The Texas Health and Human Services Commission (HHSC) proposes new Subchapter O, Delivery System and Provider Payment Initiatives, §353.1303, concerning Quality Incentive Payment Program for Nursing Facilities.

Elsewhere in this issue, related §353.1301 of this title (relating to General Provisions) is proposed concurrent with this section and describes general provisions that apply to this and other sections under this new Subchapter O.

Background and Justification

This proposed new rule describes the Quality Incentive Payment Program (QIPP). QIPP is designed to incentivize nursing facilities (NFs) to improve quality and innovation in the provision of NF services, using the Centers for Medicare & Medicaid (CMS) Five-Star Quality Rating System as its measure of success.

During the 83rd Session, the Texas Legislature outlined its goals for the Medicaid managed care carve-in of NFs. In implementing the NF carve-in, HHSC was directed to encourage transformative efforts in the delivery of NF services, including "efforts to promote a resident-centered care culture through facility design and services provided" (Senate Bill 7, 83rd Texas Legislature Regular Session).

In 2014, HHSC established the Minimum Payment Amount Program (MPAP). The MPAP, which became effective March 1, 2015, established minimum payment amounts for qualified NFs participating in STAR+PLUS. The STAR+PLUS managed care organizations (MCOs) paid the minimum payment amounts to qualified NFs based on state direction. The MPAP was always intended to be a short-term program that would ultimately transition to a performance-based initiative.

The goal of transition was reinforced during the 84th Legislative Session. The General Appropriations Act for the 2016 - 2017 biennium contains HHSC Budget Rider 97, which directs HHSC to transition the MPAP to QIPP.

Conceptual Framework

Eligibility

QIPP is open to two classes of NFs: non-state government-owned NFs and private NFs. To ensure that QIPP funds are focused on the Medicaid population, private NF participation in QIPP is limited to private NFs with Medicaid utilization as a percentage of total utilization at least equal to the mean for all private Medicaid NFs in Texas plus one standard deviation. Based on the most current data available from 2014 Texas Medicaid NF cost reports, this value is equal to 78 percent, meaning at least 78 percent of a private NF's units of service must have been provided to Medicaid recipients for the private NF to be eligible to participate in QIPP.

Capitation Rate Structure

QIPP dollars will be limited by 1115 waiver budget-neutrality capacity and the amount of intergovernmental transfer (IGT) funds available for the program. No general revenue will be invested in QIPP. QIPP IGTs for a specific capitation rate period will be due to HHSC approximately three months prior to the beginning of the rate period to allow HHSC's actuaries certainty as to the amount of funding to be incorporated into the capitation rates for QIPP. The amount of the capitation will be determined by the amount of the non-federal share available for the program.

QIPP funds will be paid through three new components of the STAR+PLUS NF managed care capitation rates. Each component's value will be determined as a percentage of the total amount of funding available for the QIPP program.

Capitation Rate Components

- Component One will have a total value equal to 110 percent of the non-federal share of the QIPP program. The interim allocation of funds across qualifying non-state government-owned NFs will be based on historical Medicaid days of NF service. Monthly payment to non-state government-owned NFs will be triggered by the NF's submission to the MCO of a monthly Quality Assurance Performance Improvement (QAPI) Validation Report. Private NFs are not eligible for payments from Component One. The interim allocation of funds across qualifying non-state government-owned NFs will be reconciled to the actual distribution of Medicaid NF days of service across these NFs during the eligibility period as captured by HHSC's Medicaid contractors for fee-for-service and managed care 180 days after the last day of the eligibility period. This reconciliation will only be performed if the weighted average (weighted by Medicaid NF days of service during the eligibility period) of the absolute values of percentage changes between each NFs proportion of historical Medicaid days of NF service and actual Medicaid days of NF service is greater than 20 percent.

- Component Two will have a total value equal to 35 percent of remaining QIPP funds after accounting for the funding of Component One. Allocation of funds across qualifying non-state government-owned and private NFs will be proportional, based on historical Medicaid days of NF service. Quarterly payments to NFs will be triggered by improvement on specific quality metrics.

- Component Three will have a total value equal to 65 percent of remaining QIPP funds after accounting for the funding of Component One. Allocation of funds across qualifying non-state government-owned and private NFs will be proportional, based on historical Medicaid days of NF service. Quarterly payments to NFs will be triggered by improvement on specific quality metrics. Payments made to NFs meeting the standards of Component Three will include both the 35 percent allocated for Component Two and the remaining 65 percent allocated for Component Three.

- Funds that would lapse due to failure of one or more NFs to meet quality metrics will be distributed across all QIPP NFs based on each NF's proportion of total earned QIPP funds from Components One, Two, and Three combined.

Quality Design

Payments from MCOs to qualified NFs will be made based on improvement on specific quality metrics. QIPP will include at least three quality measures, equally weighted for payment each quarter and currently utilized by CMS' Five-Star Quality Rating System for NFs. Quality metrics may change from eligibility period to eligibility period. Information regarding specific quality metrics for an eligibility period will be provided annually through the QIPP webpage on the HHSC website.

NFs must make incremental improvements towards pre-set goals to qualify for payments. A NF's baseline will remain the same throughout the eligibility period, while the amount of improvement required each quarter increases. Higher levels of improvement are required to access funds from Component Three than are required to access funds from Component Two.

Quality targets will be quarterly in order to allow for quarterly payments. Each successful NF within a class will receive an equal payment amount per Medicaid day of service with days of service based upon an historical measure. A NF that performs better than the national average (e.g., benchmark) for a specific quality indicator may decline in performance and still earn 100 percent of the available funds as long as the NF remains above the benchmark.

Section-by-Section Summary

Proposed new §353.1303(a) describes the purpose and goals of QIPP.

Proposed new §353.1303(b) defines key terms used in the section.

Proposed new §353.1303(c) describes the eligibility criteria for QIPP.

Proposed new §353.1303(d) describes the data sources used to determine historical units of service.

Proposed new §353.1303(e) describes participation requirements for QIPP.

Proposed new §353.1303(f) describes how the non-federal share of QIPP payments will be funded through IGTs.

Proposed new §353.1303(g) describes the QIPP capitation rate components.

Proposed new §353.1303(h) describes the distribution of QIPP payments.

Proposed new §353.1303(i) describes the QIPP performance requirements.

Proposed new §353.1303(j) describes QIPP processes and requirements pertaining to changes of ownership during an eligibility period.

Proposed new §353.1303(k) indicates that payments under §353.1303 may be subject to recoupment as described in 1 TAC §353.1301(k) of this subchapter.

FISCAL NOTE

Greta Rymal, Deputy Executive Commissioner for Financial Services, has determined that for each year of the first five years the proposed rule is in effect, capitation payments for managed care payments could increase to provide performance-based incentives for NFs. The increase would be funded with federal funds and with the non-federal share provided through IGTs from non-state governmental entities. The amounts of such funds are dependent upon the actions of local units of government and cannot be estimated, but could be significant.

PUBLIC BENEFIT AND COST

Pam McDonald, Director of Rate Analysis, has determined that for each year of the first five years the rule is in effect, the anticipated public benefit of adopting the proposed rule is the incentivizing of improvements in care in participating NFs.

Ms. McDonald has also determined that there are no probable economic costs to persons required to comply with the proposed rule.

HHSC has determined that the proposed rule will not affect a local economy. There is no anticipated negative impact on local employment.

SMALL BUSINESS AND MICRO-BUSINESS IMPACT ANALYSIS

HHSC has determined that there will be no adverse economic effect on small businesses or micro-businesses to comply with the proposed rule. The implementation of the proposed rule does not require any changes in practice or any additional cost to the contracted provider, because participation in QIPP is voluntary.

REGULATORY ANALYSIS

HHSC has determined that this proposal is not a "major environmental rule" as defined by §2001.0225 of the Texas Government Code. A "major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure.

TAKINGS IMPACT ASSESSMENT

HHSC has determined that this proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under §2007.043 of the Government Code.

PUBLIC COMMENT

Written comments on the proposal may be submitted to Jennifer Carrillo, 11307 Roszell Street, San Antonio, Texas, 78217, Mail Code 279-4; by fax at (512) 438-5768; or by e-mail to Jennifer.Carrillo@hhsc.state.tx.us within 30 days of publication of this proposal in the Texas Register.

PUBLIC HEARING

A public hearing is scheduled for February 1, 2017, at 3:15 p.m. to 4:15 p.m. (Central Time) in the Public Hearing Room, Brown Heatly Building, 4900 North Lamar Boulevard, Austin, TX 78714-9030. Persons requiring further information, special assistance, or accommodations should contact Amy Chandler at (512) 487-3419.

STATUTORY AUTHORITY

The new rule is proposed under Texas Government Code §531.033, which provides the Executive Commissioner of HHSC with board rulemaking authority; Texas Human Resources Code §32.021 and Texas Government Code §531.021(a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas; and Texas Government Code §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 Texas Human Resources Code, Chapter 32; and with Texas Government Code §533.002, which authorizes HHSC to implement the Medicaid managed care program.

The proposed new rule implements Texas Human Resources Code, Chapter 32; Texas Government Code, Chapter 531; and Texas Government Code Chapter 533. No other statutes, articles, or codes are affected by this proposal.