|(a) Definitions. The words and terms, when used in
this section, have the following meanings, unless the context clearly
(1) Applicant--An individual or entity requesting a
bed allocation waiver or exemption.
(2) Assignment of rights--The Health and Human Services
Commission (HHSC) conveyance of a specific number of allocated Medicaid
beds from a nursing facility or entity to another entity for purposes
of constructing a new nursing facility or for any other use as authorized
by this chapter.
(3) Bed allocation--The process by which HHSC controls
the number of nursing facility beds that are eligible to become Medicaid-certified
in each nursing facility.
(4) Bed certification--The process by which HHSC certifies
compliance with state and federal Medicaid requirements for a specified
number of Medicaid beds allocated to a nursing facility.
(5) County or precinct occupancy rate--The number of
residents, regardless of source of payment, occupying certified Medicaid
beds in a county divided by the number of Medicaid beds allocated
in the county, including Medicaid beds that are certified and Medicaid
beds that have been allocated but are not certified. In the four most
populous counties in the state, the occupancy rate is calculated for
each county commissioner precinct.
(6) Licensee--The individual or entity, including a
controlling person, that is:
(A) an applicant for licensure by HHSC under Chapter
242 of the Texas Health and Safety Code and for Medicaid certification;
(B) licensed by HHSC under Chapter 242 of the Texas
Health and Safety Code; or
(C) licensed under Chapter 242 of the Texas Health
and Safety Code and holds the contract to provide Medicaid services.
(7) Lien holder--The individual or entity that holds
a lien against a physical plant.
(8) Multiple-facility owner--An individual or entity
that owns, controls, or operates under lease two or more nursing facilities
within or across state lines.
(9) Occupancy rate--The number of residents occupying
certified Medicaid beds divided by the number of certified Medicaid
beds in a nursing facility.
(10) Open solicitation period--A period during which
an individual or entity may apply for an allocation of Medicaid beds
in a high-occupancy county or precinct.
(11) Physical plant--The land and attached structures
to which beds are allocated or for which an application for bed allocation
has been submitted.
(12) Property owner--The individual or entity that
owns a physical plant.
(13) Transfer of beds-- HHSC conveyance of a specific
number of allocated Medicaid beds from an existing nursing facility
or entity to another existing licensed nursing facility. The nursing
facility may use the transferred Medicaid beds to increase the number
of Medicaid-certified beds currently licensed or to increase the number
of Medicaid-certified beds when additional licensed beds are added
to the nursing facility in the future.
(b) Purpose. The purpose of this section is to control
the number of Medicaid beds that HHSC contracts, to improve the quality
of resident care by selective and limited allocation of Medicaid beds,
and to promote competition.
(c) Bed allocation general requirements. The allocation
of Medicaid beds is an opportunity for the property owner or the lessee
of a nursing facility to obtain a Medicaid nursing facility contract
for a specific number of Medicaid-certified beds.
(1) Medicaid beds are allocated to a nursing facility
and remain at the physical plant where they were originally allocated,
unless HHSC transfers or assigns the beds.
(2) When HHSC allocates Medicaid beds to a nursing
facility as a result of actions by the licensee, HHSC requires that
the beds remain allocated to the physical plant, even when the licensee
ceases operating the nursing facility, unless HHSC assigns or transfers
(3) Notwithstanding any language in subsections (f)
and (g) of this section and the fact that applicants for bed allocation
waivers and exemptions may be licensees or property owners, HHSC allocates
beds to the physical plant and the owner of that property controls
the Medicaid beds subject to HHSC rules and requirements and all valid
physical plant liens.
(d) Control of beds. Except as specified in this section,
HHSC does not accept applications for a Medicaid contract for nursing
facility beds from any nursing facility that was not granted:
(1) a valid certificate of need (CON) by the Texas
Health Facilities Commission before September 1, 1985;
(2) a waiver or exemption approved by the Department
of Human Services before January 1, 1993; or
(3) a valid order that had the effect of authorizing
the operation of the nursing facility at the bed capacity for which
participation is sought.
(e) Level of acceptable care. Unless specifically exempted
from this requirement, applicants and controlling persons of an applicant
for Medicaid bed allocation waivers or exemptions must comply with
level of acceptable care requirements. Level of acceptable care requirements
apply only in determining bed allocation waiver and exemption eligibility
and have no effect on other sections of this chapter.
(1) HHSC determines a waiver or exemption applicant
or a controlling person of an applicant complies with level of acceptable
care requirements if, within the preceding 24 months, the applicant
or controlling person:
(A) has not received any of the following sanctions:
(i) termination of Medicaid or Medicare certification;
(ii) termination of Medicaid contract;
(iii) denial, suspension, or revocation of a nursing
(iv) cumulative Medicaid or Medicare civil monetary
penalties totaling more than $5,000 per facility;
(v) civil penalties pursuant to §242.065 of the
Texas Health and Safety Code; or
(vi) denial of payment for new admissions;
(B) does not have a pattern of substantial or repeated
licensing and Medicaid sanctions, including administrative penalties
or other sanctions; and
(C) does not have a condition listed in §19.214(a)
of this chapter (relating to Criteria for Denying a License or Renewal
of a License).
(2) HHSC considers the criteria in paragraph (1) of
this subsection to determine if local facilities provide a level of
acceptable care in counties, communities, ZIP codes or other geographic
areas that are the subject of a waiver application. HHSC only considers
sanctions that are final and are not subject to appeal when determining
if a local facility complies with level of acceptable care requirements.
(3) Nursing facilities that have received any of the
sanctions listed in paragraph (1) of this subsection within the previous
24 months are not eligible for an allocation of Medicaid beds under
subsection (h) of this section or an allocation of additional Medicaid
beds under subsection (f) of this section. In the case of sanctions
against the nursing facility to which the beds would be allocated
that are appealed, either administratively or judicially, an application
will be suspended until the appeal has been resolved. Sanctions that
have been administratively withdrawn or were subsequently reversed
upon administrative or judicial appeal are not considered.
(4) If an applicant for an allocation of additional
Medicaid beds or a controlling person of an applicant is a multiple-facility
owner or a multiple-facility owner owns the applicant, the multiple-facility
owner must demonstrate an overall record of complying with level of
acceptable care requirements. HHSC considers the number of facilities
that have received sanctions listed in paragraph (1) of this subsection
in relation to the number of facilities that the multiple-facility
owner owns to determine if a multiple-facility owner meets level of
acceptable care requirements. HHSC only considers sanctions that are
final and are not subject to appeal when determining whether the multiple-facility
owner's facilities not receiving the new bed allocation comply with
level of care requirements.
(5) When the applicant is a licensee that has operated
a nursing facility less than 24 months, the nursing facility must
establish at least a 12-month compliance record immediately preceding
the application in which the nursing facility has not received any
of the sanctions listed under paragraph (1) of this subsection.
(6) When the applicant has no history of operating
nursing facilities, HHSC will review the compliance record of health-care
facilities operated, managed, or otherwise controlled by controlling
parties of the applicant. If a controlling party or the applicant
has never operated, managed, or otherwise controlled any health-care
facilities, a compliance review is not required.
(7) The executive commissioner, or the executive commissioner's
designee, may make an exception to any of the requirements in this
subsection if the executive commissioner or the executive commissioner's
designee determines the needs of Medicaid recipients in a local community
will be served best by granting a Medicaid bed allocation waiver or
exemption. In determining whether to make an exception to the requirements,
the executive commissioner or the executive commissioner's designee
may consider the following:
(A) the overall compliance record of the waiver or
(B) the current availability of Medicaid beds in facilities
that comply with level of acceptable care requirements in the local
(C) the level of support for the waiver or exemption
from the local community;
(D) the way a waiver or exemption will improve the
overall quality of care for nursing facility residents; and
(E) the age and condition of nursing facility physical
plants in the local community.
(f) Exemptions. HHSC may grant an exemption from the
requirements in subsection (d) of this section. All exemption actions
must comply with the requirements in this subsection and with requirements
of the Centers for Medicare & Medicaid Services (CMS) regarding
bed capacity increases and decreases. When a bed allocation exemption
is approved, the licensee must comply with the requirements in §19.201
of this chapter (relating to Criteria for Licensing) at the time of
licensure and Medicaid certification of the new beds or nursing facility.
(1) Replacement Medicaid nursing facilities and beds.
An applicant may request that HHSC approve replacement of allocated
Medicaid beds by the construction of one or more new nursing facilities.
(A) The applicant must own the physical plant where
the beds are allocated or possess a valid assignment of rights to
the Medicaid beds.
(B) The applicant must obtain written approval by all
lien holders of the physical plant where the beds are allocated before
requesting HHSC approval to relocate the Medicaid beds to the replacement
facility if the replacement facility will be constructed at a different
address than the current facility. The applicant must submit the lien
holder approval with the replacement nursing facility request. If
the physical plant where the Medicaid beds are allocated does not
have a lien, the applicant must submit a written attestation of that
fact with the replacement nursing facility request.
(C) Replacement nursing facility applicants, including
those who obtained the rights to the beds through a HHSC assignment
of beds, must comply with the level of acceptable care requirements
in subsection (e) of this section, unless the applicant for a replacement
nursing facility is the current property owner.
(D) HHSC may grant a replacement facility an increase
of up to 25 percent of the currently allocated Medicaid beds, if the
applicant complies with the level of acceptable care requirements
in subsection (e) of this section. HHSC will not transfer or assign
the additional allocation of beds until they are certified at the
(E) The physical plant of the replacement nursing facility
must be located in the same county in which the Medicaid beds currently
(2) Transfer of Medicaid beds. An applicant may request
HHSC transfer allocated Medicaid beds certified or previously certified
to another physical plant.
(A) The applicant must own the physical plant where
the beds are allocated, or the applicant must present HHSC with:
(i) a valid Medicaid bed transfer agreement that specifies
the number of additional Medicaid beds the applicant is requesting
HHSC allocate to the receiving nursing facility; or
(ii) a valid Medicaid bed assignment that specifies
the number of additional Medicaid beds the applicant is requesting
HHSC allocate to the receiving nursing facility.
(B) If the Medicaid beds are allocated to a specific
physical plant, the applicant must obtain and submit written approval
from the property owner and, if the physical plant has a lien, written
approval from all lien holders to obtain a HHSC transfer of the Medicaid
beds to another facility. If the physical plant where the Medicaid
beds are allocated does not have a lien, the applicant must submit
a written attestation of that fact with the transfer request.
(C) The receiving licensee must comply with level of
acceptable care requirements in subsection (e) of this section.