TITLE 1. ADMINISTRATION

PART 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION

CHAPTER 355. REIMBURSEMENT RATES

SUBCHAPTER H. REIMBURSEMENT METHODOLOGY FOR 24-HOUR CHILD CARE FACILITIES

1 TAC §355.7103

PROPOSED PREAMBLE

The Texas Health and Human Services Commission (HHSC) proposes amendments to §355.7103, concerning Rate-Setting Methodology for 24-Hour Residential Child-Care Reimbursements.

BACKGROUND AND JUSTIFICATION

The proposed amendments are necessary to comply with the 2018-19 General Appropriations Act (Article II, Department of Family and Protective Services, Senate Bill 1, 85th Legislature, Regular Session, 2017).

The 2018-19 General Appropriations Act (the Act) appropriated general revenue for general payment rate increases for the 24-Hour Residential Child Care (24 RCC) program as described in Department of Family and Protective Services (DFPS) Rider 42. In addition, the Act appropriated general revenue for a new Intense Plus service level for General Residential Operations/Residential Treatment Centers (GRO/RTCs) and for the new services Treatment Foster Family, Integrated Care Coordination Placement, Integrated Care Coordination Case Management and Temporary Emergency Placement. The proposed amendment to §355.7103 adds the new rates for the 24 RCC program and adds a reimbursement methodology for the new services.

Also, the proposed amendment adds a 5 percent risk corridor for rates for Single Source Continuum Contractors (SSCCs) under the Community-based Foster Care program. Rates for SSCCs are determined using the official forecast of case mix for paid foster care for the catchment area in which the SSCC operates that is available when the payment rates are determined. Once the SSCC rates are determined, they do not change unless rates for legacy 24 RCC are updated. SSCC rates do not vary by the child's level of need, while legacy rates do vary by level of need. As a result, changes in case mix and associated changes in provider costs are accounted for in the legacy system but are not accounted for in the Community-based Foster Care program. The addition of a risk corridor will allow HHSC to update SSCC rates to recognize changes in a catchment area's case mix when the impact of such changes exceeds a certain percentage, either positive or negative.

Finally, the proposed amendment to §355.7103 includes some renumbering of rules for clarity.

SECTION-BY-SECTION SUMMARY

The proposed amendment to §355.7103(q) deletes the language relating to the rates effective September 1, 2015, and renumbers the definitions that remain in this subsection. This is done to provide clarity that these definitions apply to all rates; not just the rates effective September 1, 2017. The proposed amendment to §355.7103(q) also adds new definitions for Community-based Care, Integrated Care Coordination and Temporary Emergency Placement.

The proposed amendment to §355.7103(r) deletes the language relating to the reimbursement methodology for Foster Care Redesign, which is moved to new §355.7103(t), and adds the reimbursement methodology for legacy system reimbursement rates effective September 1, 2015.

Proposed new §355.7103(s) adds the reimbursement methodology for legacy system reimbursement rates effective September 1, 2017.

Proposed new §355.7103(t) adds the language for the Foster Care Redesign program, now called Community-based Foster Care. This new subsection also includes the reimbursement methodology for a risk corridor for the SSCC in the Community-based Foster Care program.

Proposed new §355.7103(u) adds reimbursement methodologies for Treatment Foster Family, Integrated Care Coordination Placement, Integrated Care Coordination Case Management and Temporary Emergency Placement.

FISCAL NOTE

Greta Rymal, Deputy Executive Commissioner for Financial Services, has determined that for each year of the first five years that the amended rule is in effect, there will be a cost to state government. Specifically $75,455,478 General Revenue (GR) ($85,904,643 All Funds (AF)) for State Fiscal Year (SFY) 2018, $71,693,507 GR ($82,678,943 AF) for SFY 2019, $55,247,970 GR ($62,392,844 AF) for SFY 2020, $47,711,794 GR ($54,971,083 AF) for SFY 2021, and $46,640,075 GR ($55,726,149 AF) SFY 2022.

There is no anticipated impact to costs and revenues of local governments.

SMALL BUSINESS AND MICRO-BUSINESS IMPACT ANALYSIS

Ms. Rymal has also determined that there will be no adverse economic effect on small businesses or micro-businesses to comply with the amended rule. Implementation of the amended rule does not require any changes in practice or any additional cost.

PUBLIC BENEFIT AND COST

Pam McDonald, Director of Rate Analysis, has determined that for each year of the first five years the rule is in effect, the public will benefit from adoption of the rule. The anticipated public benefit will be that the increased rates will lead to improved service delivery by 24 RCC providers, the risk corridor for SSCCs will ensure that changes in case mix in a catchment area are recognized in the SSCC rates, and the addition of reimbursement methodologies for new services will allow for reimbursement of new services designed to better meet the needs of children with high needs in state custody.

Ms. McDonald has also determined that there are no probable economic costs to persons required to comply with the amended rule.

HHSC has determined that the amended rule will not affect a local economy. There is no anticipated negative impact on local employment.

TAKINGS IMPACT ASSESSMENT

HHSC has determined that the proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under §2007.043 of the Government Code.

PUBLIC COMMENT

Written comments on the proposal may be submitted to Sarah Hambrick, Texas Health and Human Services Commission, Rate Analysis Department, Mail Code H-400, P.O. Box 85200, Austin, Texas 78705-5200; by fax to (512) 730-7475; or by e-mail to RAD-LTSS@hhsc.state.tx.us within 30 days of publication of this proposal in the Texas Register.

The last day to submit comments falls on a Sunday; therefore, comments should be: (1) postmarked or shipped before the last day of the comment period; (2) hand-delivered before 5:00 p.m. on the last working day of the comment period; or (3) faxed or e-mailed by midnight on the last day of the comment period. When faxing or e-mailing comments, please indicate "Comments on Proposed Rule 1R040" in the subject line.

STATUTORY AUTHORITY

The amendment is proposed under Texas Government Code §531.033, which provides the Executive Commissioner of HHSC with broad rulemaking authority.

The proposed amendment affects Texas Government Code Chapter 531. No other statutes, articles, or codes are affected by this proposal.

§355.7103.Rate-Setting Methodology for 24-Hour Residential Child-Care Reimbursements.

(a) - (o) (No change.)

(p) Payment rates for psychiatric step-down services are determined on a pro forma basis in accordance with §355.105(h) of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures). Payment rates for psychiatric step-down services effective September 1, 2017 [2015], will be equal to the rates in effect on August 31, 2015.

(q) [Rates effective September 1, 2015.]

[(1)] Definitions.

(1) [(A)] Child-placing agency (CPA)--Child-placing agencies as defined in 40 Texas Administrative Code (TAC) §745.21.

(2) Community-based Care--Community-based Care as defined in 40 TAC §700.108.

(3) [(B)] CPA retainage--The portion of the rate that includes the CPA's costs for administering the service, including, but not limited to recruiting and training foster families, matching children with foster families, monitoring foster families and foster homes, and the associated overhead costs.

(4) [(C)] Emergency Care Services--Emergency care services as defined in 40 TAC §748.61.

(5) [(D)] Foster home--Foster home as defined in 40 TAC §749.43 and §750.43.

(6) [(E)] General Residential Operation (GRO)--General residential operations as defined in 40 TAC §748.43.

(7) Integrated Care Coordination (ICC)--Integrated Care Coordination as defined in 40 TAC §700.110.

(8) [(F)] Levels of service--Levels of service as described in 40 TAC Chapter 700, Subchapter W.

(9) [(G)] Residential Treatment Center (RTC)--Residential treatment center as defined in 40 TAC §748.43.

(10) Temporary Emergency Placement (TEP)--Temporary Emergency Placement as defined in 40 TAC §700.1337.

(11) Treatment Foster Care (TFF)--Treatment Foster Care as defined in 40 TAC §700.1335.

(r) [(2)] Rates effective September 1, 2015. Rates are paid for each level of service identified by DFPS.

(1) [(A)] For CPAs, the rate consists of a foster home payment described in paragraph (2) of this subsection [subparagraph (B) of this paragraph] and a CPA retainage. Effective September 1, 2015, the CPA retainage for each level of service will be equal CPA retainage for that level of service in effect August 31, 2015:

(A) [(i)] plus 9.39 percent for the basic level of service;

(B) [(ii)] plus 1.14 percent for the moderate level of service;

(C) [(iii)] plus 0.42 percent for the specialized level of service; and

(D) [(iv)] plus 0.01 percent for the intense level of service.

(2) [(B)] For foster homes, the minimum daily rate to be paid to a foster home effective September 1, 2015, for each level of service will be equal to the rate for that level of service in effect August 31, 2015.

(3) [(C)] For GROs and RTCs, the rates effective September 1, 2015, will be equal to the rates paid to GROs and RTCs in effect August 31, 2015:

(A) [(i)] plus 9.58 percent for the specialized level of service;

(B) [(ii)] plus 0.3 percent for the intense level of service; and

(C) [(iii)] unchanged for other levels of service.

(4) [(D)] For emergency care services the rates effective September 1, 2015, will be equal to the rates in effect August 31, 2015, plus 6.0 percent.

[(r) Payment rates for Single Source Continuum Contractors under Foster Care Redesign are determined on a pro forma basis in accordance with §355.105(h) of this title.]

(s) Rates effective September 1, 2017. Rates are paid for each level of service identified by DFPS.

(1) For CPAs, the rate consists of a foster home payment described in paragraph (2) of this subsection and a CPA retainage. Effective September 1, 2017, the combined CPA retainage and foster home payment for each level of service will be:

(A) $48.47 for the basic level of service;

(B) $85.46 for the moderate level of service;

(C) $109.08 for the specialized level of service; and

(D) $186.42 for the intense level of service.

(2) For foster homes, the minimum daily rate to be paid to a foster home effective September 1, 2017, for each level of service will be:

(A) $27.07 for the basic level of service;

(B) $47.37 for the moderate level of service;

(C) $57.86 for the specialized level of service; and

(D) $92.43 for the intense level of service.

(3) For GROs and RTCs, the rates effective September 1, 2017, will be:

(A) $45.19 for the basic level of service;

(B) $103.03 for the moderate level of service;

(C) $197.69 for the specialized level of service;

(D) $277.37 for the intense level of service; and

(E) $400.72 for the intense plus level of service.

(4) For emergency care services, the rate effective September 1, 2017, will be $129.53.

(5) For treatment foster care, the rate effective September 1, 2017, will be $277.37.

(t) Community-based Care.

(1) Initial payment rates for a defined rate period for Single Source Continuum Contractors under Community-based Care are determined on a pro forma basis in accordance with §355.105(h) of this title using the official forecast of case mix for paid foster care for each specific catchment area for the rate period available at the time the payment rates are calculated.

(2) HHSC will recalculate payments rates whenever a new official forecast of case mix for paid foster care is available.

(3) HHSC will compare the payment rates calculated using actual paid foster care case mix data for each catchment area to the payment rates in place for the rate period to determine the percentage difference between the two sets of payment rates.

(4) If the payment rates calculated using actual paid foster care case mix data for a catchment area are at least 5% greater than the initial payment rates for the rate period, HHSC will increase the catchment area payment rates.

(5) If the payment rates calculated using actual paid foster care case mix for a catchment area are at least 5% less than the initial payment rates for the rate period, HHSC will reduce the catchment area payment rates;

(6) Calculations and prospective rate adjustments, if any, will be performed separately for each catchment area.

(u) Treatment Foster Family, Integrated Care Coordination Placement, Integrated Care Coordination Case Management, and Temporary Emergency Placement.

(1) The payment rates for these services are developed based on rates determined for other programs that provide similar services. If payment rates are not available from other programs that provide similar services, payment rates are determined using a pro forma approach in accordance with §355.105(h) of this title. The information in §355.101 of this title (relating to Introduction) and §355.105(g) of this title also applies.

(2) Reporting of cost. To gather adequate financial and statistical information upon which to base reimbursement, HHSC may require a contracted provider to submit a cost report for one or more of these services.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 12, 2017.

TRD-201702274

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: July 23, 2017

For further information, please call: (512) 707-6066


1 TAC §355.7109

PROPOSED PREAMBLE

The Texas Health and Human Services Commission (HHSC) proposes new §355.7109, concerning Reimbursement Methodology for Residential Child Care Case Management and Family-based Support Services.

BACKGROUND AND JUSTIFICAITON

Proposed new §355.7109 is necessary to comply with Senate Bill 11, 85th Legislature, Regular Session, 2017, which transfers the case management functions related to children in state custody from the Department of Family and Protective Services (DFPS) to community-based, nonprofit entities. HHSC, under its authority and responsibility to administer and implement rates, proposes new §355.7109 to codify the reimbursement methodology for Residential Child Care Case Management services and Family-based Support Services provided by community-based, nonprofit entities.

SECTION-BY-SECTION SUMMARY

Proposed new §355.7109(a) adds reimbursement methodology for Residential Child Care Case Management and Family-based Support Services. The methodology establishes that the payment rates for these services are developed based on rates determined for other programs that provide similar services. If payment rates are not available from other programs that provide similar services, HHSC will model rates based on a pro forma analysis. A pro-forma analysis makes assumptions about staff salaries and service requirements and estimates the basic types and costs of products and services necessary to deliver services that meet federal and state requirements.

Proposed new §355.7109(b) adds language stating that HHSC may collect cost reports from providers of these services, if necessary, to obtain appropriate cost data to be used in rate setting.

FISCAL NOTE

Greta Rymal, Deputy Executive Commissioner for Financial Services, has determined that for each year of the first five years that the proposed rule is in effect, there will be a cost to state government, specifically of $22,395,459 General Revenue (GR) ($27,649,211 All Funds (AF)) for State Fiscal Year (SFY) 2018, $27,129,111 GR ($31,289,274 AF) for SFY 2019, $23,772,972 GR ($27,205,073 AF) for SFY 2020, $24,709,530 GR ($28,243,973 AF) for SFY 2021, and $25,659,719 GR ($29,274,084 AF) for SFY 2022.

There is no anticipated impact to costs and revenues of local governments.

SMALL BUSINESS AND MICRO-BUSINESS IMPACT ANALYSIS

Ms. Rymal has also determined that there will be no adverse economic effect on small businesses or micro-businesses to comply with the proposed rule. Implementation of the proposed rule does not require any changes in practice or any additional cost.

PUBLIC BENEFIT AND COST

Pam McDonald, Director of Rate Analysis, has determined that for each year of the first five years the rule is in effect, the public will benefit from adoption of the rule. The anticipated public benefit will be that payment rates can be developed for case management services provided by community-based, nonprofit entities. It is expected that these entities will be maximally equipped to respond to community needs, and that by reducing duplication of services between the public and private sectors, the providers will achieve efficiencies in the performance of case management responsibilities.

Ms. McDonald has also determined that there are no probable economic costs to persons required to comply with the proposed rule.

HHSC has determined that the proposed rule will not affect a local economy. There is no anticipated negative impact on local employment.

TAKINGS IMPACT ASSESSMENT

HHSC has determined that the proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under §2007.043 of the Government Code.

PUBLIC COMMENT

Written comments on the proposal may be submitted to Sarah Hambrick, Texas Health and Human Services Commission, Rate Analysis Department, Mail Code H-400, P.O. Box 85200, Austin, Texas 78705-5200; by fax to (512) 730-7475; or by e-mail to RAD-LTSS@hhsc.state.tx.us within 30 days of publication of this proposal in the Texas Register.

The last day to submit comments falls on a Sunday; therefore, comments should be: (1) postmarked or shipped before the last day of the comment period; (2) hand-delivered before 5:00 p.m. on the last working day of the comment period; or (3) faxed or e-mailed by midnight on the last day of the comment period. When faxing or e-mailing comments, please indicate "Comments on Proposed Rule 1R041" in the subject line.

STATUTORY AUTHORITY

The new rule is proposed under Texas Government Code §531.033, which provides the Executive Commissioner of HHSC with broad rulemaking authority.

The proposed new rule affects Texas Government Code Chapter 531. No other statutes, articles, or codes are affected by this proposal.

§355.7109.Reimbursement Methodology for Residential Child Care Case Management and Family-Based Supportive Services.

(a) The payment rates for residential child care case management and family-based supportive services are developed based on rates determined for other programs that provide similar services. If payment rates are not available from other programs that provide similar services, payment rates are determined using a pro forma approach in accordance with §355.105(h) of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures). The information in §355.101 of this title (relating to Introduction) and §355.105(g) of this title also applies.

(b) Reporting of cost. To gather adequate financial and statistical information upon which to base reimbursement, HHSC may require a contracted provider to submit a cost report.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 12, 2017.

TRD-201702275

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: July 23, 2017

For further information, please call: (512) 707-6066


SUBCHAPTER J. PURCHASED HEALTH SERVICES

DIVISION 4. MEDICAID HOSPITAL SERVICES

1 TAC §355.8052

PROPOSED PREAMBLE

The Texas Health and Human Services Commission (HHSC) proposes amendments to §355.8052, concerning Inpatient Hospital Reimbursement.

BACKGROUND AND PURPOSE

The proposed amendment to §355.8052 revises the definition of a rural hospital.

The amendment to this rule is proposed to comply with the 2018-19 General Appropriations Act (Article II, SB 1, 85th Legislature, Regular Session, 2017, Section 180), which allocates certain funds appropriated to HHSC to provide increased reimbursement for rural hospitals. The rider contains a definition of a rural hospital for purposes of allocating the appropriated funds.

Currently, the rule defines a rural hospital as a hospital in a county with 60,000 or fewer persons based on the 2010 decennial census, a hospital designated by Medicare as a Critical Access Hospital (CAH), a Sole Community Hospital (SCH), or a Rural Referral Center (RRC). To comply with the appropriations rider, the proposed amendment changes this to define a rural hospital as (1) a hospital located in a county with 60,000 or fewer persons according to the 2010 U.S. Census; or (2) a hospital designated by Medicare as a Critical Access Hospital (CAH), Sole Community Hospital (SCH), or a Rural Referral Center (RRC) that is not located in a Metropolitan Statistical Area (MSA), as defined by the U.S. Office of Management and Budget; or (3) a hospital that (a) has 100 or fewer beds, (b) is designated by Medicare as a CAH, SCH, or RRC, and (c) is located in an MSA.

SECTION-BY-SECTION SUMMARY

The proposed amendment to §355.8052(b)(29) provides a revised definition for a rural hospital.

FISCAL NOTE

Greta Rymal, Deputy Executive Commissioner for Financial Services, has determined that for each year of the first five years that the amended rule is in effect, there will be a savings to state government; specifically $44,686,485 General Revenue (GR) ($103,488,849 All Funds (AF)) for State Fiscal Year (SFY) 2018, $44,148,343 GR ($103,488,849 AF) for SFY 2019, $44,106,947 ($103,488,849 AF) for SFY 2020, $44,106,947 GR ($103,488,849 AF) for SFY 2021, and $44,106,947 GR ($103,488,849 AF) SFY 2022. There will be no effect on local government.

SMALL BUSINESS AND MICRO-BUSINESS IMPACT ANALYSIS

Greta Rymal, Deputy Executive Commissioner for Financial Services, has also determined that there will be no adverse economic impact on small businesses or micro-businesses required to comply with the section as proposed, because no hospital meeting the definition of a small business or micro-business receives Medicaid hospital funding.

ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT

There are no anticipated economic costs to persons who are required to comply with the section as proposed.

HHSC has determined that the proposed rule will not affect a local economy. There is no anticipated negative impact on local employment.

PUBLIC BENEFIT

Pam McDonald, Director of Rate Analysis, has determined that for each year of the first five years the section is in effect, the public will benefit from adoption of the section. The public benefit anticipated as a result of enforcing or administering the section will be that rural hospital rates will only apply to hospitals in rural areas of the state and to small urban hospitals that have received one of the specified designations from Medicare, thus ensuring the appropriated funds are allocated as directed by the Legislature.

TAKINGS IMPACT ASSESSMENT

HHSC has determined that the proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Government Code, §2007.043.

PUBLIC HEARING

A public hearing to receive comments on the proposal will be scheduled after publication in the Texas Register and will be held at HHSC, 4900 North Lamar Blvd., Austin, Texas 78714-9030. The meeting date will be posted on the HHSC website (https://hhs.texas.gov/about-hhs/communications-events/meetings-events).

PUBLIC COMMENT

Questions about the content of this proposal may be directed to Kevin Niemeyer, HHSC Rate Analyst, at (512) 730-7445.

Written comments on the proposal may be submitted to the HHSC Rate Analysis Department, 4900 North Lamar Blvd., Austin, TX 78714-9030 (Mail Code H-400); by fax to (512)-( 730-7475); or by e-mail to RateAnalysisDept@hhsc.state.tx.us within 30 days of publication of this proposal in the Texas Register.

To be considered, comments must be submitted no later than 30 days after the date of this issue of the Texas Register. The last day to submit comments falls on a Sunday; therefore, comments must be: (1) postmarked or shipped before the last day of the comment period; (2) hand-delivered before 5:00 p.m. on the last working day of the comment period; or (3) faxed or e-mailed by midnight on the last day of the comment period. When faxing or e-mailing comments, please indicate "Comments on Proposed Rule 1R046" in the subject line.

STATUTORY AUTHORITY

The amendment is proposed under Texas Government Code §531.033, which authorizes the Executive Commissioner of HHSC to adopt rules necessary to carry out HHSC's duties; Texas Human Resources Code §32.021 and Texas Government Code §531.021(a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas; Texas Government Code §531.021(b), which establishes HHSC as the agency responsible for adopting reasonable rules governing the determination of fees, charges, and rates for medical assistance payments under the Texas Human Resources Code, Chapter 32.

The amendment affects Texas Government Code Chapter 531 and Texas Human Resources Code Chapter 32. No other statutes, articles, or codes are affected by this proposal.

§355.8052.Inpatient Hospital Reimbursement.

(a) (No change.)

(b) Definitions.

(1) - (28) (No change.)

(29) Rural hospital [hospitals]--A hospital enrolled as a Medicaid provider that:

(A) is located in a county with 60,000 or fewer persons according to the 2010 U.S. Census;

(B) is designated by Medicare as a Critical Access Hospital (CAH), a Sole Community Hospital (SCH), or a Rural Referral Center (RRC) that is not located in a Metropolitan Statistical Area (MSA), as defined by the U.S. Office of Management and Budget; or

(C) meets all of the following:

(i) has 100 or fewer beds;

(ii) is designated by Medicare as a CAH, a SCH, or a RRC; and

(iii) is located in an MSA.

[in a county with 60,000 or fewer persons based on the 2010 decennial census, a hospital designated by Medicare as a Critical Access Hospital (CAH), a Sole Community Hospital (SCH), or a Rural Referral Center (RRC).]

(30) - (41) (No change.)

(c) - (n) (No change.)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 8, 2017.

TRD-201702245

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: July 23, 2017

For further information, please call: (512) 707-6088


DIVISION 11. TEXAS HEALTHCARE TRANSFORMATION AND QUALITY IMPROVEMENT PROGRAM REIMBURSEMENT

1 TAC §355.8201

PROPOSED PREAMBLE

The Texas Health and Human Services Commission (HHSC) proposes amendments to §355.8201, concerning Waiver Payments to Hospitals for Uncompensated Care, to revise the definition of a Rider 38 hospital.

BACKGROUND AND PURPOSE

The definition of a "Rider 38 hospital" in the current rule was adopted to conform to the definition of "rural hospital" contained in the General Appropriations Act for the 2014-15 biennium (S.B. 1, 83rd Leg., R.S., 2013, Article II, Health and Human Services Commission, Rider 38). The same definition was contained in the General Appropriations Act for the 2016-17 biennium (H.B. 1, 84th Leg., R.S., 2015, Article II, Special Provisions Relating to All Health and Human Services Agencies, Section 58). The definition was changed during the recent legislative session, which is the reason HHSC proposes to amend the rule.

The General Appropriations Act for the 2018-19 biennium (S.B. 1, 85th Leg., R.S., 2017, Article II, Health and Human Services Commission, Rider 180) revises the definition of a rural hospital to be: (1) a hospital located in a county with 60,000 or fewer persons according to the 2010 U.S. Census; or (2) a hospital designated by Medicare as a Critical Access Hospitals (CAH), a Sole Community Hospital (SCH), or a Rural Referral Center (RRC) that is not located in a Metropolitan Statistical Area (MSA); or (3) a hospital that (a) has 100 or fewer beds, (b) is designated by Medicare as a CAH, a SCH or a RRC, and (c) is located in an MSA.

Concurrently with this proposed rule amendment (elsewhere in this issue of the Texas Register), HHSC proposes amending §355.8052, Inpatient Hospital Reimbursement, to revise the definition of rural hospital consistent with Rider 180. For consistency in the use of terms in the administrative rules, HHSC proposes to revise §355.8201 to substitute the term "Rural hospital" for "Rider 38 hospital" throughout the rule and to define "Rural hospital" by reference to the definition in §355.8052.

SECTION-BY-SECTION

Proposed amended §355.8201 changes "Rider 38 hospital" to "rural hospital" or "Rider 38" to "rural" throughout the rule. The proposed amendment also changes subsection (b) to define rural hospital by reference to §355.8052(b)(29) of this title (relating to Inpatient Hospital Reimbursement) instead of the current definition, stated above.

FISCAL NOTE

Greta Rymal, Deputy Executive Commissioner for Financial Services, has determined that for each year of the first five years that the section will be in effect, there will be no effect on costs or revenues of state or local governments as a result of enforcing and administering the section as proposed.

SMALL BUSINESS AND MICRO-BUSINESS IMPACT ANALYSIS

Greta Rymal, Deputy Executive Commissioner for Financial Services, has also determined that there is no anticipated adverse economic impact on small businesses or micro-businesses required to comply with the section as proposed.

ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT

There are no anticipated costs to persons who are required to comply with the section as proposed.

There is no anticipated negative impact on local employment.

PUBLIC BENEFIT

Pam McDonald, Director of Rate Analysis, has determined that for each year of the first five years the section is in effect, the public will benefit from adoption of the section. The public benefit anticipated as a result of enforcing or administering the section will be consistency in the administrative rules in both the term used to refer to rural hospitals and in the definition of the term.

TAKINGS IMPACT ASSESSMENT

HHSC has determined that the proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Government Code, §2007.043.

PUBLIC HEARING

A public hearing to receive comments on the proposal will be scheduled after this rule is published in the Texas Register and will be held at HHSC, 4900 North Lamar Blvd., Austin, TX 78714-9030. The meeting date will be posted on the HHSC website (https://hhs.texas.gov/about-hhs/communications-events/meetings-events). Please contact Kevin Niemeyer, kevin.niemeyer@hhsc.state.tx.us, if you have questions.

PUBLIC COMMENT

Written comments on the proposal may be submitted to the HHSC Rate Analysis Department, 4900 North Lamar Blvd., Austin, Texas 78714-9030 (Mail Code H-400); by fax to (512) 730-7475; or by email to RateAnalysisDept@hhsc.state.tx.us within 30 days of publication of this proposal in the Texas Register.

To be considered, comments must be submitted no later than 30 days after the date of this issue of the Texas Register. The last day to submit comments falls on a Sunday; therefore, comments must be: (1) postmarked or shipped before the last day of the comment period; (2) hand-delivered before 5:00 p.m. on the last working day of the comment period; or (3) faxed or emailed by midnight on the last day of the comment period. When faxing or emailing comments, please indicate "Comments on Proposed Rule 1R039" in the subject line.

STATUTORY AUTHORITY

The amendment is proposed under Texas Government Code §531.033, which authorizes the Executive Commissioner of HHSC to adopt rules necessary to carry out HHSC's duties; Texas Human Resources Code §32.021 and Texas Government Code §531.021(a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas; Texas Government Code §531.021(b), which establishes HHSC as the agency responsible for adopting reasonable rules governing the determination of fees, charges, and rates for medical assistance payments under the Texas Human Resources Code, Chapter 32.

The amendment affects Texas Government Code Chapter 531 and Texas Human Resources Code Chapter 32. No other statutes, articles, or codes are affected by this proposal.

§355.8201.Waiver Payments to Hospitals for Uncompensated Care.

(a) (No change.)

(b) Definitions.

(1) - (19) (No change.)

(20) Rural [Rider 38] hospital--A hospital that is described in §355.8052(b)(29) of this title (relating to Inpatient Hospital Reimbursement) [located in a county with 60,000 or fewer persons according to the most recent United States Census, a Medicare-designated Rural Referral Center, a Sole Community Hospital, or a Critical Access Hospital].

(21) - (26) (No change.)

(c) - (e) (No change.)

(f) Funding limitations.

(1) Payments made under this section are limited by the maximum aggregate amount of funds allocated to the provider's uncompensated-care pool for the demonstration year. If payments for uncompensated care for an uncompensated-care pool attributable to a demonstration year are expected to exceed the aggregate amount of funds allocated to that pool by HHSC for that demonstration year, HHSC will reduce payments to providers in the pool as described in subsection (g)(5) of this section.

(2) HHSC will establish the following seven uncompensated-care pools: a state-owned hospital pool; a large public hospital pool; a small public hospital pool; a private hospital pool; a physician group practice pool; a governmental ambulance provider pool; and a publicly owned dental provider pool as follows:

(A) The state-owned hospital pool.

(i) The state-owned hospital pool funds uncompensated-care payments to state-owned teaching hospitals, state-owned IMDs and state chest hospitals.

(ii) HHSC will determine the allocation for this pool at an amount less than or equal to the total annual maximum uncompensated-care payment amount for these hospitals as calculated in subsection (g)(2) of this section.

(B) Rural hospital [Rider 38] set-aside amounts. HHSC will determine rural hospital [Rider 38] set-aside amounts as follows:

(i) Divide the amount of funds approved by CMS for uncompensated-care payments for the demonstration year by the amount of funds approved by CMS for uncompensated-care payments for the 2013 demonstration year and round the result to four decimal places.

(ii) Determine the small rural public hospital [Rider 38] set-aside amount by multiplying the value from clause (i) of this subparagraph by the sum of the interim hospital specific limits from subsection (g)(2)(A) of this section for all rural [Rider 38] hospitals that are eligible to receive uncompensated-care payments under this section and that meet the definition of a small public hospital from subsection (b)(21) of this section. Truncate the resulting value to zero decimal places.

(iii) Determine the private rural hospital [Rider 38] set-aside amount by multiplying the value from clause (i) of this subparagraph by the sum of the interim hospital specific limits from subsection (g)(2)(A) of this section for all rural [Rider 38] hospitals that are eligible to receive uncompensated-care payments under this section and that meet the definition of a private hospital from subsection (b)(16) of this section. Truncate the resulting value to zero decimal places.

(iv) Determine the total rural hospital [Rider 38] set-aside amount by summing the results of clauses (ii) and (iii) of this subparagraph.

(C) Non-state-owned provider pools. HHSC will allocate the remaining available uncompensated-care funds, if any, and the rural hospital [Rider 38] set-aside amount among the non-state-owned provider pools as described in this subparagraph. The remaining available uncompensated-care funds equal the amount of funds approved by CMS for uncompensated-care payments for the demonstration year less the sum of funds allocated to the state-owned hospital pool under subparagraph (A) of this paragraph and the rural hospital [Rider 38] set-aside amount from subparagraph (B) of this paragraph.

(i) HHSC will allocate the funds among non-state-owned provider pools based on the following amounts:

(I) Large public hospitals:

(-a-) The sum of the interim hospital specific limits from subsection (g)(2)(A) of this section for all large public hospitals, as defined in subsection (b)(14) of this section, eligible to receive uncompensated-care payments under this section; plus

(-b-) An amount equal to the IGTs transferred to HHSC by large public hospitals to support DSH payments to themselves and private hospitals for the same demonstration year.

(II) Small public hospitals:

(-a-) The sum of the interim hospital specific limits from subsection (g)(2)(A) of this section for all non-rural [non-Rider 38] small public hospitals, as defined in subsection (b)(21) of this section, eligible to receive uncompensated-care payments under this section; plus

(-b-) An amount equal to the IGTs transferred to HHSC by small public hospitals to support DSH payments to themselves for Pass One and Pass Two payments for the same demonstration year.

(III) Private hospitals: The sum of the interim hospital specific limits from subsection (g)(2)(A) of this section for all non-rural [non-Rider 38] private hospitals, as defined in subsection (b)(16) of this section, eligible to receive uncompensated-care payments under this section.

(IV) Physician group practices: The sum of the unreimbursed uninsured costs and Medicaid shortfall for physician group practices, as described in §355.8202(g)(2)(A) of this title (relating to Waiver Payments to Physician Group Practices for Uncompensated Care).

(V) Governmental ambulance providers: The sum of the uncompensated care costs multiplied by the federal medical assistance percentage (FMAP) in effect during the cost reporting period for governmental ambulance providers, as described in §355.8600 of this title (relating to Reimbursement Methodology for Ambulance Services). Estimated amounts may be used if actual data is not available at the time calculations are performed.

(VI) Publicly-owned dental providers: The sum of the total allowable cost minus any payments for publicly owned dental providers, as described in §355.8441 of this title (relating to Reimbursement Methodologies for Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) Services). Estimated amounts may be used if actual data is not available at the time calculations are performed.

(ii) - (iii) (No change.)

(3) Payments made under this section are limited by the availability of funds identified in subsection (d) of this section. If sufficient funds are not available for all payments for which a hospital is eligible, HHSC will reduce payments as described in subsection (h)(2) of this section.

(g) Uncompensated-care payment amount.

(1) - (4) (No change.)

(5) Reduction to stay within uncompensated-care pool aggregate limits. Prior to processing uncompensated-care payments for any payment period within a waiver demonstration year for any uncompensated-care pool described in subsection (f)(2) of this section, HHSC will determine if such a payment would cause total uncompensated-care payments for the demonstration year for the pool to exceed the aggregate limit for the pool and will reduce the maximum uncompensated-care payment amounts providers in the pool are eligible to receive for that period as required to remain within the pool aggregate limit.

(A) - (E) (No change.)

(F) Notwithstanding the calculations described in subparagraphs (A) - (E) of this paragraph, if the payment period is the final payment period for the demonstration year, to the extent the payment is supported by IGT, each rural [Rider 38] hospital is guaranteed a payment at least equal to its interim hospital specific limit from paragraph (2)(A) of this subsection multiplied by the value from subsection (f)(2)(B)(i) of this section for the demonstration year less any prior period payments. If this guarantee will cause payments for a pool to exceed the aggregate pool limit, the reduction required to stay within the pool limit will be distributed proportionally across all non-rural [non-Rider 38] providers in the pool based on each provider's resulting payment from subparagraphs (A) - (E) of this paragraph as compared to the payments to all non-rural [non-Rider 38] hospitals in the pool resulting from subparagraphs (A) - (E) of this paragraph.

(6) - (7) (No change.)

(h) - (k) (No change.)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 8, 2017.

TRD-201702246

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: July 23, 2017

For further information, please call: (512) 707-6088


DIVISION 14. FEDERALLY QUALIFIED HEALTH CENTER SERVICES

1 TAC §355.8261

PROPOSED PREAMBLE

The Texas Health and Human Services Commission (HHSC) proposes amendments to §355.8261, concerning Federally Qualified Health Center Services Reimbursement.

BACKGROUND AND PURPOSE

The proposed amendments to §355.8261 are necessary to comply with Legacy Community Health Services, Inc. v. Janek (No. 4:15-CV-25, slip op. dated May 3, 2016), which requires changes to the FQHC payment process.

Under federal law (42 U.S.C. §1396a(bb)), Federally Qualified Health Centers (FQHCs) must be paid for services provided to Medicaid clients in an amount that is equal to the average of the FQHC's per visit costs. This amount is called its encounter rate.

If an FQHC provides services under a contract with a managed care organization (MCO) or dental maintenance organization (DMO) (also referred to in §355.8261 as dental managed care organization), 42 U.S.C. §1396a(bb)(5) requires the state to make a supplemental, or "wrap," payment to the FQHC in the amount of the difference between the federally required encounter rate and the amount of the payments provided under the contract. Since September 1, 2011, HHSC has required MCOs and DMOs, for both Medicaid and Children's Health Insurance Program (CHIP) services, to pay FQHCs their full encounter rate, rather than a contracted rate, thus eliminating the need for a wrap payment.

Legacy Community Health Services, an FQHC, filed suit against HHSC in January 2015, claiming HHSC's reimbursement policy with respect to Medicaid services violates the Medicaid Act, 42 U.S.C. ch. 7, subch. XIX. In May 2016, the United States District Court for the Southern District of Texas held that HHSC had improperly delegated its payment obligations to MCOs by requiring them to pay the full encounter rate. In February 2017, the Court granted a joint motion that permits HHSC to implement a wrap payment process, and thus be in compliance with the initial court order, no later than September 1, 2017. As a result, HHSC is amending §355.8261 to describe how the agency will operationalize the Court's ruling.

SECTION-BY-SECTION SUMMARY

The proposed amendment of §355.8261(b) provides that an FQHC wrap payment will be made in the event the contracted amount an MCO or DMO pays an FQHC is less than the FQHC's encounter rate. The proposed amendment also provides that the state will ensure the FQHC is reimbursed the wrap payment. These changes are based on HHSC's work with stakeholders to implement a wrap payment process that has the option to utilize an entity other than the state, such as an MCO or DMO, to make a wrap payment to an FQHC.

The proposed amendment also permits wrap payments to be made more often than quarterly. This change is consistent with stakeholder input to allow wrap payments to occur more frequently than those made under the system HHSC used prior to September 1, 2011.

Finally, the proposed amendment adds "PPS or APPS" to the sentence describing calculation of the supplemental payment to clarify that the encounter rate used to calculate the amount of the wrap payment applies to both methods of calculating the encounter rate (the Prospective Payment System and Alternative Prospective Payment System).

The proposed amendment also creates a new subsection, (c), which provides a process for payment disputes between an FQHC and an MCO or DMO. The process applies to disputes regarding claims for services provided by an FQHC regardless of whether the services were provided on an in-network or out-of-network basis.

FISCAL NOTE

Greta Rymal, Deputy Executive Commissioner for Financial Services, has determined that for each year of the first five years that the rule will be in effect, there will be no effect on costs or revenues of state or local governments as a result of enforcing and administering the section as proposed.

SMALL BUSINESS AND MICRO-BUSINESS IMPACT ANALYSIS

Ms. Rymal has also determined that there will be no adverse impact on small businesses or micro-businesses required to comply with the section as proposed. Allowing additional flexibility in implementing the wrap payment process is not expected to create any additional administrative burden on FQHCs, MCOs, or DMOs, regardless of size.

ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT

There are no anticipated economic costs to persons who are required to comply with the section as proposed.

There is no anticipated negative impact on local employment.

PUBLIC BENEFIT

Jami Snyder, State Medicaid Director, has determined that for each year of the first five years the rule is in effect, the public will benefit from the adoption of the rule. The anticipated public benefit will be the implementation of an FQHC wrap payment system that minimizes any disruption to FQHCs' ability to provide healthcare services to the Medicaid and CHIP populations.

TAKINGS IMPACT ASSESSMENT

HHSC has determined that the proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Government Code, §2007.043.

PUBLIC COMMENT

Written comments on the proposal may be submitted to Marcus Denton, Medicaid Policy Advisor, 4900 North Lamar Boulevard; by fax to (512) 730-7477; or by e-mail to marcus.denton@hhsc.state.tx.us within 30 days of publication of this proposal in the Texas Register.

To be considered, comments must be submitted no later than 30 days after the date of this issue of the Texas Register. The last day to submit comments falls on a Sunday; therefore, comments must be: (1) postmarked or shipped before the last day of the comment period; (2) hand-delivered before 5 p.m. on the last working day of the comment period; or (3) faxed or e-mailed by midnight on the last day of the comment period. When faxing or e-mailing comments, please indicate "Comments on Proposed Rule 1R032" in the subject line.

STATUTORY AUTHORITY

The amended rule is proposed under Texas Government Code §531.033, which provides the Executive Commissioner of HHSC with broad rulemaking authority; Texas Human Resources Code §32.021 and Texas Government Code §531.021(a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas; and Texas Government Code §531.02192(b)(2), which requires HHSC to ensure that FQHCs are paid in accordance with 42 U.S.C. §1396a(bb).

The proposed amendment implements Texas Human Resources Code Chapter 32 and Texas Government Code Chapter 531. No other statutes, articles, or codes are affected by this proposal.

§355.8261.Federally Qualified Health Center Services Reimbursement.

(a) (No change.)

(b) Alternative Prospective Payment System (APPS) Methodology. FQHCs selecting the APPS methodology, in accordance with section 1902(bb) of the Social Security Act, as amended by the Benefits Improvement and Protection Act (BIPA) of 2000 (42 U.S.C. §1396a(bb)), effective for the FQHC's fiscal year that includes dates of service occurring January 1, 2001, and after, are reimbursed an APPS per visit encounter rate for Medicaid covered services at one hundred percent (100%) of reasonable costs. FQHCs are reimbursed a prospective per visit encounter rate for a visit that meets the requirements of paragraphs (12) and (13) of this subsection. The final base rate for each FQHC existing in 2000 was calculated based on one hundred percent (100%) of the average of the FQHC's reasonable costs for providing Medicaid covered services as determined from audited cost reports for the FQHC's 1999 and 2000 fiscal years. The final base rate was calculated by adding the total audited reimbursable costs as determined from the 1999 and 2000 cost reports and dividing by the total audited visits for these same two periods.

(1) - (10) (No change.)

(11) In the event that the [total] amount paid to an FQHC by a managed care organization (MCO) or dental managed care organization (DMO) is less than the amount the FQHC would receive under PPS or APPS, whichever is applicable, the state will ensure the FQHC is reimbursed [reimburse] the difference on at least a quarterly basis. The state's [quarterly] supplemental payment obligation will be determined by subtracting the baseline payment under the contract for services being provided from the effective PPS or APPS rate without regard to the effects of financial incentives that are linked to utilization outcomes, reductions in patient costs, or bonuses.

(12) - (13) (No change.)

(c) Payment dispute.

(1) An FQHC that believes an MCO or DMO has improperly denied a claim for payment or has provided insufficient reimbursement may appeal to the MCO or DMO. The MCO or DMO must address provider appeals as required by Texas Government Code §533.005(a)(15) and (19) and its contractual obligations with HHSC.

(2) If the MCO or DMO is not able to resolve the appeal, the FQHC may submit a complaint to HHSC for review. If HHSC finds the MCO or DMO has not correctly reimbursed the FQHC in accordance with contractual obligations, HHSC may require the MCO or DMO to reimburse the FQHC and assess remedies against the MCO or DMO in accordance with HHSC's contract with the MCO or DMO.

(3) The state will ensure the FQHC is paid the full PPS or APPS encounter rate for all valid claims.

(4) This subsection applies to claims for services provided by an FQHC on an in-network or out-of-network basis.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 12, 2017.

TRD-201702276

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: July 23, 2017

For further information, please call: (512) 730-7413