TITLE 1. ADMINISTRATION

PART 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION

CHAPTER 355. REIMBURSEMENT RATES

SUBCHAPTER J. PURCHASED HEALTH SERVICES

DIVISION 4. MEDICAID HOSPITAL SERVICES

1 TAC §355.8070

The Texas Health and Human Services Commission (HHSC) adopts new §355.8070, concerning the Hospital Augmented Reimbursement Program. Section 355.8070 is adopted with changes to the proposed text as published in the July 16, 2021, issue of the Texas Register (46 TexReg 4248). This rule will be republished.

BACKGROUND AND JUSTIFICATION

HHSC is creating this program to continue the financial transition for providers who have historically participated in the Delivery System Reform Incentive Payment program. We continue to work on solutions to preserve the financial resources many of our hospitals depend on to provide access to quality care to Medicaid clients and the uninsured. The Hospital Augmented Reimbursement Program would be created, subject to approval by the Centers for Medicare and Medicaid Services (CMS), through the Medicaid state plan. State plan programs and services do not impact 1115 Waiver budget neutrality. HHSC intends to submit state plan amendments to CMS to request authorization to make payments as described under new §355.8070 to non-state government-owned and -operated hospitals and to private hospitals. State plan amendments to include various hospital ownership types may be submitted on individual timelines. The program will provide additional funding to hospitals to help offset the cost hospitals incur while providing Medicaid services. The hospital’s maximum payment will be their individual Medicare payment gap. The most current Medicare upper payment limit (UPL) demonstration available at the time of calculation will be used.

COMMENTS

The 21-day comment period ended August 6, 2021. During this period, HHSC received comments regarding the new rule from eleven (11) entities: Texas Children's Hospital (TCH), Texas Essential Healthcare Partnerships (TEHP), Community Hospital Corporation (CHC), CHRISTUS Health, Children's Hospital Association of Texas (CHAT), Community Health Systems (CHS), Texas Hospital Association (THA), Steward Health Care, OakBend Medical Center, Parkland Health and Hospital System, and Teaching Hospitals of Texas (THOT). A summary of comments relating to the rule and HHSC's responses follow.

Comment: Multiple commenters show support and appreciate the development and implementation of the Hospital Augmented Reimbursement Program(HARP).

Response: HHSC thanks all those expressing appreciation and support in the development of the HARP program. No changes were made in response to this comment.

State Plan Amendments (SPAs)

Comment: Multiple commenters suggest HHSC submit one SPA for non-state government-owned and -operated hospitals and private hospitals.

Response: No changes were made in response to this comment. HHSC thanks the commenters for their suggestion.

Comment: Multiple commenters asked that if two separate SPAs are submitted, they are given equal priority, are submitted at the same time, and that HHSC tries to seek approval at the same time if possible.

Response: No changes were made in response to this comment. HHSC thanks the commenters for their suggestion.

Comment: Multiple commenters support HHSC making separate requests to assure HARP reimbursement is approved for a portion of hospitals if the program cannot be approved quickly for all hospitals.

Response: No changes were made in response to this comment. HHSC thanks the commenters for their comment.

Calculations

Comment: Multiple commenters shared concerns about using commercial rates to determine allocation of funds. The commenters state that the methodology favors larger hospitals that can negotiate higher commercial rates and that the methodology is not approved by CMS for similar programs in other states. The commenters request that HHSC change the methodology to be purely based on Medicare UPL gap instead of the greater of the average commercial gap and the Medicare UPL gap.

Response: HHSC removed the average commercial gap from all calculations in this rule. Updates were made as follows.

-Subsection (b) paragraph (1) was removed and paragraphs (2) through (14) were renumbered.

-Subsection (c) paragraph (1) subparagraphs (A) and (B) were removed.

-Subsection (d) paragraph (3) was modified to clarify the use of Medicare payment gap in the methodology.

-Subsection (d) paragraph (3) subparagraphs (A) through (G) related to average commercial gap were removed.

-Subsection (d) paragraphs (4) and (5) were removed.

-Subsection (e) paragraph (3) was modified to clarify the use of Medicare payment gap in the methodology.

-Subsection (e) paragraph (3) subparagraphs (A) through (G) related to average commercial gap were removed.

-Subsection (e) paragraphs (4) and (5) were removed.

-Subsection (f) paragraph (3) subparagraphs (A) and (B) were revised to explain the use of Medicare payment gap for state-owned hospitals.

-Subsection (f) paragraph (3) subparagraphs (C) through (G), as well as paragraphs (4) and (5) were removed.

-Subsection (g) paragraph (3) was revised to explain the use of inpatient Medicare payment gap for state-owned Institutions for Mental Diseases.

-Subsection (g) paragraph (3) subparagraphs (A) through (G) and paragraph (4) were removed.

-Subsection (h) paragraph (3) was revised to explain the use of Inpatient Medicare payment gap for private Institutions for Mental Diseases.

-Subsection (h) paragraph (3) subparagraphs (A) through (G) and paragraph (4) were removed.

Comment: A commenter suggested HHSC reevaluate the payment methodology for private hospitals and use only the Medicare UPL gap.

Response: HHSC removed the average commercial gap from all calculations in this rule.

Clarifying Language

Comment: A commenter suggested adding information related to data periods, whether there will be a run-out period, any adjustment periods, whether the payments will be retrospective or prospective, and a need for reconciliation process to bring clarity to HARP payments.

Response: No changes were made in response to this comment. The program payments will not be made on a per claim basis. The payments are calculated based on historical data and will be paid out twice a year based on the estimates using the historical data. Per the rule, if during the reconciliation HHSC finds that the amount of non-federal funds expended under this section is less than the amount transferred to HHSC, HHSC will refund the balance proportionally to how it was received.

Comment: A commenter suggested clarifying language related to data used in the definitions of Average Commercial Reimbursement gap and Medicare payment gap.

Response: HHSC removed the average commercial gap from all calculations in this rule.

Comment: A commenter requests HHSC amend §355.8070(b)(6), now §355.8070(b)(5), to include CHRISTUS Spohn Hospital Corpus Christi with other similarly situated urban hospitals.

Response: No changes were made in response to this comment. Per our most recent licensing records, this hospital does not meet the definition of a non-state government-owned and operated hospital.

Comment: Multiple commenters request rewording §355.8070(e)(2)(B) to allow private hospitals to designate one or more sponsoring local governmental entities instead of a single sponsoring entity.

Response: No changes were made in response to this comment. Allowing multiple sponsoring entities per hospital creates an administrative burden on HHSC staff as well as intergovernmental transfer (IGT) entities.

Comment: Two commenters request changing the term "maximum" to "greater" in §355.8070(e)(3)(C) and (e)(4)(C), as well as updating §355.8070(e)(3)(F) and §355.8070(e)(4)(F), respectively.

Response: HHSC removed the average commercial gap from all calculations in this rule. These sections no longer exist.

Comment: Two commenters request that HHSC remove the language in §355.8070(e)(2)(C) that says HHSC will communicate suggested IGT responsibilities since the proposed rule contains a separate paragraph about IGT notification to avoid confusion.

Response: No changes were made in response to this comment. HHSC believes this section is necessary to explain the IGT process.

Comment: Two commenters request replacing "sum of the Medicare payment gap" with "amount determined in subparagraph (E)" in §355.8070(e)(3)(F) and §355.8070(e)(4)(F).

Response: HHSC removed the average commercial gap from all calculations in this rule. These sections no longer exist.

Comment: A commenter suggested adding the word "hospitals" in paragraph §355.8070(f)(4)(E) at the end of the first sentence.

Response: HHSC removed the average commercial gap from all calculations in this rule. These sections no longer exist.

HHSC modified §355.8070(a) to clarify the program is for providers that serve Texas Medicaid fee-for-service (FFS) patients. The eligibility criteria for HARP requires hospitals to participate in Texas Medicaid fee-for-service, but HHSC decided to add this statement to the introduction to further clarify that this program is for hospitals that serve fee-for service patients.

The definition for "Medicare payment gap" was modified to further define that the Medicare payment gap is obtained from the most recent FFS UPL demonstration. HHSC moved this statement to the "Medicare payment gap" definition due to the change in methodology. The methodology was updated as a result of comments to remove the Average Commercial Reimbursement gap.

STATUTORY AUTHORITY

New §355.8070 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; 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 payments under the Texas Human Resources Code Chapter 32.

§355.8070.Hospital Augmented Reimbursement Program.

(a) Introduction. This section establishes the Hospital Augmented Reimbursement (HARP) Program, wherein the Texas Health and Human Services Commission (HHSC) directs payments to certain providers that serve Texas Medicaid fee-for-service patients, including eligible non-state government owned hospitals, private hospitals, state-owned hospitals, state government-owned Institutions for Mental Diseases (IMDs), and private IMDs. This section also describes the methodology used by HHSC to calculate and administer such payments. A provider is eligible for a payment under this section only if HHSC has submitted and CMS has approved a state plan amendment permitting HHSC to make payments under this section to the hospital class to which the provider belongs.

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

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

(2) Inpatient hospital services--Services ordinarily furnished in a hospital for the care and treatment of inpatients under the direction of a physician or dentist, or a subset of these services identified by HHSC. Inpatient hospital services do not include services furnished in a skilled nursing facility, intermediate care facility services furnished by a hospital with swing-bed approval, or any other services that HHSC determines should not be subject to payment.

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

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

(5) Non-state government-owned and operated hospital--A hospital that is owned and operated by a local government entity, including but not limited to a city, county, or hospital district.

(6) Outpatient hospital services--Preventive, diagnostic, therapeutic, rehabilitative, or palliative services that are furnished to outpatients of a hospital under the direction of a physician or dentist, or a subset of these services identified by HHSC.

(7) Private hospital--Any hospital that is not government-owned and operated.

(8) Private Institution for Mental Diseases (IMD)--A hospital that is primarily engaged in providing psychiatric diagnosis, treatment or care of individuals with mental illness and that is not government-owned and operated.

(9) Program period--Each program period is equal to a federal fiscal year beginning October 1 and ending September 30 of the following year.

(10) Prospective Payment System--A method of reimbursement in which payment is made based on a predetermined, fixed amount.

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

(12) State government-owned hospital--Any hospital owned by the state of Texas that is not considered an IMD.

(13) State government-owned IMD--A hospital that is primarily engaged in providing psychiatric diagnosis, treatment or care of individuals with mental illness and that is owned by the state of Texas that is considered an IMD.

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

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

(2) If a provider has changed ownership in the past five years in a way that impacts eligibility for this program, the provider must submit to HHSC, upon demand, copies of contracts it has with third parties with respect to the transfer of ownership or the management of the provider and which reference the administration of, or payment from, this program.

(d) Payments for non-state government-owned and operated hospitals.

(1) Eligible hospitals. Payments under this subsection will be limited to hospitals defined as "non-state government owned and operated hospital" that are enrolled in Medicare and participate in Texas Medicaid fee-for-service.

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

(A) HHSC will communicate suggested IGT responsibilities. Suggested IGT responsibilities will be based on the maximum dollars to be available under the program for the program period as determined by HHSC. HHSC will also communicate estimated revenues each enrolled hospital could earn under the program for the program period with those estimates based on HHSC's suggested IGT responsibilities.

(B) HHSC will issue an IGT notification to specify the date that IGT is requested to be transferred not fewer than 14 business days before IGT transfers are due. HHSC may post the IGT deadlines and other associated information on HHSC's website, send the information through the established Medicaid notification procedures used by HHSC's fiscal intermediary, send through other direct mailing, send through GovDelivery, or provide the information to the hospital associations to disseminate to their member hospitals.

(3) Payment Methodology. To determine each participating non-state government-owned and operated hospital's payment under this section, HHSC will sum the hospital's inpatient FFS Medicare payment gap and the hospital's outpatient FFS Medicare payment gap.

(e) Payments for private hospitals.

(1) Eligible hospitals. Payments under this subsection will be limited to hospitals defined as "private hospital" in subsection (b) of this section that are enrolled in Medicare and participate in Texas Medicaid fee-for-service.

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

(A) HHSC must receive the non-federal portion of reimbursement for HARP through a method approved by HHSC and Centers for Medicare & Medicaid Services (CMS) for reimbursement through this program.

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

(C) HHSC will communicate suggested IGT responsibilities. Suggested IGT responsibilities will be based on the maximum dollars to be available under the program for the program period as determined by HHSC. HHSC will also communicate estimated revenues each enrolled hospital could earn under the program for the program period with those estimates based on HHSC's suggested IGT responsibilities.

(D) HHSC will issue an IGT notification to specify the date that IGT is requested to be transferred not fewer than 14 business days before IGT transfers are due. HHSC may post the IGT deadlines and other associated information on HHSC's website, send the information through the established Medicaid notification procedures used by HHSC's fiscal intermediary, send through other direct mailing, send through GovDelivery, or provide the information to the hospital associations to disseminate to their member hospitals.

(3) Payment Methodology. To determine each participating private hospital's payment under this section, HHSC will sum the hospital's inpatient FFS Medicare payment gap and the hospital's outpatient FFS Medicare payment gap.

(f) Payments for state government-owned hospitals.

(1) Eligible hospitals. Payments under this subsection will be limited to hospitals defined as "state government-owned hospital" in subsection (b) of this section that are enrolled in Medicare and participate in Texas Medicaid fee-for-service.

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

(A) HHSC must receive the non-federal portion of reimbursement for HARP through a method approved by HHSC and CMS for reimbursement through this program.

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

(C) HHSC will communicate suggested IGT responsibilities. Suggested IGT responsibilities will be based on the maximum dollars to be available under the program for the program period as determined by HHSC. HHSC will also communicate estimated revenues each enrolled hospital could earn under the program for the program period with those estimates based on HHSC's suggested IGT responsibilities.

(D) HHSC will issue an IGT notification to specify the date that IGT is requested to be transferred not fewer than 14 business days before IGT transfers are due. HHSC will publish the IGT deadlines and all associated dates on its Internet website.

(3) Payment Methodology.

(A) To determine payment under this section for each participating state-owned hospital reimbursed through Prospective Payment System (PPS), HHSC will sum the hospital's inpatient FFS Medicare payment gap and the hospital's outpatient FFS Medicare payment gap.

(B) To determine payment under this section for each participating state-owned hospital not reimbursed through Prospective Payment System (PPS), HHSC will use the hospital's FFS outpatient Medicare payment gap.

(g) Payments for state government-owned IMDs.

(1) Eligible hospitals.

(A) Payments under this subsection will be limited to hospitals defined as "state government-owned IMD" in subsection (b) of this section that are enrolled in Medicare and participate in Texas Medicaid fee-for-service.

(B) The hospital must have submitted at least one adjudicated FFS Medicaid claim for each reporting period to be eligible for payment.

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

(A) HHSC must receive the non-federal portion of reimbursement for HARP through a method approved by HHSC and CMS for reimbursement through this program.

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

(C) HHSC will communicate suggested IGT responsibilities. Suggested IGT responsibilities will be based on the maximum dollars to be available under the program for the program period as determined by HHSC. HHSC will also communicate estimated revenues each enrolled hospital could earn under the program for the program period with those estimates based on HHSC's suggested IGT responsibilities.

(D) HHSC will issue an IGT notification to specify the date that IGT is requested to be transferred not fewer than 14 business days before IGT transfers are due. HHSC may post the IGT deadlines and other associated information on HHSC's website, send the information through the established Medicaid notification procedures used by HHSC's fiscal intermediary, send through other direct mailing, send through GovDelivery, or provide the information to the hospital associations to disseminate to their member hospitals.

(3) Payment Methodology. To determine each participating state government-owned IMD hospital's payment under this section, HHSC will use the hospital's inpatient FFS Medicare payment gap.

(h) Payments for private IMDs.

(1) Eligible hospitals.

(A) Payments under this subsection will be limited to hospitals defined as "private IMD" in subsection (b) of this section that participate in Texas Medicaid fee-for-service.

(B) The hospital must have submitted at least one adjudicated FFS Medicaid claim for each reporting period to be eligible for payment.

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

(A) HHSC must receive the non-federal portion of reimbursement for HARP through a method approved by HHSC and CMS for reimbursement through this program.

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

(C) HHSC will communicate suggested IGT responsibilities. Suggested IGT responsibilities will be based on the maximum dollars to be available under the program for the program period as determined by HHSC. HHSC will also communicate estimated revenues each enrolled hospital could earn under the program for the program period with those estimates based on HHSC's suggested IGT responsibilities.

(D) HHSC will issue an IGT notification to specify the date that IGT is requested to be transferred not fewer than 14 business days before IGT transfers are due. HHSC may post the IGT deadlines and other associated information on HHSC's website, send the information through the established Medicaid notification procedures used by HHSC's fiscal intermediary, send through other direct mailing, send through GovDelivery, or provide the information to the hospital associations to disseminate to their member hospitals.

(3) Payment Methodology. To determine each participating private IMD hospital's payment under this section, HHSC will use the hospital's inpatient FFS Medicare payment gap.

(i) Changes in operation. If an enrolled hospital closes voluntarily or ceases to provide hospital services in its facility, the hospital must notify the HHSC Provider Finance Department by hand delivery, United States (U.S.) mail, or special mail delivery within 10 business days of closing or ceasing to provide hospital services. Notification is considered to have occurred when the HHSC Provider Finance Department receives the notice.

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

(k) Payments under this section will be made on a semi-annual basis.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on September 9, 2021.

TRD-202103576

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Effective date: September 29, 2021

Proposal publication date: July 16, 2021

For further information, please call: (512) 730-7401