The Texas Health and Human Services Commission (HHSC) proposes amendments to §355.101, concerning introduction, §355.105, concerning general reporting and documentation requirements, methods, and procedures, §355.308, concerning enhanced direct care staff rate, and new §355.312, concerning liability insurance lists, in its Medicaid Reimbursement Rates chapter.

House Bill 154 of the 77th Legislature directed HHSC to ensure that the "rates paid for nursing home services provide for the rate component derived from reported liability insurance costs to be paid only to those homes that purchase liability insurance acceptable to the commission." The purpose of the proposed amendments is to comply with House Bill 154 by creating separate payment rates for nursing facilities such that facilities with acceptable liability insurance will receive higher payment rates that include a separate payment rate component for professional liability insurance and a separate payment rate component for general liability insurance paid to the provider as appropriate.

The spending requirement effective September 1, 2002 will be increased from 85% to 90%. Facilities that fail to meet the spending requirement are subject to recoupment of unexpended funds below 90% of the direct care staff compensation rate component revenues. In recognition of nursing facilities that deliver good care, some of the spending recoupment of facilities that fail to meet their spending requirement will be mitigated for facilities that achieve a high quality index score. The higher the quality index score of the facility, the less recoupment the facility will be required to repay. The proposal will also mitigate staffing recoupments to the extent that enhancements are expended on direct care nursing staff compensation.

For facilities that staff above their required staffing levels, the proposal provides for the distribution of funds that were collected as recoupments. The distribution would be made to nursing facilities that requested higher enhanced staffing levels than were granted, and achieved the higher levels of staffing.

The calculation of the staffing requirement for private pay residents is being modified to use the facility's average case mix or Texas Index for Level of Effort (TILE) level 207, whichever is lower. Currently the facility's average case mix for Medicaid recipients is used in the calculation of the staffing requirement for private pay residents, because TILE levels are not determined for private pay residents. The proposal will also allow respiratory therapists to be included as direct care staff for the determination of staffing requirements when the facility is receiving the supplemental payment for serving ventilator dependent recipients.

The proposal eliminates the Six-Month Staffing Report and allows contracted providers to elect to combine their Annual Staffing and Compensation Report and their cost report by using the rate year as the reporting period. In addition, beginning with the rate year September 1, 2001 to August 31, 2002, the annual staffing and compensation report must be completed by an individual that has attended the nursing facility cost report training. The proposal also clarifies that undocumented staff and contract labor time will be disallowed from the staffing and compensation reports. The proposal requires facilities that fail to submit an acceptable staffing and compensation report be made non-participants retroactive to the first day of the reporting period in question until an acceptable report is received and any funds owed are recouped.

The proposal clarifies how the days of service and revenue for Medicaid managed care recipients in nursing facilities are used in the calculation of required spending levels. In addition, it clarifies that swing beds in rural hospitals will be paid the minimum participant rate, but are not subject to staffing and spending requirements. The proposal also clarifies when compliance with spending requirements may be evaluated in the aggregate for all nursing facility contracts controlled by a single parent company, sole member or governmental entity.

In addition, the proposal allows HHSC to delay or cancel the annual enhancement enrollment in July if HHSC determines it to be warranted; eliminates references to the implementation period which ended on August 31, 2000; and changes the references from DHS to references for HHSC as the responsible entity for nursing facility payment rates.

Don Green, Chief Financial Officer, has determined that for the first five-year period the sections are in effect there will be no fiscal implications for state government or local governments as a result of enforcing or administering the sections.

Commissioner Don Gilbert has determined that for each year of the first five years the sections are in effect the public benefit anticipated as a result of enforcing the sections will be the creation of separate payment rates for nursing facilities such that facilities with acceptable liability insurance will receive higher payment rates. The option to mitigate staffing recoupments with spending will make the accountability standards more equitable in light of differentials in wages and staff availability across the state and make participation in the enhancement program viable for a greater number of facilities. Increasing the spending requirement to 90% will further expand the accountability of spending on direct care staff. Mitigation of spending recoupments for facilities with high quality index scores will recognize facilities that provide high quality of care at a lower cost than average. Redistributing recouped funds to facilities that staffed above their required staffing levels will reward facilities with high levels of direct care staff. The modification in the private pay staffing requirement recognizes that in some cases facilities may have a high average case mix for their Medicaid recipients and a lower average case mix for their private pay residents. The proposal allows respiratory therapists to be included as direct care staff for the determination of staffing requirements when the facility is receiving the supplemental payment for serving ventilator dependent recipients. The changes in the reporting requirements for the Staffing and Compensation Reports are intended to reduce paperwork, allow the full year for providers to meet their staffing requirement, and improve the quality of the staffing and compensation reports submitted by providers. The proposal clarifies how managed care days of service and revenue are handled in the calculation of required spending levels, how swing beds in rural hospitals will be paid, and that swing beds are not subject to the spending requirements. The proposal allows HHSC to delay or cancel the open enrollment if warranted which will give HHSC the flexibility necessary to successfully administer the enhancement program.

Contracted providers that did not spend 90% of the direct care staff revenues on direct care staff spending would have the unexpended funds below 90% subject to recoupment. The change in the spending requirement to 90% is effective September 1, 2002 to allow time for contracted providers to adjust their spending to comply with this new requirement. The spending requirement would have the same impact on all businesses, and there will be no adverse economic effect on large, small, or micro businesses, because the spending recoupment can be avoided through increased direct care spending by the individual contracted provider. The proposal allows for possible mitigation of some of the recouped funds for facilities that achieve a high quality index score. This would reward facilities with high quality by reducing the amount of recoupment.

The amendments provide for the redistribution of funds within the nursing facility program. For example, the funds that are recouped because of the proposed change in the spending requirement may be reinvested into additional levels of rate enhancements. In addition, the mitigation or reduction of recoupments for failure to meet staffing requirements if facilities spent the enhanced funds that they received and/or based on their quality index score, would reduce the funds that could be redistributed into increased levels of enhanced rates.

A public hearing on this proposal will be held on October 11, 2001, at 9 AM in the Texas Department of Human Services' public hearing room, room 125EE, at 701 West 51st Street, Austin, Texas.

Questions about the content of this proposal may be directed to Carolyn Pratt at (512) 438-4057 in HHSC's Rate Analysis Department. Written comments on the proposal may be submitted to Supervisor, Rules and Handbooks Unit-227, Texas Department of Human Services E-205, P.O. Box 149030, Austin, Texas 78714-9030, within 30 days of publication in the Texas Register. For further information regarding the proposal or to make the proposal available for public review, contact local offices of DHS or Carolyn Pratt at (512) 438-4057 in HHSC's Rate Analysis Department.

The amendments are proposed under the Government Code, §531.033, which authorizes the commissioner of the Health and Human Services Commission to adopt rules necessary to carry out the commission's duties, and §531.021(b), which establishes the commission as the agency responsible for adopting reasonable rules governing the determination of fees, charges, and rates for medical assistance payments under Chapter 32, Human Resources Code.

The amendments implement the Government Code, §§531.033 and 531.021(b).