The Texas Health and Human Services Commission (HSSC) proposes amendments to §§355.102, 355.103, 355.105, 355.106, 355.110, and 355.111, concerning general principles of allowable and unallowable costs, specifications for allowable and unallowable costs, general reporting and documentation requirements, methods, and procedures, basic objectives and criteria for audit and desk review of cost reports, informal reviews and formal appeals, and administrative contract violations, in its Cost Determination Process chapter. The purpose of the amendments is to define approval processes and cost reporting procedures, clarify allowable and unallowable costs, remove obsolete references, replace an obsolete reference with a new reference, and correct a typographical error. The amendments clarify current allowable and unallowable costs rules regarding where to report different types of benefits on the cost report and the definition of a passenger van. Clarifications are also being made to the process for requesting a waiver of the related party requirements for reporting costs on the cost report, the disclosure and process for requesting approval of an acceptable allocation method, and the contact for sending a request for an informal review of cost report adjustments. The proposal also specifies that the request of a waiver of the related party requirement for reporting costs on the cost report must be submitted within 45 days of the due date of the cost report. Clarifications are also being made to the definition of direct costing of certain costs on the cost report. The proposal clarifies that prior approval must be obtained to use an allocation method that is not in compliance with DHS rules. The proposal explains what is a functional allocation method. The proposal also grants a compliance period of 15 calendar days before a vendor hold can be placed for failure to submit a required cost report, and correct a typographical error regarding how often mandatory cost report training must be attended. The rules requiring completion of cost reports according to instructions and rules that differentiate between 1994, 1995, and 1996 cost reports and cost reports for 1997 and subsequent years have been deleted. The requirement that cost reports must be completed according to instructions and rules has been moved and restated without a differentiation between cost report years. The rule reference to vendor hold for the nursing facility program has been revised to a new rule reference.

Don Green, chief financial officer, has determined that for the first five-year period the sections are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the sections.

Mr. Green also 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 will be that the rules will provide guidance to contracted providers regarding the completion of required costs reports. There will be no effect on large, small, or micro businesses, because the amendments define approval processes and cost reporting procedures, clarify allowable and unallowable costs, remove obsolete references, replace an obsolete reference, and correct a typographical error. No changes in practice are required of any business. There is no anticipated economic cost to persons who are required to comply with the proposed sections.

Under §2007.003(b) of the Texas Government Code, the department has determined that Chapter 2007 of the Government Code does not apply to these rules. Accordingly, the department is not required to complete a takings impact assessment regarding these rules.

Questions about the content of this proposal may be directed to Carolyn Pratt at (512) 438-4057 in DHS's Rate Analysis Division. Written comments on the proposal may be submitted to Supervisor, Rules and Handbooks Unit-148, Texas Department of Human Services E-205, P.O. Box 149030, Austin, Texas 78714-9030, within 30 days of publication in the Texas Register .

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

The amendments implement the Government Code, §531.033 and §531.021(b).