The Texas Health and Human Services Commission (HHSC) proposes to amend §§355.101-355.111, concerning the cost determination process, in its Medicaid Reimbursement Rates chapter. The purpose of the amendments is to: (1) add references to the Texas Department of Mental Health and Mental Retardation (TDMHMR) and to make these rules applicable to TDMHMR contracted programs that submit cost reports used in rate determination; (2) remove references to the Texas Department of Human Services (DHS) and replace them with references to HHSC where appropriate and to indicate that "Texas Department of Human Services (DHS)" means DHS or its successor agency; (3) increase the limit at which a cost incurred by a provider can be expensed on the cost report in the year purchased instead of being depreciated from $1,000 to $2,500; and (4) make technical and other minor corrections.

Tom Suehs, Deputy Executive Commissioner for Financial Services, has determined that, for the first five-year period the proposed sections are in effect, there are fiscal implications for state government as a result of enforcing or administering the sections. There are no fiscal implications for local governments as a result of enforcing or administering the sections. The effect on state government for the first five-year period the sections are in effect is an estimated additional cost of $0 in fiscal year (FY) 2004; $0 in FY 2005; $594,630 in FY 2006; $594,630 in FY 2007; and $594,630 in FY 2008.

Ed White, Director for Rate Setting and Forecasting, has determined that, for each year of the first five years the sections are in effect, the public benefit anticipated as a result of enforcing the sections is that the cost determination process rules will be consistent for all long term care programs for which cost reporting is required and will provide more comprehensive rules and guidelines on cost reporting, allowable and unallowable costs, and record keeping for providers contracted with TDMHMR. The rules will accurately reflect that HHSC manages the rate determination and audit processes. Providers will benefit from being able to expense items costing $2,500 on the cost report in the year of the purchase and will no longer need to depreciate items costing between $1,001 and $2,500, which will reduce some of their record-keeping time and expenses. There is no adverse economic effect on small or micro businesses, or on businesses of any size, as a result of enforcing or administering the sections, because the amendments impose no additional requirements on businesses. There is no anticipated economic cost to persons who are required to comply with the proposed sections. There is no anticipated effect on local employment in geographic areas affected by these sections.

Questions about the content of this proposal may be directed to Carolyn Pratt in HHSC's Rate Analysis Department (telephone: (512) 491-1359 or fax: (512) 491-1998)). Written comments on the proposal may be submitted to Ms. Pratt via fax at (512) 491-1998 or mailed to HHSC Rate Analysis, Mail Code H-400, 1100 West 49th Street, Austin, TX 78756-3101, within 30 days of publication in the Texas Register.

Under Government Code, §2007.003(b), HHSC has determined that Chapter 2007 of the Government Code does not apply to these rules. The changes these rules make do not implicate a recognized interest in private real property. Accordingly, HHSC is not required to complete a takings impact assessment regarding these rules.

The amendments are proposed under the Texas Government Code, §531.033, which authorizes the commissioner of HHSC to adopt rules necessary to carry out the commission's duties, and §531.021(b), which establishes HHSC as the agency responsible for adopting reasonable rules governing the determination of fees, charges, and rates for medical assistance payments under the Human Resources Code, Chapter 32.

The amendments affect the Human Resources Code, Chapter 32, and the Texas Government Code, Chapter 531. No other statutes, articles, or codes are affected by this proposal.