Another commenter noted that the Centers for Medicare & Medicaid Services' (CMS) 2016 Medicaid Managed Care Final Rule allows states to receive federal Medicaid funds for capitation payments on behalf of nonelderly adults who receive inpatient psychiatric services in an IMD with a cap of 15 inpatient days during a given month. The commenter said that Texas currently receives these funds, and both the 1115 Waiver Special Terms & Conditions and the Uniform Managed Care Terms & Conditions allow MCOs to pay IMDs for providing inpatient psychiatric services to their enrollees aged 21 through 64 in lieu of an acute care hospital inpatient setting. This commenter requested HHSC amend §353.1306(f)(2) to align the proposed rules with current payment practice and policy.

Response: No changes were made in response to these comments. There are certain federal regulations, including actuarial requirements, related to IMDs providing services to individuals ages 21 through 64. These requirements make it difficult to provide a CHIRP rate increase for this population.

Comment: One commenter said the language in proposed §353.1306(f)(1) is vague and that HHSC should provide a listing of services that will be covered under CHIRP.

Response: No changes were made in response to this comment. HHSC will direct rate increases for inpatient and outpatient services.

Comment: Regarding §353.1306(f)(1), one commenter asked if MCOs will have flexibility to apply rate increases unique to the patient population seen and etiology of those patients, as the etiology varies within SDA by MCO.

Response: No changes were made in response to this comment. MCOs will only apply rate increases as directed by HHSC.

Allocation Methodology & CHIRP Capitation Rate Components

Comment: Two commenters asked for confirmation about the percentage increase hospitals will receive. One commenter asked if all hospitals in a class (e.g., urban hospitals) will receive the same UHRIP percentage regardless of SDA. The other commenter asked if all rural hospitals will receive the same UHRIP/ACIA percentage increase, regardless of region or designation (CAH or Prospective Payment System).

Response: HHSC received overwhelming comments that supported defining the hospital classes based upon SDA. As a result, HHSC modified §353.1306 to define the classes based upon inpatient rate class and SDA. All hospitals in a class will receive the same UHRIP percentage within an SDA. The ACIA percentage increase will be a unique percentage for each hospital, but the estimated payment for each hospital will be a uniform percentage of the gap (not to exceed 100 percent) less UHRIP payments. The ACIA percentage increase is calculated based on the estimated payment. Rural hospitals will receive the same UHRIP percentage regardless of designation and will receive unique percentages for ACIA that result from paying the same uniform percentage of their ACR gap less UHRIP payments.

Comment: One commenter expressed concern with the projections shown for rural hospitals in the modeling HHSC posted to its website on January 27, 2021. The commenter said that rural hospitals will come out short in the calculations due to a combination of a little better Medicaid reimbursement and a little less favorable commercial contracts (ACR). Although it is not reflected in Medicare base rates, the commenter said there are a number of rural extenders (add on payments) in the Medicare program (e.g., the low volume adjustment (LVA), bad-debt settlement) that can often account for a 20 to 30 percent increase to traditional Medicare payments for rural Texas hospitals. The commenter said that if the rural extenders could be part of the Medicare UPL gap formula, it would help soften rural harm in the transition from DSRIP to DPPs.

Response: No changes were made in response to this comment. Medicare data is from the Medicare cost reports. UPL Medicare payments are from Worksheet E Part 1 Column 2 Line 4 Total interim payments for Inpatient Part A from the Title XVIII cost report. At this time, HHSC is not making any updates to the UPL demonstration calculations, which are performed in accordance with federal requirements and instructions.

Comment: One commenter is concerned that the Network Access Improvement Program (NAIP) hospital pass through payments are included in the Medicare gap and ACR gap calculations and said it results in reduced CHIRP payments. The commenter reasoned that NAIP is substantially related to physician/faculty program support that is passed through to hospitals and that discounting hospital rates for these physician payments disadvantages affected hospitals. The commenter also added that inclusion of NAIP suggests payment gaps for affected hospitals are smaller than they really are. The commenter asked that HHSC remove NAIP payments from the gap calculations or otherwise seek adjustments and flexibility from CMS to exclude NAIP as hospital payments for purposes of allocating CHIRP payments.

Response: No changes were made in response to this comment. CMS requires that all directed payments and pass-through payments be included in the evaluation of total payment levels for hospitals. If NAIP payments are not considered during the calculation of the Medicare and ACR gap, there is a risk that total payment levels will exceed the Medicare and ACR amounts. HHSC plans to continue to offset NAIP payments in the Medicare and ACR UPL gaps for this reason.

Comment: One commenter asked HHSC to confirm their understanding of the ACIA rules. For ACIA, the intent is to have a uniform increase across all hospital ACR gaps. Example: A 50 percent ACIA increase of an ACR gap of $10 or $100 will be $5 and $50, respectively. This will mean the rate increases between hospitals and MCOs will be different to achieve 50 percent of the ACR gap for the ACIA increase after UHRIP is considered. While all providers will take the same haircut percentage, the ACIA methodology will result in hospitals in the same statewide class having different (non-uniform) final rate increase percentages after their ACIA allocation is factored in.

Response: That is correct, the percentages will vary from provider to provider in order to achieve the same percentage of the ACR gap. One clarification is that the UHRIP component will also be included in the calculation. HHSC amended §353.1306(g)(3)(B) to provide an example of how the calculation will be performed. Additionally, HHSC upon adoption of the rule has decided to define classes to include geographic boundaries, rather than on a statewide basis.

Comment: One commenter asked if there is any indication of what the increase will be to meet the performance measures.

Response: No changes were made in response to this comment. This is outside the scope of the rules. Measure performance goals are being determined through a separate process outside of these rules.

Comment: Some commenters noted that the proposed rules provide that HHSC will set the total value of UHRIP as a percentage of the estimated Medicare Upper Payment Limit (UPL) gap for each statewide hospital class but provide no details on exactly how HHSC will calculate the Medicare UPL. The commenters asked HHSC to define the UHRIP payment component more clearly and asked that HHSC provide an opportunity for hospitals to review HHSC modeling and provide input on the UPL pool sizing method.

Response: No changes were made in response to this comment. The UHRIP rate increases will be calculated using the total Medicare UPL gap of each class within an SDA compared to total encounters. The Medicaid payments used to calculate the gap exclude the Disproportionate Share Hospital (DSH), Uncompensated Care (UC), and UHRIP payments. DSH and UC payments are excluded because they cannot be easily split between inpatient and outpatient. Every hospital in a class within an SDA will have the same uniform percentage increase for UHRIP. HHSC shared initial modeling with stakeholders on January 27, 2021 and plans to release updated modeling in the future. At this time, HHSC is continuing to use the payment-to-charge methodology for the Medicare UPL test.

Comment: Two commenters noted that the proposed rules speak to calculating an average commercial rate gap statewide, and then allocating a funding allocation on a hospital-specific basis. If HHSC is unable to provide an updated CHIRP funding model, the commenters asked HHSC to provide a specific calculation example of how HHSC will calculate an individual hospital's ACIA entitlement. The commenters also asked if HHSC has confirmed with MCOs whether this is administratively possible.

Response: HHSC shared initial modeling with stakeholders on January 27, 2021 and plans to release updated modeling in the future. HHSC also revised the rule at §353.1306(g)(3) to add an example to explain the calculation of ACIA.

Comment: One commenter asked HHSC to guarantee a minimum floor on the state fiscal year 2022 CHIRP implementation for each rural hospital equal to the greater of their state fiscal year 2021 rate increase percentage or the new total CHIRP add-on percentage HHSC calculates for state fiscal year 2022. The commenter noted the shift to inpatient hospital base rate classes and statewide calculations as reasons for this request. The commenter also referenced that during the state fiscal year 2021 implementation of UHRIP, HHSC provided hospital classes in each SDA the greater of the rate increase percentage from either (i) their new Medicare gap calculation, or (ii) the rate increase percentage in place for state fiscal year 2020.

Alternatively, the commenter asked HHSC to either retain the current hospital class definitions and SDA structure in CHIRP, or at least guarantee the rural hospitals total CHIRP add-on percentage will equal at least the median (59 percent) rate increase percentage of the various rural private and rural public hospital classes' SFY 2021 managed care hospital rate increase percentages.

Response: No changes were made in response to this comment. HHSC is not guaranteeing a minimum floor or guaranteeing a median rate for any hospital class. CHIRP has been redesigned and HHSC is not developing a methodology that is based on prior UHRIP program year payments.

Comment: One commenter agrees with HHSC's approach to use an external benchmark to calculate uniform rate adjustments. The commenter said that using an external benchmark provides a standard to ensure that the rates are appropriate and justifiable.

Response: HHSC appreciates the support. No changes were made in response to this comment.

Comment: Some commenters asked why UHRIP is based on the Medicare gap and ACIA is based on the commercial payment rate, and if there is a significant difference between the Medicare gap and commercial payment rates. Commenters also asked if the percentage for UHRIP and ACIA will be released prior to the application.

Response: No changes were made in response to this comment. The UHRIP component is based on the Medicare gap to align with previous program years of UHRIP. Medicaid payments should be similar to Medicare and CMS requires states to demonstrate that their payments are considered reasonable compared to Medicare. ACIA is based on the average commercial reimbursement rate to allow providers to receive an amount above what Medicare pays since commercial reimbursement may be higher than Medicare. The difference between the Medicare gap and commercial payments rates will vary from provider to provider. Percentage rate increases are determined based on enrollment.

Comment: One commenter asked what necessary data providers need to submit to calculate the ACR gap. The commenter also asked what happens if providers cannot submit the data due to contracts with commercial providers.

Response: No changes were made in response to this comment. To participate in ACIA, a provider will need to submit: inpatient charges, inpatient payments, inpatient days, inpatient stays, outpatient charges, outpatient payments, and outpatient claims.

Comment: One commenter asked whether it would affect UHRIP payments if a provider does not participate in ACIA.

Response: No changes were made in response to this comment. No. If a hospital chooses not to participate in ACIA, it will not affect the calculation of their UHRIP payments. ACIA is an optional component to provide hospitals with an additional opportunity for payment. If a hospital chooses to only participate in UHRIP, they will receive the same UHRIP percentage as the other hospitals in their class.

Comment: One commenter said that the proposed CHIRP methodology adversely affects Texas' super safety net providers and public hospitals across the state. Under CHIRP, the commenter noted that these providers face significant funding reductions and have few opportunities to participate in directed payment or other transitioned programs to contribute to the state's goals under the waiver. The commenter asked that HHSC address and correct within the waiver and DSRIP transition programs, the severe inequity in funding distribution reflected in CHIRP modeling. The commenter also urged HHSC to complete modeling to evaluate the impact of the increase in CHIRP funding on the state's other supplemental payment programs and on overall Medicaid payments as a percentage of Medicaid allowable costs by hospital class under this proposed model.

Response: No changes were made in response to this comment. HHSC appreciates the contributions of all hospitals in Texas to providing care to both Medicaid clients and the uninsured. However, state-directed payments in managed care should be based upon appropriate and attainable reimbursement for the Medicaid managed care services that are delivered to Medicaid managed care beneficiaries. HHSC believes that other programs that are not beneficiary specific, such as the Disproportionate Share Hospital program and the Uncompensated Care program, should be used to provide financial support for uninsured or charity care costs.

Comment: One commenter said HHSC should continue to tailor UHRIP rate increase percentages and funding allocations by Medicaid managed care SDA. The commenter reasoned that each SDA faces unique challenges, including potential Medicaid DSH/UC entitlement offsets, and moving to a statewide structure inhibits local stakeholders from tailoring the UHRIP component in the way that is best for that community.

Response: HHSC agrees that there are regional variations and market dynamics that should be considered when establishing reimbursement rate increases under CHIRP and amended §353.1306 to define the rate classes to include geographic boundaries. However, HHSC does not agree that the class definitions under CHIRP should be defined as a result of the potential impact that may be experienced in other programs. Rather, HHSC believes that CHIRP payments should be based upon appropriate and attainable reimbursement for the Medicaid managed care services that are delivered to Medicaid managed care beneficiaries.

Comment: Multiple commenters said that both rate increases, and the non-federal share of the program, should continue to be determined and administered by class on an SDA-by-SDA level. The commenters reasoned that Texas is a large and diverse state and that the CHIRP program should consider the very different market, demographic, and other conditions that regional providers experience. According to the commenters, sourcing and crediting IGT on a statewide level will be problematic and risks overriding local policy decisions and overburdening the very communities who rely most heavily on the Medicaid program. The commenters further noted that federal law does not prohibit consideration of regional factors in establishing classes for purposes of a uniform rate increase.

Some of the commenters noted that the proposed rule does not specify whether the IGT supporting the non-federal share will be sourced and credited at an SDA level or on a statewide level, such as by class-type statewide, but said that proposed §353.1306(d)(1), (d)(2), and (e) all appear to contemplate HHSC continuing to determine rate increases at the SDA level.

Response: HHSC agrees that there are regional variations and market dynamics that should be considered when establishing reimbursement rate increases under CHIRP and amended §353.1306 to define the rate classes to include geographic boundaries. However, HHSC affirms that transferring of IGT to HHSC is voluntary and, while HHSC may consider available funding, among other factors, when determining the size of the program, HHSC should not be and is not involved with local decisions about whether to make such a voluntary transfer. The rules for CHIRP do address the process by which HHSC will collect information about whether units of local government wish to contribute IGT towards the program and specifies dates for when the IGT is requested to be transferred. The rules do not describe the use of specific IGT for specific jurisdictions, statewide or otherwise.

Distribution of CHIRP Payments

Comment: Proposed §353.1306(g) says "The MCOs' distributions of CHIRP funds to the enrolled hospitals may be based on each hospital's performance related to the quality metrics." One commenter asked if this means that both the UHRIP and ACIA components may be conditioned on or are subject to the achievement of quality metrics or if it only applies to ACIA.

Response: No changes were made in response to this comment. The language in proposed §353.1306(g) is not mandatory. HHSC further described in subsection (h) that CHIRP payments will be distributed based upon actual utilization as a uniform rate increase. Providers will be required to adhere to the program eligibility requirements, including mandatory reporting, to remain eligible for the program; however, the payments will not be based upon achievement of a specific measure.

Comment: One commenter asked if ACIA payments will be based on "pay for reporting" requirements only or if some portion of the payments will be conditioned on quality outcome measures, such as "pay for performance." The commenter also asked if this will shift over time.

Response: No changes were made in response to this comment. Per §353.1306(h), CHIRP payments will be based upon actual utilization as a uniform rate increase.

Comment: Two commenters asked if payments will be paid as a lump-sum or a rolling per claim basis like current UHRIP payments. If lump-sum, one commenter asked what the proposed timing is.

Response: No changes were made in response to this comment. Per §353.1306(h), CHIRP payments will be based upon actual utilization as a uniform rate increase.