The Executive Commissioner of the Texas Health and Human Services Commission (HHSC) proposes an amendment to §353.1305, concerning Uniform Hospital Rate Increase Program; new §353.1306, concerning Comprehensive Hospital Increase Reimbursement Program for program periods on or after September 1, 2021; and new §353.1307, concerning Quality Metrics and Required Reporting Used to Evaluate the Success of the Comprehensive Hospital Increase Reimbursement Program.

BACKGROUND AND PURPOSE

To continue incentivizing hospitals to improve access, quality, and innovation in the provision of hospital services in Year 5 of the program (i.e., September 1, 2021, through August 31, 2022) and beyond, HHSC is proposing new quality metrics, eligibility requirements and financing components for the program. HHSC is also proposing these amendments to comply with federal regulations that require directed-payment programs to advance goals included in the state's managed care quality strategy and to align with the ongoing efforts to transition from the Delivery System Reform Incentive Payment program.

During the months of September and October 2020, HHSC convened a workgroup of stakeholders including hospitals from all hospital classes, such as children's, rural, urban, publicly-owned, privately-owned, state-owned, and advocacy groups representing hospitals to assist in the design of the proposed program structure.

The Uniform Hospital Rate Increase Program was initially implemented on December 1, 2017, and operated under Texas Administrative Code Title 1 §353.1301 and §353.1305 for the initial program year and subsequent years. Section 353.1301 is not being amended at this time. The amendment to §353.1305 will make the rule applicable to the program before September 1, 2021.

New §353.1306 and §353.1307 will apply to the program beginning on September 1, 2021, and will re-name the program the Comprehensive Hospital Increase Reimbursement Program (CHIRP), which will be comprised of the Uniform Hospital Rate Increase Payment (UHRIP) and the Average Commercial Incentive Award (ACIA). A description of the conceptual framework of the program is as follows:

Eligibility and Enrollment

CHIRP is open to six classes of hospitals: children's hospitals, rural hospitals, state-owned hospitals that are not institutions for mental diseases (IMDs), urban hospitals, non-state-owned IMDs, and state-owned IMDs. Eligibility for hospitals will now be based upon an individual hospital application, which will allow hospitals to participate even if other hospitals within the same class do not wish to participate.

Capitation Rate Structure

CHIRP 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 CHIRP payments is funded through IGTs from sponsoring governmental entities. No general revenue is available to support CHIRP. The MCOs' distribution of CHIRP funds to the enrolled hospitals will be based on the hospital's actual utilization as a uniform percentage increase. CHIRP 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 CHIRP. The amount of the capitation will be determined by the amount of the non-federal share available for the program.

CHIRP funds will be paid through two components of the 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 CHIRP program.

Capitation Rate Components

The UHRIP Component will be equal to a percentage of the estimated difference between what Medicare is estimated to pay for the services and what Medicaid actually paid for the same services (Medicare gap) on a per class basis. UHRIP payments will be paid as a uniform rate increase per class and will be distributed based upon actual paid claims.

The ACIA Component will be equal to a percentage of the difference between what an average commercial payer is estimated to pay for the services and what Medicaid actually paid for the same services (ACR gap) less payments received under UHRIP. ACIA payments will be paid as a uniform rate increase per class and will be distributed based upon actual paid claims.

Quality Evaluation

For each program period, HHSC will specify the performance requirements that will be associated with the designated quality metric that is expected to advance at least one of the goals and objectives in the managed care quality strategy. Achievement of the performance requirements will be used to evaluate the degree to which the program advances at least one of the goals and objectives that are incentivized by the CHIRP payments.

HHSC will publish notice of the proposed metrics and their associated performance requirements no later than January 31 of the calendar year that precedes the first month of the program period. Final quality metrics and performance requirements will be provided on HHSC's website on or before February 28 of the calendar year that also contains the first month of the program period.

SECTION-BY-SECTION SUMMARY

The proposed amendment of §353.1305 adds "before September 1, 2021" to the title of the section and to subsection (a) to clarify that this rule applies to UHRIP prior to September 1, 2021.

Proposed new §353.1306 provides the framework for the CHIRP for program years beginning on or after September 1, 2021. Subsection (a) describes the purpose and goals of CHIRP. CHIRP is designed to incentivize hospitals to improve access, quality and innovation in the provision of hospital 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. Subsection (b) defines key terms used in the section. Subsection (c) indicates the requirements for participation in the CHIRP by hospitals. Subsection (d) specifies the classes of hospitals that are authorized to be part of the CHIRP. Subsection (e) describes eligibility requirements for the CHIRP and factors HHSC will consider when identifying classes eligible for a reimbursement increase. Subsection (f) describes which services are eligible for a reimbursement increase. Subsection (g) describes the CHIRP capitation rate components and eligibility related thereto. Subsection (h) specifies the distribution of CHIRP payments. Subsection (i) describes how rate increases for eligible classes will be determined. Subsection (j) discusses the non-federal share of CHIRP payments. No general revenue funds are available for CHIRP. Subsection (k) provides the effective date of the rate increases. Subsection (l) discusses notification requirements if a provider ceases to operate. Subsection (m) discusses the reconciliation of the amount of the non-federal funds actually expended. Subsection (n) indicates the circumstances under which payments may be subject to recoupment.

Proposed new §353.1307 describes the quality metrics and required reporting used to evaluate the success of the CHIRP. Subsection (a) establishes the purpose of the section. Subsection (b) defines key terms used in the section. Subsection (c) describes the quality metrics HHSC can designate for each CHIRP capitation rate component. Possible metrics include structure or pay-for-reporting measures and will be evidence-based. Subsection (d) discusses the performance requirements that will be associated with the designated quality metrics. Achievement of performance requirements will be used to evaluate the degree to which the CHIRP advances at least one of the goals and objectives that are incentivized by the payments described in §353.1306(g) of this subchapter. Subchapter (e) provides that HHSC will publish notice of the proposed metrics and their associated performance requirements no later than January 31 preceding the first month of the program period. The notice will be published by publication on HHSC's website. Subsection (f) provides that final quality metrics and performance requirements will be provided through HHSC's website on or before February 28 of the calendar year that also contains the first month of the program period. Subsection (g) provides that HHSC will evaluate the success of the program based on a statewide review of reported metrics and that HHSC will publish interim evaluation findings. HHSC will publish a final evaluation report within 270 days of the conclusion of the program period.

FISCAL NOTE

Trey Wood, Chief Financial Officer for HHSC, has determined that for each year of the first five years the proposed rules are in effect, there are no foreseeable implications relating to costs or revenues of state government.

For the first five years the proposed rules are in effect, there may be financial implications to local governments. Capitation payments for MCOs will increase in order to provide performance-based incentives for hospitals. The increase to capitation payments would be funded with federal funds and with the non-federal share provided through IGTs from governmental entities.

GOVERNMENT GROWTH IMPACT STATEMENT

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

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

(2) implementation of the proposed rules does not require the creation of new HHSC employee positions;

(3) implementation of the proposed rules will result in no assumed change in future legislative appropriations;

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

(5) the proposed rules will create a new rule;

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

(7) the proposed rules will not change 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

Trey Wood has also determined that there will be no adverse economic effect on small businesses, micro-businesses, or rural communities. There are no Texas hospitals participating in Medicaid that qualify as small businesses or micro-businesses. The proposed rules do not impose any additional fees or costs on rural communities required to comply.

LOCAL EMPLOYMENT IMPACT

The proposed rules will not affect a local economy.

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.

PUBLIC BENEFIT AND COSTS

Victoria Grady, Director of Provider Finance, has determined that for each year of the first five years the rules are in effect, the public benefit will be improved quality for Medicaid clients receiving services at participating hospitals.

Trey Wood has also determined that for the first five years the rules are in effect, there are no anticipated economic costs to persons who are required to comply with the proposed rules because the rules do not impose any additional fees or costs on those who are required to comply.

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 Texas Government Code §2007.043.

PUBLIC HEARING

A public hearing is scheduled for January 11, 2021, at 10:30 a.m. (Central Standard Time) to receive public comments on the proposal. Persons requiring further information, special assistance, or accommodations should email RAD_1115_Waiver_Finance@hhsc.state.tx.us.

Due to the declared state of disaster stemming from COVID-19, the hearing will be conducted online only. No physical entry to the hearing will be permitted.

Persons interested in attending may register for the public hearing at:

https://attendee.gotowebinar.com/register/8149983017350194192

After registering, a confirmation email will be sent with information about joining the webinar.

HHSC will broadcast the public hearing. The broadcast will be archived for access on demand and can be accessed at https://hhs.texas.gov/about-hhs/communications-events/live-archived-meetings.

PUBLIC COMMENT

Written comments on the proposal may be submitted to HHSC, Mail Code H400, P.O. Box 13247, Austin, Texas 78711-3247, or by email to RAD_1115_Waiver_Finance@hhsc.state.tx.us.

During the current state of disaster due to COVID-19, physical forms of communication are checked with less frequency than during normal business operations. Therefore, please submit comments by email, if possible.

To be considered, comments must be submitted no later than 31 days after the date of this issue of the Texas Register. Comments must be: (1) postmarked or shipped before the last day of the comment period; (2) hand-delivered before 5:00 p.m. on the last working day of the comment period; or (3) emailed before midnight on the last day of the comment period. If the last day to submit comments falls on a holiday, comments must be post-marked, shipped, or emailed before midnight on the following business day to be accepted. When emailing comments, please indicate "Comments on Proposed Rule 21R027" in the subject line.

STATUTORY AUTHORITY

The amendment and new sections are authorized by Texas Government Code §531.033, which authorizes the Executive Commissioner of HHSC to adopt rules necessary to carry out HHSC's duties; 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-1), 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 Texas Government Code §533.002, which authorizes HHSC to implement the Medicaid managed care program.

The amendment and new sections affect Human Resources Code Chapter 32 and Government Code Chapters 531 and 533.