ad hoc advisory panel shall be abolished no later than 90 days 
after its creation. 
(4) Rulemaking advisory committees. 
(A) Purpose. The commission, by order, may create ad hoc rulemaking advisory 
committees pursuant to the Government Code, Chapter 2001, sec.2001.031, for the 
purpose of receiving advice from experts, interested persons, or the general 
public with respect to contemplated rulemaking. 
(B) Duties. A rulemaking advisory committee shall provide advice and 
recommendations with respect to a specific contemplated rulemaking.
(C) Manner of reporting. A rulemaking advisory committee shall report its advice 
and recommendations to the division responsible for the development of the 
rules. 
(D) Duration. A rulemaking committee shall be abolished upon final adoption of 
rules by the commission. 
(5) Traffic Records Council (TRC). 
(A) Purpose. The TRC coordinates and guides the planning and implementation of 
various Texas traffic records systems. The overall goal of the TRC is to share 
information regarding the various state data bases related to traffic records, 
establish a mutual understanding of the overall state goal of increasing the 
safety and efficiency of the roadway system, and to develop strategies for 
continued cooperation among all state and local participants with an interest in 
the traffic records process. 
(B) Duties. The TRC shall: 
(i) assist the department in the coordination and guidance of the planning and 
implementation of the various Texas traffic records systems to improve 
information quality and quantity; 
(ii) provide recommendations concerning the implementation of a strategic plan 
for the improvement of the state's record systems; 
(iii) help transfer related information on technology and systems through 
meetings and forums; and 
(iv) provide recommendations to the various agencies on system enhancements and 
linkages. 
(C) Manner of reporting. The TRC shall report its advice and recommendations to 
the various participating agencies, including the department and its Traffic 
Operations Division. 
(6) Intelligent Transportation Systems (ITS) Steering Committees. 
(A) Purpose. Federal law encourages the expenditure of federal transportation 
funds to achieve improvements in the efficiency of transportation operations. A 
portion of these funds are specifically designated for the planning and testing 
of Intelligent Transportation Systems technologies. As part of the development 
and implementation of these projects, a district engineer, in conjunction with 
local officials, may create a steering committee to provide support for ITS 
activities. Advice and recommendations expressed by a committee will foster the 
coordination of state and local benefit in the design, maintenance, and 
operation of ITS facilities. 
(B) Duties. A committee shall provide advice and recommendations with respect 
to: 
(i) ITS project priorities; 
(ii) the approval of projects; 
(iii) seeking project funding; 
(iv) coordinating public and private ventures; and 
(v) promoting ITS at local, state, and national levels. 
(C) Manner of reporting. A committee shall report its advice and recommendations 
to the local district engineer, or his or her designee.
(7) Motor Transportation Advisory Committee. 
(A) Purpose. The Motor Transportation Advisory Committee provides a forum for 
communication among state agencies, the trucking industry, motor bus companies 
that do not operate wholly within the limits of any incorporated town or city 
and its suburbs, and the affected public in a cooperative effort to seek 
solutions to common problems, and to support the department's mission to work 
cooperatively to provide safe, effective, and efficient movement of people and 
goods. 
(B) Duties. The Motor Transportation Advisory Committee shall provide advice 
with respect to: 
(i) the issuance of permits for the movement of oversize and overweight vehicles 
and loads; 
(ii) the registration of trucks and motor buses; 
(iii) future truck and motor bus equipment and highway needs;
(iv) coordination of regulatory and enforcement activities of state agencies 
affecting the trucking and motor bus industries. 
(v) truck and motor bus safety; 
(vi) opportunities for one-stop shopping for state services and requirements of 
trucks and motor bus companies; and 
(vii) other issues concerning the department and the trucking and motor bus 
industries. 
(C) Manner of reporting. The committee shall report its advice and 
recommendations to the assistant executive director for motorist services and 
the assistant executive director for multimodal transportation. 
(8) Bicycle Advisory Committee. 
(A) Purpose. The purpose of the Bicycle Advisory Committee is to advise the 
commission on bicycle issues. By involving representatives of the public, 
including bicyclists, the department helps ensure effective communication with 
the bicycle community, and that the bicyclist's perspective will be considered 
in the development of departmental policies affecting bicycle use including, the 
design, construction and maintenance of highways.
(B) Duties. The committee shall review and make recommendations on items of 
mutual concern between the department and the bicycling community.
(C) Manner of reporting. The committee shall report its advice and 
recommendations to the commission. 
(D) Creation. The effective date for establishment of the bicycle advisory 
committee will be the same date that the Bicycle Rules Advisory Committee is 
abolished. 
(E) Reimbursement. The department may reimburse a member of the Bicycle Advisory 
Committee for reasonable and necessary travel expenses. Current rules and laws 
governing reimbursement of expenses for state employees shall govern 
reimbursement of expenses for advisory committee members. 
(9) Partners in Texas Transportation Safety Committee.
(A) Purpose. The Partners in Texas Transportation Safety Committee provides 
advice and makes recommendations to improve transportation safety by identifying 
and evaluating safety issues for consideration in transportation strategies, 
plans, and projects. 
(B) Duties. The committee shall: 
(i) develop and recommend safety goals and objectives for the state through 
consideration of current transportation trends; 
(ii) identify and recommend safety policies, procedures, and processes which 
affect safety-related decisions; and 
(iii) coordinate and communicate transportation issues with other agencies and 
individuals to ensure a functional and productive safety management system. 
(C) Subcommittees. 
(i) The committee may appoint subcommittees to work independently on select 
safety issues. 
(ii) A subcommittee shall report its finding or recommendation to the committee 
chair. 
(D) Manner of reporting. The committee shall report its advice and 
recommendations to the participating agencies and the Director of Traffic 
Operations. 
(E) Duration. The committee is abolished September 1, 1999, unless continued in 
existence by affirmative vote of the commission. 
(b) Operating procedures. 
(1) Membership. An advisory committee shall be composed of not more than 24 
members to be appointed by the office or official to whom the committee is to 
report. When applicable to the purpose and duties of the committee, the 
membership shall provide a balanced representation between:
(A) industries or occupations regulated or directly affected by the department; 
and 
(B) consumers of services provided either by the department or by industries or 
occupations regulated by the department. 
(2) Meetings. 
(A) An advisory committee shall meet once a calendar year and such other times 
as requested by the office to which it reports. 
(B) A majority of the membership of an advisory committee constitutes a quorum. 
A committee may take formal action only by majority vote of its membership. 
(3) Officers. Each committee shall elect a chair and vice-chair by majority vote 
of the members of the committee. 
(c) Duration. Except as otherwise specified in this subsection, a committee 
created under this section is abolished September 1, 1999, unless continued in 
existence by affirmative vote of the commission. 
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 August 4, 1997.
TRD-9710060
Bob Jackson
Deputy General Counsel
Texas Department of Transportation
Effective date: August 25, 1997
Proposal publication date: June 10, 1997
For further information, please call: (512) 463-8630