|(a) Purpose. In conducting reviews for adjustments
to reimbursement, the Texas Health and Human Services Commission (HHSC)
adjusts allowable costs to account for inflation between the reporting
period and the prospective reimbursement period. HHSC retains the
discretion to measure and apply inflation adjustments on a program-by-program
basis using the options set forth in this section.
(b) Contracting for inflation index development. HHSC
may contract with a reputable and experienced independent firm to
develop an appropriate inflation index. If HHSC obtains such an index
under contract, the agency retains the option, on a program-by-program
basis, to use this index and those described in subsection (c) of
this section, either separately or in combination, for reimbursement
(c) Inflation indices. Allowable costs are inflated
using the general inflation index defined in paragraph (1) of this
subsection unless otherwise specified in paragraph (2) of this subsection.
(1) General inflation index. HHSC uses the Personal
Consumption Expenditures (PCE) chain-type price index, published by
the Bureau of Economic Analysis of the U.S. Department of Commerce,
as the index for general inflation.
(2) Item-specific and program-specific inflation indices.
HHSC may use a specific inflation index in place of the general inflation
index defined in paragraph (1) of this subsection when an item- or
program-specific inflation index is developed using data from HHSC
cost reports or other surveys or data made available from another
source, and HHSC has determined that this specific index is derived
from information that adequately represents the program or cost to
which the specific index is to be applied. Program-specific inflation
indices may be designated in program-specific reimbursement methodology
rules. Item-specific inflation indices that HHSC may use include those
listed in the subparagraphs of this paragraph.
(A) HHSC uses the employment cost index of wages and
salaries for private industry workers in nursing and residential care
facilities to measure the inflation of wages and salaries of licensed
vocational nurses and nurse aides. This index is published by the
U.S. Bureau of Labor Statistics. Periodic reviews of the chosen inflation
index are performed based on comparisons to cumulative HHSC cost report
data on nursing wages and salaries; HHSC may modify the chosen inflation
index and its application based on these periodic reviews.
(B) To adjust costs associated with fixed capital assets,
HHSC uses one of two options. HHSC may follow program-specific reimbursement
methodology rules to calculate a fixed capital asset component of
the overall reimbursement in the form of a use fee. As an alternative
to calculating the fixed capital asset use fee, HHSC may use one-half
of the percentage increase in the Consumer Price Index for All Urban
Consumers (CPI-U) to measure the inflation of lease expenses and to
adjust the base of allowable depreciation for assets that have undergone
an ownership change.
(C) Professional and paraprofessional wage and benefit
inflation rates for state employees are based on state employee wage
and salary increases determined by the Texas Legislature.
(d) Inflation adjustment calculations. When adjusting
costs for inflation, HHSC considers economic conditions and regulatory
changes that may be reasonably anticipated for the prospective reimbursement
period as specified in §355.109 of this subchapter (relating
to Adjusting Reimbursement When New Legislation, Regulations, or Economic
Factors Affect Costs). For each inflation index specified in subsection
(c) of this section:
(1) the inflation index is forecasted using a nationally
recognized source available to HHSC at the time proposed payment rates
are prepared for public dissemination and comment; and
(2) a rate of inflation over a specific period of time
is calculated and applied to the allowable costs appropriate to that
index as follows:
(A) costs reported in HHSC cost reports or other surveys
are multiplied by the result of the inflation rate at the midpoint
of the prospective reimbursement period divided by the inflation rate
at the midpoint of the provider's reporting period; or
(B) costs are multiplied by the result of the average
inflation rate during the entire prospective reimbursement period
divided by the average inflation rate during the entire base period.
|Source Note: The provisions of this §355.108 adopted to be effective September 1, 1996, 21 TexReg 7866; duplicated effective September 1, 1997, as published in the Texas Register October 17, 1997, 22 TexReg 10311; amended to be effective November 22, 1998, 23 TexReg 11631; amended to be effective October 1, 2000, 25 TexReg 9924; amended to be effective August 31, 2004, 29 TexReg 8093; amended to be effective February 27, 2022, 47 TexReg 768