TITLE 1. ADMINISTRATION
PART 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION
CHAPTER 354. MEDICAID HEALTH SERVICES
SUBCHAPTER
O.
The executive commissioner of the Texas Health and Human Services Commission (HHSC) adopts amendments to §354.4003, concerning Definitions; §354.4005, concerning Personal Care Services that Require the Use of EVV; §354.4006, concerning Home Health Care Services that Require the Use of EVV; and §354.4013, concerning HHSC and MCO Compliance Reviews and Enforcement Actions.
Sections 354.4003, 354.4005, 354.4006 and 354.4013 are adopted without changes to the proposed text as published in the April 3, 2026, issue of the Texas Register (51 TexReg 2166). These rules will not be republished.
BACKGROUND AND JUSTIFICATION
The amendments, in part, are necessary to comply with the Centers for Medicare & Medicaid Services (CMS) Contract Year 2023 Medicare Advantage and Part D Final Rule that required states to phase-out their Medicare-Medicaid Plan (MMP) Dual Demonstration Program. The amendments reflect that the STAR+PLUS MMP ended December 31, 2025.
The amendments also reflect that electronic visit verification (EVV) was required for STAR+PLUS MMP personal care and home health services, if delivered before January 1, 2026. This clarification is necessary because though the MMP Dual Demonstration Program ended on December 31, 2025, program providers and financial management services agencies (FMSAs) may need to submit EVV claims for MMP services that were delivered before the MMP Dual Demonstration Program end date.
The amendments remove Free Text Reviews from the list of compliance reviews because HHSC and managed care organizations (MCOs) stopped conducting these reviews in 2023.
The amendments add an EVV Alternative Device Compliance Review, and the actions HHSC and the MCO may take, if a program provider's or consumer directed services (CDS) employer's EVV Alternative Device Compliance score exceeds the allowable percentage score described in the EVV Policy Handbook. The alternative device reduction schedule is in the EVV Policy Handbook, limiting the use of an alternative device as an approved method to clock in and clock out of an EVV system over a four-year period beginning September 1, 2025 (fiscal year 2026). Gradually reducing reliance on alternative devices allows program providers and CDS employers time to migrate their service providers and CDS employees to one of the other approved clock in and clock out methods. The purpose for limiting the use of an alternative device is to enhance program integrity.
The amendments require a program provider or CDS employer to use EVV if Medicaid pays for any part of the personal care or home health care services that require EVV. These amendments clarify that EVV must be used if these services are paid for by both Medicaid and a third party, such as private insurance.
The amendment to §354.4003 defines "dual eligible member" to make sure the public understands the meaning of this term when used in the rules and revises the definitions of EVV proprietary system, EVV state vendor system, and program provider to make their meanings clearer.
The amendment to §354.4013 clarifies that the action HHSC or the MCO may propose the third time a CDS employer does not meet the EVV Usage Score may end the member's participation in the CDS option, not terminate the member from the Medicaid program.
COMMENTS
The 31-day comment period ended May 4, 2026.
HHSC received comments regarding the proposed rules from two commenters. HHSC received comments from Deaf Blind Services Of Texas and the Texas Association of Home Care and Hospice. A summary of comments relating to the rules and HHSC's responses follows.
Comment: One commentor suggested the rules do not clearly state EVV is required when Medicaid pays for any part of a service, and that such language should be added.
Response: HHSC disagrees and declines to revise the rule in response to this comment. Upon adoption, §354.4005(a), §354.4005(b), §354.4006(a) and §354.4006(b) will explicitly state that a program provider or CDS employer must use EVV to document the delivery of personal care services and home health care services if HHSC, an HHSC designated contractor, or an MCO pays for any part of the claim for these services.
Comment: One commenter suggested that the rules should clearly state whether value-added services provided by an MCO require EVV.
Response: HHSC disagrees and did not revise the rules in response to this comment. EVV is designed to protect state and federal Medicaid funds from fraud, waste and abuse. Value-added services (VAS), by definition, are supplemental benefits provided by an MCO that are not Medicaid-covered services and do not involve Medicaid funds. Section 354.4005 and §354.4006 tie the EVV requirement to specific personal care and home health services delivered as part of Medicaid benefits. VAS is outside of that scope. Although the MCO is paying for VAS, the MCO's payment to the provider for the services provided exclusively under VAS is not part of a Medicaid claim. An MCO offering VAS may choose to require that the provider comply with visit verification regarding VAS, but the MCO's VAS requirements are not subject to Medicaid rules. Adding VAS to an EVV rule would be inconsistent with the rule's own defined scope of applicability.
Comment: One commenter stated that EVV was introduced as a no-cost clock in and clock out system and that the rules do not save the state money. The EVV system has evolved into a restrictive process with mandatory compliance that has shifted the operational costs to the providers and FMSAs.
Response: HHSC disagrees and declines to revise the rule in response to this comment. HHSC must comply with state and federal law to implement EVV as required by Texas Government Code Chapter 532, Subchapter F and the 21st Century Cures Act (Section 1903(l) of the Social Security Act). The Cures Act requires that HHSC use EVV to collect visit transaction data electronically. Texas' EVV model is an Open Vendor Model which is a hybrid model where the state contracts with at least one EVV system while allowing the program providers and FMSAs to use a proprietary system if they choose. If a program provider or FMSA chooses to use a proprietary system, they assume all costs associated with the use of that system. If program providers and FMSAs do not wish to assume these costs, they may choose to use the state-provided EVV system vendor for free.
Comment: One commenter suggested alternative devices be available the same as other approved clock in and clock out methods.
Response: HHSC disagrees and declines to revise the rule in response to this comment. Alternative devices do not track the location of service delivery like the mobile application and the landline telephone. HHSC is limiting alternative devices in order to improve program integrity.
Comment: In a joint comment, both commenters expressed concerns about the alternative device usage limits. They stated that program providers and CDS employers must monitor the use of alternative devices to ensure service providers and CDS employees do not exceed the thresholds, but that the thresholds are not specified in the rule. In addition, they have stated that program providers and CDS employers should be allowed to use alternative devices after the phase out. They suggest that the rules be amended to include the alternative device usage thresholds and allow program providers and CDS employers to use alternative devices for some visit transactions after the use is phased out.
Response: HHSC disagrees with this comment and declines to revise the rule in response to this comment at this time. HHSC is not eliminating alternative devices but rather reducing the allowable percentage of visit transactions made with an alternative device. The reduction will occur over a four-year period beginning September 1, 2025 (fiscal year 2026), and effective September 1, 2028, program providers and CDS employers must limit the number of visit transactions made with an alternative device to 5% of their total visit transactions. This allows program providers and CDS employers to use alternative devices in limited situations where no other alternative exists for using EVV. The alternative device reduction schedule is in the EVV Policy Handbook and referenced in the rules. HHSC will review the rules and consider whether it is appropriate to amend the rules in a future rule project to include the alternative device reduction schedule.
Comment: One commenter stated that limiting the use of alternative devices requires staff to own smartphones to use the mobile application for clocking in and clocking out. Many service providers and CDS employees do not own or have access to a smart phone. The commenter also stated that the change does not allow service providers to share a smart phone with family members. This creates a barrier to people becoming service providers or CDS employees and limits the available workforce. The amended rules do not allow service providers or CDS employees to share a smart phone with family.
Response: HHSC disagrees and declines to revise the rule in response to this comment. HHSC does not mandate that service providers use their personal devices or personal data. It is the responsibility of the service provider's employer (the program provider or CDS employer) to ensure that the service provider has the tools necessary to comply with EVV requirements. There is no restriction on a service provider or CDS employee using a family member's smartphone or device for EVV. The service provider or CDS employee may use a family member's smart phone or device but must not share their login credentials or allow the family member's smartphone or device to store their login credentials. The Federal Communications Commission Lifeline program also offers free and low-cost smart phones with data plans to people who meet certain eligibility criteria. Program providers and CDS employers may encourage staff who do not have a smart phone or device to explore the Lifeline program.
Comment: One commenter stated the limit on the use of alternative devices does not offer any public benefit or protect taxpayer money and would potentially harm members.
Response: HHSC disagrees and declines to revise the rule in response to this comment. Since alternative devices do not track the location, it is not possible to confirm where the service provider or CDS employee uses the device to obtain the code used to clock in and clock out. The service provider or CDS employee could remove the alternative device from the member's home and obtain the codes while not providing services. Limiting the use of alternative devices to those situations where there is no other option for clocking in and clocking out increases the integrity of the program.
Comment: One commenter stated that HHSC should not have the authority to limit approved clock in and clock out methods. Landlines are almost obsolete, so limiting the use of alternative devices would force service providers and CDS employees to use a smart phone or device. Federal guidance requires EVV to be easy to use.
Response: HHSC disagrees and declines to revise the rule in response to this comment. HHSC has broad statutory authority to implement and amend rules, including those regarding EVV. Texas Government Code §532.0260 directs HHSC to adopt rules to implement EVV. HHSC has been given authority to decide what methods and models to use. The Cures Act, CMS regulations, and Texas Government Code Chapter 532, Subchapter F do not require the use of a specific type of EVV model or method for collecting the required data, and do not require HHSC to permit the use of alternative devices. CMS guidance says states should develop an EVV system that best meets the state's needs in consultation with stakeholders. HHSC has multiple EVV workgroups that have been meeting since 2019 to discuss all aspects of EVV.
Comment: One commenter stated the purpose of EVV is to prevent fraud and ensure the member receives care. Using an alternative device is not fraudulent.
Response: HHSC agrees but declines to revise the rule in response to this comment. While alternative devices are not fraudulent in and of themselves, they are more prone to be used fraudulently than the other approved EVV clock in and clock out methods because alternative devices do not provide the location where the device is used.
Comment: One commenter opposed the 80% EVV Usage score in §354.4013(b) and (c) because it does not reflect service delivery standards, only EVV transactions. In addition, the commenter stated the usage score can initiate a progressive enforcement process and is a risk when applied to home and community-based settings.
Response: HHSC appreciates the commenter's participation in its rulemaking process. However, HHSC did not propose to amend §354.4013(b) in this proposal. HHSC amended §354.4013(c)(3) to change "terminate" to "end" to improve the plain language of the rule, but otherwise there were no substantive changes to §354.4013(c). Therefore, HHSC declines to revise the rule in response to this comment because this comment is out of scope for this proposal.
Comment: One commenter suggested the rules should be revised to include timelines for HHSC and the MCOs to respond when the program providers or CDS employers submit training documentation, corrective action plans and other required documentation. The lack of timelines creates uncertainty regarding the acceptance of the documentation.
Response: HHSC disagrees and declines to revise the rule in response to this comment. The rule already includes certain compliance timelines. For example, throughout §354.4013, the rules require that corrective action plans must be completed within 10 days. Additionally, the rule requires that the EVV policy and system trainings be completed within a time frame that will be specified.
Comment: One commenter suggested the EVV rules should include hearing rights.
Response: The right to request an administrative hearing, and to appeal, for an HHSC or MCO proposed action described in §354.4013 are currently found in the EVV rules in §354.4025, Administrative Hearing. Therefore, HHSC declines to revise §354.4013 in response to this comment.
Comment: One commenter suggested that the rule should include a phased implementation of compliance standards.
Response: HHSC disagrees and declines to revise the rule in response to this comment. As detailed in the EVV Policy Handbook 7040, HHSC has already established a timeline to reduce the use of alternative devices over a four-year period beginning September 1, 2025 (fiscal year 2026).
Comment: One commenter is concerned about escalation to potential contract termination for non-compliance and suggests HHSC should require a case-by-case review prior to initiating a termination and use training and corrective action plans before more severe penalties.
Response: HHSC declines to revise the rule in response to this comment. HHSC policy and the rules in §354.4013(b) and (h) require program providers and CDS employers to complete training and corrective action plans if they exceed the allowable Alternative Device Usage percentage. HHSC may only propose to terminate the contract of the program provider or to end the member's participation in the CDS option when there is a third occurrence of exceeding the Alternative Device Usage percentage in a 24-month period. In addition, the EVV Policy Handbook details that before proposing to terminate the program provider's contract or to end the member's participation in the CDS Option, HHSC or the MCO must do their due diligence and make sure failure to meet and maintain an acceptable compliance score was not because of circumstances beyond the program provider's or CDS employee's control, such as payer errors, system issues or natural disasters.
Comment: One commenter suggested HHSC use timesheets with member verification as an alternative to electronic clock in and clock out methods.
Response: HHSC disagrees and declines to revise the rule in response to this comment. CMS has clarified that states cannot accept a timesheet completed by the service provider or CDS employee and verified by the member in lieu of the service provider or CDS employee using EVV. Per the CMS Informational Bulletin titled "Additional EVV Guidance" dated August 8, 2019, timesheets verified by the member do not sufficiently electronically verify the required data elements. Allowing this would violate the Cures Act requirements to use EVV for personal care services and home health care services.
Comment: One commenter stated that eliminating free text reviews limits the program provider's or CDS employer's ability to document valid explanations.
Response: HHSC disagrees and declines to revise the rule in response to this comment. HHSC and the MCOs no longer conduct free-text reviews. HHSC added bill time in and bill time out fields that allow program providers, FMSAs and CDS employers to adjust the time of a visit transaction. As a result of the addition of these fields the clock in and clock out time generated when the service provider or CDS employee clocks in or clocks out of the EVV system are no longer adjusted. In addition, the new Reason Codes effective Oct. 1, 2023, provide more information, thus eliminating the need for free text. Program providers and CDS employers are still able, if they choose, to include free text to provide further explanations. Eliminating the routine review of free text by HHSC and the MCOs does not limit the provider's ability to include free text for documentation purposes. HHSC program staff conducting compliance reviews and OIG staff conducting investigations may use the free text as additional documentation.
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; Texas Government Code §532.0260, which provides the executive commissioner of HHSC with broad rulemaking authority; and Texas Human Resources Code §32.021, which provides HHSC with the authority to administer the federal medical assistance program in Texas and to adopt rules and standards for program administration.
The 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 24, 2026.
TRD-202603142
Karen Ray
Chief Counsel
Texas Health and Human Services Commission
Effective date: August 13, 2026
Proposal publication date: April 3, 2026
For further information, please call: (512) 438-5241