TITLE 1. ADMINISTRATION

PART 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION

CHAPTER 353. MEDICAID MANAGED CARE

The executive commissioner of the Texas Health and Human Services Commission (HHSC) proposes amendments to §353.2, concerning Definitions; §353.1502 concerning Definitions; and §353.1503 concerning Use of Telecommunications in Assessments; and the repeal of §353.608, concerning Minimum Payment Amounts to Qualified Nursing Facilities.

BACKGROUND AND PURPOSE

This proposal is necessary to align Medicaid program rules with the fiscal rules that implemented House Bill (H.B.) 1, 88th Legislature, Regular Session, 2023 (Article II, Health and Human Services Commission (HHSC), Rider 25), which require HHSC to implement a Texas version of the Patient Driven Payment Model for Long-Term Care (PDPM LTC) methodology for the reimbursement of long-term stay nursing facility (NF) services in the Medicaid program.

Due to federal requirements in Title 42 Code of Federal Regulations §441.302(e) and (f), changing the NF reimbursement methodology from the Resource Utilization Group (RUG) to the PDPM LTC requires HHSC to incorporate the PDPM LTC methodology into the individual cost limit methodologies and related cost limit methodology. This proposal updates references to the former RUG reimbursement methodology with the term "reimbursement rate" in the Texas Administrative Code (TAC) for the state's two NF waiver programs, the STAR+PLUS Home and Community-Based Services Program and the Medically Dependent Children Program.

This proposal implements H.B. 4611, 88th Legislature, Regular Session, 2023, which made certain non-substantive revisions to Subtitle I, Title 4, Texas Government Code, which governs HHSC, Medicaid, and other social services as part of the legislature's ongoing statutory revision program. The proposed amendment to §353.2 updates Texas Government Code citations for this purpose.

This proposal also implements Senate Bill (S.B.) 457, 89th Legislature, Regular Session, 2025, which eliminated the NF enhancement rate program. The proposed amendment updates definitions to remove references to the NF enhancement rate program.

The proposed repeal of §353.608 removes outdated rules for the Minimum Payment Amount Program (MPAP) for Qualified Nursing Facilities. The MPAP was replaced by the Quality Incentive Payment Program for NFs, which is covered in 1 TAC, §353.1301 and §353.1303.

SECTION-BY-SECTION SUMMARY

The proposed amendment to §353.2 updates citations to reflect the current statute and TAC references; corrects outdated agency acronyms; moves the definition of HHSC so the section is correctly alphabetized and then renumbers the section accordingly; updates the definition of "Nursing facility unit rate" to remove a citation to the former NF rate enhancement program that no longer exists; and makes other minimal changes to grammar and rule structure for clarity.

The proposed repeal of §353.608 deleted the rule as no longer necessary, because it refers to use of the MPAP for Qualified Nursing Facilities, which no longer exists.

The proposed amendment to §353.1502 updates citations to reflect the current TAC references, corrects outdated agency acronyms, updates the HHSC definition, adds a definition for PDPM LTC, removes the RUG definition, renumbers the subsections, and makes other minimal changes to grammar and rule structure for clarity.

The proposed amendment to §353.1503 replaces RUG language with PDPM LTC language.

FISCAL NOTE

Victoria Grady, Deputy Chief, Finance, has determined that for each year of the first five years that the rules will be in effect, enforcing or administering the rules do not have foreseeable implications relating to costs or revenues of state or local governments.

GOVERNMENT GROWTH IMPACT STATEMENT

HHSC has determined that during the first five years that the rules will be in effect:

(1) the proposed rules will not create or eliminate a government program;

(2) implementation of the proposed rules will not affect the number of HHSC employee positions;

(3) implementation of the proposed rules will result in no assumed change in future legislative appropriations;

(4) the proposed rules will not affect fees paid to HHSC;

(5) the proposed rules will not create a new regulation;

(6) the proposed rules will repeal existing regulations;

(7) the proposed rules will not change the number of individuals subject to the rules; and

(8) the proposed rules will not affect the state's economy.

SMALL BUSINESS, MICRO-BUSINESS, AND RURAL COMMUNITY IMPACT ANALYSIS

Victoria Grady has also determined that there will be no adverse economic effect on small businesses, micro-businesses, or rural communities because the rules are codifying current processes and MCO capitation rates were addressed in rule project 24R019.

LOCAL EMPLOYMENT IMPACT

The proposed rules will not affect a local economy.

COSTS TO REGULATED PERSONS

Texas Government Code §2001.0045 does not apply to these rules because the rules do not impose a cost on regulated persons; are necessary to receive a source of federal funds or comply with federal law; and are necessary to implement legislation that does not specifically state that §2001.0045 applies to the rules.

PUBLIC BENEFIT AND COSTS

Emily Zalkovsky, Chief Medicaid and CHIP Services Officer, has determined that for each year of the first five years the rules are in effect, the public will benefit from having these rules use terminology consistent with the new PDPM LTC reimbursement methodology in 1 TAC Chapter 355 and removing the rules related to the discontinued MPAP.

Victoria Grady has also determined that for the first five years the rules are in effect, there are no anticipated economic costs to persons who are required to comply with the proposed rules because the proposed rules don't require affected persons to alter current business practices and MCO capitation rates were addressed in rule project 24R019.

TAKINGS IMPACT ASSESSMENT

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

PUBLIC COMMENT

Written comments on the proposal, including information related to the cost, benefit, or effect of the proposed rule, as well as any applicable data, research, or analysis, may be submitted to Rules Coordination Office, P.O. Box 13247, Mail Code 4102, Austin, Texas 78711-3247, or street address 4601 West Guadalupe Street, Austin, Texas 78751; or emailed to HHSRulesCoordinationOffice@hhs.texas.gov.

To be considered, comments must be submitted no later than 31 days after the date of this issue of the Texas Register. Comments must be (1) postmarked or shipped before the last day of the comment period; (2) hand-delivered before 5:00 p.m. on the last working day of the comment period; or (3) emailed before midnight on the last day of the comment period. If the last day to submit comments falls on a holiday, comments must be postmarked, shipped, or emailed before midnight on the following business day to be accepted. When emailing comments, please indicate "Comments on Proposed Rule 24R074" in the subject line.

SUBCHAPTER A. GENERAL PROVISIONS

STATUTORY AUTHORITY

The amendment is authorized by Texas Government Code §524.0151, which provides that the executive commissioner of HHSC shall adopt rules for the operation and provision of services by the health and human services system; and Texas Human Resources Code §32.021, which provides HHSC with the authority to administer the federal medical assistance program in Texas and to adopt rules and standards for program administration.

The amendment affects Texas Government Code §524.0151 and Texas Human Resources Code §32.021.

§353.2. Definitions.

The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise.

(1) Action--

(A) An action is defined as:

(i) the denial or limited authorization of a requested Medicaid service, including the type or level of service;

(ii) the reduction, suspension, or termination of a previously authorized service;

(iii) the failure to provide services in a timely manner;

(iv) the denial in whole or in part of payment for a service; or

(v) the failure of a managed care organization (MCO) to act within the timeframes set forth by the Texas Health and Human Services Commission (HHSC) and state and federal law.

(B) "Action" does not include expiration of a time-limited service.

(2) Acute care--Preventive care, primary care, and other medical or behavioral health care provided by the provider or under the direction of a provider for a condition having a relatively short duration.

(3) Acute care hospital--A hospital that provides acute care services.

(4) Adoption Assistance Program--The program administered by DFPS in accordance with 40 TAC Chapter 700, Subchapter H (relating to Adoption Assistance Program).

(5) Agreement or Contract--The formal, written, and legally enforceable contract and amendments thereto between HHSC and an MCO.

(6) Allowable revenue--All managed care revenue received by the MCO pursuant to the contract during the contract period, including retroactive adjustments made by HHSC. This would include any revenue earned on Medicaid managed care funds such as investment income, earned interest, or third party administrator earnings from services to delegated networks.

(7) Appeal--The formal process by which a member or his or her representative requests a review of the MCO's action.

(8) Applicant Provider--A physician or other health care provider applying for expedited credentialing [as defined in Texas Government Code §533.0064].

(9) Behavioral health service--A covered service for the treatment of mental, emotional, or substance use disorders.

(10) Capitated service--A benefit available to members under the Texas Medicaid program for which an MCO is responsible for payment.

(11) Capitation rate--A fixed predetermined fee paid by HHSC to the MCO each month, in accordance with the contract, for each enrolled member in exchange for which the MCO arranges for or provides a defined set of covered services to the member, regardless of the amount of covered services used by the enrolled member.

(12) CFR--Code of Federal Regulations.

(13) Children's Medicaid Dental Services--The dental services provided through a dental MCO to a client birth through age 20.

(14) Clean claim--A claim submitted by a physician or provider for health care services rendered to a member, with the data necessary for the MCO or subcontracted claims processor to adjudicate and accurately report the claim. A clean claim must meet all requirements for accurate and complete data as further defined under the terms of the contract executed between the MCO and HHSC.

(15) Client--Any Medicaid-eligible recipient.

(16) CMS--The Centers for Medicare & Medicaid Services, which is the federal agency responsible for administering Medicare and overseeing state administration of Medicaid.

(17) Complainant--A member, or a treating provider or other individual designated to act on behalf of the member, who files a complaint.

(18) Complaint--Any dissatisfaction expressed by a complainant, orally or in writing, to the MCO about any matter related to the MCO other than an action. Subjects for complaints may include:

(A) the quality of care of services provided;

(B) aspects of interpersonal relationships such as rudeness of a provider or employee; and

(C) failure to respect the member's rights.

(19) Consumer Directed Services (CDS) option--A service delivery option (also known as self-directed model with service budget) in which an individual or legally authorized representative employs and retains service providers and directs the delivery of certain program services.

(20) Covered services--Unless a service or item is specifically excluded under the terms of the state plan, a federal waiver, a managed care services contract, or an amendment to any of these, the phrase "covered services" means all health care, long term services and supports, or dental services or items that the MCO must arrange to provide and pay for on a member's behalf under the terms of the contract executed between the MCO and HHSC, including:

(A) all services or items considered [comprising] "medical assistance" as defined in Texas Human Resources Code §32.003 [of the Human Resources Code]; and

(B) all value-added services under such contract.

(21) Credentialing--The process through which an MCO collects, assesses, and validates qualifications and other relevant information pertaining to a Medicaid enrolled health care provider to determine whether the provider may be contracted to deliver covered services as part of the network of the managed care organization.

(22) Cultural competency--The ability of individuals and systems to provide services effectively to people of various disabilities, cultures, races, ethnic backgrounds, and religions in a manner that recognizes, values, affirms, and respects the worth of the individuals and protects and preserves their dignity.

(23) Day--A calendar day, unless specified otherwise.

(24) Default enrollment--The process established by HHSC to assign a Medicaid managed care enrollee to an MCO when the enrollee has not selected an MCO.

(25) Dental contractor--A dental MCO that is under contract with HHSC for the delivery of dental services.

(26) Dental home--A provider who has contracted with a dental MCO to serve as a dental home to a member and who is responsible for providing routine preventive, diagnostic, urgent, therapeutic, initial, and primary care to patients, maintaining the continuity of patient care, and initiating referral for care. Provider types that can serve as dental homes are federally qualified health centers and individuals who are general dentists or pediatric dentists.

(27) Dental managed care organization (dental MCO)--A dental indemnity insurance provider or dental health maintenance organization licensed or approved by the Texas Department of Insurance.

(28) Dental service--The routine preventive, diagnostic, urgent, therapeutic, initial, and primary care provided to a member and included within the scope of HHSC's agreement with a dental contractor. For purposes of this chapter, "dental service" does not include dental devices for craniofacial anomalies; treatment rendered in a hospital, urgent care center, or ambulatory surgical center setting for craniofacial anomalies; or emergency services provided in a hospital, urgent care center, or ambulatory surgical center setting involving dental trauma. These types of services are treated as health care services in this chapter.

(29) DFPS--The Texas Department of Family and Protective Services.

(30) Disability--A physical or mental impairment that substantially limits one or more of an individual's major life activities, such as caring for oneself, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, socializing, or working.

(31) Disproportionate Share Hospital (DSH)--A hospital that serves a higher than average number of Medicaid and other low-income patients and receives additional reimbursement from the State.

(32) Dual eligible--A Medicaid recipient who is also eligible for Medicare.

(33) Elective enrollment--Selection of a primary care provider (PCP) and MCO by a client during the enrollment period established by HHSC.

(34) Emergency behavioral health condition--Any condition, without regard to the nature or cause of the condition, that in the opinion of a prudent layperson possessing an average knowledge of health and medicine:

(A) requires immediate intervention and/or medical attention without which the client would present an immediate danger to themselves or others; or

(B) renders the client incapable of controlling, knowing, or understanding the consequences of his or her actions.

(35) Emergency medical condition--A medical condition manifesting itself by acute symptoms of recent onset and sufficient severity (including severe pain), such that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical care to result in:

(A) placing the patient's health in serious jeopardy;

(B) serious impairment to bodily functions;

(C) serious dysfunction of any bodily organ or part;

(D) serious disfigurement; or

(E) serious jeopardy to the health of a pregnant woman or her unborn child.

(36) Emergency service--A covered inpatient and outpatient service, furnished by a network provider or out-of-network provider that is qualified to furnish such service, that is needed to evaluate or stabilize an emergency medical condition and/or an emergency behavioral health condition. For health care MCOs, the term "emergency service" includes post-stabilization care services.

(37) Encounter--A covered service or group of covered services delivered by a provider to a member during a visit between the member and provider. This also includes value-added services.

(38) Enrollment--The process by which an individual determined to be eligible for Medicaid is enrolled in a Medicaid MCO serving the service area in which the individual resides.

(39) EPSDT--The federally mandated Early and Periodic Screening, Diagnosis, and Treatment program defined in 25 TAC Chapter 33 (relating to Early and Periodic Screening, Diagnosis, and Treatment). The State of Texas has adopted the name Texas Health Steps (THSteps) for its EPSDT program.

(40) EPSDT-CCP--The Early and Periodic Screening, Diagnosis, and Treatment-Comprehensive Care Program described in Chapter 363 of this title (relating to Texas Health Steps Comprehensive Care Program).

(41) Exclusive provider benefit plan (EPBP)--An MCO that complies with 28 TAC §§3.9201 - 3.9212, relating to the Texas Department of Insurance's requirements for EPBPs, and contracts with HHSC to provide Medicaid coverage.

(42) Expedited Credentialing--The process under Texas Government Code §540.0656 [§533.0064] in which an MCO allows an applicant provider to provide Medicaid services to members on a provisional basis pending completion of the credentialing process.

(43) Experience rebate--The portion of the MCO's net income before taxes that is returned to the State in accordance with the MCO's contract with HHSC.

(44) Fair hearing--The process adopted and implemented by HHSC in Chapter 357, Subchapter A of this title (relating to Uniform Fair Hearing Rules) in compliance with federal regulations and state rules relating to Medicaid fair hearings.

(45) Federal Poverty Level (FPL)--The household income guidelines issued annually and published in the Federal Register by the United States Department of Health and Human Services under the authority of 42 U.S.C. §9902(2) and as in effect for the applicable budget period determined in accordance with 42 CFR [C.F.R.] §435.603(h). HHSC uses the FPL to determine an individual's eligibility for Medicaid.

(46) Federal waiver--Any waiver permitted under federal law and approved by CMS that allows states to implement Medicaid managed care.

(47) Federally Qualified Health Center (FQHC)--An entity that is certified by CMS to meet the requirements of 42 U.S.C. §1395x(aa)(3) as a Federally Qualified Health Center and is enrolled as a provider in the Texas Medicaid program.

(48) Former Foster Care Children (FFCC) program--The Medicaid program for young adults who aged out of the conservatorship of DFPS, administered in accordance with Chapter 366, Subchapter J of this title (relating to Former Foster Care Children's Program).

(49) Functional necessity--A member's need for services and supports with activities of daily living (ADLs) or instrumental activities of daily living (IADLs) to be healthy and safe in the most integrated setting possible. This [determination] is determined based on the results of a functional assessment.

(50) Habilitation--Acquisition, maintenance, and enhancement of skills necessary for the individual to accomplish ADLs, IADLs, and health-related tasks based on the individual's person-centered service plan.

(51) [(52)] Health care managed care organization (health care MCO)--An entity that is licensed or approved by the Texas Department of Insurance to operate as a health maintenance organization or to issue an EPBP.

(52) [(53)] Health care provider group--A legal entity, such as a partnership, corporation, limited liability company, or professional association, enrolled in Medicaid, under which certified or licensed individual health care providers provide health care items or services.

(53) [(54)] Health care services--The acute care, behavioral health care, and health-related services that an enrolled population might reasonably require in order to be maintained in good health, including, at a minimum, emergency services and inpatient and outpatient services.

(54) [(55)] Health maintenance organization (HMO)--An organization that holds a certificate of authority from the Texas Department of Insurance to operate as an HMO under Chapter 843 of the Texas Insurance Code, or a certified Approved Non-Profit Health Corporation formed in compliance with Chapter 844 of the Texas Insurance Code.

(56) Hospital--A licensed public or private institution as defined in [the] Texas Health and Safety Code [at] Chapter 241, relating to Hospitals [hospitals], or Chapter 261, relating to Municipal Hospitals [municipal hospitals].

(57) Intermediate care facility for individuals with an intellectual disability or related condition (ICF-IID)--A facility providing care and services to individuals with intellectual disabilities or related conditions as defined in §1905(d) of the Social Security Act (42 U.S.C. 1396(d)).

(58) Legally authorized representative (LAR)--A person authorized by law to act on behalf of an individual with regard to a matter described in this chapter, and may, depending on the circumstances, include a parent, guardian, or managing conservator of a minor, or the guardian of an adult, or a representative designated pursuant to 42 CFR §435.923 [C.F.R. 435.923].

(59) Long term services [service] and supports [support] (LTSS)--Services [A service] provided to a qualified member in the member's [his or her] home or other community-based setting necessary to allow the member to remain in the most integrated setting possible. LTSS includes services provided under the Texas State Plan as well as services that are available to people [persons] who qualify for the STAR+PLUS Home and Community-Based Services Program [services] or a Medicaid §1915(c) [1915(c)] waiver program [services]. LTSS is available through an MCO that participates in STAR+PLUS, STAR Health, and STAR Kids. LTSS services vary [varies] by program model.

(60) Main dentist--See definition of "dental home" in this section.

(61) Managed care--A health care delivery system or dental services delivery system in which the overall care of a patient is coordinated by or through a single provider or organization.

(62) Managed care organization (MCO)--A dental MCO or a health care MCO.

(63) Marketing--Any communication from an MCO to a client who is not enrolled with the MCO that can reasonably be interpreted as intended to influence the client's decision to enroll, not to enroll, or to disenroll from a particular MCO.

(64) Marketing materials--Materials that are produced in any medium by or on behalf of the MCO that can reasonably be interpreted as intending to market to potential members. Materials relating to the prevention, diagnosis, or treatment of a medical or dental condition are not marketing materials.

(65) MDCP--Medically Dependent Children Program. A Medicaid §1915(c) waiver program that provides community-based services to assist Medicaid beneficiaries under age 21 to live in the community and avoid living in a facility [institutionalization].

(66) Medicaid--The medical assistance program authorized and funded pursuant to Title XIX of the Social Security Act (42 U.S.C. §1396 et seq) and administered by HHSC.

(67) Medicaid for Transitioning Foster Care Youth (MTFCY) Program [transitioning foster care youth (MTFCY) program]--The Medicaid program for young adults who aged out of the conservatorship of DFPS. This program is[,] administered in accordance with Chapter 366, Subchapter F of this title (relating to Medicaid for Transitioning Foster Care Youth).

(68) Medical Assistance Only (MAO)--A person who qualifies financially and functionally for Medicaid assistance but does not receive Supplemental Security Income (SSI) benefits, as defined in Chapters 358, 360, and 361, of this title (relating to Medicaid Eligibility for the Elderly and People with Disabilities, Medicaid Buy-In Program, and Medicaid Buy-In for Children Program).

(69) Medical home--A PCP or specialty care provider who has accepted the responsibility for providing accessible, continuous, comprehensive, and coordinated care to members participating in an MCO contracted with HHSC.

(70) Medically necessary--

(A) For Medicaid members birth through age 20, this means the following Texas Health Steps services:

(i) screening, vision, dental, and hearing services; and

(ii) other health care services or dental services that are necessary to correct or ameliorate a defect, [or] physical or mental illness, or condition and must: [. A determination of whether a service is necessary to correct or ameliorate a defect or physical or mental illness or condition:]

(I) [must] comply with the requirements of a final court order that applies to the Texas Medicaid program or the Texas Medicaid managed care program as a whole; and

(II) if applicable, consider [may include consideration of] other relevant factors, such as the criteria described in subparagraphs (B)(ii) - (vii) and (C)(ii) - (vii) of this paragraph.

(B) For Medicaid members over age 20, non-behavioral health services that are:

(i) reasonable and necessary to prevent illnesses or medical conditions, or provide early screening, interventions, or treatments for conditions that cause suffering or pain, cause physical deformity or limitations in function, threaten to cause or worsen a disability, cause illness or infirmity of a member, or endanger life;

(ii) provided at appropriate facilities and at the appropriate levels of care for the treatment of a member's health conditions;

(iii) consistent with health care practice guidelines and standards that are endorsed by professionally recognized health care organizations or governmental agencies;

(iv) consistent with the member's medical need;

(v) no more intrusive or restrictive than necessary to provide a proper balance of safety, effectiveness, and efficiency;

(vi) not experimental or investigative; and

(vii) not primarily for the convenience of the member or provider.

(C) For Medicaid members over age 20, behavioral health services that:

(i) are reasonable and necessary for the diagnosis or treatment of a mental health or substance use disorder, or to improve, maintain, or prevent deterioration of functioning resulting from such a disorder;

(ii) are in accordance with professionally accepted clinical guidelines and standards of practice in behavioral health care;

(iii) are furnished in the most appropriate and least restrictive setting in which services can be safely provided;

(iv) are the most appropriate level or supply of service that can safely be provided;

(v) could not be omitted without adversely affecting the member's mental and/or physical health or the quality of care rendered;

(vi) are not experimental or investigative; and

(vii) are not primarily for the convenience of the member or provider.

(71) Member--A person who is eligible for benefits under Title XIX of the Social Security Act and Medicaid, is in a Medicaid eligibility category included in the Medicaid managed care program, and is enrolled in a Medicaid MCO.

(72) Member education program--A planned program of education:

(A) concerning access to health care services or dental services through the MCO and about specific health or dental topics;

(B) that is approved by HHSC; and

(C) that is provided to members through a variety of mechanisms that must include, at a minimum, written materials and face-to-face or audiovisual communications.

(73) Member materials--All written materials produced or authorized by the MCO and given out [distributed] to members or potential members that contain [containing] information about [concerning] the managed care program. Member materials include member identification [ID] cards, member handbooks, list of providers [provider directories], and marketing materials.

(74) Non-capitated service--A benefit available to members under the Texas Medicaid program for which an MCO is not responsible for payment.

(75) Nursing facility--As defined in §358.103 of this title (relating to Definitions) and 26 TAC §554.101 (relating to Definitions), an entity or institution, also called nursing home or skilled nursing facility, that provides organized and structured nursing care and services and is subject to licensure under Texas Health and Safety Code Chapter 242.

(76) Nursing facility add-on services--The types of services that are provided in a nursing facility setting by a nursing facility provider or another provider, but are not included in the nursing facility unit rate, including emergency dental services, physician-ordered rehabilitative services, customized power wheelchairs [wheel chairs], and augmentative communication devices[, tracheostomy care for youth under age 22, and ventilator care].

(77) Nursing facility services--The services included in the nursing facility unit rate, nursing facility Medicare coinsurance, and nursing facility add-on services.

(78) Nursing facility unit rate--The daily rate that covers Medicaid fee-for-service (FFS) standard care and services for nursing facility providers [The rate for the type of services included in the Medicaid fee-for-service (FFS) daily rate for nursing facility providers] as defined in 26 TAC §554.2601 (relating to Vendor Payment (Items and Services Included)). This includes [, including] room and board, medical supplies and equipment, personal needs items, social services, and non-legend [over-the-counter] drugs. The nursing facility unit rate also includes the [applicable nursing facility staff rate enhancements as described in §355.308 of this title (relating to Direct Care Staff Rate Component), and] professional and general liability insurance add-on payments as described in §355.312 of this title (relating to Reimbursement Setting Methodology--Liability Insurance Costs). The nursing facility unit rate excludes nursing facility add-on services.

(79) Outside regular business hours--As applied to FQHCs and rural health clinics (RHCs), means before 8 a.m. and after 5 p.m. Monday through Friday, weekends, and federal holidays.

(80) Participating MCO--An MCO that has a contract with HHSC to provide services to members.

(81) Permanency Care Assistance Program--The program administered by DFPS in accordance with 40 TAC Chapter 700, Subchapter J, Division 2 (relating to Permanency Care Assistance Program).

(82) Person-centered care--An approach to care that focuses on members as individuals and supports caregivers working most closely with them. It involves a continual process of listening, testing new approaches, and changing routines and organizational approaches in an effort to individualize and de-institutionalize the care environment.

(83) Person-centered planning--A documented service planning process that includes people chosen by the individual, is directed by the individual to the maximum extent possible, enables the individual to make choices and decisions, is timely and occurs at times and locations convenient to the individual, reflects cultural considerations of the individual, includes strategies for solving conflict or disagreement within the process, offers choices to the individual regarding the services and supports they receive and from whom, includes a method for the individual to require updates to the plan, and records alternative settings that were considered by the individual.

(84) Post-stabilization care service--A covered service, related to an emergency medical condition, that is provided after a Medicaid member is stabilized in order to maintain the stabilized condition, or, under the circumstances described in 42 CFR [C.F.R.] §438.114(b) and (e) and 42 CFR [C.F.R.] §422.113(c)(iii) to improve or resolve the Medicaid member's condition.

(85) Primary care provider (PCP)--A physician or other provider who has agreed with the health care MCO to provide a medical home to members and who is responsible for providing initial and primary care to patients, maintaining the continuity of patient care, and initiating referral for care.

(86) Provider--A credentialed and licensed individual, facility, agency, institution, organization, or other entity, and its employees and subcontractors, that has a contract with the MCO for the delivery of covered services to the MCO's members.

(87) Provider education program--Program of education presented by the MCO to the MCO's providers about the Medicaid managed care program and [about] specific health or dental care issues. This program is presented [by the MCO to its providers] through written materials and training events.

(88) Provider network or Network--All providers that have contracted with the MCO for the applicable managed care program.

(89) Quality improvement--A system to continuously examine, monitor, and revise processes and systems that support and improve administrative and clinical functions.

(90) Rural Health Clinic (RHC)--An entity that meets all of the requirements for designation as a rural health clinic under §1861(aa)(1) of the Social Security Act (42 U.S.C. §1395x(aa)(1)) and is approved for participation in the Texas Medicaid program.

(91) Service area--The counties included in any HHSC-defined service area as applicable to each MCO.

(92) Significant traditional provider (STP)--A provider identified by HHSC as having provided a significant level of care to the target population, including a DSH.

(93) STAR--The State of Texas Access Reform (STAR) managed care program that operates under a federal waiver and primarily provides, arranges for, and coordinates preventive, primary, acute care, and pharmacy services for low-income families, children, and pregnant women.

(94) STAR Health--The managed care program that operates under the Medicaid state plan and primarily serves:

(A) children and youth in DFPS conservatorship;

(B) young adults who voluntarily agree to continue in a foster care placement (if the state as conservator elects to place the child in managed care); and

(C) young adults who are eligible for Medicaid as a result of their former foster care status through the month of their 21st birthday.

(95) STAR Kids--The program that operates under a federal waiver and primarily provides, arranges, and coordinates preventative, primary, acute care, and long-term services and supports to persons with disabilities under the age of 21 who qualify for Medicaid.

(96) STAR+PLUS--The managed care program that operates under a federal waiver and primarily provides, arranges, and coordinates preventive, primary, acute care, and long-term services and supports to persons with disabilities and [elderly] persons age 65 and over who qualify for Medicaid based on the person's [by virtue of their] SSI or MAO status.

(97) STAR+PLUS Home and Community-Based Services Program--The program that provides person-centered care services that are delivered in the home or in a community setting, as authorized through a federal waiver under §1115 of the Social Security Act, to qualified Medicaid-eligible clients who are age 21 or older, as cost-effective alternatives to institutional care in nursing facilities.

(98) State plan--The agreement between the CMS and HHSC regarding the operation of the Texas Medicaid program, in accordance with the requirements of Title XIX of the Social Security Act.

(99) Supplemental Security Income (SSI)--The federal cash assistance program of direct financial payments to people who are 65 years of age or older, are blind, or have a disability administered by the Social Security Administration (SSA) under Title XVI of the Social Security Act. All persons who are certified as eligible for SSI in Texas are eligible for Medicaid. Local SSA claims representatives make SSI eligibility determinations. The transactions are forwarded to the SSA in Baltimore, which then notifies the states through the State Data Exchange (SDX).

(100) Texas Health Steps (THSteps)--The name adopted by the State of Texas for the federally mandated Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) services, described at 42 U.S.C. §1396d(r), [and] 42 CFR §440.40, and 42 CFR Part 441 Subpart B [§§441.40 - 441.62].

(101) Value-added service--A service provided by an MCO that is not "medical assistance," as defined by Texas Human Resources Code §32.003 [of the Texas Human Resources Code].

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 August 3, 2026.

TRD-202603261

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: September 13, 2026

For further information, please call: (512) 438-2910

SUBCHAPTER G. STAR+PLUS

STATUTORY AUTHORITY

The repeal is authorized by Texas Government Code §524.0151, which provides that the executive commissioner of HHSC shall adopt rules for the operation and provision of services by the health and human services system; and Texas Human Resources Code §32.021, which provides HHSC with the authority to administer the federal medical assistance program in Texas and to adopt rules and standards for program administration.

The repeal affects Texas Government Code §524.0151 and Texas Human Resources Code §32.021.

§353.608. Minimum Payment Amounts to Qualified Nursing Facilities.

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 August 3, 2026.

TRD-202603262

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: September 13, 2026

For further information, please call: (512) 438-2910

SUBCHAPTER R. TELECOMMUNICATIONS IN MANAGED CARE SERVICE COORDINATION AND ASSESSMENTS

STATUTORY AUTHORITY

The amendments are authorized by Texas Government Code §524.0151, which provides that the executive commissioner of HHSC shall adopt rules for the operation and provision of services by the health and human services system; and Texas Human Resources Code §32.021, which provides HHSC with the authority to administer the federal medical assistance program in Texas and to adopt rules and standards for program administration.

The amendments affect Texas Government Code §524.0151 and Texas Human Resources Code §32.021.

§353.1502. Definitions.

The following words and terms, when used in this subchapter, have the following meanings unless the context clearly indicates otherwise.

(1) Assessments--Managed care organization (MCO) evaluation of a member's medical and functional service needs, including [community-based] long-term services and supports, behavioral health services, therapies (e.g., physical, occupational, speech), and nursing services. This includes the MCO's completion of program-specific instruments and forms.

(2) Audio-only--Synchronous interactive, two-way audio communication that uses only sound and that meets the privacy requirements of the Health Insurance Portability and Accountability Act. Audio-only includes the use of telephonic communication. Audio-only does not include face-to-face communication.

(3) Audio-visual--Synchronous interactive, two-way audio and video communication that conforms to privacy requirements under the Health Insurance Portability and Accountability Act. Audio-visual does not include audio-only or in-person communication.

(4) CFR [C.F.R.]--Code of Federal Regulations.

(5) Change in condition--A significant change in a member's health, caregiver support, or functional status that will not normally resolve itself without further intervention and requires review of and revision to the member's current service plan or individual service plan.

(6) [(7)] Community First Choice (CFC)--A Medicaid state plan benefit described in 1 TAC Chapter 354, Subchapter A, Division 27 (relating to Community First Choice).

(7) [(8)] Covered services--Unless a service or item is specifically excluded under the terms of the state plan, a federal waiver, a managed care services contract, or an amendment to any of these, the phrase "covered services" means all health care, long term services and supports, nonemergency medical transportation services, or dental services or items that the MCO must arrange to provide and pay for on a member's behalf under the terms of the contract executed between the MCO and the Texas Health and Human Services Commission, including:

(A) all services or items considered [comprising] "medical assistance" as defined in Human Resources Code §32.003; and

(B) all value-added services under such contract.

(8) [(9)] Declared state of disaster--A State of Disaster declared by the governor in accordance with Texas Government Code §418.014.

(9) [(10)] Face-to-face--In-person or audio-visual communication that meets the requirements of the Health Insurance Portability and Accountability Act. Face-to-face does not include audio-only communication.

(10) [(11)] Functionally necessary covered services--LTSS [Community-based long-term services and supports] provided to assist members with activities of daily living based on a functional assessment of the member's activities of daily living and a determination of the amount of supplemental supports necessary for the member to remain independent or in the most integrated setting.

(11) [(12)] Healthcare service plan--An individualized plan developed with and for a member with special healthcare needs in the STAR Health program. The healthcare service plan includes the following:

(A) the member's history;

(B) a summary of current medical and social needs and concerns;

(C) short and long-term needs and goals; and

(D) a treatment plan to address the member's physical, psychological, and emotional healthcare problems and needs, including:

(i) a list of required services;

(ii) the frequency of each service;

(iii) a description of who will provide each service; and

(iv) for a member in the Early Childhood Intervention program, the individual family service plan.

(12) [(13)] HHSC--The Texas Health and Human Services Commission or its designee.

(13) [(14)] HIPAA--Health Insurance Portability and Accountability Act. Collectively, the Health Insurance Portability and Accountability Act of 1996, 42 U.S.C. §§1320d et seq., and regulations adopted under that act, as modified by the Health Information Technology for Economic and Clinical Health Act (HITECH) (P.L. 111-105), and regulations adopted under that act at 45 CFR Parts 160 and 164.

(14) [(15)] Individual service plan (ISP)--An individualized and person-centered plan in which a member enrolled in the STAR Kids, STAR Health, or STAR+PLUS HCBS program operated by an MCO, with assistance as needed, identifies and documents the member's preferences, strengths, and health and wellness needs in order to develop short term objectives and action steps to ensure personal outcomes are achieved within the most integrated setting by using identified supports and services. The ISP is supported by the results of a member's program-specific assessment and must meet the requirements of 42 CFR [C.F.R.] §441.301.

(15) [(16)] Information technology--Includes text, email, fax, secure transmission of clinical information, and HIPAA-compliant telecommunication tools such as health plan websites where a member or the member's legally authorized representative can access the member's healthcare information, including service plans.

(16) [(17)] In-person (or in person)--Within the physical presence of another person. In-person or in person does not include audio-visual or audio-only communication.

(17) [(18)] Legally authorized representative (LAR)--A person authorized by law to act on behalf of an individual with regard to a matter described in this subchapter, and may, depending on the circumstances, include a parent, guardian, or managing conservator of a minor, or the guardian of an adult, or a representative designated pursuant to 42 CFR [C.F.R.] §435.923.

(18) [(19)] Managed care organization (MCO)--An entity licensed and approved by the Texas Department of Insurance with which HHSC contracts to provide Medicaid services and that complies with Chapter 353 of this title (relating to Medicaid Managed Care).

(19) [(20)] Medical consenter--The person who may consent to medical care for a member under Texas Family Code Chapter 266.

(20) [(21)] Medically Dependent Children Program (MDCP)--A Medicaid §1915(c) [1915(c)] waiver program that provides community-based services to assist Medicaid members [beneficiaries] under age 21 to live in the community and avoid living in a care facility [institutionalization].

(21) [(22)] Medically necessary--Has the meaning as defined in §353.2 of this chapter (relating to Definitions).

(22) [(23)] Medical Necessity Level of Care (MN/LOC)--An assessment instrument used to determine medical necessity for a nursing facility as defined by 26 TAC §554.2601. An MN/LOC is required for STAR+PLUS HCBS Program and CFC eligibility.

(23) [(24)] Member--A person who is eligible for benefits under Medicaid, is in a Medicaid eligibility category included in the Medicaid managed care program, and is enrolled in a Medicaid MCO.

(24) [(25)] Minimum data set (MDS)--Has the meaning as defined in 26 TAC §554.101 (relating to Definitions).

(25) [(26)] Nursing facility--An entity that provides organized and structured nursing care and services, and is subject to licensure under Texas Health and Safety Code, Chapter 242.

(26) [(27)] Nursing facility level of care--The determination that the level of care required to adequately serve a member is at or above the level of care provided by a nursing facility.

(28) Person-centered care--An approach to care that focuses on members as individuals and supports caregivers working most closely with members. It involves a continual process of listening, testing new approaches, and changing routines and organizational approaches in an effort to individualize and de-institutionalize the care environment.

(29) Resident Assessment Instrument (RAI)--Has the meaning as defined in 26 TAC §554.101.

(30) [(31)] Service coordination--A specialized care management service that is performed or arranged by the MCO to identify needs, including physical health, mental health services and long term support services, facilitate development of a service plan or individualized service plan to address those identified needs, and coordination of services among the member's primary care provider, specialty providers, and non-medical providers to ensure timely access to covered services, non-capitated services, and community services.

(31) [(32)] Service coordinator--The person with primary responsibility for providing service coordination to Medicaid managed care members.

(32) [(33)] Service plan (SP)--An individualized and person-centered plan in which a member, with assistance as needed, identifies and documents the member's preferences, strengths, and needs in order to develop short-term objectives and action steps to ensure personal outcomes are achieved within the most integrated setting by using identified supports and services. The service plan is supported by the results of the member's program-specific assessment. In STAR+PLUS, a service plan applies to members who are not enrolled in the STAR+PLUS HCBS Program.

(33) [(34)] STAR+PLUS Home and Community-Based Services (HCBS) Program--The program that provides person-centered care services that are delivered in the home or in a community setting, as authorized through a federal waiver under §1115 of the Social Security Act, to qualified Medicaid-eligible clients who are age 21 or older, as cost-effective alternatives to institutional care in nursing facilities.

(34) [(35)] Telecommunications--An exchange of information by electronic and electrical means.

(35) [(36)] Telephonic--Audio-only communication using a telephone. Telephonic communication does not include audio-visual communication.

(36) [(37)] Verbal consent--The spoken agreement of a member, a member's legally authorized representative, or a member's medical consenter.

§353.1503. Use of Telecommunications in Assessments.

(a) STAR+PLUS.

(1) STAR+PLUS MCOs [managed care organizations (MCOs)] must conduct initial assessments and annual reassessments using HHSC-developed tools for STAR+PLUS HCBS Program eligibility in-person.

(2) STAR+PLUS MCOs must conduct all initial and annual assessments using HHSC-developed tools for functionally necessary covered services such as personal assistance services, Community First Choice services, and day activity and health services, in -person.

(3) Change in condition assessments that require or potentially require a change in the PDPM LTC [Resource Utilization Group (RUG)] level must be conducted in-person.

(4) STAR+PLUS MCOs may offer [to STAR+PLUS] members a choice of audio-visual communication in place of in-person change in condition assessments, if [as long as] the assessment does not require or potentially require a change in the PDPM LTC [RUG] level.

(A) When a STAR+PLUS [an] MCO conducts a change in condition assessment using audio-visual communication, the MCO must receive and document verbal consent [must be obtained and documented], and use a HIPAA-compliant audio-visual communication product [must be used].

(B) If verbal consent for audio-visual communication is not received, the STAR+PLUS MCO must meet the member in-person [use in-person communication].

(C) The STAR+PLUS MCO must inform members who use [utilize] audio-visual communication for change in condition assessments that the member's services depend on [will be subject to] the following. [:]

(i) The MCO must monitor services for fraud, waste, and abuse.

(ii) The MCO must determine whether additional social services or supports are needed.

(iii) The MCO must ensure that verbal consent to use telecommunications is documented in writing.

(5) Except as described in paragraph (4) of this subsection, a [A] STAR+PLUS MCO may not conduct an initial assessment, annual reassessment, or change in condition assessment without the in-person presence of the member.

(6) During a declared state of disaster, HHSC may issue direction to STAR+PLUS MCOs regarding whether initial, annual renewal, or change in condition assessments may be conducted through audio-visual or audio-only communication for STAR+PLUS members who reside in the area subject to the declared state of disaster.

(7) STAR+PLUS MCOs must adhere to §353.1153 of this chapter (relating to STAR+PLUS Home and Community Based Services (HCBS) Program) for STAR+PLUS assessments and service planning, and §353.1(c) of this chapter (relating to Purpose) regarding compliance with all terms of the contract with HHSC.

(8) For limited circumstances, STAR+PLUS MCOs may submit, in a manner and format prescribed by HHSC, an exceptions policy for required in-person assessments for approval by HHSC. The policy must be developed by the MCO's clinical staff, such as the Chief Medical Director or the Director's designee.

(b) STAR Kids.

(1) [The] STAR Kids MCOs [MCO] must administer the initial assessment and annual reassessments using the HHSC-developed STAR Kids assessment tool in-person.

(2) Change in condition assessments that require or potentially require a change in the PDPM LTC [RUG] level must be conducted in-person.

(3) MCOs may offer STAR Kids members a choice of audio-visual communication in place of in-person change in condition assessments, as long as the assessment does not require or potentially require a change in the PDPM LTC [RUG] level.

(A) When a STAR Kids [an] MCO conducts a change in condition assessment using audio-visual communication, the MCO must receive and document verbal consent [must be obtained and documented], and use a HIPAA-compliant audio-visual communication product [must be used].

(B) If verbal consent for audio-visual communication is not received, the STAR Kids MCO must meet the member in-person [use in-person communication].

(C) The STAR Kids MCO must inform members who use [utilize] audio-visual communication for change in condition assessments that the member's services depend on [will be subject to] the following. [:]

(i) The MCO must monitor services for fraud, waste, and abuse.

(ii) The MCO must determine whether additional social services or supports are needed.

(iii) The MCO must ensure that verbal consent to use telecommunications is documented in writing.

(4) [A] STAR Kids MCOs [MCO] may not conduct an assessment without the in-person presence of the member.

(5) During a declared state of disaster, HHSC may issue direction to STAR Kids MCOs regarding whether initial, annual renewal, or change in condition assessments may be conducted through audio-visual or audio-only communication for STAR Kids members who reside in the area subject to the declared state of disaster.

(6) STAR Kids MCOs must adhere to §353.1155 of this chapter (relating to Medically Dependent Children Program) for assessments and service planning, and §353.1(c) of this chapter regarding compliance with all terms of the contract with HHSC.

(7) For limited circumstances, STAR Kids MCOs may submit, in a manner and format prescribed by HHSC, an exceptions policy for required in-person assessments for approval by HHSC. The policy must be developed by the MCO's clinical staff, such as the Chief Medical Director or the Director's designee.

(c) STAR Health.

(1) The STAR Health MCO must administer the HHSC-developed assessment tool for initial Medically Dependent Children Program (MDCP) eligibility and annual reassessments in -person.

(2) The STAR Health MCO must conduct all initial and annual reassessments using HHSC-developed tools for functionally necessary covered services such as personal assistance services, personal care services, and Community First Choice services, in -person.

(3) Change in condition assessments that require or potentially require a change in the PDPM LTC [RUG] level must be conducted in-person.

(4) The STAR Health MCO [MCOs] may offer [STAR Health] members a choice of audio-visual communication in place of in-person change in condition assessments, if [as long as] the assessment does not require or potentially require a change in the PDPM LTC [RUG] level.

(A) When the STAR Health [an] MCO conducts a change in condition assessment using audio-visual communication, the MCO must receive and document verbal consent [must be obtained and documented], and use a HIPAA-compliant audio-visual communication product [must be used].

(B) If verbal consent for audio-visual communication is not received, the STAR Health MCO must meet the member in-person [use in-person communication].

(C) The STAR Health MCO must inform members who use [utilize] audio-visual communication for change in condition assessments that the member's services depend on [will be subject to] the following. [:]

(i) The MCO must monitor services for fraud, waste, and abuse.

(ii) The MCO must determine whether additional social services or supports are needed.

(iii) The MCO must ensure that verbal consent to use telecommunications is documented in writing.

(5) A STAR Health MCO may not conduct an assessment without the in-person presence of the member.

(6) During a declared state of disaster, HHSC may give [issue] direction to the STAR Health MCO on [MCOs regarding] whether initial, annual renewal, or change in condition assessments may be conducted through audio-visual or audio-only communication for [STAR Health] members who live [reside] in the area subject to the declared state of disaster.

(7) The [A] STAR Health MCO must adhere to §353.1155 of this chapter for MDCP assessments and service planning, and §353.1(c) of this chapter regarding compliance with all terms of the contract with HHSC.

(8) For limited circumstances, the [a] STAR Health MCO may submit, in a manner and format provided or described [prescribed] by HHSC, an exceptions policy for required in-person assessments. This policy must be approved [for approval] by HHSC. The policy must be developed by the MCO's clinical staff, such as the Chief Medical Director or the Director's designee.

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 August 3, 2026.

TRD-202603263

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: September 13, 2026

For further information, please call: (512) 438-2910