TITLE 1. ADMINISTRATION

PART 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION

CHAPTER 354. MEDICAID HEALTH SERVICES

SUBCHAPTER D. TEXAS HEALTHCARE TRANSFORMATION AND QUALITY IMPROVEMENT PROGRAM

DIVISION 7. DSRIP PROGRAM DEMONSTRATION YEARS 7-8

1 TAC §§354.1691, 354.1693, 354.1695, 354.1697, 354.1699, 354.1701, 354.1703, 354.1705, 354.1707, 354.1709, 354.1711, 354.1713, 354.1715, 354.1717, 354.1719, 354.1721

The Texas Health and Human Services Commission (HHSC) adopts new Division 7, concerning DSRIP Program Demonstration Years 7-8, and within the new division: new §354.1691, concerning Definitions; new §354.1693, concerning Regional Healthcare Partnerships (RHPs); new §354.1695, concerning Participants; new §354.1697, concerning RHP Plan Update; new §354.1699, concerning RHP Plan Update Review; new §354.1701, concerning RHP Plan Update Modifications; new §354.1703, concerning Independent Assessor; new §354.1705, concerning Categories; new §354.1707, concerning Performer Valuations; new §354.1709, concerning Category A Requirements for Performers; new §354.1711, concerning Category B Requirements for Performers; new §354.1713, concerning Category C Requirements for Performers; new §354.1715, concerning Category D Requirements for Performers; new §354.1717, concerning Uncompensated Care (UC) Hospital Requirements; new §354.1719, concerning Disbursement of Funds; and new §354.1721, concerning Remaining Funds for Demonstration Years (DYs) 7-8.

These new rules are adopted without changes to the proposed text as published in the August 25, 2017, issue of the Texas Register (42 TexReg 4201), and therefore will not be republished.

Background and Justification

On December 12, 2011, the Centers for Medicare & Medicaid Services (CMS) approved Texas' request for a new Medicaid demonstration waiver entitled "Texas Healthcare Transformation and Quality Improvement Program" in accordance with §1115 of the Social Security Act. This waiver authorized the establishment of the Delivery System Reform Incentive Payment (DSRIP) program. The DSRIP program provides incentive payments to hospitals and certain other providers to support their efforts to enhance access to health care, the quality of care, and the health of patients and families served.

The initial waiver was approved through September 30, 2016, and an initial extension was granted through December 31, 2017. HHSC has requested an additional 21 months that would extend the waiver through September 30, 2019.

These adopted new rules mirror the proposed Program Funding and Mechanics (PFM) protocol submitted to CMS on May 17, 2017. If approved by CMS, the proposed PFM protocol will govern the requested additional 21 months (demonstration years 7-8) of the waiver. Before submitting the proposal to CMS, HHSC posted the draft PFM protocol, along with a survey to solicit stakeholder feedback, to the Transformation Waiver website. HHSC received more than 170 responses to the survey and made a number of revisions to the proposed PFM protocol based on these survey responses.

Following additional stakeholder feedback, HHSC further revised the proposed PFM protocol and submitted it to CMS on August 4, 2017. At that point, the proposed rules had already been processed for publication in the Texas Register. HHSC will amend these rules, if needed, to make them consistent with the PFM protocol once approved by CMS.

The adopted rules in new Division 7 describe the DSRIP policies for DY7-8. In DY7-8, DSRIP will evolve from project-level reporting to core activities supporting performer-level outcomes that measure continued transformation of the Texas healthcare system. DY7-8 will serve as an opportunity for performers to move further towards sustainability of their transformed systems, including development of Alternative Payment Models to continue services for Medicaid and low-income or uninsured (MLIU) individuals after the waiver ends.

COMMENTS

The 30-day comment period ended September 25, 2017. During this period, HHSC received comments regarding the proposed rules from 13 entities, including: Baptist Hospitals of Southeast Texas; Center for Public Policy Priorities (CPPP); Central Health, RHP 7 Anchor; Children's Hospital Association of Texas (CHAT); CHRISTUS Health; CHRISTUS Santa Rosa Health System; Harris Health System, RHP 3 Anchor; Hospitals of Providence; Hospital Corporation of Texas (HCA), Texas Division; Las Palmas del Sol; Memorial Hermann Health System; City of San Antonio Metropolitan Health District (SAMHD); and Yoakum Community Hospital. A summary of comments relating to the rules and HHSC's responses follow.

Comment: Regarding proposed §354.1691 (Definitions), one commenter recommended that the phrase "and DY6" be deleted from the definition of the term "RHP Plan Update" in paragraph (17) because the PFM protocol does not mention DY6 and the RHP plan.

Response: HHSC disagrees and declines to revise the rule in response to this comment, as the information included in the DSRIP DY6 Participation Templates is considered part of the RHP plan.

Comment: Regarding proposed §354.1691 (Definitions), one commenter argued that the second sentence of the definition of the term "system" in paragraph (20) is unnecessary.

Response: HHSC agrees with the commenter and will amend this rule after adoption to remove this sentence from the definition of "system."

Comment: Regarding proposed §354.1691 (Definitions), one commenter argued that it is unclear from the definition of the term "system" in paragraph (20) whether the performer's definition of its system is subject to HHSC approval or audit.

Response: HHSC disagrees and declines to revise the rule in response to this comment. A performer's definition of its system must be included in the RHP Plan Update submission for the performer's RHP, in accordance with §354.1697(b)(7)(A). Each RHP Plan Update submission is subject to HHSC review and approval, as per §354.1699. RHP Plan Updates are subject to audit and/or review by the independent assessor, HHSC, CMS, and any other federal entity, as per §354.1703.

Comment: Regarding proposed §354.1693 (Regional Healthcare Partnerships (RHPs)), one commenter recommended that performers be allowed to participate in the RHP Plan Update for more than one RHP.

Response: HHSC disagrees and declines to revise the rule in response to this comment. Performers were given the option to select a home region and were allowed to remain in separate regions if they were able to clearly separate their system definitions and populations so that individuals would be counted only once and the requirements for Category B and C would be met. Given the population overlap across regions, most providers agreed to participate in one home RHP.

Comment: Regarding proposed §354.1695 (Participants), one commenter argued that the phrase "coordinate the update of the community needs assessment included in the RHP plan and" should be deleted from the rule. The commenter argued that the anchoring entity was required to coordinate the update of the community needs assessment in DY6, and is not required to update it again in DY7.

Response: HHSC disagrees and declines to revise the rule in response to this comment. An RHP is required during DY6 or DY7 to update at least once the original community needs assessment that the RHP submitted at the beginning of the initial demonstration period, and submit the updated community needs assessment to HHSC with its RHP Plan Update. The required community needs assessment update may have occurred during DY6, or it may occur during DY7.

Comment: Regarding proposed §354.1695 (Participants) and proposed §354.1697 (RHP Plan Update), one commenter argued that the word "funds" should be inserted after the word "DSRIP" in subsection (c)(7).

Response: HHSC agrees with this comment and will amend these rules after adoption to make this change.

Comment: Regarding proposed §354.1697 (RHP Plan Update), one commenter requested clarification regarding the types of changes to Category C Measure Bundles and measures that hospitals and physician practices may request per subsection (b)(7)(D).

Response: The requested change in the rule is unnecessary because paragraph 12(c) of the PFM protocol describes the types of changes to Category C Measure Bundles and measures that performers may request. No changes were made to the rule in response to this comment.

Comment: Regarding proposed §354.1701 (RHP Plan Update Modifications), one commenter requested clarification on whether changes to the payer type for Category C measure reporting and achievement milestones were allowed for reasons other than low volume.

Response: HHSC disagrees and declines to revise the rule in response to this comment. Paragraph 12(c) of the PFM protocol describes the types of changes to Category C Measure Bundles and measures that performers may request. Per paragraph 12(c)(i) (relating to Category C Measure Payer Types for Reporting Milestones), a performer may request to be exempted from reporting its performance on the Medicaid-only payer type and/or the LIU-only payer type for a measure's reporting milestone with good cause, such as low volume or data limitations. Likewise, per paragraph 12(c)(ii) (relating to Category C P4P Measure Payer Type for Goal Achievement Milestones), a performer may request to change the type of payer a measure's goal achievement milestone is based on with good cause, such as low volume or data limitations. Given that the MLIU population is the target population of DSRIP, and that DSRIP seeks to improve health outcomes for the target population in particular, that it may be challenging for the performer to improve health outcomes for the DSRIP target population does not constitute good cause for the requests described in paragraphs 12(c)(i) and 12(c)(ii) of the PFM protocol.

Comment: Regarding proposed §354.1711 (Category B Requirements for Performers), one commenter expressed concern about the ability of performers to provide unduplicated Total Population by Provider (PPP) and MLIU PPP counts. Specifically, the commenter expressed concern that some performers, such as local health departments, that provide services in alternative, non-clinical settings and record the provision of those services in a number of disparate electronic and manual reporting systems will not be able to provide unduplicated Total PPP and MLIU PPP counts. Therefore, the commenter requested flexibility in this area, particularly for local health departments.

Response: While HHSC appreciates the complexity of capturing unduplicated patient counts for all performers, particularly those without a single electronic medical record (EMR) system and multiple access points to services, HHSC declines to revise the rule in response to this comment. HHSC established the PPP to ensure consistency in the measurement of DSRIP's impact across performers and to support continued IT and data system improvements and performer capacity. To address the challenges noted by the commenter, HHSC provides for an allowable MLIU PPP goal variation in DY7 and DY8 to mitigate normal caseload fluctuations that occur across DYs as well as those instances where unintended duplication may occur and be discovered subsequent to reporting.

Comment: Regarding proposed §354.1713 (Category C Requirements for Performers), several commenters argue that DSRIP was designed as a hospital-based program and should focus on improvements in hospital-based outcomes. The commenters requested that HHSC include more measures with a DSRIP-specified setting of "hospital" or "emergency department" in the Measure Bundles. The commenters also suggested that if a Measure Bundle selected by a hospital includes any measures with a DSRIP-specified setting other than "hospital" or "emergency department," those measures should be optional for the hospital.

Response: HHSC disagrees and declines to revise the rule in response to this comment. The Healthcare Transformation Waiver expanded Medicaid managed care statewide and created two funding pools, the Uncompensated Care (UC) pool and the DSRIP pool. The UC pool replaced the Upper Payment Limit (UPL) program. The DSRIP pool is a separate pool that enabled hospitals, other healthcare providers, and community partners to improve Texas' healthcare infrastructure through innovative care delivery models and increased access to care. DSRIP is not just a hospital program, as it also includes providers who are community mental health centers, physician practices associated with academic health science centers, and local health departments. And through DSRIP, hospitals have also had the opportunity to increase access to primary and preventive care, care management, care transitions, etc. Including other provider types in addition to hospitals is consistent with the original intention of DSRIP to transform healthcare in Texas and increase coordination of providers to improve the patient experience of care, improve the health of populations, and reduce the per capita cost of health care.

Comment: Regarding proposed §354.1713 (Category C Requirements for Performers), two commenters recommended that HHSC modify subsection (a)(1)(H) to allow a hospital with a valuation up to $2.5 million per DY to select a rural Measure Bundle.

Response: HHSC agrees with this recommendation and will amend these rules after adoption to allow a hospital with a valuation up to $2.5 million per DY to select a rural Measure Bundle.

Comment: Regarding proposed §354.1713 (Category C Requirements for Performers), one commenter argued that the provisions for hospitals with a limited scope of practice in subsection (a)(4)(c) should apply to all DSRIP provider types.

Response: HHSC disagrees and declines to revise the rule as the commenter suggests. In addition to hospitals with a limited scope of practice, physician practices with a limited scope of practice may also request approval for a reduced MPT. The intent of this policy is to accommodate those hospitals and physician practices that provide more targeted or specialty services that are not similar in scope to the services provided by the majority of hospitals and physician practices. Such hospitals and physician practices may not otherwise have enough Measure Bundles that are worth enough points to meet their MPT from which to choose. For example, a children's hospital does not provide services to adults, and the majority of Measure Bundles are intended to measure an adult population. Similarly, there may not be enough Measure Bundles for an infectious disease hospital that provides only targeted services. With respect to the other two types of providers that participate in DSRIP, community mental health centers (CMHCs) and local health departments (LHDs), each of these two provider types has a narrow scope with similarities in services delivered. HHSC has made a concerted effort to include a broad array of measures for CMHCs and LHDs on their respective menus and will amend the rules after adoption to allow LHDs to use in DY7-8 measures they used in Category 3 during the initial demonstration period.

Comment: Regarding proposed §354.1713 (Category C Requirements for Performers), one commenter requested clarification on the criteria HHSC will use to determine if a hospital has a limited scope of practice as described in subsection (a)(4)(C). The commenter requested that HHSC consider a hospital that provides a full range of services but serves only a subset of the population (e.g., only children) to meet the limited scope of practice criteria.

Response: HHSC declines to revise the rule in response to this comment. HHSC is working to further develop the policy for hospitals and physician practices with a limited scope of practice. The final policy will be communicated to DSRIP providers as policy guidance.

Comment: Regarding proposed §354.1713 (Category C Requirements for Performers), one commenter requested clarification on the criteria HHSC will use to determine whether to reduce the total valuation for a hospital with a limited scope of practice as described in subsection (a)(4)(C). The commenter argues that hospitals with a limited scope of practice should not have their total valuation reduced because HHSC has not made a sufficient number of points available to them.

Response: HHSC declines to revise the rule in response to this comment. HHSC is working to further develop the policy for hospitals and physician practices with a limited scope of practice. The final policy will be communicated to DSRIP providers as policy guidance.

Comment: Regarding proposed §354.1713 (Category C Requirements for Performers), one commenter requested clarification on the intent behind subsection (a)(1)(I) related to hospitals with a limited scope of practice.

Response: As previously stated, the intent behind the limited scope of practice provision is to accommodate hospitals and physician practices that provide targeted or specialty services not similar in scope to the services provided by most hospitals and physician practices. There may not be enough Measure Bundles for such hospitals or physician practices to choose. HHSC is working to further develop the policy for hospitals and physician practices with a limited scope of practice and will amend these rules after adoption to reflect this policy.

Comment: Regarding proposed §354.1713 (Category C Requirements for Performers), one commenter requested a transition period to give performers time to modify their data systems to enable them to extract the data needed to meet Category C requirements.

Response: HHSC declines to revise the rule in response to this comment. HHSC has proposed that pay-for-performance (P4P) measures may be eligible for a shorter baseline measurement period and/or a delayed baseline measurement period that ends no later than September 30, 2018. This should give providers sufficient time to modify their data systems to extract data for eligible P4P measures.

Comment: Regarding proposed §354.1715 (Category D Requirements for Performers), one commenter requested clarification regarding how a performer's Category D valuation will be impacted if multiple performers in the performer's RHP withdraw from DSRIP in DY7-8. The commenter proposed that instead of allowing a performer to allocate 15 percent of its total valuation to Category D if the performer's RHP meets its minimum private hospital participation requirement, and only 5 percent if it does not, that HHSC implement a "step-down" method proportional to the number of providers/DSRIP valuation in the RHP withdrawing.

Response: HHSC disagrees and declines to revise the rule in response to this comment. The purpose of this provision is to provide sufficient incentive to maintain current levels of private hospital participation in DSRIP. HHSC has even built into the minimum private hospital participation valuations an allowable variance of three percent; therefore, as long as an RHP's private hospital participation for DY7-8 is at least 97 percent of its private hospital participation in the initial demonstration period, each performer in the RHP may allocate 15 percent of its total valuation to Category D. If HHSC were to implement the "step-down" method suggested by the commenter, the incentive to maintain private hospital participation would be reduced.

Comment: Regarding proposed §354.1715 (Category D Requirements for Performers), several commenters indicated that the proposed financial incentive to encourage private hospital participation is insufficient. To strengthen the incentive, the commenters suggested that HHSC reduce an IGT entity's DSRIP allocation if the IGT entity reduces or ends IGT funding for its affiliated private hospitals. The commenters also suggested that HHSC increase to 20 percent the percentage of a performer's valuation that can be allocated to Category D if the performer is part of an RHP that maintains its private hospital participation (and thereby reduce the percentage of a performer's valuation that must be allocated to Category C to 50 percent in DY7 and 70 percent in DY8).

Response: HHSC disagrees and declines to revise the rule in response to this comment. However, HHSC has moved a portion of the text of this rule to §354.1707, as the text relates to both Category D and Category C, and §354.1715 is specific to Category D.

With respect to the commenter's suggestion that HHSC reduce an IGT entity's DSRIP allocation if the IGT entity reduces or ends IGT funding for its affiliated private hospitals, not all DSRIP IGT entities are performers. If an IGT entity is not a performer, it does not have a DSRIP allocation that could be reduced. With respect to the commenter's suggestion that HHSC increase to 20 percent the percentage of a performer's valuation that can be allocated to Category D, which is pay-for-reporting, if the performer is part of an RHP that maintains its private hospital participation (thereby reducing the percentage of a performer's valuation that must be allocated to Category C, which is pay-for-performance, to 50 percent in DY7 and 70 percent in DY8), HHSC has already increased from 10 to 15 the percentage of a performer's valuation that may be allocated to Category D for DY7 and DY8. This decreases the percentage of a performer's valuation that the performer must allocate to Category C from 60 percent to 55 percent for DY7 and from 80 percent to 75 percent for DY8. Given the DY7-8 DSRIP focus on outcome achievement, HHSC does not agree that performers should be able to shift additional funds from Category C to Category D.

Comment: One commenter recommended that HHSC take the appropriate steps to update the rules to make them consistent with the final CMS-approved PFM protocol.

Response: As of October 23, 2017, the proposed PFM protocol is under review by CMS and subject to change. Therefore, HHSC agrees with this recommendation and, if necessary, will amend these rules after adoption to make them consistent with the final CMS-approved PFM protocol.

Comment: One commenter recommended that HHSC postpone the January 31, 2018, deadline for RHP plan update submission.

Response: HHSC has postponed the deadline for RHP plan update submission until April 30, 2018.

Comment: One commenter requested that HHSC provide detail in the DY7-8 PFM protocol, in the Measure Bundle Protocol, or elsewhere regarding HHSC's contingency plan if CMS does not extend the waiver.

Response: HHSC declines to revise the rule in response to this comment. HHSC remains optimistic that the waiver will be renewed. Any alternatives to the proposed waiver would be worked out during the negotiation process with CMS.

Comment: One commenter requested clarification on how the proposed rules align with managed care organizations (MCOs) or value-based purchasing (VBP) methodologies and whether this will be addressed in rule.

Response: One of HHSC's goals for DSRIP for DY7-8 is to build providers' capacity at the system level for participation in VBP arrangements with MCOs. To this end, in developing the DSRIP Category C Measure Bundle and measure menus, HHSC included the same measures used by other quality-based payment programs, particularly the HHSC Pay-for-Quality (P4Q) program for Texas Medicaid and CHIP MCOs. Aligning the measures across HHSC's quality-based payment programs aligns the goals of MCOs and providers to improve performance on the same measures, thereby creating an incentive for MCOs and providers to work together to achieve their shared goals.

HHSC has included a requirement in §354.1709 (relating to Category A Requirements for Performers) for performers with a total valuation greater than or equal to $1 million per DY to report the costs of at least one core activity of its choice, as well as the forecasted or generated savings from that core activity. HHSC believes this exercise will help performers to calculate a return-on-investment of their specific interventions and thereby help them to make a case to MCOs for VBP arrangements. HHSC has also included a requirement in §354.1709 for performers to report progress toward, or implementation of, Alternative Payment Model (APM) arrangements with Medicaid MCOs or other payers during the second reporting period of each DY.

Given the foregoing, no changes were made to the rule in response to this comment.

Comment: One commenter requested additional detail and training from HHSC on how a performer should define its system.

Response: This comment goes beyond the scope of the published proposal. However, HHSC has developed a Frequently Asked Questions (FAQ) document regarding how a performer should define its system. This FAQ has been posted to the DSRIP Online Reporting System Bulletin Board and will be updated every two weeks (or as relevant questions are submitted to HHSC). Should performers continue to have difficulty defining their systems, HHSC will consider a webinar or phone call for anchors specific to system definition parameters.

Statutory Authority

The new rules are adopted 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 payments under the Texas Human Resources Code, Chapter 32.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 10, 2017.

TRD-201704548

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Effective date: December 1, 2017

Proposal publication date: August 25, 2017

For further information, please call: (512) 424-6605


CHAPTER 355. REIMBURSEMENT RATES

SUBCHAPTER J. PURCHASED HEALTH SERVICES

DIVISION 11. TEXAS HEALTHCARE TRANSFORMATION AND QUALITY IMPROVEMENT PROGRAM REIMBURSEMENT

1 TAC §355.8205, §355.8206

The Texas Health and Human Services Commission (HHSC) adopts new §355.8205, concerning Delivery System Reform Incentive Payments for Demonstration Years 7-8; and new §355.8206, concerning Funding for DSRIP Monitoring Program for Demonstration Years 7-8. New §355.8205 is adopted with changes to the proposed text as published in the August 25, 2017, issue of the Texas Register (42 TexReg 4213). New §355.8206 is adopted without changes to the proposed text as published in the August 25, 2017, issue of the Texas Register (42 TexReg 4213), and therefore will not be republished.

BACKGROUND AND JUSTIFICATION

On December 12, 2011, the Centers for Medicare & Medicaid Services (CMS) approved Texas's request for a new Medicaid demonstration waiver entitled "Texas Healthcare Transformation and Quality Improvement Program" in accordance with §1115 of the Social Security Act. This waiver authorized the establishment of the Delivery System Reform Incentive Payment (DSRIP) program. The DSRIP program provides incentive payments to hospitals and certain other providers to support their efforts to enhance access to health care, the quality of care, and the health of patients and families served.

The initial waiver was approved through September 30, 2016, and an initial extension was granted through December 31, 2017. HHSC has requested an additional 21 months that would extend the waiver through September 30, 2019.

These adopted new rules mirror the proposed Program Funding and Mechanics (PFM) protocol submitted to CMS on May 17, 2017. If approved by CMS, the proposed PFM protocol will govern the requested additional 21 months (demonstration years 7-8) of the waiver. Before submitting the proposal to CMS, HHSC posted the draft PFM protocol, along with a survey to solicit stakeholder feedback, to the Transformation Waiver website. HHSC received more than 170 responses to the survey and made a number of revisions to the proposed PFM protocol based on these survey responses.

Following additional stakeholder feedback, HHSC further revised the proposed PFM protocol and submitted it to CMS on August 4, 2017. At that point, the proposed rules had already been processed for publication in the Texas Register. HHSC will amend these rules, if needed, to make them consistent with the PFM protocol once approved by CMS.

The adopted rules describe the DSRIP policies for DY7-8. In DY7-8, DSRIP will evolve from project-level reporting to core activities supporting performer-level outcomes that measure continued transformation of the Texas healthcare system. DY7-8 will serve as an opportunity for performers to move further towards sustainability of their transformed systems, including development of Alternative Payment Models to continue services for Medicaid and low-income or uninsured (MLIU) individuals after the waiver ends.

COMMENTS

The 30-day comment period ended September 25, 2017. During this period, HHSC received comments regarding the proposed rules from nine entities, including: Baptist Hospitals of Southeast Texas; Center for Public Policy Priorities (CPPP); CHRISTUS Health; CHRISTUS Santa Rosa Health System; Hospitals of Providence; Hospital Corporation of Texas (HCA), Texas Division; Las Palmas del Sol; Memorial Hermann Health System; and Yoakum Community Hospital. A summary of comments relating to the rules and HHSC's responses follow.

Comment: Regarding proposed §355.8205 (Delivery System Reform Incentive Payments for Demonstration Years 7-8), several commenters expressed support for the proposal that if a governmental entity does not transfer the maximum IGT amount on behalf of each performer owned by or affiliated with that governmental entity, each performer owned by or affiliated with that governmental entity will receive a portion of the value associated with that milestone (as specified in the RHP plan update) that is proportionate to the total value of all milestones that are completed and eligible for payment for that period by all performers owned by or affiliated with that governmental entity. However, the commenters argued that this proposal does not prevent a governmental entity from ending its affiliation with private hospitals prior to DY7, and that HHSC's proposal for encouraging private hospital participation is insufficient.

Response: HHSC disagrees that the incentive for private hospital participation is insufficient and declines to revise the rule in response to this comment. In order to incentivize private hospital participation in DSRIP, HHSC proposes in §354.1707 that if a performer is part of an RHP that maintains its private hospital participation, the performer may increase the percentage of its total valuation allocated to Category D, which is pay-for-reporting, from 5 percent to 15 percent for DY7 and DY8, thereby decreasing the percentage of its total valuation allocated to Category C, which is pay-for-performance, from 65 percent to 55 percent for DY7, and from 85 percent to 75 percent for DY8. HHSC believes this incentive is sufficient to encourage private hospital participation.

Comment: One commenter recommended that HHSC take the appropriate steps to update the rules to make them consistent with the final CMS-approved PFM protocol.

Response: As of October 23, 2017, the proposed PFM protocol is under review by CMS and subject to change. Therefore, HHSC agrees with this recommendation and, if necessary, will amend these rules after adoption to make them consistent with the final CMS-approved PFM protocol.

STATUTORY AUTHORITY

The new rules are adopted 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 payments under the Texas Human Resources Code, Chapter 32.

§355.8205.Delivery System Reform Incentive Payments for Demonstration Years 7-8.

(a) Introduction. Texas Healthcare Transformation and Quality Improvement Program §1115(a) Medicaid demonstration waiver Delivery System Reform Incentive Payment (DSRIP) program payments for demonstration year (DY) 7 and DY8 are available under this section for eligible performers described in subsection (c) of this section. DSRIP payments to performers must be in compliance with the Centers for Medicare & Medicaid Services (CMS) approved Program Funding and Mechanics Protocol, Health and Human Services Commission (HHSC) instructions, and this section.

(b) Definitions.

(1) Demonstration Year (DY) 6--Federal fiscal year 2017 (October 1, 2016 - September 30, 2017).

(2) Demonstration Year (DY) 7--Federal fiscal year 2018 (October 1, 2017 - September 30, 2018).

(3) Demonstration Year (DY) 8--Federal fiscal year 2019 (October 1, 2018 - September 30, 2019).

(4) Performer--A provider enrolled in Texas Medicaid that participates in DSRIP and receives DSRIP payments.

(5) Regional Healthcare Partnership (RHP) Plan Update--An RHP plan for the initial demonstration period and DY6 that is updated for DY7-8, as further described in §354.1697 of this title (relating to RHP Plan Update).

(c) Eligibility for DSRIP. For a performer to be eligible to receive DSRIP, the performer must:

(1) be a provider enrolled in Texas Medicaid;

(2) submit to HHSC documentation of completion of a milestone identified in the approved RHP plan update; and

(3) for a private performer only, comply with the eligibility requirements in §355.8201(c)(1)(B) of this title (relating to Waiver Payments to Hospitals for Uncompensated Care) or §355.8202(c)(3) of this title (relating to Waiver Payments to Physician Group Practices for Uncompensated Care), as applicable.

(d) Source of funding. The non-federal share of funding for payments under this section is limited to timely receipt by HHSC of public funds from a governmental entity.

(e) Payment frequency. DSRIP payments will be distributed at least annually, not to exceed two payments per performer per year, upon achievement of RHP plan update milestones as reviewed and approved by HHSC. The payment schedule or frequency may be modified as specified by CMS or HHSC.

(f) Funding limitations. Payments made under this section are limited by the maximum aggregate amount of funds approved by CMS for DSRIP for each year that the waiver is in effect.

(g) DSRIP maximum payment amounts. The approved RHP plan update establishes the payment amount associated with a particular milestone. DSRIP payments cannot exceed the amount in the RHP plan update.

(h) Payment methodology.

(1) Notice. Prior to making any DSRIP payments, HHSC will give notice of the following information:

(A) the maximum payment amount for the payment period;

(B) the maximum intergovernmental transfer (IGT) amount necessary for a performer to receive the amount described in subparagraph (A) of this paragraph; and

(C) the deadline for completing the IGT.

(2) Payment amount. The approved RHP plan update establishes the payment amount associated with a milestone. DSRIP payments cannot exceed the amount established in the approved RHP plan update. The amount of the payment to a performer will be determined based on the amount of funds transferred by a governmental entity as follows.

(A) If a governmental entity transfers the maximum amount referenced in paragraph (1) of this subsection on behalf of each performer owned by or affiliated with that governmental entity, each performer owned by or affiliated with that governmental entity will receive the full payment amount calculated for that payment period.

(B) If a governmental entity does not transfer the maximum amount referenced in paragraph (1) of this subsection on behalf of each performer owned by or affiliated with that governmental entity, each performer owned by or affiliated with that governmental entity will receive a portion of the value associated with that milestone (as specified in the RHP plan update) that is proportionate to the total value of all milestones that are completed and eligible for payment for that period by all performers owned by or affiliated with that governmental entity.

(3) Final payment opportunity. If a performer does not receive a full DSRIP payment as a result of paragraph (2)(B) of this subsection, a governmental entity may provide the necessary IGT to make up the non-federal share of that shortfall until the last reporting period of the DY following the DY in which the applicable milestone is listed in the RHP plan update. Any shortfall remains the obligation of the original governmental entity until that governmental entity informs HHSC that it will no longer agree to fund that obligation.

(A) If the governmental entity will no longer fund the obligation or a proportion of the obligation, that governmental entity must inform HHSC no later than the last date of the reporting period for the applicable payment period.

(B) A performer may utilize any affiliated governmental entity to fund the shortfall but must inform HHSC of the identity of this governmental entity no later than the last date of a reporting period in order for that affiliated entity to fund the shortfall during the associated payment period.

(i) Recoupment.

(1) In the event of an overpayment identified by HHSC or a disallowance by CMS of federal financial participation related to a performer's receipt or use of payments under this section, HHSC may recoup an amount equivalent to the amount of the overpayment or disallowance. The non-federal share of any funds recouped from the performer will be returned to the governmental entity that was the source of those funds.

(2) Payments under this section may be subject to adjustment for payments made in error, including, without limitation, adjustments under §371.1711 of this title (relating to Recoupment of Overpayments and Debts), 42 CFR Part 455, and Chapter 403, Texas Government Code. HHSC may recoup an amount equivalent to any such adjustment.

(3) HHSC may recoup from any current or future Medicaid payments as follows.

(A) HHSC will recoup from the performer against which any overpayment was made or disallowance was directed.

(B) If, within 30 days of the performer's receipt of HHSC's written notice of recoupment, the performer has not paid the full amount of the recoupment or entered into a written agreement with HHSC to do so, HHSC may withhold any or all future Medicaid payments from the performer until HHSC has recovered an amount equal to the amount overpaid or disallowed.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 10, 2017.

TRD-201704549

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Effective date: December 1, 2017

Proposal publication date: August 25, 2017

For further information, please call: (512) 424-6605


DIVISION 23. EARLY AND PERIODIC SCREENING, DIAGNOSIS, AND TREATMENT (EPSDT)

1 TAC §355.8443

The Texas Health and Human Services Commission (HHSC) adopts amended §355.8443, concerning Reimbursement Methodology for School Health and Related Services (SHARS).

The amended section is adopted without changes to the proposed text as published in the August 25, 2017, issue of the Texas Register (42 TexReg 4216), and therefore will not be republished.

BACKGROUND AND JUSTIFICATION

SHARS is a joint program of HHSC and the Texas Education Agency that allows school districts to obtain federal Medicaid reimbursement for the provision of health-related services to students in special education. The amendment allows HHSC to retain one percent of the total Title XIX federal share of actual and reasonable costs for the SHARS program to fund Health and Human Service (HHS) administrative activities. Such activities include increased oversight of the SHARS program by HHSC to improve the quality and consistency of compliance monitoring and audits and to provide school districts with enhanced technical guidance and feedback on SHARS program issues. This amendment complies with the 2018 - 19 General Appropriations Act, Senate Bill 1, 85th Legislature, Regular Session, 2017 (Article II, HHSC, Rider 34 a (11)).

COMMENTS

The 30-day comment period ended September 25, 2017. During this period, HHSC did not receive any comments regarding the proposed rule.

STATUTORY AUTHORITY

The amendment is adopted 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 payments under Texas Human Resources Code, Chapter 32.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 7, 2017.

TRD-201704498

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Effective date: November 27, 2017

Proposal publication date: August 25, 2017

For further information, please call: (512) 707-6071