TITLE 1. ADMINISTRATION

DIVISION 4. MEDICAID HOSPITAL SERVICES

1 TAC §355.8070

The executive commissioner of the Texas Health and Human Services Commission (HHSC) adopts an amendment to §355.8070, concerning Hospital Augmented Reimbursement Program (HARP).

Section 355.8070 is adopted without changes to the proposed text as published in the August 7, 2026, issue of the Texas Register (51 TexReg 5040). This rule will not be republished.

BACKGROUND AND JUSTIFICATION

The amendment to §355.8070 establishes a calculation that allows any unused HARP payment room to be distributed to other eligible hospitals within the same class based on an allocation proportionate to the remaining Medicaid charges that exceed all Medicaid payments, including supplemental payments and the portion of HARP payments attributable to the inpatient fee-for-service (FFS) Medicare payment gap.

A previous amendment to §355.8070, related to the HARP program, was adopted and effective on April 2, 2025. That amendment added the Centers for Medicare & Medicaid Services (CMS) definition of a nominal charge provider and clarified that the payment methodology for HARP payments will limit inpatient Medicaid payments, so they do not exceed inpatient Medicaid charges for all providers, except those that meet the Medicare definition of a nominal charge provider.

This amendment establishes a mechanism to distribute any unused payment room after the limitation is applied to other eligible hospitals within the same class. This amendment also includes edits to correct grammar and punctuation, spell out acronyms for clarity, and reorganize parts where necessary.

COMMENTS

The 14-day comment period ended on August 21, 2026.

HHSC received comments regarding the proposed rule from four commenters. HHSC received comments from Teaching Hospitals of Texas (THOT), Medical Center Health System, Parkland Health, and the Texas Hospital Association (THA). A summary of comments relating to the rule and HHSC's responses follow.

Comment: Multiple commenters supported the rule amendment to distribute unused HARP payment capacity to other eligible hospitals within the same hospital class. The commenters stated that it is a reasonable and efficient amendment to the existing HARP methodology and that redistribution based on each eligible hospital's excess inpatient Medicaid fee-for-service charges is fair and administratively practical.

Response: HHSC appreciates the supportive comments. No revision to the rule was made in response to these comments.

Comment: A commenter supported the rule amendment and recommended spelling out payment methodologies for classes of hospitals that do not currently receive HARP, such as private institutions for mental diseases (IMDs), state government-owned hospitals, and state-government-owned IMDs.

Response: HHSC appreciates the comment and understands the desire to expand and include this payment methodology to the listed HARP provider classes. However, these additional hospital classes have not yet been approved by CMS for HARP supplemental payments and are not eligible for the program at this time. No revision to the rule was made in response to the comment.

STATUTORY AUTHORITY

The amendment 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, and Texas Government Code §524.0005, which provides the executive commissioner of HHSC with broad rulemaking authority; Texas Human Resources Code §32.021 and Texas Government Code §532.0051, which provide HHSC with the 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 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 September 11, 2026.

TRD-202603949

Stephanie Tourk

Deputy Chief Counsel

Texas Health and Human Services Commission

Effective date: October 1, 2026

Proposal publication date: August 7, 2026

For further information, please call: (512) 487-3480

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