The Executive Commissioner of the Texas Health and Human Services Commission (HHSC) proposes an amendment to §355.105, concerning General Reporting and Documentation Requirements, Methods, and Procedures.

BACKGROUND AND PURPOSE

Texas Human Resources Code §40.058 requires the Texas Department of Family and Protective Services (DFPS) and HHSC to "enter into contracts for the provision of shared administrative services, including...rate setting." As part of these rate-setting activities, HHSC collects annual cost reports from program providers in the 24-Hour Residential Child Care (24RCC) program and uses the data to calculate and recommend payment rates to DFPS. DFPS currently reimburses providers through two payment models: the legacy system and Community-Based Care (CBC). Under the legacy system, DFPS pays 24RCC providers a payment rate for each day of care provided. Under CBC, DFPS contracts with a Single Source Continuum Contractor (SSCC) who is responsible for finding foster homes or other living arrangements for children in state care and providing them with a full continuum of services. SSCCs subcontract with residential childcare providers to provide residential foster care in their catchment areas.

The Texas Legislature directed DFPS to implement foster care rate modernization within the Issue Docket Decisions of the 2024-2025 General Appropriations Bill, House Bill 1, 88th Legislature, Regular Session, 2023 (Article II - Health and Human Services). Cost Report modifications have been outlined in HHSC's legislative reports pertaining to the Foster Care Rate Modernization project. For example, HHSC's Pro Forma Modeled Rate and Fiscal Impact Report, as required by the 2022-2023 General Appropriations Act, Senate Bill 1, 87th Legislature, Regular Session, 2021 (Article II Special Provisions Relating to All Health and Human Services Agencies, Section 26), stated: "HHSC and DFPS must evaluate if calculating a statewide case management rate using actual SSCC cost data in lieu of resource transfer is appropriate. Using SSCC costs to calculate the CBC rate may improve the state's ability to align rates more closely to provider costs. HHSC and DFPS would have to evaluate if a cost-based approach is appropriate for CBC. A cost-based approach could result in DFPS paying provider-specific, per-catchment rates or a uniform statewide rate." The cost-based approach was also outlined in HHSC's Implementation Plan.

The purpose of the proposal is to update the cost report excusal criteria for DFPS' 24RCC program to ensure program providers have sufficient data to justify collecting an annual cost report. The proposed amendment updates the excusal criteria to account for providers who have subcontracted with an SSCC under CBC by adding SSCC referrals into the calculation of state-placed days.

The proposed amendment would also require all SSCCs to submit cost reports on the state fiscal year rather than the provider's current fiscal year. This amendment would allow additional time for claims adjudication before cost reports are submitted to improve data reliability and reduce adjustments during HHSC's financial examination processes. The amendments also make clarifying edits throughout the rule.

SECTION-BY-SECTION SUMMARY

The proposed amendment to §355.105(b)(4)(D)(viii) removes the excusal criteria for providing only basic level services and adds SSCC-placed days to the definition of state-placed days for the purposes of 24RCC program cost report excusal criteria.

The proposed amendment to §355.105(b)(5) requires that the SSCC's cost reporting period coincides with the State of Texas's fiscal year.

The proposed amendment to §355.105 includes reference corrections and edits to improve readability and understanding.

FISCAL NOTE

Trey Wood, Chief Financial Officer, has determined that for each year of the first five years that the rule will be in effect, enforcing or administering the rule does not have foreseeable implications relating to costs or revenues of state or local governments.

GOVERNMENT GROWTH IMPACT STATEMENT

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

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

(2) implementation of the proposed rule will not affect the number of HHSC employee positions;

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

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

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

(6) the proposed rule will expand an existing rule;

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

(8) the proposed rule will not affect the state's economy.

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

Trey Wood also determined that there may be an adverse economic effect on small businesses, micro-businesses, or rural communities. Approximately 50 24RCC providers, who are currently being excused under this rule, will need to complete cost reports as a result of this proposed rule amendment. HHSC cannot estimate the number of small businesses, micro-businesses, or rural communities who must comply with this amendment.

LOCAL EMPLOYMENT IMPACT

The proposed rule will not affect a local economy.

COSTS TO REGULATED PERSONS

Texas Government Code §2001.0045 does not apply to this rule because the rule is necessary to implement legislation that does not specifically state that §2001.0045 applies to the rule.

PUBLIC BENEFIT AND COSTS

Victoria Grady, Director of the Provider Finance Department, has determined that for each year of the first five years the rule is in effect, the proposed amendment benefits the public because it improves the data used for rate setting and cost analyses used to inform fiscal estimates provided to the legislature. These changes will improve HHSC's ability to estimate methodological rates.

Trey Wood has also determined that for the first five years the proposed rule amendment is in effect, persons who are required to comply with the proposed rule may incur economic costs because changes to the excusal criteria will require more foster care providers to complete reports that currently are excused, which creates a cost to comply. Although HHSC cannot estimate the cost to comply, HHSC anticipates about 50 additional providers will have to complete cost reports under this amendment.

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 COMMENT

Written comments on the proposal may be submitted to HHSC Provider Finance Department, Mail Code H-400, P.O. Box 149030, Austin, Texas 78714-9030, or by email to PFD-LTSS@hhs.texas.gov.

To be considered, comments must be submitted no later than 21 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 postmarked, shipped, or emailed before midnight on the following business day to be accepted. When emailing comments, please indicate "Comments on Proposed Rule 23R039" in the subject line.

STATUTORY AUTHORITY

The amendment is authorized by Texas Government Code §531.0055, which provides that the Executive Commissioner of HHSC shall adopt rules for the operation and provision of services by the health and human services agencies, and Texas Human Resources Code §40.058, which provides for HHSC to provide administrative, rate setting, and contracting services on behalf of DFPS.

The amendment affects Texas Government Code Chapter 531 and Texas Human Resources Code Chapter 40.