The Texas Health and Human Services Commission (HHSC) proposes an amendment to §353.1303, concerning Quality Incentive Payment Program for Nursing Facilities before September 1, 2019, new §353.1302, concerning Quality Incentive Payment Program for Nursing Facilities on or after September 1, 2019, and new §353.1304, concerning Quality Metrics for the Quality Incentive Payment Program for Nursing Facilities on or after September 1, 2019.

BACKGROUND AND PURPOSE

In order to continue incentivizing Nursing Facilities (NFs) to improve quality and innovation in the provision of NF services, HHSC is proposing new quality metrics, eligibility requirements, and financing components for the Quality Incentive Payment Program for Nursing Facilities (QIPP) to begin in program year 3 (i.e., September 1, 2019, through August 31, 2020).

The QIPP is a type of Medicaid managed care delivery system and provider payment initiative, or directed payment program. Such programs require annual approval from the Centers for Medicare & Medicaid Services (CMS). In April of 2017, CMS approved the QIPP for implementation on September 1, 2017, and HHSC adopted Texas Administrative Code §353.1301 and §353.1303 to govern the program. The QIPP is now in its second year, which began on September 1, 2018.

While still a very young program, HHSC heard stakeholder calls to expand the QIPP to allow more Medicaid NF clients to benefit. HHSC also received feedback from CMS when it approved year 2 of the program that the QIPP quality measures should be modified and enhanced in future program years.

With these goals in mind, HHSC convened a series of workgroup meetings during June, July, and August 2018. The workgroup included private and public nursing facility owners and operators, managed care organizations (MCOs), and advocacy groups representing NF providers and NF clients. The proposed rules emerged from these workgroup meetings.

Existing §353.1301 is not being amended at this time. Existing §353.1303 will be modified to make it applicable to the program's operation before September 1, 2019. Proposed new §353.1302 and §353.1304 will apply to the program's operation beginning on September 1, 2019. A description of the conceptual framework of the redesigned program is as follows:

Eligibility

QIPP is open to two classes of NFs: non-state government-owned NFs and privately-owned NFs. Eligibility for non-state government-owned NFs is being expanded beyond NFs that are located in the same Regional Healthcare Partnership (RHP) as, or within 150 miles of, the non-state governmental entity taking ownership of the facility. Eligibility can now be demonstrated by ownership of the NF by the non-state governmental entity for no less than four years prior to the first day of the eligibility period, or by certification in connection with the enrollment application that the NF can demonstrate an active partnership between the NF and the non-state governmental entity that owns the NF. Criteria that demonstrate an active partnership between the NF and the non-state governmental entity that owns the NF are Monthly meetings (in-person or virtual) with NF administrative staff to review the NF's clinical and quality operations and identify areas for improvement, quarterly joint trainings on topics and trends in nursing home care best practices or on needed areas of improvement, and annual, on-site inspections of the NF by a non-state governmental entity-sponsored Quality Assurance team.

The eligibility criteria for private NFs is also being expanded, and the percentage of Medicaid NF days of service that a private NF must meet or exceed to participate in the QIPP is being set at 65 percent of historical Medicaid NF days of service provided under fee for service (FFS) and managed care compared to the NF's total days of service. Previously, the NF needed to have a percentage of Medicaid NF days of service greater than or equal to "the private NF QIPP eligibility cut-off point," which was equal to the mean percentage of historical Medicaid NF days of service provided under FFS and managed care by all private NFs plus one standard deviation, as determined by HHSC.

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. The non-federal share of all QIPP payments is funded through IGTs from sponsoring non-state governmental entities. No general revenue is available to support QIPP. The MCOs' distribution of QIPP funds to the enrolled NFs will be based on each NF's performance on a set of defined quality metrics. 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 four components of the STAR+PLUS NF managed care per member per month (PMPM) capitation rates. Each component's value will be determined as a percentage of the 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 of a form to HHSC in which it attests that it convened a Quality Assurance Performance Improvement (QAPI) meeting. 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 18 percent.

- Component Two will have a total value equal to 30 percent of remaining QIPP funds after accounting for the funding of Component One and Component Four. Allocation of funds across qualifying non-state government-owned and private NFs will be proportional, based on historical Medicaid days of NF service. Monthly payments to NFs will be triggered by achievement of performance requirements.

- Component Three will have a total value equal to 70 percent of remaining QIPP funds after accounting for the funding of Component One and Component Four. 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 achievement of performance requirements.

- Component Four will have a total value equal to 16 percent of the funds of the QIPP. Allocation of funds across qualifying non-state government-owned NFs will be proportional, based upon historical Medicaid days of NF service. Quarterly payments to non-state government-owned NFs will be triggered by achievement of performance requirements. Private NFs are not eligible for payments from Component Four.

- Funds that are non-disbursed due to failure of one or more NFs to meet performance requirements will be distributed across all QIPP NFs based on each NF's proportion of total earned QIPP funds from Components One, Two, Three, and Four combined.

Quality Design

For each eligibility period, HHSC will designate one or more of the following quality metrics for each QIPP capitation rate component: QAPI meetings, Minimum Data Set (MDS)-based measures, a recruitment and retention program, RN staffing metrics, and an infection control program. HHSC may develop additional metrics for inclusion in QIPP if there is a specific systemic data-supported quality concern impacting Texas Medicaid NF residents. For year 3, QAPI meetings have been designated as the quality metric for Component 1, the recruitment and retention plan and two RN staffing metrics will be used in Component Two, MDS-based measures will be used in Components Three and Four, and the infection control program will be used in Component Four.

For each eligibility period, HHSC will specify the performance requirements that will be associated with the designated quality metric. NFs must make improvements or meet performance requirements that will be established for each facility prior to the beginning of the eligibility period. A NF's baseline will remain the same throughout the eligibility period, while the amount of improvement required each quarter increases.

HHSC will publish notice of the proposed metrics and their associated performance requirements no later than December 31 of the calendar year that precedes the first month of the eligibility period. Final quality metrics and performance requirements will be provided through the QIPP webpage on HHSC's website on or before February 1 of the calendar year that also contains the first month of the eligibility period.

SECTION-BY-SECTION SUMMARY

Proposed new §353.1302 provides the framework for the QIPP for program years beginning September 1, 2019.

Proposed new §353.1302(a) describes the purpose and goals of QIPP. QIPP is designed to incentivize NFs to improve quality and innovation in the provision of NF services to Medicaid recipients through the use of metrics that are expected to advance at least one of the goals and objectives of the state's quality strategy.

Proposed new §353.1302(b) defines key terms used in the section. Terms that are used in this and other sections of this subchapter may also be defined in §353.1301 (relating to General Provisions) or §353.1304 (relating to Quality Metrics for the Quality Incentive Payment Program for Nursing Facilities on or after September 1, 2019) of this subchapter.

Proposed new §353.1302(c) indicates the eligibility requirements for participation in the QIPP by non-state government-owned (NSGO) NFs and private NFs.

Proposed new §353.1302(d) specifies the data sources used to determine historical units of service. Historical units of service are used to determine an individual private NF's QIPP eligibility status and the distribution of QIPP funds across eligible and enrolled NFs.

Proposed new §353.1302(e) describes participation requirements for the QIPP.

Proposed new §353.1302(f) describes how the non-federal share of QIPP payments is funded through IGTs. No state general revenue is available to support QIPP.

Proposed new §353.1302(g) describes the QIPP capitation rate components and eligibility related thereto. The NF must have had at least one Medicaid client in the care of that NF for each reporting period to be eligible for payments.

Proposed new §353.1302(h) specifies the timing and distribution of QIPP payments. Prior to the beginning of each eligibility period, HHSC will calculate the portion of the PMPM associated with each QIPP-enrolled NF broken down by QIPP capitation rate component, quality metric, and payment period.

Proposed new §353.1302(i) describes the eligibility requirements of participants who undergo a change of ownership (CHOW). This includes a NF undergoing a CHOW from privately-owned to NSGO, as well as from NSGO to privately-owned.

Proposed new §353.1302(j) discusses changes in operation and indicates that participants who close voluntarily or cease to provide NF services within the facility must notify HHSC within 10 business days of closing or ceasing to provide NF services.

Proposed new §353.1302(k) indicates the circumstances under which payments may be subject to recoupment.

The proposed amendment of §353.1303 adds "before September 1, 2019" to the title of the section and to subsection (a) to clarify that this rule applies to the QIPP prior to September 1, 2019.

Proposed new §353.1304 describes the quality metrics associated with the QIPP on or after September 1, 2019.

Proposed new §353.1304(a) introduces the section.

Proposed new §353.1304(b) defines key terms used in the section. Terms that are used in this and other sections of this subchapter may also be defined in §353.1301 (relating to General Provisions) or §353.1302 (relating to Quality Incentive Payment Program for Nursing Facilities on or after September 1, 2019) of this subchapter.

Proposed new §353.1304(c) describes the quality metrics HHSC can designate for each QIPP capitation rate component. Possible metrics include QAPI meetings, MDS-based measures, a recruitment and retention program, RN staffing metrics, and an infection control program. HHSC may develop other, evidence-based metrics if there is a specific systemic data-supported quality concern impacting Texas Medicaid NF residents.

Proposed new §353.1304(d) discusses the performance requirements that will be associated with the designated quality metrics. Achievement of performance requirements will trigger payments for the QIPP capitation rate components as described in §353.1302 of this subchapter.

Proposed new §353.1304(e) provides that HHSC will publish notice of the proposed metrics and their associated performance requirements no later than December 31 of the calendar year that precedes the first month of the eligibility period. The notice must be published either by publication on HHSC's Internet web site or in the Texas Register.

Proposed new §353.1304(f) provides that final quality metrics and performance requirements will be provided through the QIPP webpage on HHSC's website on or before February 1 of the calendar year that also contains the first month of the eligibility period.

Proposed new §353.1304(g) establishes telehealth requirements that relate to the RN staffing metric.

FISCAL NOTE

Greta Rymal, Deputy Executive Commissioner for the Financial Services Division for HHSC, has determined that for each year of the first five years the proposed sections are in effect, there will be no fiscal implications to state government, but there may be fiscal implications to local governments. Capitation payments for MCOs will increase in order to provide performance-based incentives for NFs. The increase to capitation payments would be funded with federal funds and with the non-federal share provided through lGTs 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 potentially be significant.

GOVERNMENT GROWTH IMPACT STATEMENT

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

(1) The proposed rules will not create or eliminate a government program;

(2) Implementation of the proposed rules will not affect the number of employee positions;

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

(4) The proposed rules will not affect fees paid to the agency;

(5) The proposed rules will create new rules;

(6) The proposed rules will limit an existing rule;

(7) The proposed rules will increase the number of individuals subject to the rules; and

(8) The proposed rules will positively affect the state's economy.

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

Greta Rymal has also determined there may be an adverse economic effect on small businesses, micro-businesses, or rural communities because the rules could increase the number of private NFs participating in the program, resulting in decreased payments to existing participants on a per day per bed basis. However, that is only true assuming the pool size remains constant, and pool size is determined through a separate administrative action. As the pool size for QIPP year 3 and future program years has not yet been established, the impact cannot be determined at this time.

Additionally, participation in the program is optional and payments are not guaranteed. However, possible payments to private providers may decrease from $18.60 per day per bed to less than $10.00 per day per bed, if the pool remains constant.

HHSC considered four alternatives to minimize the possible adverse economic effect.

Alternative 1: Alternative 1 would maintain the program with no modifications.

Alternative 2: Alternative 2 would modify the eligibility criteria only.

Alternative 3: Alternative 3 would modify the quality metrics only.

Alternative 4: Alternative 4 would expand the program eligibility, modify the quality metrics, and modify the financial components of the program.

Alternative 1 was not selected. CMS, our federal partner, must approve the program design annually. In the approval notification for year 2 of QIPP (September 1, 2018 - August 31, 2019), CMS provided guidance that certain quality metrics should evolve for year 3 in order to continue to receive approval for the program. Therefore, leaving the program unchanged would jeopardize future CMS approval.

Alternative 2 was not selected. While modifying the eligibility criteria only would have allowed additional Medicaid clients to benefit from QIPP, it would not address the guidance issued by CMS for future approval of the program.

Alternative 3 was not selected. While this option would have addressed the CMS guidance described above, it would not have allowed additional Medicaid clients to benefit from this program.

HHSC selected Alternative 4. Modification of the quality metrics and financial components, while simultaneously expanding the eligibility criteria, will allow the program to continue and evolve as directed by CMS. These modifications also allow for additional Medicaid clients to benefit from the program, while maintaining a stable funding mechanism.

ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT

HHSC has determined there are no anticipated economic costs to persons who are required to comply with the sections as proposed

There is no anticipated negative impact on local employment.

COSTS TO REGULATED PERSONS

Texas Government Code, §2001.0045 does not apply to these rules because the rules do not impose a cost on regulated persons and they are necessary to receive a source of federal funds.

PUBLIC BENEFIT