The Texas Health and Human Services Commission (HHSC) adopts an amendment to §353.1305, concerning Uniform Hospital Rate Increase Program for program periods before September 1, 2021; 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.

New §353.1306 and new §353.1307 are adopted with changes to the proposed text as published in the January 1, 2021, issue of the Texas Register (46 TexReg 13). These rules will be republished. The amendment to §353.1305 is adopted without changes to the proposed text as published in the January 1, 2021, issue of the Texas Register (46 TexReg 13). This rule will not be republished.

BACKGROUND AND JUSTIFICATION

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 adopting new quality metrics, eligibility requirements and financing components for the program. HHSC is also adopting these amendments to comply with federal regulations that require directed-payment programs (DPPs) 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 (DSRIP) program.

During 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 hospitals, as well as advocacy groups representing hospitals to assist in the design of the 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 managed care organizations' (MCO) 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 within a service delivery area (SDA) 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 payor 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 within a service delivery area (SDA) 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 preceding 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.

COMMENTS

The 31-day comment period ended February 1, 2021.

During this period, HHSC received comments regarding the proposed rules from forty-seven (47) commenters: Acadia Healthcare; Adelanto HealthCare Ventures, LLC; Amerigroup Texas, Inc; Ascension; Baylor Scott & White Health; Brazos County; Cameron County Healthcare Funding District; Children's Hospital Association of Texas (CHAT); CHRISTUS Health; Community First Health Plans; Community Health Services; Doctors Hospital at Renaissance, Ltd. (DHR Health); Gjerset & Lorenz, LLP; Guadalupe Regional Medical Center; Harris Health System; HCA Healthcare; Hendrick Medical Center; Hidalgo County; JPS Health Network; LifePoint Health; McLennan County Indigent Health Care; Midland Memorial Hospital; Memorial Hermann Health System; Mitchell County Hospital; Oceans Healthcare; Rolling Plains Memorial Hospital; Signature Healthcare Services; Springstone; St. Luke's Health; SUN Behavioral Health; Teaching Hospitals of Texas (THOT); Tenet Healthcare; Texas Association of Community Health Plans; Texas Association of Health Plans; Texas Association of Voluntary Hospitals (TAVH); Texas Children's Hospital; Texas Essential Healthcare Partnerships (TEHP); Texas Health Resources; Texas Hospital Association (THA); Texas Organization of Rural & Community Hospitals (TORCH); Texas Scottish Rite Hospital; Travis County Healthcare District, d/b/a Central Health; United Regional Health Care System; University Health; University Medical Center of El Paso; Webb County; Wilson N. Jones Regional Medical Center

A summary of the comments received and HHSC's responses to the comments follow.

Participation Requirements

Comment: One commenter was concerned that since many rural hospitals did not respond to the Average Commercial Rate Survey that it will hurt them. The commenter suggested a formal application process to address the 2022 year that includes them (and the rate opportunity that some missed).

Response: No changes were made in response to this comment. The average commercial data was collected to model what the CHIRP program payments might look like, but there will be an official enrollment period to collect applications and data for state fiscal year 2022. All hospitals will have the opportunity to submit average commercial data during the official enrollment process.

Comment: One commenter expressed support for the application process and the allowance of participation in the programs by less than the entire class.

Response: HHSC appreciates the support. No changes were made in response to this comment.

Comment: One commenter asked if hospitals who have not previously participated in UHRIP can apply to the CHIRP Program.

Response: No changes were made in response to this comment. Yes, hospitals can apply to the program that have not previously participated in UHRIP if they meet the conditions of participation and other program requirements.

Comment: One commenter asked whether CHIRP allows a hospital to opt into either the UHRIP or ACIA component or if the option is available only for ACIA for hospitals that apply for CHIRP.

Response: Providers can choose to participate in UHRIP without participating in ACIA, they can participate in both UHRIP and ACIA, or they can choose to not participate in either component. The option is not available to participate in ACIA without participating in UHRIP. In response to this comment, HHSC revised §353.1306(c)(1)(A) to clarify that ACIA is only available to hospitals that first choose to participate in UHRIP.

Comment: Two commenters were concerned that proposed §353.1306(c)(2) would effectively make a hospital ineligible to participate in CHIRP if it has used revenue from CHIRP payments to pay a consultant or lawyer fees for assistance with CHIRP, regardless of the underlying fee structure. The commenters added that while it appears that consulting fees and legal fees that are paid from a hospital's non-CHIRP revenue sources would not cause any issues under proposed §353.1306(c)(2), isolating revenue from CHIRP payments in such a way to ensure that such revenue is not utilized for consulting and legal services related to CHIRP may be administratively difficult for many hospitals. The commenters urged HHSC to reconsider the proposed participation requirement by revising or removing the proposed requirement.

Response: HHSC agrees with the commenters that the rule language should be refined to more clearly prohibit contingency fees for services that are based solely on the amount of the hospital's CHIRP revenue. HHSC agrees that hospitals may utilize consultants, advisors, or legal counsel for a variety of reasons. HHSC has amended §353.1306(c)(2) to specify that no part of any CHIRP payment will be used to pay a contingent fee nor may the entity's agreement with the hospital use a reimbursement methodology that contains any type of incentive, directly or indirectly, for inappropriately inflating, in any way, claims billed to the Medicaid program including the hospital's receipt of CHIRP funds.

Comment: Multiple commenters expressed concern with the proposed condition in §353.1306(c)(3) that "[t]he entity that owns the hospital must submit to HHSC, upon demand, copies of contracts it has with third parties that reference the administration of, or payments from, CHIRP." The commenters said the request for contract disclosures is overly broad and risks putting HHSC in the business of policing entirely private agreements that do not involve a governmental entity or state action. The commenters further said that the broad disclosure request creates confidentiality concerns for providers and risks forcing the disclosure of commercially sensitive information. Commenters urged HHSC to remove the proposed condition or, at a minimum, to revise the broad language.

Response: HHSC agrees with the commenter that HHSC does not wish to impose significant administrative burdens or to infringe upon third parties' relationships to which a governmental entity is not a party. HHSC's intent of the proposed language was specific to instances where a change of ownership has occurred that would impact the eligibility of the provider. HHSC made a change to §353.1306(c)(3) to clarify the applicability of this provision.

Comment: Two commenters asked if HHSC will need to collect additional data from hospitals in order to support the proposed pool size announced for CHIRP. If so, the commenters requested that HHSC provide at least 30 days of lead time to complete the analysis to ensure that they have time to provide the most accurate and complete information.

Response: No changes were made in response to this comment. HHSC will collect additional data from hospitals wanting to participate in ACIA during the CHIRP enrollment period, as well as general hospital information like hospital name and national provider identification number. Enrollment will be open for no less than 21 calendar days. At this time, HHSC is not extending the enrollment period.

Comment: Two commenters asked HHSC to clarify if hospitals will submit applications to participate in CHIRP on a twelve-month or six-month basis. If applications are every twelve months, aside from the proposed rules' reference to permitting SDAs to join at the halfway point of the state fiscal year, the commenters asked if there are other circumstances (e.g., new hospital opens or hospital undergoes change in ownership) where HHSC would permit a provider to submit an application and begin participating in CHIRP during a program period before the next twelve-month application opportunity.

Response: Applications are submitted on a 12-month basis. There are no circumstances where HHSC would permit a provider to submit an application and begin participating in CHIRP before the next 12-month application opportunity. HHSC revised §353.1306(b)(7) to clarify this requirement.

Comment: One commenter appreciated the proposed rule including an "opt-in" procedure in which the hospital must select whether it will participate in the optional program components.

Response: HHSC appreciates the support. No changes were made in response to this comment.

Classes of Participating Hospitals

Comment: One commenter asked HHSC to confirm the hospital class for "private rural hospitals" and "private urban hospitals." Two other commenters noted that the proposed rules' definitions do not include urban private hospitals as a participating class for CHIRP. These commenters said they believe this was a clerical oversight and that HHSC will revise the rules upon adoption to include both private and public urban hospitals.

Response: Private rural hospitals fall within the "rural hospital" classification for CHIRP. In proposed §353.1306(d)(1)(D), HHSC included "urban public hospitals" as a class. The class should have been "urban hospitals," as it was correctly described in the proposed preamble, to describe both private and public urban hospitals in a single class. Subsection (d)(1)(D) was revised to change the class to "urban hospitals."

Comment: One commenter asked if a Sole Community Hospital and Critical Access Hospital in a Metropolitan Statistical Area (MSA) are classified as "urban hospitals" or "rural hospitals" for UHRIP. The commenter said that it appears urban, per their reading, but requested confirmation.

Response: No changes were made in response to this comment. There may be instances where a Sole Community Hospital (SCH) or Critical Access Hospital (CAH) in an MSA can be considered rural. Per the definition included in the rule, a hospital that is an SCH or CAH or Rural Referral Center (RRC) is considered rural if it is not located in an MSA, or if it has fewer than 100 beds, is an SCH, CAH, or RRC and is located in an MSA.

Comment: Multiple commenters expressed concern with HHSC's proposal to change the classes of participating hospitals from eight classes (in UHRIP) to six classes (in CHIRP). Specific concerns were noted about the proposal to combine rural private hospitals and rural public hospitals into a single class and the proposal to combine urban public hospitals and urban private hospitals into a single class. The commenters pointed to differences between the hospitals (e.g., Medicare gap is larger for private hospitals than public, rural hospitals are not all paid the same) and said that combining them into the respective classes will result in reduced payments for some of the hospitals. Some of the commenters said accommodations should be made, either in CHIRP or a related supplemental payment program, to balance the inequity.

Response: No changes were made in response to this comment. HHSC has decided to collapse the class structure into the hospital inpatient rate classes to more closely align with established classes in the Medicaid state plan. Although at this time HHSC is not planning to modify related supplemental programs based on CHIRP, the CHIRP payments will continue to be offset from the State Payment Caps for the Disproportionate Share Hospital program which may also affect the distribution of Uncompensated Care payments.

Comment: One commenter asked if there are documented definitions for the provider class criteria determining component eligibility.

Response: The provider class criteria can be found in 1 TAC §355.8052 for most hospital classes. To further clarify what constitutes an IMD hospital, HHSC has revised the definition at §353.1306(b)(4) to clarify that IMD hospitals are reimbursed as freestanding psychiatric facilities under 1 TAC §355.8060.

Comment: One commenter asked if a hospital is classified as non-urban public for UHRIP purposes, how will they be classified for CHIRP.

Response: No changes were made in response to this comment. The hospital will fall under the class "urban hospital" in CHIRP.

Comment: One commenter expressed support for HHSC's proposal to consolidate hospitals classes from eight to six. The commenter was previously concerned that the proposal would disproportionately shift funding from private urban hospitals to public urban hospitals but said that HHSC's modeling addressed this issue and is now supportive of the proposal.

Response: HHSC appreciates the support. No changes were made in response to this comment.

Services Subject To Rate Increase

Comment: Multiple commenters expressed their appreciation for the inclusion of private IMDs in CHIRP but asked HHSC to reconsider the decision to exclude the adult population from the scope of the CHIRP rate increase. The commenters said the availability of a CHIRP rate increase for adult patients would allow IMDs to provide better access to care for this underserved population and ease the demand for care in state psychiatric hospitals.