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(a)Introduction. This section describes the circumstances
under which HHSC directs an MCO to provide a uniform percentage rate
increase to hospitals in the MCO's network in a designated service
delivery area for the provision of inpatient services, outpatient
services, or both. This section also describes the methodology used
by HHSC to calculate and administer such rate increase.
(b)Definitions. The following definitions apply when
the terms are used in this section. Terms that are used in this and
other sections of this subchapter may be defined in §353.1301
of this subchapter (relating to General Provisions).
(1)Children's hospital--A Medicaid hospital designated
by Medicare as a children's hospital.
(2)Inpatient hospital services--Services ordinarily
furnished in a hospital for the care and treatment of inpatients under
the direction of a physician or dentist, or a subset of these services
identified by HHSC. Inpatient hospital services do not include skilled
nursing facility or intermediate care facility services furnished
by a hospital with swing-bed approval, and any other services that
HHSC determines should not be subject to the rate increase.
(3)Institution for mental diseases (IMD)--A hospital
that is primarily engaged in providing psychiatric diagnosis, treatment,
or care of individuals with mental illness.
(4)Non-urban public hospital--
(A)A hospital owned and operated by a governmental
entity, other than a hospital described in paragraph (9) of this subsection
defining urban public hospital; or
(B)A hospital meeting the definition of rural public-financed
hospital in §355.8065(b)(37) of this title (relating to Disproportionate
Share Hospital Reimbursement Methodology), other than a hospital described
in paragraph (7) of this subsection defining rural hospital.
(5)Outpatient hospital services--Preventive, diagnostic,
therapeutic, rehabilitative, or palliative services that are furnished
to outpatients of a hospital under the direction of a physician or
dentist, or a subset of these services identified by HHSC. HHSC may,
in its contracts with MCOs governing rate increases under this section,
exclude from the definition of outpatient hospital services such services
as are not generally furnished by most hospitals in the state, or
such services that HHSC determines should not be subject to the rate
increase.
(6)Program period--A period of time for which HHSC
will contract with participating MCOs to pay increased capitation
rates for the purpose of provider payments under this section. Each
program period is equal to a state fiscal year beginning September
1 and ending August 31 of the following year.
(7)Rural hospital--A hospital located in a county
with 60,000 or fewer persons according to the most recent United States
Census, a Medicare-designated rural referral center, a sole community
hospital, or a critical access hospital.
(8)State-owned hospital--A hospital that is owned
and operated by a state university or other state agency.
(9)Urban public hospital--A hospital that is operated
by or under a lease contract with one of the following entities: the
Dallas County Hospital District, the El Paso County Hospital District,
the Harris County Hospital District, the Tarrant County Hospital District,
the Travis County Healthcare District dba Central Health, the University
Health System of Bexar County, the Ector County Hospital District,
the Lubbock County Hospital District, or the Nueces County Hospital
District.
(c)Classes of participating hospitals.
(1)HHSC may direct the MCOs in a service delivery
area to provide a uniform percentage rate increase to all hospitals
within one or more of the following classes of hospital with which
the MCO contracts for inpatient or outpatient services:
(A)children's hospitals;
(B)non-urban public hospitals;
(C)rural hospitals;
(D)state-owned hospitals;
(E)urban public hospitals;
(F)institutions for mental diseases; and
(G)all other hospitals.
(2)If HHSC directs rate increases to more than one
class of hospital within the service delivery area, the percentage
rate increases directed by HHSC may vary between classes of hospital.
(d)Eligibility. HHSC determines eligibility for rate
increases by service delivery area and class of hospital.
(1)Service delivery area. Only hospitals in a service
delivery area that includes at least one sponsoring governmental entity
are eligible for a rate increase.
(2)Class of hospital. HHSC will identify the class
or classes of hospital within each service delivery area described
in paragraph (1) of this subsection to be eligible for a rate increase.
HHSC will consider the following factors when identifying the class
or classes of hospital eligible for a rate increase and the percent
increase applicable to each class:
(A)whether a class of hospital contributes more or
less significantly to the goals and objectives in HHSC's quality strategy,
as required in 42 C.F.R. §438.340, relative to other classes;
(B)which class or classes of hospital the sponsoring
governmental entity wishes to support through intergovernmental transfers
(IGTs) of public funds; and
(C)the percentage of Medicaid costs incurred by the
class of hospital in providing care to Medicaid managed care clients
that are reimbursed by Medicaid MCOs prior to any uniform rate increase
administered under this section.
(e)Services subject to rate increase. HHSC may direct
the MCOs in a service delivery area to increase rates for all or a
subset of inpatient services, all or a subset of outpatient services,
or all or a subset of both, based on the service or services that
will best advance the goals and objectives of HHSC's quality strategy.
(f)Determination of percentage of rate increase.
(1)In determining the percentage of rate increase
applicable to one or more classes of hospital, HHSC will consider
the following factors:
(A)information from the sponsoring governmental entities
on one or both of the following:
(i)the amount of IGT the sponsoring governmental entities
propose to transfer to HHSC to support the non-federal share of the
increased rates for the first six months of a program period; and
(ii)the percentage rate increase the sponsoring governmental
entities propose for one or more classes of hospital for the first
six months of a program period;
(B)the class or classes of hospital determined in
subsection (d)(2) of this section;
(C)the type of service or services determined in subsection
(e) of this section;
(D)actuarial soundness of the capitation payment needed
to support the rate increase;
(E)available budget neutrality room under any applicable
federal waiver programs; and
(F)other HHSC goals and priorities.
(2)After determining the percentage of rate increase
as described in paragraph (1) of this subsection, HHSC will modify
its contracts with the MCOs in the service delivery area to direct
the percentage rate increases.
(g)Timing and amount of transfer of non-federal share.
(1)Sponsoring governmental entities must complete
the IGT for the first six months of the program period no later than
May 1 of the calendar year that also contains the first month of the
program period, unless otherwise instructed by HHSC.
(2)Following the transfer of funds described in paragraph
(1) of this subsection, sponsoring governmental entities must transfer
additional IGT at such times and in such amounts as determined by
HHSC to be necessary to ensure the availability of funding of the
non-federal share of the state's expenditures under this section and
HHSC's compliance with the terms of its contracts with MCOs in the
service delivery area.
(3)HHSC will instruct sponsoring governmental entities
as to the required IGT amounts. Required IGT amounts will include
all costs associated with the uniform rate increase, including costs
associated with premium taxes, risk margins, and administration, plus
ten percent.
(h)Effective date of rate increases. HHSC will direct
MCOs to increase rates under this section beginning the first day
of the program period that includes the increased capitation rates
paid by HHSC to each MCO pursuant to the contract between them.
(i)Reconciliation. HHSC will reconcile the amount
of the non-federal funds actually expended under this section during
the program period with the amount of funds transferred to HHSC by
the sponsoring governmental entities for that same period using the
methodology described in §353.1301(g) of this subchapter.
(j)Recoupment. Payments under this section may be
subject to recoupment as described in §353.1301(k) of this subchapter.
The agency certifies that legal counsel has reviewed
the proposal and found it to be within the state agency's legal authority
to adopt.
Filed with the Office
of the Secretary of State on January 9, 2017
TRD-201700105 Karen Ray
Chief Counsel
Texas Health and Human Services Commission
Earliest possible date of adoption: February 19, 2017
For further information, please call: (512) 424-6900
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