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Regarding all forms of compensation, providers
must maintain documentation for each employee which clearly identifies
each compensation component, including regular pay, overtime pay,
incentive pay, mileage reimbursements, bonuses, sick leave, vacation,
other paid leave, deferred compensation, retirement contributions,
provider-paid instructional courses, health insurance, disability
insurance, life insurance, and any other form of compensation. Types
of documentation would include insurance policies; provider benefit
policies; records showing paid leave accrued and taken; documentation
to support hours (regular and overtime) worked and wages paid; and
mileage logs or other documentation to support mileage reimbursements
and travel allowances. For accrued benefits, the documentation must
clearly identify the period of the accrual. For example, if an employee
accrues two weeks of vacation during 20x1 and receives the corresponding
vacation pay during 20x3, that employee's compensation documentation
for 20x3 should clearly indicate that the vacation pay received had
been accrued during 20x1.
(I)For staff required to maintain continuous daily
time sheets as per §355.102(j) of this subchapter [title
] and subclause (II) of this clause, the daily timesheet must
document, for each day, the staff member's start time, stop time,
total hours worked, and the actual time worked (in increments of 30
minutes or less) providing direct services for the provider, the actual
time worked performing other functions, and paid time off. The employee
must sign each timesheet. The employee's supervisor must sign the
timesheets each payroll period or at least monthly. Work schedules
are unacceptable documentation for staff whose duties include multiple
direct service types, both direct and indirect service component types,
and both direct hands-on support and first-level supervision of direct
care workers.
(II)For the Intermediate Care Facilities for Individuals
with an Intellectual Disability or Related Conditions (ICF/IID), Home
and Community-based Services (HCS), and Texas Home Living
(TxHmL) programs, staff required to maintain continuous daily timesheets
include staff whose duties include multiple direct service types,
both direct and indirect service component types and/or both direct
hands-on support and first-level supervision of direct care workers.
(xiii)Management fees paid to related parties must
be documented as to the actual costs of the related party for materials,
supplies, and services provided to the individual provider[,]
and upon which the management fees were based. If the cost to the
related party includes owner compensation or compensation to related
parties, documentation guidelines for those costs are specified in
clause (xi) of this subparagraph. Documentation must be maintained
that indicates stated objectives, periodic assessment of those objectives,
and evaluation of the progress toward those objectives.
(xiv)For central office and/or home office costs,
documentation must be maintained that indicates the organization of
the business entity, including position, titles, functions, and compensation.
For multi-state organizations, documentation must be maintained that
clearly defines the relationship of costs associated with any level
of management above the individual Texas contracted entity [which
are] allocated to the individual Texas contracted entity.
(xv)Documentation regarding depreciable assets includes,
at a minimum, historical cost, date of purchase, depreciable basis,
estimated useful life, accumulated depreciation, and the calculation
of gains and losses upon disposal.
(xvi)Providers must maintain documentation clearly
itemizing their employee relations expenditures. For employee entertainment
expenses, documentation must show the names of all persons participating,
along with a classification of the person attending, such
as employee, nonemployee, owner, family of employee, client, or vendor.
(xvii)Adequate documentation substantiating the offsetting
of grants and contracts from federal, state, or local governments
prior to reporting either the net expenses or net revenue must be
maintained by the provider. As specified in §355.103(b)(18) of
this subchapter [title], such offsetting is
required prior to reporting on the cost report. The provider must
maintain written documentation as to the purpose for which the restricted
revenue was received and the offsetting of the restricted revenue
against the allowable and unallowable costs for which the restricted
revenue was used.
(xviii)During the course of an audit or an audit desk
review, the provider must furnish any reasonable documentation requested
by HHSC auditors within ten working days of the request or a later
date as specified by the auditors. If the provider does not present
the requested material within the specified time, the audit or audit
desk review is closed, and HHSC automatically disallows the costs
in question.
(xix)Any expense that cannot be adequately documented
or substantiated is disallowed. HHSC is not responsible for the contracted
provider's failure to adequately document and substantiate reported
costs.
(xx)Any cost report that is determined to be unauditable
through a field audit or that cannot have its costs verified through
a desk review will not be used in the reimbursement determination
process.
(3)Cost report and methodology certification. Providers
must certify the accuracy of cost reports submitted to HHSC in the
format specified by HHSC. Providers may be liable for civil and/or
criminal penalties if the cost report is not completed according to
HHSC requirements or is determined to contain misrepresented or falsified
information. Cost report preparers must certify that they read the
cost determination process rules, the reimbursement methodology rules,
the cost report cover letter, and cost report instructions,
and that they understand that the cost report must be prepared in
accordance with the cost determination process rules, the reimbursement
methodology rules and cost report instructions. Not all persons who
contributed to the completion of the cost report must sign the certification
page. However, the certification page must be signed by a responsible
party with direct knowledge of the preparation of the cost report.
A person with supervisory authority over the preparation of the cost
report who reviewed the completed cost report may sign a certification
page in addition to the actual preparer.
(4)Requirements for cost report completion.
(A)A completed cost report must:
(i)be completed according to the cost determination
rules of this chapter, program-specific allowable and unallowable
rules, cost report instructions, and policy clarifications;
(ii)contain a signed, notarized, original certification
page or an electronic equivalent where such equivalents are specifically
allowed under HHSC policies and procedures;
(iii)be legible with entries in sufficiently dark
print to be photocopied;
(iv)contain all pages and schedules;
(v)be submitted on the proper cost report form;
(vi)be completed using the correct cost reporting
period; and
(vii)contain a copy of the state-issued cost report
training certificate except for cost reports submitted through the
State of Texas Automated Information and Reporting System (STAIRS).
(B)Providers are required to report amounts on the
appropriate line items of the cost report pursuant to guidelines established
in the methodology rules, cost report instructions, or policy clarifications.
Refer to program-specific reimbursement methodology rules, cost report
instructions, or policy clarifications for guidelines used to determine
the placement of amounts on cost report line items.
(i)For nursing facilities, placement on the cost report
of an amount, which was determined to be inaccurately placed, may
result in vendor hold as specified in §355.403 of this chapter [
title] (relating to Vendor Hold).
(ii)For School Health and Related Services (SHARS),
placement on the cost report of an amount, which was determined to
be inaccurately placed, may result in an administrative contract violation
as specified in §355.8443 of this chapter [title]
(relating to Reimbursement Methodology for School Health and Related
Services (SHARS)).
(iii)For all other programs, placement on the cost
report of an amount, which was determined to be inaccurately placed,
constitutes an administrative contract violation. In the case of an
administrative contract violation, procedural guidelines and informal
reconsideration and/or appeal processes are specified in §355.111
of this subchapter [title].
(C)A completed cost report must be filed by the cost
report due date.
(i)For nursing facilities, failure to file a completed
cost report by the cost report due date may result in vendor hold
as specified in §355.403 of this chapter [title].
(ii)For SHARS, failure to file a completed cost report
by the cost report due date constitutes an administrative contract
violation. In the case of an administrative contract violation, procedural
guidelines and informal reconsideration and/or appeal processes are
specified in §355.8443 of this chapter [title].
(iii)For all other programs, failure to file a completed
cost report by the cost report due date constitutes an administrative
contract violation. In the case of an administrative contract violation,
procedural guidelines and informal reconsideration and/or appeal processes
are specified in §355.111 of this subchapter [title].
(D)HHSC may excuse providers from the requirement
to submit a cost report. A provider that is not enrolled in Attendant
Compensation Rate Enhancement as described in §355.112 of this
subchapter [title] (relating to Attendant Compensation
Rate Enhancement) for a specific program or the Nursing Facility Direct
Care Staff Rate enhancement as described in §355.308 of this chapter
[title] (relating to Direct Care Staff Rate Component)
during the reporting period for the cost report in question, is excused
from the requirement to submit a cost report for such program if the
provider meets one or more of the following conditions:
(i)For all programs, if the provider performed no
billable services during the provider's cost-reporting period.
(ii)For all programs, if the cost-reporting period
would be less than or equal to 30 calendar days or one entire calendar
month.
(iii)For all programs, if circumstances beyond the
provider's control, such as the loss of records due to natural disasters
or removal of records from the provider's custody by a regulatory
agency, make cost-report completion impossible.
(iv)For all programs, if all of the contracts that
the provider is required to include in the cost report have been terminated
before the cost-report due date.
(v)For the Nursing Facility, ICF/IID, Assisted Living/Residential
Care (AL/RC), and Residential Care (RC) programs, if the total number
of days that the provider performed service for recipients during
the cost-reporting period is less than the total number of calendar
days included in the cost-reporting period.
(vi)For the Day Activity and Health Services (DAHS)
program, if the provider's total units of service provided to recipients
during the cost-reporting period is less than the total number of
calendar days included in the cost-reporting period times 1.5.
(vii)For the Home-Delivered Meals program, if a provider
agency served an average of fewer than 500 meals a month for the designated
cost report period.
(viii)On or after September 1, 2023, for [
For] the Department of Family and Protective Services (DFPS)
24-Hour Residential Child-Care program, if:
(I)the provider has no current contract(s) within
the state for 24-Hour Residential Child-Care program [the
contract was not renewed];
[(II)only Basic Level services were
provided;]
[(III)the total number of state-placed
days (DFPS days and other state agency days) was 10 percent or less
of the total days of service provided during the cost-reporting period;]
(II)[(IV)] the total number
of DFPS-placed days and Single Source Continuum Contractor (SSCC)-placed
days was 10 percent or less of the total days of service provided
during the cost-reporting period;
(III)[(V)] for facilities that
provide Emergency Care Services only, the occupancy rate was less
than 30 percent during the cost-reporting period; or
(IV)[(VI)] for all other facility
types except child-placing agencies and those providing Emergency
Care Services, the occupancy rate was less than 50 percent during
the cost-reporting period.
(5)Cost report year. A provider's cost report year
must coincide with the provider's fiscal year as used by the provider
for reports to the Internal Revenue Service (IRS) or with the state
of Texas' fiscal year, which begins September 1 and ends August 31,
except for SSCC providers in the DFPS 24-Hour Residential Child Care
program whose cost report year must coincide with the state fiscal
year.
(A)Providers whose cost report year coincides with
their IRS fiscal year are responsible for reporting to HHSC Provider
Finance Department any change in their IRS fiscal year and subsequent
cost report year by submitting written notification of the change
to HHSC Provider Finance Department along with supportive IRS documentation.
HHSC Provider Finance Department must be notified of the provider's
change in IRS fiscal year no later than 30 days following the provider's
receipt of approval of the change from the IRS.
(B)Providers who chose to change their cost report
year from their IRS fiscal year to the state fiscal year or from the
state fiscal year to their IRS fiscal year must submit a written request
to HHSC Provider Finance Department by August 1 of state fiscal year
in question.
(6)Failure to report allowable costs. HHSC is not
responsible for the contracted provider's failure to report allowable
costs;[,] however, any omitted costs [which
are] identified during the desk review or audit process will
be included in the cost report or brought to the attention of the
provider to correct by submitting an amended cost report.
(c) - (i)(No change.)
The agency certifies that legal counsel has reviewed
the proposal and found it to be within the state agency's legal authority
to adopt.
Filed with the Office
of the Secretary of State on July 7, 2023
TRD-202302462 Karen Ray
Chief Counsel
Texas Health and Human Services Commission
Earliest possible date of adoption: August 20, 2023
For further information, please call: (737) 867-7817
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