|(a) Definitions. The following words and terms, when used in this section have the following meanings, unless the context clearly indicates otherwise. (1) Allowable costs--Those expenses that are reasonable and necessary costs in the normal conduct of operations relating to case management services as defined in §355.102(f)(1) and (2) of this title (relating to General Principles of Allowable and Unallowable Costs). (2) Provider--An entity delivering service coordination to Medicaid-enrolled individuals according to program rules established by Department of Aging and Disability Services (DADS). (3) Collateral--An actively involved person as defined in 40 TAC §2.553(1) (relating to Definitions). (4) Unit of Service--Two statewide encounter rates are established for Mental Retardation Service Coordination services. The encounter unit of service is established as follows: (A) Comprehensive encounter (Encounter Type A) is a face-to-face contact with the client based on an average time of 45 minutes per contact. The comprehensive encounter is limited to one billable encounter per client per calendar month. (B) Follow-up encounter (Encounter Type B) is a face-to-face, telephone, or telemedicine contact that involves interface with the client or collateral and is based on an average time of 15 minutes per contact. The follow-up encounter is limited to three follow-up encounters per provider per calendar month for each comprehensive encounter that has occurred within the calendar month. The follow-up encounter does not have to be provided to the client for whom the comprehensive encounter was provided. (b) Rate methodology. (1) Initial rates effective September 1, 2011. The initial rates will be determined by summing the total agency expenditures for each type of service coordination service for the most recent cost-settled fiscal year, and dividing that sum by the estimated total number of units of service by type of service for the fiscal year. The total cost to provide service coordination services includes both the interim rates paid and any adjustments made to the interim rates such as additional payments or recoupments. (2) Cost-report based rates. After the Health and Human Services Commission (HHSC) determines that cost data collected as described in subsection (c) of this section is reliable and sufficient to support development of a cost-report based rate, HHSC will develop statewide reimbursement rates using that data to replace the initial rates as follows: (A) Project each provider's total allowable costs per type of service from the historical cost reporting period to the prospective reimbursement period using inflation factors according to §355.108 of this title (relating to Determination of Inflation Indices) to arrive at the projected cost per type of service. (B) For each provider, divide the projected cost per type of service, determined in subparagraph (A) of this paragraph, by the provider's total units of service per type of service delivered during the historical cost reporting period, to arrive at the provider's projected cost per unit of service for each type of service; and (C) For each type of service: (i) Arrange all providers' projected cost per unit of service in an array from low to high, with the corresponding total number of units of service for each provider; (ii) Sum the total number of units of service for each provider in the array progressively, from the lowest projected cost per unit to the highest, to create a running total; (iii) Divide the total number of units of service by two; (iv) Identify the value, from the running total sums calculated in clause (ii) of this subparagraph, that is closest to the result in clause (iii) of this subparagraph; and (v) Identify the cost per unit of service that corresponds to the value identified in clause (iv) of this subparagraph, to arrive at the recommended rate for that service. (c) Reporting of costs. Service Coordination providers must submit cost report data according to HHSC's specifications. (1) Exceptions. All Service Coordination providers must submit a cost report unless: (A) the number of days between the date the first client received services and the fiscal year end is 30 days or fewer; or (B) if circumstances beyond the control of the provider make cost report completion impossible, such as the loss of records due to natural disasters or removal of records from the provider's custody by any governmental entity. To be excused from submitting a cost report under this subparagraph, the HHSC Rate Analysis Department must receive the request before the due date of the cost report. (2) Additional requirements. In addition to following the requirements of this section, the provider must follow the cost reporting guidelines described in: §355.101 of this title (relating to Introduction); §355.102 of this title (relating to General Principles of Allowable and Unallowable Costs); §355.103 of this title (relating to Specifications for Allowable and Unallowable Costs); §355.104 of this title (relating to Revenues); §355.105 of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures); §355.106 of this title (relating to Basic Objectives and Criteria for Audit and Desk Review of Cost Reports); §355.107 of this title (relating to Notification of Exclusions and Adjustments); §355.108 of this title (relating to Determination of Inflation Indices); §355.109 of this title (relating to Adjusting Reimbursement When New Legislation, Regulations, or Economic Factors Affect Costs); §355.110 of this title (relating to Informal Reviews and Formal Appeals); and §355.11 of this title (relating to Administrative Contract Violation). (3) Allowable costs. 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 rates. (4) Unallowable costs. To ensure that the database reflects costs and other information that are necessary for the provision of services and is consistent with federal and state regulations, HHSC excludes from rate determination any unallowable expenses included in the cost report and makes the appropriate adjustments to expenses and other information reported by providers. Individual provider cost reports may not be included in the database used for reimbursement determination if: (A) there is reasonable doubt as to the accuracy or allowability of a significant part of the information reported; or (B) an auditor determines that reported costs are not verifiable.