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RULE §355.510Reimbursement Methodology for Emergency Response Services (ERS)

(a) General requirements. The Texas Health and Human Services Commission (HHSC) or its designee applies the general principles of cost determination as specified in §355.101 of this title (relating to Introduction). Whenever the term "HHSC" occurs, it means the Texas Health and Human Services Commission or its designee.

(b) General reporting guidelines. Providers must follow the cost-reporting guidelines as specified in §355.105 of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures).

(c) Reimbursement ceiling determination. When HHSC does not require a cost report, HHSC may adjust the rate ceiling as appropriate based upon cost data collected in the form of special surveys or reports submitted by all contracted providers, or other appropriate cost data related to the Emergency Response Services program.

(d) Reimbursement ceiling determination based on a cost-reporting process. If HHSC deems it appropriate to require cost reporting, cost reports will be governed by the information in this subsection.

  (1) Reimbursement ceiling. The reimbursement ceiling is determined for a per-month unit of service. The ceiling applies to all provider agencies uniformly, regardless of geographic location or other factors.

  (2) Excused from submission of cost reports. If required by HHSC, a contracted provider must submit a cost report unless the provider meets one or more of the conditions in §355.105(b)(4)(D) of this title.

  (3) Exclusion of cost reports.

    (A) Providers are responsible for reporting only allowable costs on the cost report, except where cost report instructions indicate that other costs are to be reported in specific lines or sections. Only allowable cost information is used to determine recommended reimbursement. HHSC excludes from reimbursement determination any unallowable expenses included in the cost report and makes the appropriate adjustments to expenses and other information reported by providers. The purpose is to ensure that the data base reflects costs and other information which are necessary for the provision of services and are consistent with federal and state regulations.

    (B) Individual cost reports may not be included in the data base used for reimbursement determination if:

      (i) there is a reasonable doubt as to the accuracy or allowability of a significant part of the information reported; or

      (ii) an auditor determines that reported costs are not verifiable.

  (4) Recommended reimbursement ceiling. HHSC determines a recommended reimbursement ceiling in the following manner. The reimbursement ceiling is determined by the analysis of financial and statistical data submitted by provider agencies on cost reports and, as deemed appropriate, a market survey analysis of emergency response equipment suppliers.

    (A) HHSC allocates payroll taxes and employee benefits to each salary line item on the cost report on a pro rata basis based on the portion of that salary line item to the amount of total salary expense. The employee benefits for administrative staff are allocated directly to the corresponding salaries for those positions. The allocated payroll taxes are Federal Insurance Contributions Act (FICA) or social security, Workers' Compensation Insurance (WCI), the Federal Unemployment Tax Act, and Texas Unemployment Compensation Act.

    (B) Allowable expenses, excluding depreciation and mortgage interest, are projected from the provider agency's reporting period to the next ensuing reimbursement period. HHSC determines reasonable and appropriate economic inflators or adjusters as described in §355.108 of this title (relating to Determination of Inflation Indices) to calculate a prospective expense. HHSC also adjusts reimbursement if new legislation, regulations, or economic factors affect costs as specified in §355.109 of this title (relating to Adjusting Reimbursement When New Legislation, Regulations, or Economic Factors Affect Costs).

    (C) Allowable reported expenses are combined into three cost areas: responder, program operations, and facility. To determine the projected cost per unit of service, a contracted provider's projected expenses in each cost area are divided by its total units of service for the reporting period.

    (D) The contracted providers' projected costs per unit of service are ranked from low to high in each cost area, with corresponding units of service.

    (E) The 80th percentile cost, weighted by units of service, is determined for each cost area. The recommended reimbursement ceiling is the sum of the 80th percentile costs of the three cost areas.

    (F) The reimbursement determination authority for this reimbursement ceiling is specified in §355.101 of this title (relating to Introduction).

(e) Contract-specific unit reimbursement. The actual reimbursement for each contract is negotiated between DADS staff and the provider agency. The contract-specific reimbursement DADS pays the provider agency is the full cost for emergency response services. The provider agency must not bill the client for any additional charges. In no instance may the negotiated unit reimbursement exceed the per-month reimbursement ceiling.

(f) Reviews and field audits of cost reports. HHSC staff perform either desk reviews or field audits on all contracted providers. The frequency and nature of the field audits are determined by HHSC staff to ensure the fiscal integrity of the program. Desk reviews and field audits will be conducted in accordance with §355.106 of this title (relating to Basic Objectives and Criteria for Audit and Desk Review of Cost Reports), and providers will be notified of the results of a desk review or a field audit in accordance with §355.107 of this title (relating to Notification of Exclusions and Adjustments). Providers may request an informal and, if necessary, an administrative hearing to dispute an action taken by HHSC under §355.110 of this title (relating to Informal Reviews and Formal Appeals).

(g) Factors affecting allowable costs. In determining whether a cost is allowable or unallowable, providers must follow the guidelines specified in §355.102 of this title (relating to General Principles of Allowable and Unallowable Costs). Providers must follow the guidelines for allowable and unallowable costs as specified in §355.103 of this title (relating to Specifications for Allowable and Unallowable Costs) and follow the guidelines for unallowable costs specific to the ERS program as specified in this subsection.

(h) Unallowable cost. The unallowable cost specific to the ERS program is the expense of base station equipment at the response center.

(i) Reporting revenue. Revenue must be reported on the cost report according to §355.104 of this title (relating to Revenue).

Source Note: The provisions of this §355.510 adopted to be effective September 1, 1996, 21 TexReg 7896; amended to be effective January 1, 2002, 26 TexReg 10391; transferred effective September 1, 2004, as published in the Texas Register September 17, 2004, 29 TexReg 9013; amended to be effective December 13, 2010, 35 TexReg 10944; amended to be effective November 25, 2012, 37 TexReg 9086

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