TITLE 1. ADMINISTRATION

PART 1. OFFICE OF THE GOVERNOR

CHAPTER 5. GENERAL ADMINISTRATION

SUBCHAPTER C. REGULATORY COMPLIANCE DIVISION

1 TAC §§5.206, 5.209 - 5.211, 5.213

The Regulatory Compliance Division of the Office of the Governor ("Division") adopts amendments to 1 TAC §§5.206, 5.209, 5.210, and 5.213, concerning the Division's procedure for reviewing a supplemental amendment to a previously reviewed proposed rule. The Division also adopts a new rule at 1 TAC §5.211, concerning the Division's ability to request information from a state agency when deciding whether to direct the state agency to submit a proposed rule for review. The amendments and new rule are adopted without changes to the proposed text as published in the September 3, 2021, issue of the Texas Register (46 TexReg 5491) and will not be republished.

REASONED JUSTIFICATION

Pursuant to Texas Occupations Code, Chapter 57, Subchapter C, the Division is responsible for conducting an independent review of certain state agencies' proposed rules that affect market competition. The primary purpose of the adopted amendments and new rule is to increase efficiencies in the Division's processes for identifying and reviewing proposed rules that affect market competition.

The adopted amendments to §5.206 allow the Division to review an additional amendment to a previously reviewed proposed rule and issue an addendum to the Division's original determination letter.

The adopted amendments to §5.209 set out the procedures and timeline for issuing an addendum to a determination letter.

The adopted amendments to §5.210 explain how a state agency may adopt and implement a proposed rule if an addendum is issued.

The adopted amendments to §5.213 require that any addenda issued by the Division be maintained on the Division's website.

The adopted new §5.211 makes clear that, prior to initiating a review, the Division may request information from a state agency to determine whether a proposed rule affects market competition.

SUMMARY OF COMMENTS

The Division received one comment from the Texas Behavioral Health Executive Council in support of the adopted amendments and new rule.

STATUTORY AUTHORITY

The amendments and new rule are adopted under Texas Occupations Code §57.107, which provides that the Division may adopt rules to carry out its functions under Texas Occupations Code, Chapter 57, Subchapter C.

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 October 8, 2021.

TRD-202103990

Erin Bennett

Director, Regulatory Compliance Division

Office of the Governor

Effective date: October 28, 2021

Proposal publication date: September 3, 2021

For further information, please call: (512) 463-8500


PART 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION

CHAPTER 355. REIMBURSEMENT RATES

SUBCHAPTER F. REIMBURSEMENT METHODOLOGY FOR PROGRAMS SERVING PERSONS WITH MENTAL ILLNESS OR INTELLECTUAL OR DEVELOPMENTAL DISABILITY

1 TAC §355.727

The Texas Health and Human Services Commission (HHSC) adopts an amendment to §355.727, concerning Add-on Payment Methodology for Home and Community-Based Services Supervised Living and Residential Support Services. Section 355.727 is adopted without changes to the proposed text as published in the August 13, 2021, issue of the Texas Register (46 TexReg 4927). This rule will not be republished.

BACKGROUND AND JUSTIFICATION

The purpose of the adopted amendment extends the period in which add-on payments for Home and Community-based Services Waiver (HCS) Supervised Living and Residential Support Services (SL/RSS) are effective.

The amendment is necessary to comply with 2022-23 General Appropriations Act, Senate Bill (S.B.) 1, 87th Legislature, Regular Session, 2021 (Article II, HHSC, Rider 30), which requires HHSC to maintain rate increases authorized by the 2020-21 General Appropriations Act, House Bill 1, 86th Legislature, Regular Session, 2019 (Article II, HHSC, Rider 44).

The amendment to §355.727(b) revises the last date in which HHSC will pay an add-on to the direct care portion of the SL/RSS rates from August 31, 2021, to August 31, 2023. The amendment to §355.727(c)(1) revises the period in which providers may be required to submit cost reports in addition to other reporting requirements. This amendment corresponds with the date revision in the change to subsection (b). The amendment to §355.727(c)(1) also revises the name of HHSC Rate Analysis to reflect the new name of the department: the HHSC Provider Finance Department.

COMMENTS

The 21-day comment period ended September 3, 2021.

During this period, HHSC did not receive any comments regarding the proposed rule.

STATUTORY AUTHORITY

The amendment is adopted under 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 system; 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 medical assistance (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 October 4, 2021.

TRD-202103917

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Effective date: October 24, 2021

Proposal publication date: August 13, 2021

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


SUBCHAPTER J. PURCHASED HEALTH SERVICES

DIVISION 4. MEDICAID HOSPITAL SERVICES

1 TAC §355.8061

The Texas Health and Human Services Commission (HHSC) adopts an amendment to §355.8061, concerning Outpatient Hospital Reimbursement. The amendment to §355.8061 is adopted with changes to the proposed text as published in the August 13, 2021, issue of the Texas Register (46 TexReg 4931). This rule will be republished.

BACKGROUND AND JUSTIFICATION

The purpose of the amendment is to comply with Senate Bill (S.B.) 1, Article II, HHSC, Rider 8(f), 87th Legislature, Regular Session 2021, and to make other amendments to enhance clarity, consistency, and specificity. HHSC is required by S.B. 1 to allocate certain funds appropriated to provide an increase to outpatient reimbursement rates for rural hospitals. HHSC will implement an increase to outpatient services reimbursement by removing the cap that was established September 1, 2013, and applying a percentage increase to the cost to charge ratios for rural hospitals.

The amendment will also eliminate the cost settlement of payments to maintain the level of payment directed by the rider. Rider 8 states that reimbursement for outpatient emergency department services which do not qualify as emergency visits may not exceed 65 percent of the cost. Therefore, HHSC will decrease the allowable percentage to 55 percent for these services to accommodate the increase in cost to charge ratios and retain the payments below 65 percent of the cost.

Pursuant to S.B. 170, 86th Legislature, Regular Session, 2019 and S.B. 1621, 86th Legislature, Regular Session, 2019, HHSC's managed care contracts require managed care organizations to reimburse rural hospitals using a minimum fee schedule for services delivered through the Medicaid managed care program. The proposed amendment adds subsection (e), requiring a Medicaid minimum fee schedule for all rural hospitals, to conform the rule to the current law as well.

In addition, the amendment explains the cost to charge ratio (CCR) rate-setting process by including a section specific to rural hospitals.

COMMENTS

The 21-day comment period ended September 3, 2021.

During this period, HHSC received three comments regarding the amendment from one entity: Texas Hospital Association (THA). A summary of the comments relating to the rule and HHSC's responses are as follows.

Comment: The first comment requested clarification on the effective date of the rule.

Response: HHSC will implement the outpatient rate changes with an effective date of September 1, 2021 to comply with S.B. 1, Article II, Rider 8(f), 87th Legislature, Regular Session, 2021. However, the rule amendment will take effect on a subsequent date. Pursuant to §355.201, rate changes may be implemented in compliance with either the methodology described in Chapter 355 or consistent with legislative appropriations. No changes were made to the rule text as a result of this comment.

Comment: The second comment requested confirmation on whether the full amount of funds would be allocated over ten months if implemented November 1, 2021.

Response: HHSC will implement an increase to outpatient service reimbursement by applying a percentage increase to the cost to charge ratios for rural hospitals effective September 1, 2021. No changes were made to the rule text as a result of this comment.

Comment: The third comment asked for clarification regarding the way funds will be distributed by the managed care organizations (MCO).

Response: HHSC adopted a methodology effective September 1, 2020 through contracts with the MCOs requiring the MCOs to reimburse rural hospitals for Medicaid managed care services using a minimum fee schedule as contemplated by S.B. 170, 86th Legislature, Regular Session, 2019 and S.B. 1621, 86th Legislature, Regular Session, 2019.

HHSC amended subsection (e) to reflect the correct effective date of the MCO contract amendments.

STATUTORY AUTHORITY

The amendment is adopted under Texas Government Code §531.033, which authorizes the Executive Commissioner of HHSC to adopt rules necessary to carry out HHSC's duties; 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; 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 medical assistance payments under the Texas Human Resources Code Chapter 32; and Texas Government Code §531.02194, which requires adoption of a prospective reimbursement methodology for the payment of rural hospitals.

§355.8061.Outpatient Hospital Reimbursement.

(a) Introduction. The Texas Health and Human Services Commission (HHSC), or its designee reimburses outpatient hospital services under the reimbursement methodology described in this section. Except as described in subsections (c) and (d) of this section, HHSC will reimburse for outpatient hospital services based on a percentage of allowable charges and an outpatient interim rate.

(b) Interim reimbursement.

(1) HHSC will determine a percentage of allowable charges, which are charges for covered Medicaid services determined through claims adjudication.

(A) For high volume providers that received Medicaid outpatient payments equaling at least $200,000 during calendar year 2004.

(i) For children's hospitals and state-owned hospitals as defined in §355.8052 of this division (relating to Inpatient Hospital Reimbursement), the percentage of allowable charges is 76.03 percent, except as described in subparagraph (C) of this paragraph.

(ii) For rural hospitals as defined in §355.8052 of this division, the percentage of allowable charges is 100 percent.

(iii) For all other providers, the percentage of allowable charges is 72.00 percent.

(B) For all providers not considered high volume providers as determined in paragraph (1)(A) of this subsection.

(i) For children's hospitals and state-owned hospitals as defined in §355.8052 of this division, the percentage of allowable charges is 72.27 percent, except as described in subparagraph (C) of this paragraph.

(ii) For rural hospitals as defined in §355.8052 of this division, the percentage of allowable charges is 100 percent.

(iii) For all other providers, the percentage of allowable charges is 68.44 percent.

(C) For children's hospitals:

(i) The percentage of allowable charges described in subparagraphs (A)(i) and (B)(i) of this paragraph are subject to the prior written approval of the Legislative Budget Board and the Governor, as required by the 2014-2015 General Appropriations Act (Article II, Health and Human Services Comm., S.B. 1, 83rd Leg., Regular Session, 2013, Rider 83 and Special Provisions Relating to All Health and Human Services Agencies, Section 44, Rate Limitations and Reporting Requirements).

(ii) If the percentages of allowable charges described in subparagraphs (A)(i) and (B)(i) of this paragraph are not approved as described in clause (i) of this subparagraph, the percentages of allowable charges described in subparagraphs (A)(iii) and (B)(iii) of this paragraph apply.

(D) For outpatient emergency department (ED) services that do not qualify as emergency visits, which are listed in the Texas Medicaid Provider Procedures Manual and other updates on the claims administrator's website, HHSC will reimburse:

(i) rural hospitals, as defined in §355.8052 of this division, an amount not to exceed 65 percent of allowable charges after application of the methodology in paragraph (2)(C) of this subsection, which will result in a payment that does not exceed 65 percent of allowable cost; and

(ii) all other hospitals, a flat fee set at a percentage of the Medicaid acute care physician office visit amount for adults.

(2) HHSC will determine an outpatient interim rate for each non-rural hospital, which is the ratio of Medicaid allowable outpatient costs to Medicaid allowable outpatient charges derived from the hospital's Medicaid cost report.

(A) For a non-rural hospital with at least one tentative cost report settlement completed prior to September 1, 2013, the interim rate is the rate in effect on August 31, 2013, except the hospital will be assigned the interim rate calculated upon completion of any future cost report settlement if that interim rate is lower.

(B) For a non-rural new hospital that does not have at least one tentative cost report settlement completed prior to September 1, 2013, the default interim rate is 50 percent until the interim rate is adjusted as follows:

(i) If the non-rural hospital files a short-period cost report for its first cost report, the hospital will be assigned the interim rate calculated upon completion of the hospital's first tentative cost report settlement.

(ii) The hospital will be assigned the interim rate calculated upon completion of the hospital's first full-year tentative cost report settlement.

(iii) The hospital will retain the interim rate calculated as described in clause (ii) of this subparagraph, except it will be assigned the interim rate calculated upon completion of any future cost report settlement if that interim rate is lower.

(C) Interim claim reimbursement for non-rural hospitals is determined by multiplying the amount of a hospital's outpatient allowable charges after applying any reductions to allowable charges made under paragraph (1) of this subsection by the outpatient interim rate in effect on the date of service.

(D) Cost settlement. Interim claim reimbursement determined in subparagraph (C) of this paragraph will be cost-settled at both tentative and final audit of a non-rural hospital's cost report. The calculation of allowable costs will be determined based on the amount of allowable charges after applying any reductions to allowable charges made under paragraph (1) of this subsection.

(i) Interim payments for claims with a date of service prior to September 1, 2013, will be cost settled.

(ii) Interim payments for claims with a date of service on or after September 1, 2013, will be included in the cost report interim rate calculation, but will not be adjusted due to cost settlement unless the settlement calculation indicates an overpayment.

(iii) HHSC will calculate an interim rate at tentative and final cost settlement for the purposes described in subparagraph (B) of this paragraph.

(iv) If a hospital's interim claim reimbursement for all outpatient services, excluding imaging, clinical lab and outpatient emergency department services that do not qualify as emergency visits, for the hospital's fiscal year exceeded the allowable costs for those services, HHSC will recoup the amount paid to the hospital in excess of allowable costs.

(v) If a hospital's interim claim reimbursement for all outpatient services, excluding imaging, clinical lab and outpatient emergency department services that do not qualify as emergency visits, for the hospital's fiscal year was less than the allowable costs for those services, HHSC will not make additional payments through cost settlement to the hospital for service dates on or after September 1, 2013.

(3) HHSC will determine an outpatient interim rate for each rural hospital, which is the ratio of Medicaid allowable outpatient costs to Medicaid allowable outpatient charges derived from the hospital's Medicaid cost report.

(A) For a rural hospital with at least one tentative cost report settlement completed prior to September 1, 2021, the interim rate effective on September 1, 2021, is the rate calculated in the latest initial cost report with an additional percentage increase, not to exceed an interim rate of 100 percent. After September 1, 2021, a rural hospital will be assigned the interim rate calculated upon completion of each initial or amended initial cost report, with an additional percentage increase, not to exceed an interim rate of 100 percent.

(B) For a new rural hospital that does not have at least one initial cost report completed prior to September 1, 2021, the default interim rate is 50 percent until the interim rate is adjusted as follows.

(i) If the rural hospital files a short-period cost report for their first cost report, the hospital will continue to receive the default rate until completion of the first full-year initial cost report.

(ii) The rural hospital will be assigned the interim rate calculated upon completion of a review of the hospital's first full-year initial or amended initial cost report, with an additional percentage increase, not to exceed an interim rate of 100 percent.

(C) Interim claim reimbursement for a rural hospital is determined by multiplying the amount of a hospital's outpatient allowable charges after applying any reductions to allowable charges made under paragraph (1) of this subsection by the outpatient interim rate in effect on the date of service as described in subparagraph (A) of this paragraph.

(D) Interim claim reimbursement determined in subparagraph (C) of this paragraph will not be cost-settled for services rendered on or after September 1, 2021.

(c) Outpatient hospital surgery. Outpatient hospital non-emergency surgery is reimbursed in accordance with the methodology for ambulatory surgical centers as described in §355.8121 of this subchapter (relating to Reimbursement).

(d) Outpatient hospital imaging.

(1) For all hospitals except rural hospitals, as defined in §355.8052 of this division, outpatient hospital imaging services are not reimbursed under the outpatient reimbursement methodology described in subsection (b) of this section. Outpatient hospital imaging services are reimbursed according to an outpatient hospital imaging service fee schedule that is based on a percentage of the Medicare Outpatient Prospective Payment System fee schedule for similar services. If a resulting fee for a service provided to any Medicaid beneficiary is greater than 125 percent of the Medicaid adult acute care fee for a similar service, the fee is reduced to 125 percent of the Medicaid adult acute care fee.

(2) For rural hospitals, outpatient hospital imaging services are reimbursed based on a percentage of the Medicare Outpatient Prospective Payment System fee schedule for similar services.

(e) Minimum Fee Schedule. Effective September 1, 2020, Managed Care Organizations are required to reimburse rural hospitals based on a minimum fee schedule. The minimum fee schedules are the rates specific to rural hospitals, as described in subsections (b) - (d) of this section.

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 October 4, 2021.

TRD-202103918

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Effective date: October 24, 2021

Proposal publication date: August 13, 2021

For further information, please call: (512) 839-9493