DIVISION 1. COMMITTEES

1 TAC §§351.805, 351.821, 351.823, 351.825, 351.827

The executive commissioner of the Texas Health and Human Services Commission (HHSC) adopts amendments to §351.805, concerning State Medicaid Managed Care Advisory Committee; §351.821, concerning Value-Based Payment and Quality Improvement Advisory Committee; §351.823, concerning e-Health Advisory Committee; §351.825, concerning Texas Brain Injury Advisory Council; and §351.827, concerning Palliative Care Interdisciplinary Advisory Council.

The amended sections are adopted without changes to the proposed text as published in the June 6, 2025, issue of the Texas Register (50 TexReg 3293). These rules will not be republished.

BACKGROUND AND JUSTIFICATION

The amendments align the rules with statute and Executive Order No. GA-55 issued January 31, 2025.

The amendments also replace citations to Texas Government Code §531.012 with §523.0201 and §523.0203 in §§351.805, 351.821, 351.823, and 351.825 to comply with House Bill 4611, 88th Legislature, Regular Session, 2023. House Bill 4611 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 new Texas Government Code sections became effective April 1, 2025.

Additionally, the amendments extend the e-Health Advisory Committee (e-HAC) abolition date from December 31, 2025, to December 31, 2027. HHSC conducted an internal evaluation of e-HAC, including review of implementation of its recommendations to the agency, public and committee member participation at open meetings, and committee input to the agency regarding policy development and legislative implementation. In alignment with HHSC strategic goals and objectives, HHSC extends the committee for two years.

The amendments also include edits that align the rules with the current HHSC advisory committee rule template.

COMMENTS

The 21-day comment period ended June 27, 2025.

During this period, HHSC received comments regarding the proposed rules from three commenters. HHSC received comments from one individual, a member of the Texas e-Health Alliance, and a member of the e-HAC. A summary of comments relating to the rules and HHSC responses follows.

Comment: A commenter raised awareness of Senate Bill 14, 89th Texas Legislature, Regular Session, 2025 and House Bill 12, 89th Texas Legislature, Regular Session, 2025, and suggested amending the rules to address potential conflicts between HHSC policies and regulations. The commentor requested changes to implement these bills with respect to the advisory committees regarding conflicts between internal agency policies and corresponding administrative rules.

Response: HHSC appreciates the feedback and is currently working to implement the aforementioned bills; however, the requested change is outside the scope of the proposed rule amendments. No changes are made to the rules in response to this comment.

Comment: Two commenters expressed that they support the two-year extension of e-HAC. One commenter stated that the extension is an important step for Texas patients and providers and the commenter appreciates HHSC support of e-HAC. Another commenter highlighted the role e-HAC has in guiding HHSC and bringing attention to healthcare industry issues, and emphasized that advisory committees enhance transparency and accountability and strengthen public trust.

Response: HHSC acknowledges the comment. No changes are made to the rules in response to this comment.

STATUTORY AUTHORITY

The amendments are adopted under 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 Government Code §523.0201 and §523.0203, which authorizes the executive commissioner to establish advisory committees by rule.

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 July 14, 2025.

TRD-202502498

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Effective date: August 3, 2025

Proposal publication date: June 6, 2025

For further information, please call: (512) 221-9021

---

DIVISION 16. MEDICAID PROFESSIONAL SERVICES

1 TAC §355.8301

The executive commissioner of the Texas Health and Human Services Commission (HHSC) adopts new §355.8301, concerning Nurse Residency Program, in new Division 16, Medicaid Professional Services. New §355.8301 is adopted with changes to the proposed text as published in the January 24, 2025, issue of the Texas Register (50 TexReg 522). This rule will be republished.

BACKGROUND AND JUSTIFICATION

This new rule implements a Nurse Residency Program (NRP) to support increased retention of nurses through post-graduation and post-licensure residencies at state-owned Health-Related Institutions (HRIs). The new rule describes the participation requirements and structure of the NRP.

Payments will be based on the number of registered nurses (RNs) and licensed vocational nurses (LVNs) in formal nursing residencies using separate weighting factors as a fraction of the upper payment limit (UPL) for related fee-for-service claims. The new rule also describes the methodology used by HHSC to determine the payment amounts. HHSC has submitted this program to the Centers for Medicare and Medicaid Services (CMS) for approval under the Texas state plan. The program is expected to be funded by intergovernmental transfers.

COMMENTS

The 31-day comment period ended on February 24, 2025.

During this period, HHSC received comments regarding the proposed rule from four (4) commenters, the Teaching Hospitals of Texas, the Texas Medical Association, the University of Texas Medical Branch, and the Texas Nurses Association. A summary of comments relating to the rules and HHSC's responses follows.

Comment: Multiple commenters thanked HHSC for working to address the nursing shortage in Texas and support nurse training in the state.

Response: HHSC appreciates the support for the proposed amendment. No revision to the rule text was made in response to this comment.

Comment: One commenter urged HHSC to extend the program to public and private hospitals after CMS approval.

Response: HHSC acknowledges the comment and appreciates this suggestion. This program is new and unique. HHSC has submitted a state plan amendment to CMS based on the currently proposed structure. HHSC will take the suggestion to extend the program to additional public and private hospitals into account for future program updates based on the feedback received from CMS during its review process.

Comment: One commenter suggested clarifying the eligibility requirements for HRIs, suggesting that the program is limited to state-owned hospitals under the HRIs. The commenter alternatively suggested adopting a definition of eligible entities as state hospitals using the Medicaid program definition of state hospitals and using that definition consistently in the rule.

Response: In response to this comment, HHSC modified the definition of Health-Related Institution in §355.8301(b)(2) to remove the word "public" and replace it with "state-owned."

Comment: Two commenters recommended that the Medicaid payment gap allow for the greater of the Medicare UPL or the average commercial rate (ACR), since some hospitals' Medicare UPL may exceed the ACR.

Response: HHSC appreciates the suggestion but declines to make changes at this time because HHSC anticipates there will be an ACR gap sufficient to allow for supplemental payments to eligible institutions through this new program. HHSC will take this suggestion into consideration as we work through the implementation of this new program.

Comment: Two commenters asked for additional accreditation options for the program training requirements. Suggestions were allowing the Commission on Collegiate Nursing Education (CCNE) accreditation, Vizient, or American Association of Colleges and Nursing accreditation, or another similar internally developed program that meets similar standards and requirements. One commenter also suggested allowing hospital-developed programs to participate and suggested lowering the length of training to a three-month minimum for RNs and LVNs, advising that the actual length could vary based on facility and specialty.

Response: HHSC appreciates the suggestions but declines to make changes to the rule text. It is intentionally structured with a standard total duration to further training opportunities and incentivize LVNs and RNs to eventually practice independently. The goal of this program is to increase nurse retention, so shortening the duration required would not further the goal of the program to provide training and support to allow a transition period into practice for new nurses. Additionally, HHSC will be limiting the program to only the most thoroughly researched, vetted programs during the first year.

Comment: Two commenters suggested clarifying that although state general revenue (GR) is not available to support the program, state hospitals, which are appropriated GR, may use those funds as an intergovernmental transfer.

Response: In response to this comment, HHSC made a clarifying edit in §355.8301(d)(2) to specify that no state general revenue is available to HHSC to support the program.

Comment: One commenter recommended that the rule clarify the methodology for determining the number of nurse residents used as a basis for payment. The commenter suggested that HHSC use the total number of nurse residents in the prior year as the basis for payments in the program. The commenter also suggested that HHSC consider using either the total number of nurse residents employed in a year or the full-time equivalent nurse residents. The commenter believes that these suggested changes could help stabilize funding to reduce year-to-year variability.

Response: HHSC declines to make a change to use the total number of nurse residents in the prior year as a basis for payments. This program is designed to prioritize payments to providers serving a higher volume of Medicaid beneficiaries and those that have a higher number of LVNs and RNs in the clinical education program. Therefore, the program structure is dependent on the number of nurses training in the program year, with the applicable Medicaid payment gap for the identified timeframe. If prior years were used to make payments, it is anticipated that a reconciliation to actual nurses in the program year would be required; this change would not reduce variability as the commenter suggests.

Comment: One commenter wants HHSC to ensure that weighted payment factors account for all program costs, including salaries, accreditation fees, and training expenses, beyond only the preceptor costs.

Response: HHSC declines to make changes because the weighting factors are based on the total number of RNs and LVNs participating in the program and the Medicaid payment gap. This gap is not specific to program costs. The weighted payment factors divide the total Medicaid payment gap between RN and LVNs as a percentage of the total number of nurses. These factors would account for additional program costs within the available Medicaid payment gap.

Comment: Two commenters strongly recommend changing the program name and language to "transition to practice program" in lieu of "residency" to avoid confusion with medical provider residencies for physicians.

Response: HHSC had stakeholder meetings throughout the development of this program, discussed multiple options, and changed the name of the program to the current title based on stakeholder feedback. HHSC understands the concern and that there may be specific titles for programs used by individual hospitals. HHSC declines to make changes to the program name at this time and will reassess if CMS has questions during the state plan amendment approval process.

HHSC revised §355.8301(b) and (b)(6) to make minor stylistic edits.

HHSC revised §355.8301(b)(9) to remove "May 1, 2025" as the date the initial program period begins and replaced it with "on the later of the effective date of this rule or the effective date of the state plan amendment described in subsection (a)." HHSC also replaced "August 31, 2025" as the date the initial program period ends with "August 31 following the date the initial program period begins." These changes were made to reflect the timeframe for the initial program period in the event the rule or the state plan amendment or both become effective after August 31, 2025.

HHSC revised §355.8301(d)(2)(B) to remove "local" before "governmental entity for accuracy.

HHSC revised §355.8301(d)(3) to replace the acronym "NPIs" with its full form, "National Provider Identifiers," for clarity.

STATUTORY AUTHORITY

The new section is adopted under 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; Texas Human Resources Code §32.021 and Texas Government Code §532.0051(a), which provide HHSC with authority to administer the federal medical assistance (Medicaid) program in Texas; and Texas Government Code §532.0057(a), which establishes HHSC as the agency responsible for adopting reasonable rules governing the determination of fees, charges, and rates for Medicaid payments under Texas Human Resources Code, Chapter 32.

The new section implements Texas Government Code Chapters 524 and 532, and Texas Human Resources Code Chapter 32.

§355.8301. Nurse Residency Program.

(a) Introduction. This section establishes the Nurse Residency Program (NRP), wherein the Texas Health and Human Services Commission (HHSC) directs payments to eligible health-related institutions (HRIs) that serve Texas Medicaid fee-for-service patients. This section also describes the methodology used by HHSC to calculate and administer such payments. A provider is eligible for a payment under this section only if HHSC submits, and the Centers for Medicare & Medicaid Services (CMS) approves, a state plan amendment permitting HHSC to make payments under this section to eligible HRIs participating in the program.

(b) Definitions. The following words and terms, when used in this section, have the following meanings unless the context clearly indicates otherwise.

(1) Fee-for-service (FFS)--A system of health insurance payment in which HHSC pays a fee to a health care provider through the contracted Medicaid claims administrator directly for each service rendered. For Texas Medicaid purposes, FFS excludes any service rendered under a managed care program through a managed care organization.

(2) Health-Related Institution (HRI)--A state-owned institution named in Texas Education Code §63.002.

(3) Intergovernmental transfer (IGT)--A transfer of public funds from another state agency or a non-state governmental entity to HHSC.

(4) Medicaid payment gap--The difference between what commercial insurers are estimated to pay for the services and what Medicaid actually paid for the same services from the most recent FFS upper payment limit (UPL) demonstration.

(5) Nurse trainee--A graduate of an accredited Registered Nurse (RN) or Licensed Vocational Nurse (LVN) training program who is engaging in a preceptorship through an entity participating in the Nurse Residency Program.

(6) Nurse Residency Program--A formal Practice Transition Accreditation Program (PTAP) accredited onboarding program or preceptorship for a nurse trainee to observe and develop skills in the practice of nursing. This training must be directly overseen by a preceptor. The clinical portion must be at least three months in duration for LVN preceptorships and at least 6 months in duration for RN preceptorships or as otherwise specified by the PTAP.

(7) Participating entity--A healthcare organization that:

(A) fulfills the participation requirements in subsection (c) of this section; and

(B) meets the requirements for an eligible institution in subsection (d)(1) of this section.

(8) Preceptor--A licensed RN or LVN who practices in the clinical setting and directly supervises clinical learning experiences for a nurse trainee in that setting. A clinical preceptor assists in the evaluation of the nurse trainee during the experiences and in acclimating the student to the role of nurse. A clinical preceptor facilitates nurse trainee learning according to the facility policy for clinical preceptorship.

(9) Program period--A period for which a participating entity may receive the NRP amounts described in this section. Each program period is equal to a state fiscal year (SFY) beginning September 1 and ending August 31 of the following year. The initial program period begins on the later of the effective date of this rule or the effective date of the state plan amendment described in subsection (a), and ends on August 31 following the date the initial program period begins.

(10) Sponsoring governmental entity--A state or non-state governmental entity that agrees to transfer to HHSC some or all of the non-federal share of program expenditures under Subchapter J of this chapter.

(11) Total program value--The maximum amount available under the NRP for a program period, as determined by HHSC.

(c) Participation requirements. As a condition of participation, all eligible institutions participating in the program must allow for the following:

(1) An eligible institution must submit a properly completed enrollment application by the due date determined by HHSC. The enrollment period must be no less than 15 business days, and the final date of the enrollment period is at least nine days prior to the IGT notification.

(2) The participating entity is required to submit all requested information about the entity's residency programs consistent in a manner specified by HHSC.

(d) Payments for a participating entity.

(1) Eligible institutions. Payments under this subsection are limited to HRIs that have a Nurse Residency Program as defined in subsection (b) of this section. Eligible institutions must be enrolled in Medicaid and participate in Texas Medicaid FFS.

(2) Non-federal share of program payments. The non-federal share of the payments is funded through IGTs from sponsoring governmental entities. No state general revenue is available to HHSC to support the program.

(A) HHSC must receive the non-federal portion of program payments for NRP through a method approved by HHSC.

(B) A participating entity under this subsection must designate a single governmental entity to provide the non-federal share of the payment through a method determined by HHSC. If the single local governmental entity transfers less than the full non-federal share of an eligible institution's payment amount calculated in any paragraph under this subchapter, HHSC recalculates that specific participating entity's payment based on the amount of the non-federal share transferred.

(C) HHSC communicates suggested IGT responsibilities. Suggested IGT responsibilities are based on the maximum dollars to be available under the program for the program period as determined by HHSC. HHSC also communicates estimated revenues based on HHSC's suggested IGT responsibilities that each enrolled entity could earn through the NRP for the program period.

(D) HHSC issues an IGT notification to specify the date the IGT is requested to be transferred at least 14 business days before IGT transfers are due. HHSC publishes the IGT deadlines and all associated dates on the HHSC website.

(3) Payment Methodology. HHSC sums the professional services FFS Medicaid payment gap for all billed Medicaid claims from associated provider National Provider Identifiers, not including anesthesia, dental, or pharmacy codes, or radiology codes billed separately as professional or technical components. HHSC then:

(A) multiplies by a fixed weighting factor determined by the percentage of RNs participating in the program as compared to all RNs and LVNs participating in the program, and then multiplies the product by the number of RNs in residency during the program period for Component 1; and

(B) multiplies by a second fixed weighting factor determined by the percentage of LVNs participating in the program as compared to all LVNs and RNs participating in the program, and then multiplies the product by the number of LVNs in residency during the program period for Component 2.

(e) Changes in operation. If a participating entity closes voluntarily or ceases to provide services, the entity must notify the HHSC Provider Finance Department by email, hand delivery, United States (U.S.) mail, or special mail delivery within 10 business days after closing or ceasing to provide services. Notification is considered to have occurred when the HHSC Provider Finance Department receives the notice.

(f) Reconciliation. HHSC reconciles the amount of the non-federal funds actually expended under this section during the program period with the amount of funds transferred to HHSC by a sponsoring governmental entity for that same period. If the amount of non-federal funds actually expended under this section is less than the amount transferred to HHSC, HHSC refunds the balance proportionally to how it was received.

(g) The two payments under this section will be made on a semi-annual basis.

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 July 3, 2025.

TRD-202502251

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Effective date: July 23, 2025

Proposal publication date: January 24, 2025

For further information, please call: (737) 867-7999

---