The Texas Health and Human Services Commission (HHSC) proposes amendments to §353.1303, concerning the Quality Incentive Payment Program for Nursing Facilities.

BACKGROUND AND PURPOSE

The amendment would delete the good cause exception to the geographic proximity criterion in the Quality Incentive Payment Program (QIPP) rule. The rule was drafted to avoid possible deferrals and disallowances by the Centers for Medicare and Medicaid Services (CMS), as it closely monitors state funding arrangements that involve intergovernmental transfers (IGTs), especially in instances when a nursing facility (NF) is outside the effective reach of the owner's location. Use of the good cause exception for the sole purpose of enhancing Federal funding potentially jeopardizes the integrity of the QIPP program. None of the exception requests received to date included sufficient documentation to indicate there would be no risk to Federal funds, therefore HHSC has not granted any such requests. Additionally, this good cause exception appears administratively unworkable.

The amendment would also modify the calculation of the eligibility cut-off point for participation by private NFs. As amended, the private NF QIPP eligibility cut-off point for state fiscal year (SFY) 2019 and beyond will be equal to the mean percentage plus one-quarter of one standard deviation of historical Medicaid NF days of service provided under fee-for service (FFS) and managed care (MC) by all private NFs. Additionally, a private NF that was eligible to participate in QIPP during Eligibility Period One is eligible to participate in the eligibility period for SFY 2019 regardless of its Medicaid NF days of service for the SFY 2019 eligibility period. These modifications will continue to ensure that QIPP funds are focused on the Medicaid population while increasing the number of eligible providers.

The amendment would also clarify the rule in regards to submission of the Quality Assurance Performance Improvement (QAPI) Validation Report. The QAPI Validation Report must be submitted by NFs to HHSC monthly.

Finally, the amendment would delete a reference to audited cost reports. Upon initial adoption, HHSC removed all references to audited cost reports in response to a comment. This specific reference mistakenly remained in the rule language upon adoption.

SECTION-BY-SECTION SUMMARY

The proposed amendment to §353.1303(b)(10) replaces "an MCO" as the point of submission of the QAPI Validation Report to "HHSC."

The proposed amendment to §353.1303(c)(1)(A)(iii) removes the good cause exception to the geographic proximity criterion. Due to the risk of Federal funds, HHSC is no longer allowing exceptions to the 150 mile radius requirement.

The proposed amendment to §353.1303(c)(2) adds a subparagraph (A) to indicate the revised formula for calculating the eligibility cut-off point for participation by private NFs in future eligibility periods. It also adds a subparagraph (B) to make private NFs that were eligible to participate in QIPP during Eligibility Period One eligible to participate in state fiscal year 2019, regardless of their Medicaid NF days of service for that eligibility period.

The proposed amendment to §353.1303(d)(4)(A) deletes the reference to an "audited" cost report. This reference should have been removed upon adoption.

The proposed amendment to §353.1303(g)(1)(C) replaces "the MCOs" as the point of submission of the QAPI Validation Report to "HHSC."

FISCAL NOTE

Greta Rymal, Deputy Executive Commissioner for Financial Services, has determined that for each year of the first five years the amendments will be in effect, there may be fiscal implications to local governments as a result of enforcing and administering the amendments as proposed.

The rule may limit a local government NF's ability to increase their revenue by not allowing a good cause exemption to the existing 150 mile rule, thus disqualifying some local government NF's from participation in QIPP. This potential limit would apply only to local government NF's who are not currently participating in QIPP. The potential increase in entrants to the program related to the change in the eligibility cut-off point will impact a local governmental NF's potential share of the QIPP pool of funds.

Through a separate administrative action, HHSC intends to size the pool if this rule is adopted, such that local government NFs already participating in QIPP do not experience a negative impact in the absolute amount of funds received on a per-day/per-bed basis relative to the first QIPP program year (FY18) provided the quality metrics are achieved.

GOVERNMENT GROWTH IMPACT STATEMENT

HHSC has determined that during the first five years that the amendments will be in effect:

(1) the proposed amendments will not create or eliminate a government program;

(2) implementation of the proposed amendments will not require the creation or elimination of employee positions;

(3) implementation of the proposed amendments will not require an increase or decrease in future legislative appropriations;

(4) the proposed amendments will not require an increase or decrease in fees paid to the agency;

(5) the proposed amendments will not create a new rule;

(6) the proposed amendments will both limit and expand an existing rule; and

(7) the proposed amendments will increase the number of individuals subject to the rule.

HHSC has insufficient information to determine the proposed amendments' effects on the state's economy.

SMALL BUSINESS, MICRO-BUSINESS, AND RURAL COMMUNITY IMPACT ANALYSIS

Ms. Rymal has also determined that there may be an adverse economic effect on small businesses, micro-businesses, or rural communities. The rule may limit a provider's ability to increase their revenue by not allowing a good cause exemption to the 150 mile rule thus disqualifying some providers from participation in QIPP. This potential limit would apply only to providers who are not currently participating in QIPP, including small and micro-businesses.

The potential increase in entrants to the program related to the change in the eligibility cut-off point could impact a small business or micro-business NF's potential share of the QIPP pool of funds, however, no small business or micro-business currently participates.

Under §2006.002 of the Government Code, a state agency proposing an administrative rule that may have an adverse economic effect on small businesses must prepare an economic impact statement and a regulatory flexibility analysis. The economic impact statement estimates the number of small businesses subject to the rule and projects the economic impact of the rule on small businesses. The regulatory flexibility analysis describes the alternative methods the agency considered to achieve the purpose of the proposed rule while minimizing adverse effects on small businesses. The purpose of the proposed rules is to remove the good cause exception to the geographic proximity criterion, modify the calculation of the eligibility cut-off point for participation by private NFs, update the submission requirements of the QAPI Validation Report to align with current policies, and delete a reference to audited cost reports. Only the removal of the good cause exemption may have an adverse economic impact on small businesses, micro-businesses, or rural communities.

It is not possible to estimate the number of small businesses, micro businesses, or rural communities this rule may adversely impact. This rule may only adversely impact private providers who do not currently participate in QIPP, who will not meet the amended eligibility cut-off point, and who do not meet the geographic proximity criterion. It is not possible to determine which small business or micro business will request enrollment in QIPP and which of those may be impacted by the geographic proximity criterion.

HHSC considered four alternatives to removing the good cause exemption to the geographic proximity criterion.

Alternative 1: Alternative 1 would remove the good cause exemption to the geographic proximity criterion.

Alternative 2: Alternative 2 would retain the good cause exemption to the geographic proximity criterion.

Alternative 3: Alternative 3 would retain the good cause exemption to the geographic proximity criterion and provide informal guidance on what constitutes a good cause exemption to the geographic proximity criterion and how to ensure there is a legitimate, recognizable patient flow relationship between the hospital district and the NF.

Alternative 4: Alternative 4 would retain the good cause exemption to the geographic proximity criterion and establish in the rule specific criteria that must be met for a good cause exception to be granted.

HHSC selected Alternative 1. Elimination of the good cause exemption removes the potential risk of deferrals or disallowances by CMS due to the perception that the exception merely enhances Federal funds. Also, while Alternative 1 limits a provider's ability to increase its revenue, it does not reduce existing rates or revenues.

Alternative 2 was not selected. Retaining the good cause exception does not alleviate the risk of deferrals or disallowances.

Alternatives 3 and 4 were also not selected. The definition of "good cause" is subjective and open to interpretation. Elimination of the good cause exemption ensures all providers are treated equally. Additionally, if an exception is granted and is later determined to be inappropriate, it could place Federal funds at risk and jeopardize the integrity of the QIPP program.

HHSC considered 4 alternatives to modifying the eligibility cut-off point for private NFs.

Alternative 1: Alternative 1 would modify the eligibility cut-off point to allow additional entrants to the pool at the cut-off point determined by the proposed methodology.

Alternative 2: Alternative 2 would allow all private NFs to participate regardless of historical Medicaid days.

Alternative 3: Alternative 3 would increase the eligibility cut-off point for private NFs.

Alternative 4: Alternative 4 would disallow the participation of private NFs.

HHSC selected Alternative 1. Modifying the eligibility cut-off point allows for increased participation in QIPP which increases the opportunity for small businesses or micro-businesses to potentially participate as private NFs. Because there are no existing micro-businesses or small businesses that participate, it does not reduce existing revenues to these provider types.

Alternative 2 was not selected due to the risk of deferrals or disallowances.

Alternative 3 and 4 were not selected because they would further restrict potential participation by small businesses or micro-businesses.

ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT

There are no anticipated economic costs to persons who are required to comply with the amendments as proposed. The implementation of the proposed amendment does not require any changes in practice or impose any cost on NFs.

There is no anticipated negative impact on local employment.

COSTS TO REGULATED PERSONS

Texas Government Code, §2001.0045 does not apply to this rule because the rule does not impose a cost on regulated persons since it does not reduce existing rates or revenues. In addition, the rule is necessary to receive a source of federal funds or comply with federal law.

PUBLIC BENEFIT

Selvadas Govind, Director of Rate Analysis, has determined that for each year of the first five years the amendment is in effect, the public will benefit from adoption of the amendment. The public benefit anticipated as a result of enforcing or administering the amendment will be administrative simplification and mitigation of potential risk to Federal funds, and will increase the number providers eligible to participate in QIPP.

TAKINGS IMPACT ASSESSMENT

HHSC has determined that the 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 Government Code, §2007.043.

PUBLIC HEARING

HHSC will conduct a public hearing on May 14, 2018, at 1:00 p.m. to receive public comments on these proposed rules. The public hearing will be held in the Public Hearing Room of the Brown-Heatly Building at 4900 N. Lamar Blvd, Austin, Texas. Entry is through security at the main entrance of the building facing Lamar Blvd. Persons with disabilities who wish to attend the hearing and require auxiliary aids or services should contact Rate Analysis by calling (512) 730-7401 at least 72 hours prior to the hearing so appropriate arrangements can be made.

PUBLIC COMMENT

Written comments on the proposal may be submitted to the Long Term Services and Supports section of the Rate Analysis Department, Texas Health and Human Services Commission, Mail Code H-400, P.O. Box 85200, Austin, TX 78705-5200; by fax to (512) 730-7475; or by e-mail to rad-ltss@hhsc.state.tx.us within 30 days after publication of this proposal in the Texas Register.

STATUTORY AUTHORITY

The amendment is proposed under Texas Government Code §531.033, which provides the Executive Commissioner of HHSC with broad 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; 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 amendment affects Texas Government Code Chapters 531 and 533 and Texas Human Resources Code Chapter 32. No other statutes, articles, or codes are affected by this proposal.