TITLE 1. ADMINISTRATION

PART 1. OFFICE OF THE GOVERNOR

CHAPTER 3. PUBLIC SAFETY OFFICE

SUBCHAPTER J. DETERMINATION OF DEFUNDING MUNICIPALITIES

1 TAC §§3.9401 - 3.9407

The Office of the Governor ("OOG") proposes changes to 1 Texas Administrative Code Chapter 3. The OOG proposes new Subchapter J, §§3.9401 - 3.9407, concerning the Determination of Defunding Municipalities.

BACKGROUND AND PURPOSE

The Public Safety Office ("PSO") of the OOG is responsible for determining whether a municipality is a defunding municipality, deciding whether to approve a municipality's proposed reduction to the appropriation to the municipality's police department for certain specified reasons that except a municipality from being considered a defunding municipality, and terminating a defunding determination upon finding that the defunding municipality has reversed the unapproved reduction. The establishment of these functions are governed by Chapter 109 of the Texas Local Government Code, which was added by the 87th Legislature, Regular Session, in House Bill 1900 (HB 1900). The primary purposes of the new subchapter are to provide guidance to municipalities that seek an exception for a reduction to the appropriation to the municipality's police department, to establish the criteria used to approve such proposed reductions, and to formalize the practices the Division follows when reviewing applicable budgets or complaints.

SECTION-BY-SECTION SUMMARY

Proposed new §3.9401 establishes the applicability of new Subchapter J.

Proposed new §3.9402 defines certain terms used in new Subchapter J.

Proposed new §3.9403 addresses the PSO review process for municipal budgets.

Proposed new §3.9404 explains the procedure for submitting an application for PSO approval of a proposed reduction of the appropriated budget for a municipality's police department.

Proposed §3.9405 states the review procedure and criteria used by PSO in deciding whether to approve a reduction under this exception.

Proposed §3.9406 establishes practices PSO will use to issue written determinations establishing a defunding municipality.

Proposed §3.9407 provides guidance regarding the PSO's termination of an issued defunding determination.

FISCAL NOTE

Aimee Snoddy, Executive Director, Public Safety Office, has determined that during each year of the first five years in which the new subchapter is in effect, there will be no expected fiscal impact on state government as a result of administering the proposed rules.

The proposed rules will have a negative fiscal impact on local governments where a municipality has taken an action for which the municipality has been determined to be a defunding municipality. Adverse impacts include loss of revenue from disannexed areas, tax rate restrictions, and limitations on fees or rates established by municipally owned utilities.

Ms. Snoddy does not anticipate any measureable effect on local employment or the local economy as a result of administering the proposed new subchapter.

PUBLIC BENEFIT AND COSTS

Ms. Snoddy has also determined that during each year of the first five years in which the proposed new subchapter is in effect, the public benefits anticipated as a result of the new subchapter will be to implement the statutory changes made by HB 1900, including ensuring that municipalities do not defund or reduce law enforcement budgets without a granted basis, and to standardize and provide notice of the requirements and practices regarding the issuance of notice for a defunding municipality.

Ms. Snoddy has determined there are no measurable anticipated economic costs to persons required to comply with the proposed new subchapter.

There will be no adverse economic effect on small businesses, micro-businesses, or rural communities, therefore, preparation of an Economic Impact Statement and a Regulatory Flexibility Analysis, as detailed under Texas Government Code §2006.002, is not required.

GOVERNMENT GROWTH IMPACT STATEMENT

Ms. Snoddy has determined that during each year of the first five years in which the proposed new subchapter is in effect, the new subchapter:

1) will not create or eliminate a government program;

2) will not require the creation of new employee positions or the elimination of existing employee positions;

3) will not require an increase or decrease in future legislative appropriations to the OOG;

4) will not require an increase or decrease in fees paid to the OOG;

5) does create new regulations;

6) will not expand, limit, or repeal existing regulations;

7) will not increase or decrease the number of individuals subject to the applicability of the rules; and

8) will not positively or adversely affect the Texas economy.

TAKINGS IMPACT ASSESSMENT

The OOG has determined that no private real property interests are affected by the proposed rules and the proposed rules do not restrict, limit, or impose a burden on an owner's rights to the owner's private real property that would otherwise exist in the absence of government action. As a result, the proposed new subchapter does not constitute a taking or require taking an impact assessment under Government Code §2007.043.

SUBMISSION OF COMMENTS

Written comments regarding the proposed new subchapter may be submitted to Stephanie Greger, Assistant General Counsel, Office of the Governor, P.O. Box 12428, Austin, Texas 78711 or by email to stephanie.greger@gov.texas.gov with the subject line "Public Safety Office Rule Review." The deadline for receipt of comments is 5:00 p.m., Central Time, on October 17, 2021.

STATUTORY AUTHORITY

The rules are proposed under Texas Government Code, §772.006(a)(10), which provides that the Criminal Justice Division shall adopt necessary rules, and Texas Local Government Code §109.006(b), which provides that the division shall adopt rules to implement requirements established in Chapter 109 of the Texas Local Government Code.

CROSS REFERENCE TO STATUTE

Chapter 3, Subchapter J. No other statutes, articles, or codes are affected by the proposed rules.

§3.9401.Applicability.

Subchapter J of this chapter applies only to a municipality with a population of more than 250,000.

§3.9402.Definitions.

(a) Budget--An annual municipal budget required under Sec. 102.002, Local Government Code, that is prepared by a municipality's budget officer to cover the proposed expenditures of the municipal government for the succeeding year.

(b) Municipality--A unit of local government that is established under Title 2, Subtitle A, Local Government Code, or that operates under a municipal charter that has been adopted or amended as authorized by Article XI, Section 5, Texas Constitution.

(c) Police department--A municipal law enforcement agency established as a regular police force under Chapter 341, Subchapter A, Local Government Code.

(d) PSO--The Public Safety Office, which includes the Criminal Justice Division of the Office of the Governor.

§3.9403.Review Process for Municipal Budgets.

(a) The PSO shall conduct an annual budget review of all municipalities with a population of more than 250,000 following each fiscal year beginning on or after September 1, 2021, to determine whether the municipality potentially qualifies as a defunding municipality because it reduced its appropriation to the municipality's police department in comparison to its preceding fiscal year.

(b) The PSO shall derive the population of municipalities of this state from the most recent census provided by the United States Census Bureau.

(c) Each annual review shall be based on the data collected from the municipality's publicly available budget as mandated by Chapter 102, Texas Local Government Code.

(d) The PSO may also consider the following resources in each annual review:

(1) law enforcement agency budget office data;

(2) publicly sourced data; and

(3) any other relevant data necessary for the PSO to meet the requirements in Chapter 109, Local Government Code.

§3.9404.Application for Exception for Certain Reductions to Budget.

(a) A municipality must submit an application provided under subsection (d) of this section to the PSO to request an exception from being considered a defunding municipality due to a reduction to the appropriation to the municipality's police department as set forth in Section 109.004(a)(2), Local Government Code.

(b) An application submitted under this section must be submitted by either the mayor or city manager of the applying municipality.

(c) The application and all necessary documentation must be submitted via certified mail to: Public Safety Office, Office of the Governor, PO Box 12428, Austin, Texas 78711.

(d) Applications must be postmarked no later than 60 business days prior to the formal adoption of the proposed budget. The PSO shall make a determination on granting the exception within 30 business days after it receives the application. PSO shall not grant an exception under this section after a municipality has adopted a budget for the fiscal year for which it seeks an exception.

(e) Application forms shall be made available at https://gov.texas.gov/organization/cjd.

§3.9405.Criteria for Approval of Certain Reductions to Budget.

The PSO's decision whether to grant approval for a reduction to the appropriation to a municipality's police department shall be based upon the following factors:

(1) the municipality's capital expenditures related to law enforcement during the preceding fiscal year;

(2) the municipality's response to a state of disaster declared under Section 418.014, Government Code; and

(3) any additional factors relevant to the application, including, but not limited to:

(A) effect on public safety;

(B) change in peace officer response times; and

(C) change in peace officer to population ratios.

§3.9406.Written Determination That A Municipality is a Defunding Municipality.

(a) If the PSO determines a municipality has defunded its police department as specified by Chapter 109, Local Government Code, the PSO shall issue a written determination to the municipality.

(b) The PSO shall send the written determination made under this Section to the Texas Comptroller of Public Accounts and, to the extent applicable, to the following office-holders or executive staff of the designated municipality:

(1) mayor;

(2) city manager; and

(3) all city council members.

§3.9407.Termination of Defunding Determination.

(a) A defunding determination issued by the PSO may be terminated by the PSO if the defunding municipality has reversed the reduction in appropriation to the municipality's police department, as described by Section 109.005, Local Government Code.

(b) A termination of a defunding determination shall be issued in writing to the parties listed in §3.9406(b) of this chapter.

(c) Decisions concerning a termination of a defunding determination shall be made at the time of the annual review conducted by PSO, unless a municipality submits to the PSO a separate request and supporting documentation earlier.

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 September 3, 2021.

TRD-202103522

Stephanie Greger

Assistant General Counsel

Office of the Governor

Earliest possible date of adoption: October 17, 2021

For further information, please call: (512) 463-2000


PART 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION

CHAPTER 353. MEDICAID MANAGED CARE

SUBCHAPTER M. HOME AND COMMUNITY BASED SERVICES IN MANAGED CARE

1 TAC §353.1155

The Texas Health and Human Services Commission (HHSC) proposes an amendment to 1 TAC §353.1155, concerning Medically Dependent Children Program.

BACKGROUND AND PURPOSE

The purpose of the proposal is to implement Texas Government Code, §531.0601, Long-term Care Services Waiver Program Interest Lists, for individuals enrolled in the Medically Dependent Children Program (MDCP) who, on or after December 1, 2019, become ineligible for MDCP for not meeting the level of care criteria for medical necessity for nursing facility care or the criteria of being under 21 years of age. Section 531.0601 was added to the Texas Government Code by Senate Bill 1207, 86th Legislature, Regular Session, 2019.

The proposed amendment also ensures the eligibility criteria for where an individual may reside is consistent with federal regulations, the MDCP waiver application, and state law on the number of children who can reside in an "agency foster home."

The proposed amendment aligns the MDCP interest list rules with the interest list rules in the Community Living Assistance and Support Services (CLASS), Deaf Blind with Multiple Disabilities (DBMD), Home and Community-based Services (HCS), and Texas Home Living (TxHmL) waiver programs.

SECTION-BY-SECTION SUMMARY

The proposed amendment to §353.1155 deletes subsection (a) because it is no longer necessary to include these applicability statements. The statements are not necessary because MDCP services are only provided under Medicaid managed care and because the rules under 40 TAC, Chapter 51 Medically Dependent Children Program were repealed effective December 22, 2020. The proposed amendment also reformats the rule section due to the deletion of subsection (a).

The proposed amendment in subsection (b), reformatted as subsection (a), makes changes in two of the MDCP eligibility criteria a managed care organization (MCO) assesses for an individual. The proposed amendment clarifies the criteria of not being enrolled in "another Medicaid HCBS waiver program" by listing each of the current waiver programs approved by the Centers for Medicare & Medicaid Services. The proposed amendment makes changes in the criteria for where an individual must reside to: (1) ensure the MDCP rule complies with the Code of Federal Regulations, Title 42, §441.301(b)(1)(ii) and (c)(5), that requires Home and Community Based Services (HCBS) be provided in a home and community-based setting; (2) clarify that the residency criteria applies to all individuals, not just individuals under 18 years of age; and (3) replace the "foster home" limit of no more than four children with "agency foster home." "Agency foster home" is defined in Texas Human Resources Code, §42.002, as a foster home that provides care for not more than six children and is considered to be an HCBS setting. The proposed amendment also makes minor editorial changes.

The proposed amendment in subsection (c), reformatted as subsection (b), makes the MDCP interest list rules consistent with the other waiver program interest list rules by adding: (1) the actions HHSC takes after receiving a request to add an individual's name to the MDCP interest list; and (2) how HHSC manages the MDCP interest list for an individual determined diagnostically or functionally ineligible during the enrollment process for the CLASS Program, DBMD Program, HCS Program, or TxHmL Program. The proposed amendment: (1) for an individual who becomes ineligible for MDCP due to the level of care criteria, specifies that the individual or the individual's legally authorized representative (LAR) may request one time that HHSC add the individual's name to the first position on the MDCP interest list; and (2) for an individual who becomes ineligible due to the level of care criteria or the criteria of being under 21 years of age, specifies that the individual or LAR may request that HHSC add the individual's name to the interest list for any of the listed waiver programs or change the individual's interest list date for any of the listed waiver programs in accordance with the interest list rules cited for each program. The proposed amendment, for an individual on the MDCP interest list who is assessed for MDCP and determined to be ineligible, adds that the individual has had an opportunity to exercise the individual's right to a fair hearing as described in 1 TAC Chapter 357, relating to Hearings. The proposed amendment, for an individual assessed for MDCP and determined to be ineligible, specifies that the individual may request to have the individual's name added to the MDCP interest list as described in paragraph (1) of this subsection to replace that the individual may request to be placed at the end of the interest list.

The proposed amendments in subsections (d) - (h), reformatted as subsections (c) - (g), make minor editorial changes.

FISCAL NOTE

Trey Wood, HHSC Chief Financial Officer, has determined that for each year of the first five years that the rule will be in effect, enforcing or administering the rule does not have foreseeable implications relating to costs or revenues of state or local government.

GOVERNMENT GROWTH IMPACT STATEMENT

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

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

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

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

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

(5) the proposed rule will not create a new rule;

(6) the proposed rule will expand an existing rule;

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

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

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

Trey Wood has also determined that there will be no adverse economic effect on small businesses, micro-businesses, or rural communities. No Texas Medicaid MCO is a small business, micro-business or rural community.

LOCAL EMPLOYMENT IMPACT

The proposed rule will not affect a local economy.

COSTS TO REGULATED PERSONS

Texas Government Code §2001.0045 does not apply to this rule because the rule is necessary to protect the health, safety, and welfare of the residents of Texas;

and is necessary to implement legislation that does not specifically state that §2001.0045 applies to the rule.

PUBLIC BENEFIT AND COSTS

Stephanie Stephens, State Medicaid Director, has determined that for each year of the first five years the rule is in effect, the public will benefit from rules that accurately describe the residency eligibility criteria for MDCP. Individuals enrolled in MDCP who, on or after December 1, 2019, becomes ineligible for MDCP for not meeting the level of care criteria for medical necessity for nursing facility care or the criteria of being under 21 years of age, will benefit from interest list rules that may decrease the amount of time it takes for the individual to be offered enrollment in the MDCP, DBMD, HCS, or TxHmL Programs.

Trey Wood has also determined that for the first five years the rule is in effect, there are no anticipated economic costs for those required to comply with the proposal because the proposed rules do not require any alteration to current business practices.

TAKINGS IMPACT ASSESSMENT

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

PUBLIC COMMENT

Written comments on the proposal may be submitted to Rules Coordination Office, P.O. Box 13247, Mail Code 4102, Austin, Texas 78711-3247, or street address 4900 North Lamar Boulevard, Austin, Texas 78751; or e-mailed 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 faxing or emailing comments, please indicate "Comments on Proposed Rule 20R085" in the subject line.

STATUTORY AUTHORITY

The amendment is authorized by Texas Government Code §531.0055, which provides that the Executive Commissioner of HHSC shall adopt rules for the operation and provision of services by the health and human services systems; Texas Human Resources Code §32.021, which authorizes the Executive Commissioner of HHSC to adopt rules necessary for the proper and efficient operation of the Medicaid program; and Texas Government Code, §531.0601, which describes circumstances under which HHSC must add the names of individuals who have become ineligible for the MDCP to the interest list for that program or other similar programs.

§353.1155.Medically Dependent Children Program.

[(a) This section applies to the Medically Dependent Children Program (MDCP) services provided under a Medicaid managed care program. The rules under 40 TAC, Chapter 51 (relating to Medically Dependent Children Program) do not apply to MDCP services provided under a Medicaid managed care program.]

(a) [(b)] An [The] MCO assesses an individual's eligibility for MDCP.

(1) To be eligible for MDCP, an individual must:

(A) be under 21 years of age;

(B) reside in Texas;

(C) meet the level of care [level-of-care] criteria for medical necessity for nursing facility care as determined by HHSC;

(D) have an unmet need for support in the community that can be met through one or more MDCP services [service];

(E) choose MDCP as an alternative to nursing facility services, as described in 42 CFR §441.302(d);

(F) not be enrolled in one of the following [another] Medicaid HCBS waiver programs [program] approved by CMS: [;]

(i) the Community Living Assistance and Support Services (CLASS) Program;

(ii) the Deaf Blind with Multiple Disabilities (DBMD) Program;

(iii) the Home and Community-based Services (HCS) Program;

(iv) the Texas Home Living (TxHmL) Program; or

(v) the Youth Empowerment Services waiver;

(G) live in:

(i) the individual's home; or

(ii) an agency foster home as defined in Texas Human Resource Code, §42.002, (relating to Definitions); and

[(G) if the individual is under 18 years of age, reside:]

[(i) with a family member; or]

[(ii) in a foster home that includes no more than four children unrelated to the individual; and]

(H) be determined by HHSC to be financially eligible for Medicaid under Chapter 358 of this title (relating to Medicaid Eligibility for the Elderly and People with Disabilities), Chapter 360 of this title (relating to Medicaid Buy-In Program), or Chapter 361 of this title (relating to Medicaid Buy-In for Children Program).

(2) An individual receiving Medicaid nursing facility services is approved for MDCP if the individual requests services while residing in a [the] nursing facility and meets the eligibility criteria listed in paragraph (1) of this subsection. If an [the] individual is discharged from a [the] nursing facility into [for] a community setting before being determined eligible for Medicaid nursing facility services and MDCP, the individual is denied immediate enrollment in the program.

(b) [(c)] HHSC maintains a statewide interest list of individuals interested in receiving services through MDCP.

(1) A person may request that an individual's name be added to the MDCP interest list by:

(A) calling HHSC toll-free 1-877-438-5658;

(B) submitting a written request to HHSC; or

(C) generating a referral through the YourTexasBenefits.com, Find Support Services screening and referral tool.

(2) If a request is made in accordance with paragraph (1) of this subsection, HHSC adds an individual's name to the MDCP interest list:

(A) if the individual is a Texas resident; and

(B) using the date HHSC receives the request as the MDCP interest list date.

(3) For an individual determined diagnostically or functionally ineligible during the enrollment process for the CLASS Program, DBMD Program, HCS Program, or TxHmL Program:

(A) if the individual's name is not on the MDCP interest list, at the request of the individual or LAR, HHSC adds the individual's name to the MDCP interest list using the individual's interest list date for the waiver program for which the individual was determined ineligible as the MDCP interest list date;

(B) if the individual's name is on the MDCP interest list and the individual's interest list date for the waiver program for which the individual was determined ineligible is earlier than the individual's MDCP interest list date, at the request of the individual or LAR, HHSC changes the individual's MDCP interest list date to the individual's interest list date for the waiver program for which the individual was determined ineligible; or

(C) if the individual's name is on the MDCP interest list and the individual's MDCP interest list date is earlier than the individual's interest list date for the waiver program for which the individual was determined ineligible, HHSC does not change the individual's MDCP interest list date.

(4) This paragraph applies to an individual who is enrolled in MDCP and, because the individual does not meet the level of care criteria for medical necessity for nursing facility care, is determined ineligible for MDCP after November 30, 2019 and before the date Texas Government Code §531.0601 expires. The individual or the individual's LAR may request one time that HHSC add the individual's name to the first position on the MDCP interest list.

(5) This paragraph applies to an individual who is enrolled in MDCP and, because the individual does not meet the level of care criteria for medical necessity for nursing facility care or the requirement to be under 21 years of age, is determined ineligible for MDCP after November 30, 2019 and before the date Texas Government Code §531.0601 expires. The individual or the individual's LAR may request that HHSC add the individual's name to the interest list for any of the following programs or change the individual's interest list date for any of the following programs in accordance with:

(A) 40 TAC §45.202 (relating to CLASS Interest List) for the CLASS Program;

(B) 40 TAC §42.202 (relating to DBMD Interest List) for the DBMD Program;

(C) 40 TAC §9.157 (relating to HCS Interest List) for the HCS Program; and

(D) 40 TAC §9.566 (relating to TxHmL Interest List) for the TxHmL Program.

(6) [(2)] HHSC removes an individual's name from the MDCP interest list if:

(A) the individual is deceased;

(B) the individual is assessed for MDCP [the program] and determined to be ineligible and has had an opportunity to exercise the individual's right to a fair hearing, as described in Chapter 357 of this title (relating to Hearings);

(C) the individual, medical consenter, or LAR requests in writing that the individual's name be removed from the interest list; or

(D) the individual moves out of Texas, unless the individual is a military family member living outside of Texas as described in Texas Government Code §531.0931:

(i) while the military member is on active duty; or

(ii) for less than one year after the former military member's active duty ends.

(7) An individual assessed for MCDP and determined to be ineligible, as described in paragraph (6)(B) of this subsection, may request to have the individual's name added to the MDCP interest list as described in paragraph (1) of this subsection.

[(3) An individual may request to be placed at the end of the interest list immediately following a determination of ineligibility].

(c) [(d)] An [The] MCO develops a person-centered individual service plan (ISP) for each member in MDCP [individual], and all applicable documentation, as described in the STAR Kids Handbook and the Uniform Managed Care Manual (UMCM).

(1) An [The] ISP must:

(A) include services described in the waiver approved by CMS;

(B) include services necessary to protect a member's [the individual's] health and welfare in the community;

(C) include services that supplement rather than supplant the member's [individual's] natural supports and other non-Medicaid supports and services for which the member [individual] may be eligible;

(D) include services designed to prevent the member's [individual's] admission to an institution;

(E) include the most appropriate type and amount of services to meet the member's [individual's] needs in the community;

(F) be reviewed and revised if the member's [an individual's] needs or natural supports change or at the request of the member or LAR [individual or their legally authorized representative]; and

(G) be cost effective.

(2) If a member's [an individual's] ISP exceeds 50 percent of the cost of the member's [individual's ] level of care in a nursing facility to safely serve the member's [individual's] needs in the community, HHSC must review the circumstances and, when approved, provide funds through general revenue.

(d) [(e)] An MCO is [MCOs are] responsible for conducting a reassessment [reassessments] and developing an ISP [development] for each member's [their enrollees'] continued eligibility for MDCP, in accordance with the policies and procedures outlined in the STAR Kids Handbook, UMCM, or materials designated by HHSC and in accordance with the timeframes outlined in the MCO's contract.

(e) [(f)] An MCO is [MCOs are] responsible for authorizing a provider of a member's choice [the individual's choosing] to deliver services outlined in the member's [an individual's] ISP.

(f) [(g)] A member [Individuals] participating in MDCP has [have] the same rights and responsibilities as any member [individual ] enrolled in managed care, as described in Subchapter C of this chapter [title] (relating to Member Bill of Rights and Responsibilities), including the right to appeal a decision made by HHSC or an MCO and the right to a fair hearing, as described in Chapter 357 of this title [(relating to Hearings)].

(g) [(h)] HHSC conducts utilization reviews of MCOs providing MDCP services.

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

Filed with the Office of the Secretary of State on September 3, 2021.

TRD-202103530

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: October 17, 2021

For further information, please call: (512) 438-2339


CHAPTER 355. REIMBURSEMENT RATES

SUBCHAPTER A. COST DETERMINATION PROCESS

1 TAC §355.108, §355.109

The Executive Commissioner of the Texas Health and Human Services Commission (HHSC) proposes amendments to §355.108, concerning Determination of Inflation Indices, and §355.109, concerning Adjusting Reimbursement When New Legislation, Regulations, or Economic Factors Affect Costs.

BACKGROUND AND PURPOSE

The purpose of the proposal is to clarify how the agency calculates reimbursement rate adjustments in response to inflation and payroll tax rate changes. The inflation methodologies pertaining to the proposed amendments are used to calculate payment rates for long-term services and supports programs. Calculating rates of inflation and applying them to appropriate costs allows HHSC to account for economic inflation when estimating the costs of rate changes implemented as a result of Legislative direction, calculating periodic rate changes such as biennial fee reviews, establishing rates for new programs, and completing other special analyses.

SECTION-BY-SECTION SUMMARY

The proposed amendment to §355.108(a) clarifies the purpose of adjusting allowable costs for inflation when HHSC conducts reimbursement reviews.

The proposed amendment to §355.108(b) makes general clarifying edits.

The proposed amendment to §355.108(c) replaces language about which indices HHSC may utilize with language about how costs are adjusted. The contents of subsections (d) and (e) are moved to new paragraphs (1) and (2), respectively, under subsection (c), and edited for clarity.

The proposed amendment to §355.108(e) deletes paragraphs (1), (2), and (3) because the language is unrelated to inflation. The language in paragraphs (1) and (2) are covered by §355.109, and paragraph (3) is moved to §355.109. Paragraphs (4) and (5) under subsection (e) are deleted and moved to new paragraph (2) under subsection (c). The content in paragraph (4) is moved to new paragraphs (2)(A) and (2)(C) under subsection (c), modified to specify the inflation index for the wages and salaries of licensed vocational nurses and nurse aides, and modified to reduce redundancy and increase clarity. The content of paragraph (5) is moved to new paragraph (2)(B) under subsection (c), modified to reduce redundancy and increase clarity, and modified to remove language regarding the Omnibus Reconciliation Act of 1984 and the Consolidated Omnibus Budget Reconciliation Act of 1985 because they are no longer applicable in this context.

The proposed amendment to §355.108 adds new subsection (d) to clarify how adjustments to costs are calculated using the inflation indices specified in subsection (c). New paragraph (1) adds information about the source of data HHSC uses to forecast inflation. New paragraph (2) and subparagraphs (A) and (B) outline how certain variables may be multiplied and divided to calculate a rate of inflation.

The proposed amendment to §355.109 adds subsection (a)(3) regarding adjustments to reimbursement in response to changes to unemployment tax rates. The content of paragraph (3) is from its current location in §355.108(e)(3) and revised to clarify the calculation. Minor edits are made throughout the rule for consistency and to correct spelling.

FISCAL NOTE

Trey Wood, Chief Financial Officer, has determined that for each year of the first five years the rules will be in effect, there may be an additional cost to state government as a result of enforcing and administering the rules as proposed. The estimated fiscal impact would only result if all rates were funded to account for the changes to inflation factors proposed.

The potential effect on state government for each year of the first five years the proposed rules are in effect is an estimated cost of $1,290,006 in General Revenue (GR) ($3,302,108 in All Funds (AF)) in fiscal year (FY) 2022, $2,653,481 in GR ($6,778,178 in AF) in FY 2023, $2,725,011 in GR ($6,960,652 in AF) in FY 2024, $2,803,437 in GR ($7,160,719 in AF) in FY 2025, $2,922,454 in GR ($7,464,334 in AF) in FY 2026.

For each year of the first five years the rules will be in effect, enforcing or administering the rules does not have foreseeable implications relating to costs or revenues of 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 not require an increase or a decrease in future legislative appropriations;

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

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

(6) the proposed rules will not expand, limit, or repeal an existing rule;

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

(8) HHSC has insufficient information to determine the proposed rules' effect on the state economy.

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

Trey Wood has also determined that the proposal could have an adverse economic effect on small businesses, micro-businesses, and rural communities.

HHSC is unable to determine the number of small businesses, micro-businesses, and/or rural communities that are subject to the rules.

HHSC is unable to estimate the economic effect of the rule on small businesses, micro-businesses and/or rural communities because of the uncertain nature of economic forecasts.

Several alternatives were considered in determining how to accomplish the objectives of the proposed rules while minimizing any adverse economic effect on small businesses, micro-businesses, or rural communities. Each of the alternatives assumes that the stated inflation methodologies will impact future rates. Given that the nursing wage inflation methodology update is the sole source of the potential fiscal impact, the first two alternatives focus on alternative nursing wage inflation methodologies.

Alternative 1: The U.S. Bureau of Labor Statistics (BLS) employment cost index for nursing wages outlined in the proposed amendment to §355.108 was chosen among other potential indices based on how closely its historical inflation results from 2011 to 2017 aligned with HHSC's actual cost report data of licensed vocational nurses and nurse aide wages during the same period. HHSC would alternatively use the Skilled Nursing Facility Centers for Medicare and Medicaid Services Market Basket Index, a BLS wage index on average hourly earnings in nursing and residential care facilities, or the same employment cost index but for compensation (wages, salaries, and benefits) as opposed to wages and salaries only. However, per analyses of each alternative index's historical inflation values versus HHSC's 2011 to 2017 cost report data, not only would the three alternative indices be less accurate than the chosen index, all three alternatives resulted in inflation factors that were lower than the cost report based historical inflation; this was not the case with the chosen index. Based on these analyses, these three alternative indices would be more likely to impact small businesses, micro-businesses, and rural communities adversely than the chosen employment cost index.

Alternative 2: For simplicity and to align with the inflation methodology of most other costs, HHSC would use the Personal Consumption Expenditures (PCE) chain-type price index for the inflation of nursing wages; however, this would be an inaccurate measure of inflation for licensed vocational nurses and nurse aides given that the wages of these occupations experience inflation at a much different, and typically, much higher level than that of general inflation. Small businesses, micro-businesses, and rural communities would likely be adversely affected by this alternative.

Alternative 3: HHSC would not adopt the proposed rules and thus be unable to clarify its inflation methodologies and increase the accuracy of cost projections. Inaccurate inflation methodologies could harm small businesses, micro-businesses, and rural communities if inaccurately calculating inflation leads to lower inflation factors and thus lower proposed methodological rates.

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.

PUBLIC BENEFIT AND COSTS

Victoria Grady, Director of Provider Finance, has determined that for each year of the first five years the rules are in effect, the public benefit will be improved transparency regarding calculations of inflation and cost projections.

Trey Wood 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 they implement changes to how HHSC calculates inflation used for rate reviews and therefore all costs to implement the proposal will be absorbed by HHSC.

TAKINGS IMPACT ASSESSMENT

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

PUBLIC COMMENT

Written comments on the proposal may be submitted to HHSC Provider Finance Department, Mail Code H-400, P.O. Box 149030, Austin, Texas 78714-9030, or by email to PFD-LTSS@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 Rules 19R021" in the subject line.

STATUTORY AUTHORITY

The amendments are authorized by Texas Government Code §531.0055, which provides that the Executive Commissioner of HHSC shall adopt rules for the operation and provision of services by the health and human services agencies; 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-1), 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 amendments affect Texas Government Code §531.0055, Texas Government Code Chapter 531, and Texas Human Resources Code Chapter 32.

§355.108.Determination of Inflation Indices.

(a) Purpose. In conducting reviews for adjustments to reimbursement, the Texas Health and Human Services Commission (HHSC) adjusts allowable costs to account for inflation between the reporting period and the prospective reimbursement period. HHSC retains the discretion to measure and apply inflation adjustments on a program-by-program basis using the options set forth in this section. [Function and types of indices. In order to account for cost inflation between the reporting period and the prospective reimbursement period, the Texas Health and Human Services Commission (HHSC) makes adjustments to allowable costs based on inflation factors or multipliers calculated from appropriate inflation indices. HHSC retains the discretion, on a program-by-program basis, to exercise the following options in order to obtain appropriate inflation indices.]

(b) Contracting for inflation index development. HHSC may contract with a reputable and experienced independent [professional ] firm to develop an appropriate inflation index [optional indices for Texas]. If HHSC obtains such an index [indices] under contract, the agency retains the option, on a program-by-program basis, to use this index and [of utilizing these indices and/or] those described in subsection (c) of this section [the remainder of this section], either separately or in combination, for reimbursement determination purposes.

(c) Inflation [Cost inflation] indices. Allowable costs are inflated using the general inflation index defined in paragraph (1) of this subsection unless otherwise specified in paragraph (2) of this subsection. [HHSC may utilize a general cost inflation index obtained from a reputable independent professional source and, where HHSC deems appropriate and pertinent data are available, develop and/or utilize several item-specific and program-specific inflation indices as follows.]

(1) [(d)] General [cost] inflation index. HHSC uses the Personal Consumption Expenditures (PCE) chain-type price index, published by the Bureau of Economic Analysis of the U.S. Department of Commerce, as the index for general [cost] inflation [index. The PCE is a nationally recognized measure of inflation published by the Bureau of Economic Analysis of the U.S. Department of Commerce. To project or inflate costs from the reporting period to the prospective reimbursement period, HHSC uses the lowest feasible PCE forecast consistent with the forecasts of nationally recognized sources available to HHSC at the time proposed reimbursement is prepared for public dissemination and comment].

(2) [(e)] Item-specific and program-specific inflation indices. HHSC may use a specific inflation index [indices] in place of the general [cost] inflation index defined [specified] in paragraph (1) of this subsection [(d) of this section] when an item- [appropriate item-specific] or program-specific inflation index is developed using data [cost indices are available] from HHSC cost reports or other surveys or data made available from another source [,other Texas state agencies or independent private sources, or nationally recognized public agencies or independent private firms], and HHSC has determined that this [these] specific index is [indices are] derived from information that adequately represents the program [program(s)] or cost [cost(s)] to which the specific index is to be applied. Program-specific inflation indices may be designated in program-specific reimbursement methodology rules. Item-specific inflation [For example, HHSC may use specific indices pertaining to cost items such as payroll taxes, key professional and non-professional staff wages, and other costs subject to specific federal or state limits. The specific] indices that HHSC may use include those listed in the subparagraphs of this paragraph [following] .

(A) HHSC uses the employment cost index of wages and salaries for private industry workers in nursing and residential care facilities to measure the inflation of wages and salaries of licensed vocational nurses and nurse aides. This index is published by the U.S. Bureau of Labor Statistics. Periodic reviews of the chosen inflation index are performed based on comparisons to cumulative HHSC cost report data on nursing wages and salaries; HHSC may modify the chosen inflation index and its application based on these periodic reviews.

(B) To adjust costs associated with fixed capital assets, HHSC uses one of two options. HHSC may follow program-specific reimbursement methodology rules to calculate a fixed capital asset component of the overall reimbursement in the form of a use fee. As an alternative to calculating the fixed capital asset use fee, HHSC may use one-half of the percentage increase in the Consumer Price Index for All Urban Consumers (CPI-U) to measure the inflation of lease expenses and to adjust the base of allowable depreciation for assets that have undergone an ownership change.

(C) Professional and paraprofessional wage and benefit inflation rates for state employees are based on state employee wage and salary increases determined by the Texas Legislature.

[(1) Federal Insurance Contributions Act (FICA) or Social Security taxes, including Old Age, Survivors, and Disability Insurance (OASDI) and Medicare taxes, are set by Federal statute. The inflation index for these taxes is the average tax rate, or average tax per payroll dollar, during the prospective reimbursement period divided by the average tax rate, or average tax per payroll dollar, during each provider's reporting period. If tax rates for the prospective reimbursement period are not available at the time proposed reimbursements are prepared for public dissemination and comment, the most recent known rates are assumed to remain in effect.]

[(2) Costs associated with workers' compensation, e.g., traditional insurance coverage, risk pool participation, and direct claims settlement costs, vary widely among individual providers. Even for those subscribing to traditional insurance, there is no uniform "rate" per payroll dollar. Consequently, these costs are inflated at the same rate as applicable employee wages.]

[(3) Except where indicated otherwise for specific programs, the unemployment tax inflation index is based on unemployment insurance payroll taxes in accordance with the Federal Unemployment Tax Act (FUTA) and the Texas Unemployment Compensation Act (TUCA) rates obtained from the Texas Workforce Commission. Because the TUCA component of the tax rate may be contractor-specific, HHSC obtains the average effective rates for the lowest available Standard Industrial Classification (SIC) code pertinent to each program. The unemployment tax inflation index is the average tax rate during the prospective reimbursement period divided by the average tax rate during each provider's reporting period. If either the FUTA or TUCA rates for the prospective rate period are not available at the time proposed reimbursements are prepared for public dissemination and comment, the most recent known rates are assumed to remain in effect. When changes occur in such factors as payroll limits to which tax rates apply, HHSC may make appropriate adjustments in projections to reflect new limits and related factors affecting the impact of new limits, such as employee turnover rates.]

[(4) Inflation factors for key professional and/or paraprofessional staff wages and salaries, e.g., nurses, nurse aides and attendants, are based on wage survey data pertaining to specific types of professional and paraprofessional staff in Texas when HHSC has determined that reliable data of this kind are available for specific or comparable programs. Projections from the cost reporting period to the reimbursement period are based on discernible trends or experience as evidenced by the most recent reliable data available at the time proposed reimbursement is prepared for public dissemination and comment, and take into consideration economic conditions and regulatory changes which may be reasonably anticipated for the reimbursement period. When HHSC has determined that reliable wage and salary data pertaining to specific types of staff in Texas are unavailable for specific or comparable programs, inflation factors for professional and/or paraprofessional staff are based on the lowest feasible forecast of the PCE. Professional and/or paraprofessional wage and benefit inflation rates for state employees are based on state employee wage and salary increases determined by the Texas Legislature.]

[(5) For the Medicaid nursing facility program, determination of adjustments to historical costs of fixed capital assets are consistent with requirements of the federal Omnibus Budget Reconciliation Act of 1984 (OBRA 1984) and Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA 1985). For each program, one of two options is used.]

[(A) Reimbursement is in the form of a fixed capital asset use fee component of the overall reimbursement, based on facility appraisals, as described in program-specific reimbursement methodology rules.]

[(B) Reimbursement for fixed capital asset costs is calculated based on historical costs included in the reimbursement component designated in program-specific reimbursement methodology rules. The index used to inflate lease expense and to adjust the allowable depreciation base of assets which have undergone ownership changes is one-half the All-item Urban Consumer Price Index (CPI-U).]

(d) Inflation adjustment calculations. When adjusting costs for inflation, HHSC considers economic conditions and regulatory changes that may be reasonably anticipated for the prospective reimbursement period as specified in §355.109 of this subchapter (relating to Adjusting Reimbursement When New Legislation, Regulations, or Economic Factors Affect Costs). For each inflation index specified in subsection (c) of this section:

(1) the inflation index is forecasted using a nationally recognized source available to HHSC at the time proposed payment rates are prepared for public dissemination and comment; and

(2) a rate of inflation over a specific period of time is calculated and applied to the allowable costs appropriate to that index as follows:

(A) costs reported in HHSC cost reports or other surveys are multiplied by the result of the inflation rate at the midpoint of the prospective reimbursement period divided by the inflation rate at the midpoint of the provider's reporting period; or

(B) costs are multiplied by the result of the average inflation rate during the entire prospective reimbursement period divided by the average inflation rate during the entire base period.

§355.109.Adjusting Reimbursement When New Legislation, Regulations, or Economic Factors Affect Costs.

(a) In conducting reimbursement reviews for adjustments, the Texas Health and Human Services Commission (HHSC) takes into consideration changes in laws, rules, regulations, policies, guidelines, or economic factors which will have a demonstrable material impact on most contracted providers' costs of providing services meeting federal and state standards.

(1) HHSC may recommend adjustments to reimbursement when federal or state laws, rules, regulations, policies, or guidelines are adopted, promulgated, judicially interpreted, or otherwise changed in ways that affect allowable costs. The law, rule, regulation, policy, or guideline change must result in necessary changes in allowable costs that:

(A) affect most, if not all, contracted providers; and

(B) require contracted providers to take definitive action to incur additional allowable costs not included in the cost database [data base] used to determine reimbursements and which would not otherwise be covered in reimbursements.

(2) HHSC may recommend adjustments to reimbursement when it can be clearly demonstrated that changes in economic factors will result in changes in allowable costs. The changes in economic factors must result in changes in allowable costs that:

(A) affect most, if not all, providers; and

(B) are allowable cost changes that the providers have little or no control over and are allowable costs that are not included in the cost database [data base] used to determine reimbursements and which would not otherwise be covered in reimbursements.

(3) HHSC may recommend adjustments to reimbursement when there is a change to any of the unemployment insurance tax components detailed in subparagraphs (A) - (D) of this paragraph. If unemployment insurance tax rates for the prospective reimbursement period are not available at the time reimbursement is prepared for public comment, the most recent known tax rates are assumed to remain in effect.

(A) The calendar year average Texas Unemployment Compensation Tax Act (TUCA) rate, as calculated by the Texas Workforce Commission (TWC); or

(B) if HHSC has determined that a specific program will have significantly higher or lower average unemployment tax costs than the average industry in Texas, the calendar year average effective TUCA rate for the North American Industry Classification System code or codes pertinent to that specific program, as calculated by TWC; or

(C) the rate of tax set by the Federal Unemployment Tax Act; or

(D) the maximum credits against tax set by the Federal Unemployment Tax Act.

(b) HHSC may recommend adjustments to reimbursement for the reasons stated in subsection (a)(1) of this section at the earliest feasible opportunity in order for the adjustment to become effective on the effective date of the federal or state laws, rules, regulations, policies, or guidelines. In the case of Medicaid state plan program reimbursements, the adjustments will not be effective until after the federal requirements for notice are met.

(c) HHSC may recommend adjustments to reimbursement when federal or state funding is changed in ways that affect the available funding for programs.

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 31, 2021.

TRD-202103422

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: October 17, 2021

For further information, please call: (512) 424-6637


SUBCHAPTER J. PURCHASED HEALTH SERVICES

DIVISION 5. GENERAL ADMINISTRATION

1 TAC §355.8095

The Executive Commissioner of the Texas Health and Human Services Commission (HHSC) proposes an amendment to §355.8095, concerning Medicaid Administrative Claiming Program.

BACKGROUND AND PURPOSE

The purpose of the proposal is to allow Aging and Disability Resource Centers (ADRCs) the opportunity to participate in the Medicaid Administrative Claiming (MAC) program. MAC is a joint federal-state funded program authorized by the Centers for Medicare & Medicaid Services (CMS) which provides reimbursement for the costs of Medicaid administrative activities that refer eligible or potentially eligible Medicaid recipients to appropriate Medicaid and health-related services. HHSC serves as a pass-through entity to administer these federal funds. MAC in Texas currently provides funding for school districts, mental health programs/programs serving individuals with intellectual and developmental disabilities, local health departments/districts, and early childhood intervention programs. Access to this reimbursement opportunity allows ADRCs a mechanism to better serve the healthcare needs of Medicaid beneficiaries.

The rule change also amends a statement regarding costs allowable for submission through a MAC claim to better reflect the staff requirements for cost reporting, as per the CMS-approved Time Study Implementation Guide.

SECTION-BY-SECTION SUMMARY

The proposed amendment to §355.8095(c)(2)(E) adds ADRCs as an eligible provider type.

The proposed amendment to §355.8095(f)(2)(A) and (B) adds the ADRC provider type and §355.8095(f)(2)(B)(iii) is amended to better explain allowable costs related to administrative and administrative support staff.

Minor edits are made to correct punctuation, capitalization, and a department name, and an edit is made for consistency.

FISCAL NOTE

Trey Wood, Chief Financial Officer, has determined that for each year of the first five years that the rule will be in effect, enforcing or administering the rule has foreseeable implications relating to costs of state government. HHSC anticipates there will be a small administrative cost but lacks data at this time to provide an estimate of the fiscal impact.

For each year of the first five years that the rule will be in effect, enforcing or administering the rule has foreseeable implications relating to costs of local government. HHSC anticipates there will be an increase in revenue from federal MAC but, because of the uncertainty of how many ADRCs will participate and at what level, is unable to provide an estimate of the amount at this time.

GOVERNMENT GROWTH IMPACT STATEMENT

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

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

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

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

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

(5) the proposed rule will not create a new rule;

(6) the proposed rule will not expand the existing rule;

(7) the proposed rule will increase the number of individuals subject to the rule; and

(8) HHSC has insufficient information to determine the proposed rule's effect on the state's economy.

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

Trey Wood has also determined that there will be no adverse economic effect on small businesses, micro-businesses, or rural communities. There are no anticipated adverse economic effects on small businesses, micro-businesses, or rural communities as participation in the program is voluntary and places no burden on small businesses, micro-businesses, or rural communities.

LOCAL EMPLOYMENT IMPACT

The proposed rule amendment will not affect a local economy.

COSTS TO REGULATED PERSONS

Texas Government Code §2001.0045 does not apply to this rule because the rule does not impose a cost on regulated persons and is necessary to receive a source of federal funds or comply with federal law.

PUBLIC BENEFIT AND COSTS

Victoria Grady, Director of Provider Finance, has determined that for each year of the first five years the rule is in effect, the public will benefit from the adoption of the rule. The anticipated public benefit will be allowing for new reimbursement opportunities for Aging and Disability Resource Centers related to Medicaid administrative and outreach activities.

Trey Wood has also determined that for the first five years the proposed rule amendment is in effect, there are no anticipated economic costs to persons who are required to comply with the rule because participation in the program is voluntary.

TAKINGS IMPACT ASSESSMENT

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

PUBLIC COMMENT

Questions about the content of this proposal may be directed to the MAC Team, Acute Care Section, Provider Finance Department at (512) 462-6200.

Written comments on the proposal may be submitted to HHSC Provider Finance at Mail Code H-400, P.O. Box 149030, Austin, Texas 78714; or by email to the MAC Team at MedicaidAdministrativeClaiming@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 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 21R060" in the subject line.

STATUTORY AUTHORITY

The proposed amendment to §355.8095 is authorized by 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-1), which establishes HHSC as the agency responsible for adopting reasonable rules governing the determination of fees, charges, and rates for Medicaid payments under the Texas Human Resources Code Chapter 32.

The amendment affects Texas Government Code Chapter 531 and Texas Human Resources Code Chapter 32.

§355.8095.Medicaid Administrative Claiming Program.

(a) Introduction. Medicaid Administrative Claiming (MAC) is a joint federal-state funded health care program which provides reimbursement for the costs of Medicaid administrative activities that refer eligible or potentially eligible Medicaid recipients to appropriate Medicaid and health-related services.

(b) Definitions. The following definitions apply when the terms are used in this section.

(1) CMS--Centers for Medicare & Medicaid Services. The federal agency within the United States Department of Health and Human Services responsible for overseeing and directing Medicare and Medicaid, or its successor.

(2) FFY--Federal fiscal year. Begins October 1 and ends September 30 of the following calendar year.

(3) Governmental entity--A state agency or a political subdivision of the state. A governmental entity includes a city, county, school district, special district, community mental health center, or other unit of government.

(4) HHSC--The Texas Health and Human Services Commission or its designee.

(5) MAC Financial Claim--The claim for reimbursement submitted to HHSC by a governmental entity each federal fiscal quarter.

(6) Participant--A governmental entity employee or contractor position, including a federally funded position, responsible for performing MAC activities in support of Medicaid or medical services as a weekly part of the position's job duties. These activities must directly support efforts to identify, enroll, and maintain Medicaid eligibility for eligible and potentially-eligible children and adults.

(7) PL--Participant list. A comprehensive list of all participants eligible for inclusion in the Random Moment Time Study, as defined in paragraph (9) of this subsection.

(8) QSI--Quarterly Summary Invoice. An invoice of costs reimbursable to a MAC participating governmental entity.

(9) RMTS--Random Moment Time Study. A federally-approved, statistical sampling technique administered by HHSC to identify the percentage of time that is reimbursable under the MAC program versus the percentage of time that is directly or indirectly related to covered services and other activities.

(10) STAIRS--State of Texas Automated Information Reporting System. HHSC's online application for submitting cost reports and accountability reports.

(c) Eligible providers. A governmental entity is eligible to be reimbursed for MAC activities if it meets the following criteria.[:]

(1) It has entered into a written provider agreement with HHSC.

(2) It operates one of the following provider types or programs:

(A) Early Childhood Intervention (ECI);

(B) local health department (LHD);

(C) local mental health authority or local intellectual and developmental disability authority (MH/IDD authority); [or]

(D) school district, public charter school, or state school (school district); or[.]

(E) Aging and Disability Resource Center (ADRC).

(3) The provider or program is enrolled in Medicaid.

(d) Eligible activities.

(1) To be claimed through the MAC program, administrative activities must:

(A) directly support efforts to identify, enroll, and maintain Medicaid eligibility for eligible and potentially-eligible children and adults; and

(B) directly support the provision of services covered under the Texas Medicaid State Plan.

(2) The following activities have been identified by CMS as eligible for reimbursement:

(A) outreach;

(B) utilization review;

(C) eligibility determination;

(D) Medicaid referral, coordination, and monitoring;

(E) scheduling or arranging transportation to Medicaid covered services;

(F) translation services;

(G) program planning;

(H) development and interagency coordination;

(I) training;

(J) provider relations; and

(K) activities that determine a consumer's need for direct medical care.

(e) Governmental Entity's Responsibilities.

(1) Designated contacts. A governmental entity that participates in MAC must:

(A) designate an employee to serve as an RMTS contact who:

(i) ensures that the entity's PL is verified and updated quarterly;

(ii) attends the RMTS training required in paragraph (2) of this subsection;

(iii) provides RMTS training to sampled participants;

(iv) provides ongoing technical assistance to entity participants;

(v) ensures entity compliance with 85 percent [85%] required time study response rate; and

(vi) ensures all contact information recorded in STAIRS is current and accurate; and

(B) designate an employee to serve as a MAC financial contact who:

(i) serves as the main point of contact between the entity and HHSC for all MAC financial-related issues;

(ii) maintains the accuracy of all contacts in STAIRS;

(iii) communicates with all key stakeholders to ensure all participants claimed engaged in eligible activities during the claiming period on a weekly basis;

(iv) attends the MAC financial training required in paragraph (3) of this subsection;

(v) certifies the accuracy of the MAC Financial Claim and the availability of matching funds;

(vi) ensures that the QSI is signed by an entity employee with signature authority and is notarized; and

(vii) ensures that all supporting documentation described in paragraph (4) of this subsection is maintained.

(2) RMTS training. Annual training conducted by HHSC is mandatory for all RMTS contacts who certify a PL for an entity.

(3) MAC financial training. HHSC provides annual training to participating governmental entities.

(A) Each primary MAC financial contact must attend and receive credit for training for each FFY in which the governmental entity chooses to participate.

(B) Training is provided for each FFY and is not retroactive.

(C) A governmental entity that does not have a trained MAC financial contact who is an employee of the entity is prohibited from submitting a MAC Financial Claim. Governmental entity-contracted vendors are not permitted to enter an entity's data into STAIRS for any entity that does not have a trained MAC financial contact who is an employee of the entity.

(4) Documentation. A governmental entity that participates in MAC must maintain documentation that supports the MAC activities performed by the entity and all costs submitted for reimbursement.

(A) A governmental entity must collect and maintain MAC participation documents in a readily-accessible location and format, including:

(i) financial data used to develop the expenditures and revenues for the claim calculations, including the state and local match used for certification;

(ii) copies of computations used to calculate financial costs;

(iii) all revenues offset from the claim, by source; and

(iv) all signed and certified QSIs.

(B) Participation documents must be maintained for a period of no less than three years. In the case of an audit during the first three retention years, the records must be retained three years after the close of the audit. A school district must retain participation documents for a period of no less than five years, but in the case of an audit during the first five retention years, the records must be retained five years after the close of the audit.

(f) Claim calculation.

(1) Preparers of MAC Financial Claims must apply the cost principles outlined in:

(A) 2 CFR Part [part] 200; and

(B) §355.102 of this chapter (relating to General Principles of Allowable and Unallowable Costs), §355.103 of this chapter (relating to Specifications for Allowable and Unallowable Costs), §355.104 of this chapter (relating to Revenues); and §355.105 of this chapter (relating to General Reporting and Documentation Requirements, Methods, and Procedures).

(2) The costs allowable for submission through a MAC Financial Claim are:

(A) for an ECI, LHD, MH/IDD authority, ADRC, or school district:

(i) salary, payroll taxes, and benefits; and

(ii) contracted staff expenses; and

(B) for an ECI, LHD, [or] MH/IDD authority, or ADRC:

(i) materials and supplies;

(ii) equipment and other allowable costs; and

(iii) expenses for administrative staff and administrative support staff excluded from the RMTS [time study positions left off the PL, unless the positions are clerical].

(3) HHSC reserves the right to retain five percent of the federal share of actual and reasonable costs for HHSC's own administrative costs.

(g) Claim submission.

(1) To claim reimbursement for eligible activities, eligible providers must:

(A) have an active written provider agreement with HHSC executed on or before the first day of the quarter in which reimbursement is being claimed;

(B) have participated in the HHSC-administered RMTS;

(C) have a MAC financial contact who is an entity employee and who has received credit for the MAC training for the FFY in which the governmental entity wishes to submit a claim;

(D) submit a certified PL for the quarter in which reimbursement is being claimed;

(E) submit a MAC Financial Claim; and

(F) submit a certified QSI.

(2) The MAC Financial Claim and other required documents are submitted to HHSC through STAIRS.

(h) Program specific requirements for school districts. Participating school districts must:

(1) have an approved MAC Program Operating Plan on file with the HHSC Provider Finance [Rate Analysis] Department; and

(2) when contracting with a vendor for which the school district will be held accountable, incorporate the authorization to enter and certify the school district's quarterly financial information into the contract and provide the contract upon HHSC request.

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 31, 2021.

TRD-202103420

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: October 17, 2021

For further information, please call: (512) 462-6200