TITLE 1. ADMINISTRATION

PART 10. DEPARTMENT OF INFORMATION RESOURCES

CHAPTER 201. GENERAL ADMINISTRATION

1 TAC §201.4, §201.9

The Texas Department of Information Resources (department) proposes amendments to 1 TAC Chapter 201, §201.4, and §201.9 to ensure the rules accurately reflect the department's policies and procedures.

In 1 TAC §201.4, the Department proposes an amendment to require agency employees and officials involved in procurement or contract management to disclose potential conflicts of interest with respect to contracts with private vendors; prohibit the department from entering into contracts with vendors with whom certain department employees or officials have a financial interest; and defines the prohibited financial interest.

In 1 TAC §201.9, the Department proposes correcting a technical error.

The changes to the chapter apply to DIR and will have no effect on state agencies and institutions of higher education. The assessment of the impact of the proposed changes on institutions of higher education was prepared in consultation with the Information Technology Council for Higher Education (ITCHE) in compliance with §2054.121(c), Texas Government Code.

Martin Zelinsky, General Counsel, has determined that during the first five-year period following the amendments to 1 TAC Chapter 201 there will be no fiscal impact on state agencies, institutions of higher education and local governments.

Mr. Zelinsky has further determined that for each year of the first five years following the adoption of the amendments to 1 TAC Chapter 201 there are no anticipated additional economic costs to persons or small businesses required to comply with the amended rules.

Written comments on the proposed amendments may be submitted to Martin Zelinsky, General Counsel, 300 West 15th Street, Suite 1300, Austin, Texas 78701, or to martin.zelinsky@dir.texas.gov. Comments will be accepted for 30 days after publication in the Texas Register.

The amendments are proposed pursuant to §2054.052(a), Texas Government Code, which authorizes the department to adopt rules as necessary to implement its responsibilities under Chapter 2054, Texas Government Code; 2255.01, Texas Government Code, which authorizes state agencies to develop rules; and §2001.021(b), Texas Government Code, which authorizes state agencies to, by rule, prescribe the form of a petition under the section.

No other code, article or statute is affected by this proposal.

§201.4.Board Policies.

(a) The executive director is hereby delegated authority by the board to grant a requesting state agency a compliance waiver from administrative rule, statewide standards, or other board policies. A state agency may request a compliance waiver from administrative rule, statewide standards or other board policy. The agency must clearly demonstrate to the department through written justification any performance or cost advantages to be gained and that the overall economic interests of the state are best served by granting the compliance waiver. The executive director of the department will notify the board when requests for waivers are received.

(b) The executive director is hereby delegated authority by the board to establish a sick leave pool program for employees of the department. The program must be consistent with the requirements of state law regarding state employee sick leave pools. The executive director is hereby appointed as the sick leave pool administrator. The executive director may designate another employee of the department to serve as the pool administrator under the supervision of the executive director. The pool administrator shall prescribe procedures relating to the operation of the sick leave pool program.

(c) In compliance with Chapter 2255, Texas Government Code, this subsection establishes the criteria, procedures and standards of conduct governing the relationship between the department and its officers and employees and private donors. This subsection authorizes the department to accept gifts and donations the department determines it is in the public interest to accept as a result of an emergency, including both natural and manmade disasters. The department is authorized to accept gifts and donations the department determines it is in the public interest to accept as a result of technology benefit including education, assessment or innovation.

(1) A private donor may make donations, including gifts, to the department to be spent or used for public purposes during times of emergency, including times of manmade and natural disasters or for any public purpose related to the duties of the department. Use by the department of the donation must be consistent with the mission and duties of the department. If the donor specifies the purpose for which the donation may be spent, the department must expend the donation only for that purpose.

(2) Monetary donations must be spent in accordance with the State Appropriations Act and shall be deposited in the state treasury unless statutorily exempted.

(3) The executive director is hereby delegated authority to coordinate all donations and may accept donations that do not exceed $250,000 in value on behalf of the department. Each donation accepted by the executive director must be acknowledged by the board at the board meeting following acceptance of the donation by the department. Donations that exceed $250,000 in value must be approved by the board prior to acceptance.

(4) Acceptance of the donation by either the board or the executive director of the department must be recorded in the board minutes, together with the name of the donor, description of the donation and a statement of the purpose of the donation.

(5) Donations may be accepted only if the executive director or board, as applicable, determines the donation will further the department's mission or duties, provide significant public benefit and not influence or reasonably appear to influence, the department in the performance of its duties.

(6) Execution of a donation agreement is required if the value of the donation exceeds $10,000 or if a written agreement is necessary, in the opinion of the department, to:

(A) indemnify the department as to ownership;

(B) prevent potential claims that could result from use of the donation, including access to confidential information;

(C) document donation terms or conditions;

(D) describe how the donation will further the department's mission or duties, provides a significant public benefit and is not made in an effort to influence action on the part of the department; or

(E) delete any information on a device donated to the department.

(7) Each donation agreement must include:

(A) a description of the donation, including a determination of its value;

(B) donor attestation of ownership rights in the donation;

(C) any restrictions or terms of use of the donation imposed by the donor;

(D) contact information for the donor;

(E) a statement that the department takes no position regarding and is not responsible for any tax-related representations by the donor and all value determinations are the responsibility of the donor and do not constitute affirmation of that value by the department[.]; and

(F) the signature of the executive director and the donor or an authorized representative of the donor if it is an entity rather than an individual.

(d) The board shall set a strategic direction for the department by:

(1) establishing a subcommittee for each major program area to monitor activities, major outsourced contracts, and new initiatives for and service offerings by the department;

(2) evaluating and approving new initiatives for, or categories of, services offered by the department under the department's various programs.

(e) The board shall regularly evaluate the extent to which the department fulfills the department's information resources technology mission by providing cost-effective services and meeting customer needs.

(f) The board shall regularly evaluate department operations, including an evaluation of analytical data and information regarding trends in department revenue and expenses, as well as performance information.

(g) The board shall maintain an audit subcommittee of the board. The subcommittee shall oversee the department's internal auditor and any other audit issues that the board considers appropriate. The subcommittee shall evaluate whether the internal auditor has sufficient resources to perform the auditor's duties and ensure that sufficient resources are available.

(h) A department employee may not:

(1) have an interest in, or in any manner be connected with, a contract or bid for a purchase of goods or services by the department; or

(2) in any manner, including by rebate or gift, directly or indirectly accept or receive from a person to whom a contract may be awarded anything of value or a promise, obligation, or contract for future reward or compensation.

(3) Each state agency employee or official who is involved in procurement or in contract management for a state agency shall disclose to the agency any potential conflict of interest specified by state law or agency policy that is known by the employee or official with respect to any contract with a private vendor or bid for the purchase of goods or services from a private vendor by the agency.

(4) [(3)] A department employee who violates paragraph (1), [or] (2), or (3) of this subsection is subject to disciplinary action, including dismissal.

(5) [(4)] The department shall train staff in the requirements of this subsection and Government Code, Chapter 572, and incorporate the requirements into the contract management guide and the department's internal policies, including employee manuals.

(i) The department will not enter into a contract for the purchase of goods or services with a private vendor with whom any of the following department employees or officials have a financial interest:

(1) a member of the board;

(2) the executive director, general counsel, chief procurement officer, or procurement director of the department; or

(3) a family member related to an employee or official described by paragraph (1) or (2) of this subsection within the second degree by affinity or consanguinity.

(j) A department employee or official has a financial interest in a person if the employee or official:

(1) owns or controls, directly or indirectly, an ownership interest of at least one percent in the person, including the right to share in profits, proceeds, or capital gains; or

(2) could reasonably foresee that a contract with the person could result in a financial benefit to the employee or official.

(k) A financial interest prohibited by this section does not include a retirement plan not under direct control of a department employee or official (e.g. mutual funds), a blind trust, insurance coverage, or an ownership interest of less than one percent in a corporation.

§201.9.Petition for the Adoption of a Rule.

(a) Purpose. This section provides procedures for any interested person (petitioner) to request the department to adopt a rule.

(b) Content of Petition.

(1) The petition must be in writing. No form is required but all information must be provided, or a reason why required information cannot be provided.

(2) The petition must contain the following:

(A) petitioner's name, address, organization or affiliation, if any, and the name of the person or entity on whose behalf the petition is filed, if different from the person submitting the petition;

(B) a plain and brief statement about why a rule or change in an existing rule is needed, required, or desirable, including the public good to be served and any effect on those who would be required to comply with the rule;

(C) an estimate of the fiscal impact on state and local government as a result of enforcing or administering the proposed rule, an estimate of the economic impact on persons required to comply with the proposed rule, whether there may be an effect on local employment, and the facts, assumptions and methodology used to prepare estimates and impacts required by this subparagraph;

(D) a statement on the department's authority to adopt the proposed rule;

(E) the proposed text of a new rule, or proposed changes to an existing rule; and

(F) a list of individuals, organizations or affiliations that may be interested or affected by the proposed rule, if known.

(c) Submission. A petition is submitted on the date it is received by the department. The petition must be mailed to the department, or hand delivered to the department in Austin, Texas.

(d) Review. The department will review the petition for compliance with the requirements of this section.

(e) Decision to Deny or Accept. The department will deny a petition for rulemaking, or accept, in whole or in part, a petition for rulemaking within 60 days from the date the petition is submitted.

(1) The department will notify the petitioner in writing if the petition is denied and state the reason or reasons for the denial.

(2) The department will refer an accepted petition to agency staff to initiate the rulemaking process under Chapter 2001, Subchapter B, of the Government Code. Agency staff may redraft the proposed text to conform to style, format and policy decisions of the agency.

(f) Repetitive petitions. The department may refuse to bring a petition for rulemaking to the board [commission ] if, within the preceding year, the board [commission ] has considered a previously submitted petition for the same rule.

(g) Board Petition Report. Prior the end of each fiscal year, the department will present to the board a report of all petitions received during the fiscal year. The report shall contain a summary of the petitions and the status or final determination of the petition review process.

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 February 27, 2017.

TRD-201700776

Martin Zelinsky

General Counsel

Department of Information Resources

Earliest possible date of adoption: April 16, 2017

For further information, please call: (512) 936-7577


PART 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION

CHAPTER 355. REIMBURSEMENT RATES

The Texas Health and Human Services Commission (HHSC) proposes amendments to §355.112, concerning Attendant Compensation Rate Enhancement, and §355.723, relating to Reimbursement Methodology for Home and Community-Based Services and Texas Home Living Programs.

Background and Justification

Methods of Communication between HHSC and Contracted Providers

Section 355.112 outlines procedures for the Attendant Compensation Rate Enhancement program. The Rate Enhancement program is an optional program that offers contracted providers the option to receive increased payments if they meet certain spending requirements. HHSC offers contracted providers the opportunity annually to enroll in the program. During the enrollment period, contracted providers who have never been participants in the enhancement program, or who are current or prior participants and have met the spending requirements outlined in §355.112(s), may request enrollment at any level ("open enrollment"). Contracted providers who are current or prior participants and did not meet the spending requirements are limited to a certain level of participation, due to a failure to meet the spending requirements. Currently, the rules defining the enrollment procedures require that HHSC notify contracted providers of the open enrollment period and their limitation level (if any) by letter via the United States Postal Service.

Contracted providers who are subject to an enrollment limitation may request a revision to their enrollment limitation. The request may result in a change to or elimination of the enrollment limitation. Currently, the rules require contracted providers to request a revision to their enrollment limitation by submitting a written request via hand delivery, the United States Postal Service, or special delivery mail.

HHSC notifies contracted providers who did not meet spending requirements of the amount that will be recouped. Currently, the rules state that HHSC Rate Analysis will notify contracted providers of the recoupment amount in writing. Beginning with the cost reports collected for the 2015 cost report period, HHSC Rate Analysis implemented a new data collection system, the State of Texas Automated Information Reporting System (STAIRS), which provides electronic notification of recoupments.

Contracted providers who are subject to recoupment due to a failure to meet spending requirements are allowed to request that HHSC recalculate the recoupment by combining the cost data on multiple reports. Currently, the rules require a provider to request a recalculation via hand delivery, the United States Postal Service, or special delivery mail.

The proposed amendments will allow HHSC to notify contracted providers of the open enrollment period, their enrollment limitations (if any), and recoupments due to failure to meet spending requirements (if any) electronically or by other appropriate means as determined by HHSC. The proposed amendments will also allow contracted providers to submit requests for revisions or recalculations electronically or by other appropriate means as determined by HHSC. This will allow for the use of a broad array of communication methods by HHSC staff for enrollment, limitation notifications, recoupment notifications, and provider requests for revisions and recalculations.

Aligning Certain Home and Community-Based Services (HCS) and Texas Home Living (TxHmL) Rates with Costs and Rates for Similar Services

TxHmL is projected to be carved-in to Medicaid managed care under STAR+PLUS effective September 1, 2018; and HCS is projected to be carved-in effective September 1, 2021. Currently, STAR+PLUS covers attendant and habilitation services for individuals with disabilities through STAR+PLUS Community First Choice (CFC), including services for individuals with intellectual and developmental disabilities (IDD). When TxHmL and HCS are carved-in to Medicaid managed care, attendant care and habilitation services will be provided through STAR+PLUS CFC. There will be no differential between individuals receiving additional waiver benefits and those receiving only CFC services with respect to those services.

Currently, payment rates for TxHmL Community Support Services (CSS) and HCS Supported Home Living (SHL) services are higher than the STAR+PLUS CFC rate and the costs of providing these services. In preparation for the managed care carve-ins of these services, HHSC is proposing amendments to rules governing their rate determination to more closely align them with the STAR+PLUS CFC rate.

As outlined in §355.112(l), the attendant compensation rate component for nonparticipating contracts is frozen at the rates in effect on August 31, 2010, for the HCS and TxHmL programs. Currently, §355.112(l) requires the attendant compensation rate component for nonparticipating contracts to remain constant over time, except in the case of increases mandated by the Texas Legislature or necessitated by an increase in the federal minimum wage. HHSC proposes amending this rule to indicate that the attendant compensation rate component for nonparticipating contracts for HCS SHL and TxHmL CSS is equal to $14.52 per hour, which is the level currently justified by HCS and TxHmL provider cost reports.

Section 355.723 establishes the rate methodology for all other HCS SHL and TxHmL CSS cost components. HHSC proposes amending this rule to align its rate methodology for these cost components with rate methodologies for similar services. Specifically, HHSC proposes tying the HCS SHL and TxHmL indirect cost component (also known as the administration and facility cost component) to the administrative and facility cost component of the Community Living Assistance and Support Services (CLASS) waiver program residential habilitation service, and deleting the other direct service staffing cost component. The CLASS residential habilitation service has similar requirements for these cost areas and was incorporated in the calculation of the STAR+PLUS CFC proxy rate as described in §355.9090, relating to Reimbursement Methodology for Community First Choice. Specifically, §355.9090(b)(1) states that the STAR+PLUS CFC rate will be equal to a weighted average of rates established for CLASS habilitation services and proxy rates for attendant services under the Community Based Alternatives waiver prior to its termination.

Rate Methodology for HCS High Medical Needs Services and Correction to Rate Methodology for HCS Nursing Services

As indicated above, §355.723 establishes the reimbursement methodology for the HCS and TxHmL waiver programs. Additional proposed amendments to this rule include: (1) adding the new HCS High Medical Needs Support, High Medical Needs Registered Nurse (RN), and High Medical Needs Licensed Vocational Nurse (LVN) services to the list of non-variable rates; (2) adding the rate methodology for the new HCS High Medical Needs Support Services; and (3) correcting an error in the projected weighted units calculation for Nursing Services.

High Medical Needs Support, High Medical Needs RN, and High Medical Needs LVN are being added as new services to the HCS program. These services will provide additional support for eligible persons who have medical needs that exceed the service specification for existing HCS services and need additional support in order to remain in a community setting.

The indirect cost component per unit of service for each HCS service is determined by calculating the projected weighted units of service for each service type, and then using the projected weighted units to allocate administration and operation costs to the specific service type. These weights are codified in the reimbursement methodology; however, the weighting factor for Nursing Services is incorrect in the rule and does not match the weighting factor used in the calculation of the rates. The proposed rule amendment corrects this error.

Other Changes

The proposed amendments to §355.112 also correct punctuation and outdated rule references. References to Title 40 of the Texas Administrative Code (TAC) §49.15 (relating to Contract Assignment) are replaced with 40 TAC §49.210 (relating to Contractor Change of Legal Entity).

SECTION-BY-SECTION SUMMARY

The proposed amendment to §355.112(e) adds language to indicate that HHSC will notify contracted providers of the open enrollment period by electronic mail (e-mail) to an authorized representative per the signature authority designation form applicable to the provider's contract or ownership type.

The proposed amendment to §355.112(g) removes language that refers to "mailing" of a notification.

The proposed amendment to §355.112(j) corrects punctuation.

The proposed amendment to §355.112(l)(2) adds subparagraph (D), which indicates that the attendant compensation rate component for nonparticipating contracts for HCS SHL and TxHmL CSS is equal to $14.52 per hour.

The proposed amendment to §355.112(t) changes the name of the subsection to make it clear that it refers to notifications of recoupment and requests for recalculation. The proposed amendment divides the subsection into paragraphs (1) and (2), and further subdivides paragraph (2) into subparagraphs (A) and (B). Substantively, the proposed amendment provides that notices of recoupment, both initial and adjusted, will be made available through STAIRS, and providers will be notified by e-mail to the entity contact when such information is available. With regard to requests for recalculation, the proposed amendment adds e-mail as a method by which such requests can be submitted to HHSC Rate Analysis.

The proposed amendment to §355.112(u) adds a paragraph relating to notifications of enrollment limitations. Such notifications will be made available through STAIRS, and providers will be notified by e-mail to the entity contact when that limitation information is available for review. With regard to provider requests for revision of enrollment limitations, the proposed amendment removes the requirement that such requests be delivered to HHSC by hand, U.S. mail, or special delivery mail. As revised, such requests must be received by HHSC Rate Analysis no later than the deadline indicated in the notification of open enrollment specified in subsection (e).

The proposed amendment to §355.112(w)(1) updates references to 40 TAC §49.15 with 40 TAC §49.210 (relating to Contractor Change of Legal Entity).

The proposed amendment to §355.723(b)(2) adds High Medical Needs Support, High Medical Needs RN, and High Medical Needs LVN services to the list of non-variable rates. The proposed amendment also adds Registered Nurse and Licensed Vocational Nurse to the existing acronyms RN and LVN.

The proposed amendment to §355.723(c) creates three subsections, with existing language in new subsection (1), a new reimbursement methodology for HCS SHL and TxHmL CSS effective July 1, 2017, in new subsection (2), and a reimbursement methodology for the new High Medical Needs Support service in new subsection (3).

The proposed amendment to §355.723(d)(5) corrects punctuation.

The proposed amendment to §355.723(d)(5)(D) applies the methodology for determining projected weighted units of service for HCS SHL and TxHmL CSS to the new High Medical Needs Support service.

The proposed amendment to §355.723(d)(5)(J) corrects the weighting factor for Nursing Services to 0.25 and adds High Medical Needs Nursing.

The proposed amendment to §355.723(d)(10) adds HCS High Medical Needs Support and TxHmL CSS to the paragraph and sets the administration and operation cost component per unit of service equal to the administrative and facility cost component for Residential Habilitation Services under the CLASS Waiver Program effective July 1, 2017.

Fiscal Note

David Cook, HHSC Deputy Chief Financial Officer, has determined that, for each year of the first five-years the amended rules are in effect, there will be a cost savings to state government of $4,624,334 ($1,708,448 General Revenue (GR) and $2,915,886 Federal) for fiscal year (FY) 2017, $27,331,280 ($9,923,438 GR and $17,407,842 Federal) for FY 2018, $28,803,637 ($10,321,235 GR and $18,482,402 Federal) for FY 2019, $28,804,071 ($10,309,937 GR and $18,494,134 Federal) for FY 2020, and $28,804,515 ($10,310,159 GR and $18,494,356 Federal) for SFY 2021. There are no fiscal implications for local governments as a result of enforcing or administering the rules.

Public Benefit AND COST

Pam McDonald, Director of Rate Analysis, has determined that, for each year of the first five years the rules are in effect, the public benefits expected as a result of adopting the rules will be: that costs and staff time will be reduced as a result of no longer sending enrollment and limitation notifications by certified mail, and that contracted providers will have more options to request a revision to an enrollment limitation; that HHSC can calculate and adopt rates for the new HCS services High Medical Needs Support, High Medical Needs RN, and High Medical Needs LVN; and that the HCS SHL and TxHmL CSS rates more closely align with costs and rates for similar services in preparation for the carve-in of these services to STAR+PLUS managed care.

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

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

Small Business and Micro-Business Impact Analysis

HHSC has determined that the proposed amendments to the rate methodologies for HCS SHL and TxHmL CSS will have an adverse economic effect on small businesses and micro-businesses.

Under §2006.002 of the Government Code, a state agency proposing an administrative rule that may have an adverse economic effect on small businesses must prepare an economic impact statement and a regulatory flexibility analysis. The economic impact statement estimates the number of small businesses subject to the rule and projects the economic impact of the rule on small businesses. The regulatory flexibility analysis describes the alternative methods the agency considered to achieve the purpose of the proposed rule while minimizing adverse effects on small businesses. The purpose of the amended rules is to more closely align the rates for HCS SHL and TxHmL CSS with costs and rates for similar services in preparation for the carve-in of these services to STAR+PLUS managed care.

In 2015, approximately 630 entities provided HCS services to Department of Aging and Disability Services consumers. Based on 2014 Texas Medicaid cost reports for the HCS and TxHmL programs (the most recent, audited data available), of these entities, approximately 482 were small businesses, of which approximately 353 were micro-businesses.

HHSC considered four alternatives to more closely align the rates for HCS SHL and TxHmL CSS with costs and rates for similar services in preparation for the carve-in of these services to STAR+PLUS managed care.

Alternative 1: Alternative 1 aligns the HCS SHL and TxHmL CSS attendant compensation rate component with HCS and TxHmL providers' actual attendant compensation costs as captured by provider cost reports and aligns the non-attendant compensation part of the rate with the non-attendant part of the CLASS rate, the higher of the two rates used in determining the STAR+PLUS CFC rate. The resulting rate of $17.73 is lower than the current HCS SHL and TxHmL CSS base rate of $22.41 but higher than the current STAR+PLUS CFC base rate of $12.69 and the current CLASS residential habilitation base rate of $13.85.

Alternative 2: Under Alternative 2, HHSC would reduce the HCS SHL and TxHmL CSS base rate of $22.41 to be equal to the CLASS residential habilitation base rate of $13.85.

Alternative 3: Under Alternative 3, HHSC would reduce the HCS SHL and TxHmL CSS base rate of $22.41 to be equal to the STAR+PLUS CFC rate of $12.69.

Alternative 4: Under Alternative 4, HHSC would increase the STAR+PLUS CFC rate of $12.69 to be equal to the current HCS SHL and TxHmL CSS base rate of $22.41.

HHSC selected the methodology in Alternative 1. Alternative 1 begins the necessary process of more closely aligning the HCS SHL and TxHmL CSS rates with costs and the STAR+PLUS CFC rates, while avoiding the more significant rate reductions laid out under Alternatives 2 and 3. Alternative 4 was not selected because it would result in inefficient rates by: 1) maintaining existing HCS SHL and TxHmL CSS rates that exceed reported provider costs of providing these services; and 2) increasing base rates for STAR+PLUS CFC above the levels currently required to meet STAR+PLUS network adequacy requirements.

Regulatory Analysis

HHSC has determined that this proposal is not a "major environmental rule" as defined by §2001.0225 of the Texas Government Code. A "major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure.

Takings Impact Assessment

HHSC has determined that this 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 this proposal may also be submitted to Sarah Hambrick, Senior Rate Analyst, by mail to the HHSC 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 after publication of this proposal in the Texas Register.

PUBLIC HEARING

HHSC will conduct a public hearing on April 6, 2017, at 9:00 a.m. to receive comments on the proposal. The public hearing will be held in the Public Hearing Room of the John H. Winters Building at 701 West 51st Street, Austin, Texas. Entry is through security at the main entrance of the building facing West 51st Street. Persons requiring Americans with Disability Act (ADA) accommodation or auxiliary aids or services should contact Rate Analysis by calling (512) 730-7401 at least 72 hours prior to the hearing so appropriate arrangements can be made.

SUBCHAPTER A. COST DETERMINATION PROCESS

1 TAC §355.112

Statutory Authority

These amendments are 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 §531.021(b), which establishes HHSC as the agency responsible for adopting reasonable rules governing the determination of fees, charges, and rates for medical assistance (Medicaid) payments under Texas Human Resources Code Chapter 32.

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

§355.112.Attendant Compensation Rate Enhancement.

(a) - (d) (No change.)

(e) Open enrollment. Open enrollment begins on the first day of July and ends on the last day of that same July preceding the rate year for which payments are being determined. HHSC notifies providers of open enrollment by electronic mail (e-mail) to an authorized representative per the signature authority designation form applicable to the provider's contract or ownership type. If open enrollment has been postponed or cancelled, [unless] the Texas Health and Human Services Commission (HHSC) will notify [notified ] providers by e-mail before the first day of July [that open enrollment has been postponed or cancelled]. Should conditions warrant, HHSC may conduct additional enrollment periods during a rate year.

(f) (No change.)

(g) New contracts. For the purposes of this section, for each rate year a new contract is defined as a contract or component code whose effective date is on or after the first day of the open enrollment period, as defined in subsection (e) of this section, for that rate year. Contracts that underwent a contract assignment or change of ownership and new contracts that are part of an existing component code are not considered new contracts. For purposes of this subsection, an acceptable contract amendment is defined as a legible enrollment contract amendment that has been completed according to instructions, signed by an authorized representative as per the DADS' signature authority designation form applicable to the provider's contract or ownership type, and received by HHSC Rate Analysis within 30 days [of the mailing] of notification to the provider that such an enrollment contract amendment must be submitted. If the 30th day is on a weekend day, state holiday, or national holiday, the next business day will be considered the last day requests will be accepted. New contracts will receive the nonparticipant attendant compensation rate as specified in subsection (l) of this section with no enhancements. For new contracts specifying their desire to participate in the attendant compensation rate enhancement on an acceptable enrollment contract amendment, the attendant compensation rate is adjusted as specified in subsection (r) of this section, effective on the first day of the month following receipt by HHSC of an acceptable enrollment contract amendment. If the granting of newly requested enhancements was limited by subsection (p)(2)(B) of this section during the most recent enrollment, enrollment for new contracts will be subject to that same limitation. If the most recent enrollment was cancelled by subsection (e) of this section, new contracts will not be permitted to be enrolled.

(h) - (i) (No change.)

(j) Completion of compensation reports. All Attendant Compensation Reports and cost reports functioning as Attendant Compensation Reports must be completed in accordance with the provisions of §§355.102 - 355.105 of this title (relating to General Principles of Allowable and Unallowable Costs;[,] Specifications for Allowable and Unallowable Costs;[,] Revenues;[,] and General Reporting and Documentation Requirements, Methods, and Procedures) and may be reviewed or audited in accordance with §355.106 of this title (relating to Basic Objectives and Criteria for Audit and Desk Review of Cost Reports). Beginning with the rate year that starts September 1, 2002, all Attendant Compensation Reports and cost reports functioning as Attendant Compensation Reports must be completed by preparers who have attended the required cost report training for the applicable program under §355.102(d) of this title. For the ICF/IID program, cost reports functioning as Attendant Compensation Reports must also be completed in accordance with the provisions of §355.457 of this title. For the HCS and TxHmL programs, cost reports functioning as Attendant Compensation Reports must also be completed in accordance with the provisions of §355.722 of this title.

(k) (No change.)

(l) Determination of attendant compensation rate component for nonparticipating contracts.

(1) (No change.)

(2) For ICF/IID DH, ICF/IID residential services, HCS SL/RSS, HCS DH, HCS supported home living, HCS respite, HCS supported employment, HCS employment assistance, TxHmL DH, TxHmL community supports, TxHmL respite, TxHmL supported employment, and TxHmL employment assistance, for each level of need, HHSC will calculate an attendant compensation rate component for nonparticipating contracts for each service as follows:

(A) For each service, for each level of need, determine the percent of the fully-funded model rate in effect on August 31, 2010 for that service accruing from attendants. For ICF/IID, the fully-funded model is the model as calculated under §355.456(d) of this title (relating to Reimbursement Methodology) prior to any adjustments made in accordance with §355.101 of this title (relating to Introduction) and §355.109 of this title (relating to Adjusting Reimbursement When New Legislation, Regulations, or Economic Factors Affect Costs). For HCS and TxHmL, the fully-funded model is the model as calculated under §355.723(d) of this title (relating to Reimbursement Methodology for Home and Community-based Services and Texas Home Living Programs) prior to any adjustments made in accordance with §355.101 of this title and §355.109 of this title for the rate period.

(B) For each service, for each level of need, multiply the percent of the fully-funded model rate in effect on August 31, 2010 for that service accruing from attendants from subparagraph (A) of this paragraph by the total adopted reimbursement rate for that service in effect on August 31, 2010. The result is the attendant compensation rate component for that service for nonparticipating contracts.

(C) The attendant compensation rate component for nonparticipating contracts will remain constant over time, except in the case of increases to the attendant compensation rate component for nonparticipating contracts explicitly mandated by the Texas legislature; and for adjustments necessitated by increases in the minimum wage. Adjustments necessitated by increases in the minimum wage are limited to ensuring that these rates are adequate to cover mandated minimum wage levels.

(D) The attendant compensation rate component for nonparticipating contracts for HCS supported home living and TxHmL community supports is equal to $14.52 per hour.

(m) - (s) (No change.)

(t) Notification of recoupment and request for recalculation.

(1) Notification of recoupment. The estimated amount to be recouped is indicated in the State of Texas Automated Information Reporting System (STAIRS), the online application for submitting cost reports and accountability reports. STAIRS will generate an e-mail to the entity contact, indicating that the provider's estimated recoupment is available for review. The entity contact is the provider's authorized representative per the signature authority designation form applicable to the provider's contract or ownership type. [Providers will be notified in a manner specified by HHSC of the amount to be repaid to HHSC, or its designee.] If a subsequent review by HHSC or audit results in adjustments to the annual Attendant Compensation Report or cost reporting, as described in subsection (h) of this section, that change the amount to be repaid, the provider will be notified by e-mail to the entity contact that [in writing of] the adjustments and the adjusted amount to be repaid are available in STAIRS for review. HHSC, or its designee, will recoup any amount owed from a provider's vendor payment(s) following the date of the initial or subsequent notification [letter]. For the HCS and TxHmL programs, if HHSC, or its designee, is unable to recoup owed funds in an automated fashion, the requirements detailed under subsection (dd) of this section apply.

(2) Request for recalculation. Providers notified of a recoupment based on an Attendant Compensation Report described in subsection (h)(2)(A) or (h)(2)(F) of this section may request that HHSC recalculate their recoupment after combining the Attendant Compensation Report with the provider's next full-year cost report. The request [must be in writing and] must be received by HHSC Rate Analysis [by hand delivery, United State (U.S.) mail, or special mail delivery] no later than 30 days after the date on the e-mail [written] notification of recoupment. If the 30th calendar day is a weekend day, national holiday, or state holiday, then the first business day following the 30th calendar day is the final day the receipt of the [written] request will be accepted.

(A) The request must be made by e-mail to the e-mail address specified in STAIRS, hand delivery, United States (U.S.) mail, or special mail delivery. An e-mail request must be typed on the provider's letterhead, signed by a person indicated in subparagraph (B) of this paragraph, then scanned and sent by e-mail to HHSC.

(B) The [written] request must be signed by an individual legally responsible for the conduct of the provider, such as the sole proprietor, a partner, a corporate officer, an association officer, a governmental official, a limited liability company member, a person authorized by the applicable signature authority designation form for the provider at the time of the request, or a legal representative for the provider. The administrator or director of a facility or program is not authorized to sign the request unless the administrator or director holds one of these positions. HHSC will not accept a request that is not signed by an individual responsible for the conduct of the provider.

(u) Enrollment limitations. A provider will not be enrolled in the attendant compensation rate enhancement at a level higher than the level it achieved on its most recently available, audited Attendant Compensation Report or cost report functioning as an Attendant Compensation Report. HHSC will notify [issue a notification letter that informs] a provider [in writing] of its enrollment limitations (if any) prior to the first day of the open enrollment period.

(1) Notification of enrollment limitations. The enrollment limitation level is indicated in STAIRS. STAIRS will generate an e-mail to the entity contact, indicating that the provider's enrollment limitation level is available for review.

(2) Requests for revision. A provider may request a revision of its enrollment limitation if the provider's most recently available audited Attendant Compensation Report or cost report functioning as an Attendant Compensation Report does not represent its current attendant compensation levels.

(A) A request for revision of enrollment limitation must include the documentation specified in subparagraph (B) of this paragraph and must be received by HHSC Rate Analysis [by hand delivery, United States mail, or special delivery mail] no later than the deadline indicated in the notification of open enrollment specified in subsection (e) of this section [30 calendar days from the date on the notification letter. If the 30th calendar day is a weekend day, national holiday, or state holiday, the first business day following the 30th calendar day is the final day the receipt of the written request will be accepted]. A request for revision that is not received by the stated deadline and that is not submitted as [on the form] specified by HHSC will not be accepted, and the enrollment limitation specified in the notification [letter] will apply.

(B) A provider that requests a revision of its enrollment limitation must submit documentation, in the form specified by HHSC in the notification of open enrollment [letter], which shows that, for the period beginning September 1 of the current rate year and ending April 30 of the current rate year, the provider met a higher attendant compensation level than the notification [letter ] indicates. In such cases, the provider's enrollment limitation will be established at the level supported by its request for revision documentation. It is the responsibility of the provider to render all required documentation at the time of its request for revision. Requests not in the form specified by HHSC [in the notification letter] and requests that fail to support an attendant compensation level different from what is indicated in the notification [letter] will result in a rejection of the request, and the enrollment limitation specified in the notification [letter] will apply.

(C) A request for revision must be signed by an individual legally responsible for the conduct of the provider or legally authorized to bind the provider, such as the sole proprietor, a partner, a corporate officer, an association officer, a governmental official, a limited liability company member, a person authorized by the applicable DADS signature authority designation form for the interested party on file at the time of the request, or a legal representative for the interested party. A request for revision that is not signed by an individual legally responsible for the conduct of the interested party will not be accepted, and the enrollment limitation specified in the notification [letter] will apply.

(D) If the provider's Attendant Compensation Report or cost report functioning as an Attendant Compensation Report for the rate year that included the open enrollment period described in subsection (e) of this section shows the provider compensated attendants below the level it presented in its request for revision, HHSC will immediately recoup all enhancement payments associated with the request for revision documents, and the provider will be limited to the level supported by the report for the remainder of the rate year.

(3) [(2)] Informal reviews and formal appeals. The filing of a request for an informal review or formal appeal relating to a provider's most recently available, audited Attendant Compensation Report or cost report functioning as an Attendant Compensation Report under §355.110 of this title (relating to Informal Reviews and Formal Appeals) does not stay or delay implementation of an enrollment limitation applied in accordance with the requirements of this subsection. If an informal review or formal appeal relating to a provider's most recently available, audited Attendant Compensation Report or cost report functioning as an Attendant Compensation Report is pending at the time the enrollment limitation is applied, the result of the informal review or formal appeal shall be applied to the provider's enrollment retroactively to the beginning of the rate year to which the enrollment limitation was originally applied.

(4) [(3)] New owners after a contract assignment or change of ownership that is an ownership change from one legal entity to a different legal entity. Enhancement levels for a new owner after a contract assignment or change of ownership that is an ownership change from one legal entity to a different legal entity will be determined in accordance with subsection (w) of this section. A new owner after a contract assignment or change of ownership that is an ownership-change from one legal entity to a different legal entity will not be subject to enrollment limitations based upon the prior owner's performance.

(5) [(4)] New providers. A new provider's enrollment will be determined in accordance with subsection (g) of this section.

(v) (No change.)

(w) Contract assignments. The following applies to contract assignments.

(1) Definitions. The following words and terms have the following meanings when used in this subsection.

(A) Assignee--A legal entity that assumes a Community Care contract through a legal assignment of the contract from the contracting entity as provided in 40 TAC §49.210 (relating to Contractor Change of Legal Entity) [§49.15 (relating to Contract Assignment)].

(B) Assignor--A legal entity that assigns its Community Care contract to another legal entity as provided in 40 TAC §49.210 [§49.15].

(C) Contract assignment--The transfer of a contract by one legal entity to another legal entity as provided in 40 TAC §49.210 [§49.15].

(i) Type One Contract Assignment--A contract assignment by which the assignee is an existing Community Care contract.

(ii) Type Two Contract Assignment--A contract assignment by which the assignee is a new Community Care contract.

(2) - (4) (No change.)

(x) - (hh) (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 March 3, 2017.

TRD-201700836

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: April 16, 2017

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


SUBCHAPTER F. REIMBURSEMENT METHODOLOGY FOR PROGRAMS SERVING PERSONS WITH MENTAL ILLNESS OR INTELLECTUAL OR DEVELOPMENTAL DISABILITY

1 TAC §355.723

Statutory Authority

These amendments are 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 §531.021(b), which establishes HHSC as the agency responsible for adopting reasonable rules governing the determination of fees, charges, and rates for medical assistance (Medicaid) payments under Texas Human Resources Code Chapter 32.

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

§355.723.Reimbursement Methodology for Home and Community-Based Services and Texas Home Living Programs.

(a) Prospective payment rates. The Texas Health and Human Services Commission (HHSC) sets payment rates to be paid prospectively to Home and Community-based Services (HCS) and Texas Home Living (TxHmL) providers.

(b) Levels of need.

(1) Variable rates. Rates vary by level of need for the following services: Residential Support Services, Supervised Living, Foster/Companion Care, and HCS Day Habilitation.

(2) Non-variable rates. Rates do not vary by level of need for the following services: Supported Home Living, High Medical Needs Support, Community Support Services, Supported Employment, Employment Assistance, Respite, Registered Nurse (RN) [RN], Licensed Vocational Nurse (LVN) [LVN], High Medical Needs RN, High Medical Needs LVN, Dietary, Behavioral Support, Physical Therapy, Occupational Therapy, Speech Therapy, Audiology, Cognitive Rehabilitative Therapy, and Social Work. Rates for TxHmL Day Habilitation will be equal to HCS level of need five Day Habilitation rates.

(c) Recommended rates.

(1) Rate Models. The recommended modeled rates are determined for each HCS and TxHmL service listed in subsection (b)(1) - (2) of this section by type and, for services listed in subsection (b)(1) of this section, by level of need to include the following cost components: direct care worker staffing costs (wages, benefits, modeled staffing ratios for direct care workers, direct care trainers and job coaches), other direct service staffing costs (wages for direct care supervisors, benefits, modeled staffing ratios); facility costs (for respite care only); room and board costs for overnight, out-of-home respite care; administration and operation costs; and professional consultation and program support costs. The determination of all components except for the direct care worker staffing costs component is based on cost reports submitted by HCS and TxHmL providers in accordance with §355.722 of this subchapter (relating to Reporting Costs by Home and Community-based Services (HCS) and Texas Home Living (TxHmL) Providers). The determination of the direct care worker staffing costs component is calculated as specified in §355.112 of this chapter [title] (relating to Attendant Compensation Rate Enhancement).

(2) Supported Home Living and Community Support Services. Effective July 1, 2017, the recommended modeled rates for HCS Supported Home Living and TxHmL Community Support Services include the following cost components: direct care worker staffing costs, and administration and operation costs. The modeled rates for these two services do not include a cost component for other direct service staffing costs. The determination of the administration and operation cost component is calculated as specified in subsection (d)(10) of this section. The determination of the direct care worker staffing costs component is calculated as specified in §355.112 of this chapter.

(3) High Medical Needs Support. Payment rates for High Medical Needs Support are developed based on payment 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 analysis in accordance with §355.105(h) of this chapter (relating to General Reporting and Documentation Requirements, Methods, and Procedures).

(d) Administration and operation cost component. The administration and operation cost component included in the recommended rates described in subsection (c) of this section for each HCS and TxHmL service type is determined as follows.

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

(5) Step 5. Determine projected weighted units of service for each HCS and TxHmL service type as follows:

(A) Supervised Living and Residential Support Services in HCS. Projected weighted units of service for Supervised Living and Residential Support Services equal projected Supervised Living and Residential Support units of service times a weight of 1.00. [;]

(B) Day Habilitation in HCS and TxHmL. Projected weighted units of service for Day Habilitation equal projected Day Habilitation units of service times a weight of 0.25. [;]

(C) Foster/Companion Care in HCS. Projected weighted units of service for Foster/Companion Care equal projected Foster/Companion Care units of service times a weight of 0.50. [;]

(D) Supported Home Living in HCS, High Medical Needs Support in HCS, and Community Support Services in TxHmL. For each service, projected [Projected] weighted units of service [for Supported Home Living] equal projected [Supported Home Living] units of service times a weight of 0.30. [;]

(E) Respite in HCS and TxHmL. Projected weighted units of service for Respite equal projected Respite units of service times a weight of 0.20. [;]

(F) Supported Employment in HCS and TxHmL. Projected weighted units of service for Supported Employment equal projected Supported Employment units of service times a weight of 0.25. [;]

(G) Behavioral Support in HCS and TxHmL. Projected weighted units of service for Behavioral Support equal projected Behavioral Support units of service times a weight of 0.18. [;]

(H) Physical Therapy, Occupational Therapy, Speech Therapy, Audiology, and Cognitive Rehabilitative Therapy in HCS and TxHmL. Projected weighted units of service for Physical Therapy, Occupational Therapy, Speech Therapy, Audiology, and Cognitive Rehabilitative Therapy equal projected Physical Therapy, Occupational Therapy, Speech Therapy, Audiology, and Cognitive Rehabilitative Therapy units of service times a weight of 0.18. [;]

(I) Social Work in HCS. Projected weighted units of service for Social Work equal projected Social Work units of service times a weight of 0.18. [;]

(J) Nursing in HCS and TxHmL and High Medical Needs Nursing in HCS. Projected weighted units of service for Nursing and High Medical Needs Nursing equal projected Nursing and High Medical Needs Nursing units of service times a weight of 0.25. [0.18;]

(K) Employment Assistance in HCS and TxHmL. Projected weighted units of service for Employment Assistance equal projected Employment Assistance units of service times a weight of 0.25. [; and]

(L) Dietary in HCS and TxHmL. Projected weighted units of service for Dietary equal projected Dietary units of service times a weight of 0.18.

(6) - (9) (No change.)

(10) Step 10. Effective July 1, 2017 [September 1, 2011], the administration and operation cost component per unit of service for Supported Home Living in HCS, Community Support Services in TxHmL, and High Medical Needs Support in HCS is equal to the administrative and facility cost component of Habilitation Services in the Community Living Assistance and Support Services (CLASS) program as specified in §355.505 of this title (relating to Reimbursement Methodology for the Community Living and Support Services Waiver Program) [five dollars].

(11) Step 11. For fiscal years 2012 and 2013, the foster/companion care coordinator component of the foster/companion care rate will be remodeled using a consumer to foster/companion care coordinator ratio of 1:20. This remodeling will be performed after the administration and operation cost component per unit of service for each HCS and TxHmL service type is calculated as described in paragraph (9) of this subsection.

(e) - (f) (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 March 3, 2017.

TRD-201700837

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: April 16, 2017

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


SUBCHAPTER C. REIMBURSEMENT METHODOLOGY FOR NURSING FACILITIES

1 TAC §355.308

The Texas Health and Human Services Commission (HHSC) proposes an amendment to §355.308, concerning Direct Care Staff Rate Component.

Background and Justification

Section 355.308 outlines procedures for the Nursing Facility Direct Care Staff Enhancement program. The Direct Care Staff Enhancement program is an optional program that offers contracted nursing facility providers the option to receive increased payments if they meet certain staffing and spending requirements. HHSC offers contracted providers the opportunity annually to enroll in the program. During the enrollment period, contracted providers who have never been participants in the enhancement program, or who are current or prior participants and have met the spending requirements outlined in §355.308(o), may request enrollment at any level ("open enrollment"). Contracted providers who are current or prior participants and did not meet the spending requirements are limited to a certain level of participation, due to a failure to meet the spending and staffing requirements. Currently, the rules defining the enrollment procedures require that HHSC notify contracted providers of the open enrollment period and their limitation level (if any) by letter via the United States Postal Service (USPS).

Contracted providers who are subject to an enrollment limitation may request a revision to their enrollment limitation. The request may result in a change to or elimination of the enrollment limitation. Currently, the rules require contracted providers to request a revision to their enrollment limitation by submitting a written request via hand delivery, USPS, or special delivery mail.

HHSC notifies contracted providers who did not meet the spending and staffing requirements of the amount that will be recouped. Currently, the rules state that HHSC Rate Analysis will notify contracted providers of the recoupment amount in writing. Beginning with the cost reports collected for the 2015 cost report period, HHSC Rate Analysis began using a new data collection system, the State of Texas Automated Information Reporting System (STAIRS), which provides electronic notification of recoupments.

Contracted providers who are subject to recoupment due to a failure to meet the spending and staffing requirements are allowed to request that HHSC recalculate the recoupment by combining the cost data on multiple reports. Currently, the rules require a provider to request a recalculation via hand delivery, USPS, or special delivery mail.

The proposed amendment will allow HHSC to notify contracted providers of the open enrollment period, their enrollment limitations (if any), and recoupments due to failure to meet the spending and staffing requirements (if any) electronically or by other appropriate means as determined by HHSC. This proposed amendment also allows contracted providers to submit requests for revisions or recalculations electronically or by other appropriate means as determined by HHSC. This will allow for the use of a broad array of communication methods by HHSC staff for enrollment, limitation notifications, recoupment notifications, and provider requests for revisions and recalculations.

Section-by-Section Summary

The proposed amendment to §355.308(a) deletes unnecessary language.

The proposed amendment to §355.308(c) adds language to indicate that HHSC will notify contracted providers of the open enrollment period by electronic mail (e-mail) to an authorized representative per the signature authority designation form applicable to the provider's contract or ownership type.

The proposed amendment to §355.308(e) removes language that refers to "mailing" of a notification.

The proposed amendment to §355.308(f) deletes unnecessary language.

The proposed amendment to §355.308(h) corrects punctuation and deletes unnecessary language.

The proposed amendment to §355.308(i) adds a paragraph relating to notifications of enrollment limitations. Such notifications will be made available through STAIRS and nursing facilities will be notified by e-mail to the Entity Contact when that limitation information is available for review. With regard to facility requests for revision of enrollment limitations, the proposed amendment removes the requirement that such requests be delivered to HHSC by hand, U.S. mail, or special delivery mail. As revised, such requests must be received by HHSC Rate Analysis no later than the deadline indicated in the notification of open enrollment specified in subsection (c).

The proposed amendment to §355.308(k)(4) corrects a cross reference to another rule.

The proposed amendment to §355.308(p)(4) deletes unnecessary language.

The proposed amendment to §355.308(s) changes the name of the subsection to make it clear that it refers to notifications of recoupment and requests for recalculation. The proposed amendment divides the subsection into paragraphs (1) and (2), and further subdivides paragraph (2) into subparagraphs (A) and (B). Substantively, the proposed amendment provides that notices of recoupment, both initial and adjusted, will be made available through STAIRS, and nursing facilities will be notified by e-mail to the entity contact when such information is available. With regard to requests for recalculation, the proposed amendment adds e-mail as a method by which such requests can be submitted to HHSC Rate analysis.

Fiscal Note

David Cook, HHSC Deputy Chief Financial Officer, has determined that, for each year of the first five-years the amended rule is in effect, there will be a cost savings to state government of $6,792 ($3,396 General Revenue (GR) and $3,396 Federal Funds) for state fiscal year (SFY) 2017, $6,946 ($3,473 GR and $3,473 Federal) for SFY 2018, $7,104 ($3,552 GR and $3,552 Federal) for SFY 2019, $7,266 ($3,633 GR and $3,633 Federal) for SFY 2020, and $7,430 ($3,715 GR and $3,715 Federal) for SFY 2021. There are no fiscal implications for local governments as a result of enforcing or administering the rule.

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 benefits expected as a result of adopting the rule will be that costs and staff time will be reduced as a result of no longer sending enrollment and limitation notifications by certified mail, and that contracted providers will have more options to request a revision to an enrollment limitation.

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.

Small Business and Micro-Business Impact Analysis

HHSC has determined that there will be no adverse economic effect on small businesses or micro-businesses to comply with the amended rule, as it will not require any changes in practice or result in any additional cost to a contracted provider.

Regulatory Analysis

HHSC has determined that this proposal is not a "major environmental rule" as defined by §2001.0225 of the Texas Government Code. A "major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure.

Takings Impact Assessment

HHSC has determined that this 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

Questions about the content of this proposal may be directed to Sarah Hambrick in the HHSC Rate Analysis Department by telephone at (512) 730-7401. Written comments on this proposal may be submitted to Ms. Hambrick by mail to the HHSC 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 after publication of this proposal in the Texas Register.

Statutory Authority

This amendment 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 §531.021(b), which establishes HHSC as the agency responsible for adopting reasonable rules governing the determination of fees, charges, and rates for medical assistance (Medicaid) payments under Texas Human Resources Code Chapter 32.

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

§355.308.Direct Care Staff Rate Component.

(a) Direct care staff cost center. This cost center will include compensation for employee and contract labor Registered Nurses (RNs), including Directors of Nursing (DONs) and Assistant Directors of Nursing (ADONs); Licensed Vocational Nurses (LVNs), including DONs and ADONs; medication aides; and nurse aides performing nursing-related duties for Medicaid contracted beds.

(1) Compensation to be included for these employee staff types is the allowable compensation defined in §355.103(b)(1) of this title (relating to Specifications for Allowable and Unallowable Costs) that is reported as either salaries and/or wages (including payroll taxes and workers' compensation) or employee benefits. Benefits required by §355.103(b)(1)(A)(iii) of this title [(relating to Specifications for Allowable and Unallowable Costs)] to be reported as costs applicable to specific cost report line items are not to be included in this cost center.

(2) - (3) (No change.)

(4) Contract labor refers to personnel for whom the contracted provider is not responsible for the payment of payroll taxes (such as FICA, Medicare, and federal and state unemployment insurance) and who perform tasks routinely performed by employees. Allowable contract labor costs are defined in §355.103(b)(3) of this title [(relating to Specifications for Allowable and Unallowable Costs)].

(5) For facilities receiving supplemental reimbursement for children with tracheostomies requiring daily care as described in §355.307(b)(3)(F) of this title (relating to Reimbursement Setting Methodology), staff required by 40 TAC §19.901(14)(C)(iii) (relating to Quality of Care) performing nursing-related duties for Medicaid contracted beds are included in the direct care staff cost center.

(6) For facilities receiving supplemental reimbursement for qualifying ventilator-dependent residents as described in §355.307(b)(3)(E) of this title [(relating to Reimbursement Setting Methodology)], Registered Respiratory Therapists and Certified Respiratory Therapy Technicians are included in the direct care staff cost center.

(7) - (9) (No change.)

(b) Rate year. The standard rate year begins on the first day of September and ends on the last day of August of the following year.

(c) Open enrollment. Open enrollment for the enhanced direct care staff rates will begin on the first day of July and end on the last day of that same July preceding the rate year for which payments are being determined. HHSC notifies providers of open enrollment by electronic mail (e-mail) to an authorized representative per the signature authority designation form applicable to the provider's contract or ownership type. If open enrollment has been postponed or cancelled, [unless] the Texas Health and Human Services Commission (HHSC) will notify [notified] providers by e-mail prior to the first day of July [that open enrollment has been postponed or cancelled]. Should conditions warrant, HHSC may conduct additional enrollment periods during a rate year.

(d) (No change.)

(e) New facilities. For purposes of this section, for each rate year a new facility is defined as a facility delivering its first day of service to a Medicaid recipient after the first day of the open enrollment period, as defined in subsection (c) of this section, for that rate year. Facilities that underwent an ownership change are not considered new facilities. For purposes of this subsection, an acceptable enrollment contract amendment is defined as a legible enrollment contract amendment that has been completed according to instructions, signed by an authorized representative as per the DADS signature authority designation form applicable to the provider's contract or ownership type, and received by HHSC within 30 days of the [mailing of] notification to the facility by HHSC that such an enrollment contract amendment must be submitted. New facilities will receive the direct care staff base rate as determined in subsection (k) of this section with no enhancements. For new facilities specifying their desire to participate on an acceptable enrollment contract amendment, the direct care staff rate is adjusted as specified in subsection (l) of this section, effective on the first day of the month following receipt by HHSC of the acceptable enrollment contract amendment. If the granting of newly requested enhancements was limited as per subsection (j)(3) of this section during the most recent enrollment, enrollment for new facilities will be subject to that same limitation.

(f) Staffing and Compensation Report submittal requirements.

(1) Annual Staffing and Compensation Report. For services delivered on or before August 31, 2009, providers must file Staffing and Compensation Reports as follows. All participating facilities will provide HHSC, in a method specified by HHSC, an Annual Staffing and Compensation Report reflecting the activities of the facility while delivering contracted services from the first day of the rate year through the last day of the rate year. This report will be used as the basis for determining compliance with the staffing requirements and recoupment amounts as described in subsection (n) of this section, and as the basis for determining the spending requirements and recoupment amounts as described in subsection (o) of this section. Participating facilities failing to submit an acceptable Annual Staffing and Compensation Report within 60 days of the end of the rate year will be placed on vendor hold until such time as an acceptable report is received and processed by HHSC.

(A) - (C) (No change.)

(D) Participating facilities whose cost report year coincides with the state of Texas fiscal year as per §355.105(b)(5) of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures) are exempt from the requirement to submit a separate Annual Staffing and Compensation Report. For these facilities, their cost report will be considered their Annual Staffing and Compensation Report.

(2) For services delivered on September 1, 2009, and thereafter, cost reports as described in §355.105(b) of this title [(relating to General Reporting and Documentation Requirements, Methods and Procedures)] will replace the Staffing and Compensation Report with the following exceptions:

(A) - (G) (No change.)

(3) Other reports. HHSC may require other Staffing and Compensation Reports from all facilities as needed.

(4) Vendor hold. HHSC or its designee will place on hold the vendor payments for any participating facility that does not submit a timely report as described in paragraph (1) of this subsection, or for services delivered on or after September 1, 2009, a timely report as described in paragraph (2) of this subsection completed in accordance with all applicable rules and instructions. This vendor hold will remain in effect until HHSC receives an acceptable report.

(A) Participating facilities that do not submit an acceptable report completed in accordance with all applicable rules and instructions within 60 days of the due dates described in this subsection or, for cost reports, the due dates described in §355.105(b) of this title [(relating to General Reporting and Documentation Requirements, Methods and Procedures)], will become nonparticipants retroactive to the first day of the reporting period in question and will be subject to an immediate recoupment of funds related to participation paid to the facility for services provided during the reporting period in question. These facilities will remain nonparticipants and recouped funds will not be restored until they submit an acceptable report and repay to HHSC, or its designee, funds identified for recoupment from subsections (n) and/or (o) of this section. If an acceptable report is not received within 365 days of the due date, the recoupment will become permanent and, if all funds associated with participation during the reporting period in question have been recouped by HHSC or its designee, the vendor hold associated with the report will be released.

(B) Participating facilities with an ownership change or contract termination that do not submit an acceptable report completed in accordance with all applicable rules and instructions within 60 days of the change in ownership or contract termination will become nonparticipants retroactive to the first day of the reporting period in question and will be subject to an immediate recoupment of funds related to participation paid to the facility for services provided during the reporting period in question. These facilities will remain nonparticipants and recouped funds will not be restored until they submit an acceptable report and repay to HHSC or its designee funds identified for recoupment from subsections (n) and/or (o) of this section. If an acceptable report is not received within 365 days of the change of ownership or contract termination date, the recoupment will become permanent and if all funds associated with participation during the reporting period in question have been recouped by HHSC or its designee, the vendor hold associated with the report will be released.

(5) Provider-initiated amended accountability reports and cost reports functioning as Staffing and Compensation Reports. Reports must be received prior to the date the provider is notified of compliance with spending and/or staffing requirements for the report in question as per subsections (n) and/or (o) of this section.

(g) Report contents. Annual Staffing and Compensation Reports and cost reports functioning as Staffing and Compensation Reports will include any information required by HHSC to implement this enhanced direct care staff rate.

(h) Completion of Reports. All Staffing and Compensation Reports and cost reports functioning as Staffing and Compensation Reports must be completed in accordance with the provisions of §§355.102 - 355.105 of this title (relating to General Principles of Allowable and Unallowable Costs; [,] Specifications for Allowable and Unallowable Costs; [,] Revenues; [,] and General Reporting and Documentation Requirements, Methods, and Procedures) and may be reviewed or audited in accordance with §355.106 of this title (relating to Basic Objectives and Criteria for Audit and Desk Review of Cost Reports). Beginning with the state fiscal year 2002 report, all Staffing and Compensation Reports and cost reports functioning as Staffing and Compensation Reports must be completed by preparers who have attended the required nursing facility cost report training as per §355.102(d) of this title [(relating to General Principles of Allowable and Unallowable Costs)].

(i) Enrollment limitations. A facility will not be enrolled in the enhanced direct care staff rate at a level higher than the level it achieved on its most recently available, audited Staffing and Compensation Report or cost report functioning as its Staffing and Compensation Report. HHSC will notify [issue a notification letter that informs] a facility [in writing] of its enrollment limitations (if any) prior to the first day of the open enrollment period.

(1) Notification of enrollment limitations. The enrollment limitation level is indicated in the State of Texas Automated Information Reporting System (STAIRS), the online application for submitting cost reports and accountability reports. STAIRS will generate an e-mail to the entity contact, indicating that the facility's enrollment limitation level is available for review. The entity contact is the provider's authorized representative per the signature authority designation form applicable to the provider's contract or ownership type.

(2) [(1)] Requests for revision. A facility may request a revision of its enrollment limitation if the facility's most recently available, audited Staffing and Compensation Report or cost report functioning as its Staffing and Compensation Report does not represent its current staffing levels.

(A) A request for revision of enrollment limitation must include the documentation specified in subparagraph (B) of this paragraph and must be received by HHSC Rate Analysis [by hand delivery, United States mail, or special delivery mail] no later than the deadline indicated in the notification of open enrollment specified in subsection (c) [30 calendar days from the date on the notification letter. If the 30th calendar day is a weekend day, national holiday, or state holiday, then the first business day following the 30th calendar day is the final day the receipt of the written request will be accepted]. A request for revision that is not received by the stated deadline [and that is not submitted on the form specified by HHSC] will not be accepted and the enrollment limitation specified in STAIRS [the notification letter] will apply.

(B) A facility that requests a revision of its enrollment limitation must submit documentation that [, in the form specified by HHSC in the notification letter, which] shows that, for the period beginning September 1 of the current rate year and ending April 30 of the current rate year, the facility met a higher staffing level than STAIRS [the notification letter] indicates. In such cases, the facility's enrollment limitation will be established at the level supported by its request for revision documentation. It is the responsibility of the provider [facility] to render all required documentation at the time of its request for revision. Requests [not in the form specified by HHSC in the notification letter and requests] that fail to support a staffing level different than indicated in STAIRS [the notification letter] will result in a rejection of the request and the enrollment limitation specified in STAIRS [the notification letter] will apply.

(C) A request for revision must be signed by an individual legally responsible for the conduct of the provider [facility ] or legally authorized to bind the facility, such as the sole proprietor, a partner, a corporate officer, an association officer, a governmental official, a limited liability company member, a person authorized by the applicable DADS signature authority designation form for the interested party on file at the time of the request, or a legal representative for the interested party. A request for revision that is not signed by an individual legally responsible for the conduct of the interested party will not be accepted and the enrollment limitation specified in STAIRS [the notification letter] will apply.

(D) - (E) (No change.)

(3) [(2)] New owners after a change of ownership. Enhancement levels for a new owner after a change of ownership will be determined in accordance with subsection (y) of this section. A new owner will not be subject to enrollment limitations based upon the prior owner's performance. This exemption from enrollment limitations does not apply in cases where HHSC or its designee has approved a successor-liability-agreement that transfers responsibility from the former owner to the new owner.

(4) [(3)] New facilities. A new facility's enrollment will be determined in accordance with subsection (e) of this section.

(j) (No change.)

(k) Determination of direct care staff base rate.

(1) - (3) (No change.)

(4) For rates effective September 1, 2009 and thereafter, to calculate the direct care staff per diem base rate component for all facilities for each of the RUG-III case mix groups and for the default groups, divide each RUG-III index from §355.307(b)(3)(C) of this title (relating to Reimbursement Setting Methodology) by 0.9908, which is the weighted average Texas Index for Level of Effort (TILE) case mix index associated with the initial database, and then multiply each of the resulting quotients by the average direct care staff base rate component from paragraph (3) of this subsection.

(5) The direct care staff per diem base rates will remain constant except for adjustments for inflation from paragraph (2) of this subsection. HHSC may also recommend adjustments to the rates in accordance with §355.109 of this title (relating to Adjusting Reimbursement When New Legislation, Regulations, or Economic Factors Affect Costs).

(l) - (o) (No change.)

(p) Dietary and Fixed Capital Mitigation. Recoupment of funds described in subsection (o) of this section may be mitigated by high dietary and/or fixed capital expenses as follows.

(1) - (3) (No change.)

(4) Calculate fixed capital revenue surplus. At the end of the facility's rate year, accrued Medicaid fixed capital per diem revenues will be compared to accrued, allowable Medicaid fixed capital per diem costs as defined in §355.306(b)(2)(A) of this title [(relating to Cost Finding Methodology)]. If revenues are greater than costs, the fixed capital revenue per diem surplus will be equal to the difference between accrued Medicaid fixed capital per diem revenues and accrued, allowable Medicaid fixed capital per diem costs. If revenues are less than costs, the fixed capital revenue surplus will be equal to zero. For purposes of this paragraph, fixed capital per diem costs of facilities with occupancy rates below 85% are adjusted to the cost per diem the facility would have accrued had it maintained an 85% occupancy rate throughout the rate year.

(5) - (7) (No change.)

(q) - (r) (No change.)

(s) Notification of recoupment based on Annual Staffing and Compensation Report or cost report and request for recalculation.

(1) Notification of recoupment. The estimated amount to be recouped is indicated in STAIRS. STAIRS will generate an e-mail to the entity contact, indicating that the facility's estimated recoupment is available for review. [Facilities will be notified, in a manner specified by HHSC, within 90 days of the determination of their recoupment amount by HHSC of the amount to be repaid to HHSC or its designee.] If a subsequent review by HHSC or audit results in adjustments to the Annual Staffing and Compensation Report or cost report as described in subsection (f) of this section that changes the amount to be repaid to HHSC or its designee, the facility will be notified by e-mail to the entity contact that [in writing of] the adjustments and the adjusted amount to be repaid are available in STAIRS for review. HHSC or its designee will recoup any amount owed from a facility's vendor payment(s) following the date of the initial or subsequent notification [letter].

(2) Request for recalculation. Providers notified of a recoupment based on an Annual Staffing and Compensation Report described in subsection (f)(2)(A) or (f)(2)(F) of this section may request that HHSC recalculate their recoupment after combining the Annual Staffing and Compensation Report with the provider's next cost report or Staffing and Compensation Report, as appropriate. The request [must be in writing and] must be received by HHSC Rate Analysis [by hand delivery, United States mail, or special mail delivery] no later than 30 days after the date on the e-mail [written] notification of recoupment. If the 30th calendar day is a weekend day, national holiday, or state holiday, then the first business day following the 30th calendar day is the final day the receipt of the [written] request will be accepted.

(A) The request must be made by e-mail to the e-mail address specified in STAIRS, by hand delivery, United States (U.S.) mail, or special mail delivery. An e-mail request must be typed on the provider's letterhead, signed by a person indicated in subparagraph (B) of this paragraph, then scanned and sent by e-mail to HHSC.

(B) The [written] request must be signed by an individual legally responsible for the conduct of the provider, such as the sole proprietor, a partner, a corporate officer, an association officer, a governmental official, a limited liability company member, a person authorized by the applicable signature authority designation form for the provider at the time of the request, or a legal representative for the provider. The administrator or director of a facility or program is not authorized to sign the request unless the administrator or director holds one of these positions. HHSC will not accept a request that is not signed by an individual responsible for the conduct of the provider.

(t) - (ee) (No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

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 March 3, 2017.

TRD-201700838

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: April 16, 2017

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