| Body: | TITLE 1. ADMINISTRATION
PART 15. TEXAS HEALTH AND
HUMAN SERVICES COMMISSION
CHAPTER 355. REIMBURSEMENT RATES
SUBCHAPTER J. PURCHASED HEALTH
SERVICES
The Texas Health and Human Services Commission (HHSC)
adopts amendments to §355.8065, concerning Disproportion-
ate Share Hospital Reimbursement Methodology, §355.8066,
concerning Hospital-Specifc Limit Methodology, and §355.8212,
concerning Waiver Payments to Hospitals for Uncompensated
Charity Care. Sections 355.8065, 355.8066, and 355.8212 are
adopted with changes to the proposed text as published in the
April 14, 2023, issue of the Texas Register (48 TexReg 1903).
These rules will be republished.
BACKGROUND AND JUSTIFICATION
HHSC has operated portions of the Medicaid program under
the authority of an 1115 Healthcare Transformation and Quality
Improvement Demonstration Waiver (1115 Waiver) since 2011.
When the 1115 Waiver began, Texas received authority for Med-
icaid-managed care for several populations of existing Medicaid
benefciaries as well as expenditure authority for two supplemen-
tal funding pools - the Delivery System Reform Incentive Pay-
ment (DSRIP) Program and the Uncompensated Care (UC) Pro-
gram. The non-federal share of the payments was funded using
primarily local funds matched with federal Medicaid funds. Pay-
ments were valued based on allocations that were made early in
the waiver development process and were based upon projects,
and then achievement, not the utilization of Medicaid services.
When the waiver was renewed in 2017, the Special Terms and
Conditions of the 1115 Waiver required Texas to reduce expen-
ditures through DSRIP before ultimately ending the DSRIP pro-
gram on September 30, 2021.
HHSC planned successor fnancial programs that were referred
to collectively as the "DSRIP Transition." Through these suc-
cessor fnancial programs, HHSC was able to fully replace (and
exceed) the total Medicaid expenditures that would have been
lost due to the end of DSRIP. This overall maintenance of fund-
ing in the health care system is important because the over-
all economic stability of Texas is not projected to be negatively
impacted by the DSRIP Transition. However, complicating the
DSRIP Transition, the COVID-19 global pandemic overlapped
with the time frame and caused provider market instability and
fundamental shifts in historically stable utilization. As a result
of various limitations on expenditures and reimbursements con-
tained within various federal statutes and regulations, HHSC
was unable to replace expenditures on a per-provider or even
a per-class basis, and the regional impact of the transition has
resulted in disparate impacts in rural and urban markets.
DSRIP's endurance as a payment mechanism in the health care
system in Texas for 10 years resulted in a reliance on those
funds for many participating providers to not just incentivize per-
formance, but to fnance their underlying infrastructure and cover
costs. For hospitals, DSRIP was one of several funding streams
that providers relied on, and the transition from DSRIP to suc-
cessor programs resulted in signifcant shifts among providers.
For some rural hospitals and large urban public hospitals, their
current payment projections for fscal year 2022 and after are not
equivalent to their payment levels under DSRIP. This difference
is largely a result of all successor programs being based in some
manner on Medicaid benefciary utilization, rather than an allo-
cation basis.
HHSC's approach to the DSRIP Transition was to create pro-
grams that were related to the delivery of Medicaid services.
Given that Medicaid managed care is the Medicaid model
through which the majority of services are delivered, HHSC
focused efforts on the modifcation or creation of directed pay-
ment programs (DPPs) that would enable HHSC to increase
payments to providers up to their average commercial reim-
bursement.
Understanding that programs and payments are interlinked due
to the successive nature of how uncompensated costs are calcu-
lated, HHSC intended to move successively through each pro-
gram in the payment fow to determine whether modifcations or
the creation of new programs were appropriate to support the
DSRIP Transition. However, due to signifcant delays in the ap-
proval of the DPPs planned for the DSRIP Transition, these ef-
forts were largely paused until a time when HHSC would have
more certainty about the landscape of approved payments. Fol-
lowing the approval of the Comprehensive Hospital Increase Re-
imbursement Program (CHIRP), the Texas Incentives for Physi-
cians and Professional Services (TIPPS), and the Rural Access
for Primary and Preventive Services (RAPPS) in March 2022,
HHSC began focusing efforts quickly on getting the programs
implemented and reinvigorating efforts to examine the other pro-
grams. HHSC pursued a Medicaid state plan amendment (SPA)
to create a new fee-for-service program, the Hospital Augmented
Reimbursement Program, to act as a mechanism to increase re-
imbursements for public hospitals. Centers for Medicare & Med-
icaid Services (CMS) approved the SPA for public hospitals on
August 31, 2022.
Now that the Medicaid payments for services delivered to Med-
icaid benefciaries have been established, HHSC is moving in
succession to examine modifcations that may be necessary to
the Disproportionate Share Hospital (DSH) program, as well as
UC. Both of these programs incorporate payment limits in the al-
location of the program pools, which HHSC has termed the State
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Payment Cap for the interim calculation and the Hospital-Spe-
cifc Limit, a federally determined cap for audit and reconciliation.
HHSC had many requests from stakeholders related to potential
modifcations for DSH or UC and HHSC examined these pro-
grams in their entirety with the intent of ensuring that the funds
are allocated in accordance with their purpose, where the funds
were most likely to beneft a large number of Texans receiv-
ing care, and in accordance with established state policy goals.
HHSC examined each amended change against the framework
of the following goals:
-no fnancial harm to state entities;
-maintain or increase payments to Rural Hospitals, if possible;
-limit the potential for recoupments of funds at the time of audit
or reconciliation;
-ensure compliance with federal laws and regulations and state
laws;
-sustainability of program structures, if federal reductions to DSH
are ever implemented;
-increase clarity of the regulations;
-increase transparency of the existing administrative practices;
and
-sustain long term stability in the fnancing of the programs.
To the greatest extent possible, HHSC believes the amended
modifcations to the rules adhere to those goals, while also en-
suring that as many hospitals as possible receive suffcient pay-
ments to achieve fnancial stability and continue providing ser-
vices to Medicaid clients and uninsured Texans.
State Payment Cap
From 1993 to 2012, Section 1923 (g)(1)(A) of the Social Secu-
rity Act (SSA) limited a hospital's payments to no more than "the
costs incurred during the year of furnishing hospital services (as
determined by the Secretary and net of payments under [the
Medicaid Act], other than under this section, and by uninsured
patients) by the hospital to individuals who either are eligible for
medical assistance under the State plan or have no health in-
surance (or other source of third party coverage) for services
provided during the year." This defnition describes the federal
Hospital Specifc Limit (HSL), the maximum amount a hospital
can be reimbursed for the cost of services provided to Medicaid
and uninsured patients. It is the sum of the Medicaid shortfall
and the hospital's unreimbursed costs of services to the unin-
sured. The HSL limits payments to hospitals in DSH and UC at
the time of the audit or reconciliation, respectively. A higher HSL
means a higher potential payment from one or both of those pro-
grams. Both programs have a set amount of funds that may be
distributed in a program year.
Consequently, a hospital's DSH and UC payment was also de-
pendent (to a certain extent) on the size of its HSL relative to the
HSLs of other hospitals in those programs. Section 1923(g) of
the SSA has limited DSH payments to the HSL since 1993. The
uninsured component of the calculation has not changed. Until
2010, HHSC calculated the Medicaid shortfall component using
Medicaid claim and payment data submitted to Texas Medicaid
and Healthcare Partnership (TMHP). Only costs associated with
submitted claims were included; only Medicaid payments offset
those costs. However, CMS issued guidance in the form of an-
swers to Frequently Asked Questions (FAQs) in January 2010
that interpreted Section 1923(g) to require that private insurance
payments and Medicare payments offset costs in the HSL cal-
culation. CMS' response to FAQ 33 instructed that all costs and
payments associated with Medicaid-eligible patients, who were
also covered by private insurance, must be included in the HSL
calculation. This guidance primarily impacted children's hospi-
tals because they serve many children who are presumptively
eligible for Medicaid based on low birth weight or catastrophic ill-
nesses, without regard to family income or insurance coverage.
As a result, many low-weight babies and children with disabili-
ties may have family coverage even if they are also eligible for
Medicaid. If the insurer pays for care at rates higher than the re-
ported Medicaid cost, the insurance payment then acts to offset
the uninsured or Medicaid shortfall costs of other patients.
FAQ 34 instructed that costs and payments for patients dually
eligible for Medicare and Medicaid must be included. This guid-
ance primarily impacted hospitals with high Medicare popula-
tions - i.e., those that serve a lot of dual-eligible patients. In
response to CMS' guidance, HHSC revised the data it collected
from hospitals to calculate the HSL for interim payments and the
DSH audit. Starting in 2011, HHSC reduced hospitals' costs for
the DSH program by their total private insurance and Medicare
payment amounts, thus lowering their DSH or UC payments.
This method of calculating costs is frequently referred to as a
"full-offset" methodology.
In December 2014, Texas Children's Hospital (TCH) fled suit
against CMS in federal district court in the District of Columbia
(D.C.) challenging FAQ 33. TCH successfully obtained a tem-
porary injunction. CMS was enjoined from enforcing, applying,
or implementing FAQ 33 and from taking any action to recoup
federal DSH funds based on a state's noncompliance with the
policy. The defnition at issue was one in which costs for Medic-
aid-secondary clients would be included, but any payments from
third-party payors would not. This method is frequently referred
to as a "no offset" methodology. In August 2016, CMS proposed
a rule requiring that Medicare and other third-party insurance
payments be considered when determining costs for calculating
the HSL for DSH program payments. The rule codifed CMS' in-
terpretation of Section 1923(g) as articulated in FAQs 33 and 34
and CMS' arguments in various courts. The rule was to become
effective June 2, 2017.
In addition to the TCH lawsuit, numerous lawsuits were fled in
federal district courts challenging FAQs 33 and 34 and CMS' f-
nal rule. Courts issued preliminary injunctions against CMS in
some cases and permanent injunctions when the cases were
decided on the merits. On February 21, 2018, Doctors Hospi-
tal of Renaissance fled suit against CMS in the United States
District Court for D.C. challenging FAQ 34 and the fnal rule. In
May 2017, The Children's Hospital Association of Texas (CHAT)
and four free-standing children's hospitals located in Minnesota,
Virginia, and Washington fled suit in the United States District
Court for D.C. alleging that CMS' fnal rule was contrary to the
Medicaid Act. On March 2, 2018, the court ruled in favor of the
plaintiffs and vacated the rule. On March 6, 2018, the court is-
sued its memorandum opinion explaining the decision. The court
determined that Section 1923(g), on its face, does not authorize
including Medicare payments and private payments in the DSH
limit calculation. The court vacated the rule and applied the de-
cision to CMS nationwide; not just to plaintiffs.
On November 4, 2019, the 8th Circuit Court of Appeals ruled in
favor of CMS and its fnal rule implementing FAQs 33 and 34.
The decision was consistent with the August 2019 holding by
the D.C. Circuit Court of Appeals that ruled against CHAT and
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reversed the decision of the United State District Court for the
District of Columbia. The fnal rule's effective date was retroac-
tive, to June 2, 2017.
On December 27, 2020, the Consolidated Appropriations Act for
2021 was signed into law. Included within the legislation was
a federal statutory change to remove the cost and payments of
individuals with Medicare or third-party coverage from the def-
inition and calculation of the HSL. This defnition is commonly
referred to as the "MACPAC" defnition.
However, in Texas, two payment caps exist for hospitals that par-
ticipate in DSH and UC. The HSL and the state payment cap
(SPC), previously known as the interim HSL, that HHSC may de-
fne. The SPC is calculated in the payment year for DSH and UC
but the federal payment cap is calculated two years after the pay-
ment year using updated data. HHSC had previously linked the
interim HSL to the fnal HSL so there would be a limited chance
that recoupment would occur after the fnal HSL was calculated.
Due to the ongoing changes to the HSL, HHSC implemented an
SPC that is wholly defned by the state and utilizes the full-offset
methodology.
At the time that HHSC chose to defne the SPC using the full-off-
set methodology, the HSL was similarly defned as using a full-
offset methodology. Beginning in 2021 when the federal HSL
defnition moved to largely refect the "MACPAC" methodology
(described above), the two defnitions diverged. Subsequently,
HHSC has seen a large number of recoupments at the time of
the audit or reconciliation of DSH or UC due to this divergence.
These recoupments have most signifcantly impacted rural and
state-owned institutions. As a result, maintaining the SPC def-
inition as currently defned would be contrary to HHSC's stated
goals for this project.
HHSC is modifying the SPC to become a dual-calculation lim-
itation. This new defnition of SPC would be the lesser of two
payment ceilings. The frst payment ceiling will be the Full-Off-
set Payment Ceiling. This payment ceiling will use the full-off-
set methodology to identify costs related to Medicaid and unin-
sured individuals where there are no revenues associated with
any Medicaid or uninsured individuals available to pay for those
expenditures. The second payment ceiling will be the Recoup-
ment Prevention Payment Ceiling. This payment ceiling will use
the federal HSL calculation to identify costs that are able to be re-
imbursed, but without inclusion of costs or payments that would
not be considered during the audit or reconciliation. From this
two-pronged approach to establishing the payment cap, HHSC
will meet the goals established above of limiting the potential for
recoupments, while also balancing the importance of fnancial
stability for hospitals serving large portions of Medicaid clients
or uninsured persons.
HHSC received comments regarding some language that
providers felt required additional specifcity. HHSC also received
comments related to certain determinations that will be made
by CMS. HHSC is adopting the proposed changes to the SPC
rules with amendments in response to these comments with an
immediate effective date.
Disproportionate Share Hospital Program
DSH payments are authorized by federal law to provide hospi-
tals that serve a large share of Medicaid and low-income patients
with additional funding. DSH payments are supplemental pay-
ments to help cover more of the cost of care for Medicaid and
low-income patients. These payments cannot exceed a hospi-
tal's uncompensated costs for both Medicaid-enrolled and unin-
sured patients. DSH payments are the only Medicaid payment
in federal law that is explicitly for paying the unpaid costs of care
for uninsured patients. It can be used by states to offset or make
up for low Medicaid base payments. However, it is affected by
Medicaid base payments and other supplemental funding. For
example, an increase to a hospital's base Medicaid payment and
its other non-DSH supplemental funding may decrease a hospi-
tal's Medicaid shortfall, resulting in a reduction in its uncompen-
sated care costs for which DSH pays.
DSH program payments are made by HHSC to qualifying hos-
pitals that serve a large number of Medicaid and uninsured in-
dividuals. Federal law establishes an annual DSH allotment for
each state that limits Federal Financial Participation (FFP) for
total statewide DSH payments made to hospitals. Federal law
also limits FFP for DSH payments through the hospital-specifc
DSH limit. In Texas, the state has established a State Payment
Cap that limits the amount of payments that a provider receives
through the interim payment process. This adoption amends
the calculation of the State Payment Cap effective for fscal year
2023.
Effective for fscal year 2024, the adoption also amends the def-
inition of the rural provider classes, establishes a new rural DSH
pool, describes a methodology for redistribution of certain re-
couped funds, modifes the calculation of the Low-Income Uti-
lization Rate to refect federal law, updates the payment alloca-
tion methodology, establishes changes to qualifcations of the
program, revises the advance payment methodology for fed-
eral fscal year 2024, and makes other clarifying amendments.
HHSC has decided to delay implementation of the rule changes
in §355.6065 to fscal year 2024 in response to concerns that
providers had not budgeted for potential recoupments that might
occur from their interim/advance payments as a result of the
methodological changes.
HHSC will modify the advance payment methodology for DSH
2024 to pay providers based upon the estimated amount that
they will receive in the 2024 fnal DSH payment in an effort to
help providers avoid reliance on interim or advance payments
that are inconsistent with the fnal payment methodology. Multi-
ple commenters were concerned about recoupment of 2023 ad-
vance DSH payments due to the alteration of the DSH method-
ology and the mismatch of the advance payment methodology
and the fnal payment methodology, and this issue will be perpet-
uated if the advance payment methodology does not align with
the rule changes.
This rule amendment will establish an allocation methodology
that is separate from the SPC to allocate Pool 2. This payment
will consist of two sub-pools: Pool 2a and Pool 2b.
Pool 2a, the Standard DSH pool, was created in response to
comments received that were concerned that providers that
qualifed for DSH might not receive a payment, that DSH is the
program of last resort for Medicaid costs, and that teaching
hospitals need fnancial support to continue their residency
programs. To address these concerns Pool 2a pays every
hospital the maximum of a standard payment amount or their
Medicaid shortfall (based on the minimum of the full offset and
MACPAC Medicaid shortfall). Two standard payment amounts
will be used: an amount for hospitals with residents (to support
the existence of residency programs across the state), and an
amount for hospitals that do not have residents. The payment
will be capped at their minimum SPC after considering the
non-federal share associated with Pool 2a for all hospitals other
than the transferring hospitals' portion of non-federal share
^almqba oribp gune NSI OMOP QU qexoeg PNUV
transferred on behalf of private hospitals. The Standard DSH
payment ensures that remaining uncovered Medicaid costs are
reimbursed frst and creates a predictable standard payment
amount. This pool will protect smaller hospitals by allocating
them a simple, predictable payment amount.
Pool 2b will consider hospitals' payment to cost ratio against the
set percentage. Hospitals will receive payment based on a set
percentage of their total costs after consideration of payments,
including Pool 2a All Funds payments excluding the amount of
IGT transferring hospitals transfer for private hospitals. DSH is
the only Medicaid reimbursement option that remains to reim-
burse for any uncompensated Medicaid costs or non-charity un-
compensated care. As such, providers who have high levels of
non-Medicaid utilization, which is common among rural and large
public providers, may beneft from a method that considers the
unique opportunity for reimbursement available under DSH. Ad-
ditionally, a reimbursement methodology that considers the pro-
portion of total costs covered could help providers achieve more
similar percentages of total costs reimbursed.
The low-income utilization rate (LIUR) is a ratio that represents
the hospital's volume of inpatient charity care relative to total
inpatient services. As currently defned, several providers have a
LIUR over one hundred percent, and the rule is being amended
to address this. The rule is also being amended to align state
LIUR defnition with the federal defnition and to specify the use
of LIUR for qualifcation purposes only.
The current rule provides that HHSC can redistribute recouped
funds to eligible providers but does not describe the method
of the calculation. This rule amendment will provide details of
the redistribution methodology and describes two methods of
calculation. The frst method was formerly used in DSH years
2011-2017 and will continue to be implemented for DSH year
2020 and after and would redistribute funds proportionately to
remaining Hospital Specifc Limit (HSL) room for eligible hospi-
tals. The rule amendment will also describe a second method
used during DSH years 2018-2019 where recouped funds from
non-state providers were redistributed to eligible providers using
a weighted allocation methodology.
HHSC is incorporating this methodology for calculating payment
redistributions to increase transparency regarding the existing
practice.
HHSC is removing Children's Hospitals as a deemed ownership
type to align with the federal rule which only provides exemption
from the Two-Physician requirement in the conditions of partic-
ipation. With this rule amendment, Children's Hospitals will be
required to meet all eligibility criteria, continue to meet at least
one qualifcation criteria and meet all the conditions of participa-
tion.
This rule amendment will also create a new condition of partic-
ipation. Beginning in DSH program year 2024, providers, with
the exception of rural hospitals, will be required to participate in
all voluntary Medicaid programs that they are eligible for (e.g.,
CHIRP, public HARP, GME) in order to participate in DSH. This
change will provide safeguard for the state share funding mech-
anism of the program and as a result ensure the stability of the
DSH program.
The recommendation from the 2021 DSH workgroups to add
level one trauma hospitals as a category of hospitals that Texas
will deem for DSH qualifcation is not being pursued currently,
although providers are welcome to provide public comment on
the topic.
This amended rule will update the DSH rural defnition to match
the Hospital Inpatient Reimbursement rule §355.8052 and es-
tablish a new rural DSH pool. This change is intended to provide
increased clarity regarding what hospitals are considered rural
in the Medicaid program. Within the DSH program allocations,
there is an opportunity for certain public hospitals to receive pay-
ments through "Pass 3." Pass 3 was intended to allow certain
public hospitals an additional opportunity to receive DSH fund-
ing for which there was not another source of non-federal share
funding available. However, a lack of non-federal share funds
has not occurred in recent years, but HHSC has understood that
rural hospitals in particular had come to rely on Pass 3 for DSH
funding. Therefore, HHSC has been setting aside funds for Pass
3 for several years for this express purpose.
To more transparently and clearly achieve this purpose, HHSC is
proposing the creation of a rural DSH sub-pool for hospitals that
meet the same defnition of rural in the inpatient reimbursement
are categorized. The amount of the sub-pool will be equivalent
to the amount that has been reserved for Pass 3 in recent years.
If rural public hospitals cannot fully utilize the allocated funds, a
percentage of any remaining funds will be made available to the
rural private hospitals with any other funds being redirected back
to the Pool 1 and Pool 2 secondary allocation.
The defnition for infation update factor was previously erro-
neously removed and will be added back to the DSH rule with
this amendment. The defnition for ratio of cost-to-charges has
been updated to include inpatient and outpatient data. HHSC
has added a defnition for Tax Revenue which has not been
historically defned. The term Total state and local payments
has been updated to Total state and local subsidies and now
includes inpatient and outpatient care to match the federal DSH
rule.
Some institution for mental diseases providers have raised a
concern about in lieu of services where an MCO pays for ser-
vices delivered to clients in the 21-64 age range but the costs
and payments for these services are not currently included in
DSH. HHSC is not amending the rule related to this topic but is
interested in receiving comments on this issue.
Uncompensated Care Program
UC payments to hospitals are authorized under Section 1115
demonstrations. UC payments originated as a way for Texas
to continue to expand managed care in Medicaid programs and
continue making supplemental payments to hospitals. States
negotiate the parameters of their UC pools with CMS. Texas
UC payments may be used to reduce the actual uncompensated
cost of medical services provided to uninsured individuals who
meet a provider's charity care policy. The medical services must
meet the defnition of "medical assistance" as defned in federal
law.
Under the terms of the January 15, 2021 1115 Waiver, HHSC
negotiated for the continuation and resizing of the UC pool. The
result of the frst pool resizing is an increase in the pool by ap-
proximately $600 million annually, for a total of $4.5 billion for
demonstration years 12 through 16. This expenditure authority
may be utilized only for providers that are authorized to partic-
ipate in UC who demonstrate charity care expenses. HHSC is
adopting a methodology that the new, additional UC funding be
considered for a different allocation methodology than the pre-
viously extant $3.9 billion. HHSC is defning this sub-pool as
the High Impecunious Charge Hospital (HICH pool). HHSC had
proposed that eligibility to receive funds from this pool would be
QU qexoeg PNVM gune NSI OMOP qex~s oegister
restricted to rural hospitals, state-owned hospitals, and hospitals
that have at least 30 percent of their charges from serving unin-
sured persons.
HHSC received several comments that requested that HHSC
add specifc hospital classes to be included in the HICH pool.
HHSC will not make changes to add additional hospital classes,
but recognizes that the 30 percent charge threshold that had
been proposed might be too restrictive. Therefore, upon adop-
tion, HHSC will amend the rule to lower the threshold of charges
to 27.5 percent. HHSC will use 27.5 percent of charges as this
threshold because it continues to represent a small number of
hospitals - indicating that 27.5 percent is truly rare and a high
portion of charges. This will target these funds to hospitals that
serve a large volume of uninsured persons as part of their pa-
tient-mix as well as rural hospitals and state-owned facilities,
consistent with HHSC's established goals.
In addition, the amended update removes the Regional Health
Partnership (RHP) eligibility requirement that is no longer in ef-
fect as the RHP is no longer in operation with the discontinuation
of DSRIP.
Clarifying Amendments
Throughout all three rules, HHSC has attempted, when possible,
to align defnitions, remove references to DSRIP or DSRIP-re-
lated requirements, and make other changes for clarity and ease
of reading.
COMMENTS
The 31-day comment period ended May 15, 2023.
During this period, HHSC received comments regarding the
proposed rules from 55 organizations and one individual, in-
cluding Texas Organization of Rural and Community Hospitals
(TORCH); Texas Association of Behavioral Health Systems
(TBHS); Sun Behavioral Health; Summit Behavioral Healthcare;
Texas Essential Healthcare Partnership; Baylor Scott and White
Health; Children's Hospital Association of Texas; Preferred
Management; Texas Essential Healthcare Partnership; Mission
Regional Medical Center and Knapp Medical Center; DHR
Health; Christus Health; Huntsville Memorial Hospital; JPS
Health Network; Teaching Hospitals of Texas (THOT); Parkland
Health; UMC Health System; University Health; University
Medical Center El Paso; Harris Health Systems; South Texas
Delegation; UTHealth East Texas; BSA Health System; Seton
Medical Center Harker Heights; Baptist Hospital of Southeast
Texas; Oakbend Medical Center; Big Bend Regional Medical
Center; Unidos Contra La Diabetes; Hope Family Health Center;
Regional Vice President; Tenet Health; Su Clinica; Memorial
Hermann; HCA Healthcare; Texas Health Resources; Texas
Children's Financial Services; UT Health East Texas; Medical
Center of Southeast Texas (MCSET); Texas Association of
Voluntary Hospitals (TAVH); Medical Center Health Systems;
Tenet Healthcare Corporation; Signature Healthcare Services;
Universal Health Services (UHS); Nuestra Clinica Del Valle,
INC; Seton Medical Center Harker Heights; Texas Hospital
association; Oceans Healthcare; St. Luke's Health and its
hospitals; Lifepoint Health; Odessa Regional Medical Center;
Community health Systems; Acadia Healthcare; Texas Scottish
Rite Hospital for Children.
A summary of comments relating to the rules §355.8065,
§355.8066, and §355.8212, and HHSC's responses follows.
Regarding §355.8065, concerning Disproportionate Share Hos-
pital Reimbursement Methodology:
Allocation Methodology.
Comment: Multiple commenters provided comments in support
of the proposed allocation methodology. They stated that the
proposed amendments are a comprehensive and transparent
approach to consider all Medicaid payment programs and the
costs of caring for those covered by Medicaid and those without
insurance. They expressed support for the comprehensive ap-
proach of the proposed amendments as a measure to compare
Medicaid payments made to different provider groups and as a
way to achieve better equity between provider groups.
Response: HHSC appreciates the support. No revision to the
rule text was made in response to this comment.
Comment: Multiple commenters provided comments opposed
to the proposed allocation methodology. They stated that mov-
ing to a cost-based methodology disadvantages certain hospital
classes and regions of the state because under the proposed
rules some providers that qualify for DSH will not receive any
payment, in particular private IMD hospitals and hospitals in the
South Texas border region.
Response: HHSC disagrees that the proposed rules would
have disadvantaged certain hospital classes or regions of the
state as the changes proposed did not specifcally exclude
any geographic area or hospital class from receiving payment.
HHSC does agree that the determination that a hospital is quali-
fed and eligible for DSH indicates that a hospital should receive
some payment from DSH, if the hospital has room under their
state payment cap. Therefore, as a result of these comments,
HHSC will amend the rules upon adoption to incorporate an
updated allocation methodology to include a new standard DSH
payment before the payment-to-cost pool. This addresses the
commenters' concerns ensuring that providers that qualify for
DSH from all hospital classes and geographic regions receive
a payment. HHSC updated 355.8065(g) and 355.8065(h) to
describe the methodology and updated 355.8065(b)(24) to
ensure the appropriate cross-reference.
Comment: Multiple commenters provided comments opposed to
the proposed allocation methodology stating that the methodol-
ogy incentivizes increasing costs to increase payments and does
not incentivize hospitals to serve Medicaid and uninsured pa-
tients.
Response: HHSC disagrees with the comment that moving to
a payment-to-cost-based methodology would incentivize hospi-
tals to infate costs to increase payments because a provider is
unlikely to receive full cost reimbursement through DSH and is
therefore unlikely to infate costs in order to receive a fractional
reimbursement of those costs. HHSC declines to make changes
to the rule text in response to this comment.
Comment: Several commenters provided comments opposed
to the proposed allocation methodology stating that it limits the
potential for a hospital that has uncompensated Medicaid costs
to be reimbursed because the UC program is only for uninsured
charity care.
Response: HHSC disagrees that the proposed allocation
methodology inherently limits the potential for a hospital that has
uncompensated Medicaid cost to be reimbursed because, to the
extent that a hospital has uncompensated Medicaid costs and
does not have a higher than typical payment-to-cost ratio, the
provider would receive DSH payments that could compensate
for unreimbursed Medicaid costs. However, HHSC does ac-
knowledge that DSH is the payment of last option for Medicaid
^almqba oribp gune NSI OMOP QU qexoeg PNVN
costs as the UC program is only for uninsured charity care.
Therefore, as a result of these comments, HHSC will amend
the rules upon adoption to incorporate an updated the allocation
methodology to include a new standard DSH payment that will
allocate payments to providers in an amount that is the greater
of the Standard amount or the provider's Medicaid shortfall
(capping all payments at the provider's state payment cap) to
ensure that to the greatest extent possible Medicaid costs are
reimbursed. HHSC updated 355.8065(g) and 355.8065(h) to
describe the methodology and updated 355.8065(b)(24) to point
to the appropriate reference.
Comment: Several commenters provided comments opposed to
the proposed allocation methodology stating that it treats hospi-
tals homogenously when they are not.
Response: HHSC disagrees and declines to make changes to
the rule text in response to this comment. With regard to hospi-
tals being treated homogenously, the rule has multiple different
hospital classes and defnitions because HHSC recognizes that
different needs exist among different hospital classes.
Comment: Several commenters provided comments opposed to
the proposed allocation methodology stating that it favors inef-
fcient hospitals with higher costs resulting from their inability to
better manage the level of care.
Response: HHSC disagrees that the proposed method favors
ineffcient hospitals with higher costs and declines to make
changes to the rule text in response to this comment. The
prior allocation methodology of days could result in providers
prioritizing extending inpatient stays which is ineffcient.
Comment: Multiple commenters provided comments opposed
to the proposed allocation methodology stating that it introduces
instability and unpredictability with a percentage of cost paid foor
that changes every year.
Response: HHSC acknowledges the changes in funding for
certain hospital classes and areas of the state, and the impor-
tance of stability and predictability for hospitals' fnancial health.
As a result of these comments, HHSC updated the allocation
methodology to include a new standard DSH payment before
the cost pool. This addresses the commenters' concerns by
lessening the total funds in the cost-based pool, resulting in a
redistribution of funds as a result. HHSC updated 355.8065(g)
and 355.8065(h) to describe the methodology and updated
355.8065(b)(24) to point to the appropriate reference.
Exclusion of advance UC payment in DSH percentage of cost
calculation.
Comment: One commenter requested that HHSC consider
excluding advance UC payments when calculating a hospital's
percentage of reimbursed DSH costs, stating that doing so
would not result in hospitals receiving reimbursement twice for
the same costs as the UC program reimbursement is generally
considered after the DSH program.
Response: HHSC disagrees and declines to make changes to
the rule text as a result of this comment as the State Payment
Cap has historically had an offset for UC advance payments that
exceed UC only costs; this practice is continued in the percent-
age of cost covered calculation. This structure avoids reimburs-
ing providers in DSH for costs that may have already been reim-
bursed in UC.
LIUR.
Comment: Multiple commenters commented against the
change in the LIUR calculation to align with Federal LIUR
calculation, stating that the updated calculation methodology
could be devastating to many hospitals including rural hospitals.
Commenters request for HHSC to retain the historical LIUR
calculation.
Response: HHSC disagrees and declines to make changes to
the rule text in response to this comment as the updated text
is based on the Federal LIUR calculation which is a part of the
Federal statute for the DSH program as described in 42 U.S.C.
§1396r-4 (b)(3).
Comment: Several commenters made suggestions on the calcu-
lation methodology of the LIUR calculation stating that the LIUR
calculation should include all Medicaid payments.
Response: HHSC declines to make changes to the rule text in
response to this comment as the updated text is based on the
Federal LIUR defnition. HHSC will adhere to the Federal LIUR
as described in 42 U.S.C. §1396r-4 (b)(3).
Local Provider Participation Funds.
Comment: Multiple commenters commented against the pro-
posed changes stating that the changes would lead to strain on
local provider participation funds (LPPFs) across the state as pri-
vate hospitals' payments would shift from DSH to UC, which may
lead to LPPFs being pushed to their caps.
Response: HHSC disagrees with this comment and declines
to make changes to the rule text in response to this comment.
HHSC has observed a willingness on the part of governmental
entities that operate LPPFs to support through IGT all the varied
Medicaid programs that have been created under the Medicaid
state plan and the 1115 Waiver. HHSC has not received any
requests asking HHSC to halt the growth in size of other pro-
grams, such as the Comprehensive Hospital Increased Reim-
bursement Program (CHIRP) or the Uncompensated Care pro-
gram due to a lack of available local public funds. Rather, HHSC
has consistently received requests for HHSC to pursue the ap-
proval of new and additional programs, which would utilize, at
least in part, LPPF-derived local funds as the source of non-fed-
eral share. This indicates to HHSC that there is an availability of
local funds suffcient to support hospital payment programs held
by local governments that IGT for such programs. All govern-
mental entities are required to comply with all federal and state
laws and regulations related to the operation of LPPFs, includ-
ing the limitations on the percentage of net patient revenue that
may be assessed as a mandatory payment and HHSC designs
programs and payment methodologies that are distinct from the
method of fnance that a local government may utilize. As result,
no revision to the rule text was made in response to this com-
ment.
Modeling.
Comment: Multiple commenters stated that the posted models
on the DSH proposed changes included an error where private
rural providers were included in the model for the public rural
pool and requested an updated model based on 2023 data.
Response: Models are for informational purpose only and are
not to be used as the basis of actual payments. However, HHSC
identifed due to the comment that the rule text did not describe
participation of private rural hospitals in the rural pool in DSH.
HHSC will amend the rule upon adoption to clarify that private
hospitals are eligible to receive a percentage of the remaining
QU qexoeg PNVO gune NSI OMOP qex~s oegister
rural pool if the public rural hospitals do not fully exhaust the
rural public pool.
Recoupments.
Comment: Multiple commenters provided comments that they
are against the retroactive application of the rule changes as it
would lead to recoupment for many hospitals and lead to harm
for hospitals that will be recouped based on the rule changes.
Response: HHSC disagrees that the rule changes proposed
could be considered retroactive as any payments that providers
have received to date are either interim or advance payments
that are subject to being recouped at the time that the fnal pay-
ments are calculated for DSH and UC respectively. As such, the
potential recoupments a provider might experience at the time
of a fnal payment are fully within the current practice of rebal-
ancing payments at the time of the fnal payment, which is made
based upon the rule in effect at the time HHSC makes the f-
nal payment. However, HHSC understands that providers may
have made budgetary assumptions that did not contemplate the
proposed changes and, in response to commenters' concerns,
HHSC will defer the application of the changes in 355.8065 to the
DSH 2024 program period. Additionally, to assist providers with
appropriate fnancial planning next year, HHSC will modify the
advance payment methodology for DSH 2024 to pay providers
based upon the estimated amount that they will receive in the
2024 fnal DSH payment in an effort to help providers avoid re-
liance on interim or advance payments that are inconsistent with
the fnal payment methodology. HHSC updated 355.8065(a) and
355.8065(q)(5) in response to this comment.
General Comments.
Comments: Multiple providers provided general comments in
support for all of the proposed rule changes.
Response: HHSC appreciates the support for the proposed
amendment. No revision to the rule text was made in response
to this comment.
Comment: Several commenters provided general comments
against the proposed rule changes including observations that
there is a disparity between the DSH and UC funding sources,
stating the UC reimbursements are diminished in comparison
to DSH reimbursements.
Response: HHSC disagrees and declines to make changes to
the rule text in response to this comment. Qualifcations for par-
ticipation in the DSH program are updated to align with federal
rules and UC reimbursement has increased by $600 million dol-
lars annually so it is unclear what the basis is used for this com-
parison.
Rural defnition.
Comment: Multiple commenters provided comment against the
change in the rural defnition and stated that the change would
deny many hospitals of a vital payment. Several commenters
have also requested maintaining the current rural defnition or
modifying the rural defnition to be more inclusive and to account
for population growth in Texas.
Response: HHSC disagrees and declines to make changes to
the rule text in response to this comment. It is HHSC's intention
to align the rural defnition to the Inpatient rate rule for consis-
tency and transparency. A non-urban public defnition is retained
for Pass 3 in DSH.
Public Rural pool.
Comment: A commenter provided comment in support of the
establishment of the public rural pool.
Response: HHSC appreciates the support for the proposed
amendment. No revision to the rule text was made in response
to this comment.
Timing.
Comment: Multiple commenters provided comments against the
timing of the proposed rule changes, stating that the proposed
rule changes are happening in the midst of many other program
and rate changes affecting hospitals including the comprehen-
sive hospital increase reimbursement program, enhanced am-
bulatory patient groups, inpatient rate rebasing, and changes in
federal policies and that proposed changes were based on plan-
ning that began prior to the pandemic and public health emer-
gency and that proposed changes should be revisited.
Response: HHSC disagrees and declines to make changes to
the rule text in response to this comment. HHSC has carefully
evaluated options the last few years, both before and during the
COVID-19 public health emergency. It is HHSC's intention to
implement these changes at this time after careful analysis, and
HHSC will continue to monitor the DSH and UC programs in
subsequent years as we administer the programs. Discussion
of other program changes, audits, or federal policies is outside
of scope of the current DSH/UC rule updates.
Comment: Several commenters provided comment in support of
the timing of the proposed rule changes.
Response: HHSC appreciates the support for the proposed
amendment. No revision to the rule text was made in response
to this comment.
IGT.
Comment: A commenter requested the treatment of IGT as
costs in the DSH program and several commenters requested
for the continuation and expansion of IGT credits in the UC
program.
Response: HHSC acknowledges this comment. HHSC declines
to expand the IGT credits for either DSH or UC and the treat-
ment of IGT because these requests are outside the scope of
the proposed rule changes. HHSC will take this into considera-
tion for future analysis. No revision to the rule text was made in
response to this comment.
Condition of Participation.
Comment: Multiple commenters provided comments in support
of the new condition of participation requiring hospitals to partic-
ipate in directed and supplemental Medicaid payment programs
they are eligible for.
Response: HHSC appreciates the support for the proposed
amendment. No revision to the rule text was made in response
to this comment.
Comment: A commenter requested the inclusion of language for
exemption for hospitals that do not qualify for programs or would
receive zero dollars or less from programs during the program
year.
Response: HHSC agrees and has updated §355.8065(e)(9) and
§355.8212(c)(1)(F) to include language outlining an exemption
from this eligibility requirement for any directed or supplemental
payment programs for which hospitals are eligible if their esti-
mated payment will be $25,000 or less.
^almqba oribp gune NSI OMOP QU qexoeg PNVP
Comment: Several commenters provided comments against the
condition of participation, stating that this requirement in effect
creates application fees for the DSH program, especially for pri-
vate IMDs that may receive less reimbursement through the pro-
gram than the application fee for other programs.
Response: HHSC acknowledges this comment. HHSC updated
§355.8065(e)(9) and §355.8212(c)(1)(F) to include language for
an exemption from this eligibility requirement for any directed or
supplemental payment programs for which hospitals are eligible
if their estimated payment from that program will be $25,000 or
less.
Comment: A commenter requested the removal of application
fees for Medicaid directed and supplemental payment programs.
Response: This is outside the scope of the proposed rule
changes. No revision to the rule text was made in response to
this comment.
Comment: A commenter provided feedback that IMDs are often
not eligible for an average commercial incentive award (ACIA) in-
crease in CHIRP and many IMDs have not applied for the ACIA
component because they would not receive any additional ben-
eft while being subjected to increased quality reporting require-
ments.
Response: HHSC acknowledges this feedback and has clarifed
the rule text in §355.8065(e)(9) and §355.8212(c)(1)(F) to state
that hospitals are required to "enroll, participate in, and comply
with requirements for all voluntary supplemental Medicaid or di-
rected Medicaid programs for which the hospital is eligible, in-
cluding all required components of those programs" if the hospi-
tal is estimated to receive at least $25,000 from the program or
the program component.
Comment: A commenter provided comment against the timing
of the condition of participation stating that by proposing for this
change to begin in program year 2024, the proposed change
would occur more than six months after CHIRP enrollment period
has ended for the 2024 program year. As this was known after
the fact, HHSC should not penalize hospitals for failing to meet
a condition of participation for program year 2024.
Response: HHSC agrees and has updated the rule text in
§355.8065(e)(9) and §355.8212(c)(1)(F) to clarify that this
requirement applies for all programs for which the enrollment
period begins after this rule is effective.
Impact statements.
Comment: One commenter provided comments against the pro-
posed rule changes, stating the proposed rule changes will affect
local businesses, economies, and the State at large.
Response: HHSC disagrees with the comment. The rule does
not directly regulate local business or economies, and the pro-
posed rules did not impede the ability of any community or hos-
pital within a community to receive payments if the hospital has a
lower payment-to-cost ratio. Further, the same aggregate fund-
ing level was available to the State at large. Nevertheless, HHSC
made changes in the adopted rule to mitigate funding shifts while
still promoting stated policy goals.
DSRIP.
Comment: Multiple commenters have commented that DSH is
not an appropriate vehicle for restoring hospitals' DSRIP pay-
ments because the goal of DSRIP was to incentivize perfor-
mance which is not aligned with the purpose of the DSH program
which supports hospitals serving a higher volume of Medicaid
and low-income patients.
Response: HHSC acknowledges this comment but declines to
make any changes to the rules as a result. Funding is com-
plex with multiple interdependencies and DSH is not being used
as the mechanism to fully replace the DSRIP program, but the
changes to DSH are in part necessary as the impact of other
programs that were designed to replace DSRIP have resulted in
imbalance in overall hospital fnancing stability.
Comment: Several commenters stated that the DSRIP fund-
ing was inequitably allocated and noted that numerous private
providers were unable to participate in DSRIP. The commenters
further noted that as such the proposed changes perpetuate the
inequity by shifting funds away from certain hospital classes to
other hospital classes.
Response: The allocation of DSRIP funding and prior DSRIP
participation is outside the scope of the current proposed rules.
In the development of the proposed rules, HHSC examined the
DSH and UC programs in their entirety with the intent of ensur-
ing that the funds are allocated in accordance with their purpose,
where the funds were most likely to beneft a large number of
Texans receiving care, and in accordance with established state
policy goals. No changes were made in response to this com-
ment.
Comment: One commenter stated that they disagree with the
assessment that large urban public hospitals have not already
replaced their DSRIP funding.
Response: HHSC disagrees with the commenter. Pursuant to
HHSC's Rider 15(j) report, our analysis indicates that the reim-
bursement levels for certain classes of hospitals including large
urban publics is not at an equivalent level overall compared
to FFY 2020, the last year that DSRIP was operational. No
changes were made in response to this comment.
Private IMDs.
Comment: Multiple commenters have submitted comments
against the proposed rule changes, stating that the changes
would negatively impact private IMDs. Commenters requested
protection for private IMD hospitals through creation of a pro-
tected private IMD pool, maintaining state hospitals allocation
at 90 percent of their state payment caps in DSH to avoid future
recoupments and private IMDs exceeding the statewide aggre-
gate IMD limit and stated that the proposed rule would reduce
non-state IMDs before reducing state IMD DSH payments for
the IMD allotment cap which would further diminish non-state
IMDs in participation of the DSH Program.
Response: HHSC has added a new standard DSH pool to pro-
vide a minimum payment to all hospitals, including private IMDs,
that have room under their state payment cap. However, IMD
hospitals can only receive a limited portion of the DSH funds
under federal statute. HHSC annually determines the percent-
age of the state payment caps that will be paid to state-owned
providers. HHSC will consider the impact to non-state-owned
IMDs as those amounts are established each year, as is the cur-
rent practice. HHSC updated 355.8065(b)(22), 355.8065(g) and
355.8065(h) in response to this comment.
CHIRP adjustment appeal.
Comment: Two commenters submitted comments requesting
HHSC to allow hospitals to use historical UHRIP /CHIRP pay-
QU qexoeg PNVQ gune NSI OMOP qex~s oegister
ment projections and actual payments in appeals of HHSC's
CHIRP adjustments in the DSH and UC programs.
Response: This is outside the scope of the proposed rule
changes. No revision to the rule text was made in response to
this comment.
Graduate Medical Education Payments.
Comment: One commenter is in support of the proposed DSH
methodology and states that inclusion of Medicaid GME pay-
ments in the proposed DSH rules is appropriate and further
states that while teaching hospitals are in support of the pro-
posed changes, teaching hospitals are still left with unfunded
healthcare workforce teaching and training costs within GME.
Response: HHSC appreciates the support for the proposed
amendment and acknowledges the comment on the needs of
teaching hospitals. In the amended rule text, the standard DSH
payment for hospitals with residents will be a higher payment
than hospitals without residents.
Ambiguous Rule text.
Comment: Several commenters submitted comments against
the ambiguity of the wording of §355.8065(c)(2)(B) and (c)(3)(B),
stating that the words "may" and "if necessary" does not provide
suffcient justifcation and allows HHSC too much discretion to
make changes to the payment ceiling calculations of hospitals.
Response: HHSC disagrees with the suggested update. The
commenters had mistakenly provided the incorrect rule text
reference for this comment. No revision to the §355.8065
rule text was made in response to this comment. However,
HHSC believes that the commenters intention was to reference
§355.8066(c)(2)(B) and (c)(3)(B). As a result, HHSC has review
the §355.8066(c)(2)(B) and (c)(3)(B) rule text and amended the
"may" to "shall" and removed "if necessary" for greater clarity.
Regarding §355.8066, concerning Hospital-Specifc Limit
Methodology:
Lesser of methodology.
Comment: Multiple commenters submitted comments in support
of the lesser of methodology for the State Payment Cap.
Response: HHSC appreciates the support for the proposed
amendment. No revision to the rule text was made in response
to this comment.
Comment: Multiple commenters submitted comments against
the lesser of methodology citing that it is unnecessarily compli-
cated and requesting the use of the MACPAC defnition as the
sole SPC.
Response: HHSC disagrees and declines to make revisions to
the rule as a result of this comment. The lesser of methodology
protects hospitals against future recoupments which outweighs
the noted complexity of the methodology.
Comment: One commenter submitted comment against the
lesser of methodology and stated that HHSC's proposal to
continue to use the full-offset state-payment cap calculation in
the lesser of approach goes against the cost reporting principles
of the DSH HSL calculation as supported by the now withdrawn
CMS FAQs 33 and 34.
Response: HHSC disagrees. The state has the authority to cal-
culate a state-specifc limit, which is the state payment cap, as a
basis for distributing interim DSH funds. CMS has adopted rules
that describe how the fnal HSL is calculated, and HHSC is ad-
hering to federal direction on the DSH audit.
Comment: Multiple commenters stated that using the lesser of
methodology is inequitable because it applies different standard
calculations across hospitals with some hospitals including dual
eligible populations in their percentage of cost calculations, while
others will have that population excluded. These commenters
requested the use of only the MACPAC SPC.
Response: HHSC disagrees and declines to make revisions to
the rule as a result of this comment. The lesser of methodology
protects hospitals from recoupments, and the cost and payments
used in the percentage of cost covered pool correspond to the
minimum SPC.
Exceptions.
Comment: One commenter requested that HHSC revise
§355.8066(c)(3)(D) and (d)(3) before adoption to remove the
requirement that hospitals request HHSC determine whether
they meet the 97th percentile exception; and add language that
HHSC will rely on the eligibility determination made by CMS.
Response: HHSC agrees and has revised §355.8066(c)(3)(D)
and (d)(3) to include the statement "HHSC will adhere to CMS'
determination on eligibility for exceptions authorized by Section
1923(g) of the Social Security Act."
Regarding §355.8212, concerning Waiver Payments to Hospi-
tals for Uncompensated Charity Care:
Rural Defnition
Comment: A commenter stated that HHSC did not change from
2010 to 2020 census defnition for the standard defnition of rural
hospital.
Response: HHSC agrees and has revised §355.8212(b)(17)(A)
to state "most recent decennial census" instead of citing the 2010
U.S. Census to conform with anticipated defnition changes that
will also be made to the inpatient rate rule defnitions.
Charity Care calculation.
Comment: A commenter provided a suggestion for rural
providers to be allowed to choose between a cost spread
methodology or their overall Cost to Charge Ratio as reported
on S-10 for charity care cost calculations.
Response: This is outside the scope of the proposed rule
changes. No revision to the rule text was made in response to
this comment.
HICH.
Comment: Multiple commenters submitted comments in support
of the establishment of the HICH pool.
Response: HHSC appreciates the support for the proposed
amendment. No revision to the rule text was made in response
to this comment.
Comment: One commenter suggested that the HICH ratio
should exclude uninsured charity charges and duplicates in the
numerator and simply utilize DSH uninsured charges for total
uninsured charges in the numerator to calculate uninsured vol-
ume, and that the HICH ratio's denominator should equal total
charges drawn from the same time period as total uninsured
charges in the numerator.
Response: HHSC disagrees and declines to make changes to
the rule text as a result. As the HICH pool and the HICH ratio
^almqba oribp gune NSI OMOP QU qexoeg PNVR
is a part of the UC program which reimburses hospitals for unin-
sured charity care, the usage and inclusion of uninsured charity
charges is appropriate, as is the consideration of any duplicated
uninsured charges from the DSH and UC programs to ensure
accuracy in the calculation of the numerator. The intention of
the HICH pool is to allocate funds amongst hospitals with a high
proportion of uncompensated care charges, using total allow-
able revenue would provide a more accurate picture of the pro-
portion of uncompensated care charges than the suggested total
charges from the same time period as the denominator.
Comment: Multiple commenters requested modifcation of HICH
pool eligibility. Requests for HICH pool eligibility qualifcations in-
cluded requests to include non-transferring and transferring pub-
lic hospitals and request to exclude rural public hospitals.
Response: HHSC declines to add transferring and non-trans-
ferring public hospitals to the HICH pool eligibility based on the
comments. However, HHSC understands that the 30 percent
HICH ratio may be too restrictive and will be lowering that thresh-
old to 27.5 percent in 355.8212(f)(2)(D)(ii).
Rule text language.
Comment: A commenter requested retaining the lan-
guage "to that hospital and private hospitals" in 1 TAC
§355.8212(g)(2)(A)(iv) to add clarity related to transferring
public hospitals.
Response: HHSC agrees and has retained the language "to that
hospital and private hospitals" in §355.8212(g)(2)(A)(iv). This
update to the rule does not change the calculations or method-
ology of the updated rule text.
Regional Healthcare partnership.
Comment: A commenter stated that the removal of Regional
Healthcare partnership (RHP) from the rule would contradict the
waiver standard term and condition (STC) (38)(a)(ii)(2) that re-
quires a hospital to participate in an RHP in order to qualify for
UC payments and that a waiver amendment to that STC should
be considered.
Response: HHSC has submitted a request for a technical cor-
rection for the waiver to update the standard term and condition
(STC) to align with the removal of Regional Healthcare partner-
ship (RHP) and requirement of affliation agreements. Until such
a time as the STC technical correction is approved by CMS, 1
TAC §355.8212(a) continues to require providers to comply with
all underlying federal requirements, including the STCs.
IMD age exclusion.
Comment: Several commenters stated that the rule changes dis-
advantages IMDs in particular because in addition to expected
reduction in DSH payments, IMDs are subject to the age exclu-
sion for charity costs for patients ages 21-64 in the UC program.
Response: HHSC did not propose any changes for this topic,
but we will take this into consideration for future rule making. No
revision to the rule text was made in response to this comment.
DIVISION 4. MEDICAID HOSPITAL
SERVICES
1 TAC §355.8065, §355.8066
STATUTORY AUTHORITY
The amendments are adopted under 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; and 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.
§355.8065. Disproportionate Share Hospital Reimbursement
Methodology.
(a) Introduction. Hospitals participating in the Texas Medic-
aid program that meet the conditions of participation and that serve
a disproportionate share of low-income patients are eligible for reim-
bursement from the disproportionate share hospital (DSH) fund. The
Texas Health and Human Services Commission (HHSC) will establish
each hospital's eligibility for and amount of reimbursement using the
methodology described in this section beginning with the DSH pro-
gram year corresponding with federal fscal year 2024. For program
periods that correspond with federal fscal year 2023, eligibility and
payments will be made in accordance with the rule text as it existed on
June 1, 2023.
(b) Defnitions.
(1) Adjudicated claim--A hospital claim for payment for a
covered Medicaid service that is paid or adjusted by HHSC or another
payer.
(2) Available DSH funds--The total amount of funds that
may be distributed to eligible qualifying DSH hospitals for the DSH
program year, based on the federal DSH allotment for Texas (as deter-
mined by the Centers for Medicare & Medicaid Services) and available
non-federal funds. HHSC may divide available DSH funds for a pro-
gram year into one or more portions of funds to allow for partial pay-
ment(s) of total available DSH funds at any one time with remaining
funds to be distributed at a later date(s). If HHSC chooses to make a
partial payment, the available DSH funds for that partial payment are
limited to the portion of funds identifed by HHSC for that partial pay-
ment.
(3) Available general revenue funds--The total amount of
state general revenue funds appropriated to provide a portion of the
non-federal share of DSH payments for the DSH program year for non-
state-owned hospitals. If HHSC divides available DSH funds for a
program year into one or more portions of funds to allow for partial
payment(s) of total available DSH funds as described in paragraph (2)
of this subsection, the available general revenue funds for that partial
payment are limited to the portion of general revenue funds identifed
by HHSC for that partial payment.
(4) Bad debt--A debt arising when there is nonpayment on
behalf of an individual who has third-party coverage.
(5) Centers for Medicare & Medicaid Services (CMS)--
The federal agency within the United States Department of Health and
Human Services responsible for overseeing and directing Medicare and
Medicaid, or its successor.
(6) Charity care--The unreimbursed cost to a hospital of
providing, funding, or otherwise fnancially supporting health care ser-
vices on an inpatient or outpatient basis to indigent individuals, either
directly or through other nonproft or public outpatient clinics, hospi-
tals, or health care organizations. A hospital must set the income level
for eligibility for charity care consistent with the criteria established in
§311.031, Texas Health and Safety Code.
QU qexoeg PNVS gune NSI OMOP qex~s oegister
(7) Charity charges--Total amount of hospital charges for
inpatient and outpatient services attributed to charity care in a DSH
data year. These charges do not include bad debt charges, contractual
allowances, or discounts given to other legally liable third-party payers.
(8) Children's hospital--A hospital that is a Children's hos-
pital as defned in §355.8052 of this chapter (relating to Inpatient Hos-
pital Reimbursement).
(9) Disproportionate share hospital (DSH)--A hospital
identifed by HHSC that meets the DSH program conditions of partici-
pation and that serves a disproportionate share of Medicaid or indigent
patients.
(10) DSH data year--A twelve-month period, two years be-
fore the DSH program year, from which HHSC will compile data to
determine DSH program qualifcation and payment.
(11) DSH program year--The twelve-month period begin-
ning October 1 and ending September 30.
(12) Dually eligible patient--A patient who is simultane-
ously eligible for Medicare and Medicaid.
(13) Governmental entity--A state agency or a political
subdivision of the state. A governmental entity includes a hospital
authority, hospital district, city, county, or state entity.
(14) HHSC--The Texas Health and Human Services Com-
mission or its designee.
(15) Hospital-specifc limit (HSL) --The maximum pay-
ment amount, as applied to payments made during a prior DSH
program year, that a hospital may receive in reimbursement for the
cost of providing Medicaid-allowable services to individuals who
are Medicaid-eligible or uninsured. The hospital-specifc limit is
calculated using the methodology described in §355.8066 of this
division (relating to State Payment Cap and Hospital-Specifc Limit
Methodology) using actual cost and payment data from the DSH
program year.
(16) Independent certifed audit--An audit that is con-
ducted by an auditor that operates independently from the Medicaid
agency and the audited hospitals and that is eligible to perform the
DSH audit required by CMS.
(17) Indigent individual--An individual classifed by a hos-
pital as eligible for charity care.
(18) Infation update factor--Cost of living index based on
annual CMS prospective payment system hospital market basket index.
(19) Inpatient day--Each day that an individual is an inpa-
tient in the hospital, whether or not the individual is in a specialized
ward and whether or not the individual remains in the hospital for lack
of suitable placement elsewhere. The term includes observation days,
rehabilitation days, psychiatric days, and newborn days. The term does
not include swing bed days or skilled nursing facility days.
(20) Inpatient revenue--Amount of gross inpatient revenue
derived from the most recent completed Medicaid cost report or re-
ports related to the applicable DSH data year. Gross inpatient revenue
excludes revenue related to the professional services of hospital-based
physicians, swing bed facilities, skilled nursing facilities, intermediate
care facilities, other nonhospital revenue, and revenue not identifed by
the hospital.
(21) Institution for mental diseases (IMD)--A hospital that
is primarily engaged in providing psychiatric diagnosis, treatment, or
care of individuals with mental illness, defned in §1905(i) of the Social
Security Act. IMD hospitals are reimbursed as freestanding psychiatric
facilities under §355.8060 of this division (relating to Reimbursement
Methodology for Freestanding Psychiatric Facilities) and §355.761 of
this chapter (relating to Reimbursement Methodology for Institutions
for Mental Diseases (IMD).
(22) Institution for mental diseases (IMD) cap--An IMD
limit determined each fscal year and as described under Section
1923(h) of the Social Security Act.
(23) Intergovernmental transfer (IGT)--A transfer of public
funds from a governmental entity to HHSC.
(24) Low-income days--Number of inpatient days at-
tributed to indigent patients are calculated using the following
methodology. Low-income days are equal to the hospitals low-in-
come utilization rate as calculated in subsection (d)(2) of this section
multiplied by the hospitals total inpatient days.
(25) Low-income utilization rate--A ratio, calculated as de-
scribed in subsection (d)(2) of this section, that represents the hospital's
volume of inpatient charity care relative to total inpatient services.
(26) Mean Medicaid inpatient utilization rate--The average
of Medicaid inpatient utilization rates for all hospitals that have re-
ceived a Medicaid payment for an inpatient claim, other than a claim
for a dually eligible patient, that was adjudicated during the relevant
DSH data year.
(27) Medicaid contractor--Fiscal agents and managed care
organizations with which HHSC contracts to process data related to the
Medicaid program.
(28) Medicaid cost report--Hospital and Hospital Health
Care Complex Cost Report (Form CMS 2552), also known as the Medi-
care cost report.
(29) Medicaid hospital--A hospital meeting the qualifca-
tions set forth in §354.1077 of this title (relating to Provider Participa-
tion Requirements) to participate in the Texas Medicaid program.
(30) Medicaid inpatient utilization rate (MIUR)--A ratio,
calculated as described in subsection (d)(1) of this section, that repre-
sents a hospital's volume of Medicaid inpatient services relative to total
inpatient services.
(31) MSA--Metropolitan Statistical Area as defned by the
United States Offce of Management and Budget. MSAs with popu-
lations greater than or equal to 137,000, according to the most recent
decennial census, are considered "the largest MSAs."
(32) Non-federal percentage--The non-federal percentage
equals one minus the federal medical assistance percentage (FMAP)
for the program year.
(33) Non-rural hospital--Any hospital that does not meet
the defnition of rural hospital as defned in §355.8052 of this chapter.
(34) Non-urban public hospital--A hospital other than a
transferring public hospital that is:
(A) owned and operated by a governmental entity; or
(B) operated under a lease from a governmental entity
in which the hospital and governmental entity are both located in the
same county, and the hospital and governmental entity have both signed
an attestation that they wish the hospital to be treated as a public hospi-
tal for all purposes under both this section and §355.8212 of this sub-
chapter (relating to Waiver Payments to Hospitals for Uncompensated
Charity Care).
^almqba oribp gune NSI OMOP QU qexoeg PNVT
(35) Obstetrical services--The medical care of a woman
during pregnancy, delivery, and the post-partum period provided at the
hospital listed on the DSH application.
(36) PMSA--Primary Metropolitan Statistical Area as de-
fned by the United States Offce of Management and Budget.
(37) Public funds--Funds derived from taxes, assessments,
levies, investments, and other public revenues within the sole and un-
restricted control of a governmental entity. Public funds do not include
gifts, grants, trusts, or donations, the use of which is conditioned on
supplying a beneft solely to the donor or grantor of the funds.
(38) Public Health Hospital (PHH)--The Texas Center for
Infectious Disease or any successor facility operated by the Department
of State Health Services.
(39) Ratio of cost-to-charges--A ratio that covers all appli-
cable hospital costs and charges relating to inpatient care and outpatient
care. This ratio will be calculated for inpatient and outpatient services
and, does not distinguish between payer types such as Medicare, Med-
icaid, or private pay.
(40) Rural public hospital--A hospital that is a rural hospi-
tal as defned in §355.8052 of this chapter and is either:
(A) owned and operated by a governmental entity; or
(B) is under a lease from a governmental entity in
which the hospital and governmental entity are both located in the
same county and the hospital and governmental entity have both
signed an attestation that they wish to be treated as a public hospital
for all purposes under this section.
(41) State institution for mental diseases (State IMD)--A
hospital that is primarily engaged in providing psychiatric diagnosis,
treatment, or care of individuals with mental illness defned in §1905(i)
of the Social Security Act and that is owned and operated by a state
university or other state agency. State IMD hospitals are reimbursed as
freestanding psychiatric facilities under §355.761 of this chapter.
(42) State-owned hospital--A hospital that is defned as a
state IMD, state-owned teaching hospital, or a Public Health Hospital
(PHH) in this section.
(43) State-owned teaching hospital--A hospital that is a
state-owned teaching hospital as defned in §355.8052 of this chapter.
(44) State payment cap--The maximum payment amount,
as applied to payments that will be made for the DSH program year,
that a hospital may receive in reimbursement for the cost of providing
Medicaid-allowable services to individuals who are Medicaid-eligible
or uninsured. The state payment cap is calculated using the methodol-
ogy described in §355.8066 of this title (relating to Hospital-Specifc
Limit Methodology) using interim cost and payment data from the DSH
data year.
(45) Tax Revenue--Funds derived from local taxes that are
assessed and payable to a hospital or a hospital district. For purposes
of this section, Tax Revenue does not include mandatory payments re-
ceived by a local governmental entity that is authorized by a relevant
chapter of Subtitle D, Title 4, Texas Health and Safety Code, to operate
a Local Provider Participation Fund (LPPF).
(46) Third-party coverage--Creditable insurance coverage
consistent with the defnitions in 45 Code of Federal Regulations (CFR)
Parts 144 and 146, or coverage based on a legally liable third-party
payer.
(47) Total Medicaid inpatient days--Total number of inpa-
tient days based on adjudicated claims data for covered services for the
relevant DSH data year.
(A) The term includes:
(i) Medicaid-eligible days of care adjudicated by
managed care organizations or HHSC;
(ii) days that were denied payment for spell-of-ill-
ness limitations;
(iii) days attributable to individuals eligible for
Medicaid in other states, including dually eligible patients;
(iv) days with adjudicated dates during the period;
and
(v) days for dually eligible patients for purposes of
the MIUR calculation described in subsection (d)(1) of this section.
(B) The term excludes:
(i) days attributable to Medicaid-eligible patients
ages 21 through 64 in an IMD;
(ii) days denied for late fling and other reasons; and
(iii) days for dually eligible patients for purposes of
the following calculations:
(I) Total Medicaid inpatient days, as described in
subsection (d)(3) of this section; and
(II) Pass one distribution, as described in subsec-
tion (h)(4) of this section.
(48) Total Medicaid inpatient hospital payments--Total
amount of Medicaid funds that a hospital received for adjudicated
claims for covered inpatient services during the DSH data year. The
term includes payments that the hospital received:
(A) for covered inpatient services from managed care
organizations and HHSC; and
(B) for patients eligible for Medicaid in other states.
(49) Total state and local subsidies--Total amount of state
and local payments that a hospital received for inpatient and outpatient
care during the DSH data year. The term includes payments under state
and local programs that are funded entirely with state general revenue
funds and state or local tax funds, such as County Indigent Health Care,
Children with Special Health Care Needs, and Kidney Health Care.
The term excludes payment sources that contain federal dollars such
as Medicaid payments, Children's Health Insurance Program (CHIP)
payments funded under Title XXI of the Social Security Act, Substance
Abuse and Mental Health Services Administration, Ryan White Title
I, Ryan White Title II, Ryan White Title III, and contractual discounts
and allowances related to TRICARE, Medicare, and Medicaid. The
term also includes tax revenue.
(50) Transferring public hospital--A hospital that is owned
and operated by one of the following entities: the Dallas County Hos-
pital District, the El Paso County Hospital District, the Harris County
Hospital District, the Tarrant County Hospital District, or the Univer-
sity Health System of Bexar County.
(c) Eligibility. To be eligible to participate in the DSH pro-
gram, a hospital must:
(1) be enrolled as a Medicaid hospital in the State of Texas;
QU qexoeg PNVU gune NSI OMOP qex~s oegister
(2) have received a Medicaid payment for an inpatient
claim, other than a claim for a dually eligible patient, that was adjudi-
cated during the relevant DSH data year; and
(3) apply annually by completing the application packet re-
ceived from HHSC by the deadline specifed in the packet.
(A) Only a hospital that meets the condition specifed
in paragraph (2) of this subsection will receive an application packet
from HHSC.
(B) The application may request self-reported data that
HHSC deems necessary to determine each hospital's eligibility. HHSC
may audit self-reported data.
(C) A hospital that fails to submit a completed applica-
tion by the deadline specifed by HHSC will not be eligible to partic-
ipate in the DSH program in the year being applied for or to appeal
HHSC's decision.
(D) For purposes of DSH eligibility, a multi-site hospi-
tal is considered one provider unless it submits separate Medicaid cost
reports for each site. If a multi-site hospital submits separate Medicaid
cost reports for each site, for purposes of DSH eligibility, it must sub-
mit a separate DSH application for each site.
(E) Merged Hospitals.
(i) HHSC will consider a merger of two or more hos-
pitals for purposes of determining eligibility and calculating a hospital's
DSH program year payments under this section if:
(I) a hospital that was a party to the merger sub-
mits to HHSC documents verifying the merger status with Medicare
prior to the deadline for submission of the DSH application; and
(II) the hospital submitting the information un-
der subclause (I) assumed all Medicaid-related liabilities of each hos-
pital that is a party to the merger, as determined by HHSC after review
of the applicable agreements.
(ii) If the requirements of clause (i) are not met,
HHSC will not consider the merger for purposes of determining eli-
gibility or calculating a hospital's DSH program year payments under
this section. Until HHSC determines that the hospitals are eligible
for payments as a merged hospital, each of the merging hospitals will
continue to receive any DSH payments to which it was entitled prior
to the merger.
(d) Qualifcation. For each DSH program year, in addition to
meeting the eligibility requirements, applicants must meet at least one
of the following qualifcation criteria, which are determined using in-
formation from a hospital's application, from HHSC, or from HHSC's
Medicaid contractors, as specifed by HHSC.
(1) Medicaid inpatient utilization rate. A hospital's Medic-
aid inpatient utilization rate is calculated by dividing the hospital's total
Medicaid inpatient days by its total inpatient census days for the DSH
data year.
(A) A hospital located outside an MSA or PMSA must
have a Medicaid inpatient utilization rate greater than the mean Med-
icaid inpatient utilization rate for all Medicaid hospitals.
(B) A hospital located inside an MSA or PMSA must
have a Medicaid inpatient utilization rate that is at least one standard de-
viation above the mean Medicaid inpatient utilization rate for all Med-
icaid hospitals.
(2) Low-income utilization rate. A hospital must have a
low-income utilization rate greater than 25 percent. For purposes of
paragraph (2) of this section, the term "low-income utilization rate" is
calculated using the calculation described in 42 U.S.C. §1396r-4 (b)(3).
(3) Total Medicaid inpatient days.
(A) A hospital must have total Medicaid inpatient days
at least one standard deviation above the mean total Medicaid inpatient
days for all hospitals participating in the Medicaid program, except a
hospital in a county with a population of 290,000 persons or fewer, ac-
cording to the most recent decennial census, must have total Medicaid
inpatient days at least 70 percent of the sum of the mean total Medicaid
inpatient days for all hospitals in this subset plus one standard devia-
tion above that mean.
(B) Days for dually eligible patients are not included in
the calculation of total Medicaid inpatient days under this paragraph.
(4) State-owned hospitals. State-owned hospitals that do
not otherwise qualify as disproportionate share hospitals under this sub-
section will be deemed to qualify. A hospital deemed to qualify must
still meet the eligibility requirements under subsection (c) of this sec-
tion and the conditions of participation under subsection (e) of this sec-
tion.
(5) Merged hospitals. Merged hospitals are subject to the
application requirement in subsection (c)(3)(E) of this section. In
accordance with requirements in subsection (c)(3)(E) of this section,
HHSC will aggregate the data used to determine qualifcation under
this subsection from the merged hospitals to determine whether the
single Medicaid provider that results from the merger qualifes as a
Medicaid disproportionate share hospital.
(6) Hospitals with multiple Medicaid provider numbers.
Hospitals that held a single Medicaid provider number during the DSH
data year, but later added one or more Medicaid provider numbers.
Upon request, HHSC will apportion the Medicaid DSH funding
determination attributable to a hospital that held a single Medicaid
provider number during the DSH data year (data year hospital), but
subsequently added one or more Medicaid provider numbers (new
program year hospital(s)) between the data year hospital and its
associated new program year hospital(s). In these instances, HHSC
will apportion the Medicaid DSH funding determination for the data
year hospital between the data year hospital and the new program year
hospital(s) based on estimates of the division of Medicaid inpatient
and low income utilization between the data year hospital and the
new program year hospital(s) for the program year, so long as all af-
fected providers satisfy the Medicaid DSH conditions of participation
under subsection (e) of this section and qualify as separate hospitals
under subsection (d) of this section based on HHSC's Medicaid DSH
qualifcation criteria in the applicable Medicaid DSH program year.
In determining whether the new program year hospital(s) meet the
Medicaid DSH conditions of participation and qualifcation, proxy
program year data may be used.
(e) Conditions of participation. HHSC will require each hos-
pital to meet and continue to meet for each DSH program year the fol-
lowing conditions of participation.
(1) Two-physician requirement.
(A) In accordance with Social Security Act
§1923(e)(2), a hospital must have at least two licensed physicians
(doctor of medicine or osteopathy) who have hospital staff privileges
and who have agreed to provide nonemergency obstetrical services to
individuals who are entitled to medical assistance for such services.
(B) Subparagraph (A) of this paragraph does not apply
if the hospital:
^almqba oribp gune NSI OMOP QU qexoeg PNVV
(i) serves inpatients who are predominantly under
18 years of age; or
(ii) was operating but did not offer nonemergency
obstetrical services as of December 22, 1987.
(C) A hospital must certify on the DSH application that
it meets the conditions of either subparagraph (A) or (B) of this para-
graph, as applicable, at the time the DSH application is submitted.
(2) Medicaid inpatient utilization rate. At the time of quali-
fcation and during the DSH program year, a hospital must have a Med-
icaid inpatient utilization rate, as calculated in subsection (d)(1) of this
section, of at least one percent.
(3) Trauma system.
(A) The hospital must be in active pursuit of desig-
nation or have obtained a trauma facility designation as defned in
§780.004 and §§773.111 - 773.120, Texas Health and Safety Code,
respectively, and consistent with 25 TAC §157.125 (relating to Re-
quirements for Trauma Facility Designation) and §157.131 (relating
to the Designated Trauma Facility and Emergency Medical Services
Account). A hospital that has obtained its trauma facility designation
must maintain that designation for the entire DSH program year.
(B) HHSC will receive an annual report from the Offce
of EMS/Trauma Systems Coordination regarding hospital participation
in regional trauma system development, application for trauma facility
designation, and trauma facility designation or active pursuit of desig-
nation status before fnal qualifcation determination for interim DSH
payments. HHSC will use this report to confrm compliance with this
condition of participation by a hospital applying for DSH funds.
(C) The following hospital types are exempted from the
condition of participation described in this paragraph: Children's Hos-
pitals, IMDs, Public Health Hospitals, and State IMDs.
(4) Maintenance of local funding effort. A hospital district
in one of the state's largest MSAs or in a PMSA must not reduce local
tax revenues to its associated hospitals as a result of disproportionate
share funds received by the hospital. For this provision to apply, the
hospital must have more than 250 licensed beds.
(5) Retention of and access to records. A hospital must
retain and make available to HHSC records and accounting systems
related to DSH data for at least fve years from the end of each DSH
program year in which the hospital qualifes, or until an open audit is
completed, whichever is later.
(6) Compliance with audit requirements. A hospital must
agree to comply with the audit requirements described in subsection
(o) of this section.
(7) Merged hospitals. Merged hospitals are subject to
the application requirement in subsection (c)(3)(E) of this section. If
HHSC receives documents verifying the merger status with Medicare
prior to the deadline for submission of the DSH application, the
merged entity must meet all conditions of participation. If HHSC does
not receive the documents verifying the merger status with Medicare
prior to the deadline for submission of the DSH application, any
proposed merging hospitals that are receiving DSH payments must
continue to meet all conditions of participation as individual hospitals
to continue receiving DSH payments for the remainder of the DSH
program year.
(8) Changes that may affect DSH participation. A hospital
receiving payments under this section must notify HHSC's Provider Fi-
nance Department within 30 days of changes in ownership, operation,
provider identifer, designation as a trauma facility or as a children's
hospital, or any other change that may affect the hospital's continued
eligibility, qualifcation, or compliance with DSH conditions of partic-
ipation. At the request of HHSC, the hospital must submit any docu-
mentation supporting the change.
(9) Participation in all voluntary Medicaid programs. Be-
ginning in Federal Fiscal Year (FFY) 2024, it will be required for all
non-rural hospitals, except for state-owned hospitals, to enroll, partic-
ipate in, and comply with requirements for all voluntary supplemental
Medicaid or directed Medicaid programs for which the hospital is eli-
gible, including all components of those programs, within the State of
Texas to participate in DSH, unless:
(A) a hospital is not required to enroll, participate in,
and comply with the requirements:
(i) of a program without multiple components if
the hospital's estimated payment from the entire program is less than
$25,000; or
(ii) of a program's component for programs that
have multiple components if the hospital's estimated payment from
the program's component is less than $25,000; and
(B) enrollment for the program concluded after the ef-
fective date of this requirement.
(f) State payment cap and hospital-specifc limit calculation.
HHSC uses the methodology described in §355.8066 of this title to
calculate a state payment cap for each Medicaid hospital that applies
and qualifes to receive payments for the DSH program year under this
section, and a hospital-specifc limit for each hospital that received pay-
ments in a prior program year under this section. For payments for each
DSH program year beginning before October 1, 2017, the state pay-
ment cap calculated as described in §355.8066 will be reduced by the
amount of prior payments received by each participating hospital for
that DSH program year. These prior payments will not be considered
anywhere else in the calculation.
(g) Distribution of available DSH funds. HHSC will distribute
the available DSH funds as defned in subsection (b)(2) of this section
among eligible, qualifying DSH hospitals using the following priori-
ties.
(1) State-owned hospitals. HHSC may reimburse
state-owned teaching hospitals, state-owned IMDs, and public health
hospitals an amount less than or equal to its state payment caps, except
that aggregate payments to IMDs statewide may not exceed federally
mandated reimbursement limits for IMDs.
(2) Rural public hospitals. HHSC will set aside an amount
for rural public hospitals. While the funds are set aside before the non-
state hospital funding, the payments will be calculated for each hospital
after the non-state hospital payments are calculated.
(3) Rural private hospitals. If funds remain from the
amount set aside in subsection (g)(2) of this section for rural public
hospitals after paying all hospitals up to their state payment caps,
HHSC may set aside a portion of the remaining funds for rural private
hospitals.
(4) Non-state hospitals. HHSC distributes the remaining
available DSH funds, if any, to other qualifying hospitals using the
methodology described in subsection (h) of this section, including rural
public and rural private hospitals.
(A) The remaining available DSH funds equal the lesser
of the funds as defned in subsection (b)(2) of this section less funds
expended under paragraph (1), (2), and (3) of this subsection or the
sum of remaining qualifying hospitals' state payment caps.
QU qexoeg POMM gune NSI OMOP qex~s oegister
(B) The remaining available general revenue funds
equal the funds as defned in subsection (b)(3) of this section.
(h) DSH payment calculation.
(1) Data verifcation. HHSC uses the methodology de-
scribed in §355.8066(e) of this title to verify the data used for the DSH
payment calculations described in this subsection. The verifcation
process includes:
(A) data sources for the application will include but not
limited to Tax Assessor Receipts/Invoices or other offcial documenta-
tion of tax revenue/statements, Medicare Cost Report, and third-party
data sources;
(B) notice to hospitals of the data provided to HHSC by
Medicaid contractors; and
(C) an opportunity for hospitals to request HHSC re-
view of disputed data.
(2) Establishment of DSH funding pools for non-state hos-
pitals. From the amount of remaining DSH funds determined in sub-
section (g)(3) of this section, HHSC will establish three DSH funding
pools.
(A) Pool One.
(i) Pool One is equal to the sum of the remaining
available general revenue funds and associated federal matching funds.
(ii) Pool One payments are available to all non-state-
owned hospitals, including non-state-owned public hospitals.
(B) Pool Two.
(i) Pool Two is equal to the lesser of:
(I) the amount of remaining DSH funds deter-
mined in subsection (g)(3) of this section less the amount determined
in paragraph (2)(A) of this subsection multiplied by the FMAP in effect
for the program year; or
(II) the federal matching funds associated with
the intergovernmental transfers received by HHSC that make up the
funds for Pool Three; and
(ii) Pool Two payments are available to all
non-state-owned hospitals except for any transferring public hospitals
as defned in subsection (b) of this section; or non-urban public hospi-
tal as defned in subsection (b) of this section that does not transfer any
funds to HHSC for Pool Three as described in subparagraph (C)(iii)
of this paragraph.
(C) Pool Three.
(i) Pool Three is equal to the sum of intergovern-
mental transfers for DSH payments received by HHSC from govern-
mental entities that own and operate transferring public hospitals and
non-urban public hospitals.
(ii) Pool Three payments are available to the hospi-
tals that are operated by or under lease contracts with the governmental
entities described in clause (i) of this subparagraph that provide inter-
governmental transfers.
(iii) HHSC will allocate responsibility for funding
Pool Three as follows.
(I) Non-urban public hospitals. Each govern-
mental entity that operates or is under a lease contract with a non-urban
public hospital is responsible for funding the non-federal share of the
hospital's DSH payments from Pool Two (calculated as described in
paragraphs (3) and (4) of this subsection) to that hospital.
(II) Transferring public hospitals. Each govern-
mental entity that owns and operates a transferring public hospital is re-
sponsible for funding the non-federal share of the DSH payments from
Pool Two (calculated as described in paragraphs (3) and (4) of this sub-
section) to its affliated hospital and a portion of the non-federal share
of the DSH payments from Pool Two to private hospitals. For funding
payments to private hospitals, HHSC will initially suggest an amount
in proportion to each transferring public hospitals' individual state pay-
ment cap relative to total state payment caps for all transferring public
hospitals. If an entity transfers less than the suggested amount, HHSC
will take the steps described in paragraph (4)(H) of this subsection.
(III) Following the calculations described in
paragraph (5) of this subsection, HHSC will notify each governmental
entity of its allocated intergovernmental transfer amount.
(3) Distribution and payment calculation for Pools One and
Two initial payment, Standard DSH payment.
(A) HHSC will frst determine the state payment cap
for the hospital in accordance with §355.8066 of this division, includ-
ing any year-to-date uncompensated-care (UC) payments as defned in
§355.8212 of this subchapter (relating to Waiver Payments to Hospi-
tals for Uncompensated Charity Care) attributable to the state payment
cap.
(B) All hospitals that meet DSH qualifcation and eligi-
bility criteria will be allocated an initial payment from Pools One and
Two. Initial payments will be allocated as follows.
(i) A hospital will receive a payment that is the
greater of:
(I) the hospital's Medicaid shortfall; or
(II) a standard DSH payment.
(ii) If the amount calculated in clause (i) of this sub-
paragraph is greater than the hospital's state payment cap after consid-
ering the state share required to fund the standard DSH payment, the
hospital will receive their state payment cap.
(C) HHSC will determine the standard DSH payment
amount described in subparagraph (B)(i)(II) of this paragraph annually
in an amount not to exceed $10,000,000 per hospital for hospitals that
have reported residents on their Medicare cost report or in an amount
not to exceed $10,000,000 per hospital for hospitals that have not re-
ported residents on their Medicare cost report.
(D) For a privately-owned institution of mental disease
their minimum payment amount may be reduced to ensure that pay-
ments for all IMDs remain below the IMD cap.
(4) Distribution and payment calculation for Pools One and
Two secondary payment, percentage of costs covered.
(A) The costs considered for the percentage of costs
covered will be the costs included in the state payment cap in para-
graph (3)(A) of this subsection.
(B) The payments considered for the percentage of
costs covered will be the payments included in the state payment
cap in paragraph (3)(A) of this subsection plus the standard DSH
payment after considering the state share required to fund the hospital's
payment. Transferring hospitals will not have IGT paid for private
hospitals for the standard DSH payment included in their percentage
of cost covered.
(C) The hospital's percentage of cost covered will be
equal to the payments in subparagraph (B) of this paragraph divided
by the cost in subparagraph (A) of this paragraph.
^almqba oribp gune NSI OMOP QU qexoeg POMN
(D) HHSC will determine an allocation percentage such
that all hospitals receive a uniform percentage of their costs covered to
fully utilize Pools One and Two, Pass Two.
(E) If a hospital's percentage of cost covered is greater
than the allocation percentage, it will not be eligible for a Pool One and
Two secondary payment.
(F) If a hospital's percentage of cost covered is lower
than the allocation percentage, it will be allocated a projected payment
such that its percentage of cost covered is equal to the uniform percent-
age in subparagraph (D) of this paragraph.
(G) If a governmental entity that operates or is under a
lease contract with a non-urban public hospital does not fully fund the
amount described in paragraph (2)(C)(iii)(I) of this subsection, HHSC
will reduce that portion of the hospital's Pool Two payment to the level
supported by the amount of the intergovernmental transfer.
(H) If a governmental entity that owns and operates a
transferring public hospital does not fully fund the amount described
in paragraph (2)(C)(iii)(II) of this subsection, HHSC will take the fol-
lowing steps.
(i) Provide an opportunity for the governmental en-
tities affliated with the other transferring public hospitals to transfer
additional funds to HHSC.
(ii) Recalculate total Pool Two payments for trans-
ferring public hospitals and private hospitals based on actual IGT pro-
vided by each transferring public hospital using a methodology deter-
mined by HHSC.
(5) Pass One distribution and payment calculation for Pool
Three.
(A) HHSC will calculate the initial payment from Pool
Three as follows.
(i) For each transferring public hospital:
(I) divide the Pool Two payments from para-
graphs (3) and (4) of this subsection by the FMAP for the program
year; and
(II) multiply the result from subclause (I) of this
clause by the non-federal percentage. The result is the Pass One initial
payment from Pool Three for these hospitals.
(ii) For each Non-urban public hospital:
(I) divide the Pool Two payments from para-
graphs (3) and (4) of this subsection by the FMAP for the program
year; and
(II) multiply the result from subclause (I) of this
clause by the non-federal percentage. The result is the Pass One initial
payment from Pool Three for these hospitals.
(iii) For all other hospitals, the Pass One initial pay-
ment from Pool Three is equal to zero.
(B) HHSC will calculate the secondary payment from
Pool Three for each transferring public hospital as follows.
(i) Sum the intergovernmental transfers made on be-
half of all transferring public hospitals.
(ii) For each transferring public hospital, divide the
intergovernmental transfer made on behalf of that hospital by the sum
of the intergovernmental transfers made on behalf of all transferring
public hospitals from clause (i) of this subparagraph.
(iii) Sum all Pass One initial payments from Pool
Three from subparagraph (A) of this paragraph.
(iv) Subtract the sum from clause (iii) of this sub-
paragraph from the total value of Pool Three.
(v) Multiply the result from clause (ii) of this sub-
paragraph by the result from clause (iv) of this subparagraph for each
transferring public hospital. The result is the Pass One secondary pay-
ment from Pool Three for that hospital.
(vi) For all other hospitals, the Pass One secondary
payment from Pool Three is equal to zero.
(C) HHSC will calculate each hospital's total Pass One
payment from Pool Three by adding its Pass One initial payment from
Pool Three and its Pass One secondary payment from Pool Three.
(6) Pass Two - Secondary redistribution of amounts in ex-
cess of state payment caps for Pool Three. For each hospital that
received a Pass One initial or secondary payment from Pool Three,
HHSC will sum the result from paragraph (4) of this subsection and the
result from paragraph (5) of this subsection to determine the hospital's
total projected DSH payment. In the event this sum plus any previous
payment amounts for the program year exceeds a hospital's state pay-
ment cap, the payment amount will be reduced such that the sum of the
payment amount plus any previous payment amounts is equal to the
state payment cap. HHSC will sum all resulting excess funds and re-
distribute that amount to qualifying non-state-owned hospitals eligible
for payments from Pool Three that have projected payments, including
any previous payment amounts for the program year, below its state
payment caps. For each such hospital, HHSC will:
(A) subtract the hospital's projected DSH payment plus
any previous payment amounts for the program year from its state pay-
ment cap;
(B) sum the results of subparagraph (A) of this para-
graph for all hospitals; and
(C) compare the sum from subparagraph (B) of this
paragraph to the total excess funds calculated for all non-state-owned
hospitals.
(i) If the sum of subparagraph (B) of this paragraph
is less than or equal to the total excess funds, HHSC will pay all such
hospitals up to the state payment cap.
(ii) If the sum of subparagraph (B) of this paragraph
is greater than the total excess funds, HHSC will calculate payments to
all such hospitals as follows.
(I) Divide the result of subparagraph (A) of this
paragraph for each hospital by the sum from subparagraph (B) of this
paragraph.
(II) Multiply the ratio from subclause (I) of this
clause by the sum of the excess funds from all non-state-owned hospi-
tals.
(III) Add the result of subclause (II) of this clause
to the projected total DSH payment for that hospital to calculate a re-
vised projected payment amount from Pools One, Two and Three after
Pass Two.
(7) Rural public hospital pool distribution and payment cal-
culation.
(A) HHSC will determine an allocation percentage such
that all rural public hospitals receive a uniform percentage of the costs
covered to fully utilize the rural public all funds allocation. The per-
QU qexoeg POMO gune NSI OMOP qex~s oegister
centage of cost covered will consider all previous DSH payments for
the program year, including the funds for the non-state hospitals.
(B) If a hospital's percentage of cost covered is greater
than the allocation percentage, it will not be eligible for any DSH pay-
ments from the rural public hospital pool.
(C) If a hospital's percentage of cost covered is lower
than the allocation percentage, it will be allocated a projected payment
such that the percentage of cost covered is equal to the uniform per-
centage in subparagraph (A) of this paragraph.
(D) Each rural public hospital is responsible for funding
the rural public payment multiplied by the non-federal percentage. If
the hospital does not fully fund the rural public payment, HHSC will
reduce the hospital's rural public payment to the level supported by the
amount of the intergovernmental transfer.
(8) Rural private hospital pool distribution and payment
calculation.
(A) If any funds remain from the rural public pool de-
scribed in paragraph (7) of this subsection, HHSC will allocate a per-
centage of the remaining funds to rural private hospitals.
(B) HHSC will determine an allocation percentage such
that all rural private hospitals receive a uniform percentage of the costs
covered to fully utilize the rural public federal funds allocation. The
percentage of cost covered will consider all previous DSH payments
for the program year, including the funds for the non-state hospitals.
(C) If a hospital's percentage of cost covered is greater
than the allocation percentage, it will not be eligible for any DSH pay-
ments from the rural private hospital pool.
(D) If a hospital's percentage of cost covered is lower
than the allocation percentage, it will be allocated a projected payment
such that the percentage of cost covered is equal to the uniform per-
centage in subparagraph (B) of this paragraph.
(E) Each governmental entity that owns and operates a
transferring public hospital is responsible for funding the non-federal
share of the DSH payments from the rural private hospital pool to rural
private hospitals. If an entity transfers less than the suggested amount,
HHSC will reduce the rural private hospitals' payments to the level
supported by the amount of the intergovernmental transfer.
(F) Any remaining funds from the percentage allocation
described in subparagraph (A) of this paragraph and any undistributed
funds from this pool will be redistributed back into the pool two sec-
ondary payment as described in paragraph (4) of this subsection.
(9) Pass Three - If any portion non-federal share of the
available DSH funds is not fully funded, the remaining allocation will
be available to non-urban public hospitals that met the funding require-
ments described in paragraph (2)(C)(iii)(I) of this subsection.
(A) For each non-urban public hospital that met the
funding requirements described in paragraph (2)(C)(iii)(I) of this
subsection, HHSC will determine the projected payment amount plus
any previous payment amounts for the program year calculated in
accordance with paragraphs (4) - (8) of this subsection, as appropriate.
(B) HHSC will subtract each hospital's projected pay-
ment amount plus any previous payment amounts for the program year
from subparagraph (A) of this paragraph from each hospital's state pay-
ment cap to determine the maximum additional DSH allocation.
(C) The governmental entity that owns the hospital
or leases the hospital may provide the non-federal share of funding
through an intergovernmental transfer to fund up to the maximum
additional DSH allocation calculated in subparagraph (B) of this
paragraph. These governmental entities will be queried by HHSC as
to the amount of funding they intend to provide through an intergov-
ernmental transfer for this additional allocation. The query may be
conducted through e-mail, through the various hospital associations or
through postings on the HHSC website.
(D) Prior to processing any full or partial DSH payment
that includes an additional allocation of DSH funds as described in this
paragraph, HHSC will determine if such a payment would cause to-
tal DSH payments for the full or partial payment to exceed the avail-
able DSH funds for the payment as described in subsection (b)(2) of
this section. If HHSC makes such a determination, it will reduce the
DSH payment amounts non-urban public hospitals are eligible to re-
ceive through the additional allocation as required to remain within the
available DSH funds for the payment. This reduction will be applied
proportionally to all additional allocations. HHSC will:
(i) determine remaining available funds by subtract-
ing payment amounts for all DSH hospitals calculated in paragraphs (4)
- (8) of this subsection from the amount in subsection (g)(3) of this sec-
tion;
(ii) determine the total additional allocation sup-
ported by an intergovernmental transfer by summing the amounts
supported by intergovernmental transfers identifed in subparagraph
(C) of this paragraph;
(iii) determine an available proportion statistic by
dividing the remaining available funds from clause (i) of this subpara-
graph by the total additional allocation supported by an intergovern-
mental transfer from clause (ii) of this subparagraph; and
(iv) multiply each intergovernmental transfer sup-
ported payment from subparagraph (C) of this paragraph by the pro-
portion statistic determined in clause (iii) of this subparagraph. The
resulting product will be the additional allowable allocation for the pay-
ment.
(E) Non-urban public hospitals that do not meet the
funding requirements of paragraph (2)(C)(iii)(I) of this subsection are
not eligible for participation on Pass Three.
(10) Reallocating funds if hospital closes, loses its license
or eligibility, or fles bankruptcy. If a hospital closes, loses its license,
loses its Medicare or Medicaid eligibility, or fles bankruptcy before
receiving DSH payments for all or a portion of a DSH program year,
HHSC will determine the hospital's eligibility to receive DSH pay-
ments going forward on a case-by-case basis. In making the deter-
mination, HHSC will consider multiple factors including whether the
hospital was in compliance with all requirements during the program
year and whether it can meet the audit requirements described in sub-
section (o) of this section. If HHSC determines that the hospital is not
eligible to receive DSH payments going forward, HHSC will notify
the hospital and reallocate that hospital's disproportionate share funds
to state hospitals then amongst all DSH hospitals in the same category
that are eligible for additional payments.
(11) HHSC will give notice of the amounts determined in
this subsection.
(12) The sum of the annual payment amounts for state
owned and non-state owned IMDs are summed and compared to the
federal IMD limit. If the sum of the annual payment amounts exceeds
the federal IMD limit, the non-state owned IMDs are reduced frst on a
pro-rata basis so that the sum is equal to the federal IMD limit. In the
case that the non-state owned IMD payments are eliminated and the
payments for the state owned IMD still exceed the federal IMD limit,
^almqba oribp gune NSI OMOP QU qexoeg POMP
then the state owned IMD payments will be reduced on a pro-rata
basis until they equal the federal IMD limit.
(13) For any DSH program year for which HHSC has cal-
culated the hospital-specifc limit described in §355.8066(c)(2) of this
chapter, HHSC will compare the interim DSH payment amount as cal-
culated in subsection (h) of this section to the hospital-specifc limit.
(A) HHSC will limit the payment amount to the hospi-
tal-specifc limit if the payment amount exceeds the hospital's hospi-
tal-specifc limit.
(B) HHSC will redistribute dollars made available as a
result of the capping described in subparagraph (A) of this paragraph
to providers eligible for additional payments subject to the hospital-
specifc limits, as described in subsection (l) of this section.
(i) Hospital located in a state or federal natural disaster area.
A hospital that is located in a county that is declared a state or federal
natural disaster area and that was participating in the DSH program
at the time of the natural disaster may request that HHSC determine
its DSH qualifcation and interim reimbursement payment amount un-
der this subsection for subsequent DSH program years. The following
conditions and procedures will apply to all such requests received by
HHSC.
(1) The hospital must submit its request in writing to HHSC
with its annual DSH application.
(2) If HHSC approves the request, HHSC will determine
the hospital's DSH qualifcation using the hospital's data from the DSH
data year prior to the natural disaster. However, HHSC will calculate
the one percent Medicaid minimum utilization rate, the state payment
cap, and the payment amount using data from the DSH data year. The
hospital-specifc limit will be computed based on the actual data for the
DSH program year.
(3) HHSC will notify the hospital of the qualifcation and
interim reimbursement.
(j) HHSC determination of eligibility or qualifcation. HHSC
uses the methodology described in §355.8066(e) of this division to ver-
ify the data and other information used to determine eligibility and
qualifcation under this section. The verifcation process includes:
(1) notice to hospitals of the data provided to HHSC by
Medicaid contractors; and
(2) an opportunity for hospitals to request HHSC review of
disputed data and other information the hospital believes is erroneous.
(k) Disproportionate share funds held in reserve.
(1) If HHSC has reason to believe that a hospital is not in
compliance with the conditions of participation listed in subsection (e)
of this section, HHSC will notify the hospital of possible noncompli-
ance. Upon receipt of such notice, the hospital will have 30 calendar
days to demonstrate compliance.
(2) If the hospital demonstrates compliance within 30 cal-
endar days, HHSC will not hold the hospital's DSH payments in re-
serve.
(3) If the hospital fails to demonstrate compliance within
30 calendar days, HHSC will notify the hospital that HHSC is holding
the hospital's DSH payments in reserve. HHSC will release the funds
corresponding to any period for which a hospital subsequently demon-
strates that it was in compliance. HHSC will not make DSH payments
for any period in which the hospital is out of compliance with the con-
ditions of participation listed in subsection (e)(1) and (2) of this sec-
tion. HHSC may choose not to make DSH payments for any period in
which the hospital is out of compliance with the conditions of partici-
pation listed in subsection (e)(3) - (7) of this section.
(4) If a hospital's DSH payments are being held in reserve
on the date of the last payment in the DSH program year, and no re-
quest for review is pending under paragraph (5) of this subsection, the
amount of the payments is not restored to the hospital, but is divided
proportionately among the hospitals receiving a last payment.
(5) Hospitals that have DSH payments held in reserve may
request a review by HHSC.
(A) The hospital's written request for a review must:
(i) be sent to HHSC's Director of Hospital Finance,
Provider Finance Department;
(ii) be received by HHSC within 15 calendar days
after notifcation that the hospital's DSH payments are held in reserve;
and
(iii) contain specifc documentation supporting its
contention that it is in compliance with the conditions of participation.
(B) The review is:
(i) limited to allegations of noncompliance with
conditions of participation;
(ii) limited to a review of documentation submitted
by the hospital or used by HHSC in making its original determination;
and
(iii) not conducted as an adversarial hearing.
(C) HHSC will conduct the review and notify the hos-
pital requesting the review of the results.
(l) Recovery and redistribution of DSH funds. As described in
subsection (o) of this section, HHSC will recoup any overpayment of
DSH funds made to a hospital, including an overpayment that results
from HHSC error or that is identifed in an audit. Recovered funds will
be redistributed as described in subsection (p) of this section.
(m) Failure to provide supporting documentation. HHSC will
exclude data from DSH calculations under this section if a hospital fails
to maintain and provide adequate documentation to support that data.
(n) Voluntary withdrawal from the DSH program.
(1) HHSC will recoup all DSH payments made during the
same DSH program year to a hospital that voluntarily terminates its par-
ticipation in the DSH program. HHSC will redistribute the recouped
funds according to the distribution methodology described in subsec-
tion (l) of this section.
(2) A hospital that voluntarily terminates from the DSH
program will be ineligible to receive payments for the next DSH pro-
gram year after the hospital's termination.
(3) If a hospital does not apply for DSH funding in the DSH
program year following a DSH program year in which it received DSH
funding, even though it would have qualifed for DSH funding in that
year, the hospital will be ineligible to receive payments for the next
DSH program year after the year in which it did not apply.
(4) The hospital may reapply to receive DSH payments in
the second DSH program year after the year in which it did not apply.
(o) Audit process.
(1) Independent certifed audit. HHSC is required by the
Social Security Act (Act) to annually complete an independent certi-
fed audit of each hospital participating in the DSH program in Texas.
QU qexoeg POMQ gune NSI OMOP qex~s oegister
Audits will comply with all applicable federal law and directives, in-
cluding the Act, the Omnibus Budget and Reconciliation Act of 1993
(OBRA '93), the Medicare Prescription Drug, Improvement and Mod-
ernization Act of 2003 (MMA), pertinent federal rules, and any amend-
ments to such provisions.
(A) Each audit report will contain the verifcations set
forth in 42 CFR §455.304(d).
(B) The sources of data utilized by HHSC, the hospitals,
and the independent auditors to complete the DSH audit and report
include:
(i) The Medicaid cost report;
(ii) Medicaid Management Information System
data; and
(iii) Hospital fnancial statements and other au-
ditable hospital accounting records.
(C) A hospital must provide HHSC or the independent
auditor with the necessary information in the time specifed by HHSC
or the independent auditor. HHSC or the independent auditor will no-
tify hospitals of the required information and provide a reasonable time
for each hospital to comply.
(D) A hospital that fails to provide requested informa-
tion or to otherwise comply with the independent certifed audit re-
quirements may be subject to a withholding of Medicaid dispropor-
tionate share payments or other appropriate sanctions.
(E) HHSC will recoup any overpayment of DSH funds
made to a hospital that is identifed in the independent certifed audit
as described in this subsection and will redistribute the recouped funds
to DSH providers in accordance with subsection (p) that received in-
terim payments, subject to the hospital-specifc limits, as described in
subsections (q) and (l) of this section.
(F) Review of preliminary audit fnding of overpay-
ment.
(i) Before fnalizing the audit, HHSC will notify
each hospital that has a preliminary audit fnding of overpayment.
(ii) A hospital that disputes the fnding or the amount
of the overpayment may request a review in accordance with the fol-
lowing procedures.
(I) A request for review must be received by the
HHSC Provider Finance Department in writing by regular mail, hand
delivery or special mail delivery, from the hospital within 30 calendar
days of the date the hospital receives the notifcation described in clause
(i) of this subparagraph.
(II) The request must allege the specifc factual
or calculation errors the hospital contends the auditors made that, if
corrected, would change the preliminary audit fnding.
(III) All documentation supporting the request
for review must accompany the written request for review or the
request will be denied.
(IV) The request for review may not dispute the
federal audit requirements or the audit methodologies.
(iii) The review is:
(I) limited to the hospital's allegations of factual
or calculation errors;
(II) solely a data review based on documentation
submitted by the hospital with its request for review or that was used
by the auditors in making the preliminary fnding; and
(III) not an adversarial hearing.
(iv) HHSC will submit to the auditors all requests
for review that meet the procedural requirements described in clause
(ii) of this subparagraph.
(I) If the auditors agree that a factual or calcula-
tion error occurred and change the preliminary audit fnding, HHSC
will notify the hospital of the revised fnding.
(II) If the auditors do not agree that a factual or
calculation error occurred and do not change the preliminary audit fnd-
ing, HHSC will notify the hospital that the preliminary fnding stands
and will initiate recoupment proceedings as described in this section.
(2) Additional audits. HHSC may conduct or require addi-
tional audits.
(p) Redistribution of Recouped Funds. Following the recoup-
ments described in subsection (o) of this section, HHSC will redis-
tribute the recouped funds to eligible providers. To receive a redis-
tributed payment, the hospital must be in compliance with all require-
ments during the program year, meet the audit requirements described
in subsection (o) of this section, and have already received a DSH pay-
ment in that DSH year of at least one dollar. For purposes of this sub-
section, an eligible provider is a provider that has room remaining in
its fnal remaining Hospital-specifc limit (HSL) calculated in the au-
dit fndings described in subsection (o) of this section after considering
all DSH payments made for that program year. Recouped funds from
state providers will be redistributed proportionately to eligible state
providers based on the percentage that each eligible state provider's
remaining fnal HSL (calculated in the audit fndings as described in
subsection (o) of this section) is of the total remaining fnal HSL (cal-
culated in the audit fndings described in subsection (o) of this sec-
tion) of all eligible state providers. Recouped funds from non-state
providers may be redistributed proportionately to state providers or el-
igible non-state providers as follows.
(1) For DSH program years 2011-2017 (October 1, 2011 -
September 30, 2017) and for DSH program years 2020 and after (Oc-
tober 1, 2019 and after), HHSC will use the following methodology to
redistribute recouped funds:
(A) the non-federal share will be returned to the gov-
ernmental entity that provided it during the program year;
(B) the federal share will be distributed proportionately
among all non-state providers eligible for additional payments that
have a source of the non-federal share of the payments; and
(C) the federal share that does not have a source of non-
federal share will be returned to CMS.
(2) For DSH program years 2018-2019 (October 1, 2017
- September 30, 2019), HHSC will use the following methodology to
redistribute recouped funds.
(A) To calculate a weight that will be applied to all non-
state providers, HHSC will divide the fnal hospital-specifc limit de-
scribed in §355.8066(c)(2) of this division by the fnal hospital-specifc
limit described in §355.8066(c)(2) of this division that has not offset
payments for third-party and Medicare claims and encounters where
Medicaid was a secondary payer. HHSC will add 1 to the quotient.
Any non-state provider that has a resulting weight of less than 1 will
receive a weight of 1.
^almqba oribp gune NSI OMOP QU qexoeg POMR
(B) HHSC will make a frst pass allocation by multiply-
ing the weight described in subsection (p)(2)(A) of this section by the
fnal remaining HSL calculated in the audit fndings described in sub-
section (o) of this section. HHSC will divide the product by the total
remaining HSLs for all non-state providers. HHSC will multiply the
quotient by the total amount of recouped dollars available for redistri-
bution described in subsection (p)(1) of this section.
(C) After the frst pass allocation, HHSC will cap non-
state providers at its fnal remaining HSL. A second pass allocation
will occur in the event non-state providers were paid over its fnal re-
maining HSL after the weight in subsection (p)(2)(A) of this section
was applied. HHSC will calculate the second pass by dividing the fnal
remaining HSL calculated in the audit fndings described in subsec-
tion (o) of this section by the total remaining HSLs for all non-state
providers after accounting for frst pass payments. HHSC will multi-
ply the quotient by the total amount of funds in excess of total HSLs
for non-state providers capped at its total HSL.
(q) Advance Payments
(1) In a DSH program year in which payments will be de-
layed pending data submission or for other reasons, HHSC may make
advance payments to hospitals that meet the eligibility requirements
described in subsection (c) of this section, meet a qualifcation in sub-
section (d) of this section, meet the conditions of participation in sub-
section (e) of this section, and submitted an acceptable disproportionate
share hospital application for the preceding DSH program year from
which HHSC calculated an annual maximum disproportionate share
hospital payment amount for that year.
(2) Advance payments are considered to be prior period
payments.
(3) A hospital that did not submit an acceptable dispropor-
tionate share hospital application for the preceding DSH program year
is not eligible for an advance payment.
(4) If a partial year disproportionate share hospital appli-
cation was used to determine the preceding DSH program year's pay-
ments, data from that application may be annualized for use in compu-
tation of an advance payment amount.
(5) The amount of the advance payments:
(A) are divided into three payments prior to a hospital
receiving its fnal DSH payment amount;
(B) in DSH program years 2020 and after a provider
that received a payment in the previous DSH program year is eligi-
ble to receive an advanced payment, and the calculations for advanced
payment 1, 2, and 3 are as follows:
(i) HHSC determines a percentage of the pool to pay
out in the advanced payments; and
(ii) the pool amount is fed through the previous DSH
program year calculation to determine the advanced payments;
(C) in DSH program year 2024, HHSC will run the ap-
plication data for hospital applications through an updated DSH quali-
fcation and calculation fle to determine advanced payment eligibility
and amount to account for rule changes between program year 2023
and 2024 to prevent recoupments; and
(D) HHSC will determine the payment allocation for
the advances for 2025 and subsequent years by calculating a percent-
age based on a hospital's payment in the preceding year divided by the
sum of all other hospitals' payment in the preceding year that are eligi-
ble for an advance payment.
§355.8066. State Payment Cap and Hospital-Specifc Limit Method-
ology.
(a) Introduction. The Texas Health and Human Services Com-
mission (HHSC) uses the methodology described in this section to
calculate a hospital-specifc limit for each Medicaid hospital partici-
pating in either the Disproportionate Share Hospital (DSH) program,
described in §355.8065 of this division (relating to Disproportionate
Share Hospital Reimbursement Methodology), or in the Texas Health-
care Transformation and Quality Improvement Program (the waiver),
described in §355.8201 of this subchapter (relating to Waiver Payments
to Hospitals for Uncompensated Care) and §355.8212 of this subchap-
ter (relating to Waiver Payments to Hospitals for Uncompensated Char-
ity Care).
(b) Defnitions.
(1) Adjudicated claim--A hospital claim for payment for a
covered Medicaid service that is paid or adjusted by HHSC or another
payor.
(2) Centers for Medicare and Medicaid Services (CMS)--
The federal agency within the United States Department of Health and
Human Services responsible for overseeing and directing Medicare and
Medicaid, or its successor.
(3) Data year--A 12-month period that is two years before
the program year from which HHSC will compile data to determine
DSH or uncompensated-care waiver program qualifcation and pay-
ment.
(4) Demonstration Year--The time period described in the
defnition for "Demonstration year" in §355.8212 of this subchapter.
(5) Disproportionate share hospital (DSH)--A hospital
identifed by HHSC that meets the DSH program conditions of partici-
pation and that serves a disproportionate share of Medicaid or indigent
patients.
(6) DSH and Uncompensated Care (UC) Application--The
HHSC data collection tool completed by each hospital applying for
participation in DSH or UC and used by HHSC to calculate the state
payment cap and hospital-specifc limit, as described in this section,
and to estimate the hospital's DSH and UC payments for the program
year, as described in §355.8065 of this division (relating to Dispropor-
tionate Share Hospital Reimbursement Methodology) and §355.8212
of this subchapter. A hospital may be required to complete multiple
applications due to different data requirements between the state pay-
ment cap and hospital-specifc limit calculations.
(7) DSH and UC Application Request Form--An online
survey sent to hospitals or its representatives to request a DSH and
UC application and to collect information necessary to prepopulate
the DSH and UC application.
(8) Dually eligible patient--A patient who is simultane-
ously enrolled in Medicare and Medicaid.
(9) Federal Fiscal Year (FFY)--The 12-month period be-
ginning October 1 and ending September 30. The period also corre-
sponds to the waiver demonstration year.
(10) Full-Offset Payment Ceiling--The maximum payment
cap derived using the full-offset methodology as described in subsec-
tion (c)(1) of this section.
(11) HHSC--The Texas Health and Human Services Com-
mission or its designee.
(12) Hospital-specifc limit--The maximum payment
amount authorized by Section 1923(g) of the Social Security Act that
a hospital may receive in reimbursement for the cost of providing
QU qexoeg POMS gune NSI OMOP qex~s oegister
Medicaid-allowable services to individuals who are Medicaid-eligible
or uninsured for payments made during a prior program year. The
amount is calculated as described in subsection (d) of this section
using actual cost and payment data from that period. The term does
not apply to payment for costs of providing services to non-Med-
icaid-eligible individuals who have third-party coverage; and costs
associated with pharmacies, clinics, and physicians. The calculation
of the hospital-specifc limit must be consistent with federal law.
(13) Infation update factor--Cost of living index based on
the annual CMS Prospective Payment System Hospital Market Basket
Index.
(14) Institution for mental diseases (IMD)--A hospital that
is primarily engaged in providing psychiatric diagnosis, treatment, or
care of individuals with mental illness, defned in §1905(i) of the Social
Security Act. IMD hospitals are reimbursed as freestanding psychiatric
facilities under §355.8060 of this division (relating to Reimbursement
Methodology for Freestanding Psychiatric Facilities) and §355.761 of
this chapter (relating to Reimbursement Methodology for Institutions
for Mental Diseases (IMD)).
(15) Medicaid contractor--Fiscal agents and managed care
organizations with which HHSC contracts to process data related to the
Medicaid program.
(16) Medicaid cost-to-charge ratio (inpatient and outpa-
tient)--A Medicaid cost report-derived cost center ratio calculated for
each ancillary cost center that covers all applicable hospital costs and
charges relating to inpatient and outpatient care for that cost center.
This ratio is used in calculating the hospital-specifc limit and does
not distinguish between payor types such as Medicare, Medicaid, or
private pay.
(17) Medicaid cost report--Hospital and Hospital Health
Care Complex Cost Report (Form CMS 2552), also known as the Medi-
care cost report.
(18) Medicaid hospital--A hospital meeting the qualifca-
tions set forth in §354.1077 of this title (relating to Provider Participa-
tion Requirements) to participate in the Texas Medicaid program.
(19) Medicaid payor type--The categories of payors on
Medicaid claims. These are categorized in the DSH and UC appli-
cation as Medicaid, where Medicaid is the sole payor, Medicare, for
claims associated with the care of dually eligible patients, and other
insurance, for claims for which the hospital received payment from a
third-party payor for a Medicaid-enrolled patient.
(20) Outpatient charges--Amount of gross outpatient
charges related to the applicable data year and used in the calculation
of a payment limit or cap.
(21) Program year--The 12-month period beginning Octo-
ber 1 and ending September 30. The period corresponds to the waiver
demonstration year.
(22) Recoupment Prevention Payment Ceiling--The max-
imum payment cap derived using the methodology described in sub-
section (c)(2) of this section that considers Medicaid only costs and
payments in the methodology.
(23) State payment cap--The maximum payment amount,
as applied to interim payments that will be made for the program year,
that a hospital may receive in reimbursement for the cost of providing
Medicaid-allowable services to individuals who are Medicaid-eligible
or uninsured. The amount is calculated as described in subsection (c)
of this section using interim cost and payment data from the data year.
The term does not apply to payment for costs of providing services
to non-Medicaid-eligible individuals who have third-party coverage or
costs associated with pharmacies, clinics, and physicians.
(24) The waiver--The Texas Healthcare Transformation
and Quality Improvement Program, a Medicaid demonstration waiver
under §1115 of the Social Security Act that was approved by CMS.
Pertinent to this section, the waiver establishes a funding pool to assist
hospitals with uncompensated-care costs.
(25) Third-party coverage--Creditable insurance coverage
consistent with the defnitions in 45 Code of Federal Regulations (CFR)
Parts 144 and 146, or coverage based on a legally liable third-party
payor.
(26) Total state and local subsidies--Total state and local
subsidies is defned in §355.8065 of this division.
(27) Uncompensated Care Hospital--A hospital identifed
by HHSC that meets the UC program eligibility criteria to receive a
payment as defned in §355.8212 of this subchapter.
(28) Uncompensated-care waiver payments--Payments to
hospitals participating in the waiver that are intended to defray the un-
compensated costs of eligible services provided to eligible individuals.
(29) Uninsured cost--The cost to a hospital of providing in-
patient and outpatient hospital services to uninsured patients as defned
by CMS.
(c) Calculating a state payment cap. Using information from
each hospital's DSH and UC Application, Medicaid cost reports and
from HHSC's Medicaid contractors, HHSC will determine the hospi-
tal's state payment cap in compliance with paragraphs (1), (2), (3), and
(4) of this subsection. The state payment cap will be used for both DSH
and uncompensated care waiver interim payment determinations.
(1) Calculation of uninsured and Medicaid costs and pay-
ments.
(A) Uninsured charges and payments.
(i) Each hospital will report in its application its in-
patient and outpatient charges for services that would be covered by
Medicaid that were provided to uninsured patients discharged during
the data year. In addition to the charges in the previous sentence, for
DSH calculation purposes only, an IMD may report charges for Medic-
aid-allowable services that were provided during the data year to Med-
icaid-eligible and uninsured patients ages 21 through 64.
(ii) Each hospital will report in its application all
payments received during the data year, regardless of when the service
was provided, for services that would be covered by Medicaid and were
provided to uninsured patients.
(I) For purposes of this paragraph, a payment re-
ceived is any payment from an uninsured patient or from a third party
(other than an insurer) on the patient's behalf, including payments re-
ceived for emergency health services furnished to undocumented aliens
under §1011 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003, Pub. L. No. 108-173, except as described
in subclause (II) of this clause.
(II) State and local subsidies to hospitals for in-
digent care are not included as payments made by or on behalf of unin-
sured patients.
(B) Medicaid charges and payments.
(i) HHSC will request from its Medicaid contractors
the inpatient and outpatient charge and payment data for claims for
services provided to Medicaid-enrolled individuals that are adjudicated
during the data year.
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(I) The requested data will include, but is not
limited to, charges and payments for:
(-a-) claims associated with the care of dually
eligible patients, including Medicare charges and payments;
(-b-) claims or portions of claims that were
not paid because they exceeded the spell-of-illness limitation;
(-c-) outpatient claims associated with the
Women's Health Program; and
(-d-) claims for which the hospital received
payment from a third-party payor for a Medicaid-enrolled patient.
(II) HHSC will exclude charges and payments
for:
(-a-) claims for services that do not meet the
defnition of "medical assistance" contained in §1905(a) of the Social
Security Act. Examples include:
(-1-) claims for the Children's
Health Insurance Program; and
(-2-) inpatient claims associated
with the Women's Health Program or any successor program; and
(-b-) claims submitted after the 95-day fling
deadline.
(ii) HHSC will request from its Medicaid contrac-
tors the inpatient and outpatient Medicaid cost settlement payment or
recoupment amounts attributable to the cost report period determined
in subparagraph (C)(i) of this paragraph.
(iii) HHSC will notify hospitals following HHSC's
receipt of the requested data from the Medicaid contractors. A hospi-
tal's right to request a review of data it believes is incorrect or incom-
plete is addressed in subsection (e) of this section.
(iv) Each hospital will report on the application the
inpatient and outpatient Medicaid days, charges and payment data for
out-of-state claims adjudicated during the data year.
(v) HHSC may apply an adjustment factor to Medic-
aid payment data to more accurately approximate Medicaid payments,
including for directed payments, following a rebasing or other change
in reimbursement rates under other sections of this division.
(C) Calculation of in-state and out-of-state Medicaid
and uninsured total costs for the data year.
(i) Cost report period for data used to calculate cost-
per-day amounts and cost-to-charge ratios. HHSC will use information
from the Medicaid cost report for the hospital's fscal year that ends
during the calendar year that falls two years before the end of the pro-
gram year for the calculations described in clauses (ii)(I) and (iii)(I) of
this subparagraph. For example, for program year 2013, the cost report
year is the provider's fscal year that ends between January 1, 2011, and
December 31, 2011.
(I) For hospitals that do not have a full year cost
report that meets this criteria, a partial year cost report for the hospital's
fscal year that ends during the calendar year that falls two years before
the end of the program year will be used if the cost report covers a
period greater than or equal to six months in length.
(II) The partial year cost report will not be pro-
rated. If the provider's cost report that ends during this time period is
less than six months in length, the most recent full year cost report will
be used.
(ii) Determining inpatient routine costs.
(I) Medicaid inpatient cost per day for routine
cost centers. Using data from the Medicaid cost report, HHSC will
divide the allowable inpatient costs by the inpatient days for each rou-
tine cost center to determine a Medicaid inpatient cost per day for each
routine cost center.
(II) Inpatient routine cost center cost. For each
Medicaid payor type and the uninsured, HHSC will multiply the Med-
icaid inpatient cost per day for each routine cost center from subclause
(I) of this clause times the number of inpatient days for each routine
cost center from the data year to determine the inpatient routine cost
for each cost center.
(III) Total inpatient routine cost. For each Med-
icaid payor type and the uninsured, HHSC will sum the inpatient rou-
tine costs for the various routine cost centers from subclause (II) of this
clause to determine the total inpatient routine cost.
(iii) Determining inpatient and outpatient ancillary
costs.
(I) Inpatient and outpatient Medicaid cost-to-
charge ratio for ancillary cost centers. Using data from the Medicaid
cost report, HHSC will divide the allowable ancillary cost by the sum
of the inpatient and outpatient charges for each ancillary cost center
to determine a Medicaid cost-to-charge ratio for each ancillary cost
center.
(II) Inpatient and outpatient ancillary cost center
cost. For each Medicaid payor type and the uninsured, HHSC will mul-
tiply the cost-to-charge ratio for each ancillary cost center from sub-
clause (I) of this clause by the ancillary charges for inpatient claims
and the ancillary charges for outpatient claims from the data year to
determine the inpatient and outpatient ancillary cost for each cost cen-
ter.
(III) Total inpatient and outpatient ancillary cost.
For each Medicaid payor type and the uninsured, HHSC will sum the
ancillary inpatient and outpatient costs for the various ancillary cost
centers from subclause (II) of this clause to determine the total ancillary
cost.
(iv) Determining total Medicaid and uninsured cost.
For each Medicaid payor type and the uninsured, HHSC will sum the
result of clause (ii)(III) of this subparagraph and the result of clause
(iii)(III) of this subparagraph plus organ acquisition costs to determine
the total cost.
(2) Calculation of the full-offset payment ceiling.
(A) Total hospital cost. HHSC will sum the total
cost for all Medicaid payor types and the uninsured from paragraph
(1)(C)(iv) of this section to determine the total hospital cost for
Medicaid and the uninsured.
(B) Total hospital payments. HHSC will reduce the to-
tal hospital cost under subparagraph (A) of this paragraph by total pay-
ments from all payor sources, including graduate medical services and
out-of-state payments. HHSC shall reduce the total hospital cost by
supplemental payments or uncompensated-care waiver payments (ex-
cluding payments associated with pharmacies, clinics, and physicians)
attributed to the hospital for the program year to prevent total interim
payments to a hospital for the program year from exceeding the state
payment cap for that program year.
(C) Infation adjustment. HHSC will trend each hospi-
tal's full-offset payment ceiling using the infation update factor. HHSC
will trend each hospital's state payment cap from the midpoint of the
data year to the midpoint of the program year.
(3) Calculation of the Recoupment Prevention Payment
Ceiling.
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(A) Total hospital cost. HHSC will calculate total cost
in accordance with Section 1923(g) of the Social Security Act. For
example, starting with the program period beginning October 1, 2022,
HHSC will sum the total cost from paragraph (1)(C)(iv) for the Med-
icaid primary payor type and the uninsured only.
(B) Total hospital payments. HHSC will reduce the to-
tal hospital cost under subparagraph (A) of this paragraph by total pay-
ments in accordance with Section 1923(g) of the Social Security Act.
For example, starting with the program period beginning October 1,
2022, HHSC will reduce the total hospital cost under subparagraph (A)
of this paragraph by the total payments from Medicaid and the unin-
sured, including graduate medical services and out-of-state payments.
HHSC shall reduce the total hospital cost by supplemental payments or
uncompensated-care waiver payments (excluding payments associated
with pharmacies, clinics, and physicians) attributed to the hospital for
the program year to prevent total interim payments to a hospital for the
program year from exceeding the state payment cap for that program
year.
(C) Infation adjustment. HHSC will trend each hospi-
tal's recoupment prevention payment ceiling using the infation update
factor. HHSC will trend each hospital's state payment cap from the
midpoint of the data year to the midpoint of the program year.
(D) A hospital that believes that it qualifes for an ex-
ception authorized by Section 1923(g) of the Social Security Act to the
calculation described in this paragraph may request that HHSC calcu-
late the recoupment prevention payment ceiling in accordance with the
exception authorized by federal law. HHSC will adhere to CMS' deter-
mination on eligibility for exception authorized by Section 1923(g) of
the Social Security Act whenever available. The hospital must submit
the request in accordance with subsection (f) of this section.
(4) State Payment Cap.
(A) For program periods beginning October 1, 2022,
HHSC will determine the lesser of between the two payment ceilings
described in paragraphs (2) and (3) of this subsection. The lesser of
the two payment ceilings will constitute the State Payment Cap for the
DSH program described in §355.8065 of this division and in the UC
program described in §355.8212 of this subchapter.
(B) For program periods beginning on or after October
1, 2019 and ending on or before September 30, 2022, the state payment
cap is described in paragraph (2) of this subsection.
(C) For program periods beginning on or after October
1, 2017 and ending on or before September 30, 2019, the state payment
cap uses the costs in paragraph (2)(A) of this subsection and the pay-
ments for inpatient and outpatient claims under Title XIX of the Social
Security Act, including graduate medical services and out-of-state pay-
ments, and payments on behalf of the uninsured.
(D) For program periods beginning on or after October
1, 2013 and ending on or before September 30, 2017, the state pay-
ment cap uses the costs in paragraph (2)(A) of this subsection and the
payments from all payor sources, including graduate medical services
and out-of-state payments, excluding third-party commercial insurance
payors for inpatient and outpatient claims.
(d) Hospital-Specifc Limit.
(1) HHSC will calculate the individual components of a
hospital's hospital-specifc limit using the calculation set out in sub-
section (c)(3) of this section, except that HHSC will:
(A) use information from the hospital's Medicaid cost
report(s) that cover the program year and from cost settlement pay-
ment or recoupment amounts attributable to the program year for the
calculations described in subsection (c)(1) of this section. If a hospital
has two or more Medicaid cost reports that cover the program year, the
data from each cost report will be pro-rated based on the number of
months from each cost report period that fall within the program year;
(B) include supplemental payments (including upper
payment limit payments) and uncompensated-care waiver payments
(excluding payments associated with pharmacies, clinics, and physi-
cians) attributable to the hospital for the program year when calculating
the total payments to be subtracted from total costs as described in
subsection (c)(3)(A) of this section;
(C) use the hospital's actual charges and payments for
services described in subsection (c)(1)(A) and (c)(1)(B) of this section
provided to Medicaid-eligible and uninsured patients during the pro-
gram year; and
(D) include charges and payments for claims submitted
after the 95-day fling deadline for Medicaid-allowable services pro-
vided during the program year unless such claims were submitted after
the Medicare fling deadline.
(2) For payments to a hospital under the DSH program, the
hospital-specifc limit will be calculated at the time of the independent
audit conducted under §355.8065(o) of this division.
(3) Federally authorized exceptions to the Hospital-spe-
cifc limit (HSL) calculation. A hospital that believes that it qualifes
for an exception authorized by Section 1923(g) of the Social Security
Act to the calculation described in paragraph (f)(3) of this section may
request that HHSC or its contractors calculate the HSL in accordance
with the exception authorized by federal law. HHSC will adhere to
CMS' determination on eligibility for exception authorized by Section
1923(g) of the Social Security Act whenever available. The following
conditions and procedures will apply to all such requests received by
HHSC or its contractors.
(A) The hospital must submit its request in writing to
HHSC within 90 days of the end of the federal fscal year, and the re-
quest must include any and all necessary data and justifcation neces-
sary for the determination of the eligibility of the hospital to receive
the exception.
(B) If HHSC approves the request, HHSC or its con-
tractors will calculate the HSL using the methodology authorized un-
der federal law.
(C) HHSC will notify the hospital of the results of the
HSL calculation in writing.
(e) Due date for DSH and UC Application.
(1) HHSC Provider Finance Department must receive a
hospital's completed application no later than 30 calendar days from
the date of HHSC's written request to the hospital for the completion
of the application, unless an extension is granted as described in
paragraph (2) of this subsection.
(2) HHSC Provider Finance Department will extend this
deadline provided that HHSC receives a written request for the exten-
sion by email no later than 30 calendar days from the date of the request
for the completion of the application.
(3) The extension gives the requester a total of 45 calendar
days from the date of the written request for completion of the appli-
cation.
(4) If a deadline described in paragraph (1) or (3) of this
subsection is a weekend day, national holiday, or state holiday, then
the deadline for submission of the completed application is the next
business day.
^almqba oribp gune NSI OMOP QU qexoeg POMV
(5) HHSC will not accept an application or request for an
extension that is not received by the stated deadline. A hospital whose
application or request for extension is not received by the stated dead-
line will be ineligible for DSH or uncompensated-care waiver pay-
ments for that program year.
(f) Verifcation and right to request a review of data. This sub-
section applies to calculations under this section beginning with calcu-
lations for program year 2014.
(1) Claim adjudication. Medicaid participating hospitals
are responsible for resolving disputes regarding adjudication of Medic-
aid claims directly with the appropriate Medicaid contractors as claims
are adjudicated. The review of data described under paragraph (2) of
this subsection is not the appropriate venue for resolving disputes re-
garding adjudication of claims.
(2) Request for review of data.
(A) HHSC will pre-populate certain felds in the DSH
and UC Application, including data from its Medicaid contractors.
(i) A hospital may request that HHSC review any
data in the hospital's DSH and UC Application that is pre-populated by
HHSC.
(ii) A hospital may not request that HHSC review
self-reported data included in the DSH and UC Application by the hos-
pital.
(B) A hospital must submit via email a written request
for review and all supporting documentation to HHSC Hospital Rate
Analysis within 30 days following the distribution of the pre-populated
DSH and UC Application to the hospital by HHSC. The request must
allege the specifc data omissions or errors that, if corrected, would
result in a more accurate HSL.
(3) HHSC's review.
(A) HHSC will review the data that is the subject of a
hospital's request. The review is:
(i) limited to the hospital's allegations that data is in-
complete or incorrect;
(ii) supported by documentation submitted by the
hospital or by the Medicaid contractor;
(iii) solely a data review; and
(iv) not an adversarial hearing.
(B) HHSC will notify the hospital of the results of the
review.
(i) If changes to the Medicaid data are made as a re-
sult of the review process, HHSC will use the corrected data for the
HSL calculations described in this section and for other purposes de-
scribed in §355.8065 and §355.8212 of this subchapter.
(ii) If no changes are made, HHSC will use the Med-
icaid data from the Medicaid contractors.
(C) HHSC will not consider requests for review submit-
ted after the deadline specifed in paragraph (2)(B) of this subsection.
(D) HHSC will not consider requests for review of the
following calculations that rely on the Medicaid data and other infor-
mation described in this subsection:
(i) the state payment cap or hospital-specifc limit
calculated as described in this section, unless it is related to exceptions
permitted by Section 1923(g) of the Social Security Act;
(ii) DSH program qualifcation or payment amounts
calculated as described in §355.8065 of this title; or
(iii) uncompensated-care payment amounts calcu-
lated as described in §355.8201 or §355.8212 of this subchapter.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on May 31, 2023.
TRD-202302015
Karen Ray
Chief Counsel
Texas Health and Human Services Commission
Effective date: June 20, 2023
Proposal publication date: April 14, 2023
For further information, please call: (737) 867-7813
♦ ♦ ♦
DIVISION 11. TEXAS HEALTHCARE TRANS-
FORMATION AND QUALITY IMPROVEMENT
PROGRAM REIMBURSEMENT
1 TAC §355.8212
STATUTORY AUTHORITY
The amendment is adopted under 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; and 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.
§355.8212. Waiver Payments to Hospitals for Uncompensated Char-
ity Care.
(a) Introduction. Texas Healthcare Transformation and Qual-
ity Improvement Program §1115(a) Medicaid demonstration waiver
payments are available under this section to help defray the uncom-
pensated cost of charity care provided by eligible hospitals on or after
October 1, 2019. Waiver payments to hospitals for uncompensated care
provided before October 1, 2019, are described in §355.8201 of this di-
vision (relating to Waiver Payments to Hospitals for Uncompensated
Care). Waiver payments to hospitals must be in compliance with the
Centers for Medicare & Medicaid Services approved waiver Program
Funding and Mechanics Protocol, HHSC waiver instructions, and this
section.
(b) Defnitions.
(1) Allocation amount--The amount of funds approved by
the Centers for Medicare & Medicaid Services for uncompensated-care
payments for the demonstration year that is allocated to each uncom-
pensated-care provider pool or individual hospital, as described in sub-
sections (f)(2) and (g)(6) of this section.
(2) Centers for Medicare & Medicaid Services (CMS)--
The federal agency within the United States Department of Health and
Human Services responsible for overseeing and directing Medicare and
Medicaid, or its successor.
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(3) Charity care--Healthcare services provided without
expectation of reimbursement to uninsured patients who meet the
provider's charity-care policy. The charity-care policy should adhere
to the charity-care principles of the Healthcare Financial Management
Association Principles and Practices Board Statement 15 (December
2012). Charity care includes full or partial discounts given to unin-
sured patients who meet the provider's fnancial assistance policy.
Charity care does not include bad debt, courtesy allowances, or
discounts given to patients who do not meet the provider's charity-care
policy or fnancial assistance policy.
(4) Data year--A 12-month period that is described in
§355.8066 of this subchapter (relating to State Payment Cap and
Hospital-Specifc Limit Methodology) and from which HHSC will
compile cost and payment data to determine uncompensated-care
payment amounts. This period corresponds to the Disproportionate
Share Hospital data year.
(5) Demonstration year--The 12-month period beginning
October 1 for which the payments calculated under this section are
made. This period corresponds to the Disproportionate Share Hos-
pital (DSH) program year. Demonstration year one corresponded to
the 2012 DSH program year, October 1, 2011, through September 30,
2012.
(6) Disproportionate Share Hospital (DSH)--A hospital
participating in the Texas Medicaid program as defned in §355.8065
of this subchapter (relating to Disproportionate Share Hospital Reim-
bursement Methodology).
(7) Governmental entity--A state agency or a political sub-
division of the state. A governmental entity includes a hospital author-
ity, hospital district, city, county, or state entity.
(8) HHSC--The Texas Health and Human Services Com-
mission, or its designee.
(9) Impecunious charge ratio--A ratio used to determine if
a hospital is eligible to receive payment from the HICH (High Impe-
cunious Charge Hospital) pool as described in subsection (f)(2)(C)(ii)
of this section.
(10) Institution for mental diseases (IMD)--A hospital that
is primarily engaged in providing psychiatric diagnosis, treatment, or
care of individuals with mental illness, defned in §1905(i) of the So-
cial Security Act. IMD hospitals are reimbursed as freestanding psy-
chiatric facilities under §355.8060 of this subchapter (relating to Re-
imbursement Methodology for Freestanding Psychiatric Facilities) and
§355.761 of this chapter (relating to Reimbursement Methodology for
Institutions for Mental Diseases (IMD)).
(11) Intergovernmental transfer (IGT)--A transfer of public
funds from a governmental entity to HHSC.
(12) Medicaid cost report--Hospital and Hospital Health
Care Complex Cost Report (Form CMS 2552), also known as the Medi-
care cost report.
(13) Mid-Level Professional--Medical practitioners which
include the following professions only:
(A) Certifed Registered Nurse Anesthetists;
(B) Nurse Practitioners;
(C) Physician Assistants;
(D) Dentists;
(E) Certifed Nurse Midwives;
(F) Clinical Social Workers;
(G) Clinical Psychologists; and
(H) Optometrists.
(14) Non-public hospital--A hospital that meets the defni-
tion of non-public provider as defned in §355.8200 of this subchapter
(relating to Retained Funds for the Uncompensated Care Program).
(15) Public funds--Funds derived from taxes, assessments,
levies, investments, and other public revenues within the sole and un-
restricted control of a governmental entity. Public funds do not include
gifts, grants, trusts, or donations, the use of which is conditioned on
supplying a beneft solely to the donor or grantor of the funds.
(16) Public Health Hospital (PHH)--The Texas Center for
Infectious Disease or any successor facility operated by the Department
of State Health Services.
(17) Rural hospital--A hospital enrolled as a Medicaid
provider that:
(A) is located in a county with 68,750 or fewer persons
according to most recent decennial census U.S. Census; or
(B) was designated by Medicare as a Critical Access
Hospital (CAH) or a Sole Community Hospital (SCH) before October
1, 2021; or
(C) is designated by Medicare as a CAH, SCH, or Rural
Referral Center (RRC); and is not located in a Metropolitan Statistical
Area (MSA), as defned by the U.S. Offce of Management and Budget;
or
(D) meets all of the following:
(i) has 100 or fewer beds;
(ii) is designated by Medicare as a CAH, SCH, or an
RRC; and
(iii) is located in an MSA.
(18) Service Delivery Area (SDA)--The counties included
in any HHSC-defned geographic area as applicable to each Managed
Care Organization (MCO).
(19) State institution for mental diseases (State IMD)--A
hospital that is primarily engaged in providing psychiatric diagnosis,
treatment, or care of individuals with mental illness defned in §1905(i)
of the Social Security Act and that is owned and operated by a state
university or other state agency. State IMD hospitals are reimbursed as
freestanding psychiatric facilities under §355.761 of this chapter (relat-
ing to Reimbursement Methodology for Institutions for Mental Disease
(IMD)).
(20) State-owned hospital--A hospital that is defned as a
state IMD, state-owned teaching hospital, or a Public Health Hospital
(PHH) in this section.
(21) State-owned teaching hospital--A hospital that is a
state-owned teaching hospital as defned in §355.8052 of this sub-
chapter (relating to Inpatient Hospital Reimbursement).
(22) State Payment Cap--The maximum payment amount,
as applied to payments that will be made for the program year, that a
hospital may receive in reimbursement for the cost of providing Med-
icaid-allowable services to individuals who are Medicaid-eligible or
uninsured. The state payment cap is calculated using the methodology
described in §355.8066 of this subchapter.
(23) Transferring public hospital--A hospital that is a trans-
ferring public hospital as defned in §355.8065 of this subchapter.
^almqba oribp gune NSI OMOP QU qexoeg PONN
(24) Uncompensated-care application--A form prescribed
by HHSC to identify uncompensated costs for Medicaid-enrolled
providers.
(25) Uncompensated-care payments--Payments intended
to defray the uncompensated costs of charity care as defned in this
subsection.
(26) Uninsured patient--An individual who has no health
insurance or other source of third-party coverage for the services pro-
vided. The term includes an individual enrolled in Medicaid who re-
ceived services that do not meet the defnition of medical assistance in
section 1905(a) of the Social Security Act (Medicaid services), if such
inclusion is specifed in the hospital's charity-care policy or fnancial
assistance policy and the patient meets the hospital's policy criteria.
(27) Waiver--The Texas Healthcare Transformation and
Quality Improvement Program Medicaid demonstration waiver under
§1115 of the Social Security Act.
(c) Eligibility. A hospital that meets the requirements de-
scribed in this subsection may receive payments under this section.
(1) Generally. To be eligible for any payment under this
section:
(A) A hospital must be enrolled as a Medicaid provider
in the State of Texas at the beginning of the demonstration year.
(B) A hospital must meet any criteria described by the
waiver as a condition of eligibility to receive an uncompensated-care
payment.
(C) Non-public hospitals must not return or reimburse
to a governmental entity any part of a payment under this section.
(D) Public Hospitals must be operated by a governmen-
tal entity, have that designation fled with HHSC and must not receive,
and have no agreement to receive, any portion of the payments made
to any non-public hospital.
(E) A non-public provider must have paid the Uncom-
pensated Care (UC) application fee upon submission of the application
in accordance with §355.8200 of this subchapter.
(F) Beginning in demonstration year thirteen, all non-
rural hospitals, except for state-owned hospitals, will be required to
enroll, participate in, and comply with requirements for all voluntary
supplemental Medicaid or directed Medicaid programs for which the
hospital is eligible, including all components of those programs, within
the State of Texas to participate in UC. This requirement does not apply
to a program or component, as applicable, if:
(i) a hospital's estimated payment:
(I) is less than $25,000 from the entire program
for a program without multiple components; or
(II) is less than $25,000 from a component for a
program with multiple components; and
(ii) enrollment for the program concluded after the
effective date of this requirement.
(2) Uncompensated-care payments. For a hospital to be el-
igible to receive uncompensated-care payments, in addition to the re-
quirements in paragraph (1) of this subsection, the hospital must sub-
mit to HHSC an uncompensated-care application for the demonstration
year, as is more fully described in subsection (g)(1) of this section, by
the deadline specifed by HHSC.
(3) Changes that may affect eligibility for uncompensated-
care payments.
(A) If a hospital closes, loses its license, loses its Medi-
care or Medicaid eligibility, or fles bankruptcy before receiving all
or a portion of the uncompensated-care payments for a demonstration
year, HHSC will determine the hospital's eligibility to receive payments
going forward on a case-by-case basis. In making the determination,
HHSC will consider multiple factors including whether the hospital
was in compliance with all requirements during the demonstration year
and whether it can satisfy the requirement to cooperate in the reconcil-
iation process as described in subsection (i) of this section.
(B) A hospital must notify HHSC Provider Finance De-
partment in writing within 30 days of the fling of bankruptcy or of
changes in ownership, operation, licensure, or Medicare or Medicaid
enrollment that may affect the hospital's continued eligibility for pay-
ments under this section.
(C) Merged Hospitals.
(i) HHSC will consider a merger of two or more hos-
pitals for purposes of determining eligibility and calculating a hospital's
demonstration year payments under this section if:
(I) a hospital that was a party to the merger sub-
mits to HHSC documents verifying the merger status with Medicare
prior to the deadline for submission of the UC application for that
demonstration year; and
(II) the hospital submitting the information un-
der subclause (I) assumed all Medicaid-related liabilities of each hos-
pital that is a party to the merger, as determined by HHSC after review
of the applicable agreements.
(ii) If the requirements of clause (i) are not met,
HHSC will not consider the merger for purposes of determining eli-
gibility or calculating a hospital's demonstration year payments under
this section. Until HHSC determines that the hospitals are eligible
for payments as a merged hospital, each of the merging hospitals will
continue to receive any UC payments to which they were entitled prior
to the merger.
(d) Source of funding. The non-federal share of funding for
payments under this section is limited to public funds from govern-
mental entities. Governmental entities that choose to support payments
under this section affrm that funds transferred to HHSC meet federal
requirements related to the non-federal share of such payments, includ-
ing §1903(w) of the Social Security Act. Prior to processing uncom-
pensated-care payments for the fnal payment period within a waiver
demonstration year for any uncompensated-care pool or sub-pool de-
scribed in subsection (f)(2) of this section, HHSC will survey the gov-
ernmental entities that provide public funds for the hospitals in that
pool or sub-pool to determine the amount of funding available to sup-
port payments from that pool or sub-pool.
(e) Payment frequency. HHSC will distribute waiver pay-
ments on a schedule to be determined by HHSC and posted on HHSC's
website.
(f) Funding limitations.
(1) Maximum aggregate amount of provider pool funds.
Payments made under this section are limited by the maximum aggre-
gate amount of funds allocated to the provider's uncompensated-care
pool for the demonstration year. If payments for uncompensated care
for an uncompensated-care pool attributable to a demonstration year
are expected to exceed the aggregate amount of funds allocated to that
pool by HHSC for that demonstration year, HHSC will reduce pay-
ments to providers in the pool as described in subsection (g)(6) of this
section.
(2) Uncompensated-care pools.
QU qexoeg PONO gune NSI OMOP qex~s oegister
(A) HHSC will designate different pools for demonstra-
tion years as follows:
(i) for demonstration years nine and ten, a
state-owned hospital pool, a non-state-owned hospital pool, a physi-
cian group practice pool, a governmental ambulance provider pool,
and a publicly owned dental provider pool;
(ii) for demonstration year eleven, a state-owned
hospital pool, a non-state-owned hospital pool, a state-owned physi-
cian group practice pool, a governmental ambulance provider pool,
and a publicly owned dental provider pool; and
(iii) for demonstration years twelve and beyond, a
state-owned hospital pool, a non-state-owned hospital pool, a high
impecunious charge hospital (HICH) pool, a state-owned physician
group practice pool, a non-state-owned physician group practice pool,
a governmental ambulance provider pool, and a publicly owned dental
provider pool.
(B) The state-owned hospital pool.
(i) The state-owned hospital pool funds uncompen-
sated-care payments to state-owned hospitals as defned in subsection
(b) of this section.
(ii) HHSC will determine the allocation for this pool
at an amount less than or equal to the total annual maximum uncom-
pensated-care payment amount for these hospitals as calculated in sub-
section (g)(2) of this section.
(C) The state-owned physician group practice pool.
(i) Beginning in demonstration year eleven, the
state-owned physician group practice pool funds uncompensated-care
payments to state-owned physician groups, as defned in §355.8214
of this division (relating to Waiver Payments to Physician Group
Practices for Uncompensated Charity Care).
(ii) HHSC will determine the allocation for this pool
at an amount less than or equal to the total maximum uncompensated-
care payment amount for these physicians.
(D) The High Impecunious Charge Hospital (HICH)
pool.
(i) Beginning in demonstration year twelve, the
HICH pool funds will be allocated amongst hospitals with a high
proportion of uncompensated care charges, rural, and state-owned
hospitals. While the funds are set aside before the non-state provider
pools, the payments will be calculated for each hospital after both the
state-owned hospital pool payments in subparagraph (B) of this para-
graph and non-state-owned hospital pool payments in subparagraph
(E) of this paragraph.
(ii) A hospital will be deemed as having a high pro-
portion of uncompensated care charges if its impecunious charge ratio
is equal to or greater than 27.5 percent, calculated as follows:
(I) The sum of the charges for DSH uninsured
charges and total uninsured charity charges, minus any duplicate unin-
sured charges is the numerator.
(II) The total allowable hospital revenue is the
denominator.
(iii) HHSC will determine the allocation for this
pool at an amount less than the difference in the amount of the total
allowable UC pool and the amount of the total allowable UC pool in
DY11 but equal to a percentage determined by HHSC annually based
on certain factors including charity-care costs, the ratio of reported
charity-care costs to hospitals' charity-care costs, and the overall
fnancial stability of hospitals of all ownership types and geographic
locations as determined by HHSC.
(E) Non-state-owned provider pools. HHSC will allo-
cate the remaining available uncompensated-care funds, if any, among
the non-state-owned provider pools as described in this subparagraph.
The remaining available uncompensated-care funds equal the amount
of funds approved by CMS for uncompensated-care payments for the
demonstration year less the sum of funds allocated to the pools un-
der subparagraphs (B) - (D) of this paragraph. HHSC will allocate the
funds among non-state-owned provider pools based on the following
amounts.
(i) For the physician group practice pool in demon-
stration years nine and ten, or the non-state-owned physician group
practice pool beginning in demonstration year eleven, the governmen-
tal ambulance provider pool, and the publicly owned dental provider
pool:
(I) for demonstration year nine, an amount to
equal the percentage of the applicable total uncompensated-care pool
amount paid to each group in demonstration year six; and
(II) for demonstration years ten and after, an
amount to equal a percentage determined by HHSC annually based
on factors including the amount of reported charity-care costs and
the ratio of reported charity-care costs to hospitals' charity-care costs.
For physicians, current year charity-care costs will be used, while for
dental and ambulance providers, prior year charity-care costs will be
used.
(ii) For the non-state-owned hospital pool, all of the
remaining funds after the allocations described in clause (i) of this
subparagraph. HHSC will further allocate the funds in the non-state-
owned hospital pool among all hospitals in the pool and create non-
state-owned hospital sub-pools as follows:
(I) calculate a revised maximum payment
amount for each non-state-owned hospital as described in subsection
(g)(6) of this section and allocate that amount to the hospital; and
(II) group all non-state-owned hospitals and
non-state-owned physician groups into sub-pools based on its geo-
graphic location within one of the state's Medicaid service delivery
areas (SDAs), as described in subsection (g)(7) of this section.
(3) Availability of funds. Payments made under this sec-
tion are limited by the availability of funds identifed in subsection (d)
of this section and timely received by HHSC. If suffcient funds are
not available for all payments for which the providers in each pool or
sub-pool are eligible, HHSC will reduce payments as described in sub-
section (h)(2) of this section.
(4) Redistribution. If for any reason funds allocated to a
provider pool or to individual providers within a sub-pool are not paid
to providers in that pool or sub-pool for the demonstration year, the
funds will be redistributed to other provider pools based on each pool's
pro-rata share of remaining uncompensated costs for the same demon-
stration year. The redistribution will occur when the reconciliation for
that demonstration year is performed.
(g) Uncompensated-care payment amount.
(1) Application.
(A) Cost and payment data reported by a hospital in the
uncompensated-care application is used to calculate the annual maxi-
mum uncompensated-care payment amount for the applicable demon-
stration year, as described in paragraph (2) of this subsection.
^almqba oribp gune NSI OMOP QU qexoeg PONP
(B) Unless otherwise instructed in the application, a
hospital must base the cost and payment data reported in the applica-
tion on its applicable as-fled CMS 2552 Cost Report(s) For Electronic
Filing Of Hospitals corresponding to the data year and must comply
with the application instructions or other guidance issued by HHSC.
(i) When the application requests data or informa-
tion outside of the as-fled cost report(s), a hospital must provide all
requested documentation to support the reported data or information.
(ii) For a new hospital, the cost and payment data pe-
riod may differ from the data year, resulting in the eligible uncompen-
sated costs based only on services provided after the hospital's Med-
icaid enrollment date. HHSC will determine the data period in such
situations.
(2) Calculation.
(A) A hospital's annual maximum uncompensated-care
payment amount is the sum of the components described in clauses (i)
- (iv) of this subparagraph.
(i) The hospital's inpatient and outpatient charity-
care costs pre-populated in or reported on the uncompensated-care ap-
plication, as described in paragraph (3) of this subsection, reduced by
interim DSH payments for the same program period, if any, that reim-
burse the hospital for the same costs. To identify DSH payments that
reimburse the hospital for the same costs, HHSC will:
(I) use self-reported information on the applica-
tion to identify charges that can be claimed by the hospital in both DSH
and Uncompensated Care (UC), convert the charges to cost, and reduce
the cost by any applicable payments described in paragraph (3) of this
subsection;
(II) calculate a DSH-only uninsured shortfall by
reducing the hospital's total uninsured costs, calculated as described in
§355.8066 of this subchapter, by the result from subclause (I) of this
clause; and
(III) reduce the interim DSH payment amount by
the sum of:
(-a-) the DSH-only uninsured shortfall calcu-
lated as described in subclause (II) of this clause; and
(-b-) the hospital's Medicaid shortfall, calcu-
lated as described in §355.8066 of this subchapter.
(ii) Other eligible costs for the data year, as de-
scribed in paragraph (4) of this subsection.
(iii) Cost and payment adjustments, if any, as de-
scribed in paragraph (5) of this subsection.
(iv) For each transferring public hospital, the
amount transferred to HHSC to that hospital and private hospitals to
support DSH payments for the same demonstration year.
(B) A hospital also participating in the DSH program
cannot receive total uncompensated-care payments under this section
(relating to inpatient and outpatient hospital services provided to unin-
sured charity-care individuals) and DSH payments that exceed the hos-
pital's total eligible uncompensated costs. For purposes of this re-
quirement, "total eligible uncompensated costs" means the hospital's
state payment cap for interim payments or DSH hospital-specifc limit
(HSL) in the UC reconciliation plus the unreimbursed costs of inpatient
and outpatient services provided to uninsured charity-care patients not
included in the state payment cap or HSL for the corresponding pro-
gram year.
(3) Hospital charity-care costs.
(A) For each hospital required by Medicare to submit
schedule S-10 of the Medicaid cost report, HHSC will pre-populate
the uncompensated-care application described in paragraph (1) of this
subsection with the uninsured charity-care charges and payments re-
ported by the hospital on schedule S-10 for the hospital's cost reporting
period ending in the calendar year two years before the demonstration
year. For example, for demonstration year 9, which coincides with the
federal fscal year 2020, HHSC will use data from the hospital's cost
reporting period ending in the calendar year 2018. Hospitals should
also report any additional payments associated with uninsured charity
charges that were not captured in worksheet S-10 in the application de-
scribed in paragraph (1) of this subsection.
(B) For each hospital not required by Medicare to sub-
mit schedule S-10 of the Medicaid cost report, the hospital must report
its hospital charity-care charges and payments in compliance with the
instructions on the uncompensated-care application described in para-
graph (1) of this subsection.
(i) The instructions for reporting eligible char-
ity-care costs in the application will be consistent with instructions
contained in schedule S-10.
(ii) An IMD may not report charity-care charges for
services provided during the data year to patients aged 21 through 64.
(4) Other eligible costs.
(A) In addition to inpatient and outpatient charity-care
costs, a hospital may also claim reimbursement under this section for
uncompensated charity care, as specifed in the uncompensated-care
application, that is related to the following services provided to unin-
sured patients who meet the hospital's charity-care policy:
(i) direct patient-care services of physicians and
mid-level professionals; and
(ii) certain pharmacy services.
(B) A payment under this section for the costs described
in subparagraph (A) of this paragraph are not considered inpatient or
outpatient Medicaid payments for the purpose of the DSH audit de-
scribed in §355.8065 of this subchapter.
(5) Adjustments. When submitting the uncompen-
sated-care application, a hospital may request that cost and payment
data from the data year be adjusted to refect increases or decreases in
costs resulting from changes in operations or circumstances.
(A) A hospital:
(i) may request that costs not refected on the as-fled
cost report, but which would be incurred for the demonstration year, be
included when calculating payment amounts; and
(ii) may request that costs refected on the as-fled
cost report, but which would not be incurred for the demonstration year,
be excluded when calculating payment amounts.
(B) Documentation supporting the request must accom-
pany the application, and provide suffcient information for HHSC to
verify the link between the changes to the hospital's operations or cir-
cumstances and the specifed numbers used to calculate the amount of
the adjustment.
(i) Such supporting documentation must include:
(I) a detailed description of the specifc changes
to the hospital's operations or circumstances;
(II) verifable information from the hospital's
general ledger, fnancial statements, patient accounting records or
QU qexoeg PONQ gune NSI OMOP qex~s oegister
other relevant sources that support the numbers used to calculate the
adjustment; and
(III) if applicable, a copy of any relevant con-
tracts, fnancial assistance policies, or other policies or procedures that
verify the change to the hospital's operations or circumstances.
(ii) HHSC will deny a request if it cannot verify that
costs not refected on the as-fled cost report will be incurred for the
demonstration year.
(C) Notwithstanding the availability of adjustments im-
pacting the cost and payment data described in this section, no adjust-
ments to the state payment cap will be considered for purposes of Med-
icaid DSH payment calculations described in §355.8065 of this sub-
chapter.
(6) Reduction to stay within uncompensated-care pool al-
location amounts. Prior to processing uncompensated-care payments
for any payment period within a waiver demonstration year for any un-
compensated-care pool described in subsection (f)(2) of this section,
HHSC will determine if such a payment would cause total uncompen-
sated-care payments for the demonstration year for the pool to exceed
the allocation amount for the pool and will reduce the maximum un-
compensated-care payment amounts providers in the pool are eligible
to receive for that period as required to remain within the pool alloca-
tion amount.
(A) Calculations in this paragraph will be applied to
each of the uncompensated-care pools separately.
(B) HHSC will calculate the following data points.
(i) For each provider, prior period payments equal
prior period uncompensated-care payments for the demonstration year,
including advance payments described in paragraph (9) of this subsec-
tion, and payments allocated in preceding UC pools. For example, the
HICH pool will consider UC payments allocated in the state-owned
hospital and non-state-owned hospital pools.
(ii) For each provider, a maximum uncompensated-
care payment for the payment period to equal the sum of:
(I) the portion of the annual maximum un-
compensated-care payment amount calculated for that provider (as
described in this section and the sections referenced in subsection
(f)(2) of this section) that is attributable to the payment period; and
(II) the difference, if any, between the portions of
the annual maximum uncompensated-care payment amounts attribut-
able to prior periods and the prior period payments calculated in clause
(i) of this subparagraph.
(iii) The cumulative maximum payment amount to
equal the sum of prior period payments from clause (i) of this subpara-
graph and the maximum uncompensated-care payment for the payment
period from clause (ii) of this subparagraph for all members of the pool
combined.
(iv) A pool-wide total maximum uncompen-
sated-care payment for the demonstration year to equal the sum of
all pool members' annual maximum uncompensated-care payment
amounts for the demonstration year from paragraph (2) of this subsec-
tion.
(v) A pool-wide ratio calculated as the pool allo-
cation amount from subsection (f)(2) of this section divided by the
pool-wide total maximum uncompensated-care payment amount for
the demonstration year from clause (iv) of this subparagraph.
(C) If the cumulative maximum payment amount for
the pool from subparagraph (B)(iii) of this paragraph is less than the
allocation amount for the pool, each provider in the pool is eligible
to receive its maximum uncompensated-care payment for the payment
period from subparagraph (B)(ii) of this paragraph without any reduc-
tion to remain within the pool allocation amount.
(D) If the cumulative maximum payment amount for
the pool from subparagraph (B)(iii) of this paragraph is more than the
allocation amount for the pool, HHSC will calculate a revised max-
imum uncompensated-care payment for the payment period for each
provider in the pool as follows.
(i) The physician group practice pool, the gov-
ernmental ambulance provider pool, and the publicly owned dental
provider pool. HHSC will calculate a capped payment amount equal to
the product of each provider's annual maximum uncompensated-care
payment amount for the demonstration year from paragraph (2) of this
subsection and the pool-wide ratio calculated in subparagraph (B)(v)
of this paragraph.
(ii) The non-state-owned hospital pool.
(I) For rural hospitals, HHSC will:
(-a-) sum the annual maximum uncompen-
sated-care payment amounts from paragraph (2) of this subsection for
all rural hospitals in the pool;
(-b-) in demonstration year:
(-1-) nine and ten, set aside for ru-
ral hospitals the amount calculated in item (-a-) of this subclause; or
(-2-) eleven and after, set aside for
rural hospitals the lesser of the amount calculated in item (-a-) of this
subclause or the amount set aside for rural hospitals in demonstration
year ten;
(-c-) calculate a ratio to equal the rural hospi-
tal set-aside amount from item (-b-) of this subclause divided by the
total annual maximum uncompensated-care payment amount for rural
hospitals from item (-a-) of this subclause; and
(-d-) calculate a capped payment amount
equal to the product of each rural hospital's annual maximum un-
compensated-care payment amount for the demonstration year from
paragraph (2) of this subsection and the ratio calculated in item (-c-)
of this subclause.
(II) For non-rural hospitals, HHSC will:
(-a-) sum the annual maximum uncompen-
sated-care payment amounts from paragraph (2) of this subsection for
all non-rural hospitals in the pool;
(-b-) calculate an amount to equal the differ-
ence between the pool allocation amount from subsection (f)(2) of this
section and the set-aside amount from subclause (I)(-b-) of this clause;
(-c-) calculate a ratio to equal the result from
item (-b-) of this subclause divided by the total annual maximum un-
compensated-care payment amount for non-rural hospitals from item
(-a-) of this subclause; and
(-d-) calculate a capped payment amount
equal to the product of each non-rural hospital's annual maximum
uncompensated-care payment amount for the demonstration year from
paragraph (2) of this subsection and the ratio calculated in item (-c-)
of this subclause.
(III) The revised maximum uncompensated-care
payment for the payment period equals the lesser of:
(-a-) the maximum uncompensated-care pay-
ment for the payment period from subparagraph (B)(ii) of this para-
graph; or
^almqba oribp gune NSI OMOP QU qexoeg PONR
(-b-) the difference between the capped pay-
ment amount from subclause (I) or (II) of this clause and the prior pe-
riod payments from subparagraph (B)(i) of this paragraph.
(IV) HHSC will allocate to each non-state-
owned hospital the revised maximum uncompensated-care payment
amount from subclause (III) of this clause.
(7) Non-state-owned hospital SDA sub-pools. After
HHSC completes the calculations described in paragraph (6) of this
subsection, HHSC will place each non-state-owned hospital into a
sub-pool based on the hospital's geographic location in a designated
Medicaid SDA for purposes of the calculations described in subsection
(h) of this section.
(8) Prohibition on duplication of costs. Eligible uncom-
pensated-care costs cannot be reported on multiple uncompensated-
care applications, including uncompensated-care applications for other
programs. Reporting on multiple uncompensated-care applications is
a duplication of costs.
(9) Advance payments.
(A) In a demonstration year in which uncompensated-
care payments will be delayed pending data submission or for other
reasons, HHSC may make advance payments to hospitals that meet the
eligibility requirements described in subsection (c)(2) of this section
and submitted an acceptable uncompensated-care application for the
preceding demonstration year from which HHSC calculated an annual
maximum uncompensated-care payment amount for that year.
(B) The amount of the advance payments will:
(i) in demonstration year nine, be based on unin-
sured charity-care costs reported by the hospital on schedule S-10 of
the CMS 2552-10 cost report used for purposes of sizing the UC pool,
or on documentation submitted for that purpose by each hospital not
required to submit schedule S-10 with its cost report; and
(ii) in demonstration years ten and after, be a per-
centage, to be determined by HHSC, of the annual maximum uncom-
pensated-care payment amount calculated by HHSC for the preceding
demonstration year.
(C) Advance payments are considered to be prior period
payments as described in paragraph (6)(B)(i) of this subsection.
(D) A hospital that did not submit an acceptable uncom-
pensated-care application for the preceding demonstration year is not
eligible for an advance payment.
(E) If a partial year uncompensated-care application
was used to determine the preceding demonstration year's payments,
data from that application may be annualized for use in the computa-
tion of an advance payment amount.
(h) Payment methodology.
(1) Notice. Prior to making any payment described in sub-
section (g) of this section, HHSC will give notice of the following in-
formation:
(A) the maximum payment amount for each hospital in
a pool or sub-pool for the payment period (based on whether the pay-
ment is made quarterly, semi-annually, or annually);
(B) the maximum IGT amount necessary for hospitals
in a pool or sub-pool to receive the amounts described in subparagraph
(A) of this paragraph; and
(C) the deadline for completing the IGT.
(2) Payment amount. The amount of the payment to hos-
pitals in each pool or sub-pool will be determined based on the amount
of funds transferred by governmental entities as follows.
(A) If the governmental entities transfer the maximum
amount referenced in paragraph (1) of this subsection, the hospitals in
the pool or sub-pool will receive the full payment amount calculated
for that payment period.
(B) If the governmental entities do not transfer the
maximum amount referenced in paragraph (1) of this subsection, each
hospital in the pool or sub-pool will receive a portion of its payment
amount for that period, based on the hospital's percentage of the total
payment amounts for all providers in the pool or sub-pool.
(3) Final payment opportunity. Within payments described
in this section, governmental entities that do not transfer the maxi-
mum IGT amount described in paragraph (1) of this subsection during
a demonstration year will be allowed to fund the remaining payments
to hospitals in the pool or sub-pool at the time of the fnal payment for
that demonstration year. The IGT will be applied in the following or-
der:
(A) to the fnal payments up to the maximum amount;
and
(B) to remaining balances for prior payment periods in
the demonstration year.
(i) Reconciliation. HHSC will reconcile actual costs incurred
by the hospital for the demonstration year with uncompensated-care
payments, if any, made to the hospital for the same period.
(1) If a hospital received payments in excess of its actual
costs, the overpaid amount will be recouped from the hospital, as de-
scribed in subsection (j) of this section.
(2) If a hospital received payments less than its actual costs,
and if HHSC has available waiver funding for the demonstration year in
which the costs were accrued, the hospital may receive reimbursement
for some or all of those actual documented unreimbursed costs.
(3) Each hospital that received an uncompensated-care
payment during a demonstration year must cooperate in the reconcili-
ation process by reporting its actual costs and payments for that period
on the form provided by HHSC for that purpose, even if the hospital
closed or withdrew from participation in the uncompensated-care
program. If a hospital fails to cooperate in the reconciliation process,
HHSC may recoup the full amount of uncompensated-care payments
to the hospital for the period at issue.
(j) Recoupment.
(1) In the event of an overpayment identifed by HHSC or
a disallowance by CMS of federal fnancial participation related to a
hospital's receipt or use of payments under this section, HHSC may
recoup an amount equivalent to the amount of the overpayment or dis-
allowance. The non-federal share of any funds recouped from the hos-
pital will be returned to the governmental entities in proportion to each
entity's initial contribution to funding the program for that hospital's
SDA in the applicable program year.
(2) Payments under this section may be subject to adjust-
ment for payments made in error, including, without limitation, adjust-
ments under §371.1711 of this title (relating to Recoupment of Over-
payments and Debts), 42 CFR Part 455, and Chapter 403 of the Texas
Government Code. HHSC may recoup an amount equivalent to any
such adjustment.
(3) HHSC may recoup from any current or future Medicaid
payments as follows.
QU qexoeg PONS gune NSI OMOP qex~s oegister
(A) HHSC will recoup from the hospital against which
any overpayment was made or disallowance was directed.
(B) If the hospital has not paid the full amount of the
recoupment or entered into a written agreement with HHSC to do so
within 30 days of the hospital's receipt of HHSC's written notice of
recoupment, HHSC may withhold any or all future Medicaid payments
from the hospital until HHSC has recovered an amount equal to the
amount overpaid or disallowed.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on May 31, 2023.
TRD-202302016
Karen Ray
Chief Counsel
Texas Health and Human Services Commission
Effective date: June 20, 2023
Proposal publication date: April 14, 2023
For further information, please call: (737) 867-7813
♦ ♦ ♦
TITLE 10. COMMUNITY DEVELOPMENT
PART 5. OFFICE OF THE GOVERNOR,
ECONOMIC DEVELOPMENT AND
TOURISM OFFICE
CHAPTER 200. TEXAS SMALL BUSINESS
CREDIT INITIATIVE
The Offce of the Governor, Economic Development and
Tourism Offce ("Offce") adopts new Subchapter A, §§200.1 -
200.20, concerning the Texas Small Business Credit Initiative
Capital Access Program, and new Subchapter B, §§200.101
- 200.117, concerning the Texas Small Business Credit Initia-
tive Loan Guarantee Program. New §§200.1, 200.3 - 200.7,
200.9 - 200.20, 200.101, 200.103 - 200.105, 200.107 - 200.117
are adopted without changes to the proposed text as pub-
lished in the March 10, 2023, issue of the Texas Register
(48 TexReg 1381) and will not be republished. New §§200.2,
200.8, 200.102, 200.106 are adopted with changes to the
proposed text as published in the March 10, 2023, issue of
the Texas Register (48 TexReg 1381) and will be republished.
The Offce has made changes to §§200.2, 200.8, 200.102,
200.106 from the proposed text to clarify the losses that are
eligible for reimbursement and that certain refnanced loans
are eligible for enrollment in the Texas Small Business Credit
Initiative ("TSCBI") Capital Access Program ("CAP") and Loan
Guarantee Program ("LGP"). The revisions do not materially
alter the issues addressed in the rules, address new subjects of
regulation, affect no new individuals, and impose no additional
requirements for compliance.
REASONED JUSTIFICATION
Subchapter A. Texas Small Business Credit Initiative Capital Ac-
cess Program
Adopted new §200.1 specifes the authority and purpose of the
TSBCI CAP.
Adopted new §200.2 establishes defnitions the Bank intends to
utilize in administering TSBCI CAP. After its initial publication,
the Offce updated §200.2(7) to clarify what losses are covered
by the TSBCI CAP program. The word "original" was added be-
fore "principal amount," and the defnition of "Loss" now reads:
"Any original principal amount due and not paid and not more
than the enrolled amount of the Qualifed Loan plus reasonable
out-of-pocket expenses. In the event only a portion of a Quali-
fed Loan was enrolled, the Offce limits reimbursement of out-
of-pocket expenses to the ratio of the enrolled portion to the total
loan amount."
Adopted new §200.3 establishes that a fnancial institution seek-
ing to participate in TSBCI CAP must apply through the TSBCI
portal, provide any additional information the Offce determines
is necessary to properly review the application, and sign a re-
quired participation agreement. The adopted rule also specifes
that the Offce has no obligation to allow a fnancial institution to
participate.
Adopted new §200.4 specifes that the Offce will develop an
agreement and underscore that a fnancial institution must agree
to the terms of that agreement to participate in the program.
Adopted new §200.5 establishes that a participating fnancial in-
stitution must establish a loan loss reserve account after it enters
the participation agreement with the Offce. The account must
have a competitive interest rate. The new rule also specifes that
the funds in the loan loss reserve account may be used to cover
loan charge offs. Thus, if a borrower defaults on a loan, the f-
nancial institution may withdraw funds from the reserve to cover
the principal it lost when it charged off the loan. Adopted new
§200.6 establishes that the loan loss reserve account does not
belong to the fnancial institution; rather, the account is property
of the State of Texas. The state will collect all interest earned
on the contributions to the account and periodically withdraw the
earned interest. Section 200.6 also specifes that the Offce may
withdraw contributions the Offce made to the account if the Of-
fce must unenroll a loan that was enrolled in error.
Adopted new §200.7 establishes the types of loans that qualify
to be enrolled in TSBCI CAP and sets minimum and maximum
loan amount thresholds.
Adopted new §200.8 specifes prohibited uses of funds from
loans enrolled in the program. After its initial publication, the Of-
fce updated §200.8(b) to delete former paragraph (5), renumber
the remaining provisions in the subsection, and add language
to clarify that only loans already enrolled in non TSBCI related
credit enhancement or credit insurance programs may not be
refnanced. These changes clarify that certain refnanced loans
or portions of refnanced loans may be enrolled in TSBCI CAP.
Adopted new §200.9 specifes the contributions that a borrower
and fnancial institution must make to the loan loss reserve and
establishes the circumstances in which a fnancial institution may
seek the maximum contribution allowed under TSCBI CAP.
Adopted new §200.10 establishes that, after a fnancial institu-
tion deposits the required contribution to the loan loss reserve,
the fnancial institution may request that the Offce enroll the loan
in TSBCI CAP. The adopted rule also lays out the loan-enroll-
ment process. The rule also establishes that the Offce must un-
enroll any loans it determines were in enrolled in error. Section
200.10 also establishes that no loan may be enrolled in TSBCI
CAP for more than one hundred twenty months.
^almqba oribp gune NSI OMOP QU qexoeg PONT
Adopted new §200.11 requires the Offce to deposit into the loan
loss reserve account an amount equal to the combined contribu-
tion from the borrower and the fnancial institution. For example,
if the borrower and fnancial institution each contribute premiums
equal to 3.5 percent of the loan principal a combined contribution
equal to seven percent of the loan principal unless an excep-
tion applies, the Offce will deposit an additional amount equal
to seven percent of the loan principal into the loan loss reserve.
New §200.11 also specifes the exceptions to the requirement
that the Offce match contributions dollar-for-dollar, such as if
the TSBCI Fund does not contain money greater than or equal
to the contribution.
Adopted new §200.12 details the process a fnancial institution
must follow to make a claim for reimbursement on a loan the in-
stitution charged off. The rule also specifes the steps a fnancial
institution must take before making a claim.
Adopted new §200.13 establishes how the Offce will review
claims and reimburse a fnancial institution when the institution
makes a valid claim. The rule also details the circumstances in
which the Offce may reject a claim. New §200.13 also specifes
that, if the loan loss reserve account does not have suffcient
funds to cover the requested reimbursement, then the Offce
will pay an amount up to the available balance of the loan loss
reserve account, less earned interest. Adopted new §200.14
requires fnancial institutions that recover on debts after the
institutions have been reimbursed for a loss to promptly repay
the loan loss reserve the amount recovered on the debt, up to
the amount of the reimbursement.
Adopted new §200.15 details some of the circumstances in
which the Offce may terminate the enrollment of loans in TSBCI
CAP, when the Offce may terminate the participation agreement
with a fnancial institution, and how a fnancial institution may
withdraw from TSBCI CAP.
Adopted new §200.16 notifes fnancial institutions that, if an in-
stitution has an annual claims rate that exceeds six percent and
the Offce determines the institution's practices do not meet TS-
BCI CAP standards or it is using the program to offset costs of
a high default rate, the Offce may disallow that institution from
enrolling future loans in the program. The new rule also details
how claims rates are determined.
Adopted new §200.17 establishes that the Offce may inspect a
fnancial institution's fles related to enrolled loans. New §200.18
specifes reporting requirements for program participants. New
§200.19 notes the Offce may recover actual and necessary ad-
ministrative expenses accrued in operating TSBCI CAP from the
TSBCI Fund.
Adopted new §200.20 details the circumstances in which a pro-
vision in Subchapter A may be waived.
Subchapter B. Texas Small Business Credit Initiative Loan Guar-
antee Program
Adopted new §200.101 specifes the authority and purpose of
the TSBCI LGP.
Adopted new §200.102 establishes defnitions the Bank intends
to utilize in administering TSBCI LGP. After its initial publication,
the Offce updated §200.2(7) to clarify what losses are covered
by the TSBCI LGP program. The word "original" was added be-
fore "principal amount," and the defnition of "Loss" now reads:
"Any original principal amount due and not paid and not in ex-
cess of the Guaranteed Amount of the Qualifed Loan."
Adopted new §200.103 establishes that a fnancial institution
seeking to participate in TSBCI LGP must apply through the TS-
BCI portal, provide any additional information the Offce deter-
mines is necessary to properly review the application, and sign
a required participation agreement. The adopted rule also speci-
fes that the Offce has no obligation to allow a fnancial institution
to participate.
Adopted new §200.104 specifes that the Offce will develop an
agreement and underscore that a fnancial institution must agree
to the terms of that agreement to participate in the program.
Adopted new §200.105 establishes the types of loans that qualify
to be enrolled in TSBCI LGP and sets minimum and maximum
loan amount thresholds.
Adopted new §200.106 specifes the purposes for which loan
proceeds may and may not be used. After its initial publication,
the Offce updated §200.106(b) to delete former paragraph (5),
renumber the remaining provisions in the subsection, and add
language to clarify that only loans already enrolled in non TSBCI
related credit enhancement or credit insurance programs may
not be refnanced. These changes clarify that certain refnanced
loans or portions of refnanced loans may be enrolled in TSBCI
LGP.
Adopted new §200.107 specifes the maximum guarantees
available under TSBCI LGP and establishes the circumstances
in which a fnancial institution may seek the maximum guar-
antee allowed under TSCBI LGP. Adopted new §200.107 also
establishes the process a fnancial institution must undertake to
enroll a loan in TSBCP LGP. The rule also establishes that the
Offce must unenroll any loans it determines were in enrolled
in error. Section 200.107 also establishes that no loan may be
enrolled in TSBCI LGP for more than one hundred eight months.
Adopted new §200.108 requires the Offce to encumber an
amount up to the guaranteed amount in the TSBCI fund, and
attribute that encumbrance to the enrolled loan. New §200.108
also specifes the exceptions to the requirement that the Offce
encumbers up to the guaranteed amount, such as if the TSBCI
Fund does not contain an available balance greater than or
equal to the encumbrance amount.
Adopted new §200.109 details the process a fnancial institution
must follow to make a claim for reimbursement on a loan the in-
stitution charged off. The rule also specifes the steps a fnancial
institution must take before making a claim.
Adopted new §200.110 establishes how the Offce will review
claims and remit funds to a fnancial institution when the institu-
tion makes a valid claim. The rule also details the circumstances
in which the Offce may reject a claim. New §200.110 also spec-
ifes that, if the TSBCI Fund does not have suffcient funds to
cover the requested amount, then the Offce will pay an amount
up to the available balance of the TSBCI Fund allocated to the
LGP. Adopted new §200.111 requires fnancial institutions that
recover on debts after the institutions have recovered on a loss
to promptly repay the Offce for the amount recovered on the
debt, up to the amount of the recovery.
Adopted new §200.112 details some of the circumstances in
which the Offce may terminate the enrollment of loans in TSBCI
LGP, when the Offce may terminate the participation agreement
with a fnancial institution, and how a fnancial institution may
withdraw from TSBCI LGP.
Adopted new §200.113 notifes fnancial institutions that, if an
institution has an annual claims rate that exceeds six percent
QU qexoeg PONU gune NSI OMOP qex~s oegister
and the Offce determines the institution's practices to not meet
TSBCI LGP standards or it is using the program to offset costs of
a high default rate, the Offce may disallow that institution from
enrolling future loans in the program. The new rule also details
how claims rates are determined.
Adopted new §200.114 establishes that the Offce may inspect
a fnancial institution's fles related to enrolled loans. New
§200.115 specifes reporting requirements for program partici-
pants. New §200.16 notes the Offce may recover actual and
necessary administrative expenses accrued in operating TSBCI
LGP from the TSBCI Fund.
Adopted new §200.17 details the circumstances in which a pro-
vision established in Subchapter B may be waived.
SUMMARY OF COMMENTS AND AGENCY RESPONSES
The public comment period for these rules began on March 10,
2023, and continued for at least 30 days, as required by Chapter
2001, Texas Government Code. The OOG received six com-
ments. The following provides summaries of the comments and
the OOG's responses.
Comment 1: The commenter expressed support for Texas's im-
plementation of the State Small Business Credit Initiative.
Response: The Offce appreciates the commenter's support.
Comment 2: The commenter expressed support for Texas's im-
plementation of the State Small Business Credit Initiative.
Response: The Offce appreciates the commenter's support.
Comment 3: The commenter expressed support for Texas's im-
plementation of the State Small Business Credit Initiative and
suggested the following: (1) Regarding 10 T.A.C. §200.113, the
commenter suggested increasing the threshold for when the Of-
fce may stop authorizing loan enrollments from 6 percent to 15
percent; (2) regarding 10 TAC §200.107, the commenter encour-
aged the Offce to not "re-underwrite" loans submitted for enroll-
ment; and (3) the commenter asked for loans to be enrolled in the
Loan Guarantee Program before the loan is funded so the lender
has assurance the loan will be supported. The commenter also
suggested that, should any fees be charged by the Programs,
they be less than those charged by other programs, such as the
federal SBA program.
Response: The Offce is grateful for the support for Texas's im-
plementation of the State Small Business Credit Initiative and for
the commenter's participation in the rulemaking process.
Regarding suggestion (1): Section VII.g of Treasury's SSBCI
guidance pertaining to Capital Access Programs requires the Of-
fce to review lenders whose annual claims rate exceeds 6 per-
cent. If lenders have an excessive claims rate, the Offce "may"
not "must" decline to enroll loans in the Capital Access Program
if the Offce determines the lender's practices do not meet pro-
gram standards or is using the program to offset costs of high
default rate lending. The Offce has also independently deter-
mined the 6 percent threshold is an appropriate measure for in-
crease oversight of a lender. For administrative alignment, the
appropriateness of the threshold, and the discretionary nature
of the requirement, the Offce set a similar standard for TSBCI
LGP. The Offce will review each lender independently and will
make determinations based on the facts before the Offce. Ac-
cordingly, the Offce declines to make such a change.
Regarding suggestion (2): The Offce agrees with the com-
menter. The Offce will perform due diligence and review to
ensure lenders are appropriately underwriting loans; not engag-
ing in fraud, waste, and abuse; and implement other controls
required by law and Treasury guidance, but the Offce will not
"re-underwrite" loans.
Regarding suggestion (3): In TSBCI LGP, the Offce requires
a participating fnancial institution to apply through the Program
Website on or before the 15th day after the loan documents were
executed, but there is no restriction on how early an application
can be submitted. This means that a lender may apply for the
LGP before the loan is funded if the application is submitted on
or before the 15th day after the loan documents are executed.
The Offce declines to make any changes in response to this
suggestion.
Comment 4: The commenter suggested three modifcations to
the rulemaking related to TSBCI LGP: (1) increase the max-
imum guarantee amount for SEDI-owned or very small busi-
nesses from 80% to 100%; (2) include an additional item in the
list of eligible uses of loan proceeds; and (3) increase the maxi-
mum guarantee for all borrowers from 50% to 80%.
Response: The Offce is grateful for the commenter's sugges-
tions and participation in the rulemaking process.
Regarding suggestion (1): The SSBCI controlling statutes and
guidance require that lenders have "a meaningful amount of their
own capital resources at risk." Providing a 100% maximum guar-
antee would mean a meaningful amount of lenders' capital would
not be at risk, and would violate SSBCI program law and pol-
icy. Accordingly, the Offce declines to make any changes in
response to this suggestion.
Regarding suggestion (2): The list provided in §200.106(a) is a
non-exhaustive list of "business purposes" and is only intended
to give examples of expenditures that fall in the category. Ac-
cordingly, the Offce declines to make any changes to the list,
as the list is not intended to specify all purposes for which TS-
BCI-related funds may be used.
Regarding suggestion (3): In addition to requiring that lenders
have a meaningful amount of capital at risk in their loans, SS-
BCI statutes and guidance encourage incentivizing lenders to
provide access to capital to SEDI-owned and very small busi-
nesses. Accordingly, to encourage participating fnancial institu-
tions to direct their efforts toward SEDI-owned businesses and
very small businesses, the Offce has provided a higher ceiling
for guarantees associated with those types of businesses. Ad-
ditionally, §200.107(g) provides a mechanism by which a lender
may be approved to obtain the maximum guaranteed amount of
80%, regardless of the SEDI status of borrowers. Accordingly,
the Offce declines to make changes in response to this sugges-
tion.
Comment 5: The commenter thanked the Offce for its efforts on
Texas's implementation of the SSBCI program and suggested
two changes to the proposed rules "to foster the inclusion of
[Community Development Financial Institutions (CDFIs)] and the
communities they serve, particularly nonproft CDFIs that serve
the communities who lack access to capital from traditional f-
nancial institutions." The commenter expressed concern that the
proposed rules may potentially omit CDFIs from participating in
TSBCI programs and that language relating to the Offce exercis-
ing its discretion in decision-making results in ambiguous guid-
ance.
The commenter's frst suggestion is for the defnition of "Partic-
ipating Financial Institution" or "PFI" to be updated to remove
^almqba oribp gune NSI OMOP QU qexoeg PONV
the phrase "bankable loans." The commenter states that some
nonproft CDFIs work to help unbankable communities become
bankable, and so the current language implies that such non-
profts may not participate in the programs.
The commenter's second suggestion is for the Offce to remove
uses in the proposed rules of the phrases "sole discretion," "due
care and diligent efforts," and "consistently and actively under-
taken activities." The commenter asserts these phrases are sub-
jective and may lead to inconsistent decision-making and create
an unpredictable and potentially unfair environment for program
recipients.
Regarding suggestion (1): The Offce will remove the word
"bankable" from the defnition of "Participating Financial Institu-
tions" to clarify that that nonproft CDFIs may participate in the
TSBCI programs.
Regarding suggestion (2): To best use SSBCI funds and ensure
proper program administration, the Offce must retain its ability to
act in its discretion. The Offce notes the purposes of the TSBCI
Programs are established in §§200.1 and 200.101 and will ex-
ercise its discretion only in accordance with these established
principles and purposes and will not act arbitrarily and capri-
ciously. Accordingly, the Offce declines to make any changes
in response to this suggestion.
Comment 6: The commenter expressed excitement about the
TSBCI programs but also expressed concern about its success
because she believes lenders will not be incentivized to partici-
pate. The commenter suggested changing the programs to allow
for the recovery of expenses the lender undertook to collect on
defaulted debts, as well as unpaid interest.
Response: The Offce is grateful for the commenter's input and
shares her excitement about Texas's implementation of the State
Small Business Credit Initiative. The Offce notes that, in ad-
dition to the original principal amount of the loan, "reasonable
out-of-pocket expenses" are reimbursable losses under both TS-
BCI CAP and TSBCI LGP. Accordingly, participating fnancial in-
stitutions will be able to recover reasonable expenses incurred
to collect on defaulted debts. Accordingly, the Offce declines to
make any changes with respect to the commenter's suggestions.
SUBCHAPTER A. TEXAS SMALL BUSINESS
CREDIT INITIATIVE CAPITAL ACCESS
PROGRAM
10 TAC §§200.1 - 200.20
STATUTORY AUTHORITY.
Section 481.021, Texas Government Code, authorizes the Offce
to adopt and enforce rules necessary to carry out the programs
established in Chapter 481, Texas Government Code, includ-
ing the TSBCI CAP, which the Offce established, and the Bank
will administer, pursuant to Section 481.403, Texas Government
Code.
CROSS REFERENCE TO STATUTE
Chapter 200, Subchapter A. No other statutes, articles, or codes
are affected by the adopted rules.
§200.2. Defnitions.
The following words and terms, when used in this Subchapter, shall
have the following meanings, unless the context clearly indicates oth-
erwise:
(1) Agreement--A contract between a Financial Institution
and the Offce that authorizes the Financial Institution to participate in
the Program and establishes, in accordance with §200.4 of this chapter
(relating to Agreement), the terms required for the Financial Institu-
tion's participation.
(2) Borrower--A Qualifed Business that has received a
Qualifed Loan from a Participating Financial Institution.
(3) Enrolled Loan--A Qualifed Loan enrolled in the Pro-
gram as described in §200.10 of this chapter (relating to Procedure for
Enrollment of a Qualifed Loan).
(4) Financial Institution--An insured depository institution,
insured credit union, or Community Development Financial Institution,
as each of those terms is defned in 12 U.S.C. § 4702.
(5) Fund--The Texas Small Business Credit Initiative Cap-
ital Access Fund.
(6) Loan Loss Reserve Account--An account established
at a fnancial institution in which premiums are deposited to serve as
insurance to reimburse a Participating Financial Institution for Losses
on Enrolled Loans.
(7) Loss--Any original principal amount due and not paid
and not more than the enrolled amount of the Qualifed Loan plus rea-
sonable out-of-pocket expenses. In the event only a portion of a Qual-
ifed Loan was enrolled, the Offce limits reimbursement of out-of-
pocket expenses to the ratio of the enrolled portion to the total loan
amount.
(8) Offce--The Economic Development and Tourism Of-
fce in the Offce of the Governor.
(9) Participating Financial Institution or PFI--A Financial
Institution authorized to conduct business in the State of Texas that has
adequate capacity, as determined by the Offce in its sole discretion, to
underwrite and monitor loans and has executed an Agreement with the
Offce to participate in the Program.
(10) Principal of a Borrower--A person, other than an in-
sured bank, that directly or indirectly, or acting through or in concert
with one or more persons, owns, controls, or has the power to vote more
than 10 percent of any class of voting securities of a member bank or
company. Shares owned or controlled by a member of an individual's
immediate family are considered to be held by the individual.
(11) Principal of a Lender--The principal of a lender is:
(A) If a sole proprietorship, the proprietor;
(B) If a partnership, each partner; and
(C) If a corporation, limited liability company, associ-
ation or a development company, each director, each of the fve most
highly compensated executives, offcers or employees of the entity, and
each direct or indirect holder of twenty percent or more of the owner-
ship stock or stock equivalent of the entity.
(12) Program--The Texas Small Business Credit Initiative
Capital Access Program.
(13) Program Website--The dynamic web portal developed
by the Offce and located at https://tsbci.gov.texas.gov.
(14) Qualifed Business--A Small Business authorized to
conduct business in the State of Texas that meets the eligibility require-
ments of §200.7 of this chapter (relating Qualifed Loan Eligibility and
Approval).
(15) Qualifed Loan--A loan or portion of a loan that is
made by a PFI to a Qualifed Business for a business purpose consistent
QU qexoeg POOM gune NSI OMOP qex~s oegister
with §200.8 of this chapter (relating to Eligible and Restricted Uses of
Texas Small Business Credit Initiative Capital Access Program Loan
Proceeds), and not contrary to state or federal law or policy.
(16) Small Business--A corporation, partnership, sole pro-
prietorship, or other legal entity that:
(A) is domiciled in this state or has at least 51 percent
of its employees located in this state;
(B) is formed to make a proft;
(C) is independently owned and operated; and
(D) employs fewer than 500 employees.
(17) Socially and Economically Disadvantaged Individu-
als or SEDI--Individuals whose ability to compete in the free enterprise
system has been impaired due to diminished capital and credit oppor-
tunities as compared to others in the same or similar line of business
who are not socially disadvantaged.
(18) Treasury--The United States Department of Treasury.
(19) Very Small Business--A Small Business that employs
fewer than 10 employees.
§200.8. Eligible and Restricted Uses of Texas Small Business Credit
Initiative Capital Access Program Loan Proceeds.
(a) Borrowers must use loan proceeds for a business purpose.
Business purposes include, but are not limited to:
(1) start-up costs;
(2) working capital;
(3) franchise fees; and
(4) acquisition of equipment, inventory, or services used in
the production, manufacturing, or delivery of a business's goods or ser-
vices, or in the purchase, construction, renovation, or tenant improve-
ments of an eligible place of business that is not for passive real estate
investment purposes.
(b) Loan proceeds shall not be used for:
(1) acquiring or holding passive investments in real estate;
(2) the purchase of owner-occupied residential housing;
(3) the construction, improvement, or purchase of residen-
tial housing that is owned or to be owned by the Borrower;
(4) the purchase of real property that is intended for resale
or not used for the business operations of the Borrower;
(5) the purchase of securities;
(6) lobbying activities;
(7) the purchase of good will;
(8) inside bank transactions;
(9) repayment of delinquent federal or state income taxes
unless the Borrower has a payment plan in place with the relevant tax-
ing authority;
(10) repayment of taxes held in trust or escrow;
(11) reimbursement of funds owed to any owner, including
any equity injection or injection of capital for the business' continuance;
(12) purchase of any portion of the ownership interest of
any owner of the Borrower, such as the acquisition of shares of a com-
pany or the partnership interest of a partner when the proceeds of the
Enrolled Loan will go to any existing owner or partner of the Borrower;
(13) refnance of any portion of a loan enrolled in another
credit enhancement or credit insurance program not encompassed by
10 T.A.C. Chapter 200;
(14) a loan in which any Principal of a Borrower has been
convicted of a sex offense against a minor as such terms are defned 34
U.S.C. 20911; or
(15) a loan that is contrary to federal or state law or policy.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on June 5, 2023.
TRD-202302060
Adriana Cruz
Executive Director
Offce of the Governor, Economic Development and Tourism Offce
Effective date: June 25, 2023
Proposal publication date: March 10, 2023
For further information, please call: (512) 463-2000
♦ ♦ ♦
SUBCHAPTER B. TEXAS SMALL BUSINESS
CREDIT INITIATIVE LOAN GUARANTEE
PROGRAM
10 TAC §§200.101 - 200.117
STATUTORY AUTHORITY.
Section 481.021, Texas Government Code, authorizes the Offce
to adopt and enforce rules necessary to carry out the programs
established in Chapter 481, Texas Government Code, includ-
ing the TSBCI LGP, which the Offce established, and the Bank
will administer, pursuant to Section 481.403, Texas Government
Code.
CROSS REFERENCE TO STATUTE
Chapter 200, Subchapter B. No other statutes, articles, or codes
are affected by the adopted rules.
§200.102. Defnitions.
The following words and terms, when used in this subchapter, shall
have the following meanings, unless the context clearly indicates oth-
erwise:
(1) Agreement--A contract between a Financial Institution
and the Offce that authorizes the Financial Institution to participate
in the Program and establishes, in accordance with §200.104 of this
chapter (relating to Agreement), the terms required for the Financial
Institution's participation.
(2) Borrower--A Qualifed Business that has received a
Qualifed Loan from a Participating Financial Institution.
(3) Enrolled Loan--A Qualifed Loan enrolled in the Pro-
gram as described in §200.107 of this chapter (relating to Loan Guar-
antee Maximums; Procedure for Enrollment of a Qualifed Loan).
(4) Financial Institution--An insured depository institution,
insured credit union, or Community Development Financial Institution,
as each of those terms is defned in 12 U.S.C. § 4702.
(5) Fund--The Texas Small Business Credit Initiative Loan
Guarantee Fund.
^almqba oribp gune NSI OMOP QU qexoeg POON
(6) Guaranteed Amount--The amount of principal of an
Enrolled Loan that is guaranteed by the Offce.
(7) Loss--Any original principal amount due and not paid
and not in excess of the Guaranteed Amount of the Qualifed Loan.
(8) Offce--The Economic Development and Tourism Of-
fce in the Offce of the Governor.
(9) Participating Financial Institution or PFI--A Financial
Institution authorized to conduct business in the State of Texas that has
adequate capacity, as determined by the Offce in its sole discretion, to
underwrite and monitor loans and has executed an Agreement with the
Offce to participate in the Program.
(10) Principal of a Borrower--A person, other than an in-
sured bank, that directly or indirectly, or acting through or in concert
with one or more persons, owns, controls, or has the power to vote more
than 10 percent of any class of voting securities of a member bank or
company. Shares owned or controlled by a member of an individual's
immediate family are considered to be held by the individual.
(11) Principal of a Lender--The principal of a lender is:
(A) If a sole proprietorship, the proprietor;
(B) If a partnership, each partner; and
(C) If a corporation, limited liability company, associ-
ation or a development company, each director, each of the fve most
highly compensated executives, offcers or employees of the entity, and
each direct or indirect holder of twenty percent or more of the owner-
ship stock or stock equivalent of the entity.
(12) Program--The Texas Small Business Credit Initiative
Loan Guarantee Program.
(13) Program Website--The dynamic web portal developed
by the Offce and located at https://tsbci.gov.texas.gov.
(14) Qualifed Business--Any Small Business authorized
to conduct business in the State of Texas that meets the eligibility re-
quirements of §200.105 of this chapter (relating to Qualifed Loan El-
igibility and Approval).
(15) Qualifed Loan--A loan or portion of a loan that is
made by a PFI to a Qualifed Business for a business purpose consis-
tent with §200.106 of this chapter (relating to Eligible and Restricted
Uses of Texas Small Business Credit Loan Guarantee Program Loan
Proceeds), and not contrary to state or federal law or policy.
(16) Small Business--A corporation, partnership, sole pro-
prietorship, or other legal entity that:
(A) is domiciled in this state or has at least 51 percent
of its employees located in this state;
(B) is formed to make a proft;
(C) is independently owned and operated; and
(D) employs fewer than 500 employees.
(17) Socially and Economically Disadvantaged Individu-
als or SEDI--Individuals whose ability to compete in the free enterprise
system has been impaired due to diminished capital and credit oppor-
tunities as compared to others in the same or similar line of business
who are not socially disadvantaged.
(18) Treasury--The United States Department of Treasury.
(19) Very Small Business--A Small Business that employs
fewer than 10 employees.
§200.106. Eligible and Restricted Uses of Texas Small Business
Credit Loan Guarantee Program Loan Proceeds.
(a) Borrowers must use loan proceeds for a business purpose.
Business purposes include, but are not limited to:
(1) start-up costs;
(2) working capital;
(3) franchise fees; and
(4) acquisition of equipment, inventory, or services used in
the production, manufacturing, or delivery of a business's goods or ser-
vices, or in the purchase, construction, renovation, or tenant improve-
ments of an eligible place of business that is not for passive real estate
investment purposes.
(b) Loan proceeds shall not be used for:
(1) acquiring or holding passive investments in real estate;
(2) the purchase of owner-occupied residential housing;
(3) the construction, improvement, or purchase of residen-
tial housing that is owned or to be owned by the Borrower;
(4) the purchase of real property that is intended for resale
or not used for the business operations of the Borrower;
(5) the purchase of securities;
(6) lobbying activities;
(7) the purchase of good will;
(8) inside bank transactions;
(9) repayment of delinquent federal or state income taxes
unless the Borrower has a payment plan in place with the relevant tax-
ing authority;
(10) repayment of taxes held in trust or escrow;
(11) reimbursement of funds owed to any owner, including
any equity injection or injection of capital for the business' continuance;
(12) purchase of any portion of the ownership interest of
any owner of the Borrower, such as the acquisition of shares of a com-
pany or the partnership interest of a partner when the proceeds of the
Enrolled Loan will go to any existing owner or partner of the Borrower;
(13) refnance of any portion of a loan enrolled in another
credit enhancement or credit insurance program not encompassed by
10 T.A.C. Chapter 200;
(14) a loan in which any Principal of a Borrower has been
convicted of a sex offense against a minor as such terms are defned 34
U.S.C. 20911; or
(15) a loan that is contrary to federal or state law or policy.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on June 5, 2023.
TRD-202302061
Adriana Cruz
Executive Director
Offce of the Governor, Economic Development and Tourism Offce
Effective date: June 25, 2023
Proposal publication date: March 10, 2023
For further information, please call: (512) 463-2000
QU qexoeg POOO gune NSI OMOP qex~s oegister
♦ ♦ ♦
TITLE 13. CULTURAL RESOURCES
PART 1. TEXAS STATE LIBRARY AND
ARCHIVES COMMISSION
CHAPTER 2. GENERAL POLICIES AND
PROCEDURES
SUBCHAPTER A. PRINCIPLES AND
PROCEDURES OF THE COMMISSION
13 TAC §§2.2, 2.70, 2.77
The Texas State Library and Archives Commission (commission)
adopts amendments to 13 Texas Administrative Code §2.2, Re-
sponsibilities of the Commission and the Director and Librarian
and §2.70, Vehicle Fleet Management, and new §2.77, Con-
tract Approval Authority and Responsibilities. The commission
adopts the amendments to §2.70 without changes to the pro-
posed text as published in the March 3, 2023, issue of the Texas
Register (48 TexReg 1197). This rule will not be republished.
The commission adopts amendments to §2.2 and new §2.77 with
changes to the proposed text as published in the March 3, 2023,
issue of the Texas Register (48 TexReg 1197) and these rules
will be republished.
The adopted amendment to §2.2 and adopted new §2.77 are
necessary to update and streamline the commission's contract
approval procedures. The amendment to §2.2(b)(3) removes
the $100,000 threshold for contract approvals and adds a refer-
ence to new §2.77. New §2.77 requires the commission to ap-
prove contracts or amendments with a value, defned to mean
the overall estimated dollar amount of the initial contract term
plus all optional renewals and extensions, expected to exceed
$1 million; amendments that result in the contract value exceed-
ing $1 million; certain contracts related to key agency programs
regardless of contract value; and any other contract deemed ap-
propriate for commission approval as determined by the director
and librarian in consultation with the commission chair. The rule
delegates approval of all other contracts to the director and li-
brarian and delegates authority to execute all contracts. Under
the adopted rule, the agency will present a contract plan to the
commission for information purposes each year with periodic up-
dates by the director and librarian.
The adopted amendments to §2.70 are necessary to update a
reference in the rule, remove unnecessary language, and im-
prove readability and clarity.
Changes to §2.2 and §2.77 as proposed correct grammar and
clarify the four instances when the commission will approve a
contract. Proposed language in §2.77 inadvertently combined
two of the subparagraphs. The adopted language separates the
two scenarios into two subparagraphs as originally intended.
The commission did not receive any comments on the proposed
amendments or new section.
STATUTORY AUTHORITY. The amendments and new rule are
adopted under Government Code, §441.002, which authorizes
the commission to assign duties to the director and librarian and
which requires the commission to develop and implement poli-
cies that clearly separate the policy-making responsibilities of the
commission and the management responsibilities of the director
and librarian and staff of the commission; Government Code,
§2261.254, which requires the commission to approve and sign
contracts over $1 million, but authorizes the commission to del-
egate this authority to director and librarian or assistant state
librarian; and Government Code, §2171.1045, which requires
the commission to adopt rules relating to assignment and use of
agency vehicles.
§2.2. Responsibilities of Commission and the Director and Librarian.
(a) General Powers and Responsibilities. The commission is
a seven member citizen board appointed by the governor with the ad-
vice and consent of the senate. The commission is an agency within
the executive branch, but functions independently within its statutory
authority to serve the long-term public interest.
(b) Powers and Responsibilities of the Commission. The com-
mission is responsible for establishing the policy framework through
which the Texas State Library carries out its statutory responsibilities.
The commission governs the library through the director and librarian.
The staff of the library receive direction from the commission through
the director and librarian. Specifcally, the commission:
(1) adopts administrative rules that guide the staff in ad-
ministering library programs;
(2) approves strategic and operating plans and requests for
appropriations;
(3) approves all contracts as specifed in §2.77 of this sub-
chapter (relating to Contract Approval Authority and Responsibilities);
(4) approves all competitive grants, and all other grants of
$100,000 or more, made by the library;
(5) acknowledges acceptance of gifts, grants, or donations
of $500 or more that are in accord with the mission and purposes of the
library;
(6) oversees operations of the library for integrity, effec-
tiveness, and effciency;
(7) acts as a fnal board of appeals for staff decisions or
advisory board recommendations on grants, accreditation of libraries,
certifcation of librarians, or other issues of concern to the public;
(8) selects the director and librarian and approves the se-
lection of the assistant state librarian; and
(9) conducts a periodic performance review of the director
and librarian.
(c) Powers and Responsibilities of the Director and Librarian.
The director and librarian is responsible for the effective and effcient
administration of the policies established by the commission. Specif-
cally, the director and librarian:
(1) selects, organizes, and directs the staff of the library;
(2) establishes the operating budget for the library and allo-
cates funds among strategies, programs, and projects within the limits
of statutory authority and as set forth in the General Appropriations
Acts of the legislature;
(3) approves expenditures of funds in accordance with law;
(4) represents the commission and reports on behalf of the
commission to the governor, the legislature, the public, or other orga-
nized groups as required;
(5) reports in a timely manner all relevant information frst
to the chairman and subsequently to all members of the commission,
endeavoring to report to members of the commission in such a manner
that the members are equally well informed on matters that concern the
commission; and
^almqba oribp gune NSI OMOP QU qexoeg POOP
(6) delegates his/her responsibilities to the assistant state
librarian or other agency staff as appropriate.
§2.77. Contract Approval Authority and Responsibilities.
(a) Purpose. The purpose of this rule is to establish the ap-
proval authority and responsibilities for executing contracts required
by the agency.
(b) Applicability. This rule applies to all contracts entered into
by the agency.
(c) Defnitions. As used in this section, the following terms
shall have the following meanings, unless the context clearly indicates
otherwise.
(1) Agency--means Texas State Library and Archives
Commission as an agency of the state of Texas, including the staff,
collections, archives, operations, programs, and property of the Texas
State Library and Archives Commission.
(2) Commission--means the seven-member governing
body of the Texas State Library and Archives Commission.
(3) Contract--means a written agreement between the
agency and a contractor for goods or services. As used in this section,
"contract" includes the following: interagency contracts with other
government entities; interlocal agreements with other government
entities; and other documents in which funds or services allocated to
the agency are exchanged for the delivery of other goods or services.
(4) Value--means the estimated dollar amount the agency
may be obligated to pay pursuant to the contract and all executed and
proposed amendments, extensions, and renewals of the contract. The
agency shall base its determination of the proposed length of and com-
pensation during the original term and renewal periods of the contract
on best business practices, state fscal standards, and applicable law,
procedures, and regulations. The agency's determination of contract
value refects the defnition set forth in the State of Texas Contract
Management Guide as developed by the comptroller under Govern-
ment Code, §2262.051.
(d) Approval Authority.
(1) Commission Approval. The director and librarian or
designee shall present certain contracts to the commission for approval.
The commission shall consider for approval:
(A) any contract or amendment with a value expected
to exceed $1 million;
(B) any amendment to a contract that results in the con-
tract value exceeding $1 million;
(C) any contract or amendment to a contract that re-
lates to the TexShare Library Consortium regardless of overall contract
value; and
(D) any other contract deemed appropriate for commis-
sion approval as determined by the director and librarian in consultation
with the chair of the commission.
(2) Agency Approval.
(A) The commission delegates authority to the director
and librarian or designee to approve all contracts not listed in paragraph
(1) of this subsection;
(B) The commission delegates authority to the director
and librarian or designee to approve contracts with an overall contract
value that exceeds $1 million as approved by commission order; and
(C) The commission delegates authority to the director
and librarian to approve a purchase request or contract listed in para-
graph (1) of this subsection for an emergency as defned in 34 TAC
§20.25 (relating to Defnitions), or to avoid undue material additional
cost to the state. The director and librarian shall report any purchase
requests or contracts executed by the director and librarian under this
authority to the commission chair prior to execution of any such pur-
chase requests or contracts.
(e) Authority to Execute Contracts. The commission delegates
authority to the director and librarian to execute all contracts for the
agency. This authority may be delegated by the director and librarian
to the assistant state librarian or other designee.
(f) Contract Planning. The agency will present to the commis-
sion for information a contract plan for the next fscal year that outlines
the agency's anticipated contracting actions that exceed $500,000. The
director and librarian or designee will present updates to the contract
plan to the commission for information periodically throughout the fs-
cal year.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on June 5, 2023.
TRD-202302063
Sarah Swanson
General Counsel
Texas State Library and Archives Commission
Effective date: June 25, 2023
Proposal publication date: March 3, 2023
For further information, please call: (512) 463-5460
♦ ♦ ♦
SUBCHAPTER C. GRANT POLICIES
DIVISION 1. GENERAL GRANT GUIDELINES
13 TAC §2.112, §2.116
The Texas State Library and Archives Commission (commission)
adopts amendments to 13 Texas Administrative Code §2.112,
Eligible and Ineligible Expenses, and §2.116, Uniform Grants
Management Standards (UGMS). The commission adopts the
amendments without changes to the proposed text as published
in the March 3, 2023, issue of the Texas Register (48 TexReg
1199). The rules will not be republished.
The adopted amendments are necessary to bring the commis-
sion's rules up to date with current standards. The amendments
to §2.116 update a reference in both the rule text and title and
delete a reference to repealed rules. The amendments to §2.112
update the reference to §2.116 as amended.
The commission did not receive any comments on the proposed
amendments.
STATUTORY AUTHORITY. The amendments are adopted un-
der Government Code, §441.009, which authorizes the com-
mission to adopt a state plan for improving library services con-
sistent with federal goals, and, more generally, §441.006(b)(3),
which authorizes the commission to accept, receive, and admin-
ister federal funds made available by grant or loan to improve
the public libraries of this state.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
QU qexoeg POOQ gune NSI OMOP qex~s oegister
Filed with the Offce of the Secretary of State on June 5, 2023.
TRD-202302064
Sarah Swanson
General Counsel
Texas State Library and Archives Commission
Effective date: June 25, 2023
Proposal publication date: March 3, 2023
For further information, please call: (512) 463-5460
♦ ♦ ♦
TITLE 19. EDUCATION
PART 2. TEXAS EDUCATION AGENCY
CHAPTER 102. EDUCATIONAL PROGRAMS
SUBCHAPTER JJ. COMMISSIONER'S RULES
CONCERNING INNOVATION DISTRICT
19 TAC §102.1303, §102.1313
The Texas Education Agency adopts amendments to §102.1303
and §102.1313, concerning innovation districts. The amend-
ments are adopted without changes to the proposed text as pub-
lished in the March 31, 2023 issue of the Texas Register (48
TexReg 1697) and will not be republished. The adopted amend-
ments modify the requirements for renewal of a local innovation
plan.
REASONED JUSTIFICATION: Chapter 102, Subchapter JJ, es-
tablishes provisions relating to the applicable processes and pro-
cedures for innovation districts.
The adopted amendment to §102.1303(a) clarifes that it is the
district's fnal and most recent academic performance rating that
must be at least acceptable performance in order to be eligible
for designation as an innovation district.
The adopted amendment to §102.1313(a)(3) specifes that the
district is not required to notify the commissioner of education of
the board's intention to vote on the adoption of the renewal of a
local innovation plan.
Adopted new §102.1313(a)(3)(A) requires the district to meet el-
igibility requirements under §102.1303 in order to be eligible to
renew a local innovation plan. Adopted new §102.1313(a)(3)(B)
allows a district that chooses to renew its local innovation plan to
do so in the six months subsequent to the plan's expiration date
to maintain a continuous designation as a district of innovation.
Adopted new §102.1313(a)(3)(B)(i) clarifes that the term of a
renewed plan may not begin prior to the date on which it is
adopted by the board of trustees unless the plan is adopted
as renewed within the six months following its expiration date.
Adopted new §102.1313(a)(3)(B)(ii) clarifes that the term of a
plan renewed during the six months subsequent to the plan's ex-
piration date begins on the date of expiration of the prior term and
may not exceed fve years. Adopted new §102.1313(a)(3)(B)(iii)
clarifes that any changes made to the plan during the renewal
process are not effective prior to the date of adoption of the re-
newed plan, and adopted new §102.1313(a)(3)(B)(iv) requires
the district to indicate the date of adoption next to any changes
made to the plan during the renewal process in order to denote
the earliest date the changes may take effect. Adopted new
§102.1313(a)(3)(B)(v) clarifes that a district whose plan is not re-
newed during the six months subsequent to the plan's expiration
date shall comply with all previously adopted exemptions upon
the plan's expiration date and begin the initial adoption process
over again in its entirety should the district wish to pursue desig-
nation as an innovation district in the future.
SUMMARY OF COMMENTS AND AGENCY RESPONSES: The
public comment period on the proposal began March 31, 2023,
and ended May 1, 2023. Following is a summary of the public
comment received and the agency response.
Comment: The Texas Classroom Teachers Association (TCTA)
commented that it behooves the public to be able to know which
districts choose to exempt themselves from sections of the Texas
Education Code (TEC) per a locally adopted district of innovation
(DOI) plan and asserted that the main mechanisms to do so are
by the requirement in TEC, §12A.005, that a district notify the
commissioner of the board's intention to vote on the adoption of a
proposed plan as well as the requirement in TEC, §12A.0071(b)
that a district provide a copy of the current local innovation plan
to the agency not later than the 15th day after the date on which
the board of trustees takes action to adopt, amend, or renew a
plan. TCTA further commented that it objects to the proposed
changes to §102.1313(a)(3) in which a board's intention to vote
on renewal of a local innovation plan is not required because
TCTA believes that the agency will not be able to effectively carry
out its statutory duty to ensure that the district sends the adopted
renewed plan to the agency for posting on the agency's internet
website within 15 days of adopting the renewed plan.
Response: The agency agrees that the public has a vested in-
terest in the actions of their school district and school board. The
agency disagrees with the assertion that the main mechanism by
which the public is made aware of local actions related to DOI is
via a district's notice of its intent to renew a locally adopted plan
or the timeline to which the district must adhere when notifying
the agency of a DOI plan adoption, amendment, or renewal. The
DOI designation is accomplished via a locally adopted plan that
receives approval by the TEC, Chapter 11, district-level commit-
tee and adoption by a district's elected board of trustees at a
public meeting. The plan is also posted for the duration of the
designation on the district's website. It is the agency's assertion
that it is through the local actions of these bodies and the local
web posting by which the public is primarily made aware from
which sections of the TEC a district is claiming exemption. As
plans are locally adopted, the onus to fulfll the timeline require-
ment under TEC, §12A.0071(b), lies with the district rather than
agency, which does not have the authority to approve or reject
plans. Whether or not a district adheres to this requirement does
not impede the agency's statutory obligation to post current local
innovation plans on its website, which is not required within 15
days but rather "promptly" after which the district's notifcation is
received.
STATUTORY AUTHORITY. The amendments are adopted
under Texas Education Code, §12A.009, which authorizes the
commissioner of education to adopt rules to implement districts
of innovation.
CROSS REFERENCE TO STATUTE. The amendments imple-
ment Texas Education Code, §12A.009.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on May 31, 2023.
TRD-202301991
^almqba oribp gune NSI OMOP QU qexoeg POOR
Cristina De La Fuente-Valadez
Director, Rulemaking
Texas Education Agency
Effective date: June 20, 2023
Proposal publication date: March 31, 2023
For further information, please call: (512) 475-1497
♦ ♦ ♦
TITLE 25. HEALTH SERVICES
PART 1. DEPARTMENT OF STATE
HEALTH SERVICES
CHAPTER 133. HOSPITAL LICENSING
SUBCHAPTER J. HOSPITAL LEVEL OF CARE
DESIGNATIONS FOR NEONATAL CARE
25 TAC §§133.181 - 133.191
The Executive Commissioner of the Texas Health and Human
Services Commission (HHSC), on behalf of the Department
of State Health Services (DSHS), adopts amendments to
§133.181, concerning Purpose; §133.182, concerning Defni-
tions; §133.183, concerning General Requirements; §133.184,
concerning the Designation Process; §133.185, concerning
Program Requirements; §133.186, concerning Neonatal Des-
ignation Level I; §133.187, concerning Neonatal Designation
Level II; §133.188, concerning Neonatal Designation Level III;
§133.189, concerning Neonatal Designation Level IV; §133.190,
concerning the Survey Team; and new §133.191, concerning
the Perinatal Care Regions (PCRs). The amendments to
§§133.182 - 133.190 are adopted with changes to the proposed
text as published in the January 13, 2023, issue of the Texas
Register (48 TexReg 83) and the sections will be republished.
The amendment to §133.181 and new §133.191 are adopted
without changes and will not be republished.
BACKGROUND AND JUSTIFICATION
The adoption updates the content and processes with the ad-
vances and practices since these rules were adopted in 2016.
Senate Bill (S.B.) 749, 86th Legislature, Regular Session, 2019,
amended the Texas Health and Safety Code, Chapter 241. S.B.
749 requires language specifc to waiver agreements, a three-
person appeal panel for designation reviews, and language spe-
cifc to telemedicine and telehealth be integrated into the neona-
tal rules.
In addition, the Perinatal Advisory Council (PAC) provided DSHS
with rule language recommendations designed to clarify spe-
cifc subsections of the rules. The recommendations include the
use of prearranged consultative agreements using telemedicine
technology, and consideration of a waiver agreement for facili-
ties that cannot meet a specifc designation requirement. The
recommendations further defne the process for the three-per-
son appeal panel, clarify that pediatric echocardiography with
pediatric cardiology interpretation and consultation to be com-
pleted in a time period consistent with standards of professional
practice, and include national accredited organizations providing
resuscitation courses.
The PAC formed a workgroup to collaborate with DSHS staff to
review the public comments received and determine the most
appropriate language to ensure the health and safety of neonatal
patients and prevent any undue burden on the facilities providing
neonatal care.
COMMENTS
During the 31-day comment period, DSHS received comments
from 35 commenters, including the American Academy of Pedi-
atrics (AAP); Baylor Scott & White Health (BSWH); Children's
Hospital Association of Texas (CHAT); Children's Hospital of
San Antonio (CHoSA); CHRISTUS Health; CHRISTUS South-
east Texas Health System; CHRISTUS St. Michael Health
System; East Texas Gulf Coast Regional Advisory Council; Har-
ris Health System; HCA Houston Healthcare Southeast; Medical
City Healthcare; Methodist Children's Hospital; Methodist Hos-
pital Stone Oak; Metropolitan Methodist Hospital; Parkland
Health; Teaching Hospitals of Texas (THOT); Tenet Healthcare;
Texas Association of Nurse Anesthetists (TxANA); Texas EMS,
Trauma and Acute Care Foundation (TETAF)/Texas Perinatal
Services; Texas Health Presbyterian Hospital Dallas; Texas
Hospital Association (THA); Texas Medical Association (TMA)
representing three additional physician organizations; and 13
individuals. A summary of comments relating to the rules and
DSHS's responses follows.
Comment: One commenter requested DSHS allow stakeholders
to review and submit comments on the DSHS survey guidelines
that are not in the proposed neonatal rules.
Response: DSHS acknowledges the comment. DSHS is coordi-
nating multiple training updates and opportunities to review the
guidelines before the January 1, 2024, implementation date.
Comment: One commenter appreciated the PAC ad hoc work-
group serving as a resource to review the comments on the
neonatal proposed rules and provide recommendations to DSHS
for revisions.
Response: DSHS appreciates the comment, and no change is
necessary to the rules.
Comment: One commenter requested clarifcation in the rules
regarding the terms medical staff, personnel, and advanced
practice providers.
Response: DSHS acknowledges the comment and declines to
revise the rules. The standard dictionary and medical dictionary
defnitions are suffcient.
Comment: One commenter requested that DSHS include rule
language to address adequate nurse staffng.
Response: DSHS disagrees and declines to revise the language
without national standards to defne required staff.
Comment: §133.182(4) and (6): Three commenters requested
the defnitions for "CAP" and "contingent probationary designa-
tion" to include DSHS operations expectations.
Response: DSHS acknowledges the comments and declines to
revise the rule language in response to these comments. The
defnition for "contingent probationary designation" was removed
from the rules. DSHS operations for the CAP--Corrective Action
Plan are implemented by DSHS policy.
Comment: §133.182(5) and (6): Nine commenters rec-
ommended the defnitions for "contingent designation" and
"contingent probationary designation" be removed from the rule
language to be consistent with the maternal rules or for DSHS
to provide further clarifcation.
QU qexoeg POOS gune NSI OMOP qex~s oegister
Response: DSHS agrees to remove both defnitions, therefore
clarifcation is not needed. The remaining paragraphs are
renumbered in §133.182 due to the removal of these defnitions.
Comment: §133.182(9): One commenter suggested adding
"outside of a medical facility" for clarity to the "Emergency
Medical Services (EMS)" defnition.
Response: DSHS acknowledges the comment and declines to
revise the rule language. The language is consistent with the
EMS defnition in §157.2 of this title, relating to Emergency Med-
ical Care.
Comment: §133.182(13): Two commenters recommended re-
moving "or near" from the defnition of "immediately."
Response: DSHS agrees and modifes the language in renum-
bered §133.182(11).
Comment: §133.182(13): One commenter requested clarifca-
tion of a time frame for "Immediately."
Response: DSHS acknowledges the comment and fnds the rule
language is suffcient. DSHS declines to revise the rule lan-
guage.
Comment: §133.182(13) and (19): One commenter supports the
new defnitions for "immediately" and "Neonatal Program Over-
sight."
Response: DSHS appreciates the comment, and no change is
necessary to the rules.
Comment: §133.182(19): Three commenters recommended
further clarifcation of the defnition "Neonatal Program Over-
sight."
Response: DSHS acknowledges the comments and declines to
revise the rule. Language is consistent with the defnition of the
Maternal Program Oversight in §133.202(19) of this title, relating
to Hospital Level of Care Designations for Maternal Care.
Comment: §133.183(c): One commenter requested the cur-
rent language regarding free-standing children's hospitals be
retained.
Response: DSHS agrees and replaces the stand-alone chil-
dren's facility language allowing exemptions from obstetrical re-
quirements.
Comment: §133.183(f)(3)(C): One commenter suggested re-
moving "specifc to the patient population served" from the
continuing education language.
Response: DSHS acknowledges the comment and declines to
revise the rule language. The language allows facilities to iden-
tify their specifc neonatal populations and ensure education ap-
propriate for patient conditions and care are provided.
Comment: §133.183(f)(3)(D) and §133.183(f)(4)(D): One com-
menter recommended adding language, to facilitate neonatal
transports, in the Level II requirements.
Response: DSHS acknowledges the comment and declines to
revise the rule language. The additional role of facilitating trans-
ports will remain with the higher-level facilities.
Comment: §§133.183(f)(3)(E), 133.183(f)(4)(E), 133.188(a)(5),
and 133.189(a)(5): Two commenters stated the proposed lan-
guage limits outreach education to only fndings in the Quality
Assessment and Performance Improvement (QAPI) Plan and
process.
Response: DSHS agrees and revises the language to provide
additional opportunities for outreach education.
Comment: §§133.183(f)(3)(E), 133.183(f)(4)(E), 133.188(a)(5),
and 133.189(a)(5): Two commenters requested to include same
and higher-level designated facilities to be included in rule lan-
guage.
Response: DSHS acknowledges the comments and declines to
revise the language in response to these comments. The re-
quirement does not exclude facilities from providing outreach ed-
ucation to same or higher-level care facilities.
Comment: §§133.183(f)(3)(E), 133.183(f)(4)(E), 133.188(a)(5),
and 133.189(a)(5): One commenter stated that providing out-
reach to non-designated facilities and lay birthing centers is a
liability for the facilities.
Response: DSHS acknowledges the comment and declines to
revise the rules in response to this comment because the facility
provides education that is appropriate and applicable.
Comment: §§133.183(f)(1)(B), 133.183(f)(2)(C),
133.183(f)(3)(C), and 133.183(f)(4)(C): Two commenters
suggested removing "annual" from the continuing education
requirements.
Response: DSHS acknowledges the comment and declines
to change the rule language. The language is consistent with
§133.203 of this title.
Comment: §133.183(f)(3)(B) and §133.188(a)(2): Two com-
menters stated concerns regarding the availability and response
times for pediatric subspecialists.
Response: DSHS acknowledges the comments and declines to
revise the rules. The language requires access to consultation
only and does not require a response time for the pediatric sub-
specialists.
Comment: §133.183(f)(4)(B) and §133.189(a)(2): Seven com-
menters stated concerns regarding the availability and response
times for pediatric subspecialists.
Response: DSHS acknowledges the comments and declines
to revise the rules. The language requires subspecialists to be
available to arrive on-site at a facility which provides care for the
most critical and complex neonatal patients. The language does
not include response times for the pediatric subspecialist.
Comment: §133.183(g): Two commenters inquired about who
determines if a facility may schedule a virtual or on-site survey.
Response: DSHS acknowledges the comments, and no change
is necessary. DSHS Designation Virtual Survey Guidelines are
available on the website to guide facilities in determining the
method of survey.
Comment: §133.183(g)(4) and (h): Two commenters recom-
mended modifying the language that facilities must not accept
surveyors with any "known" confict of interest.
Response: DSHS agrees and modifes the language.
Comment: §133.183(h)(1), and §133.190(b): Three com-
menters recommended removing the language related to
surveyors not being from the same Perinatal Care Region
(PCR) or Trauma Service Area (TSA) or a contiguous region of
the facility's location. The concern is that the requirement will
have a negative impact on the Texas hospitals and state-based
survey organizations.
^almqba oribp gune NSI OMOP QU qexoeg POOT
Response: DSHS acknowledges the comment and declines to
revise the rules. DSHS is establishing requirements to limit sur-
veyor conficts of interest with the facility undergoing the survey.
Language is consistent with §133.203(h)(1) of this title.
Comment: §133.183(h): One commenter recommended remov-
ing any responsibility from the hospital for identifying surveyor
conficts and suggested that responsibility be left solely to the
survey organization.
Response: DSHS acknowledges the comment and declines to
revise the rule. This language is consistent with §133.203(h) of
this title.
Comment: §§133.184(a)(1)(B), 133.184(d), and 133.184(k):
Seven commenters recommended DSHS extend the 90 days
for a facility to implement a sustainable change in the program.
Response: DSHS appreciates the comments and declines to
revise the rules. The proposed published language is: "doc-
umented evidence that the Plan of Correction (POC) was im-
plemented within 90 days of the designation survey," replacing
"demonstrated improvement." This language is consistent with
§133.204(a)(1)(C) of this title.
Comment: §133.184(a)(1)(C): One commenter supported the
ability for the facilities to develop and implement a plan of cor-
rection in 90 days for requirements not met.
Response: DSHS appreciates the comment, and no change is
necessary to the rule.
Comment: §133.184(c): Two commenters recommended re-
moving the language related to a change of ownership or change
in physical location requirement.
Response: DSHS disagrees and declines to revise the rule.
Re-designating ensures the commitment and the requirements
for designation continue to be met.
Comment: §133.184(g): Two commenters requested clarifca-
tion on how the designation application packet is included in the
Quality Assurance and Performance Improvement (QAPI) Plan.
Response: DSHS acknowledges the comments and declines to
revise the rule. Neonatal designation documents are an element
of the QAPI Plan to ensure confdentiality of the information.
Comment: §133.184(j)(1): Two commenters suggested allowing
facilities to post the neonatal designation status on their facility
website and not post it in a public area in the facility.
Response: DSHS disagrees and declines to revise the rule. A
certifcate posted in the facility allows staff, patients, and visitors
to view the document. Facility designation may be posted on the
facility website, in addition to posting in the facility.
Comment: §133.184(p)(1) and (2): One commenter recom-
mends DSHS develop a standard process for facility notifca-
tions.
Response: DSHS acknowledges the comment and declines to
revise the rule. Regional Advisory Councils (RACs) utilize dif-
ferent methods of notifying healthcare entities in their region of
signifcant changes impacting neonatal patient care.
Comment: §133.184(p)(2)(C): Three commenters shared con-
cerns that the waiver language is not refective of the S.B. 749
language. It is recommended to use statute language in the rule.
Response: DSHS agrees and revises the rule language to refect
the S.B. 749 language in renumbered §133.184(r)(2)(C).
Comment: §133.184(t): Twelve commenters identifed concerns
regarding access to peer review information by DSHS and sur-
vey organizations due to statutory confdentiality.
Response: DSHS agrees and removes the language in renum-
bered §133.184(v).
Comment: §133.184(u) and §133.190(f): One commenter rec-
ommended survey organizations be included in the language re-
garding complying with all relevant law related to the confden-
tiality of all facility information reviewed.
Response: DSHS agrees and revises the language in renum-
bered §133.184(w) and §133.190(f).
Comment: §133.185(b)(2)(A): Two commenters requested clar-
ifcation that policies, procedures, and guidelines may be refer-
enced in the Neonatal Program Plan.
Response: DSHS acknowledges the comments and declines to
revise the rule. The policies, procedures, and guidelines may be
referenced in the Neonatal Program Plan.
Comment: §133.185(b)(2)(D)(ii): Eight commenters stated
concerns regarding the monitoring of informed consent for
telemedicine and recommends removing the language.
Response: DSHS acknowledges the comments and declines to
amend the language in response to these comments. Inpatient
neonatal care is continuously evaluated and monitored for ap-
propriateness and variances, for both virtual and in-person en-
counters, through a collaborative, multidisciplinary process.
Comment: §133.185(b)(2)(E) and §133.188(d)(19): Two com-
menters requested clarifcation related to discharge follow-up
care.
Response: DSHS acknowledges the comments, and no revision
is needed to the rule language. The requirements are before and
during patient discharge from the facility.
Comment: §133.185(b)(2)(F): Three commenters requested the
evaluation of a facility's disaster preparedness and evacuation
plan be limited to the Neonatal Intensive Care Unit (NICU) or the
patients directly in their care.
Response: DSHS acknowledges the comments and declines to
revise the rule in response to these comments. The neonatal
designation program is inclusive of all-facility inpatient neonatal
care.
Comment: §133.185(b)(2)(F): One commenter requested clarif-
cation allowing the disaster response and evacuation plan to be
referenced in the Neonatal Program Plan.
Response: DSHS acknowledges the comment and declines to
revise the language in response to this comment, as it is suff-
cient. The disaster response and evacuation plan may be refer-
enced in the Neonatal Program Plan.
Comment: §133.185(b)(2)(G): One commenter requested clarif-
cation on this requirement and if it relieves the Neonatal Medical
Director (NMD) from the responsibility of reviewing credentials
for medical staff and respiratory therapists.
Response: DSHS acknowledges the comment and declines to
revise the rule. The NMD responsibilities are further outlined in
§133.185(d) and require review of credentials.
Comment: §133.185(b)(2)(K): Two commenters requested clar-
ifcation of the expected response times related to this rule.
QU qexoeg POOU gune NSI OMOP qex~s oegister
Response: DSHS acknowledges the comments and declines to
revise the rule in response to this comment. The facility defnes
the expected response times in their guidelines.
Comment: §133.185(b)(3)(A): Two commenters recommended
removing the requirement for the Chief Executive Offcer, Chief
Medical Offcer, and Chief Nursing Offcer to implement a culture
of safety.
Response: DSHS disagrees and declines to revise the rule lan-
guage in response to these comments. The commitment of fa-
cility administration is required for the success of a designation
program and patient safety.
Comment: §133.185(b)(3)(D): Two commenters stated con-
cerns regarding participation in benchmarking.
Response: DSHS acknowledges the comments and declines to
revise the rule in response to these comments. Benchmarking
is essential for Level III and IV neonatal facilities providing care
for the most critical and complex neonates.
Comment: §133.185(b)(3)(G): One commenter stated that not
all facilities use telehealth.
Response: DSHS agrees and modifes the language to include
"if utilized."
Comment: §133.185(c): Seven commenters stated concerns
over including the medical staff bylaws.
Response: DSHS agrees and removes "bylaws" from the lan-
guage.
Comment: §133.185(c)(2): Two commenters requested clarif-
cation of the participants in the team-based education and train-
ing.
Response: DSHS acknowledges the comments and declines to
revise the rule. Participants include all healthcare disciplines that
participate in the care of neonates. The language is consistent
with the rules in this title, relating to Hospital Level of Care Des-
ignations for Maternal Care.
Comment: §133.185(d)(1): One commenter recommended
adding language that allows the identifed Neonatal Medical
Director to delegate responsibilities to a designee.
Response: DSHS disagrees and declines to revise the rule. The
facility Neonatal Medical Director responsibilities cannot be del-
egated.
Comment: §133.185(d)(1)(I): One commenter recommended re-
vising language to be consistent with §133.205(d)(7) of this title,
regarding leading the neonatal QAPI meetings.
Response: DSHS agrees and revises the language to "fre-
quently lead the neonatal QAPI meetings with the NPM and
participate in Neonatal Program Oversight and other neonatal
meetings, as appropriate."
Comment: §133.185(e)(1): One commenter suggested addi-
tional requirements of perinatal experience for the NPM require-
ments.
Response: DSHS agrees and adds "experience" to the present
language "for neonatal care applicable to the level of care being
provided."
Comment: §133.185(e)(1): One commenter requested addi-
tional clarifcation for the NPM education.
Response: DSHS acknowledges the comment and declines to
revise the rule in response to this comment. The NPM has re-
quirements to both obtain education and to provide education.
Comment: §133.185(e)(3)(B): One commenter requested clarif-
cation of the NPM participation in staff and team-based training.
Response: DSHS acknowledges the comment and declines to
revise the rule. The standard dictionary defnition of "participa-
tion" is suffcient.
Comment: §133.185(e)(3)(E): Four commenters requested
NPM exclusion from regular and active participation in neonatal
care at the facility.
Response: DSHS acknowledges the comments and declines
to revise the rule. The NPM must be engaged and active in
neonatal care at the facility to effectively perform the duties of
the position.
Comment: §§133.186(c)(3), 133.187(c)(3), 133.187(c)(12),
133.188(d)(3), and 133.189(d)(3): Three commenters stated
concerns related to the NMD approval of providers. One of
the commenters requested to retain "reviewed" only in the
language.
Response: DSHS acknowledges the comments and modifes
the language to remove "and approved."
Comment: §§133.186(c)(4)(A), 133.187(c)(11)(E),
133.188(d)(10)(F), and 133.189(d)(10)(F): Three commenters
requested clarifcation for the preliminary and fnal radiology
readings.
Response: DSHS acknowledges the comments and declines to
revise the rules. If a preliminary reading is completed by the at-
tending or treating physician, the fnal reading will be completed
by a radiologist qualifed to read the image.
Comment: §§133.186(c)(5), 133.187(c)(9), 133.188(d)(9), and
133.189(d)(9): One commenter suggested that immediate su-
pervision of a pharmacy technician compounding medications
for neonates may be performed virtually.
Response: DSHS acknowledges the comment and declines to
revise the rules. The rule language is suffcient.
Comment: §133.187(a)(2): One commenter requested clarif-
cation for Level II subspeciality services and retaining neonatal
patients.
Response: DSHS acknowledges the comment and declines to
revise the rule. Medical decisions are made by the treating physi-
cian in the best interest of the patient.
Comment: §§133.187(c)(6), 133.188(d)(6), and 133.189(d)(6):
Eight commenters stated concerns that a dietitian has to be
available at all times, due to the "available" defnition, which is
unnecessary.
Response: DSHS agrees with the comments and revises the
language by removing "available."
Comment: §133.187(c)(10) and §133.188(d)(12): Three com-
menters stated concerns regarding the requirements for speech,
occupational, and physical therapists participating in neonatal
care.
Response: DSHS acknowledges the comments and agrees to
remove "available," which is defned as "at all times." The rule
language allows the facility to defne the availability and exper-
^almqba oribp gune NSI OMOP QU qexoeg POOV
tise or qualifcations of the therapists, based on the needs of the
neonatal population served.
Comment: §133.187(c)(14): One commenter requested clarif-
cation if the perinatal educator has to be separate from the NPM.
Response: DSHS acknowledges the comment and declines to
revise the rule. The rule language is suffcient.
Comment: §133.188(a)(4): One commenter requested to defne
"facilitate."
Response: DSHS acknowledges the comment and declines to
revise the rule. The standard dictionary defnition is suffcient.
Comment: §133.188(d)(3)(C) - (D): Eight commenters stated
that interpretation of the current rule requiring additional neona-
tology back-up coverage would be burdensome to the facilities.
Response: DSHS acknowledges the comments and modifes
the wording to clarify back-up is required when a neonatologist
is covering more than one facility.
Comment: §133.188(d)(4): One commenter suggested a lan-
guage revision for Level III facilities that do not perform neonatal
surgery.
Response: DSHS acknowledges the comment and declines to
revise the rule. The rule language is suffcient.
Comment: §133.188(d)(4) and §133.189(d)(5): Eleven com-
menters requested revising the pediatric surgeons' 30-minute
onsite response time for urgent requests.
Response: DSHS agrees and revises the language to "within
a time period consistent with current standards of professional
practice and neonatal care" and included that the response times
must be reviewed and monitored in the neonatal QAPI Plan.
Comment: §133.188(d)(5) and §133.189(d)(4): One commenter
appreciates revisions to the current rule that required anesthesi-
ologists to "directly provide" care to neonates.
Response: DSHS appreciates the comment, and no change is
necessary to the rule language.
Comment: §133.188(d)(7)(C): One commenter recommended
to remove the requirement for pathology in the operative suite
for Level III facilities.
Response: DSHS acknowledges the comment and declines to
revise the language. Pathology services are at the request of the
operating surgeon requiring timely results during the operative
procedures. Level III facilities performing applicable operative
procedures must meet the requirement.
Comment: §133.188(d)(7)(B) and (C) and §133.189(d)(7)(B)
and (C): Four commenters stated concerns regarding neonatal
pathology and the availability of the pathologist for neonatal
cases as requested.
Response: DSHS acknowledges the comments and agrees
to remove "neonatal" in §133.188(d)(7)(B) and (C) and
§133.189(d)(7)(B) and (C), leaving "pediatric" only to describe
pathology services available. DSHS disagrees with the com-
ments referring to a pathologist, as the rule language only states
"pathology services." DSHS adds "or intra-operative frozen
section" to §133.188(d)(7)(C) and §133.189(d)(7)(C), pediatric
pathology services at the request of the surgeon requirement.
Comment: §133.188(d)(10)(B) and §133.189(d)(10)(B): Five
commenters recommended to revise the personnel response
time for urgent requests and to remove magnetic resonance
imaging language.
Response: DSHS agrees with the comment and removes "mag-
netic resonance imaging." The language is revised to "within
a time period consistent with current standards of professional
practice."
Comment: §133.188(d)(10)(C) and §133.189(d)(10)(C): Three
commenters requested to have "at all times" removed from the
language.
Response: DSHS acknowledges the comments and declines to
revise the language.
Comment: §133.188(d)(10)(E) and §133.189(d)(10)(E): Seven
commenters recommended to revise the radiologist interpreta-
tion time for urgent studies.
Response: DSHS agrees and revises the language to "images
consistent with the patient condition and within a time period
consistent with current standards of professional practice with
monitoring of variances through the neonatal QAPI Plan and
process." The facility may defne the method of communication
from the radiologist.
Comment: §133.188(d)(10)(F) and §133.189(d)(10)(F): One
commenter suggested adding language from Level I to clarify if
a preliminary reading is performed.
Response: DSHS agrees and adds a new paragraph (F) for
§133.188(d)(10) and §133.189(d)(10) that states "preliminary
fndings documented in the medical record, if preliminary reading
of imaging studies pending formal interpretation is performed."
The remaining paragraph is renumbered to paragraph (G).
Comment: §133.188(d)(10)(F) and §133.189(d)(10)(F): Two
commenters requested revision to the QAPI language for pre-
liminary and fnal readings.
Response: DSHS acknowledges the comments and declines to
revise the rules. Monitoring of variances in imaging interpreta-
tions is essential for patient care.
Comment: §133.188(d)(13): Two commenters requested clarif-
cation on the "approval" of respiratory therapists by the NMD.
Response: DSHS acknowledges the comments and revises the
language by removing "and approved."
Comment: §133.188(d)(18) and §133.189(d)(18): Five com-
menters proposed changes in the availability and staffng of
lactation consultants.
Response: DSHS acknowledges the comments and de-
clines to revise the rules. The language is consistent with
§133.208(d)(28) and §133.209(d)(27) of this title.
Comment: §133.189(d)(5): Four commenters recommended re-
vising the 30-minute response time for pediatric subspecialists.
Response: DSHS agrees and revises the language to "a time
period consistent with current standards of professional practice
and neonatal care," including that surgeon response times must
be reviewed and monitored through the neonatal QAPI Plan.
Comment: §133.189(d)(10)(D) and (E): Three commenters re-
quested clarifcation for pediatric expertise for radiologists.
Response: DSHS acknowledges the comments and declines to
revise the rule in response to this comment. Pediatric expertise
is determined by the neonatal program and facility, which may
QU qexoeg POPM gune NSI OMOP qex~s oegister
include education, training, experience, and ongoing physician
performance evaluations.
Comment: §133.189(d)(17): Five commenters stated concerns
that the retinopathy of prematurity (ROP) follow-up includes post
discharge care.
Response: DSHS acknowledges the comments and declines
to revise the rule. The ROP follow up care includes inpatient
treatment and discharge planning to ensure optimal patient out-
comes.
Comment: §133.190(c)(1) and (2): One commenter suggested
removing "collaborated with a key member of the facility's lead-
ership" from the confict of interest requirements.
Response: DSHS acknowledges the comment and declines to
revise the language. DSHS is establishing requirements to limit
surveyor conficts of interest with the facility undergoing the sur-
vey. This language is consistent with §133.210(c)(1) of this title.
Comment: §133.191(a): Two commenters recommended re-
moving the Perinatal Care Regions rule from the facility levels
of care requirements.
Response: DSHS acknowledges the comments and declines to
revise the rule. DSHS is required by Texas Health and Safety
Code §241.183 to develop and adopt rules dividing the state into
neonatal and maternal care regions and for facilitating transfer
agreements through regional coordination.
DSHS revises §133.183(c) to replace the word "determines" with
"approves." The word "facility's" is changed to "location's" for
consistency within the section. The word "requirements" is re-
placed with "criteria" for consistency with §133.203(c) of this ti-
tle.
DSHS revises §133.183(d) to "must meet department-approved
requirements validated by a department-approved survey organ-
ization" and removes "demonstrate compliance with" and "have
the compliance."
DSHS revises §133.183(e) and §133.185(b)(2)(I), with the word
"meeting" for "compliance with." The language is revised to re-
move "compliance," which is a regulatory term.
DSHS revises §§133.183(f)(1)(A), 133.183(f)(2)(A),
133.186(a)(1), and 133.187(a)(1) replacing the symbol "≥" with
"more than or equal to" for public communication with plain
language.
DSHS revises §§133.183(f)(1)(C), (f)(3)(E), and (f)(4)(E);
133.183(g)(5); 133.185(b)(2)(D)(i); 133.185(b)(3), (b)(3)(A)
and (b)(3)(D); 133.185(d)(1)(C) and (d)(1)(H); 133.185(e) and
(e)(3)(F); 133.186(a)(3); 133.186(b)(3); 133.186(c)(6) and
(c)(6)(D); 133.187(a)(1)(B) and (a)(2)(B); 133.187(b)(2)(C);
133.187(c)(13), (c)(13)(D), and (c)(16); 133.188(a)(5);
133.188(d)(14), (d)(14)(D), and (d)(17); 133.189(d)(14) and
(d)(17) adding neonatal to QAPI plan to clarify the QAPI plan is
specifc to neonatal services provided in the facility.
DSHS revises §§133.183(f)(1)(C), 133.186(a)(3), 133.186(c)(6),
and 133.187(a)(1)(A) and (B) replacing the symbol "≥" with "less
than" for public communication with plain language.
DSHS revises §133.183(f)(2) to remove "The" to be consistent
with the other Level language in §133.183(f)(1), (3), and (4).
DSHS revises the language in §133.183(g)(1) - (5) with additions
of "must," "are responsible for scheduling," and "are responsible"
to clarify language and for consistency with §133.203(g)(1) - (5)
of this title.
DSHS revises §133.183(h) to include "had a previous working
relationship with the facility or facility leaders" for consistency
with §133.203(h) of this title. The time period "in the past four
years" is moved to the end of the requirement and grammar is
corrected to be consistent with the §133.203(h) of this title.
DSHS revises §133.183(h)(2) to state "Designation site survey
summary and medical record reviews performed by a surveyor
with an identifed confict of interest may not be accepted by the
department" for consistency with §133.203(h)(2) of this title.
DSHS revises §133.184(a)(1) to state "the completed application
packet includes:" to be consistent with §133.204(a)(1) of this title.
DSHS revises §133.184(a)(1)(A) adding "an accurate and com-
plete" application to align with §133.204(a)(1)(A) of this title.
DSHS revises §133.184(a)(1)(B) to add "a completed" neona-
tal attestation for consistency with §133.204(a)(1)(B) of this title.
The language "includes the requirement compliance fndings" is
replaced with "validates the department requirements are met."
The language is revised to remove "compliance fndings," which
is a regulatory term.
DSHS revises the language in §133.184(a)(1)(C) to clarify if
a facility has three or more department-approved designation
requirements defned as "not met," the facility must contact
the department within 10 business days to discuss the Plan
of Correction (POC). This language is consistent with the
§133.204(a)(1)(C) of this title.
DSHS adds "if required by the department" to §133.184(a)(1)(D)
to clarify that the POC is not required for every application
packet.
DSHS revises §133.184(a)(1)(D)(v) to state "how the cor-
rective actions will be monitored" remove " a statement on"
and change "action" to "actions" for consistent language with
§133.204(a)(1)(D)(v) of this title.
DSHS revises §133.184(a)(2)(A)(i) to replace the symbol "≤" with
"less than or equal to" for public communication with plain lan-
guage.
DSHS revises §133.184(a)(2)(A)(ii) to replace the symbol ">"
with "more than" for public communication with plain language.
DSHS revises §133.184(c) adding "The neonatal designation re-
newal process, or a request" to replace "A facility requesting."
The word "experiencing" was removed and replaced with "or"
and "require the facility to" is added to replace "must." The lan-
guage is consistent with §133.204(c) of this title.
DSHS revises §133.184(d) to replace "renewal designations"
with "designation renewals" to be consistent with §133.204(d)
of this title.
DSHS revises §133.184(e) removing "being approved for" and
replacing it with "a" and replacing "by the department" with "ap-
proval" to be consistent with §133.204(e) of this title.
DSHS adds §133.184(f) with "The facility must seek neonatal
designation renewal to maintain continual designation and pre-
vent an interruption in designation" for consistent language with
§133.204(f) of this title. The remaining subsections for this sec-
tion are renumbered due to this addition.
DSHS revises renumbered §133.184(g) to remove "timely and"
to be consistent with §133.204(g) of this title.
^almqba oribp gune NSI OMOP QU qexoeg POPN
DSHS revises renumbered §133.184(h) to remove "and all rel-
evant laws related to the confdentiality of such records" to be
consistent with §133.204(h) of this title.
DSHS revises renumbered §133.184(j) adding "and this desig-
nation" to replace "which" to be consistent with §133.204(j) of
this title.
DSHS revises renumbered §133.184(l) moving "required doc-
uments" and "to continue the designation process" together.
Words "and" and "with the" are added to be consistent with
§133.204(l) of this title. DSHS revises the language in renum-
bered §133.184(m) adding "will approve" in place of "reviews
and approves" and corrected the tense of "demonstrated" to
"demonstrates" to be consistent with §133.204(m) of this title.
DSHS revises the language in renumbered §133.184(n) with "the
designation requirement for that level of care designation" to be
consistent with §133.204(n) of this title.
DSHS adds §133.184(o) with "If a facility does not meet the
designation requirement for the level of designation requested,
the department will designate the facility at the highest level
for which designation requirements are met," for consistent
language with §133.204(o) of this title.
DSHS revises renumbered §133.184(p) adding "designation"
before requirements, changing "notify" to "provide written noti-
fcation" and adding "provide a Corrective Action Plan (CAP) to
assist the facility in meeting the designation requirements. The
CAP may include requiring the facility to have a focused survey
or a complete re-survey." The language revisions are consistent
with §133.204(p) of this title.
DSHS revises the language in renumbered §133.184(q)
to replace the word "determined" with "awarded." The lan-
guage "recommends" and "panel will recommend" is added to
§133.184(q)(2) and (3). The word "decision" is replaced with
"recommendation" in §133.184(q)(2) and (4). The word "deci-
sion" was removed in §133.184(q)(5). The language revisions
are consistent with §133.204(q), (q)(2), (q)(3), (q)(4), and (q)(5)
of this title.
DSHS revises renumbered §133.184(r)(2)(C) language to re-
move "may" and add "facility meets all other designation require-
ments for the level of care designation and the," for consistent
language with §133.204(r)(2)(C) of this title.
DSHS removes §133.184(r)(2)(C)(iv) and relocates and revises
this requirement to §133.184(r)(2)(C) to be consistent with
§133.204(r)(2)(C) of this title.
DSHS revises §133.185(b)(1) to add "and approval" to be con-
sistent with the §133.205(b) of this title.
DSHS revises §§133.185(b)(2)(D)(ii), 133.185(d)(1)(F)(i),
133.185(d)(2)(A) and 133.185(e)(3)(D)(i) by replacing the word
"compliance" with "variances." The language was revised to
remove "compliance," which is a regulatory term.
DSHS revises §133.185(b)(2)(E) to written guidelines for "follow-
through planning, discharge instructions." The language was re-
vised to remove "compliance" which is a regulatory term.
DSHS revises §133.185(b)(2)(F) to change "hospital's" to "hos-
pital" and adds "and this process" to replace "which" to align with
§133.205(b)(2)(G) of this title.
DSHS revises §§133.185(b)(2)(H) and 133.185(d)(1)(B) chang-
ing "competency" to "competencies" for consistency in the rule
language.
DSHS revises §133.185(b)(2)(I) adding "meeting" to replace
"compliance with." The language was revised to remove "com-
pliance," which is a regulatory term.
DSHS revises §133.185(b)(2)(K) to include "support" personnel
and "lactation" to align with §133.206 and §133.207 of this title.
DSHS revises §133.185(b)(3)(A) changing "available" to "allo-
cated" to align with §133.205(b)(3)(A) of this title.
DSHS revises §133.185(b)(3)(B) to replace "and monitor until
the needed change is sustained" to "An action plan will track
and analyze data through resolution or correction of the identifed
variance" to be consistent with §133.205(b)(3)(B) of this title.
DSHS revises §133.185(b)(3)(D) to add "All neonatal facilities
must participate in a neonatal data initiative." The language is
added to support the stakeholders request for state-wide data to
support PAC decisions.
DSHS revises §133.185(b)(3)(F) moving "QAPI" between "re-
gional" and "initiatives" to defne the QAPI is for regional initia-
tives.
DSHS revises §133.185(b)(3)(G) adding "reviewed and reported
by Neonatal Program Oversight" that monitor "and ensure the
provision of services or procedures through" telehealth and
telemedicine, "if utilized, is in accordance with the" standards of
care "applicable to the provision of the same service or proce-
dure in an in-person setting" to align with §133.205(b)(3)(G) of
this title.
DSHS revises §133.185(d)(1)(C) adding "stabilization, operative
intervention(s) if applicable, through discharge and review vari-
ances in care" to be consistent with §133.205(d)(3) of this title.
DSHS revises §133.185(d)(1)(F)(iv) to include "medical staff, ad-
vanced practice providers, and personnel competencies" to fur-
ther clarify which staff are included for competencies, education,
and training.
DSHS revises §133.185(d)(1)(I) to "frequently lead the neonatal
QAPI meetings with the NPM and participate in the Neonatal
Program Oversight and other neonatal meetings as appropriate"
to be consistent with §133.205(d)(7) of this title.
DSHS revises §133.185(d)(1)(K) and §133.185(e)(3)(H) adding
"develop and." The language was revised to maintain the ac-
tion of developing relationships due to personnel changes in the
MMD and MPM roles for designation.
DSHS revises §133.185(e)(1) to add "and experience" to the lan-
guage to align with §133.205(e)(1) of this title.
DSHS revises §133.185(e)(3)(C) to replace "track" with
"monitor." The language is revised to be consistent with
§133.205(b)(2)(E)(i) and (ii) of this title, related to telehealth and
telemedicine.
DSHS revises §133.185(e)(3)(G) to "frequently lead the neonatal
QAPI meetings and participate in Neonatal Program Oversight
and other neonatal meetings as appropriate" to be consistent
with §133.205(e)(5) of this title.
DSHS revises §133.186(b)(1) adding "and with privileges in
neonatal care" to be consistent with §133.206(b)(1) of this title,
which includes "privileges in maternal care."
DSHS revises §133.186(b)(3) and §133.187(b)(2)(C) adding
"demonstrates" to replace "maintains" to be consistent with
§§133.206(b)(2) and §133.207(b)(2) of this title.
QU qexoeg POPO gune NSI OMOP qex~s oegister
DSHS revises §133.186(b)(4) and §133.187(b)(2)(E) replacing
"annually" with "annual" and "must complete annual" to be con-
sistent with §133.206(b)(4) and §133.207(b)(3) of this title.
DSHS revises §§133.186(c)(3), 133.187(c)(3), and
133.188(d)(3) moving "must" to the additional list of require-
ments to clarify the grammar.
DSHS adds "The facility must have" to §133.186(c)(4) to correct
grammar.
DSHS revises §§133.186(c)(6)(D), 133.187(c)(13)(D)
133.188(d)(14)(D), and 133.189(d)(14)(D) adding "Variances
from these standards are monitored through the neonatal
QAPI Plan and process" to replace "Compliance to this staffng
requirement is monitored through the QAPI Plan." The language
was revised to remove "compliance," which is a regulatory term.
DSHS revises §§133.187(c)(6) language to "Dietitian or nutri-
tionist with appropriate training and experience in neonatal nutri-
tion provides services for the population served" to be consistent
with the §133.207 of this title.
DSHS revises §§133.187(c)(18), 133.188(d)(19), and
133.189(d)(19) to replace "follow-up" with "follow-through"
because the standard defnition for "follow-through" is more
accurate for the requirement.
DSHS revises §133.188(d)(6) language to "Dietitian or nutrition-
ist with appropriate training and experience in neonatal nutrition,
plans diets that meet the needs of the neonate/infant and pro-
vides services for the population served" to be consistent with
the §133.208 of this title.
DSHS revises §133.188(d)(12)(A) and §133.189(d)(12)(A)
replacing "manage" with "recommend management of" and
adding "as appropriate for the patient's condition" to align with
the neonatal clinical practices for the population served by the
facility.
DSHS revises §133.189(d)(3)(A) - (C) adding "must" and replac-
ing "annually" with "annual" in (B) to be consistent with §133.209
of this title.
DSHS adds "must ensure the facility has a back-up neonatal
provider if the neonatologist is not immediately available" as
§133.189(d)(3)(C). The addition for Level IV is consistent with
Level I, II, and III requirements to ensure a back-up for the
primary neonatologist if they are unavailable.
DSHS revises §133.189(d)(6) language to "Dietitian or nutrition-
ist with appropriate training and experience in neonatal nutrition,
plans diets that meet the needs of the neonate/infant and criti-
cally ill neonatal patient and provides services for the population
served" to be consistent with the §133.209 of this title.
DSHS revises §133.189(d)(12) to add "infant" and remove "be
available to" to align language with §133.188(d)(12).
DSHS revises §133.190(a)(2)(A) - (D), (a)(3)(A) - (D) and
(a)(4)(A) - (D) to correct grammar by changing "has" to "have,"
"is" to "are" and "meets" to "meet."
DSHS adds "in the facility" in §133.190(a)(3) to clarify that a pedi-
atric surgeon is included in the Level III survey team if the facility
performs neonatal surgery.
DSHS adds "or this subchapter" in §133.190(f) to ensure all in-
formation and materials required in the Neonatal Levels of Care
rule, for review by DSHS or a survey organization, are consid-
ered confdential under applicable laws to be consistent with the
§133.210 of this title.
STATUTORY AUTHORITY
The amendments and new rule are authorized by Texas Health
and Safety Code, Chapter 241, which provides DSHS with the
authority to adopt rules establishing the levels of care for neona-
tal care, establish a process of assignment or amendment of the
levels of care to hospitals, divide the state into Perinatal Care Re-
gions, and facilitate transfer agreements through regional coor-
dination; and by Texas Government Code §531.0055, and Texas
Health and Safety Code, §1001.075, which authorizes the Exec-
utive Commissioner of HHSC to adopt rules and policies neces-
sary for the operation and provision of health and human ser-
vices by DSHS and for the administration of Texas Health and
Safety Code, Chapter 1001.
§133.182. Defnitions.
The following words and terms, when used in this subchapter, have the
following meanings, unless the context clearly indicates otherwise.
(1) Attestation--A written statement, signed by the chief
executive offcer of the facility, verifying the results of a self-survey
represent a complete and accurate assessment of the facility's capabil-
ities required in this subchapter.
(2) Available--Relating to staff who can be contacted for
consultation at all times without delay.
(3) Birth weight--The weight of the neonate recorded at
time of birth.
(A) Low birth weight--Birth weight less than 2500
grams (5 lbs., 8 oz.);
(B) Very low birth weight (VLBW)--Birth weight less
than 1500 grams (3 lbs., 5 oz.); and
(C) Extremely low birth weight (ELBW)--Birth weight
less than 1000 grams (2 lbs., 3 oz.).
(4) CAP--Corrective Action Plan. A plan for the facility
developed by the department that describes the actions required of the
facility to correct identifed defciencies to ensure the applicable desig-
nation requirements are met.
(5) Department--The Texas Department of State Health
Services.
(6) Designation--A formal recognition by the department
of a facility's neonatal care capabilities and commitment for a period
of three years.
(7) EMS--Emergency medical services. Services used to
respond to an individual's perceived need for immediate medical care.
(8) Focused survey--A department-defned, modifed facil-
ity survey by a department-approved survey organization or the depart-
ment. The specifc goal of this survey is to review designation require-
ments identifed as not met to resolve a contingent designation or re-
quirement defciencies.
(9) Gestational age--The age of a fetus or embryo deter-
mined by the amount of time that has elapsed since the frst day of the
mother's last menstrual period or the corresponding age of the gestation
as estimated by a physician through a more accurate method.
(10) High-risk infant--A newborn that has a greater chance
of complications because of conditions that occur during fetal develop-
ment, pregnancy conditions of the mother, or problems that may occur
during labor or birth.
^almqba oribp gune NSI OMOP QU qexoeg POPP
(11) Immediately--Able to respond without delay, com-
monly referred to as STAT.
(12) Infant--A child from birth to one year of age.
(13) Inter-facility transport--Transfer of a patient from one
health care facility to another health care facility.
(14) Lactation consultant--A health care professional who
specializes in the clinical management of breastfeeding.
(15) Maternal--Pertaining to the mother.
(16) NCPAP--Nasal continuous positive airway pressure.
(17) Neonatal Program Oversight--A multidisciplinary
process responsible for the administrative oversight of the neonatal
program and having the authority for approving the defned neonatal
program's policies, procedures, and guidelines for all phases of neona-
tal care provided by the facility, to include defning the necessary staff
competencies, monitoring to ensure neonatal designation requirements
are met, and the aggregate review of the neonatal Quality Assessment
and Performance Improvement (QAPI) initiatives and outcomes.
Neonatal Program Oversight may be performed through the neonatal
program's performance improvement committee, multidisciplinary
oversight committee, or other structured means.
(18) Neonate--An infant from birth through 28 completed
days.
(19) NMD--Neonatal Medical Director.
(20) NPM--Neonatal Program Manager.
(21) NRP--Neonatal Resuscitation Program. A resuscita-
tion course developed and administered jointly by the American Heart
Association and the American Academy of Pediatrics.
(22) On-site--At the facility and able to arrive at the patient
bedside for urgent requests.
(23) PCR--Perinatal Care Region. The PCRs are estab-
lished for descriptive and regional planning purposes. The PCRs are
geographically divided by counties and are integrated into the existing
22 Trauma Service Areas (TSAs) and the applicable Regional Advisory
Council (RAC) of the TSA provided in §157.122 of this title (relating
to Trauma Services Areas) and §157.123 of this title (relating to Re-
gional Emergency Medical Services/Trauma Systems).
(24) Perinatal--Of, relating to, or being the period around
childbirth, especially the fve months before and one month after birth.
(25) POC--Plan of Correction. A report submitted to the
department by the facility detailing how the facility will correct any
defciencies cited in the neonatal designation site survey summary or
documented in the self-attestation.
(26) Premature/prematurity--Birth at less than 37 weeks of
gestation.
(27) QAPI Plan--Quality Assessment and Performance Im-
provement Plan. QAPI is a data-driven and proactive approach to qual-
ity improvement. It combines two approaches - Quality Assessment
(QA) and Performance Improvement (PI). QA is a process used to en-
sure services are meeting quality standards and assuring care reaches
a defned level. PI is the continuous study and improvement process
designed to improve system and patient outcomes.
(28) RAC--Regional Advisory Council as described in
§157.123 of this title.
(29) Supervision--Authoritative procedural guidance by a
qualifed person for the accomplishment of a function or activity with
initial direction and periodic inspection of the actual act of accomplish-
ing the function or activity.
(30) Telehealth service--A health service, other than a
telemedicine medical service, delivered by a health professional
licensed, certifed, or otherwise entitled to practice in this state and
acting within the scope of the health professional's license, certi-
fcation, or entitlement to a patient at a different physical location
than the health professional using telecommunications or information
technology as defned in Texas Occupations Code §111.001.
(31) Telemedicine medical service--A health care service
delivered by a physician licensed in this state, or health professional
acting under the delegation and supervision of a physician licensed in
this state and acting within the scope of the physician's or health pro-
fessional's license to a patient at a different physical location than the
physician or health professional using telecommunications or technol-
ogy as defned in Texas Occupations Code §111.001.
(32) TSA--Trauma Service Area as described in §157.122
of this title.
(33) Urgent--Requiring action or attention within 30 min-
utes of notifcation.
§133.183. General Requirements.
(a) The department reviews the applicant documents and ap-
proves the appropriate level of facility designation.
(b) A facility is defned under this subchapter as a single lo-
cation where inpatients receive hospital services; or each location, if
there are multiple buildings where inpatients receive hospital services
and are covered under a single hospital license.
(c) Each location must be considered separately for designa-
tion and the department approves the designation level for each loca-
tion based on the location's ability to demonstrate designation criteria
are met. A stand-alone children's facility that does not provide obstet-
rical services is exempt from obstetrical requirements.
(d) The department determines requirements for the levels of
neonatal designation. Facilities seeking Levels II, III, and IV neonatal
designation must meet department-approved requirements validated by
a department-approved survey organization.
(e) Facilities seeking Level I neonatal designation must submit
a self-survey and attest to meeting department-approved requirements.
(f) The four levels of neonatal designation are:
(1) Level I (Well Care). The Level I neonatal designated
facility must:
(A) provide care for mothers and their infants of gener-
ally more than or equal to 35 weeks gestational age who have routine,
transient perinatal problems;
(B) have skilled medical staff and personnel with doc-
umented training, competencies, and annual continuing education spe-
cifc for the patient population served; and
(C) provide the same level of care that the neonate
would receive at a higher-level designated neonatal facility and com-
plete an in-depth critical review and assessment of the care provided to
these infants through the neonatal QAPI Plan and process if an infant
less than 35 weeks gestational age is retained.
(2) Level II (Special Care). The Level II neonatal desig-
nated facility must:
(A) provide care for mothers and their infants of gener-
ally more than or equal to 32 weeks gestational age and birth weight
QU qexoeg POPQ gune NSI OMOP qex~s oegister
more than or equal to 1500 grams who have physiologic immaturity or
problems that are expected to resolve rapidly and are not anticipated to
require subspecialty services on an urgent basis;
(B) provide care, either by including assisted endotra-
cheal ventilation for less than 24 hours or nasal continuous positive
airway pressure (NCPAP) until the infant's condition improves, or ar-
range for appropriate transfer to a higher-level designated facility; and
(C) have skilled medical staff and personnel with doc-
umented training, competencies, and annual continuing education spe-
cifc for the patient population served.
(3) Level III (Neonatal Intensive Care). The Level III
neonatal designated facility must:
(A) provide care for mothers and comprehensive care
for their infants of all gestational ages with mild to critical illnesses or
requiring sustained life support;
(B) ensure access to consultation to a full range of pe-
diatric medical subspecialists and pediatric surgical specialists, and the
capability to perform major pediatric surgery on-site or at another ap-
propriate neonatal designated facility;
(C) have skilled medical staff and personnel with doc-
umented training, competencies, and annual continuing education spe-
cifc for the patient population served;
(D) facilitate neonatal transports; and
(E) provide outreach education related to trends iden-
tifed through the neonatal QAPI Plan, specifc requests, and system
needs to lower-level neonatal designated facilities, and as appropriate
and applicable, to non-designated facilities, birthing centers, indepen-
dent midwife practices, and prehospital providers.
(4) Level IV (Advanced Neonatal Intensive Care). The
Level IV neonatal designated facility must:
(A) provide care for mothers and comprehensive care
for their infants of all gestational ages with the most complex and criti-
cal medical and surgical conditions or requiring sustained life support;
(B) ensure access to a comprehensive range of pediatric
medical subspecialists and pediatric surgical subspecialists available to
arrive on-site, in person for consultation and care, and the capability to
perform major pediatric surgery, including the surgical repair of com-
plex conditions on-site;
(C) have skilled medical staff and personnel with doc-
umented training, competencies, and annual continuing education spe-
cifc for the patient population served;
(D) facilitate neonatal transports; and
(E) provide outreach education related to trends iden-
tifed through the neonatal QAPI Plan, specifc requests, and system
needs to lower-level neonatal designated facilities, and as appropriate
and applicable, to non-designated facilities, birthing centers, indepen-
dent midwife practices, and prehospital providers.
(g) Facilities seeking neonatal designation must undergo an
on-site or virtual survey as outlined in this section and:
(1) are responsible for scheduling a neonatal designation
survey through a department-approved survey organization;
(2) must notify the department of the neonatal designation
survey date;
(3) are responsible for expenses associated with the neona-
tal designation survey;
(4) must not accept surveyors with any known confict of
interest; and
(5) must provide the survey team access to records and doc-
umentation regarding the neonatal QAPI Plan and process related to
neonatal patients. The department may determine that failure by a fa-
cility to provide access to these records does not meet the requirements
of this subchapter.
(h) If a known confict of interest is present for the facility
seeking neonatal designation, the facility must decline the assigned sur-
veyor through the surveying organization. A confict of interest exists
when a surveyor has a direct or indirect fnancial, personal, or other
interest which would limit or could reasonably be perceived as lim-
iting the surveyor's ability to serve in the best interest of the public.
The confict of interest may include a surveyor who personally trained
a key member of the facility's leadership in residency or fellowship,
collaborated with a key member of the facility's leadership team pro-
fessionally, participated in a designation consultation with the facility,
had a previous working relationship with the facility or facility leaders,
or conducted a designation survey for the facility within the past four
years.
(1) Surveyors cannot be from the same PCR or TSA region
or a contiguous region of the facility's location.
(2) Designation site survey summary and medical record
reviews performed by a surveyor with an identifed confict of interest
may not be accepted by the department.
(i) The department, at its sole discretion, may appoint an ob-
server to accompany the survey team with the observer costs borne by
the department.
(j) The survey team evaluates the facility's evidence that de-
partment-approved designation requirements are met and documents
all requirements that are not met in the neonatal designation site sur-
vey summary and medical record reviews.
§133.184. Designation Process.
(a) A facility seeking neonatal designation or renewal of des-
ignation must submit a completed application packet.
(1) The completed application packet includes:
(A) an accurate and complete neonatal designation ap-
plication for the requested level of designation;
(B) a completed neonatal attestation and self-survey re-
port for Level I applicants, or the documented neonatal designation site
survey summary that validates the department requirements are met
and the medical record reviews for Levels II, III and IV applicants,
submitted to the department no later than 90 days after the neonatal
designation site survey date;
(C) if the facility has three or more department-ap-
proved designation requirements that are defned as not met in the
neonatal designation site survey summary, the facility must contact
the department's designation unit within 10 business days to discuss
the Plan of Correction (POC);
(D) the POC, if required by the department, which must
include:
(i) a statement of the cited designation requirement
not met;
(ii) a statement describing the corrective action
taken by the facility seeking neonatal designation to meet the require-
ment;
^almqba oribp gune NSI OMOP QU qexoeg POPR
(iii) the title of the individuals responsible for ensur-
ing the corrective actions are implemented;
(iv) the date the corrective actions were imple-
mented;
(v) how the corrective actions will be monitored;
and
(vi) documented evidence that the POC was imple-
mented within 90 days of the designation survey;
(E) written evidence of annual participation in the ap-
plicable PCRs; and
(F) any subsequent documents submitted by the date re-
quested by the department.
(2) The application includes full payment of the non-re-
fundable, non-transferrable designation fee listed:
(A) Level I neonatal facility applicants, the fees are as
follows:
(i) less than or equal to 100 licensed beds, the fee is
$250.00; or
(ii) more than 100 licensed beds, the fee is $750.00.
(B) Level II neonatal facility applicants, the fee is
$1,500.00.
(C) Level III neonatal facility applicants, the fee is
$2,000.00.
(D) Level IV neonatal facility applicants, the fee is
$2,500.00.
(b) The application will not be processed if a facility seeking
neonatal designation fails to submit the required application documents
and total designation fee.
(c) The neonatal designation renewal process, or a request to
designate at a different level of care, or a change in ownership, or a
change in physical address require the facility to notify the department
and submit a complete designation application packet outlined in sub-
section (a)(1) and (2) of this section.
(d) The facility must submit the required documents described
in subsection (a)(1) and (2) of this section to the department no later
than 90 days before the facility's current neonatal designation expira-
tion date for all designation renewals.
(e) The facility has the right to withdraw its application for
neonatal designation any time before a designation approval.
(f) The facility must seek neonatal designation renewal to
maintain continual designation and prevent an interruption in desig-
nation.
(g) The facility's neonatal designation will expire if the facility
fails to provide a complete neonatal designation application packet to
the department.
(h) The neonatal designation application packet in its entirety,
including any recommendations or follow-up from the department, and
any opportunities for improvement, must be a written element of the fa-
cility's neonatal QAPI Plan and must be reviewed through this process,
which is all subject to confdentiality as described in Texas Health and
Safety Code, §241.184, Confdentiality; Privilege.
(i) The department reviews the application packet to determine
and approve the facility's level of neonatal designation.
(j) The department defnes the fnal neonatal designation level
awarded to the facility, and this designation may be different than the
level requested based on the neonatal designation site survey summary.
(k) If the department determines the facility meets the require-
ments for neonatal designation, the department provides the facility
with a designation award letter and a designation certifcate.
(1) The facility must display its neonatal designation cer-
tifcate in a public area of the licensed premises that is readily visible
to patients, employees, and visitors.
(2) The facility must not alter the neonatal designation cer-
tifcate. Any alteration voids neonatal designation for the remainder of
that designation period.
(l) The survey organization must provide the facility with a
written, signed neonatal designation site survey summary, including
medical record reviews, regarding their evaluation and validation of
the facility's demonstration that neonatal designation requirements are
met. The neonatal designation site survey summary must be forwarded
to the facility no later than 30 days after the completion date of the
survey. The facility is responsible for submitting a copy of the neonatal
designation site survey summary and medical record reviews to the
department, with the required documents to continue the designation
process, within 90 days of completion of the site survey.
(m) The department will approve designation of a facility that
demonstrates the requirements are met.
(n) A neonatal level of care designation must not be denied to
a facility that meets the designation requirements for that level of care
designation.
(o) If a facility does not meet the designation requirements for
the level of designation requested, the department will designate the
facility at the highest level for which designation requirements are met.
(p) If the department determines a facility does not meet the
designation requirements for the level of designation requested, the de-
partment must provide written notifcation to the facility of the designa-
tion requirements not met and provide a Corrective Action Plan (CAP)
to assist the facility in meeting the designation requirements. The CAP
may include requiring the facility to have a focused survey or a com-
plete re-survey.
(1) The facility must submit to the department reports as
required and outlined in the CAP. The department may require a second
survey to ensure they meet the designation requirements. The cost of
the second survey will be at the expense of the facility.
(2) If the department substantiates actions taken by the
facility demonstrating documented evidence that designation require-
ments are met, the department removes the contingencies.
(q) If a facility disagrees with the designation level awarded by
the department, it may request an appeal in writing to the EMS/Trauma
Systems Section Director not later than 30 days after the designation
award. The written appeal must be from the facility's Chief Execu-
tive Offcer, Chief Medical Offcer, or Chief Nursing Offcer with doc-
umented evidence of how the facility meets the requirements for the
requested designation level.
(1) The EMS/Trauma Systems Section will establish a
three-person appeal panel and follow approved appeal panel guidelines
to assess the facility's designation appeal as referenced in Texas Health
and Safety Code §241.1836.
(2) If the designation appeal panel recommends the origi-
nal determination, the EMS/Trauma Systems Section Director will give
QU qexoeg POPS gune NSI OMOP qex~s oegister
written notice of such to the facility not later than 30 days after the ap-
peal panel's recommendation.
(3) If the designation appeal panel disagrees with the de-
partment's original designation determination, the panel will recom-
mend the appropriate level of neonatal designation to the department.
(4) If a facility disagrees with the designation appeal
panel's recommendation regarding its designation level, the facility
can request a second appeal review with the department's Associate
Commissioner for Consumer Protection Division. If the Associate
Commissioner upholds the designation appeal panel's recommenda-
tion, the designation status will remain the same. If the Associate
Commissioner disagrees with the designation appeal panel's recom-
mendation, the Associate Commissioner will defne the appropriate
level and award designation. The department will send a notifcation
letter of the second appeal decision within 30 days of receiving the
second appeal request.
(5) If the facility continues to disagree with the second
level of appeal, the facility has a right to a hearing in the manner
referenced in §133.121 of this title (relating to Enforcement Action).
(r) Exceptions and Notifcations
(1) A designated neonatal facility must provide written or
electronic notifcation of any signifcant change to the neonatal pro-
gram impacting patient care. The notifcation must be provided to the
following:
(A) all emergency medical services (EMS) providers
that transfer neonatal patients to or from the designated neonatal fa-
cility;
(B) the hospitals to which it customarily transfers out
or transfers in neonatal patients;
(C) applicable PCRs and RACs; and
(D) the department.
(2) If the designated neonatal facility is unable to meet the
requirements to maintain its current designation, it must submit to the
department a POC as described in subsection (a)(1)(D) of this section,
and a request for a temporary exception to the designation require-
ments. Any request for an exception must be submitted in writing from
the facility's Chief Executive Offcer and defne the facility's timeline to
meet the designation requirements. The department reviews the request
and the POC, and either grants the exception with a specifc timeline
based on the public interest, geographic maternal care capabilities, and
access to care, or denies the exception. If the facility is not granted an
exception or it does not meet the designation requirements at the end
of the exception period, the department will elect one of the following:
(A) re-designate the facility at the level appropriate to
its revised capabilities;
(B) outline an agreement with the facility to satisfy all
designation requirements for the level of care designation within a time
specifed under the agreement, which may not exceed the frst anniver-
sary of the effective date of the agreement; or
(C) waive one specifc designation requirement for a
level of care designation if the facility meets all other designation re-
quirements for the level of care designation and the department deter-
mines the waiver is justifed considering:
(i) the expected impact on accessibility of neonatal
care in the geographic area served by the facility if the waiver is not
granted and the expected impact on the quality of care and patient
safety; or
(ii) whether these services can be met by other facil-
ities in the area or with telehealth/telemedicine services.
(3) Waivers expire with the expiration of the current des-
ignation but may be renewed. The department may specify any condi-
tions for ongoing reporting during this time.
(4) The department maintains a current list on its internet
website of facilities that have contingency agreements or an approved
waiver with the department and an aggregated list of the designation
requirements conditionally met or waived.
(5) Facilities that have contingency agreements or an ap-
proved waiver with the department must post on the facility's internet
website the nature and general terms of the agreement.
(s) An application for a higher or lower level of neonatal des-
ignation may be submitted to the department at any time.
(1) A designated neonatal facility that is increasing its
neonatal capabilities may choose to apply for a higher-level of desig-
nation at any time. The facility must follow the designation process as
described in subsection (a)(1) and (2) of this section to apply for the
higher-level.
(2) A designated neonatal facility that is unable to maintain
the facility's current level of neonatal designation may choose to apply
for a lower level of designation at any time.
(t) If the facility is relinquishing its neonatal designation, the
facility must provide 30 days written, advance notice of the relinquish-
ment to the department, the applicable PCRs/RACs, EMS providers,
and facilities it customarily transfers out or transfers in neonatal pa-
tients. The facility is responsible for continuing to provide neonatal
care services or ensuring a plan for neonatal care continuity for the 30
days following the written notice of relinquishing its neonatal designa-
tion.
(u) A hospital providing neonatal services must not use the
terms "designated neonatal facility" or similar terminology in its signs,
advertisements, facility internet website, social media, or in the printed
materials and information it provides to the public, unless the facility
is currently designated at that level of neonatal care.
(v) During a virtual, on-site, or focused designation review,
conducted by the department or survey organization, the department or
surveyor has the right to review and evaluate neonatal patient records,
neonatal multidisciplinary QAPI Plan documents, and any action spe-
cifc to improving neonatal care and outcomes, as well as any other
documents relevant to neonatal care in a designated neonatal facility or
facility seeking neonatal designation to validate designation require-
ments are met.
(w) The department and survey organization will comply with
all relevant laws related to the confdentiality of records.
(x) The department may deny, suspend, or revoke designation
if a designated neonatal facility ceases to provide services to meet or
maintain the designation requirements of this section.
§133.185. Program Requirements.
(a) Neonatal Program Philosophy. Designated facilities must
have a family-centered philosophy. Parents must have reasonable ac-
cess to their infants at all times and be encouraged to participate in the
care of their infants. The facility environment for perinatal care must
meet the physiologic and psychosocial needs of the mothers, infants,
and families.
(b) Neonatal Program Plan. The facility must develop a writ-
ten neonatal operational plan for the neonatal program that includes
a detailed description of the scope of services and clinical resources
^almqba oribp gune NSI OMOP QU qexoeg POPT
available for all neonatal patients, mothers, and families. The plan
must defne the neonatal patient population evaluated, treated, trans-
ferred, or transported by the facility consistent with clinical guidelines
based on current standards of neonatal practice ensuring the health and
safety of patients.
(1) The written Neonatal Program Plan must be reviewed
and approved by Neonatal Program Oversight and be submitted to the
facility's governing body for review and approval. The governing body
must ensure the requirements of this section are implemented and en-
forced.
(2) The written Neonatal Program Plan must include, at a
minimum:
(A) clinical guidelines based on current standards
of neonatal practice, and policies and procedures that are adopted,
implemented, and enforced by the neonatal program;
(B) a process to ensure and validate these clinical guide-
lines based on current standards of neonatal practice, policies, and pro-
cedures, are reviewed and revised a minimum of every three years;
(C) written triage, stabilization, and transfer guidelines
for neonatal patients that include consultation and transport services;
(D) the role and scope of telehealth/telemedicine prac-
tices, if utilized, including:
(i) documented and approved written policies and
procedures that outline the use of telehealth/telemedicine for inpatient
hospital care or for consultation, including appropriate situations,
scope of care, and documentation that is monitored through the
neonatal QAPI Plan and process; and
(ii) written and approved procedures to gain
informed consent from the patient or designee for the use of tele-
health/telemedicine, if utilized, that are monitored for variances;
(E) written guidelines for discharge planning instruc-
tions and appropriate follow-up appointments for all neonates/infants;
(F) written guidelines for the hospital disaster response,
including a defned neonatal evacuation plan and process to relocate
mothers and infants to appropriate levels of care with identifed re-
sources, and this process must be evaluated annually to ensure neonatal
care can be sustained and adequate resources are available;
(G) written minimal education and credentialing re-
quirements for all staff participating in the care of neonatal patients,
which are documented and monitored by the managers who have
oversight of staff;
(H) written requirements for providing continuing staff
education, including annual competencies and skills assessment that is
appropriate for the patient population served, which are documented
and monitored by the managers who have oversight of staff;
(I) documentation of meeting the requirement for a
perinatal staff registered nurse to serve as a representative on the nurse
staffng committee under §133.41 of this title (relating to Hospital
Functions and Services);
(J) measures to monitor the availability of all necessary
equipment and services required to provide the appropriate level of care
and support for the patient population served; and
(K) documented guidelines for consulting support per-
sonnel with knowledge and skills in breastfeeding and lactation, which
includes expected response times, defned roles, responsibilities, and
expectations.
(3) The facility must have a documented and approved
neonatal QAPI Plan.
(A) The Chief Executive Offcer, Chief Medical Off-
cer, and Chief Nursing Offcer must implement a culture of safety for
the facility and ensure adequate resources are allocated to support a
concurrent, data-driven neonatal QAPI Plan.
(B) The facility must demonstrate that the neonatal
QAPI Plan consistently assesses the provision of neonatal care pro-
vided. The assessment must identify variances in care, the impact
to the patient, and the appropriate levels of review. This process
must identify opportunities for improvement and develop a plan of
correction to address the variances in care or the system response. An
action plan will track and analyze data through resolution or correction
of the identifed variance.
(C) The neonatal program must measure, analyze, and
track performance through defned quality indicators, core perfor-
mance measures, and other aspects of performance that the facility
adopts or develops to evaluate processes of care and patient outcomes.
Summary reports of these fndings are reported through the Neonatal
Program Oversight.
(D) All neonatal facilities must participate in a neonatal
data initiative. Level III and IV neonatal facilities must participate in
benchmarking programs to assess their outcomes as an element of the
neonatal QAPI Plan.
(E) The Neonatal Medical Director (NMD) must have
the authority to make referrals for peer review, receive feedback from
the peer review process, and ensure neonatal physician representation
in the peer review process for neonatal cases.
(F) The NMD and Neonatal Program Manager (NPM)
must participate in PCR meetings, regional QAPI initiatives, and re-
gional collaboratives, and submit requested data to assist with data
analysis to evaluate regional outcomes as an element of the facility's
neonatal QAPI Plan.
(G) The facility must have documented evidence of
neonatal QAPI summary reports reviewed and reported by Neonatal
Program Oversight that monitor and ensure the provision of services
or procedures through telehealth and telemedicine, if utilized, is in
accordance with the standards of care applicable to the provision of
the same service or procedure in an in-person setting.
(H) The facility must have documented evidence of
neonatal QAPI summary reports to support that aggregate neonatal
data are consistently reviewed to identify developing trends, opportu-
nities for improvement, and necessary corrective actions. Summary
reports must be provided through the Neonatal Program Oversight,
available for site surveyors, and submitted to the department as
requested.
(c) Medical Staff. The facility must have an organized, effec-
tive neonatal program that is recognized by the facility's medical staff
and approved by the facility's governing body.
(1) The credentialing of the neonatal medical staff must in-
clude a process for the delineation of privileges for neonatal care.
(2) The neonatal medical staff must participate in ongoing
staff and team-based education and training in the care of the neonatal
patient.
(d) Medical Director. There must be an identifed NMD and
an identifed Transport Medical Director (TMD) if the facility has its
own transport program. The NMD and TMD must be credentialed by
the facility for treatment of neonatal patients and have their responsi-
QU qexoeg POPU gune NSI OMOP qex~s oegister
bilities and authority defned in a job description. The NMD and TMD
must maintain a current status of successful completion of the Neona-
tal Resuscitation Program (NRP) or a department-approved equivalent
course.
(1) The NMD is responsible for the provision of neonatal
care services and must:
(A) examine qualifcations of medical staff and ad-
vanced practice providers requesting privileges to participate in
neonatal/infant care, and make recommendations to the appropriate
committee for such privileges;
(B) ensure neonatal medical staff and advanced practice
provider competencies in managing neonatal emergencies, complica-
tions, and resuscitation techniques;
(C) monitor neonatal patient care from transport, to
admission, stabilization, and operative intervention(s), as applicable,
through discharge, and review variances in care through the neonatal
QAPI Plan;
(D) participate in ongoing neonatal staff and
team-based education and training in the care of the neonatal patient;
(E) oversee the inter-facility neonatal transport as ap-
propriate;
(F) collaborate with the NPM, maternal teams, consult-
ing physicians, and nursing leaders and units providing neonatal care
to include developing, implementing, or revising:
(i) written policies, procedures, and guidelines for
neonatal care that are implemented and monitored for variances;
(ii) the neonatal QAPI Plan, specifc reviews, and
data initiatives;
(iii) criteria for transfer, consultation, or higher-
level of care; and
(iv) medical staff, advanced practice providers, and
personnel competencies, education, and training;
(G) participate as a clinically active and practicing
physician in neonatal care at the facility where medical director
services are provided;
(H) ensure that the neonatal QAPI Plan is specifc to
neonatal/infant care, is ongoing, data driven, and outcome based;
(I) frequently lead the neonatal QAPI meetings with the
NPM and participate in the Neonatal Program Oversight and other
neonatal meetings, as appropriate;
(J) maintain active staff privileges as defned in the fa-
cility's medical staff bylaws; and
(K) develop and maintain collaborative relationships
with other NMDs of designated neonatal facilities within the applica-
ble PCR.
(2) The TMD is responsible for the facility neonatal trans-
port program and must:
(A) collaborate with the transport team to develop, re-
vise, and implement written policies, procedures, and guidelines, for
neonatal care that are implemented and monitored for variances;
(B) participate in ongoing transport staff competencies,
education, and training;
(C) review and evaluate transports from initial activa-
tion of the transport team through delivery of patient, resources, qual-
ity of patient care provided, and patient outcomes; and
(D) integrate review fndings into the overall neonatal
QAPI Plan and process.
(3) The NMD may also serve as the TMD.
(e) NPM. The facility must identify an NPM who has the au-
thority and oversight responsibilities written in his or her job descrip-
tion, for the provision of neonatal services through all phases of care,
including discharge, and identifying variances in care for inclusion in
the neonatal QAPI Plan.
(1) The NPM must be a registered nurse with defned edu-
cation, credentials, and experience for neonatal care applicable to the
level of care being provided.
(2) The NPM must maintain a current status of successful
completion of the Neonatal Resuscitation Program (NRP) or a depart-
ment-approved equivalent course.
(3) The NPM must:
(A) ensure staff competency in resuscitation tech-
niques;
(B) participate in ongoing staff and team-based educa-
tion and training in the care of the neonatal patient;
(C) monitor utilization of telehealth/telemedicine, if
used;
(D) collaborate with the NMD, maternal program, con-
sulting physicians, and nursing leaders and units providing neonatal
care to include developing, implementing, or revising:
(i) written policies, procedures, and guidelines for
neonatal care that are implemented and monitored for variances;
(ii) the neonatal QAPI Plan, specifc reviews, and
data initiatives;
(iii) criteria for transfer, consultation, or higher-
level of care; and
(iv) staff competencies, education, and training;
(E) regularly and actively participate in neonatal care at
the facility where program manager services are provided;
(F) consistently review the neonatal care provided and
ensure the neonatal QAPI Plan is specifc to neonatal/infant care, data
driven, and outcome-based;
(G) frequently lead the meetings and participate in
Neonatal Program Oversight and other neonatal meetings as appropri-
ate; and
(H) develop and maintain collaborative relationships
with other NPMs of designated neonatal facilities within the applicable
PCR.
§133.186. Neonatal Designation Level I.
(a) Level I (Well Care). The Level I neonatal designated facil-
ity must:
(1) provide care for mothers and their infants of generally
more than or equal to 35 weeks gestational age who have routine, tran-
sient perinatal problems;
(2) have skilled medical staff and personnel with doc-
umented training, competencies, and annual continuing education
specifc for the patient population served; and
^almqba oribp gune NSI OMOP QU qexoeg POPV
(3) provide the same level of care that the neonate would
receive at a higher-level designated neonatal facility and complete an
in-depth critical review and assessment of the care provided to these
infants through the neonatal QAPI Plan and process if an infant less
than 35 weeks gestational age is retained.
(b) Neonatal Medical Director (NMD). The NMD must be a
physician who:
(1) is a currently practicing pediatrician, family medicine
physician, or physician specializing in obstetrics and gynecology with
experience in the care of neonates/infants and with privileges in neona-
tal care;
(2) maintains a current status of successful completion of
the Neonatal Resuscitation Program (NRP) or a department-approved
equivalent course;
(3) demonstrates effective administrative skills and over-
sight of the neonatal QAPI Plan; and
(4) completes annual continuing medical education spe-
cifc to the care of neonates.
(c) Program Functions and Services.
(1) The neonatal program must collaborate with the mater-
nal program, consulting physicians, and nursing leadership to ensure
pregnant mothers who are at high risk of delivering a neonate that re-
quires a higher-level of care are transferred to a higher-level facility
before delivery unless the transfer would be unsafe.
(2) The facility provides appropriate, supportive, and
emergency care delivered by trained personnel for unanticipated ma-
ternal-fetal or neonatal problems that occur during labor and delivery
through the disposition of the patient.
(3) The on-call physician, advanced practice nurse, or
physician assistant must have documented special competence in the
care of neonates, privileges and credentials to participate in neona-
tal/infant care reviewed by the NMD, and:
(A) must maintain a current status of successful com-
pletion of the NRP or a department-approved equivalent course;
(B) must complete annual continuing education specifc
to the care of neonates;
(C) must arrive at the patient bedside within 30 minutes
of an urgent request;
(D) if not immediately available to respond or is cov-
ering more than one facility, must ensure appropriate back-up cover-
age is available, back-up call providers are documented in the neonatal
on-call schedule and must be readily available to respond to the facility
staff; and
(E) the back-up call physician, advanced practice nurse,
or physician assistant must arrive at the patient bedside within 30 min-
utes of an urgent request.
(4) The facility must have written guidelines defning the
availability of appropriate anesthesia, laboratory, radiology, respira-
tory, ultrasonography, and blood bank services on a 24-hour basis as
described in §133.41 of this title (relating to Hospital Functions and
Services).
(A) If preliminary reading of imaging studies pending
formal interpretation is performed, the preliminary fndings must be
documented in the medical record.
(B) The facility must ensure regular monitoring and
comparison of the preliminary and fnal readings through the radiology
QAPI Plan. Summary reports of activities must be presented at the
Neonatal Program Oversight.
(5) Pharmacy services must be in compliance with the re-
quirements in §133.41 of this title and must have a pharmacist available
at all times.
(A) If medication compounding is done by a pharmacy
technician for neonates/infants, a pharmacist must provide immediate
supervision of the compounding process.
(B) When medication compounding is done for
neonates/infants, the pharmacist must implement guidelines to ensure
the accuracy of the compounded fnal product and ensure:
(i) the process is monitored through the pharmacy
QAPI Plan; and
(ii) summary reports of activities are presented to
the Neonatal Program Oversight.
(6) The facility must have personnel with appropriate train-
ing for managing neonates/infants, written policies, procedures, and
guidelines specifc to the facility for the stabilization and resuscitation
of neonates based on current standards of professional practice. The
facility must ensure the availability of personnel who can stabilize dis-
tressed neonates, including those less than 35 weeks gestation until they
are transferred to a higher-level facility. Variances from these standards
are monitored through the neonatal QAPI Plan and process.
(A) Each birth must be attended by at least one person
who maintains a current status of successful completion of the NRP or
a department-equivalent course, whose primary focus is management
of the neonate and initiating resuscitation.
(B) At least one person must be immediately available
on-site with the skills to perform a complete neonatal resuscitation in-
cluding endotracheal intubation, establishment of vascular access, and
administration of medications.
(C) Additional personnel with current status of success-
ful completion of the NRP, or a department-equivalent course, must be
on-site and immediately available upon request for the following:
(i) multiple birth deliveries, to care for each neonate;
(ii) deliveries with unanticipated maternal-fetal
problems that occur during labor and delivery; and
(iii) deliveries determined or suspected to be high-
risk for the pregnant patient or neonate.
(D) Variances from these standards are monitored
through the neonatal QAPI Plan and process and reported at the
Neonatal Program Oversight.
(E) Neonatal resuscitative equipment, supplies, and
medications must be immediately available for trained personnel to
perform resuscitation and stabilization on any neonate/infant.
(7) A registered nurse with experience in neonatal or peri-
natal care must provide supervision and coordination of staff education.
(8) The neonatal program ensures the availability of sup-
port personnel with knowledge and skills in breastfeeding and lactation
to assist and counsel mothers.
(9) Social services, supportive spiritual care, and counsel-
ing must be provided as appropriate to meet the needs of the patient
population served.
§133.187. Neonatal Designation Level II.
QU qexoeg POQM gune NSI OMOP qex~s oegister
(a) Level II (Special Care). The Level II neonatal designated
facility must:
(1) provide care for mothers and their infants of generally
more than or equal to 32 weeks gestational age and birth weight more
than or equal to 1500 grams who have physiologic immaturity or prob-
lems that are expected to resolve rapidly and are not anticipated to re-
quire subspecialty services on an urgent basis; and
(A) if a facility is located more than 75 miles from the
nearest Level III or IV designated neonatal facility and retains a neonate
less than 32 weeks of gestation or having a birth weight of less than
1500 grams, the facility must provide the same level of care that the
neonate would receive at a higher-level designated neonatal facility;
and
(B) any facility that retains a neonate less than 32 weeks
of gestation or a birth weight less than 1500 grams, must, through the
neonatal QAPI Plan, complete an in-depth critical review and assess-
ment of the care provided;
(2) provide care, either by including assisted endotracheal
ventilation for less than 24 hours or nasal continuous positive airway
pressure (NCPAP) until the infant's condition improves or arrange for
appropriate transfer to a higher-level designated facility; and
(A) if the facility performs neonatal surgery, it must
provide the same level of care that the neonate would receive at a
higher-level designated facility; and
(B) the neonatal surgical procedure and follow-up must
be reviewed through the neonatal QAPI Plan; and
(3) have skilled medical staff and personnel with doc-
umented training, competencies, and annual continuing education
specifc for the patient population served.
(b) Neonatal Medical Director (NMD). The NMD must be a
physician who:
(1) is a board-eligible/certifed neonatologist, with experi-
ence in the care of neonates/infants and maintains a current status of
successful completion of the Neonatal Resuscitation Program (NRP)
or a department-approved equivalent course; or
(2) is a pediatrician or neonatologist by the effective date
of this section who:
(A) continuously provided neonatal care for the last
consecutive two years and has experience and training in the care
of neonates/infants, including assisted endotracheal ventilation and
NCPAP management;
(B) maintains a consultative relationship with a board-
eligible/certifed neonatologist;
(C) demonstrates effective administrative skills and
oversight of the neonatal QAPI Plan;
(D) maintains a current status of successful completion
of the NRP or a department-approved equivalent course; and
(E) must complete annual continuing medical educa-
tion specifc to the care of neonates.
(c) Program Functions and Services.
(1) The neonatal program must collaborate with the mater-
nal program, consulting physicians, and nursing leadership to ensure
pregnant patients who are at high risk of delivering a neonate that re-
quires a higher-level of care are transferred to a higher-level facility
before delivery unless the transfer would be unsafe.
(2) The facility provides appropriate, supportive, and
emergency care delivered by trained personnel, for unanticipated ma-
ternal-fetal or neonatal problems that occur during labor and delivery
through the disposition of the patient.
(3) The on-call physician, advanced practice nurse, or
physician assistant must have documented special competence in the
care of neonates, privileges and credentials to participate in neona-
tal/infant care reviewed by the NMD, and:
(A) must maintain a current status of successful com-
pletion of the NRP or a department-approved equivalent course;
(B) must complete annual continuing education specifc
to the care of neonates;
(C) must arrive at the patient bedside within 30 minutes
of an urgent request;
(D) if not immediately available to respond or is cov-
ering more than one facility, must ensure appropriate back-up cover-
age is available, back-up call providers are documented in the neonatal
on-call schedule and must be readily available to respond to the facility
staff;
(i) the back-up call physician, advanced practice
nurse, or physician assistant must arrive at the patient bedside within
30 minutes of an urgent request; and
(ii) the on-call staff must be on-site to provide ongo-
ing care and to respond to emergencies when a neonate/infant is main-
tained on endotracheal ventilation.
(4) The neonatal program ensures if surgeries are per-
formed for neonates/infants, a surgeon privileged and credentialed to
perform surgery on a neonate/infant is on-call and must arrive at the
patient bedside within a time period consistent with current standards
of professional practice and neonatal care. Surgeon response times
must be reviewed and monitored through the neonatal QAPI Plan.
(5) Anesthesia providers with pediatric experience and
competence must provide services in compliance with the require-
ments in §133.41 of this title (relating to Hospital Functions and
Services).
(6) Dietitian or nutritionist with appropriate training and
experience in neonatal nutrition provides services for the population
served in compliance with the requirements in §133.41 of this title.
(7) Laboratory services must be in compliance with the re-
quirements in §133.41 of this title and must have:
(A) personnel on-site at all times as defned by written
management guidelines, which may include when a neonate/infant is
maintained on endotracheal ventilation; and
(B) a blood bank capable of providing blood and blood
component therapy within the timelines defned in approved blood
transfusion guidelines.
(8) The facility must provide neonatal/infant blood gas
monitoring capabilities.
(9) Pharmacy services must be in compliance with the re-
quirements in §133.41 of this title and must have a pharmacist with
experience in neonatal/pediatric pharmacology available at all times.
(A) If medication compounding is done by a pharmacy
technician for neonates/infants, a pharmacist must provide immediate
supervision of the compounding process.
^almqba oribp gune NSI OMOP QU qexoeg POQN
(B) When medication compounding is done for
neonates/infants, the pharmacist must implement guidelines to ensure
the accuracy of the compounded fnal product and ensure:
(i) the process is monitored through the pharmacy
QAPI Plan; and
(ii) summary reports of activities are presented at the
Neonatal Program Oversight.
(C) Total parenteral nutrition appropriate for
neonates/infants must be available, if requested.
(10) A speech, occupational, or physical therapist with suf-
fcient neonatal expertise must provide therapy services to meet the
needs of the population served.
(11) Radiology services must be in compliance with the re-
quirements in §133.41 of this title, incorporate the "As Low as Rea-
sonably Achievable" principle when obtaining imaging in neonatal pa-
tients, and must have:
(A) personnel appropriately trained in the use of x-ray
and ultrasound equipment;
(B) personnel at the bedside within 30 minutes of an
urgent request;
(C) personnel appropriately trained, available on-site to
provide ongoing care and to respond to emergencies when an infant is
maintained on endotracheal ventilation;
(D) interpretation capability of neonatal and perinatal
x-rays and ultrasound studies are available at all times;
(E) if preliminary reading of imaging studies pending
formal interpretation is performed, the preliminary fndings must be
documented in the medical record; and
(F) regular monitoring and comparison of preliminary
and fnal readings through the radiology QAPI Plan and provide sum-
mary reports of activities at the Neonatal Program Oversight.
(12) A respiratory therapist, with experience and special-
ized training in the respiratory support of neonates/infants, whose cre-
dentials have been reviewed by the NMD, must be immediately avail-
able on-site when:
(A) a neonate/infant is on a respiratory ventilator to pro-
vide ongoing care and to respond to emergencies; or
(B) a neonate/infant is on a Continuous Positive Airway
Pressure (CPAP) apparatus.
(13) The facility must have staff with appropriate training
for managing neonates/infants, written policies, procedures, and guide-
lines specifc to the facility for the stabilization and resuscitation of
neonates based on current standards of professional practice. Variances
from these standards are monitored through the neonatal QAPI Plan.
(A) Each birth must be attended by at least one person
who maintains a current status of successful completion of the NRP
or a department-approved equivalent course, whose primary focus is
management of the neonate and initiating resuscitation.
(B) At least one person must be immediately available
on-site with the skills to perform a complete neonatal resuscitation in-
cluding endotracheal intubation, establishment of vascular access, and
administration of medications.
(C) Additional personnel who maintain a current status
of successful completion of the NRP or a department-approved equiv-
alent course must be on-site and immediately available upon request
for the following:
(i) multiple birth deliveries, to care for each neonate;
(ii) deliveries with unanticipated maternal-fetal
problems that occur during labor and delivery; and
(iii) deliveries determined or suspected to be high-
risk for the pregnant patient or neonate.
(D) Variances from these standards are monitored
through the neonatal QAPI Plan and process and reported at the
Neonatal Program Oversight.
(E) Neonatal resuscitative equipment, supplies, and
medications must be immediately available for trained staff to perform
resuscitation and stabilization on any neonate/infant.
(14) A registered nurse with experience in neonatal care,
including special care, or perinatal care must provide supervision and
coordination of staff education.
(15) Social services, supportive spiritual care, and coun-
seling must be provided as appropriate to meet the needs of the patient
population served.
(16) Written and implemented policies and procedures to
ensure the timely evaluation of retinopathy of prematurity, documented
referral for treatment, and follow-up of an at-risk infant, which must be
monitored through the neonatal QAPI Plan.
(17) The neonatal program ensures the availability of sup-
port personnel with knowledge and expertise in breastfeeding and lac-
tation to assist and counsel mothers.
(18) The neonatal program ensures provisions for follow-
through care at discharge for infants at high risk for neurodevelopmen-
tal, medical, or psychosocial complications.
§133.188. Neonatal Designation Level III.
(a) Level III (Neonatal Intensive Care). The Level III neonatal
designated facility must:
(1) provide care for mothers and comprehensive care for
their infants of all gestational ages with mild to critical illnesses or
requiring sustained life support;
(2) ensure access to consultation to a full range of pedi-
atric medical subspecialists and pediatric surgical specialists, and the
capability to perform major pediatric surgery on-site or at another ap-
propriate neonatal designated facility;
(3) have skilled medical staff and personnel with doc-
umented training, competencies, and annual continuing education
specifc for the patient population served;
(4) facilitate neonatal transports; and
(5) provide outreach education related to trends identifed
through the neonatal QAPI Plan, specifc requests, and system needs
to lower-level neonatal designated facilities, and as appropriate and
applicable, to non-designated facilities, birthing centers, independent
midwife practices, and prehospital providers.
(b) Neonatal Medical Director (NMD). The NMD must be a
physician who is a board-eligible/certifed neonatologist with experi-
ence in the care of neonates/infants and maintains a current status of
successful completion of the Neonatal Resuscitation Program (NRP)
or a department-approved equivalent course.
(c) If the facility has its own transport program, there must be
an identifed Transport Medical Director (TMD). The TMD or Trans-
QU qexoeg POQO gune NSI OMOP qex~s oegister
port Medical Co-Director must be a physician who is a board-eligi-
ble/certifed neonatologist or pediatrician with expertise and experi-
ence in neonatal/infant transport.
(d) Program Functions and Services.
(1) The neonatal program must collaborate with the mater-
nal program, consulting physicians, and nursing leadership to ensure
pregnant patients who are at high risk of delivering a neonate that re-
quires a higher-level of care are transferred to a higher-level facility
before delivery unless the transfer would be unsafe.
(2) The facility provides appropriate, supportive, and
emergency care delivered by trained personnel for unanticipated ma-
ternal-fetal or neonatal problems that occur during labor and delivery
through the disposition of the patient.
(3) At least one of the following neonatal providers must
be on-site and available at all times: pediatric hospitalists, neonatolo-
gists, neonatal nurse practitioners, or neonatal physician assistants, as
appropriate, who must have documented competence in the manage-
ment of severely ill neonates/infants, and privileges and credentials to
participate in neonatal/infant care reviewed by the NMD and:
(A) must maintain a current status of successful com-
pletion of the NRP or a department-approved equivalent course;
(B) must complete annual continuing education specifc
to the care of neonates;
(C) must have a neonatologist available for consultation
at all times that arrives on-site within 30 minutes of an urgent request,
if the on-site provider is not a neonatologist; and
(D) if the neonatologist is covering more than one facil-
ity, must ensure the facility has a back-up neonatologist available, the
back-up neonatologist is documented in the neonatal on-call schedule,
and readily available to respond to the facility staff and arrive at the
patient bedside within 30 minutes of an urgent request.
(4) The neonatal program that performs surgeries for
neonates/infants must have a surgeon privileged and credentialed to
perform surgery on a neonate/infant on-call. The surgeon on-call
must be available to arrive at the patient bedside within a time period
consistent with current standards of professional practice and neonatal
care. Surgeon response times must be reviewed and monitored through
the neonatal QAPI Plan.
(5) Anesthesiologists with pediatric expertise and compe-
tence must direct and evaluate anesthesia care provided to neonates in
compliance with the requirements in §133.41 of this title.
(6) Dietitian or nutritionist with appropriate training and
experience in neonatal nutrition, plans diets that meet the needs of the
neonate/infant and provides services for the population served, in com-
pliance with the requirements in §133.41 of this title.
(7) Laboratory services must be in compliance with the re-
quirements in §133.41 of this title and must have:
(A) laboratory personnel on-site at all times;
(B) pediatric pathology services available for the popu-
lation served;
(C) pediatric surgical or intra-operative frozen section
pathology services available in the operative suite at the request of the
operating surgeon; and
(D) a blood bank capable of providing blood and blood
component therapy within the timelines defned in approved blood
transfusion guidelines.
(8) The facility must provide neonatal/infant blood gas
monitoring capabilities.
(9) Pharmacy services must be in compliance with the re-
quirements in §133.41 of this title and must have a pharmacist with
experience in neonatal/pediatric pharmacology available at all times.
(A) If medication compounding is done by a pharmacy
technician for neonates/infants, a pharmacist must provide immediate
supervision of the compounding process;
(B) When medication compounding is done for
neonates/infants, the pharmacist must implement guidelines to ensure
the accuracy of the compounded fnal product and ensure:
(i) the process is monitored through the pharmacy
QAPI Plan; and
(ii) summary reports of activities are presented at the
Neonatal Program Oversight.
(C) Total parenteral nutrition appropriate for
neonates/infants must be available.
(10) Radiology services must be in compliance with the re-
quirements in §133.41 of this title, incorporate the "As Low as Rea-
sonably Achievable" principle when obtaining imaging in neonatal pa-
tients, and must have:
(A) personnel appropriately trained in the use of x-ray
equipment on-site and available at all times;
(B) personnel appropriately trained in ultrasound, com-
puted tomography, and cranial ultrasound equipment available on-site
within a time period consistent with current standards of professional
practice;
(C) fuoroscopy available at all times;
(D) neonatal diagnostic imaging studies and radiol-
ogists with pediatric expertise to interpret the neonatal diagnostic
imaging studies, available at all times;
(E) a radiologist with pediatric expertise to interpret im-
ages consistent with the patient condition and within a time period con-
sistent with current standards of professional practice with monitoring
of variances through the neonatal QAPI Plan and process;
(F) preliminary fndings documented in the medical
record, if preliminary reading of imaging studies pending formal
interpretation is performed; and
(G) regular monitoring and comparison of the prelimi-
nary and fnal readings through the radiology QAPI Plan and provide
summary reports of activities at the Neonatal Program Oversight.
(11) Pediatric echocardiography with pediatric cardiology
interpretation and consultation completed within a time period consis-
tent with current standards of professional practice.
(12) Speech, occupational, or physical therapists with
neonatal/infant expertise and experience must:
(A) evaluate and recommend management of feeding or
swallowing disorders as appropriate for the patient's condition; and
(B) provide therapy services to meet the needs of the
population served.
(13) A respiratory therapist, with experience and special-
ized training in the respiratory support of neonates/infants, whose cre-
dentials have been reviewed by the NMD, must be on-site and imme-
diately available.
^almqba oribp gune NSI OMOP QU qexoeg POQP
(14) The facility must have staff with appropriate training
for managing neonates/infants and written policies, procedures, and
guidelines specifc to the facility for the stabilization and resuscitation
of neonates based on current standards of professional practice. Vari-
ances from these standards are monitored through the neonatal QAPI
Plan.
(A) Each birth must be attended by at least one person
who maintains a current status of successful completion of the NRP or
a department-approved equivalent course, and whose primary focus is
management of the neonate and initiating resuscitation.
(B) At least one person must be immediately available
on-site with the skills to perform a complete neonatal resuscitation in-
cluding endotracheal intubation, establishment of vascular access, and
administration of medications.
(C) Additional personnel who maintain a current status
of successful completion of the NRP or a department-approved equiv-
alent course must be on-site and immediately available upon request
for the following:
(i) multiple birth deliveries, to care for each neonate;
(ii) deliveries with unanticipated maternal-fetal
problems that occur during labor and delivery; and
(iii) deliveries determined or suspected to be high-
risk for the pregnant patient or neonate.
(D) Variances from these standards are monitored
through the neonatal QAPI Plan and process and reported at the
Neonatal Program Oversight.
(E) Neonatal resuscitative equipment, supplies, and
medications must be immediately available for trained staff to perform
complete resuscitation and stabilization for each neonate/infant.
(15) A registered nurse with experience in neonatal care,
including neonatal intensive care, must provide supervision and coor-
dination of staff education.
(16) Social services, supportive spiritual care, and coun-
seling must be provided as appropriate to meet the needs of the patient
population served.
(17) Written and implemented policies and procedures to
ensure timely evaluation of retinopathy of prematurity, documented re-
ferral for treatment and follow-up of an at-risk infant, which must be
monitored through the neonatal QAPI Plan.
(18) The neonatal program ensures a certifed lactation
consultant must be available at all times to assist and counsel mothers.
(19) The neonatal program ensures provisions for follow-
through care at discharge for infants at high risk for neurodevelopmen-
tal, medical, or psychosocial complications.
§133.189. Neonatal Designation Level IV.
(a) Level IV (Advanced Neonatal Intensive Care). The Level
IV neonatal designated facility must:
(1) provide care for the mothers and comprehensive care
for their infants of all gestational ages with the most complex and criti-
cal medical and surgical conditions or requiring sustained life support;
(2) ensure access to a comprehensive range of pediatric
medical subspecialists and pediatric surgical subspecialists are avail-
able to arrive on-site in person for consultation and care, and the capa-
bility to perform major pediatric surgery including the surgical repair
of complex conditions on-site;
(3) have skilled medical staff and personnel with doc-
umented training, competencies, and annual continuing education
specifc for the patient population served;
(4) facilitate neonatal transports; and
(5) provide outreach education related to trends identifed
through the neonatal QAPI Plan, specifc requests, and system needs
to lower-level neonatal designated facilities, and as appropriate and
applicable, to non-designated facilities, birthing centers, independent
midwife practices, and prehospital providers.
(b) Neonatal Medical Director (NMD). The NMD must be a
physician who is a board-eligible/certifed neonatologist and maintains
a current status of successful completion of the Neonatal Resuscitation
Program (NRP) or a department-approved equivalent course.
(c) If the facility has its own transport program, there must
be an identifed Transport Medical Director (TMD). The TMD
or Transport Medical Co-Director must be a physician who is a
board-eligible/certifed neonatologist with expertise and experience in
neonatal/infant transport.
(d) Program Functions and Services.
(1) The neonatal program must collaborate with the mater-
nal program, consulting physicians, and nursing leadership to ensure
pregnant patients who are at high risk of delivering a neonate that re-
quires specialized care are transferred to a facility with specialized care
capabilities before delivery unless the transfer would be unsafe.
(2) The facility provides appropriate, supportive, and
emergency care delivered by trained personnel for unanticipated ma-
ternal-fetal or neonatal problems that occur during labor and delivery,
through the disposition of the patient.
(3) A board-eligible/certifed neonatologist, with docu-
mented competence in the management of the most complex and
critically ill neonates/infants, with neonatal privileges and credentials
reviewed by the NMD, must be on-site and immediately available at
the neonate/infant bedside as requested. The neonatologist:
(A) must maintain a current status of successful com-
pletion of the NRP or a department-approved equivalent course;
(B) must complete annual continuing education specifc
to the care of neonates; and
(C) must ensure the facility has a back-up neonatal
provider if the neonatologist is not immediately available.
(4) Pediatric anesthesiologists must direct and evaluate
anesthesia care provided to neonates in compliance with the require-
ments in §133.41 of this title (relating to Hospital Functions and
Services).
(5) A comprehensive range of pediatric medical subspe-
cialists and pediatric surgical subspecialists privileged and credentialed
to participate in neonatal/infant care must be available to arrive on-site
for in-person consultation and care within a time period consistent with
current standards of professional practice and neonatal care. The pedi-
atric medical and pediatric surgical subspecialists' response times must
be reviewed and monitored through the neonatal QAPI Plan.
(6) Dietitian or nutritionist with appropriate training and
experience in neonatal nutrition, plans diets that meet the needs of
the neonate/infant and critically ill neonatal patient and provides ser-
vices for the population served, in compliance with the requirements
in §133.41 of this title.
(7) Laboratory services must be in compliance with the re-
quirements in §133.41 of this title and must have:
QU qexoeg POQQ gune NSI OMOP qex~s oegister
(A) appropriately trained and qualifed laboratory per-
sonnel on-site at all times;
(B) pediatric pathology services available for the popu-
lation served;
(C) pediatric surgical or intra-operative frozen section
pathology services available in the operative suite at the request of the
operating surgeon; and
(D) a blood bank capable of providing blood and blood
component therapy within the timelines defned in approved blood
transfusion guidelines.
(8) The facility must provide neonatal/infant blood gas
monitoring capabilities.
(9) Pharmacy services must be in compliance with the re-
quirements in §133.41 of this title and must have a pharmacist with
experience in neonatal/pediatric pharmacology available on-site at all
times.
(A) If medication compounding is done by a pharmacy
technician for neonates/infants, a pharmacist must provide immediate
supervision of the compounding process.
(B) When medication compounding is done for
neonates/infants, the pharmacist must implement guidelines to ensure
the accuracy of the compounded fnal product and must ensure:
(i) the process is monitored through the pharmacy
QAPI plan; and
(ii) summary reports of activities are presented at the
Neonatal Program Oversight.
(C) Total parenteral nutrition appropriate for
neonates/infants must be available.
(10) Radiology services must be in compliance with the re-
quirements in §133.41 of this title, incorporate the "As Low as Rea-
sonably Achievable" principle when obtaining imaging in neonatal pa-
tients, and must have:
(A) personnel appropriately trained in the use of x-ray
equipment on-site and available at all times;
(B) personnel appropriately trained in ultrasound, com-
puted tomography, and cranial ultrasound equipment be on-site within
a time period consistent with current standards of professional practice;
(C) fuoroscopy be available at all times;
(D) neonatal diagnostic imaging studies and radiolo-
gists with pediatric expertise to interpret neonatal diagnostic imaging
studies, available at all times;
(E) a radiologist with pediatric expertise to interpret im-
ages consistent with the patient condition and within a time period con-
sistent with current standards of professional practice with monitoring
of variances through the neonatal QAPI Plan and process;
(F) preliminary fndings documented in the medical
record, if preliminary reading of imaging studies pending formal
interpretation is performed; and
(G) regular monitoring and comparison of the prelimi-
nary and fnal readings through the radiology QAPI Plan and provide
a summary report of activities at the Neonatal Program Oversight.
(11) Pediatric echocardiography with pediatric cardiology
interpretation and consultation completed within a time period consis-
tent with current standards of professional practice.
(12) Speech, occupational, or physical therapists with
neonatal/infant expertise and experience must:
(A) evaluate and recommend management of feeding
and swallowing disorders as appropriate for the patient's condition; and
(B) provide therapy services to meet the needs of the
population served.
(13) A respiratory therapist, with experience and special-
ized training in the respiratory support of neonates/infants, whose cre-
dentials have been reviewed and approved by the Neonatal Medical
Director, must be on-site and immediately available.
(14) The facility must have staff with appropriate training
for managing neonates/infants, written policies, procedures, and guide-
lines specifc to the facility for the stabilization and resuscitation of
neonates/infants based on current standards of professional practice.
Variances from these standards are monitored through the neonatal
QAPI Plan.
(A) Each birth must be attended by at least one person
who maintains a current status of successful completion of the NRP or
a department-approved equivalent course and whose primary focus is
management of the neonate and initiating resuscitation.
(B) At least one person must be immediately available
on-site with the skills to perform a complete neonatal resuscitation in-
cluding endotracheal intubation, establishment of vascular access and
administration of medications.
(C) Additional personnel who maintain a current status
of successful completion of the NRP or a department-approved equiv-
alent course must be on-site and immediately available upon request
for the following:
(i) multiple birth deliveries, to care for each neonate;
(ii) deliveries with unanticipated maternal-fetal
problems that occur during labor and delivery; and
(iii) deliveries determined or suspected to be high-
risk for the pregnant patient or neonate.
(D) Variances from these standards are monitored
through the neonatal QAPI Plan and process and reported at the
Neonatal Program Oversight.
(E) Neonatal resuscitative equipment, supplies, and
medications must be immediately available for trained staff to perform
complete resuscitation and stabilization for each neonate/infant.
(15) A registered nurse with experience in neonatal care,
including advanced neonatal intensive care, must provide supervision
and coordination of staff education.
(16) Social services, supportive spiritual care, and coun-
seling must be provided as appropriate to meet the needs of the patient
population served.
(17) Written and implemented policies and procedures to
ensure timely evaluation and treatment of retinopathy of prematurity
on-site by a pediatric ophthalmologist or retinal specialist with ex-
pertise in retinopathy of prematurity of an at-risk infant. Patient fol-
low-up of retinopathy of prematurity must be documented and moni-
tored through the neonatal QAPI Plan.
(18) The neonatal program ensures a certifed lactation
consultant must be available at all times to assist and counsel mothers.
(19) The neonatal program ensures provisions for follow-
through care at discharge for infants at high risk for neurodevelopmen-
tal, medical, or psychosocial complications.
^almqba oribp gune NSI OMOP QU qexoeg POQR
§133.190. Survey Team.
(a) The survey team composition must be as follows:
(1) Level I facilities neonatal program staff must conduct
a self-survey, documenting the fndings on the approved department
survey form. The department may periodically require validation of
the survey fndings by an on-site review conducted by department staff.
(2) Level II facilities must be surveyed by a multidisci-
plinary team that includes, at a minimum, one neonatologist and one
neonatal nurse who:
(A) have completed a department survey training
course;
(B) have observed a minimum of one neonatal survey;
(C) are currently active in the management of neonatal
patients and active in the neonatal QAPI Plan and process at a facility
providing the same or a higher-level of neonatal care; and
(D) meet the criteria outlined in the department survey
guidelines.
(3) Level III facilities must be surveyed by a multidis-
ciplinary team that includes, at a minimum, one neonatologist, one
neonatal nurse, and a pediatric surgeon when neonatal surgery is
performed in the facility, who:
(A) have completed a survey training course;
(B) have observed a minimum of one neonatal survey;
(C) are currently active in the management of neonatal
patients and active in the neonatal QAPI Plan and process at a facility
providing the same or a higher-level of neonatal care; and
(D) meet the criteria outlined in the department survey
guidelines.
(4) Level IV facilities must be surveyed by a multidis-
ciplinary team that includes, at a minimum, one neonatologist, one
neonatal nurse, and one pediatric surgeon, who:
(A) have completed a survey training course;
(B) have observed a minimum of one neonatal survey;
(C) are currently active in the management of neonatal
patients and active in the neonatal QAPI Plan and process at a facility
providing the same level of neonatal care; and
(D) meet the criteria outlined in the department survey
guidelines.
(b) All members of the survey team, except department staff,
must come from a PCR outside the facility's region or a contiguous
region.
(c) Survey team members cannot have a confict of interest:
(1) A confict of interest exists when a surveyor has a di-
rect or indirect fnancial, personal, or other interest which would limit
or could reasonably be perceived as limiting the surveyor's ability to
serve in the best interest of the public. The confict of interest may in-
clude a surveyor who, within the past four years, has personally trained
a key member of the facility's leadership in residency or fellowship,
collaborated with a key member of the facility's leadership profession-
ally, participated in a designation consultation with the facility, or con-
ducted a designation survey for the facility.
(2) If a designation survey occurs with a surveyor who has
a confict of interest, the department, in its sole discretion, may refuse
to accept the neonatal designation site survey summary conducted by
a surveyor with a confict of interest.
(d) The survey team must follow the department survey guide-
lines to evaluate and validate that the facility demonstrates the desig-
nation requirements are met.
(e) The survey team must evaluate appropriate use of tele-
health/telemedicine utilization for neonatal care.
(f) All information and materials submitted by a facility to the
department and a survey organization under Texas Health and Safety
Code, §241.183(d) or this subchapter, are subject to confdentiality as
articulated in Texas Health and Safety Code, §241.184, Confdentiality;
Privilege, and are not subject to disclosure under Texas Government
Code, Chapter 552, or discovery, subpoena, or other means of legal
compulsion for release to any person.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on June 2, 2023.
TRD-202302037
Cynthia Hernandez
General Counsel
Department of State Health Services
Effective date: June 22, 2023
Proposal publication date: January 13, 2023
For further information, please call: (512) 535-8538
♦ ♦ ♦
TITLE 26. HEALTH AND HUMAN SERVICES
PART 1. HEALTH AND HUMAN
SERVICES COMMISSION
CHAPTER 565. HOME AND COMMUNITY-
BASED (HCS) PROGRAM AND COMMUNITY
FIRST CHOICE (CFC) CERTIFICATION
STANDARDS
The Executive Commissioner of Health and Human Services
Commission (HHSC) adopts in Texas Administrative Code (TAC)
Title 26, Part 1, Chapter 565, Home and Community-based
Program (HCS) Certifcation Standards, new §§565.2, 565.3,
565.5, 565.7, 565.9, 565.11, 565.13, 565.15, 565.17, 565.19,
565.21, 565.23, 565.25, 565.27, 565.29, 565.31, 565.33,
565.35, 565.37, 565.39, 565.41, 565.43, 565.47, and 565.49.
New §§565.3, 565.5, 565.9, 565.11, 565.13, 565.15, 565.17,
565.19, 565.21, 565.23, 565.25, 565.27, 565.31, 565.35,
565.37, and 565.49 are adopted with changes to the proposed
text as published in the February 17, 2023, issue of the Texas
Register (48 TexReg 789). These rules will be republished.
These rules contain references to §565.45, Administrative
Penalties, which is being administratively transferred from 40
TAC §9.181, effective the same day these rules are adopted.
New §§565.2, 565.7, 565.29, 565.33, 565.39, 565.41, 565.43,
and 565.47 are adopted without changes to the proposed text as
published in the February 17, 2023, issue of the Texas Register
(48 TexReg 789). These rules will not be republished.
BACKGROUND AND JUSTIFICATION
QU qexoeg POQS gune NSI OMOP qex~s oegister
The new sections are necessary to describe the regulatory cer-
tifcation standards for HCS Medicaid waiver program providers.
The rules describe certifcation standards regarding service de-
livery; rights of individuals; requirements related to abuse, ne-
glect, and exploitation; staff member and service provider re-
quirements; and quality assurance. The rules also include re-
quirements from the program's residential checklist along with
new requirements for emergency preparedness, fre drills, and
evacuation drills in all residential types in the HCS program. The
rules set forth recommendations for increased oversight of HCS
host home/companion care homes, clarify restraint and seclu-
sion requirements, and add language for restricting the use of
enclosed beds. The rules also modify HHSC surveyor require-
ments to allow for survey fexibility as the HCS waiver program
evolves.
COMMENTS
The 31-day comment period ended March 20, 2023. During
this period, HHSC received 57 comments regarding the pro-
posed rules from three commenters: Every Child, Inc., Private
Provider's Alliance of Texas, and Provider's Alliance for Commu-
nity Services of Texas. A summary of comments and HHSC's
responses follows.
Comment: A commenter recommended removing the term
"emotional well-being" from the defnition of "actual harm"
because the term is subjective, not defned, and has been used
broadly to establish harm.
Response: The concept of an individual's emotional well-being
as it relates to harm is consistently used across Long-Term Care
Regulation programs, including similar community settings for
individuals diagnosed with intellectual disabilities or related con-
ditions. Therefore, HHSC declines to make changes to this def-
nition without further dialogue with stakeholders, advocates, and
providers.
Comment: A commenter said it is unclear why there is "emo-
tional injury" in the defnition of neglect in §565.3(76) but not in
the defnition of neglect in the Texas Department of Family and
Protective Services (DFPS) rules. The commenter asked what
the defnition of emotional injury is and stated that the defnition
of neglect should match that of DFPS's defnition and include
DFPS's defnition for emotional harm, which is "a highly unpleas-
ant mental reaction with obvious signs of distress, such as an-
guish, grief, fright, humiliation, or fury." The commenter added
that emotional harm is innate in living and associating with other
people, whether a roommate or direct care staff, but does not
constitute neglect or abuse. The commenter recommended, at
a minimum, adding a defnition for "emotional harm," and that
the outcome must be tied to abuse or neglect.
Response: HHSC declines to make changes in response to
these comments because the language "emotional injury" is
used in the HHSC defnition of neglect located in 26 TAC
§711.19, How is neglect defned? HHSC is the investigative
authority for HCS abuse, neglect, and exploitation allegations,
and as such, this term is consistent for the defnition of neglect
in both HCS and investigative rules.
Comment: A commenter stated that the defnition of relative in
§565.3(99) is different from what HHSC is using for "relative host
home."
Response: HHSC declines to make changes in response to this
comment because proposed §565.3(99) is used in context with
HHSC Billing Requirements.
Comment: A commenter recommended deleting §565.7(c)(1)(B)
unless there is a statutory or policy requirement that this web-
based training be completed. Behavioral support services must
be provided by a behavior therapist; therefore, it is unclear to the
commenter what HHSC's web-based training would offer that a
trained professional did not already gain from educational and
hands-on experience.
Response: HHSC declines to make changes in response to
these comments because proposed §565.7(c)(1)(B) is, in part, a
federal Medicaid requirement as outlined in the CMS HCS waiver
application.
Comment: A commenter stated that §565.9(b)(5), under Pro-
gram Provider Requirements, may be the appropriate place to
add a requirement that providers ensure the licenses of their li-
censed contractors are in good standing.
Response: HHSC declines to make changes in response to this
comment. Proposed §565.7(c)(2)(A), under Staff Member and
Service Provider Requirements, is specifc to licensed contrac-
tors and requires a program provider to develop and implement
policy and procedures to ensure a service provider continues to
be licensed and in good standing with its licensing board during
the provision of services to an individual.
Comment: Regarding §565.9(c), a commenter stated that licen-
sure checks of service providers should be made upon employ-
ment (and upon expiration of the license) and that automobile
insurance should only be required for the period of the policy, be-
cause it is unclear what an "ongoing verifcation process" would
be other than requiring staff to inform providers if their insurance
is canceled or changes, or if their license is revoked.
Response: HHSC agrees with the commenter and revised pro-
posed §565.9(c) to require a program provider to develop and
implement policy and procedures to ensure only staff members
and service providers with a valid driver's license and insurance
transport individuals.
Comment: A commenter recommended adding "unless" to the
beginning of §565.9(e)(2).
Response: Changing the language of proposed §565.9(e)(2) in
response to the requestor's suggestion would change the mean-
ing of the rule so that the rule would no longer align with HHSC's
intent. Therefore, HHSC declines to make the commenter's pro-
posed change. However, proposed §565.9(e)(2) was revised to
clarify the intent of the subsection.
Comment: A commenter recommended the following revision to
§565.9(g)(2)(B) related to fnancial impropriety toward an indi-
vidual: "unauthorized purchase of goods not requested for the
individual and cannot be used by the individual or not intended
for the individual's use." The commenter stated that it is subjec-
tive for regulators to independently determine what an individual
can or cannot use and that this regulation does not require con-
sideration of the intent of the purchase.
Response: HHSC agrees with the commenter and revised pro-
posed §565.9(g)(2)(B) to clarify that fnancial impropriety toward
an individual includes "any purchase of goods that are not re-
quested for the individual, cannot be used by the individual, or
are not intended for the individual's use."
Comment: A commenter stated, "After an approved individ-
ual plan of care (IPC) has been signed and shared with the
provider, and unless the person has chosen a group home
and the provider does not have a group home vacancy, or the
^almqba oribp gune NSI OMOP QU qexoeg POQT
provider cannot ensure the health and safety of the individual.
Providers may offer vacancies in other contract areas to satisfy
this requirement."
Response: In accordance with the federal CMS HCS waiver ap-
plication, the program provider must accommodate the individ-
ual's preference regarding where to live. HHSC declines to make
changes in response to this comment because the requested
revision is inconsistent with the federal HCS waiver application
and would require additional analysis and a change to the fed-
eral HCS waiver application.
Comment: In reference to §565.11(a)(4), a commenter recom-
mended changing the wording to, "facilitate modifcations to a
service plan if requested by the individual and maintain service
plans to be responsive to individual's personal goals, conditions,
abilities, and needs as identifed by the service planning team
and identifed in the person directed plan."
Response: HHSC declines to make changes in response to
these comments. To ensure an individual has access to ser-
vices in a timely manner, the service provider is responsible for
maintaining a system of delivering services that is responsive to
the individual's personal goals, condition, abilities, and needs as
identifed by the service planning team, in accordance with pro-
posed §565.11(a)(4).
Comment: A commenter stated that §565.11(a)(6) requires
providers go through the process of obtaining a behavior plan to
restrict an individual's rights. The commentor would like to have
a separate process in rule for restricting an individual's right,
when applicable, since not all restrictions of rights are linked to
an undesirable behavior, and creating a behavior plan involves
multiple entities, not just the program provider.
Response: An individual receiving HCS services has all the
same rights and responsibilities exercised by people without
disabilities unless otherwise justifed. The federal CMS HCS
waiver application requires that providers justify any restriction
of rights and that those restrictions only occur with adequate
discussion and documentation through the person-centered
planning process. Therefore, HHSC declines to make changes
in response to this without further dialogue with stakeholders,
advocates, and providers.
Comment: A commenter expressed concerns regarding
§565.11(a)(10), which requires providers to initiate an individual
plan of care (IPC) renewal although they have no control over
local intellectual and developmental disability authority avail-
ability, HHSC timeliness, or the families of the individuals. The
commenter stated that providers already go without payment if
the renewal deadline is missed. The commenter argued that
if failure to meet this renewal requirement could result in an
administrative penalty, the requirement should not also be a
part of HHSC Billing Requirement nor a contract requirement
under Medicaid and Children's Health Insurance Program.
Response: The IPC document provides information related to
the care and needs of the individual. This document must be up
to date to ensure the health and safety of the individual. Medicaid
program rules located in 26 TAC §263.302 provide a 60-day win-
dow for renewals, which gives program providers suffcient time
to initiate IPC renewals. Therefore, HHSC declines to makes
changes in response to these comments because an accurate
IPC is essential to the health and safety of the individual.
Comment: A commenter stated that since §565.11(a)(12) is al-
ready in the billing requirements, it should not also be in rule.
Response: HHSC declines to make changes in response to
this comment because proposed §565.11(a)(12) is a different
requirement than that of the HCS billing requirement. Billing re-
quirements provide the documentation that is necessary for re-
imbursement. The proposed rules describe what the program
provider must do to document the individual's progress or lack
of progress towards goals and objectives.
Comment: In reference to §565.11(a)(14), a commenter stated
that, "The state has specifed that individuals can no longer re-
ceive paid work as part of a habilitation service so it is unclear
whether individuals will still have access to sub-minimum wage,
however, HHSC should not dictate the options available to indi-
viduals that are not covered by Medicaid."
Response: Proposed §565.11(a)(14) ensures that individuals
who produce marketable goods and services in habilitation train-
ing programs are paid at a wage level commensurate with that
paid to persons who are without disabilities and who would other-
wise perform that work. Compensation is based on requirements
contained in the Fair Labor Standards Act. This rule applies to
HCS program providers and what they must do for individuals
who receive HCS waiver program services. Therefore, HHSC
declines to make changes in response to this comment.
Comment: A commenter stated that the language in
§565.11(a)(20) is already outlined in licensure requirements for
Individualized Skills and Socialization as well as the program
service rules. Additionally, the commenter asserted that ad-
ditional efforts are needed to set reasonable expectations for
service providers who are contracting services with licensed
providers that are expected to meet this standard under their
license (and separately regulated by HHSC).
Response: HHSC made changes to this rule language and re-
moved the program description language from the rule. The re-
vised language requires the HCS program provider to ensure de-
livery of contracted services in accordance with the individual's
person-directed plan (PDP), IPC, implementation plan, and Ap-
pendix C of the CMS federal HCS waiver application, but it does
not require the HCS program provider to abide by the licensing
requirements in the Individualized Skills and Socialization licen-
sure rules.
Comment: The commenter recommended adding "including an
electronic copy" to §565.11(a)(42)(B).
Response: HHSC agrees with the commenter and revised pro-
posed §565.11(a)(42)(B) to include service by an electronic copy.
Comment: A commenter stated that the language about CFC
ERS in §565.19 is not in the HCS Billing Requirements or as a
service with a rate in the HCS rate tables.
Response: HHSC declines to make changes in response to this
comment. Proposed §565.19 requires the program provider to
deliver CFC ERS services as required by the federal CMS HCS
waiver application. The rule ensures that an individual receives
the appropriate services as indicated in the HCS waiver applica-
tion and for the health and safety of the individual.
Comment: In reference to §565.19(1), a commenter asked why
CFC ERS would not be approved for a person who is receiving
host home companion care.
Response: HHSC declines to make changes in response to this
comment because this comment is outside the scope of this rule
project.
QU qexoeg POQU gune NSI OMOP qex~s oegister
Comment: A commenter suggested adding "program providers
should have policies and procedures to ensure:" to §565.23(b).
Response: HHSC declines to make changes in response to this
comment because a program provider is directly responsible for
the condition of an HCS residence rather than creating policies
and procedures for selecting and maintaining HCS residences.
Comment: A commenter asked HHSC to explain how a neigh-
borhood or community in §565.23(b)(1) can ensure the health,
safety, and well-being of the individual.
Response: HHSC declines to make changes in response to this
comment because the requestor was asking HHSC to provide
examples of how a neighborhood could ensure the health, safety,
and well-being of the individual rather than make changes to the
rule language. A program provider may consider whether the
neighborhood or community is adjacent to resources the individ-
ual may require, such as community engagement opportunities
or medical resources.
Comment: A commenter recommended adding "including doc-
umentation of identifed broken equipment and order date" to
§565.23(b)(3). The commenter added that equipment breaks
and may not be available for a time if the break is unexpected.
Response: HHSC agrees with this comment and revised pro-
posed §565.23(b)(3) to clarify how a service provider will identify
adaptive equipment that is not functional.
Comment: A commenter suggested adding "provided by the
provider" to §565.23(b)(5). The commenter stated that host
homes may have furnishings not in good repair, but that this
should not necessarily be held against them, particularly if they
are the parents of the individual and have limited income and
resources.
Response: HHSC agrees with the commenter and revised pro-
posed §565.23(b)(5) to include a requirement that furnishings
must be safe and ft for use.
Comment: A commenter stated that the rules in §565.23(b)(7)
should allow for a process for identifying and treating possible
infestations and should not be penalized if the provider is treating
a potential infestation and keeping individuals safe.
Response: HHSC declines to make changes in response to
this comment because proposed §565.23(b)(7) only requires the
home to be free of infestations including bugs, rodents, and other
pests. The rule enables the provider to determine how to identify
and treat infestations within the home.
Commenter: To ensure consistency with the Home and Com-
munity-based Services settings requirements located in 26 TAC
§263.502, a commenter requested that the following be added
to the end of §565.23(b)(14)(C): "Unless the LAR is the individ-
ual's host home provider."
Response: Under §263.502(b)(4), a lock is installed on the indi-
vidual's bedroom door at no cost to the individual. The require-
ment for a lock to be installed on an individual's bedroom door at
no cost to the individual or the individual's LAR, as proposed in
rule §565.23(b)(14)(C), is consistent with §263.502 of this title.
Therefore, HHSC declines to make changes in response to this
comment.
Comment: In §565.23(b)(14)(C), a commenter asked to clarify in
LTCR rule whether a family can purchase a different lock if they
do not like the lock installed by the provider as long as it meets
requirements.
Response: HHSC declines to make changes in response to this
comment because proposed §565.23(b)(13) only requires that
the program provider ensure a lock is on the individual's bedroom
door.
Comment: A commenter asked HHSC to clarify the settings and
frequency of fre drills in §565.23(e)(1).
Response: HHSC agrees with the commenter and made
changes to §565.23 for clarity.
Comment: A commenter suggested that §565.23(e)(4) and (5)
be consolidated into one statement, "Providers should retrain or
revise emergency plans based upon assessment of staff and
individual performance of the fre drill."
Response: HHSC declines to make changes in response to this
comment because the requirement in each rule serves a differ-
ent purpose in the service provider's emergency plan. Proposed
§565.23(e)(4) relates to staff execution of a fre drill. Proposed
§565.23(e)(5) involves actions the service provider takes at any
time in response to an identifed shortcoming in the emergency
plan.
Comment: A commenter suggested adding language to
§555.23(b)(e)(5) regarding fre drills and whether a person must
evacuate in a home rated impractical with sprinklers.
Response: HHSC declines to make changes in response to this
comment because proposed §565.23(f) requires the program
provider to create and maintain an emergency plan to address
fre drills and ensure the individual can exit the residence safely.
The rule enables the HCS provider to create a plan based on the
needs of the individual and adjust as necessary.
Comment: A commenter recommended adding text in quotes at
the end of §565.25(d): "or electronically if available."
Response: HHSC agrees with the commenter and revised pro-
posed §565.25(d) to include an option for electronic delivery of
records, reports or other information requested by HHSC.
Comment: A commenter asked if providers could charge
a deposit in accordance with the Texas Property Code in
§565.27(a)(5)(A).
Response: Under 42 CFR 441.301(c)(4)(vi)(A), for a provider-
owned or controlled residential setting, the individual receiving
services has, at a minimum, the same responsibilities and pro-
tections from eviction that tenants have under the landlord/tenant
law of the State, county, city, or other designated entity. As such,
the program provider or service provider of host home/compan-
ion care and the individual or LAR agree that the residential
agreement is a "lease," as defned in Texas Property Code Chap-
ter 92, and that they are subject to state law governing residential
tenancies, including Texas Property Code Chapters 24, 91, and
92 and Texas Rules of Civil Procedure Rule 510, in accordance
with §263.503(c)(7)(A) of this title. Therefore, HHSC declines to
make changes in response to this comment because the terms of
a residential lease agreement would be controlled by the Texas
Property Code.
Comment: A commenter stated that §565.27(c) is duplicative
with fnancial impropriety provisions in §565.9(g)(2).
Response: HHSC declines to make changes in response to
this comment because proposed §565.9(g)(2) is the prohibition
against fnancial impropriety whereas proposed §565.27(c) re-
quires written approval for all charges assessed by the program
provider against the individual's personal funds.
^almqba oribp gune NSI OMOP QU qexoeg POQV
Comment: A commenter requested to add, "have policies and
procedures" to §565.31(a), Requirements Related to Abuse, Ne-
glect, and Exploitation.
Response: HHSC declines to make changes in response to this
comment because proposed §565.31(a) outlines the regulatory
requirements to ensure compliance with the service provider's
responsibility to inform the individual, the individual's LAR, and
staff on the procedures to report abuse, neglect, and exploitation
and to ensure staff is adequately trained. An additional regula-
tory requirement for the service provider to develop policies and
procedures would require further discussion with stakeholders,
advocates, and service providers.
Comment: A commenter requested adding the language "have
policies and procedures" in §565.31(a)(2) so that it requires the
provider to have policies and procedures for training staff on
abuse, neglect, and exploitation and document the training.
Response: HHSC declines to make changes in response to
this comment because proposed §565.31(a)(2) outlines the
regulatory requirements to ensure compliance with the service
provider's responsibility to ensure staff is adequately trained. An
additional regulatory requirement for the service provider to de-
velop policies and procedures would require further discussion
with stakeholders, advocates, and service providers.
Comment: A commenter stated that it does not make sense
that a provider must send Form 8494, Notifcation Regarding
an Investigation of Abuse, Neglect or Exploitation, required in
§565.31(f)(4) to HHSC because HHSC is the one who issues
the outcome of the investigation; therefore, the commenter ar-
gues, HHSC is aware of the outcome before the provider. The
commenter also stated that in some cases, HHSC has shown
up with citations written for violations of this subsection when
the provider never received the report of the investigation.
Response: HHSC declines to make changes in response to this
comment because the purpose of Form 8494 is for the service
provider to document any actions taken as a result of the out-
come of the investigation.
Comment: A commenter questioned why HHSC continues to
require that at least one person in a four-person residence must
receive residential support. The commenter stated that the rates
are the same for residential support and supervised living regard-
less of whether a person lives in a three or four-bedroom home;
the designation of "residential support" requires 24-hour awake
staff.
Response: HHSC declines to make changes in response to this
comment because the federal CMS HCS waiver application re-
quires one person receive residential support in a four-person
residence. Making a change to this rule would confict with the
federal CMS HCS waiver application.
Comment: A commenter stated that the rules use the term
"Billing Guidelines" when the terminology should be "Billing
Requirements."
Response: HHSC agrees with the commenter and revised pro-
posed §§565.3(89), (90), (99), (102), and §565.17(1)(A) to re-
place "Billing Guidelines" with "Billing Requirements."
Comment: A commenter stated that rules that allow individuals
to choose any group home and rules that specify that individuals
should have input on their roommates should be reconciled. The
commenter argued that if providers allow an individual to move
into any room he or she chooses, this could violate the rights of
other individuals living in the home and their input on regarding
perspective roommates.
Response: The commenter does not identify the rules that re-
quire reconciliation. Therefore, HHSC is unable to respond to
these comments.
Comment: Regarding §565.11(a)(4), a commenter stated that a
provider should be responsive to an individual's change in condi-
tion or specifc request for services; however, a provider should
not face "regulatory action when regulatory disagrees with the
service plan." Rather, the commenter asserted that concerns
should be referred back to the service planning team for con-
sideration.
Response: As part of the provider's service delivery, the provider
must maintain a system of delivering HCS Program and CFC
services that is continuously responsive to changes in the indi-
vidual's personal goals, condition, abilities, and needs as iden-
tifed by the service planning team. It is unclear what the com-
menter means by references to a regulatory action when regu-
latory disagrees with the service plan. Proposed §565.11(a)(4)
relates to a provider's response to an individual's change in con-
dition or a specifc request for services. Therefore, HHSC de-
clines to make changes in response to this comment.
Comment: A commenter stated that not every rights restriction
requires a behavior support plan and that providers have an
extensive process that they must undergo with the service
planning team to justify any rights restriction and documentation
in the PDP. This may or may not include a recommendation
for a behavior support plan. Therefore, the commenter stated,
§565.11(a)(6) should be modifed.
Response: As part of the provider's service delivery, the provider
must ensure that an individual's rights are not violated unless
contraindications are documented with justifcation in a behav-
ior support plan. The requirement of a behavior support plan to
restrict an individual's rights ensures there is an identifed need
for the restriction, which is documented, and that lesser restric-
tive options are considered. Therefore, HHSC declines to make
changes in response to this comment.
Comment: A commenter had concerns regarding the full impact
of including the residential review checklist in this rule because
previously providers were given the opportunity to correct any
concerns without penalty unless there was a hazard to health
and safety or serious concerns that would constitute the need
for an interim survey. The commenter stated that these rules
and program changes may change this practice and lead to es-
sentially licensing every three or four-bedroom group home in
HCS, as well as the program as a whole.
Response: HHSC declines to make changes in response to this
comment because program providers have an opportunity to cor-
rect any identifed non-compliance in accordance with proposed
§565.49, Program Provider Compliance and Corrective Action.
Comment: Two commenters had concerns with putting an end
date on the use of enclosed beds. One stated that if HHSC is go-
ing to prohibit the use of enclosure beds in §565.35(a), enclosed
beds should not be prohibited until the date the rule becomes
effective, rather than January 1, 2023.
Response: HHSC agrees with the commenter and revised pro-
posed §565.35(a) to change the effective date from January 1,
2023, to June 19, 2023, matching the effective date of the rules.
QU qexoeg PORM gune NSI OMOP qex~s oegister
Comment: Two commenters expressed concern with the prohi-
bition on enclosed beds, stating that there are unique circum-
stances where an individual may need a more restrictive bed or
where an enclosed bed is the safest option, and asserted that
they should be allowed with proper documentation and discus-
sion.
Response: Under proposed §565.35(a), the program provider
may allow the use of an enclosed bed in a residence if the
enclosed bed is purchased, obtained, and complies with
§565.35(c) prior to June 19, 2023. Under proposed §565.35(b),
an enclosed bed is prohibited in a residence if it is purchased or
obtained on or after June 19, 2023. Under proposed §565.35(e),
all enclosed beds are prohibited after June 19, 2028, for health
and safety of the individual. Therefore, HHSC declines to
continue the use of enclosed beds after June 19, 2028, without
further dialogue with stakeholders, advocates, and providers.
Comment: In reference to §565.35(c)(3)(B), a commenter sug-
gested that producing a receipt for an enclosed bed for HHSC
may not be feasible in all cases as families may not still have a
receipt for the bed.
Response: HHSC declines to make changes in response to this
comment because a receipt from a durable medical equipment
company for the enclosed bed ensures the purchased bed meets
industry standards for an enclosed bed.
Comment: A commenter reported that there is some incon-
sistency in the use of the term "enclosed beds" throughout
§565.35(c), and stated that the description of the assessment,
documentation, and review of enclosed bed usage in HCS
settings other than the participant's own home or family home is
somewhat duplicative and confusing.
Response: The commenter does not identify the inconsistencies
in the use of the term "enclosed bed" or what is duplicative and
confusing in proposed §565.35(c). Therefore, HHSC is unable
to respond to these comments.
Comment: A commenter stated that the requirements in
§565.35, Enclosed Beds, must be consistent with §565.37,
Protective Devices, given that the defnition of an enclosed bed
identifes it as a protective device.
Response: HHSC agrees with the commenter and revised pro-
posed §565.37 to state that if the protective device is an enclosed
bed, providers should follow proposed §565.35.
Comment: A commenter was concerned that the requirements
in §565.35(c)(3)(C) may cause a misunderstanding with other
requirements and asked that the rule language be simplifed for
clarity.
Response: The commenter does not identify the other require-
ments that could cause a misunderstanding with proposed
§565.35(c)(3)(C). Therefore, HHSC is unable to respond to
these comments.
Comment: A commenter was concerned that highlighting the re-
quirements in §565.35(e) that an enclosed bed must be commer-
cially produced may cause a misunderstanding with the other
requirements that are needed to meet the defnition of enclosed
bed located in §565.5(34).
Response: HHSC agrees with this comment and removed sub-
section(e) from §565.35 for clarity as this requirement was al-
ready listed in the defnition section at §565.5(34).
Comment: A commenter expressed concerns about removal of
language in existing rules at 40 TAC §9.172(4) requiring program
providers to, "encourage involvement of the LAR or family mem-
bers and friends in all aspects of the individual's life and provide
as much assistance and support as is possible and construc-
tive."
Response: The program provider must develop and imple-
ment policies to ensure the individual's family members and
LAR are involved in the individual's services, as proposed in
§565.5(b)(39). Therefore, HHSC declines to make changes in
response to this comment.
Comment: A commenter expressed concerns about removal of
language in existing rules at 40 TAC §9.174(a)(9) requiring pro-
gram providers to, "allow the individual's family members and
friends access to an individual without arbitrary restrictions un-
less exceptional conditions are justifed by the individual's ser-
vice planning team and documented in the PDP."
Response: HHSC declines to make changes in response to
this comment because proposed §565.5(b) requires the program
provider to develop and implement policies to ensure the individ-
ual can receive visitors without prior notice, have privacy in visi-
tation with family and others, and communicate, associate, and
meet privately with any person of the individual's choice.
Comment: A commenter expressed concerns about removal of
language in existing rules at 40 TAC §9.174(a)(11) requiring pro-
gram providers to, "ensure that the individual who is living out-
side the family home is living in a residence that maximizes op-
portunities for interaction with community members to the great-
est extent possible."
Response: HHSC declines to make changes in response to
this comment because proposed §565.5(b) requires the service
provider develop and implement policies to ensure the individ-
ual's right to interaction within the community is not violated.
Comment: A commenter expressed concerns about removal of
language in existing rules at 40 TAC §9.174(a)(15) requiring pro-
gram providers to, "ensure that each individual has opportunities
to develop relationships with peers with and without disabilities
and receives support if the individual chooses to develop such
relationships."
Response: HHSC declines to make changes in response to
this comment because proposed §565.5(b) requires the service
provider to develop and implement policies to ensure an individ-
ual has the opportunity to develop relationships with peers, who
may or may not have disabilities.
Comment: A commenter expressed concerns about removal of
language in existing rules at 40 TAC §9.174(a)(19) requiring pro-
gram providers to, "unless contraindications are documented
with justifcation by the service planning team, ensure that an
individual's routine provides opportunities for leisure time activi-
ties, vacation periods, religious observances, holidays, and days
off, consistent with the individual's choice and routines of other
members of the community."
Response: HHSC declines to make changes in response to
this comment because proposed §565.5(b) requires the service
provider to develop and implement policies to ensure an individ-
ual has opportunities for leisure time activities, vacation periods,
religious observances, holidays, and days off, consistent with the
individual's choice and routines of other members of the commu-
nity. Further, proposed §565.11(a)(6) would allow for restriction
of an individual's right, under §565.5, if there was a documented
^almqba oribp gune NSI OMOP QU qexoeg PORN
justifcation for the restriction in the individual's behavior support
plan.
Comment: A commenter expressed concerns about removal
of language in existing rules at 40 TAC §9.174(a)(21) requiring
program providers to, "unless contraindications are documented
with justifcation by the service planning team, ensure that each
individual is offered choices and opportunities for accessing and
participating in community activities and experiences available
to peers without disabilities."
Response: HHSC declines to make changes in response to
this comment because proposed §565.5(b) requires the service
provider to develop and implement policies to ensure an individ-
ual has an opportunity to participate in social, recreational, and
community group activities. Further, proposed §565.11(a)(6)
would allow for restriction of an individual's right, under §565.5,
if there was a documented justifcation for the restriction in the
individual's behavior support plan.
Comment: A commenter expressed concerns about removal of
language in existing rules at 40 TAC §9.174(a)(22) requiring pro-
gram providers to, "assist the individual to meet as many of the
individual's needs as possible by using generic community ser-
vices and resources in the same way and during the same hours
as these generic services are used by the community at-large."
Response: HHSC declines to make changes in response to this
comment as because proposed §565.5(b) requires the service
provider develop and implement policies to ensure the individ-
ual's right to interaction within in the community is not violated.
Comment: A commenter expressed concerns about the removal
of language in existing rules at 40 TAC §9.174(a)(51) requiring
program providers to, "ensure that appropriate staff members,
service providers, and the service coordinator are informed of
a circumstance or event that occurs in an individual's life or a
change to an individual's condition that may affect the provision
of services to the individual."
Response: HHSC declines to make changes in response to this
comment because proposed §565.11(a)(8) requires a program
provider to inform appropriate staff members, service providers,
and the service coordinator when a circumstance or even occurs
in an individual's life or a change to an individual's condition af-
fects the provision of services to the individual.
Comment: A commenter stated that while some individual rights
remain in the proposed rules and the proposed rules require
a program provider to inform and, in some cases, protect and
promote the rights of an individual the rules do not require the
provider to support the individual to exercise his or her rights.
The commenter stated that this distinction is subtle, but impor-
tant.
Response: HHSC declines to make changes in response to
this comment because proposed §565.5(b) requires a program
provider to develop and implement policies to ensure the individ-
ual can exercise the rights, enumerated under proposed §565.5,
without interference, coercion, discrimination, or retaliation by
the program provider. Further, the individual has a right to be
informed that the individual may make a complaint with the In-
tellectual and Developmental Disability Ombudsman.
Comment: A commenter recommended adding "level of need
(LON)" to §565.11(a)(2) so it reads that a program provider must
serve an eligible individual without regard to age, sex, race, dis-
ability, or level of need.
Response: Level of need is an assignment given by HHSC to
an individual upon which reimbursement for host home/compan-
ion care, supervised living, residential support, and Individual-
ized Skills and Socialization is based. Proposed §565.11(a)(2)
requires a program provider to serve an eligible applicant level
of disability. Therefore, HHSC declines to make changes in re-
sponse to this comment.
Comment: A commenter recommended adding the follow-
ing "language currently at 40 TAC §9.174(a)(23)(E) requiring
program providers to ensure: "unless contraindications are
documented with justifcation by the service planning team, the
individual lives near family and friends and needed or desired
community resources consistent with the individual's choice, if
possible."
Response: HHSC declines to make any changes in response
to this comment as proposed §565.5(b)(27) requires program
providers to promote the individual's right to participate in deci-
sions regarding their living environment. Additionally, proposed
§565.5(b)(18) outlines the right of the individual to live where the
individual is within proximity of and can access treatment and
services that are best suited to meet the individual's needs and
abilities and that enhance that individual's strengths.
HHSC made minor changes to rule language as a result of inter-
nal feedback. Revisions include:
- clarifying expectations for the frequency of fre drills;
- changing the terminology "HHSC Provider User Guide" to
"HHSC guidance";
- adding a reference to the Medicaid rules regarding prohibited
settings, to clarify appropriate settings for respite;
- clarifying language regarding the individual's right to receive
visitors without prior notice, to align with Medicaid program rules;
- clarifying the program provider's role in reporting abuse, ne-
glect, and exploitation when a contracted service provider is in-
volved, to align with Individualized Skills and Socialization rules;
and
- updating TAC references related to new Medicaid HCS pro-
gram rules.
SUBCHAPTER B. OVERVIEW
26 TAC §565.2, §565.3
STATUTORY AUTHORITY
The new sections are authorized by Texas Government Code
§531.0055, which provides that the Executive Commissioner of
HHSC shall adopt rules for the operation and provision of ser-
vices by the health and human services agencies; Texas Gov-
ernment Code §531.021, which provides HHSC with the author-
ity to administer federal funds and plan and direct the Medicaid
program in each agency that operates a portion of the Medicaid
program; and Texas Human Resources Code §32.021, which
provides that HHSC shall adopt necessary rules for the proper
and effcient operation of the Medicaid program.
§565.3. Defnitions.
The following words and terms, when used in this subchapter, have the
following meanings, unless the context clearly indicates otherwise:
(1) Abuse--Considered to be:
(A) physical abuse;
(B) sexual abuse; or
QU qexoeg PORO gune NSI OMOP qex~s oegister
(C) verbal or emotional abuse.
(2) Actively involved--Signifcant, ongoing, and support-
ive involvement with an applicant or individual by a person, as deter-
mined by the applicant's or individual's service planning team or pro-
gram provider, based on the person's:
(A) interactions with the applicant or individual;
(B) availability to the applicant or individual for assis-
tance or support when needed; and
(C) knowledge of, sensitivity to, and advocacy for the
applicant's or individual's needs, preferences, values, and beliefs.
(3) Activities of daily living (ADL)--Basic personal ev-
eryday activities, including tasks such as eating, toileting, grooming,
dressing, bathing, and transferring.
(4) Actual harm--A negative outcome that compromises an
individual's physical, mental, or emotional well-being but does not con-
stitute an immediate threat.
(5) Alarm call--A signal transmitted from an individual's
Community First Choice (CFC) emergency response services (ERS)
equipment to the CFC ERS response center indicating that the individ-
ual needs immediate assistance.
(6) Alleged perpetrator--A person alleged to have commit-
ted an act of abuse, neglect, or exploitation of an individual.
(7) Applicant--A Texas resident seeking services in the
Home and Community-based Services (HCS) Program.
(8) Behavioral emergency--A situation in which an indi-
vidual's severely aggressive, destructive, violent, or self-injurious be-
havior:
(A) poses a substantial risk of imminent probable death
of, or substantial bodily harm to, the individual or others;
(B) has not abated in response to preventive de-escala-
tory or redirection techniques;
(C) is not addressed in a written behavior support plan;
and
(D) does not occur during a medical or dental proce-
dure.
(9) Business day--Any day except a Saturday, Sunday, or
national or state holiday listed in Texas Government Code §662.003(a)
or (b).
(10) Calendar day--Any day, including weekends and hol-
idays.
(11) Centers for Medicare and Medicaid Services (CMS)--
The federal agency within the United States Department of Health and
Human Services that administers the Medicare and Medicaid programs.
(12) Certifcation standard--A minimum standard for a pro-
gram provider used by the Texas Health and Human Services Commis-
sion (HHSC) during a survey to ensure health and safety of an individ-
ual. Violations of a certifcation principle or standard are subject to
administrative penalties.
(13) CFC--Community First Choice.
(14) CFC emergency response services (CFC ERS)--
Backup systems and supports used to ensure continuity of services
and supports. CFC ERS includes electronic devices and an array of
available technology, personal emergency response systems, and other
mobile communication devices.
(15) CFC ERS provider--The entity directly providing
CFC ERS to an individual, which may be the program provider or a
contractor of the program provider.
(16) CFC Financial management services (CFC
FMS)--The term used for FMS on the individual plan of care (IPC) of
an applicant or individual if the applicant or individual receives only
CFC personal assistance services/habilitation (PAS/HAB) through the
CDS option.
(17) CFC personal assistance services/habilitation (CFC
PAS/HAB). A service that:
(A) consists of:
(i) personal assistance services that aid an individual
in performing ADLs and instrumental activities of daily living (IADLs)
based on the individual's person-centered service plan, including:
(I) non-skilled assistance with the performance
of the ADLs and IADLs;
(II) household chores necessary to maintain the
home as a clean, sanitary, and safe environment;
(III) escort services, which consist of accompa-
nying and assisting an individual to access services or activities in the
community, but do not include transporting an individual; and
(IV) assistance with health-related tasks; and
(ii) habilitation that aids an individual in acquiring,
retaining, and improving self-help, socialization, and daily living skills
and training the individual on ADLs, IADLs, and health-related tasks,
such as:
(I) self-care;
(II) personal hygiene;
(III) household tasks;
(IV) mobility;
(V) money management;
(VI) community integration, including how to
get around in the community;
(VII) use of adaptive equipment;
(VIII) personal decision making;
(IX) reduction of challenging behaviors to allow
individuals to accomplish ADLs, IADLs, and health-related tasks; and
(X) self-administration of medication; and
(B) does not include transporting the individual, which
means driving the individual from one location to another.
(18) CFC support consultation--The term used for support
consultation on the IPC of an applicant or individual if the applicant or
individual receives only CFC PAS/HAB through the CDS option.
(19) CFC support management--Training regarding how to
select, manage, and dismiss an unlicensed service provider of CFC
PAS/HAB, as described in the HCS Handbook.
(20) Chemical restraint--A medication used to control an
individual's behavior or to restrict the individual's freedom of move-
ment that is not a standard treatment for the individual's medical or
psychological condition.
(21) Cognitive rehabilitation therapy--A service that:
^almqba oribp gune NSI OMOP QU qexoeg PORP
(A) assists an individual in learning or relearning cog-
nitive skills that have been lost or altered because of damage to brain
cells or brain chemistry in order to enable the individual to compensate
for lost cognitive functions; and
(B) includes reinforcing, strengthening, or reestablish-
ing previously learned patterns of behavior, or establishing new pat-
terns of cognitive activity or compensatory mechanisms for impaired
neurological systems.
(22) Community resource coordination group (CRCG)--A
local interagency group composed of public and private agencies that
develops service plans for individuals whose needs can be met only
through interagency coordination and cooperation. The group's role
and responsibilities are described in the Memorandum of Understand-
ing on Coordinated Services to Persons Needing Services from More
Than One Agency, which is available on the HHSC website.
(23) Competitive employment--Employment that pays an
individual at least minimum wage if the individual is not self-em-
ployed.
(24) Consumer directed services option (CDS option)--A
service delivery option in which an individual or legally authorized
representative employs and retains service providers and directs the
delivery of program services.
(25) Contract--A provisional contract or a standard con-
tract.
(26) Controlling person--A person who:
(A) has an ownership interest in a program provider;
(B) is an offcer or director of a corporation that is a
program provider;
(C) is a partner in a partnership that is a program
provider;
(D) is a member or manager in a limited liability com-
pany that is a program provider;
(E) is a trustee or trust manager of a trust that is a pro-
gram provider; or
(F) because of a personal, familial, or other relationship
with a program provider, is in a position of actual control or authority
with respect to the program provider, regardless of the person's title.
(27) Critical incident--An event listed in the HCS Provider
User Guide found on the HHSC website.
(28) Critical violation--A violation for which HHSC may
assess an administrative penalty before giving a program provider an
opportunity to correct the violation. A critical violation:
(A) is an immediate threat;
(B) has resulted in actual harm and is widespread;
(C) has resulted in actual harm and is a pattern; or
(D) has the potential to result in actual harm and is
widespread.
(29) DADS--Formerly the Texas Department of Aging and
Disability Services. Its functions have been transferred to the Texas
Health and Human Services Commission.
(30) DFPS--The Department of Family and Protective Ser-
vices.
(31) Emergency--An unexpected situation in which the ab-
sence of an immediate response could reasonably be expected to result
in risk to the health and safety of an individual or another person.
(32) Emergency Plan--A written plan that describes the ac-
tions that will be taken to protect individuals, including evacuation or
sheltering-in-place, in the event of an emergency such as a fre or nat-
ural disaster.
(33) Emergency situation--An unexpected situation in-
volving an individual's health, safety, or welfare, of which a person
of ordinary prudence would determine that the legally authorized
representative (LAR) should be informed, such as:
(A) an individual needing emergency medical care;
(B) an individual being removed from his or her resi-
dence by law enforcement;
(C) an individual leaving his or her residence without
notifying a staff member or service provider and not being located; and
(D) an individual being moved from his or her residence
to protect the individual (for example, because of a hurricane, fre, or
food).
(34) Enclosed bed--A protective device that:
(A) is commercially produced;
(B) includes a 360-degree side enclosure, inclusive of a
top cover or canopy; and
(C) must be appropriate for the size and weight of the
individual.
(35) Exploitation--The illegal or improper act or process of
using, or attempting to use, an individual or the resources of an indi-
vidual for monetary or personal beneft, proft, or gain.
(36) Family-based alternative--A family setting in which
the family provider or providers are specially trained to provide sup-
port and in-home care for children with disabilities or children who are
medically fragile.
(37) Financial management services (FMS)--A service that
is provided to an individual participating in the CDS option, as defned
in 40 TAC §41.103 (relating to Defnitions).
(38) Financial management services agency (FMSA)--An
entity that provides fnancial management services to an individual par-
ticipating in the CDS option, as defned in 40 TAC §41.103.
(39) Follow-up survey--A review by HHSC of a program
provider to determine if the program provider has completed corrective
action.
(40) Former military member--A person who served in the
United States Army, Navy, Air Force, Marine Corps, Coast Guard, or
Space Force:
(A) who declared and maintained Texas as the person's
state of legal residence in the manner provided by the applicable mili-
tary branch while on active duty; and
(B) who was killed in action or died while in service, or
whose active duty otherwise ended.
(41) Four-person residence--A residence:
(A) that a program provider leases or owns;
(B) in which at least one person but no more than four
persons receive:
QU qexoeg PORQ gune NSI OMOP qex~s oegister
(i) residential support;
(ii) supervised living;
(iii) a non-HCS Program service like residential
support or supervised living (for example, services funded by DFPS
or by a person's own resources); or
(iv) respite;
(C) that, if it is the residence of four persons, at least
one of those persons receives residential support;
(D) that is not the residence of any persons other than
a service provider, the service provider's spouse, or person with whom
the service provider has a spousal relationship, or a person described
in subparagraph (B) of this paragraph; and
(E) that is not a dwelling described in §263.101(a)(5) of
this title (relating to Eligibility Criteria for HCS Program Services and
CFC Services).
(42) General residential operation (GRO)--The term has
the meaning set forth in Texas Human Resources Code §42.002.
(43) Good cause--As used in §565.19(10) of this chapter
(relating to Community First Choice (CFC) Emergency Response Sys-
tems (ERS) Services), a reason outside the control of the CFC ERS
provider, as determined by HHSC.
(44) Health-related tasks--Specifc tasks related to the
needs of an individual, which can be delegated or assigned by licensed
health care professionals under state law to be performed by a service
provider of CFC PAS/HAB. These include tasks delegated by a
registered nurse (RN); health maintenance activities as defned in 22
TAC §225.4 (relating to Defnitions), that may not require delegation;
and activities assigned to a service provider of CFC PAS/HAB by a
licensed physical therapist, occupational therapist, or speech-language
pathologist.
(45) Home and Community-based Services Program (HCS
Program)--The program operated by HHSC as authorized by CMS in
accordance with §1915(c) of the Social Security Act.
(46) HHSC--The Texas Health and Human Services Com-
mission.
(47) Instrumental activities of daily living (IADLs)--Activ-
ities related to living independently in the community, including meal
planning and preparation; managing fnances; shopping for food, cloth-
ing, and other essential items; performing essential household chores;
communicating by phone or other media; and traveling around and par-
ticipating in the community.
(48) ICAP--Inventory for Client and Agency Planning.
(49) ICF/IID--Intermediate care facility for individuals
with an intellectual disability or related conditions. An ICF/IID is a
facility in which the ICF/IID program is:
(A) licensed in accordance with Texas Health and
Safety Code Chapter 252; or
(B) certifed by HHSC, including a state supported liv-
ing center.
(50) ICF/IID program--The Intermediate Care Facilities
for Individuals with an Intellectual Disability or Related Conditions
Program, which provides Medicaid-funded residential services to
individuals with an intellectual disability or related conditions.
(51) Immediate threat--A situation that causes, or is likely
to cause, serious injury, harm, impairment to, or the death of an indi-
vidual.
(52) Implementation plan--A written document developed
by the program provider that, for each HCS Program service, except for
transportation provided as a supported home living activity, and CFC
service, except for CFC support management, on the individual's IPC
to be provided by the program provider, includes:
(A) a list of outcomes identifed in the person-directed
plan (PDP) that will be addressed using HCS Program and CFC ser-
vices;
(B) specifc objectives to address the outcomes required
by subparagraph (A) of this paragraph that are:
(i) observable, measurable, and outcome-oriented;
and
(ii) derived from assessments of the individual's
strengths, personal goals, and needs;
(C) a target date for completion of each objective;
(D) the number of units of HCS Program and CFC ser-
vices needed to complete each objective;
(E) the frequency and duration of HCS Program and
CFC services needed to complete each objective; and
(F) the signature and date of the individual, LAR, and
program provider.
(53) Individual--A person enrolled in the HCS Program.
(54) Individual plan of care (IPC)--A written plan that:
(A) states:
(i) the type and amount of each HCS Program ser-
vice and each CFC service, except for CFC support management, to be
provided to the individual during an IPC year;
(ii) the services and supports to be provided to the
individual through resources other than HCS Program services or CFC
services, including natural supports, medical services, and educational
services; and
(iii) if an individual will receive CFC support man-
agement; and
(B) is authorized by HHSC.
(55) Initial certifcation survey--A review by HHSC of a
program provider with a provisional contract to determine if the pro-
gram provider complies with the certifcation standards.
(56) Initial IPC--The frst IPC for an individual developed
before the individual's enrollment into the HCS Program.
(57) Intellectual disability--Signifcant sub-average gen-
eral intellectual functioning existing concurrently with defcits in
adaptive behavior and manifested during the developmental period.
(58) Intellectual Disability/Related Conditions Assess-
ment (ID/RC Assessment)--A form used by HHSC for level of care
(LOC) determination and level of need (LON) assignment.
(59) Intermittent survey--A review by HHSC of a program
provider, which may originate from a complaint, that is not an initial
certifcation survey, a recertifcation survey, or a follow-up survey, to
determine if the program provider complies with the certifcation stan-
dards.
^almqba oribp gune NSI OMOP QU qexoeg PORR
(60) IPC cost--Estimated annual cost of HCS Program ser-
vices included on an IPC.
(61) IPC year--A 12-month time period starting on the date
an initial or renewal IPC begins. A revised IPC does not change the
begin or end date of an IPC year.
(62) Isolated--The scope of a violation that has affected a
very limited number of individuals or that has occurred only occasion-
ally.
(63) Legally authorized representative (LAR)--A person
authorized by law to act on behalf of a person in a matter described
in this subchapter, and may include a parent, guardian, or managing
conservator of a minor, or the guardian of an adult.
(64) Level of care (LOC)--A determination given to an in-
dividual as part of the eligibility determination process based on data
submitted on the ID/RC Assessment.
(65) Level of need (LON)--An assignment given by HHSC
to an individual upon which reimbursement for host home/companion
care, supervised living, residential support, and individualized skills
and socialization is based.
(66) Licensed vocational nurse (LVN)--A person licensed
to practice vocational nursing in accordance with Texas Occupations
Code Chapter 301.
(67) Local intellectual and developmental disability
authority (LIDDA)--An entity designated by the HHSC Executive
Commissioner, in accordance with Texas Health and Safety Code
§533A.035.
(68) Managed care organization--This term has the mean-
ing set forth in Texas Government Code §536.001.
(69) Means of escape--A continuous and unobstructed path
of travel from an occupied portion of a building to an outside area.
(70) Mechanical restraint--A mechanical device, material,
or equipment used to control an individual's behavior by restricting the
ability of the individual to freely move part or all of the individual's
body.
(71) Medical Assistance Only Medicaid (MAO Medic-
aid)--A type of Medicaid for which an applicant or individual qualifes
fnancially for Medicaid assistance but does not receive Supplemental
Security Income benefts.
(72) Microboard--A program provider:
(A) that is a non-proft corporation:
(i) that is created and operated by no more than 10
persons, including an individual;
(ii) the purpose of which is to address the needs of
the individual and directly manage the provision of HCS Program ser-
vices or CFC services; and
(iii) in which each person operating the corporation
participates in addressing the needs of the individual and directly man-
aging the provision of HCS Program services or CFC services; and
(B) that has a service capacity designated in the HHSC
data system of no more than three individuals.
(73) Military family member--A person who is the spouse
or child (regardless of age) of:
(A) a military member; or
(B) a former military member.
(74) Military member--A member of the United States mil-
itary serving in the Army, Navy, Air Force, Marine Corps, Coast Guard,
or Space Force on active duty who has declared and maintains Texas
as the member's state of legal residence in the manner provided by the
applicable military branch.
(75) Natural supports--Unpaid persons, including family
members, volunteers, neighbors, and friends, who assist an individual.
(76) Neglect--A negligent act or omission that caused
physical or emotional injury or death to an individual or placed an
individual at risk of physical or emotional injury or death.
(77) Nursing facility--A facility licensed in accordance
with Texas Health and Safety Code Chapter 242.
(78) Pattern--The scope of a violation that is not wide-
spread but represents repeated failures by the program provider to
comply with certifcation standards and the failures:
(A) are found throughout the services provided by the
program provider; or
(B) involve or affect the same individuals, service
providers, or volunteers.
(79) Permanency planning--A philosophy and planning
process that focuses on the outcome of family support for an applicant
or individual under 22 years of age by facilitating a permanent living
arrangement in which the primary feature is an enduring and nurturing
parental relationship.
(80) Permanency Planning Review Screen--A screen in the
HHSC data system, completed by a LIDDA, that identifes community
supports needed to achieve an applicant's or individual's permanency
planning outcomes and provides information necessary for approval
to provide supervised living or residential support to the applicant or
individual.
(81) Person-directed plan (PDP)--A written plan, based on
person-directed planning and developed with an applicant or individual
in accordance with the HHSC Person-Directed Plan form and discov-
ery tool found on the HHSC website, that describes the supports and
services necessary to achieve the desired outcomes identifed by the
applicant or individual (and LAR on the applicant's or individual's be-
half) and ensure the applicant's or individual's health and safety.
(82) Person-directed planning--An ongoing process that
empowers the applicant or individual (and the LAR on the applicant's
or individual's behalf) to direct the development of a PDP. The process:
(A) identifes supports and services necessary to
achieve the applicant's or individual's outcomes;
(B) identifes existing supports, including natural sup-
ports and other supports available to the applicant or individual and
negotiates needed services system supports;
(C) occurs with the support of a group of people chosen
by the applicant or individual (and the LAR on the applicant's or indi-
vidual's behalf); and
(D) accommodates the applicant's or individual's style
of interaction and preferences.
(83) Physical abuse--Any of the following:
(A) an act or failure to act performed knowingly, reck-
lessly, or intentionally, including incitement to act, that caused physical
injury or death to an individual or placed an individual at risk of phys-
ical injury or death;
QU qexoeg PORS gune NSI OMOP qex~s oegister
(B) an act of inappropriate or excessive force or corpo-
ral punishment, regardless of whether the act results in a physical injury
to an individual;
(C) the use of a restraint on an individual in a manner
that is not in compliance with federal and state laws, rules, and regula-
tions; or
(D) seclusion.
(84) Physical restraint--Any manual method used to con-
trol an individual's behavior, except for physical guidance or prompt-
ing of brief duration that an individual does not resist, that restricts:
(A) the free movement or normal functioning of all or
a part of the individual's body; or
(B) normal access by an individual to a portion of the
individual's body.
(85) Plan of correction--A plan documented on the HHSC
Plan of Correction form that includes the corrective action that a pro-
gram provider will take for each violation identifed on a fnal survey
report.
(86) Plan of removal--A written plan that describes the ac-
tion a program provider will take to remove an immediate threat that
HHSC identifes.
(87) Post 45-day follow-up survey--A follow-up survey
conducted at least 46 calendar days after the exit conference of the sur-
vey in which the violation requiring corrective action was identifed.
(88) Post-move monitoring visit--A visit conducted by the
service coordinator in accordance with the Intellectual and Develop-
mental Disability Preadmission Screening and Resident Review (IDD-
PASRR) Handbook.
(89) Pre-enrollment minor home modifcations--Minor
home modifcations, as described in the HCS Program Billing Require-
ments, completed before an applicant is discharged from a nursing
facility, an ICF/IID, or a GRO and before the effective date of the
applicant's enrollment in the HCS Program.
(90) Pre-enrollment minor home modifcations assess-
ment--An assessment performed by a licensed professional as required
by the HCS Program Billing Requirements to determine the need for
pre-enrollment minor home modifcations.
(91) Pre-move site review--A review conducted by the ser-
vice coordinator in accordance with HHSC's IDD-PASRR Handbook.
(92) Program provider--A "person" as defned in 40 TAC
§49.102 (relating to Defnitions) that has a contract with HHSC to pro-
vide HCS Program services, excluding an FMSA.
(93) Protective Device--An item or device, such as a safety
vest, lap belt, bed rail, safety padding, adaptation to furniture, or hel-
met, used only to protect an individual from injury, or for body posi-
tioning of the individual to ensure health and safety, and not used to
modify or control behavior. The device or item is considered a protec-
tive device only when used in accordance with §565.37 of this chapter
(relating to Protective Devices).
(94) Provisional contract--A contract that HHSC enters
into with a program provider in accordance with 40 TAC §49.208
(relating to Provisional Contract Application Approval) that has a term
of no more than three years, not including any extension agreed to in
accordance with §49.208(e).
(95) Public emergency personnel--Personnel of a sheriff's
department, police department, emergency medical service, or fre de-
partment.
(96) Recertifcation survey--A review by HHSC of a pro-
gram provider with a standard contract to determine if the program
provider complies with the certifcation standards and will be certifed
for a new certifcation period.
(97) Registered nurse (RN)--A person licensed to practice
professional nursing in accordance with Texas Occupations Code
Chapter 301.
(98) Related condition--A severe and chronic disability
that:
(A) is attributed to:
(i) cerebral palsy or epilepsy; or
(ii) any other condition, other than mental illness,
found to be closely related to an intellectual disability because the con-
dition results in impairment of general intellectual functioning or adap-
tive behavior, similar to that of individuals with an intellectual disabil-
ity, and requires treatment or services similar to those required for in-
dividuals with an intellectual disability;
(B) is manifested before the individual reaches age 22;
(C) is likely to continue indefnitely; and
(D) results in substantial functional limitation in at least
three of the following areas of major life activity:
(i) self-care;
(ii) understanding and use of language;
(iii) learning;
(iv) mobility;
(v) self-direction; and
(vi) capacity for independent living.
(99) Relative--A person related to another person within
the fourth degree of consanguinity or within the second degree of affn-
ity. A more detailed explanation of this term is included in the HCS
Program Billing Requirements.
(100) Renewal IPC--An IPC developed for an individual
in accordance with §263.302(a) of this title (relating to Renewal and
Revision of an IPC).
(101) Repeated violation--A violation that is based on the
same certifcation standard and involves the same HCS Program ser-
vice or CFC service as a previous violation.
(102) Residence--A host home/companion care, three-per-
son, or four-person residence, as defned by the HCS Program Billing
Requirements.
(103) Residential survey--A review of a residence HHSC
to determine if the program provider complies with §565.23 of this
chapter (relating to Residential Requirements).
(104) Responder--A person designated to respond to an
alarm call activated by an individual.
(105) Restraint--Any of the following:
(A) a physical restraint;
(B) a mechanical restraint; or
(C) a chemical restraint.
^almqba oribp gune NSI OMOP QU qexoeg PORT
(106) Revised IPC--An initial IPC or a renewal IPC that is
revised during an IPC year, in accordance with §263.302(b) or (d) of
this title, to add a new HCS Program service or CFC service or change
the amount of an existing service.
(107) Seclusion--The involuntary placement of an individ-
ual in an area from which the individual is prevented from leaving.
(108) Service backup plan--A plan that ensures continuity
of critical program services if service delivery is interrupted.
(109) Service coordination--A service as defned in Chap-
ter 331 of this title (relating to LIDDA Service Coordination).
(110) Service coordinator--An employee of a LIDDA who
provides service coordination to an individual.
(111) Service planning team--One of the following:
(A) for an applicant or individual other than one de-
scribed in subparagraphs (B) or (C) of this paragraph, a planning team
consisting of:
(i) an applicant, individual, and LAR;
(ii) service coordinator; and
(iii) other persons chosen by the applicant, individ-
ual, or LAR, for example, a staff member of the program provider, a
family member, a friend, or a teacher;
(B) for an applicant 21 years of age or older who is re-
siding in a nursing facility and enrolling in the HCS Program, a plan-
ning team consisting of:
(i) the applicant and LAR;
(ii) a service coordinator;
(iii) a staff member of the program provider;
(iv) providers of specialized services;
(v) a nursing facility staff person who is familiar
with the applicant's needs;
(vi) other persons chosen by the applicant or LAR,
for example, a family member, friend, or teacher; and
(vii) at the discretion of the LIDDA, and with the
approval of the individual or LAR, other persons who are directly in-
volved in the delivery of services to persons with an intellectual or de-
velopmental disability; or
(C) for an individual 21 years of age or older who has
enrolled in the HCS Program from a nursing facility or has enrolled in
the HCS Program as a diversion from admission to a nursing facility,
for 365 calendar days after enrollment, a planning team consisting of:
(i) the individual and LAR;
(ii) a service coordinator;
(iii) a staff member of the program provider;
(iv) other persons chosen by the individual or LAR,
for example, a family member, a friend, or a teacher; and
(v) with the approval of the individual or LAR, other
persons who are directly involved in the delivery of services to persons
with an intellectual or developmental disability.
(112) Service provider--A person, who may be a staff
member, who directly provides an HCS Program service or CFC
service to an individual.
(113) Sexual abuse--Any of the following:
(A) sexual exploitation of an individual;
(B) non-consensual or unwelcomed sexual activity with
an individual; or
(C) consensual sexual activity between an individual
and a service provider, staff member, volunteer, or controlling person,
unless a consensual sexual relationship with an adult individual existed
before the service provider, staff member, volunteer, or controlling per-
son became a service provider, staff member, volunteer, or controlling
person.
(114) Sexual activity--An activity that is sexual in nature,
including kissing, hugging, stroking, or fondling with sexual intent.
(115) Sexual exploitation--A pattern, practice, or scheme
of conduct against an individual that can reasonably be construed as
being for the purposes of sexual arousal or gratifcation of any person:
(A) which may include sexual contact; and
(B) does not include obtaining information about an in-
dividual's sexual history within standard accepted clinical practice.
(116) Specialized services--The services defned in
§303.102 of this title (relating to Defnitions).
(117) SSI--Supplemental Security Income.
(118) Staff member--An employee or contractor of an HCS
Program provider.
(119) Standard contract--A contract that HHSC enters
into with a program provider in accordance with 40 TAC §49.209
(relating to Standard Contract) that has a term of no more than fve
years, not including any extension agreed to in accordance with 40
TAC §49.209(d).
(120) State Medicaid claims administrator--The entity con-
tracting with the state as the Medicaid claims administrator and fscal
agent.
(121) State supported living center--A state-supported and
structured residential facility operated by HHSC to provide to persons
with an intellectual disability a variety of services, including medical
treatment, specialized therapy, and training in acquiring personal, so-
cial, and vocational skills, but does not include a community-based
facility owned by HHSC.
(122) Support consultation--A service, as defned in 40
TAC §41.103, that is provided to an individual participating in the
CDS option at the request of the individual or LAR.
(123) Survey--An initial certifcation survey, a recertifca-
tion survey, a follow-up survey, and an intermittent survey.
(124) System check--A test of the CFC ERS equipment to
determine if:
(A) the individual can successfully activate an alarm
call; and
(B) the equipment is working properly.
(125) Three-person residence--A residence:
(A) that a program provider leases or owns;
(B) in which at least one person but no more than three
persons receive:
(i) residential support;
(ii) supervised living;
QU qexoeg PORU gune NSI OMOP qex~s oegister
(iii) a non-HCS Program service like residential
support or supervised living (for example, services funded by DFPS
or by a person's own resources); or
(iv) respite;
(C) that is not the residence of any person other than a
service provider, the service provider's spouse, a person with whom
the service provider has a spousal relationship, or a person described
in subparagraph (B) of this paragraph; and
(D) that is not a dwelling described in §263.101(a)(5)
of this title.
(126) Transition plan--As described in §303.102 of this ti-
tle, a written plan developed by the service planning team for an ap-
plicant who is residing in a nursing facility and enrolling in the HCS
Program. A transition plan includes essential and nonessential services
and supports the applicant needs to transition from a nursing facility to
a community setting.
(127) Transition assistance services (TAS)--Services pro-
vided to assist an applicant in setting up a household in the community
before being discharged from a nursing facility, an ICF/IID, or a GRO
and before enrolling in the HCS Program. TAS consists of:
(A) for an applicant whose proposed initial IPC does
not include residential support, supervised living, or host home/com-
panion care:
(i) paying security deposits required to lease a home,
including an apartment, or to establish utility services for a home;
(ii) purchasing essential furnishings for a home, in-
cluding a table, a bed, chairs, window blinds, eating utensils, and food
preparation items;
(iii) paying for expenses required to move personal
items, including furniture and clothing, into a home;
(iv) paying for services to ensure the health and
safety of the applicant in a home, including pest eradication, allergen
control, or a one-time cleaning before occupancy; and
(v) purchasing essential supplies for a home, includ-
ing toilet paper, towels, and bed linens; and
(B) for an applicant whose initial proposed IPC in-
cludes residential support, supervised living, or host home/companion
care:
(i) purchasing bedroom furniture;
(ii) purchasing personal linens for the bedroom and
bathroom; and
(iii) paying for allergen control.
(128) Transportation plan--A written plan based on per-
son-directed planning and developed with an applicant or individual us-
ing the HHSC Individual Transportation Plan form found on the HHSC
website. A transportation plan is used to document how transportation
as a supported home living activity will be delivered to support an indi-
vidual's desired outcomes and purposes for transportation as identifed
in the PDP.
(129) Vendor hold--A temporary suspension of payments
that are due to a program provider under a contract.
(130) Verbal or emotional abuse--Any act or use of verbal
or other communication, including gestures:
(A) to:
(i) harass, intimidate, humiliate, or degrade an indi-
vidual; or
(ii) threaten an individual with physical or emo-
tional harm; and
(B) that:
(i) results in observable distress or harm to the indi-
vidual; or
(ii) is of such a serious nature that a reasonable per-
son would consider it harmful or a cause of distress.
(131) Violation--A fnding by HHSC that a program
provider is not or was not in compliance with a certifcation standard.
(132) Volunteer--A person who works for a program
provider without compensation, other than reimbursement for actual
expenses.
(133) Widespread--The scope of a violation that:
(A) is pervasive throughout the services provided by the
program provider; or
(B) represents a systemic failure by the program
provider that affects or has the potential to affect a large portion of, or
all, individuals.
(134) Willfully interfering--Acting or not acting to inten-
tionally prevent, interfere with, or impede, or to attempt to intention-
ally prevent, interfere with, or impede.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on June 1, 2023.
TRD-202302018
Karen Ray
Chief Counsel
Health and Human Services Commission
Effective date: June 21, 2023
Proposal publication date: February 17, 2023
For further information, please call: (512) 438-3161
♦ ♦ ♦
SUBCHAPTER C. CERTIFICATION
STANDARDS: INDIVIDUAL'S RIGHTS
26 TAC §565.5
STATUTORY AUTHORITY
The new section 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; Texas
Government Code §531.021, which provides HHSC with the
authority to administer federal funds and plan and direct the
Medicaid program in each agency that operates a portion of
the Medicaid program; and Texas Human Resources Code
§32.021, which provides that HHSC shall adopt necessary rules
for the proper and effcient operation of the Medicaid program.
§565.5. Rights of Individuals.
(a) The program provider cannot prohibit:
^almqba oribp gune NSI OMOP QU qexoeg PORV
(1) an individual, or the legally authorized representative
(LAR) on behalf of the individual, from exercising the same rights and
responsibilities exercised by people without disabilities; and
(2) a LAR or family members from encouraging the indi-
vidual to exercise the same rights and responsibilities exercised by peo-
ple without disabilities.
(b) The program provider must develop and implement poli-
cies that ensure the individual is informed of his or her rights and can
exercise his or her rights without interference, coercion, discrimina-
tion, or retaliation from the program provider. This includes the right
to:
(1) manage, be trained to manage, or have assistance in
managing fnancial affairs upon documentation of the individual's writ-
ten request for assistance;
(2) access public accommodations;
(3) be informed of the requirements for participation;
(4) be informed, both orally and in writing, of all the HCS
Program and CFC services available and rules pertaining to the individ-
ual's enrollment and participation in the program provider's program,
including those related to the use of restraint, as well as any changes in
these that occur;
(5) be informed of the individual plan of care (IPC), im-
plementation plan, and transportation plan, including any restrictions
affecting the individual's rights;
(6) participate in decisions and be informed of the reasons
for decisions regarding plans for enrollment, service termination, trans-
fer, relocation, or denial of Home and Community-based Services Pro-
gram (HCS) Program or Community First Choice (CFC) services;
(7) be informed about the individual's own health, mental
condition, and related progress;
(8) be informed of the name and qualifcations of any per-
son serving or treating the individual and to choose among various
available service providers;
(9) receive visitors without prior notice to the program
provider;
(10) have privacy in visitation with family and other visi-
tors;
(11) make and receive telephone calls in private;
(12) send and receive sealed and uncensored mail;
(13) attend or refuse to attend religious activities;
(14) participate in developing a pre-discharge plan that ad-
dresses assistance for the individual after he or she leaves the program;
(15) be free from the use of unauthorized restraints;
(16) live in a normative residential living environment;
(17) access free public schooling according to Texas Edu-
cation Code;
(18) live where the individual is within proximity of and
can access treatment and services that are best suited to meet the indi-
vidual's needs and abilities and enhance that individual's strengths;
(19) have a personalized IPC, implementation plan, and
transportation plan based on individualized assessments that meet the
individual's needs and abilities and enhance that individual's strengths;
(20) help decide what the implementation plan and trans-
portation plan will be;
(21) be informed as to the progress or lack of progress be-
ing made in the execution of the implementation plan and transporta-
tion plan;
(22) choose from the same services that are available to all
community members, including those without disabilities;
(23) be evaluated as needed, but at least annually, to de-
termine the individual's strengths, needs, preferences, and appropriate-
ness of the implementation plan and transportation plan;
(24) complain at any time to a staff member or service
provider;
(25) receive appropriate support and assistance from a staff
member or service provider to address concerns if the individual dis-
likes or disagrees with the services being rendered or thinks that his or
her rights are being violated;
(26) live free from abuse, neglect, or exploitation in a
healthful and safe environment;
(27) participate in decisions regarding the individual's liv-
ing environment, including location, furnishings, personal property,
other individuals residing in the residence, and moves to other resi-
dential locations;
(28) have service providers who are responsive to the indi-
vidual and, at the same time, are responsible for the overall functioning
of the HCS Program;
(29) have active personal assistance in exercising civil and
self-advocacy rights attainment by provisions for:
(A) complaints;
(B) voter registration;
(C) citizenship information and education;
(D) advocacy services; and
(E) guardianship;
(30) receive counseling concerning the use of money;
(31) possess and to use money in personal and individual-
ized ways or learn to do so;
(32) access all fnancial records regarding the individual's
funds;
(33) have privacy during treatment and care of personal
needs;
(34) have privacy during visits by his or her spouse if living
apart;
(35) share a room when both spouses are living in the same
residence;
(36) be free from serving as a source of labor when residing
with persons other than family members;
(37) communicate, associate, and meet privately with any
person of his or her choice, including other individuals, unless this vi-
olates the rights of another individual;
(38) participate in social, recreational, and community
group activities;
(39) have his or her LAR involved in activities, including:
QU qexoeg POSM gune NSI OMOP qex~s oegister
(A) being informed of all rights and responsibilities
when the individual is enrolled in the program provider's program, as
well as any changes in rights or responsibilities before they become
effective;
(B) participating in the planning for HCS Program and
CFC services; and
(C) advocating for all rights of the individual;
(40) be informed of the individual's option to transfer to
other program providers as chosen by the individual or LAR as often
as desired;
(41) complain to HHSC when the program provider's reso-
lution of a complaint is unsatisfactory to the individual or LAR, and to
be informed of the Intellectual and Developmental Disability Ombuds-
man telephone number to initiate complaints (1-800-252-8154); and
(42) have opportunities for leisure time activities, vacation
periods, religious observances, holidays, and days off, consistent with
the individual's choice and routines of other members of the commu-
nity.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on June 1, 2023.
TRD-202302019
Karen Ray
Chief Counsel
Health and Human Services Commission
Effective date: June 21, 2023
Proposal publication date: February 17, 2023
For further information, please call: (512) 438-3161
♦ ♦ ♦
SUBCHAPTER D. CERTIFICATION
STANDARDS: STAFF MEMBER AND SERVICE
PROVIDER REQUIREMENTS
26 TAC §565.7, §565.9
STATUTORY AUTHORITY
The new sections are authorized by Texas Government Code
§531.0055, which provides that the Executive Commissioner of
HHSC shall adopt rules for the operation and provision of ser-
vices by the health and human services agencies; Texas Gov-
ernment Code §531.021, which provides HHSC with the author-
ity to administer federal funds and plan and direct the Medicaid
program in each agency that operates a portion of the Medicaid
program; and Texas Human Resources Code §32.021, which
provides that HHSC shall adopt necessary rules for the proper
and effcient operation of the Medicaid program.
§565.9. Program Provider Requirements.
(a) The program provider must ensure the continuous avail-
ability of trained and qualifed service providers to deliver the required
services, as determined by the individual's needs and characteristics.
(b) The program provider must:
(1) comply with 40 Texas Administrative Code (TAC)
§49.304 (relating to Background Checks);
(2) comply with 40 TAC §49.312 (relating to Personal At-
tendants), including when the service provider of supported home liv-
ing or CFC personal assistance services/habilitation (CFC PAS/HAB)
is employed by or contracts with a contractor of a program provider;
(3) obtain the criminal history record of the potential staff
member or potential contractor from the Texas Department of Public
Safety directly or through a private agency before hiring or contracting
with the potential staff member;
(4) not employ or contract with a potential staff member,
service provider, or volunteer who:
(A) has been convicted of an offense listed, and for the
time periods set forth, in Texas Health and Safety Code §250.006;
(B) is a registered sex offender; or
(C) has been convicted of an offense that the program
provider determines is a contraindication;
(5) search the following registries before hire or execution
of a contract and every 12 months thereafter to determine if a staff
member or service provider is eligible for employment:
(A) the Employee Misconduct Registry; and
(B) the Nurse Aide Registry;
(6) search the following registries before hire or execution
of a contract and every month thereafter to determine if an employee
or contractor is eligible for employment:
(A) the List of Excluded Individuals and Entities main-
tained by the United States Department of Health and Human Services;
and
(B) the List of Excluded Individuals and Entities main-
tained by the Texas Health and Human Services Commission (HHSC)
Offce of Inspector General; and
(7) not hire or continue employment for a staff member or
service provider who is listed on:
(A) the Employee Misconduct Registry as unemploy-
able;
(B) the Nurse Aide Registry as revoked or suspended;
(C) the List of Excluded Individuals and Entities main-
tained by the United States Department of Health; or
(D) the List of Excluded Individuals and Entities main-
tained by Health and Human Services offce of Inspector General or by
HHSC Offce of Inspector General.
(c) The program provider must develop and implement policy
and procedures:
(1) that ensure only staff members and service providers
with a valid driver's license and insurance transport individuals; and
(2) are revised if a shortcoming is identifed.
(d) If the service provider of supported home living or CFC
PAS/HAB is employed by or contracts with a contractor of a program
provider, the program provider must ensure that the contractor com-
plies with subsection (b)(2) of this section as if the contractor were the
program provider.
(e) The program provider must:
^almqba oribp gune NSI OMOP QU qexoeg POSN
(1) employ or contract with a person or entity of the indi-
vidual's or legally authorized representative's (LAR's) choice to pro-
vide a Home and Community-based Services Program or CFC service
to the individual if that person or entity:
(A) is qualifed to provide the service; and
(B) is willing to contract with or be employed by the
program provider to provide the service in accordance with this sub-
chapter; or
(2) have and document good cause not to employ or con-
tract with the person or entity of the individual's or LAR's choice.
(f) If a program provider contracts with a person or entity to
provide transition assistance services (TAS), the person or entity must
have a contract to provide TAS in accordance with 40 TAC Chapter 49
(relating to Contracting for Community Services).
(g) The program provider must create and implement a policy
that prevents:
(1) conficts of interest between the program provider, a
staff member, or a service provider and an individual, such as the ac-
ceptance of payment for goods or services (except payment for room
and board) from which the program provider, staff member, or service
provider could fnancially beneft;
(2) fnancial impropriety toward an individual including:
(A) unauthorized disclosure of information related to an
individual's fnances; and
(B) any purchase of goods that are not requested for the
individual, cannot be used by the individual, or are not intended for the
individual's use;
(3) abuse, neglect, or exploitation of an individual;
(4) damage to, or prevention of an individual's access to,
the individual's possessions; and
(5) threats of the actions described in paragraphs (2) - (4)
of this subsection.
(h) A program provider must comply with 42 United States
Code §1396a(w), regarding requirements about advance directives.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on June 1, 2023.
TRD-202302020
Karen Ray
Chief Counsel
Health and Human Services Commission
Effective date: June 21, 2023
Proposal publication date: February 17, 2023
For further information, please call: (512) 438-3161
♦ ♦ ♦
SUBCHAPTER E. CERTIFICATION
STANDARDS: SERVICE DELIVERY
26 TAC §§565.11, 565.13, 565.15, 565.17, 565.19, 565.21
STATUTORY AUTHORITY
The new sections are authorized by Texas Government Code
§531.0055, which provides that the Executive Commissioner of
HHSC shall adopt rules for the operation and provision of ser-
vices by the health and human services agencies; Texas Gov-
ernment Code §531.021, which provides HHSC with the author-
ity to administer federal funds and plan and direct the Medicaid
program in each agency that operates a portion of the Medicaid
program; and Texas Human Resources Code §32.021, which
provides that HHSC shall adopt necessary rules for the proper
and effcient operation of the Medicaid program.
§565.11. Service Delivery.
(a) The program provider must:
(1) serve an eligible applicant who has selected the pro-
gram provider unless the program provider's enrollment has reached
its service capacity as identifed in the Texas Health and Human Ser-
vices Commission (HHSC) data system;
(2) serve an eligible applicant without regard to age, sex,
race, or level of disability;
(3) provide or obtain as needed and without delay all Home
and Community-based Services Program (HCS) Program and Commu-
nity First Choice (CFC) services for an individual;
(4) maintain a system of delivering HCS Program and CFC
services that is continuously responsive to changes in the individual's
personal goals, condition, abilities, and needs as identifed by the ser-
vice planning team;
(5) ensure that each applicant or individual, or legally au-
thorized representative (LAR), chooses where the individual or appli-
cant will reside from available options consistent with the applicant's
or individual's needs;
(6) ensure that an individual's rights as identifed in §565.5
of this chapter (relating to Rights of Individuals) are not violated, un-
less contraindications are documented with justifcation in a Behavior
Support Plan;
(7) notify the service coordinator if a change in an indi-
vidual's condition necessitates a change in residential, educational, or
work settings;
(8) inform appropriate staff members, service providers,
and the service coordinator when a circumstance or event occurs in
an individual's life or a change to an individual's condition affects the
provision of services to the individual;
(9) notify the service coordinator if the program provider
has reason to believe that an individual is no longer eligible for HCS
Program services or CFC services or an individual or LAR has re-
quested termination of all HCS Program services or all CFC services;
(10) ensure that the individual plan of care (IPC) for each
individual:
(A) is renewed or revised in accordance with §263.302
of this title (relating to Renewal and Revision of an IPC); and
(B) is authorized by the Health and Human Services
Commission in accordance with §263.303 of this title (relating to
HHSC Review of an IPC);
(11) ensure that HCS Program and CFC services identifed
in the individual's implementation plan and transportation plan are pro-
vided in an individualized manner and are based on the results of as-
sessments of the individual's and the family's strengths, the individual's
personal goals, the family's goals for the individual, and the individual's
needs rather than which services are available;
QU qexoeg POSO gune NSI OMOP qex~s oegister
(12) ensure that each individual's progress or lack of
progress toward desired outcomes is documented in observable,
measurable, or outcome-oriented terms;
(13) ensure that individuals who perform work for the pro-
gram provider are paid on the basis of their production or performance
and at a wage level commensurate with that paid to persons who are
without disabilities and who would otherwise perform that work, and
that compensation is based on local, state, and federal regulations, in-
cluding Department of Labor regulations, as applicable;
(14) ensure that individuals who produce marketable goods
and services in habilitation training programs are paid at a wage level
commensurate with that paid to persons who are without disabilities
and who would otherwise perform that work. Compensation is based
on requirements contained in the Fair Labor Standards Act, which in-
clude:
(A) accurate recordings of individual production or per-
formance;
(B) valid and current time studies or monitoring as ap-
propriate; and
(C) prevailing wage rates;
(15) ensure that individuals provide no training, supervi-
sion, or care to other individuals unless they are qualifed and compen-
sated in accordance with local, state, and federal regulations, including
Department of Labor regulations;
(16) ensure that adaptive aids are provided in accordance
with the individual's person-directed plan (PDP), IPC, implementation
plan, and Appendix C of the HCS Program waiver application, ap-
proved by the Centers for Medicare and Medicaid Services (CMS) and
found on the HHSC website, and include the full range of lifts, mobility
aids, control switches/pneumatic switches and devices, environmental
control units, medically necessary supplies, and communication aids
and repair and maintenance of the aids, as determined by the individ-
ual's needs;
(17) ensure the coordination and compatibility of HCS Pro-
gram and CFC services with non-HCS Program services and non-CFC
services together with an individual's service coordinator;
(18) ensure that an individual has a current implementation
plan;
(19) ensure professional therapies:
(A) are provided in accordance with the individual's
PDP, IPC, implementation plan, and Appendix C of the HCS Program
waiver application approved by CMS and found on the HHSC website:
(i) audiology services;
(ii) speech/language pathology services;
(iii) occupational therapy services;
(iv) physical therapy services;
(v) dietary services;
(vi) social work services;
(vii) behavioral support; and
(viii) cognitive rehabilitation therapy; and
(B) if the service planning team determines that an indi-
vidual may need cognitive rehabilitation therapy, the program provider:
(i) in coordination with the service coordinator, as-
sists the individual in obtaining, in accordance with the Medicaid State
Plan, a neurobehavioral or neuropsychological assessment and plan of
care from a qualifed professional as a non-HCS Program service; and
(ii) use a qualifed professional as described in
§565.7 of this chapter (relating to Staff Member and Service Provider
Requirements) to provide and monitor the provision of cognitive
rehabilitation therapy to the individual in accordance with the plan of
care described in clause (i) of this subparagraph;
(20) ensure that individualized skills and socialization is
provided in accordance with the individual's PDP, IPC, implementa-
tion plan, and Appendix C of the HCS Program waiver application ap-
proved by CMS and found on the HHSC website;
(21) ensure that dental treatment is provided in accordance
with the individual's PDP, IPC, implementation plan, and Appendix C
of the HCS Program waiver application approved by CMS and found
on the HHSC website including:
(A) emergency dental treatment;
(B) preventive dental treatment;
(C) therapeutic dental treatment; and
(D) orthodontic dental treatment, excluding cosmetic
orthodontia;
(22) ensure that minor home modifcations are provided in
accordance with the individual's PDP, IPC, implementation plan, and
Appendix C of the HCS Program waiver application approved by CMS
and found on the HHSC website but are limited to the following cate-
gories:
(A) purchase and repair of wheelchair ramps;
(B) modifcations to bathroom facilities;
(C) modifcations to kitchen facilities;
(D) specialized accessibility and safety adaptations or
additions; and
(E) repair and maintenance of minor home modifca-
tions not covered by a warranty;
(23) ensure that supported home living:
(A) is available only to an individual who is not receiv-
ing:
(i) host home/companion care;
(ii) supervised living; or
(ii) residential support; and
(B) is available to an individual who is receiving foster
care services from DFPS;
(24) ensure that supported home living is provided in ac-
cordance with the individual's PDP, IPC, implementation plan, trans-
portation plan, and Appendix C of the HCS Program waiver applica-
tion approved by CMS and found on the HHSC website and includes
the following elements:
(A) direct personal assistance with activities of daily
living (grooming, eating, bathing, dressing, and personal hygiene);
(B) assisting with meal planning and preparation;
(C) providing transportation;
(D) securing transportation;
(E) assisting with housekeeping;
^almqba oribp gune NSI OMOP QU qexoeg POSP
(F) assisting with ambulation and mobility;
(G) reinforcing professional therapy activities;
(H) assisting with medications and the performing tasks
delegated by a registered nurse (RN);
(I) supervising of individuals' safety and security;
(J) facilitating inclusion in community activities, use of
natural supports, social interaction, participation in leisure activities,
and development of socially valued behaviors; and
(K) habilitation, exclusive of individualized skills and
socialization;
(25) ensure that HCS host home/companion care is pro-
vided:
(A) by a host home/companion care provider who lives
in the residence in which no more than three individuals or other per-
sons receiving similar services are living at any one time; and
(B) in a residence in which the program provider does
not hold a property interest;
(26) ensure that host home/companion care is provided in
accordance with the individual's PDP, IPC, implementation plan, and
Appendix C of the HCS Program waiver application approved by CMS
and found on the HHSC website and includes the following elements:
(A) direct personal assistance with activities of daily
living (grooming, eating, bathing, dressing, and personal hygiene);
(B) assisting with meal planning and preparation;
(C) securing and providing transportation;
(D) assisting with housekeeping;
(E) assisting with ambulation and mobility;
(F) reinforcing professional therapy activities;
(G) assisting with medications and the performance of
tasks delegated by an RN;
(H) supervising of safety and security;
(I) facilitating inclusion in community activities, use of
natural supports, social interaction, participation in leisure activities,
and development of socially valued behaviors; and
(J) habilitation, exclusive of individualized skills and
socialization;
(27) ensure that supervised living is provided:
(A) in a four-person residence that is approved in accor-
dance with §565.23(i) of this chapter (relating to Residential Require-
ments) or a three-person residence;
(B) by a service provider who provides services and
supports as needed by the individuals residing in the residence and is
present in the residence and able to respond to the needs of the individ-
uals during normal sleeping hours; and
(C) only with approval by the HHSC commissioner or
designee for the initial six months and one six-month extension and
only with approval by the HHSC Executive Commissioner after such
12-month period, if provided to an individual under 22 years of age;
(28) ensure that supervised living is provided in accor-
dance with the individual's PDP, IPC, implementation plan, and
Appendix C of the HCS Program waiver application approved by CMS
and found on the HHSC website and includes the following elements:
(A) direct personal assistance with activities of daily
living (grooming, eating, bathing, dressing, and personal hygiene);
(B) assisting with meal planning and preparation;
(C) securing and providing transportation;
(D) assisting with housekeeping;
(E) assisting with ambulation and mobility;
(F) reinforcing professional therapy activities;
(G) assisting with medications and the performance of
tasks delegated by an RN;
(H) supervising of individuals' safety and security;
(I) facilitating inclusion in community activities, use of
natural supports, social interaction, participation in leisure activities,
and development of socially valued behaviors; and
(J) habilitation, exclusive of individualized skills and
socialization;
(29) ensure that residential support is provided:
(A) in a four-person residence that is approved in accor-
dance with §565.23(i) of this chapter or in a three-person residence;
(B) by a service provider who is present in the residence
and awake whenever an individual is present in the residence;
(C) by service providers assigned on a daily shift sched-
ule that includes at least one complete change of service providers each
day; and
(D) only with approval by the HHSC commissioner or
designee for the initial six months and one six-month extension and
only with approval by the HHSC Executive Commissioner after such
12-month period, if provided to an individual under 22 years of age;
(30) ensure that residential support is provided in accor-
dance with the individual's PDP, IPC, implementation plan, and Ap-
pendix C of the HCS Program waiver application approved by CMS
and found on the HHSC website, and includes the following elements:
(A) direct personal assistance with activities of daily
living (grooming, eating, bathing, dressing, and personal hygiene);
(B) assisting with meal planning and preparation;
(C) securing and providing transportation;
(D) assisting with housekeeping;
(E) assisting with ambulation and mobility;
(F) reinforcing professional therapy activities;
(G) assisting with medications and the performance of
tasks delegated by an RN;
(H) supervising of individuals' safety and security;
(I) facilitating inclusion in community activities, use of
natural supports, social interaction, participation in leisure activities,
and development of socially valued behaviors; and
(J) habilitation, exclusive of individualized skills and
socialization;
(31) if making a recommendation to the service planning
team that the individual receive residential support, document the rea-
sons for the recommendation, which may include:
(A) the individual's medical condition;
QU qexoeg POSQ gune NSI OMOP qex~s oegister
(B) a behavior displayed by the individual that poses a
danger to the individual or to others; or
(C) the individual's need for assistance with activities
of daily living during normal sleeping hours;
(32) ensure that respite is available on a 24-hour increment
or any part of that increment to individuals living in their family homes;
(33) ensure that respite is provided in accordance with the
individual's PDP, IPC, implementation plan, and Appendix C of the
HCS Program waiver application approved by CMS and found on the
HHSC website; and:
(A) includes:
(i) training in self-help and independent living
skills;
(ii) providing room and board when respite is pro-
vided in a setting other than the individual's normal residence;
(iii) assisting with:
(I) ongoing provision of needed waiver services;
and
(II) securing and providing transportation; and
(B) is only provided:
(i) to individuals who are not receiving residential
support, supervised living, or host home/companion care; and
(ii) when the unpaid caregiver is temporarily un-
available to provide supports;
(34) provide respite in the residence of an individual or in
other locations, including residences in which host home/companion
care, supervised living, or residential support is provided or in a respite
facility or camp, that:
(A) meets HCS Program requirements and is an envi-
ronment that ensures the health and safety of the individual; and
(B) if respite is provided:
(i) in the residence of another individual, the pro-
gram provider must obtain permission from that individual or LAR and
ensure that the respite visit will cause no threat to the health, safety, or
welfare of either individual;
(ii) in a respite facility, the program provider must
obtain written approval from the local fre authority having jurisdiction
stating that the facility and its operation meet the local fre ordinances
before initiating services in the facility if more than three individuals
receive services in the facility at any one time; or
(iii) in a camp setting, the program provider must
ensure the camp is accredited by the American Camp Association;
(iv) in a home and community-based setting, the set-
ting must comply with §263.501(b) of this title (relating to Require-
ments for Home and Community-Based Settings);
(35) ensure that employment assistance:
(A) is provided to an individual to help the individual
locate competitive employment in the community;
(B) consists of a service provider:
(i) identifying an individual's employment pref-
erences, job skills, and requirements for a work setting and work
conditions;
(ii) locating prospective employers offering em-
ployment compatible with an individual's identifed preferences, skills,
and requirements;
(iii) contacting a prospective employer on behalf of
an individual and negotiating the individual's employment;
(iv) transporting an individual to help the individual
locate competitive employment in the community; and
(v) participating in service planning team meetings;
(C) is provided in accordance with an individual's PDP,
IPC, implementation plan, and with Appendix C of the HCS Program
waiver application approved by CMS and found on the HHSC website;
(D) is not provided to an individual with the individual
present at the same time that respite, supported home living, individu-
alized skills and socialization, supported employment, or CFC personal
assistance services/habilitation (CFC PAS/HAB) is provided; and
(E) does not include using Medicaid funds paid by
HHSC to the program provider for incentive payments, subsidies, or
unrelated vocational training expenses, such as:
(i) paying an employer:
(I) to encourage the employer to hire an individ-
ual; or
(II) for supervision, training, support, or adapta-
tions for an individual that the employer typically makes available to
other workers without disabilities flling similar positions in the busi-
ness; or
(ii) paying an individual:
(I) as an incentive to participate in employment
assistance activities; or
(II) for expenses associated with the start-up
costs or operating expenses of the individual's business;
(36) ensure that supported employment:
(A) is assistance provided to an individual:
(i) who, because of a disability, requires intensive,
ongoing support to be self-employed, work from home, or perform in
a work setting at which persons without disabilities are employed;
(ii) in order for the individual to sustain competitive
employment; and
(iii) in accordance with the individual's PDP, IPC,
implementation plan, and Appendix C of the HCS Program waiver ap-
plication approved by CMS and found on the HHSC website;
(B) consists of a service provider:
(i) making employment adaptations, supervising,
and providing training related to an individual's assessed needs;
(ii) transporting an individual to support the individ-
ual to be self-employed, work from home, or perform in a work setting;
and
(iii) participating in service planning team meetings;
(C) is not provided to an individual with the individual
present at the same time that respite, supported home living, individual-
ized skills and socialization, employment assistance, or CFC PAS/HAB
is provided; and
(D) does not include:
^almqba oribp gune NSI OMOP QU qexoeg POSR
(i) sheltered work or other similar types of voca-
tional services furnished in specialized facilities; or
(ii) using Medicaid funds paid by HHSC to the pro-
gram provider for incentive payments, subsidies, or unrelated voca-
tional training expenses such as:
(I) paying an employer:
(-a-) to encourage the employer to hire an in-
dividual; or
(-b-) to supervise, train, support, or make
adaptations for an individual that the employer typically makes avail-
able to other workers without disabilities flling similar positions in
the business; or
(II) paying an individual:
(-a-) as an incentive to participate in sup-
ported employment activities; or
(-b-) for expenses associated with the start-up
costs or operating expenses of the individual's business;
(37) ensure that CFC PAS/HAB is provided in accordance
with the individual's PDP, IPC, and implementation plan;
(38) ensure that CFC support management is provided to
an individual or LAR if:
(A) the individual is receiving CFC PAS/HAB; and
(B) the individual or LAR requests to receive CFC sup-
port management;
(39) inform the service coordinator of changes related to
an individual's residential setting that do not require a change to the
individual's IPC;
(40) maintain current information in the HHSC data system
about the individual and the individual's LAR, including:
(A) the individual's full name, address, location code,
and phone number; and
(B) the LAR's full name, address, and phone number;
(41) maintain a single record related to HCS Program and
CFC services provided to an individual for an IPC year that includes:
(A) the IPC;
(B) the PDP and, if CFC PAS/HAB is included on the
PDP, the completed HHSC HCS/TxHmL CFC PAS/HAB Assessment
form;
(C) the implementation plan;
(D) a behavior support plan, if one has been developed;
(E) a transportation plan, if one is required;
(F) documentation that describes the individual's
progress or lack of progress on the implementation plan;
(G) documentation that describes any changes to an in-
dividual's personal goals, condition, abilities, or needs;
(H) the Intellectual Disability/Related Conditions As-
sessment (ID/RC Assessment);
(I) documentation supporting the recommended level
of need, including the Inventory for Client and Agency Planning book-
let, assessments and interventions by qualifed professionals, and time
sheets of service providers;
(J) results and recommendations from individualized
assessments that support the individual's current need for each service
included in the IPC;
(K) documentation concerning any use of restraint
as described in §565.33(a)(2) and (3) of this chapter (relating to
Restraints);
(L) documentation related to the suspension of an indi-
vidual's HCS Program services or CFC services;
(M) for an individual under 22 years of age, a copy of
the permanency plan; and
(N) documentation required by subsection
§565.17(a)(2) of this subchapter (relating to Pre-enrollment Minor
Home Modifcation) and subsection §565.21(a)(2) of this subchapter
(relating to Transitional Assistance Service (TAS));
(42) upon request by the service coordinator:
(A) permit the service coordinator access to the record
that is required by paragraph (41) of this subsection; and
(B) provide the service coordinator a legible copy, in-
cluding an electronic copy, of a document in the record at no charge to
the service coordinator;
(43) provide a copy of the following documents to the ser-
vice coordinator:
(A) an individual's IPC; and
(B) an individual's ID/RC Assessment;
(44) if a physician delegates a medical act to an unlicensed
service provider in accordance with Texas Occupations Code Chapter
157, and the program provider has concerns about the health or safety
of the individual in performance of the medical act, communicate the
concern to the delegating physician and take additional steps as neces-
sary to ensure the health and safety of the individual;
(45) for an individual receiving host home/companion
care, residential support, or supervised living, ensure that the indi-
vidual or LAR is involved in planning the individual's residential
relocation, except in the case of an emergency;
(46) for an HCS Program or CFC service identifed on the
PDP as critical to meeting the individual's health and safety:
(A) develop a service backup plan that:
(i) contains the name of the critical service;
(ii) specifes the time period in which an interruption
to the critical service would result in an adverse effect to the individual's
health or safety; and
(iii) in the event of a service interruption resulting
in an adverse effect, as described in clause (ii) of this subparagraph,
describe the actions the program provider will take to ensure the indi-
vidual's health and safety;
(B) ensure that:
(i) if the action in the service backup plan required
by subparagraph (A) of this paragraph identifes a natural support, that
the natural support receives pertinent information about the individual's
needs and can protect the individual's health and safety; and
(ii) a person identifed in the service backup plan, if
paid to provide the service, meets the qualifcations described in this
subchapter; and
QU qexoeg POSS gune NSI OMOP qex~s oegister
(C) if the service backup plan required by subparagraph
(A) of this paragraph is implemented:
(i) discuss the implementation of the service backup
plan with the individual and the service providers or natural supports
identifed in the service backup plan to determine whether the plan was
effective;
(ii) document whether the plan was effective; and
(iii) revise the plan if the program provider deter-
mines the plan was ineffective;
(47) for an applicant 21 years of age or older who is resid-
ing in a nursing facility and enrolling in the HCS Program:
(A) participate as a member of the service planning
team, which includes attending service planning team meetings
scheduled by the service coordinator;
(B) assist in the implementation of the applicant's tran-
sition plan as described in the plan; and
(C) be physically present for the pre-move site review
and assist the service coordinator during the review as requested; and
(48) for 365 calendar days after an individual 21 years of
age or older has enrolled in the HCS Program from a nursing facility
or has enrolled in the HCS Program as a diversion from admission to
a nursing facility:
(A) be physically present for each post-move monitor-
ing visit and assist the service coordinator during the visit as requested;
(B) assist in the implementation of the individual's tran-
sition plan as described in the plan;
(C) participate as a member of the service planning
team, which includes attending service planning team meetings sched-
uled by the service coordinator; and
(D) within one calendar day after becoming aware of an
event or condition that may put the individual at risk of admission or
readmission to a nursing facility, notify the service planning team of
the event or condition.
(b) A program provider may suspend HCS Program services
or CFC services because an individual is temporarily admitted to a set-
ting described in §263.705(a) of this title (relating to Suspension of
HCS Program Services and CFC Services).
(1) If a program provider suspends HCS Program services
or CFC services, the program provider must:
(A) notify HHSC of the suspension by entering data in
the HHSC data system in accordance with HHSC instructions; and
(B) notify the service coordinator of the suspension
within one business day after services are suspended.
(2) A program provider may not suspend HCS Program
services or CFC services for more than 270 calendar days without ap-
proval from HHSC as described in §263.705(h) of this title.
§565.13. Nursing.
(a) A program provider must:
(1) ensure that nursing is provided in accordance with the
individual's person-directed plan (PDP); individual plan of care (IPC);
implementation plan; Texas Occupations Code Chapter 301 (Nursing
Practice Act); 22 Texas Administrative Code (TAC) Chapter 217 (relat-
ing to Licensure, Peer Assistance and Practice); 22 TAC Chapter 224
(relating to Delegation of Nursing Tasks by Registered Professional
Nurses to Unlicensed Personnel for Clients with Acute Conditions or in
Acute Care Environments); 22 TAC Chapter 225 (relating to RN Del-
egation to Unlicensed Personnel and Tasks Not Requiring Delegation
in Independent Living Environments for Clients with Stable and Pre-
dictable Conditions); and Appendix C of the HCS Program waiver ap-
plication approved by the Centers for Medicare and Medicaid Services
(CMS) and found on the Texas Health and Human Services Commis-
sion (HHSC) website, and consists of performing health care activities
and monitoring the individual's health conditions;
(2) this includes:
(A) administering medication;
(B) monitoring the individual's use of medications;
(C) monitoring health risks, data, and information, in-
cluding ensuring that an unlicensed service provider is performing only
those nursing tasks identifed from a nursing assessment;
(D) assisting the individual to secure emergency medi-
cal services;
(E) making referrals for appropriate medical services;
(F) performing health care procedures ordered or pre-
scribed by a physician or medical practitioner and required by stan-
dards of professional practice or law to be performed by a registered
nurse (RN) or licensed vocational nurse (LVN);
(G) delegating nursing tasks to an unlicensed service
provider and supervising the performance of those tasks in accordance
with state law and rules;
(H) teaching an unlicensed service provider about the
specifc health needs of an individual;
(I) performing an assessment of an individual's health
condition;
(J) ensuring a registered nurse (RN):
(i) performs a nursing assessment for each individ-
ual:
(I) before an unlicensed service provider per-
forms a nursing task for the individual, unless a physician has
delegated the task as a medical act under Texas Occupations Code
Chapter 157, as documented by the physician; and
(II) as determined necessary by an RN, including
if the individual's health needs change;
(ii) documents information from performance of a
nursing assessment;
(iii) if an individual is receiving a service through
the consumer directed services (CDS) option, provides a copy of the
documentation described in clause (ii) of this subparagraph to the in-
dividual's service coordinator;
(iv) develops the nursing service portion of an indi-
vidual's implementation plan, which includes developing a plan and
schedule for monitoring and supervising delegated nursing tasks; and
(v) makes and documents decisions related to the
delegation of a nursing task to an unlicensed service provider; and
(K) in accordance with Texas Human Resources Code
Chapter 161:
(i) allowing an unlicensed service provider to pro-
vide administration of medication to an individual without the delega-
tion or oversight of an RN if:
^almqba oribp gune NSI OMOP QU qexoeg POST
(I) an RN has performed a nursing assessment
and based on the results of the assessment, determined that the individ-
ual's health permits the administration of medication by an unlicensed
service provider;
(II) the medication is:
(-a-) an oral medication;
(-b-) a topical medication; or
(-c-) a metered dose inhaler;
(III) the medication is administered to the indi-
vidual for a predictable or stable condition; and
(IV) the unlicensed service provider has been:
(-a-) trained by an RN or a licensed voca-
tional nurse (LVN) under the direction of an RN regarding the proper
administration of medication; or
(-b-) determined to be competent by an RN or
LVN under the direction of an RN regarding proper administration of
medication, including through a demonstration of proper technique by
the unlicensed service provider; and
(ii) ensuring that an RN or LVN under the supervi-
sion of an RN reviews the administration of medication to an individual
by an unlicensed service provider at least annually and after any sig-
nifcant change in the individual's condition.
(b) A program provider may determine that an individual does
not require a nursing assessment if:
(1) nursing services are not on the individual's IPC and
the program provider has determined that no nursing task will be per-
formed by an unlicensed service provider as documented on HHSC
form "Nursing Task Screening Tool"; or
(2) a nursing task will be performed by an unlicensed ser-
vice provider and a physician has delegated the task as a medical act un-
der Texas Occupations Code Chapter 157, as documented by the physi-
cian.
(c) If an individual or LAR refuses a nursing assessment de-
scribed in subsection (a)(1)(J)(i) of this section, the program provider
must not:
(1) provide nursing services to the individual; or
(2) provide host home/companion care, residential support,
supervised living, supported home living, respite, employment assis-
tance, supported employment, individualized skills and socialization,
or CFC PAS/HAB to the individual unless:
(A) an unlicensed service provider does not perform
nursing tasks in the provision of the service; and
(B) the program provider determines that it can ensure
the individual's health, safety, and welfare in the provision of the ser-
vice.
(d) If an individual or LAR refuses a nursing assessment and
the program provider determines that the program provider cannot en-
sure the individual's health, safety, and welfare in the provision of a ser-
vice as described in subsection (c) of this section, the program provider
must:
(1) immediately notify the individual or LAR and the indi-
vidual's service coordinator, in writing, of the determination; and
(2) include in the notifcation required by paragraph (1) of
this subsection the reasons for the determination and the services af-
fected by the determination.
(e) If notifed by the service coordinator that the individual or
LAR refuses the nursing assessment after the discussion with the ser-
vice coordinator as described in §263.901(e)(22) of this title (relating to
LIDDA Requirements for Providing Service Coordination in the HCS
Program), the program provider must immediately send the written no-
tifcation described in subsection (d) of this section to HHSC.
§565.15. Individuals under the Age of 22.
The program provider must:
(1) request from and encourage the parent or legally autho-
rized representative (LAR) of an individual under 22 years of age re-
ceiving supervised living or residential support to provide the program
provider with the following information:
(A) the parent's or LAR's:
(i) name;
(ii) address;
(iii) telephone number;
(iv) driver license number and state of issuance or
personal identifcation card number issued by the Department of Public
Safety; and
(v) place of employment and the employer's address
and telephone number;
(B) name, address, and telephone number of a relative
of the individual or other person whom the Texas Health and Human
Services Commission (HHSC) or the program provider may contact in
an emergency situation, a statement indicating the relationship between
that person and the individual, and at the parent's or LAR's option:
(i) that person's driver license number and state of
issuance or personal identifcation card number issued by the Depart-
ment of Public Safety; and
(ii) the name, address, and telephone number of that
person's employer; and
(C) a signed acknowledgement of responsibility stating
that the parent or LAR agrees to:
(i) notify the program provider of any changes to the
contact information submitted; and
(ii) make reasonable efforts to participate in the in-
dividual's life and in planning activities for the individual;
(2) inform the parent or LAR that if the information de-
scribed in paragraph (1) of this subsection is not provided or is not ac-
curate and the service coordinator and HHSC are unable to locate the
parent or LAR as described in §263.902(e)(33) of this title (relating to
Permanency Planning) and §263.903 of this title (relating to Referral
from HHSC to DFPS), HHSC refers the case to DFPS;
(3) for an individual under 22 years of age receiving super-
vised living or residential support:
(A) make reasonable accommodations to promote the
participation of the LAR in all planning and decision-making regarding
the individual's care, including participating in meetings conducted by
the program provider;
(B) take the following actions to assist a local intellec-
tual and developmental disability authority (LIDDA) in conducting
permanency planning:
(i) cooperate with the LIDDA responsible for con-
ducting permanency planning by:
QU qexoeg POSU gune NSI OMOP qex~s oegister
(I) allowing access to an individual's records or
providing other information in a timely manner, as requested by the
local authority or HHSC;
(II) participating in meetings to review the indi-
vidual's permanency plan; and
(III) identifying, in coordination with the indi-
vidual's LIDDA, activities, supports, and services that can be provided
by the family, LAR, program provider, or the LIDDA to prepare the
individual for an alternative living arrangement;
(ii) encourage regular contact between the individ-
ual and the LAR and, if desired by the individual and LAR, between
the individual and advocates and friends in the community to continue
supportive and nurturing relationships;
(iii) keep a copy of the individual's current perma-
nency plan in the individual's record; and
(iv) refrain from providing the LAR with inaccurate
or misleading information regarding the risks of moving the individual
to another institutional setting or to a community setting;
(C) if an emergency situation occurs, attempt to notify
the parent or LAR and service coordinator as soon as the emergency
situation allows and request a response from the parent or LAR; and
(D) if the program provider determines it is unable to
locate the parent or LAR, notify the service coordinator of such deter-
mination.
§565.17. Pre-enrollment Minor Home Modifcation.
The program provider must provide pre-enrollment minor home mod-
ifcations and a pre-enrollment minor home modifcations assessment
in accordance with this subsection.
(1) The program provider must:
(A) complete a pre-enrollment minor home modifca-
tions assessment in accordance with the Home and Community-based
Services (HCS) Program Billing Requirements;
(B) provide pre-enrollment minor home modifcations
to an applicant for whom the program provider receives from the
service coordinator a completed Pre-enrollment Minor Home Mod-
ifcations/Assessments Authorization form authorized by the Texas
Health and Human Services Commission (HHSC), as described in
§263.104(k)(8)(C) of this title (relating to Process for Enrollment of
Applicants);
(C) provide to the applicant the specifc pre-enrollment
minor home modifcations identifed on the form;
(D) provide the pre-enrollment minor home modifca-
tions for the applicant within the monetary amount identifed on the
form;
(E) ensure pre-enrollment minor home modifcations
and pre-enrollment minor home modifcations assessments are pro-
vided in accordance with Appendix C of the HCS Program waiver
application approved by the Centers for Medicare and Medicaid
Services (CMS) and found on the HHSC website; and
(F) complete the pre-enrollment minor home modifca-
tions at least two days before the date of the applicant's discharge from
the nursing facility, intermediate care facility for individuals with an
intellectual disability or related conditions (ICF/IID), or general resi-
dential operation (GRO) unless the delay in completion is beyond the
control of the program provider.
(2) If the program provider does not complete pre-enroll-
ment minor home modifcations in accordance with paragraph (1) of
this subsection, the program provider must:
(A) document:
(i) a description of the pending modifcations;
(ii) the reason for the delay;
(iii) the date the program provider anticipates it will
complete the pending modifcations or specifc reasons why the pro-
gram provider cannot anticipate a completion date; and
(iv) a description of the program provider's ongoing
efforts to complete the modifcations; and
(B) at least two days before the date of the applicant's
discharge from the nursing facility, ICF/IID, or GRO, provide the in-
formation described in subparagraph (A) of this paragraph to:
(i) the applicant or legally authorized representative
(LAR); and
(ii) the service coordinator.
(3) Within one business day after completion of the pre-en-
rollment minor home modifcations, the program provider must notify
the service coordinator and the applicant or LAR that the modifcations
have been completed.
§565.19. Community First Choice (CFC) Emergency Response Sys-
tems (ERS) Services.
CFC ERS must be provided in accordance with this section.
(1) A program provider must ensure that CFC ERS is pro-
vided only to an individual who:
(A) is not receiving host home/companion care, super-
vised living, or residential support;
(B) lives alone, who is alone for signifcant parts of the
day, or has no regular caregiver for extended periods of time; and
(C) would otherwise require extensive routine supervi-
sion.
(2) A program provider must ensure that CFC ERS is pro-
vided in accordance with the individual's person-directed plan, individ-
ual plan of care (IPC), and implementation plan.
(3) A program provider must ensure that CFC ERS equip-
ment is installed within 14 business days after one of the following
dates, whichever is later:
(A) the date the Texas Health and Human Services
Commission authorizes the proposed IPC that includes CFC ERS; or
(B) the effective date of the individual's IPC as deter-
mined by the service planning team.
(4) At the time CFC ERS equipment is installed, a program
provider must ensure that:
(A) the equipment is installed in accordance with the
manufacturer's installation instructions;
(B) an initial test of the equipment is made;
(C) the equipment has an alternate power source in the
event of a power failure;
(D) the individual is trained on the use of the equipment,
including:
(i) demonstrating how the equipment works; and
^almqba oribp gune NSI OMOP QU qexoeg POSV
(ii) having the individual activate an alarm call;
(E) an explanation is given to the individual that the in-
dividual must:
(i) participate in a system check each month; and
(ii) contact the CFC ERS provider if:
(I) the individual's telephone number or address
changes; or
(II) one or more of the individual's responders
change; and
(F) the individual is informed that a responder, in re-
sponse to an alarm call, may forcibly enter the individual's home if
necessary.
(5) A program provider must ensure that the date and time
of the CFC ERS equipment installation and compliance with the re-
quirements in paragraphs (3) and (4) of this section are documented in
the individual's record.
(6) A program provider must ensure that, on or before the
date CFC ERS equipment is installed:
(A) an attempt is made to obtain from an individual, the
names and telephone numbers of at least two responders, such as a
relative or neighbor;
(B) public emergency personnel:
(i) are designated as a second responder if the indi-
vidual provides the name of only one responder; or
(ii) are designated as the sole responder if the indi-
vidual does not provide the names of any responders; and
(C) the name and telephone number of each responder
is documented in the individual's record.
(7) At least once during each calendar month a program
provider must ensure that a system check is conducted on a date and
time agreed to by the individual.
(8) A program provider must ensure that the date, time, and
result of the system check is documented in the individual's record.
(9) If, because of the system check:
(A) the equipment is working properly but the indi-
vidual is unable to successfully activate an alarm call, the program
provider must ensure that a request is made of the service coordinator
to hold a service planning team meeting to determine if CFC ERS
meets the individual's needs; or
(B) the equipment is not working properly, the program
provider must ensure that, within three calendar days of the system
check, the equipment is repaired or replaced.
(10) If a system check is not conducted in accordance with
paragraph (7) of this section, the program provider must ensure that:
(A) the failure to comply is because of good cause; and
(B) the good cause is documented in the individual's
record.
(11) A program provider must ensure that an alarm call is
responded to 24 hours a day, seven days a week.
(12) A program provider must ensure that, if an alarm call
is made, the CFC ERS provider:
(A) within 60 seconds of the alarm call, attempts to con-
tact the individual to determine if an emergency exists;
(B) immediately contacts a responder after attempting
to contact the individual, if:
(i) the CFC ERS provider confrms there is an emer-
gency; or
(ii) the CFC ERS provider is unable to communicate
with the individual; and
(C) documents in the individual's record when the in-
formation becomes available:
(i) the name of the individual;
(ii) the date and time of the alarm call, recorded in
hours, minutes, and seconds;
(iii) the response time, recorded in seconds;
(iv) the time the individual was called in response to
the alarm call, recorded in hours, minutes, and seconds;
(v) the name of the contacted responder, if applica-
ble;
(vi) a brief description of the reason for the alarm
call; and
(vii) if the reason for the alarm call is an emergency,
a statement of how the emergency was resolved.
(13) If an alarm call results in a responder being dispatched
to the individual's home for an emergency, the program provider must
ensure that:
(A) the service coordinator receives written notice of
the alarm call within one business day after the alarm call;
(B) if the CFC ERS provider is a contracted provider,
the program provider receives written notice from the contracted
provider within one business day after the alarm call; and
(C) the written notices required by subparagraphs (A)
and (B) of this paragraph are maintained in the individual's record.
(14) A program provider must ensure that, if an equipment
failure occurs, other than during a system check required by paragraph
(7) of this section:
(A) the individual is informed of the equipment failure;
and
(B) the equipment is replaced within one business day
after the failure becomes known by the CFC ERS provider.
(15) If an individual is not informed of the equipment fail-
ure and the equipment is not replaced in compliance with paragraph
(14) of this section, the program provider must ensure that:
(A) the failure to comply is because of good cause; and
(B) as soon as possible, the individual is informed of
the equipment failure and the equipment is replaced.
(16) A program provider must ensure that, if the CFC ERS
equipment registers fve or more "low battery" signals in a 72-hour
period:
(A) a visit to an individual's home is made to conduct
a system check within fve business days after the low battery signals
occur; and
QU qexoeg POTM gune NSI OMOP qex~s oegister
(B) if the battery is defective, the battery is replaced
during the visit.
(17) A program provider must ensure that, if a system
check or battery replacement is not made in accordance with paragraph
(16) of this section:
(A) the failure to comply is because of good cause; and
(B) as soon as possible, the program provide makes a
system check or battery replacement.
(18) A program provider must document in an individual's
record:
(A) the date the equipment failure or low battery signal
became known by the CFC ERS provider;
(B) the equipment or subscriber number;
(C) a description of the problem;
(D) the date the equipment or battery was repaired or
replaced; and
(E) the good cause for failure to comply as described in
paragraphs (15)(A) and (17)(A) of this section.
§565.21. Transitional Assistance Service (TAS).
The program provider must provide TAS in accordance with this sec-
tion.
(1) The program provider must:
(A) provide TAS to an applicant for whom the program
provider receives from the service coordinator a completed Form 8604,
Transition Assistance Services (TAS) Assessment and Authorization au-
thorized by HHSC, as described in §263.104(k)(6)(C) of this title (re-
lating to Process for Enrollment of Applicants);
(B) purchase TAS for the applicant within the monetary
amount identifed on the form;
(C) deliver to the applicant the specifc TAS identifed
on the form;
(D) ensure TAS is provided in accordance with the in-
dividual's person-directed plan and Appendix C of the HCS Program
waiver application approved by the Centers for Medicare and Medic-
aid and found on the HHSC website; and
(E) complete the delivery of TAS at least two days
before the date of the applicant's discharge from the nursing facility,
ICF/IID, or GRO unless the delay in completion is beyond the control
of the program provider.
(2) If the program provider does not deliver TAS in accor-
dance with paragraph (1) of this section, the program provider must:
(A) document the following:
(i) a description of the pending TAS;
(ii) the reason for the delay;
(iii) the date the program provider anticipates it will
deliver the pending TAS or specifc reasons why the program provider
cannot anticipate a delivery date; and
(iv) a description of the program provider's ongoing
efforts to deliver the TAS; and
(B) at least two days before the date of the applicant's
discharge from the nursing facility, ICF/IID, or GRO, provide the in-
formation described in subparagraph (A) of this paragraph to:
(i) the applicant or LAR; and
(ii) the service coordinator.
(3) Within one business day after the TAS has been deliv-
ered, the program provider must notify the service coordinator and the
applicant or LAR that the TAS has been delivered.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on June 1, 2023.
TRD-202302021
Karen Ray
Chief Counsel
Health and Human Services Commission
Effective date: June 21, 2023
Proposal publication date: February 17, 2023
For further information, please call: (512) 438-3161
♦ ♦ ♦
SUBCHAPTER F. CERTIFICATION
STANDARDS: QUALITY ASSURANCE
26 TAC §§565.23, 565.25, 565.27, 565.29, 565.31, 565.33,
565.35, 565.37, 565.39
STATUTORY AUTHORITY
The new sections are authorized by Texas Government Code
§531.0055, which provides that the Executive Commissioner of
HHSC shall adopt rules for the operation and provision of ser-
vices by the health and human services agencies; Texas Gov-
ernment Code §531.021, which provides HHSC with the author-
ity to administer federal funds and plan and direct the Medicaid
program in each agency that operates a portion of the Medicaid
program; and Texas Human Resources Code §32.021, which
provides that HHSC shall adopt necessary rules for the proper
and effcient operation of the Medicaid program.
§565.23. Residential Requirements.
(a) This applies to all three-person and four-person residences
and host home/companion care settings, unless otherwise specifed.
(b) A program provider must ensure that:
(1) the residence, neighborhood, and community meet the
needs of the individual and provide an environment that ensures the
health, safety, and welfare of the individual;
(2) the home is modifed to meet the specifc adaptive needs
of the individual;
(3) adaptive equipment is functional for the individual or,
if the equipment is not functional, the provider has documented:
(A) the broken equipment;
(B) the order date of new or replacement equipment;
(C) the date of the new or replacement equipment in-
stallment; and
(D) alternative strategies used during the interim;
(4) mattresses are off the foor and a mattress cover is uti-
lized unless contraindicated and documented by the service planning
team;
^almqba oribp gune NSI OMOP QU qexoeg POTN
(5) home furnishings are safe and ft for use;
(6) the home is clean and sanitary;
(7) the home is free of infestations including bugs, rodents,
and other pests;
(8) the walls, ceilings, foors, and windows are in good con-
dition and not hazardous to the individual;
(9) the bathrooms are functional and safe to use;
(10) there is hot water available at sinks and in bathing fa-
cilities;
(11) the temperature of the hot water at sinks and bathing
facilities does not exceed 120 degrees Fahrenheit unless the program
provider, in accordance with subsection (c) of this section, conducts a
competency-based skills assessment showing that all individuals in the
residence can independently regulate the temperature of the hot water
from the sinks and bathing facilities;
(12) the major home appliances are in working order, in-
cluding kitchen appliances and heating and cooling systems;
(13) the individual's bedroom door has a lock that:
(A) is operable by the individual;
(B) only the individual, a roommate of the individual if
applicable, and staff designated by the program provider have keys to
the individual's bedroom door; and
(C) is not purchased and installed at the individual's or
LAR's expense;
(14) the individual does not require a lock if:
(A) the individual lives in a host home/companion care
setting and the service provider is the LAR; or
(B) there is a documented modifcation in the individ-
ual's person-directed plan;
(15) household cleaners and chemicals are stored securely;
(16) perishable foods are refrigerated or stored safely;
(17) animals and pets are kept free of disease and vacci-
nated as required by Texas Health and Safety Code, Chapter 826; and
(18) the interior and exterior of the home:
(A) is free of accumulation of waste and trash;
(B) is accessible and free of hazards to an individual;
and
(C) does not compromise the health or safety of an in-
dividual.
(c) If the program provider conducts the competency-based
skills assessment described in subsection (b)(11) of this section:
(1) the assessment must:
(A) be conducted by a staff member who is not a service
provider of residential support, supervised living, or host home/com-
panion care who works or lives in the residence;
(B) be conducted for each individual;
(C) evaluate the individual's cognitive and physical
ability to independently mix or regulate the hot water temperature
without assistance or guidance from each sink and bathing facility in
the residence; and
(D) be based on a face-to-face demonstration by the in-
dividual; and
(2) the program provider must:
(A) complete the assessment at least annually;
(B) document the results of the assessment; and
(C) keep a copy of the results in the residence.
(d) The program provider must ensure that each residence has:
(1) exterior doors that are unobstructed and accessible to
all individuals living in the residence;
(2) two means of escape from the residence;
(3) two means of escape from an individual's bedroom, un-
less the program provider has a fre sprinkler system that is checked and
maintained according to Texas Insurance Code, Chapter 6003, at which
point there can be one means of escape from an individual's bedroom;
(4) working smoke alarms in each bedroom and immedi-
ately outside the bedrooms; and
(5) fre extinguishers that are:
(A) accessible and unobstructed to the service provider;
(B) on each level of the home;
(C) serviced or replaced after each use; and
(D) if unused, serviced according to the manufacturer's
instructions, or as required by the state or local fre marshal.
(e) The program provider, as it relates to fre drills, must:
(1) conduct at each residence at least:
(A) one fre drill every 90 days;
(B) four fre drills every 365 days; and
(C) two of the fre drills listed in subparagraph (B) of
this paragraph must be conducted during sleeping hours;
(2) ensure that each staff member participates in a fre drill
within 90 days of hire and at least annually thereafter;
(3) ensure that the staff member can explain the emergency
plans for the residence;
(4) provide training for a staff member who does not follow
the emergency plan during the fre drill; and
(5) revise the emergency plan to ensure the individual can
exit the residence safely if the individual is unable to exit the home
according to the emergency plan.
(f) The program provider, as it relates to emergency plans,
must:
(1) ensure that a staff member reviews the emergency plans
for each individual at a residence before providing services;
(2) instruct staff members on where to locate the emer-
gency plans at the residence; and
(3) maintain documentation related to emergency pre-
paredness accessible to staff members at the residence, including:
(A) emergency plans that address:
(i) the relevant emergencies given the geographic
location;
QU qexoeg POTO gune NSI OMOP qex~s oegister
(ii) the needs of the individuals living in the resi-
dence; and
(iii) fre drill responses; and
(B) emergency numbers publicly posted in an area of
the residence that is easily accessible to staff members.
(g) A program provider must implement and maintain person-
nel practices that safeguard individuals against infectious and commu-
nicable diseases, which includes:
(1) using standard precautions in the care of all individu-
als, including hand hygiene and maintaining a sanitary environment to
avoid sources and transmission of infections;
(2) creating written policies for the prevention and control
of communicable diseases among employees and individuals, includ-
ing the appropriate use of transmission-based precautions and protec-
tive measures the program provider must take if an employee contracts
a communicable disease; and
(3) revising a policy or practice if a shortcoming is identi-
fed.
(h) A program provider must implement and maintain medica-
tion administration and storage practices that safeguard an individual's
medication, which includes:
(1) creating written policies for preventing unauthorized
access to medications;
(2) using a procedure that ensures safe medication admin-
istration to the individual;
(3) ensuring staff are trained and knowledgeable about the
individuals' medications;
(4) ensuring staff who are administering medications have
been trained and delegated by a registered nurse (RN);
(5) maintaining accurate, current, and accessible documen-
tation of medication administration; and
(6) revising a policy or practice if a shortcoming is identi-
fed.
(i) A program provider must comply with the requirements in
this subsection regarding a four-person residence.
(1) Before providing residential support in a four-person
residence, the program provider must:
(A) obtain an inspection by the local fre marshal, or the
Texas State Fire Marshal's offce in locations where there is no local fre
marshal, and correct any items cited by the local fre marshal or Texas
State Fire Marshal's Offce to the satisfaction of those authorities; and
(B) obtain Texas Health and Human Services Commis-
sion (HHSC)approval of the residence in accordance with §565.43 of
this chapter(relating to HHSC Approval of Four Person Residences).
(2) HHSC inspects for certifcation, as described in para-
graph(1)(A) of this subsection, only if the program provider submits to
the HHSC Architectural Unit:
(A) one of the following:
(i) if the four-person residence is located in a juris-
diction with a local fre safety authority:
(I) a completed HHSC Form 5606, Life Safety
Code Certifcation, available on the HHSC website, documenting that
the local fre safety authority having jurisdiction refused to inspect for
certifcation using the code (i.e., the Life Safety Code or International
Fire Code) for that jurisdiction; and
(II) written documentation from the Texas State
Fire Marshal's Offce that it refused to inspect for certifcation using the
Life Safety Code; or
(ii) if the four-person residence is located in a juris-
diction without a local fre safety authority, written documentation from
the Texas State Fire Marshal's Offce that it refused to inspect for cer-
tifcation using the Life Safety Code; and
(B) a completed HHSC Form 5604, HCS Program
Provider Request for Life Safety Inspection, available on the HHSC
website.
(3) The program provider must:
(A) obtain the certifcation required by this subsection
annually; and
(B) ensure that a four-person residence:
(i) contains a copy of the most recent inspection of
the residence by the local fre safety authority, Texas State Fire Mar-
shal's Offce, or HHSC; and
(ii) is in continuous compliance with all applicable
local building codes and ordinances and state and federal laws, rules,
and regulations.
§565.25. Programmatic Requirements.
(a) Before providing services to an individual in a residence in
which supervised living or residential support is provided, and annually
thereafter, the program provider must:
(1) conduct an on-site inspection to ensure that, based on
the individual's needs, the environment is safe, accessible and suited for
the individual's abilities, and complies with applicable federal, state,
and local regulations for the community in which the individual lives;
(2) complete any action identifed in the on-site inspection
for a residence in which supervised living or residential support will be
provided:
(A) before an individual moves in; or
(B) within 30 days if an individual is already in the res-
idence; and
(C) document justifcation for any actions that cannot
be completed before the individual moving in or within 30 days with a
plan for completion.
(b) Before providing services to an individual in a residence in
which host home/companion care is provided and quarterly thereafter,
the program provider must:
(1) conduct an on-site inspection to ensure that, based on
the individual's needs, the environment is safe, accessible, and suited
for the individual's abilities and needs, and complies with applicable
federal, state, and local regulations for the community in which the
individual lives; and
(2) require proof of completion of any action identifed in
the on-site inspection for a residence in which host home/companion
care will be provided to ensure that the residence meets the needs of
the individual:
(A) before an individual moves in; or
(B) within 30 days if an individual is already in the res-
idence; and
^almqba oribp gune NSI OMOP QU qexoeg POTP
(C) document justifcation for any actions that cannot
be completed before the individual moving in or within 30 days and
include a plan for completion.
(c) The program provider must establish an ongoing con-
sumer/advocate advisory committee composed of individuals, legally
authorized representatives (LARs), community representatives, and
family members that meets at least quarterly. The committee:
(1) at least annually, reviews the information provided to
the committee by the program provider in accordance with subsec-
tion(l)(6) of this section; and
(2) based on the information reviewed, makes recommen-
dations to the program provider for improvements to the processes and
operations of the program provider.
(d) The program provider must make available all records, re-
ports, and other information related to the delivery of HCS Program
and CFC services as requested by the Texas Health and Human Ser-
vices Commission (HHSC), other authorized agencies, or the Centers
for Medicare and Medicaid and deliver such items, as requested, to a
specifed location or delivered electronically if available.
(e) The program provider must establish a procedure to assess
at least annually the satisfaction of all individuals and LARs in the
program provider's services and act within 60 days regarding any areas
of dissatisfaction.
(f) The program provider must comply with 40 Texas Admin-
istrative Code (TAC) §49.309 (relating to Complaint Process).
(g) In all respite facilities and all residences in which a service
provider of residential assistance or the program provider hold a prop-
erty interest, the program provider must post in a conspicuous location:
(1) the name, address, and telephone number of the pro-
gram provider;
(2) the effective date of the contract; and
(3) the name of the legal entity named on the contract.
(h) A program provider must report the death of an individual:
(1) to HHSC and the local intellectual and developmental
disability authority by the end of the next business day after the pro-
gram provider becomes aware of the death; and
(2) if the program provider reasonably believes that the
LAR does not know of the individual's death, to the LAR as soon
as possible, but not later than 24 hours after the program provider
becomes aware of the death.
(i) A program provider must not retaliate against:
(1) a staff member, service provider, individual, or other
person who fles a complaint, presents a grievance, or otherwise pro-
vides good faith information relating to the possible abuse, neglect, or
exploitation of an individual, including:
(A) use of seclusion; and
(B) use of a restraint not in compliance with federal and
state laws, rules, and regulations; and
(2) an individual because a person on behalf of the individ-
ual fles a complaint, presents a grievance, or otherwise provides good
faith information relating to the possible abuse, neglect, or exploitation
of an individual, including:
(A) use of seclusion; and
(B) use of a restraint not in compliance with federal and
state laws, rules, and regulations.
(j) A program provider must enter critical incident data in the
HHSC data system no later than the last calendar day of the month that
follows the month being reported in accordance with HHSC guidance
found on the HHSC website.
(k) A program provider must ensure that:
(1) the name and phone number of an alternate to the Chief
Executive Offcer (CEO) of the program provider is entered in the
HHSC data system; and
(2) the alternate to the CEO:
(A) performs the duties of the CEO during the CEO's
absence; and
(B) acts as the contact person in an HHSC investigation
if the CEO is named as an alleged perpetrator of abuse, neglect, or
exploitation of an individual, and complies with§565.31(d) - (f) of this
subchapter (relating to Requirements Related to the Abuse, Neglect,
and Exploitation).
(l) At least annually, the program provider must:
(1) evaluate information about the satisfaction of individ-
uals and LARs with the program provider's services and identify pro-
gram process improvements to increase the satisfaction;
(2) review complaints, as described in 40 TAC §49.309,
and identify program process improvements to reduce the need for fl-
ing complaints;
(3) review all fnal investigative reports from HHSC and,
based on the review, identify program process improvements that help
prevent the occurrence of abuse, neglect, and exploitation and improve
the delivery of services;
(4) review the reasons for terminating HCS Program
or CFC services and identify any related need for program process
improvements;
(5) evaluate critical incident data described in subsection
(j) of this section, compare the program provider's use of restraint to
aggregate data provided by HHSC on the HHSC website, and identify
program process improvements that help prevent the reoccurrence of
restraints and improve service delivery;
(6) provide all information the program provider reviewed,
evaluated, and created as described in paragraphs (1) - (5) of this sub-
section to the consumer/advocate advisory committee required by sub-
section (c) of this section;
(7) implement any program process improvements identi-
fed by the program provider in accordance with this subsection; and
(8) review recommendations made by the consumer/advo-
cate advisory committee as described in subsection (c)(2) of this sec-
tion and implement the recommendations approved by the program
provider.
(m) The program provider must ensure that all personal infor-
mation concerning an individual is kept confdential, such as lists of
names, addresses, and records obtained by the program provider, and
that the use or disclosure of such information and records is limited
to purposes directly connected with the administration of the program
provider's HCS Program or provision of CFC services and is otherwise
neither directly nor indirectly used or disclosed unless the consent of
the individual to whom the information applies or the individual's LAR
is obtained beforehand.
QU qexoeg POTQ gune NSI OMOP qex~s oegister
(n) The program provider must include the individual or LAR
in planning the individual's residential relocation, except in cases of
emergency.
§565.27. Finances and Rent.
(a) The program provider must comply with this subsection
regarding charges against an individual's personal funds.
(1) The program provider must, in accordance with this
paragraph, collect a monthly amount for room from an individual who
lives in a three-person or four-person residence. The cost for room
must consist only of:
(A) an amount equal to:
(i) rent of a comparable dwelling in the same geo-
graphical area that is unfurnished; or
(ii) the program provider's ownership expenses, lim-
ited to the interest portion of a mortgage payment, depreciation ex-
pense, property taxes, neighborhood association fees, and property in-
surance; and
(B) the cost of:
(i) shared appliances, electronics, and housewares;
(ii) shared furniture;
(iii) monitoring for a security system;
(iv) monitoring for a fre alarm system;
(v) property maintenance, including personnel
costs, supplies, lawn maintenance, pest control services, carpet clean-
ing, septic tank services, and painting;
(vi) utilities, limited to electricity, gas, water,
garbage collection, and a landline telephone; and
(vii) shared television and Internet service used by
the individuals who live in the residence.
(2) Except as provided in subparagraphs (B) and (C) of this
paragraph, a program provider must collect a monthly amount for board
from an individual who lives in a three-person or four-person residence.
(A) The cost for board must consist only of the cost of
food, including food purchased for an individual to consume while
away from the residence as a replacement for food and snacks nor-
mally prepared in the residence, and of supplies used for cooking and
serving, such as utensils and paper products.
(B) A program provider is not required to collect a
monthly amount for board from an individual if collecting such an
amount may make the individual ineligible for the Supplemental
Nutrition Assistance Program operated by the Texas health and Human
Services Commission(HHSC).
(C) A program provider must not collect a monthly
amount for board from an individual if the individual chooses to
purchase the individual's own food, as documented in the individual's
implementation plan.
(3) To determine the maximum room and board charge for
each individual, a program provider must:
(A) develop a process or formula that divides the rent
equitably and considers:
(i) the number of residents receiving HCS Program
services or similar services that the residence has been developed to
support plus the number of service providers and other persons who
live in the residence; and
(ii) the features or space to which an individual has
exclusive or shared access, unless the additional space is requested and
needed for accessibility purposes;
(B) divide the board cost described in paragraph (2) of
this subsection by the number of persons consuming the food; and
(C) add the amounts calculated in accordance with sub-
paragraphs (A)and (B) of this paragraph.
(4) A program provider must not increase the charge for
room and board because a resident moves from the residence.
(5) A program provider:
(A) must not charge an individual a room and board
amount that exceeds an amount determined in accordance with para-
graphs (1) - (3)of this subsection; and
(B) must maintain documentation demonstrating that
the room and board charge was determined in accordance with para-
graphs (1) - (3)of this subsection.
(6) Before an individual or legally authorized representa-
tive (LAR)selects a residence, the program provider must ensure the
individual or LAR has a written residential agreement with:
(A) the program provider if the individual lives in a
three-person residence or four-person residence; or
(B) the service provider of host home/companion care
if the individual does not own the residence or lease the residence from
another person.
(7) Except as provided in paragraph (8) of this subsection,
a program provider may not charge or collect payment from any person
for room and board provided to an individual receiving host home/com-
panion care.
(8) If a program provider makes a payment to an individ-
ual's host home/companion care provider while waiting for the individ-
ual's federal or state benefts to be approved, the program provider may
seek reimbursement from the individual for such payments.
(9) For a program provider who manages personal funds
of an individual who receives host home/companion care, the program
provider:
(A) must pay the agreed upon amount for the host
home/companion care services;
(B) must pay the host home/companion care provider
directly from the individual's account;
(C) may pay a room and board charge for the individual
that is less than the host home/companion care provider's cost of room
and board, as determined using the calculations described in paragraphs
(1) and(2) of this subsection, for a three-person or four-person resi-
dence, divided by the number of persons living in the host home/com-
panion care provider's home; and
(D) must not pay a host home/companion care provider
a room and board charge that exceeds the host home/companion care
provider's cost of room and board, as determined using the calculations
described in paragraphs (1) and (2) of this subsection for a three-person
or four-person residence, divided by the number of persons living in the
host home/companion care provider's home.
(10) For an item or service other than room and board, the
program provider must apply a consistent method in assessing a charge
against the individual's personal funds that ensures that the charge for
the item or service is reasonable and comparable to the cost of a similar
item or service generally available in the community.
^almqba oribp gune NSI OMOP QU qexoeg POTR
(b) The program provider must inform the individual and LAR
orally or in writing of any charges assessed by the program provider
against the individual's personal funds, the purpose of those charges,
and effects of the charges in relation to the individual's fnancial status.
(c) The program provider must ensure that the individual or
LAR has agreed in writing to all charges assessed by the program
provider against the individual's personal funds before the charges are
assessed.
(d) The program provider must not assess charges against the
individual's personal funds for costs for items or services reimbursed
through the HCS Program or through CFC.
(e) At the written request of an individual or LAR, the pro-
gram provider must manage the individual's personal funds entrusted
to the program provider, without charge to the individual or LAR in
accordance with this subsection.
(1) The program provider must not commingle the individ-
ual's personal funds with the program provider's funds.
(2) The program provider must maintain a separate, de-
tailed record of:
(A) all deposits into the individual's account; and
(B) all expenditures from the individual's account.
(3) If an expenditure is for the individual to use as personal
spending money, the program provider must have a process to show
the individual acknowledged receiving the funds.
(4) The program provider may accrue an expense for nec-
essary items and services for which the individual's personal funds are
not available for payment, such as room and board, medical and dental
services, legal fees or fnes, and essential clothing.
(5) If an expense is accrued as described in paragraph (4)
of this subsection, the program provider must enter a written payment
plan with the individual or LAR for reimbursement of the funds.
§565.31. Requirements Related to Abuse, Neglect, and Exploitation.
(a) A program provider must:
(1) ensure that an individual and legally authorized repre-
sentative(LAR), at the time the individual begins receiving a Home
and Community-based Services (HCS) Program or Community First
Choice(CFC) service and at least annually thereafter, are:
(A) informed of how to report allegations of abuse, ne-
glect, or exploitation to:
(i) the Texas Department of Family and Protective
Services (DFPS)and given the toll-free telephone number, 1-800-647-
7418, in writing; and
(ii) HHSC Complaint and Incident Intake (CII) by
calling the toll-free telephone number, 1-800-458-9858; and
(B) educated about protecting the individual from
abuse, neglect, and exploitation;
(2) ensure that each staff member, service provider, and
volunteer are:
(A) trained and knowledgeable of:
(i) acts that constitute abuse, neglect, and exploita-
tion;
(ii) signs and symptoms of abuse, neglect, and ex-
ploitation; and
(iii) methods to prevent abuse, neglect, and exploita-
tion;
(B) instructed to report to DFPS immediately, but not
later than one hour after having knowledge or suspicion, that an indi-
vidual has been or is being abused, neglected, or exploited, by:
(i) calling the DFPS Abuse Hotline toll-free tele-
phone number, 1-800-647-7418; or
(ii) using the DFPS Abuse Hotline website; and
(C) given the instructions described in subparagraph
(B) of this paragraph in writing;
(3) ensure that each staff member, service provider, and
volunteer sign an acknowledgement that they understand all individ-
uals must live free of abuse, neglect, and exploitation; and
(4) conduct the activities described in paragraph (2) and (3)
of this subsection before a staff member, service provider, or volunteer
assumes job duties and at least annually thereafter.
(b) Except as provided by §559.241(a) of this title (relating to
Reporting Abuse, Neglect, Exploitation, or Incidents to HHSC), if a
program provider, staff member, service provider, volunteer, or con-
trolling person knows or suspects an individual is being or has been
abused, neglected, or exploited, the program provider must report or
ensure that the person with knowledge or suspicion reports the allega-
tion of abuse, neglect, or exploitation to DFPS immediately, but not
later than one hour after having knowledge or suspicion, by:
(1) calling the DFPS Abuse Hotline toll-free telephone
number, 1-800-647-7418; or
(2) using the DFPS Abuse Hotline website.
(c) If a report required by subsection (b) of this section al-
leges abuse, neglect, or exploitation by a person who is not a service
provider, staff member, volunteer, or controlling person, a program
provider must:
(1) assess the individual and allegation and as necessary:
(A) obtain appropriate medical or psychological ser-
vices for the individual; and
(B) assist in obtaining ongoing medical or psychologi-
cal services for the individual;
(2) discuss with the individual or LAR safety measures, in-
cluding alternative residential settings or individualized skills and so-
cialization providers that may help ensure the individual's safety;
(3) when taking the actions described in paragraphs (1) and
(2) of this subsection, avoid compromising the investigation or further
traumatizing the individual; and
(4) preserve and protect evidence related to the allegation.
(d) If a report required by subsection (b) of this section alleges
abuse, neglect, or exploitation by a service provider, staff member, vol-
unteer, or controlling person; or if a program provider is notifed by
HHSC of an allegation of abuse, neglect, or exploitation by a service
provider, staff member, volunteer, or controlling person, the program
provider must:
(1) assess the individual and allegation as necessary:
(A) obtain appropriate medical or psychological ser-
vices for the individual; and
(B) assist in obtaining ongoing medical or psychologi-
cal services for the individual;
QU qexoeg POTS gune NSI OMOP qex~s oegister
(2) take actions to secure the safety of the individual, in-
cluding if necessary, ensuring that the alleged perpetrator does not have
contact with the individual or any other individual until HHSC com-
pletes the investigation;
(3) when taking the actions described in paragraphs (1) and
(2) of this subsection, avoid compromising the investigation or further
traumatizing the individual;
(4) preserve and protect evidence related to the allegation;
and
(5) notify, as soon as possible, but no later than 24 hours
after the program provider reports or is notifed of the allegation, the
individual, the LAR, and the service coordinator of:
(A) the allegation report; and
(B) the actions the program provider has taken or will
take based on the allegation, the condition of the individual, and the
nature and severity of any harm to the individual, including the actions
required by paragraph (2) of this subsection.
(e) During an HHSC investigation of an alleged perpetrator
who is a service provider, staff member, volunteer, or controlling per-
son, a program provider must:
(1) cooperate with the investigation as requested by HHSC,
including providing documentation and participating in an interview;
(2) provide HHSC access to:
(A) sites owned, operated, or controlled by the program
provider;
(B) individuals, service providers, staff members, vol-
unteers, and controlling persons; and
(C) evidence pertinent to the investigation of the alle-
gation; and
(3) ensure that staff members, service providers, volun-
teers, and controlling persons comply with paragraphs (1) and (2) of
this subsection.
(f) After a program provider receives a fnal investigative re-
port from HHSC for an investigation described in subsection (e) of this
section, the program provider must:
(1) if the allegation of abuse, neglect, or exploitation is con-
frmed by HHSC:
(A) review the report, including any concerns and rec-
ommendations by HHSC; and
(B) take action within the program provider's authority
to prevent the reoccurrence of abuse, neglect or exploitation, including
disciplinary action against the service provider, staff member, or vol-
unteer confrmed to have committed abuse, neglect, or exploitation;
(2) if the allegation of abuse, neglect, or exploitation is un-
confrmed, inconclusive, or unfounded:
(A) review the report, including any concerns and rec-
ommendations by HHSC; and
(B) take appropriate action within the program
provider's authority, to ensure the individual's safety, as necessary;
(3) immediately, but not later than fve calendar days after
the date the program provider receives the HHSC fnal investigative
report:
(A) notify the individual, the LAR, and the service co-
ordinator of:
(i) the investigation fnding; and
(ii) the action taken by the program provider in re-
sponse to the HHSC investigation as required by paragraphs (1) and
(2) of this subsection; and
(B) notify the individual or LAR of:
(i) the process to appeal the investigation fnding as
described in Chapter 711, Subchapter J of this title (relating to Appeal-
ing the Investigation Finding); and
(ii) the process for requesting a copy of the inves-
tigative report from the program provider;
(4) within 14 calendar days after the date the program
provider receives the fnal investigative report, complete and send
to HHSC the Form 8494, Notifcation Regarding an Investigation of
Abuse, Neglect or Exploitation, located on the HHSC website; and
(5) upon request of the individual or LAR, provide to the
individual or LAR a copy of the HHSC fnal investigative report after
removing any information that would reveal the identity of the reporter
or of any individual who is not the alleged victim.
(g) The program provider must ensure the coordination of ser-
vices with the licensed individualized skills and socialization provider,
including information regarding abuse, neglect, and exploitation.
§565.35. Enclosed Beds.
(a) The program provider may allow the use of an enclosed bed
in a residence if the enclosed bed is purchased, obtained, and complies
with the requirements in subsection (c) of this section prior to June 19,
2023.
(b) An enclosed bed is prohibited in a residence if it is pur-
chased or obtained on or after June 19, 2023, even if it complies with
subsection (c) of this section.
(c) If the program provider allows the use of an enclosed bed
in a residence, the program provider must:
(1) visually inspect the enclosed bed to ensure it meets the
criteria of an enclosed bed as defned in §565.3 of this chapter(related
to Defnitions);
(2) ensure that a physician, occupational therapist, or phys-
ical therapist:
(A) conducts an annual assessment to determine:
(i) if the individual has a medical need for the en-
closed bed;
(ii) the circumstances under which the enclosed bed
may be used;
(iii) that less restrictive methods would be ineffec-
tive in protecting the individual and the reasons for that determination;
(iv) how to use the enclosed bed and any contraindi-
cations specifc to the individual;
(v) how and when to document the use of the en-
closed bed; and
(vi) how to monitor the use of the enclosed bed to
ensure it is being used in accordance with the assessment; and
(B) follows up after any signifcant change to determine
if the individual still has a medical need for the enclosed bed;
(3) obtain and retain the following documentation:
^almqba oribp gune NSI OMOP QU qexoeg POTT
(A) a letter of medical necessity from the prescribing
physician or professional therapist; and
(B) a receipt from a durable medical equipment com-
pany for the enclosed bed;
(4) develop and implement policies and procedures that re-
quire:
(A) routine checks of the enclosure bed to ensure it is
in good repair and safe for the individual;
(B) a documented quarterly review by a registered
nurse (RN) or professional therapist to ensure the enclosed bed is still
safe and necessary given the individual's current needs and other less
restrictive options available; and
(C) an order for the enclosed bed updated annually, or
sooner if the RN has determined there is a signifcant change to the
individual's condition.
(d) To prevent misuse or overuse of the enclosed bed, the pro-
gram provider must:
(1) develop and implement a usage plan that details when
the enclosed bed will be used that is consistent with the assessment and
order;
(2) require any staff member who provides services to an
individual with an enclosed bed to read and document understanding
of the usage plan before providing services; and
(3) make the usage plan readily available to staff members
providing services.
(e) All enclosed beds are prohibited after June 19, 2028.
§565.37. Protective Devices.
(a) Except as provided in §565.35 of this subchapter (relating
to Enclosed Beds), if a protective device is used, the program provider
must ensure that it is used in accordance with this section.
(b) A program provider must not use a protective device:
(1) to modify or control an individual's behavior;
(2) for disciplinary purposes;
(3) for staff convenience; or
(4) as a substitute for an effective, less restrictive method.
(c) If a need for a protective device is identifed, the program
provider must ensure that a physician, occupational therapist, physical
therapist, or registered nurse (RN):
(1) conducts an initial assessment to determine:
(A) if the individual has a medical need for a protective
device;
(B) that less restrictive methods would be ineffective in
protecting the individual, and the reasons for that determination;
(C) the type of protective device to be used, which must
be the least restrictive protective device that will protect the individual;
(D) the circumstances under which the protective de-
vice may be used;
(E) how to use the protective device and any contraindi-
cations specifc to the individual;
(F) how and when to document the use of the protective
device; and
(G) how to monitor the use of the protective device to
ensure it is being used in accordance with the assessment; and
(2) then annually and after any signifcant change to deter-
mine:
(A) if the individual has a medical need for a protective
device;
(B) that less restrictive methods would be ineffective in
protecting the individual, and the reasons for that determination; and
(C) the type of protective device to be used, which must
be the least restrictive protective device that will protect the individual.
(d) Before a program provider uses a protective device, the
program provider must:
(1) obtain and retain in the individual's record:
(A) an order for the use of the protective device identi-
fed in the initial assessment;
(B) complete initial and subsequent assessments from
subsection (c)of this section; and
(C) consent of the individual or legally authorized rep-
resentative(LAR) to use the protective device;
(2) provide oral and written notifcation to the individual
or LAR of the right at any time to withdraw consent for the use of the
protective device; and
(3) develop a policy and procedure to ensure that each ser-
vice provider who will use the protective device has been trained in
the proper use of the protective device, in accordance with the initial
assessment.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on June 1, 2023.
TRD-202302022
Karen Ray
Chief Counsel
Health and Human Services Commission
Effective date: June 21, 2023
Proposal publication date: February 17, 2023
For further information, please call: (512) 438-3161
♦ ♦ ♦
SUBCHAPTER G. HHSC ACTIONS
26 TAC §§565.41, 565.43, 565.47, 565.49
STATUTORY AUTHORITY
The new sections are authorized by Texas Government Code
§531.0055, which provides that the Executive Commissioner of
HHSC shall adopt rules for the operation and provision of ser-
vices by the health and human services agencies; Texas Gov-
ernment Code §531.021, which provides HHSC with the author-
ity to administer federal funds and plan and direct the Medicaid
program in each agency that operates a portion of the Medicaid
program; and Texas Human Resources Code §32.021, which
provides that HHSC shall adopt necessary rules for the proper
and effcient operation of the Medicaid program.
§565.49. Program Provider Compliance and Corrective Action.
QU qexoeg POTU gune NSI OMOP qex~s oegister
(a) If the Texas Health and Human Services Commission
(HHSC) determines from a survey that a program provider complies
with the certifcation standards, HHSC:
(1) sends the program provider a fnal survey report stating
that the program provider complies with the certifcation standards;
(2) does not require any action by the program provider;
and
(3) if the survey is an initial or a recertifcation survey, cer-
tifes the program provider as described in §565.41(f) of this subchapter
(relating to HHSC Surveys of a Program Provider).
(b) If HHSC determines from a survey that a program provider
is not in compliance with a certifcation standard and the violation is an
immediate threat, HHSC notifes the program provider of the determi-
nation. The program provider must immediately provide HHSC with
a plan of removal.
(c) In a plan of removal provided in accordance with subsec-
tion (b) of this section, a program provider must specify the time by
which the program provider will remove the immediate threat. HHSC
approves or disapproves the plan of removal and monitors to ensure the
immediate threat is removed.
(d) If a program provider that is required to provide a plan of
removal does not provide a plan of removal, HHSC does not approve
the program provider's plan of removal, or the program provider does
not implement the plan of removal approved by HHSC, HHSC:
(1) denies or terminates certifcation of the program
provider; and
(2) coordinates with the local intellectual and developmen-
tal disability authorities (LIDDAs) the immediate provision of alterna-
tive services for the individuals.
(e) If HHSC determines from a survey that a program provider
is not in compliance with a certifcation standard, HHSC sends to the
program provider, within 10 business days after the date of the exit
conference:
(1) a fnal survey report with a list of violations;
(2) a letter notifying the program provider that the program
provider may request an informal dispute resolution to dispute a viola-
tion in the fnal survey report; and
(3) if HHSC imposes an administrative penalty in accor-
dance with §565.45 of this subchapter (relating to Administrative
Penalties), a written notice of the administrative penalty as described
in 40 TAC §49.535(b) (relating to Administrative Penalties in the HCS
and TxHmL Programs).
(f) If HHSC determines from an initial certifcation survey, re-
certifcation survey, or intermittent survey that a program provider is
not in compliance with a certifcation standard, the program provider
must submit to HHSC, within 14 calendar days after the date the pro-
gram provider receives the fnal survey report, a plan of correction for
each violation identifed by HHSC in the fnal survey report. The pro-
gram provider must submit a plan of correction in accordance with this
subsection even if the program provider disagrees with the violation or
requests an informal dispute resolution.
(g) In a plan of correction submitted in accordance with sub-
section (f) of this section, a program provider must specify a date by
which the program provider will complete corrective action for each
violation and such date must:
(1) for a critical violation, be no later than 30 calendar days
after the date of the survey exit conference; and
(2) for a violation that is not a critical violation, be no later
than 45 calendar days after the date of the survey exit conference.
(h) After HHSC receives the plan of correction required by
subsection (f) of this section, HHSC notifes the program provider
whether the plan is approved or not approved.
(i) If HHSC does not approve a plan of correction required
by subsection (f) of this section, the program provider must submit
a revised plan of correction within fve business days after the date
of HHSC's notice that the plan of correction was not approved. After
HHSC receives the revised plan of correction, HHSC notifes the pro-
gram provider whether the revised plan is approved or not approved.
(j) If the program provider does not submit a plan of correction
required by subsection (f) of this section or a revised plan of correction
required by subsection (i) of this section, or if HHSC notifes the pro-
gram provider that a revised plan of correction is not approved, HHSC:
(1) imposes a vendor hold against the program provider
until HHSC approves a plan of correction submitted by the program
provider; or
(2) denies or terminates certifcation of the program
provider.
(k) If HHSC approves a plan of correction, HHSC takes the
following actions to determine if a program provider has completed its
corrective action:
(1) requests that the program provider submit evidence of
correction to HHSC; and
(2) conducts:
(A) for a critical violation, a follow-up survey after the
date specifed in the plan of correction for correcting the violation but
within 45 calendar days after the survey exit conference, unless HHSC
conducts an earlier follow-up survey as described in subsection (l) of
this section; or
(B) for a violation that is not critical, a post 45-day fol-
low-up survey, unless HHSC conducts an earlier follow-up survey as
described in subsection (l) of this section.
(l) At the request of a program provider, HHSC may conduct
a follow-up survey earlier than the timeframes described in subsection
(k)(2) of this section.
(1) If HHSC determines from the earlier follow-up survey
that corrective action has been completed and the program provider
has not yet submitted a plan of correction to HHSC in accordance with
subsection (f) of this section, the program provider must include the
corrective action taken on the plan of correction that is submitted.
(2) If HHSC determines from the earlier follow-up survey
that corrective action has not been completed for a violation that is not
critical, HHSC conducts the post 45-day follow-up survey.
(m) If HHSC determines from a follow-up survey described in
subsections (k)(2)(A) or (l) of this section that the program provider has
completed corrective action for a critical violation, the administrative
penalty stops accruing on the date corrective action was completed,
as determined by HHSC. HHSC sends the program provider a written
notice as described in 40 TAC §49.535(c).
(n) If HHSC determines from a follow-up survey described in
subsections (k)(2)(A) or (l) of this section that the program provider
has not completed the corrective action for a critical violation, HHSC:
^almqba oribp gune NSI OMOP QU qexoeg POTV
(1) continues the administrative penalty and conducts an-
other follow-up survey to determine if the program provider completed
the corrective action;
(2) imposes a vendor hold against the program provider; or
(3) denies or terminates certifcation of the program
provider.
(o) HHSC takes the actions described in this subsection re-
garding a follow-up survey described in subsection (n)(1) of this sec-
tion.
(1) If HHSC determines from the survey that the program
provider has completed the corrective action, the administrative
penalty stops accruing on the date corrective action was completed,
as determined by HHSC. HHSC sends the program provider a written
notice as described in 40 TAC §49.535(c).
(2) If HHSC determines from the survey that the program
provider has not completed the corrective action, the administrative
penalty stops accruing and HHSC:
(A) imposes a vendor hold against the program
provider; or
(B) denies or terminates certifcation of the program
provider.
(p) If HHSC determines from a post 45-day follow-up survey
or an earlier survey described in subsection (l) of this section that a
program provider has completed corrective action for a violation that
is not critical, HHSC does not impose an administrative penalty for the
non-critical violation.
(q) If HHSC determines from a post 45-day follow-up survey
that a program provider has not completed corrective action for a vio-
lation that is not critical, HHSC:
(1) imposes an administrative penalty for the non-critical
violation in accordance with §565.45 of this subchapter;
(2) notifes the program provider of the administrative
penalty, as described in 40 TAC §49.535(b); and
(3) conducts a survey:
(A) at least 31 calendar days after the date of the post
45-day exit conference of the follow-up survey; or
(B) earlier than 31 calendar days after the date of the
exit conference of the post 45-day follow-up survey if the program
provider has submitted evidence of corrective action to HHSC during
the 30-day period.
(r) HHSC takes the actions described in this subsection regard-
ing a survey described in subsection (q)(3) of this section.
(1) If HHSC determines from the survey that the program
provider has completed corrective action, the administrative penalty
stops accruing on the date corrective action was completed, as deter-
mined by HHSC. HHSC sends the program provider a written notice
as described in 40 TAC §49.535(c).
(2) If HHSC determines from the survey that the program
provider has not completed the corrective action, the administrative
penalty stops accruing and HHSC:
(A) imposes a vendor hold against the program
provider; or
(B) denies or terminates certifcation of the program
provider.
(s) If HHSC determines that a program provider committed
any of the actions described in §565.45(a)(2) of this subchapter, HHSC
takes one of the following actions:
(1) imposes an administrative penalty against the program
provider as described in §565.45 of this subchapter;
(2) imposes a vendor hold against the program provider; or
(3) denies or terminates certifcation of the program
provider.
(t) If HHSC imposes a vendor hold in accordance with this
section:
(1) for a program provider with a provisional contract,
HHSC initiates termination of the program provider's contract in
accordance with 40 TAC §49.534 (relating to Termination of Contract
by HHSC); or
(2) for a program provider with a standard contract, HHSC
conducts a survey at least 31 calendar days after the effective date of
the vendor hold to determine if the program provider completed the
corrective action required to release the vendor hold and:
(A) if the program provider completed the corrective
action, HHSC releases the vendor hold; or
(B) if the program provider has not completed the cor-
rective action, HHSC denies or terminates certifcation.
(u) If HHSC determines that a program provider is out of com-
pliance with §565.9(b)(2) of this chapter (relating to Program Provider
Requirements), corrective action required by HHSC may include the
program provider paying or ensuring payment to a service provider of
supported home living or CFC PAS/HAB who was not paid the wages
required by §565.9(b)(2) of this chapter, the difference between the
amount required and the amount paid to the service provider.
(v) HHSC does not cite a program provider for violation of a
certifcation standard based solely on the action or inaction of a person
who is not a service provider or a staff member. HHSC may cite a
program provider for violation of a certifcation standard based on the
program provider's response to the action or inaction of such a person.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on June 1, 2023.
TRD-202302023
Karen Ray
Chief Counsel
Health and Human Services Commission
Effective date: June 21, 2023
Proposal publication date: February 17, 2023
For further information, please call: (512) 438-3161
♦ ♦ ♦
CHAPTER 748. MINIMUM STANDARDS FOR
GENERAL RESIDENTIAL OPERATIONS
The Texas Health and Human Services Commission (HHSC)
adopts amendments to §748.105, concerning What are the re-
quirements for my personnel policies and procedures, §748.363,
concerning What information must the personnel record of an
employee include, and §748.505, concerning What minimum
qualifcations must all employees meet; and new §748.751, con-
QU qexoeg POUM gune NSI OMOP qex~s oegister
cerning What are the requirements for obtaining and verifying
an applicant's employment history, and §748.753, concerning
What are the requirements for completing an applicant's refer-
ence checks, in Texas Administrative Code, Title 26, Chapter
748, Minimum Standards for General Residential Operations.
New §748.751 and §748.753 are adopted with changes to the
proposed text as published in the March 17, 2023, issue of the
Texas Register (48 TexReg 1531). These rules will be repub-
lished.
Amended §§748.105, 748.363, and 748.505 are adopted without
changes to the proposed text as published in the March 17, 2023,
issue of the Texas Register (48 TexReg 1531). These rules will
not be republished.
BACKGROUND AND JUSTIFICATION
The amended and new sections are necessary to support the
June 9, 2022, court fling regarding the June 6, 2022, status
hearing in the MD v. Abbott litigation. The fling, signed by the
court, refers to an agreement by HHSC to initiate rulemaking
to require operations to contact all an applicant's job references
prior to commencement of employment. In addition to this court
fling, CCR has determined that the rules will improve the safety
of children in care in general residential operations by requiring
a more thorough vetting of prospective employees.
Accordingly, HHSC Child Care Regulation (CCR) is adopting
new and amended rules to establish (1) employment history ver-
ifcation standards that require a General Residential Operation
(GRO) to obtain and verify the most recent fve years of an appli-
cant's employment history; and (2) applicant reference check re-
quirements that require a GRO to complete reference checks for
each applicant by obtaining at least two references and contact-
ing each of those references as part of an operation's pre-em-
ployment screening process.
COMMENTS
The 31-day comment period ended April 17, 2023. During this
period, HHSC received 22 comments regarding the rules from
the Texas Alliance of Child and Family Services (TACFS). HHSC
also received one additional comment from Amarillo Children's
Home, a GRO that is a member of TACFS and provided input into
TACFS' comments, stating their support for TACFS' comments.
A summary of the comments relating to the rules and HHSC's
responses follows.
Comment: Regarding §748.363, one commenter recommended
that HHSC ensure there is only one citable subsection for each
requirement related to employment verifcation and employee
reference checks. The commenter also recommended that doc-
umentation requirements be weighted medium-low or lower.
Response: HHSC agrees that only one subsection for each re-
quirement should be citable but declines to revise the rule be-
cause the comment is not related to the rule content or language.
With respect to the comment, CCR will not assign a weight to this
rule because CCR will cite the specifc rules referenced in this
rule in the event CCR determines an operation violated these
requirements.
Comment: Regarding §748.505(b)(5) and the rules in general,
one commenter recommended HHSC clearly communicate that
citations should not be "stacked" so that CCR staff do not cite an
operation for this rule while also citing identical, referenced re-
quirements in §748.751, What are the requirements for obtaining
and verifying an applicant's employment history, or §748.753,
What are the requirements for completing an applicant's refer-
ence checks.
Response: HHSC agrees that training CCR staff on regulatory
expectations is important but declines to revise the rules, as this
issue relates to training and not rule content or language. Ac-
cordingly, CCR will continue its current practice of including this
message in the training CCR provides to staff on an ongoing ba-
sis and when new rules are adopted. In the event an operation
disagrees with a citation or wishes to contest a citation as evi-
dence of "stacking," the operation retains the right to request an
administrative review, as outlined in Texas Administrative Code,
Title 26, Chapter 745, Licensing, Subchapter M, Administrative
Reviews and Due Process Hearings.
Comment: Regarding §§748.505(b)(5), 748.751, and 748.753,
one commenter recommended each rule be amended to remove
the requirement that all applicants clear a pre-employment
screening that includes employment history verifcation and
applicant reference checks. The commenter stated that the
requirements should be applicable only to employees who are
counted in ratio or have unsupervised contact with children.
Response: HHSC disagrees with the comment and declines to
revise the rules. Employees may pose a risk to children in care
even if they do not provide care directly to children or have un-
supervised access to children in care. Therefore, any employee
in an operation that serves children, whether in a direct care role
or an ancillary role, should be thoroughly vetted to ensure the
safety of children.
Comment: Regarding §748.751, one commenter requested
HHSC maintain the technical assistance (TA) information in-
cluded in the informal proposal that specifed that organizations
may use existing forms and applications to meet and document
the requirements in the new rules.
Response: HHSC agrees with the comment and intends to pub-
lish the TA as indicated by the commenter in the TA box that
follows the rule in the minimum standards courtesy publication.
Comment: Regarding §748.751, one commenter recommended
HHSC include an optional employment history verifcation form
that meets the documentation requirements outlined in the rule.
Response: HHSC agrees with the comment and will publish a
TA document that contains the employment verifcation require-
ments for use as an optional reference for operations. The doc-
ument will be maintained in CCR's TA library.
Comment: Regarding §748.751, one commenter recommended
HHSC explicitly clarify that the rule applies to paid employees in
accordance with the other defnitions in Chapter 748 and does
not apply to interns or volunteers.
Response: HHSC disagrees with the comment and declines to
revise the rule. The rule contains language that clarifes it applies
only to applicants under consideration for employment. More-
over, Chapter 748 includes a defnition for employee that speci-
fes that an employee is a person an operation employs full-time
or part-time to work for wages, salary, or other compensation.
Comment: Regarding §748.751(a)(1), one commenter recom-
mended HHSC explicitly clarify in rule that an applicant must
provide fve years of employment history only when an applicant
has fve years of employment history.
Response: HHSC agrees with the comment and updated the
rule to address situations when a person has not continuously
^almqba oribp gune NSI OMOP QU qexoeg POUN
been employed for the last fve years or has never been em-
ployed.
Comment: Regarding §748.751 and §748.753, one commenter
recommended HHSC clarify that an applicant who is a survivor
of commercial exploitation is not required to include employ-
ment history or list employment references from their recovery
or trauma history that would violate the survivor's privacy and re-
covery. The commenter recommended that HHSC include sug-
gestions for other reference options in such situations.
Response: HHSC agrees that maintaining the safety of survivors
of commercial exploitation is important but declines to revise the
rule because an operation may request a variance to the rules in
such circumstances. HHSC added language to this effect in the
TA box that follows the rule in the minimum standards courtesy
publication.
Comment: Regarding §748.751(c) and §748.753(e), one com-
menter issued a statement of support regarding the applicability
of the rules to applicants on or after August 9, 2023.
Response: HHSC appreciates support of the rules.
Comment: Regarding §748.753, one commenter recommended
that the language for when an employer is unable to obtain infor-
mation from a reference should mirror that for §748.751(b)(2).
Response: HHSC agrees with the comment and updated the
rule to address situations when the reference is permanently un-
reachable.
Comment: Regarding §748.753, one commenter recommended
HHSC clarify that a professional reference may be the same as
someone who provides information regarding an applicant's em-
ployment history.
Response: HHSC agrees with the comment but declines to re-
vise the rule. HHSC does not believe this recommendation war-
rants a rule change because the rules do not prohibit the person
verifying employment from providing a reference. However, to
help ensure consistent interpretation of the rules, HHSC added
this clarifcation to the TA box that follows the rule in the mini-
mum standards courtesy publication.
Comment: Regarding the rules in general, one commenter
issued a statement of support for changes that HHSC made
from the informal draft rules to the proposed rules. In particular,
the commenter recognized the following changes: moving
away from asking references to opine on an applicant's mental
and emotional ftness; being less prescriptive in the number
and manner of attempts a prospective employer must make to
contact a former employer or reference; and moving away from
requiring contact to every employer in preceding fve years and
focusing on the recent (but still signifcant) history.
Response: HHSC appreciates support of the rules.
Comment: Regarding the rules in general, one commenter
stated the proposal will layer on administrative and compliance
burdens and impede provider capacity to serve children in need
without a commensurate improvement to safety, as employers
are almost universally disinclined to provide the type of mean-
ingful reference information the rule presumes that operations
can obtain. The commenter stated that the rules will cause
delays in hiring staff and make it even more challenging to fnd
qualifed employees.
Response: HHSC disagrees with the comment and declines to
revise the rules. The rules are necessary to support the June
9, 2022, court fling regarding the June 6, 2022, status hearing
in the MD v. Abbott litigation. The fling, signed by the court,
refers to an agreement by HHSC to initiate rulemaking to require
operations to contact all an applicant's job references prior to
commencement of employment. In addition to this court fling,
CCR has determined that the rules will improve the safety of
children in care in general residential operations by requiring a
more thorough vetting of prospective employees.
Comment: Regarding the rules in general, one commenter
stated that it would have been far more impactful for HHSC
to have offered meaningful technical assistance (rather than
mandatory and prescriptive rules) around risk mitigation through
the hiring and interview process, and ways to support new
employees to minimize risk.
Response: HHSC disagrees with the comment and declines to
revise the rules. The rules are necessary to support the June 9,
2022, court fling regarding the June 6, 2022, status hearing in
the MD v. Abbott litigation. The fling, signed by the court, refers
to an agreement by HHSC to initiate rulemaking to require oper-
ations to contact all an applicant's job references prior to com-
mencement of employment. In addition to this court fling, CCR
has determined that the rules will improve the safety of children
in care in general residential operations by requiring a more thor-
ough vetting of prospective employees. HHSC also believes that
the rules and CCR's provision of meaningful technical assistance
will further reduce risk to children in care.
Comment: Regarding the rules in general, one commenter rec-
ommended HHSC implement the proposed employment history
verifcation and reference check requirements for CCR staff.
Response: HHSC disagrees with the comment. HHSC has
polices that require all CCR employees to undergo both back-
ground checks and reference checks prior to employment.
Comment: Regarding the rules in general, one commenter
stated that employers would need additional staff resources
to meet pre-employment screening requirements, without
additional funding to conduct the required activities, main-
tain documentation, implement quality assurance practices to
assure that the activities and documentation are occurring,
and for increasingly many of them, pay a third-party to carry
out these functions because the administrative lift cannot be
borne in-house without detriment to current programming. The
commenter also asserted that regardless of whether a provider
handles the activities themselves or somehow comes up with
resources to pay a third-party, they will periodically be required
to pay private services such as The Work Number to conduct
employment verifcation.
Response: HHSC disagrees with the comment and declines to
revise the rules. The rules are necessary to support the June 9,
2022, court fling regarding the June 6, 2022, status hearing in
the MD v. Abbott litigation. The fling, signed by the court, refers
to an agreement by HHSC to initiate rulemaking to require oper-
ations to contact all an applicant's job references prior to com-
mencement of employment. In addition to this court fling, CCR
has determined that the rules will improve the safety of children
in care in general residential operations by requiring a more thor-
ough vetting of prospective employees. HHSC noted that some
operations may incur increased costs to implement the pre-em-
ployment screening requirements and some may not. HHSC is
unable to determine the extent of the impact to individual opera-
tions due to the variability in existing screening processes across
GROs.
QU qexoeg POUO gune NSI OMOP qex~s oegister
Comment: Regarding the rules in general, one commenter rec-
ommended HHSC withdraw the proposal and allow for continued
discretion in hiring by private sector employees who are already
regulated.
Response: HHSC disagrees with the comment and declines to
withdraw the proposal. The rules are necessary to support the
June 9, 2022, court fling regarding the June 6, 2022, status hear-
ing in the MD v. Abbott litigation. The fling, signed by the court,
refers to an agreement by HHSC to initiate rulemaking to require
operations to contact all an applicant's job references prior to
commencement of employment. In addition to this court fling,
CCR has determined that the rules will improve the safety of chil-
dren in care in general residential operations by requiring a more
thorough vetting of prospective employees.
SUBCHAPTER C. ORGANIZATION AND
ADMINISTRATION
DIVISION 1. REQUIRED PLANS AND
POLICIES, INCLUDING DURING THE
APPLICATION PROCESS
26 TAC §748.105
STATUTORY AUTHORITY
The amendment is adopted under 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
Government Code §531.02011, which transferred the regulatory
functions of the Texas Department of Family and Protective
Services to HHSC. In addition, Texas Human Resources Code
§42.042(a) requires HHSC to adopt rules to carry out the re-
quirements of Chapter 42 of the Texas Human Resources Code.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on June 2, 2023.
TRD-202302042
Karen Ray
Chief Counsel
Health and Human Services Commission
Effective date: August 9, 2023
Proposal publication date: March 17, 2023
For further information, please call: (512) 438-3269
♦ ♦ ♦
SUBCHAPTER D. REPORTS AND RECORD
KEEPING
DIVISION 3. PERSONNEL RECORDS
26 TAC §748.363
STATUTORY AUTHORITY
The amendment is adopted under 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
Government Code §531.02011, which transferred the regulatory
functions of the Texas Department of Family and Protective
Services to HHSC. In addition, Texas Human Resources Code
§42.042(a) requires HHSC to adopt rules to carry out the re-
quirements of Chapter 42 of the Texas Human Resources Code.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on June 2, 2023.
TRD-202302044
Karen Ray
Chief Counsel
Health and Human Services Commission
Effective date: August 9, 2023
Proposal publication date: March 17, 2023
For further information, please call: (512) 438-3269
♦ ♦ ♦
SUBCHAPTER E. PERSONNEL
DIVISION 1. GENERAL REQUIREMENTS
26 TAC §748.505
STATUTORY AUTHORITY
The amendment is adopted under 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
Government Code §531.02011, which transferred the regulatory
functions of the Texas Department of Family and Protective
Services to HHSC. In addition, Texas Human Resources Code
§42.042(a) requires HHSC to adopt rules to carry out the re-
quirements of Chapter 42 of the Texas Human Resources Code.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on June 2, 2023.
TRD-202302043
Karen Ray
Chief Counsel
Health and Human Services Commission
Effective date: August 9, 2023
Proposal publication date: March 17, 2023
For further information, please call: (512) 438-3269
♦ ♦ ♦
DIVISION 8. PRE-EMPLOYMENT
SCREENING
26 TAC §748.751, §748.753
STATUTORY AUTHORITY
The new sections are adopted under Texas Government Code
§531.0055, which provides that the Executive Commissioner of
HHSC shall adopt rules for the operation and provision of ser-
vices by the health and human services agencies, and Texas
Government Code §531.02011, which transferred the regula-
tory functions of the Texas Department of Family and Protective
Services to HHSC. In addition, Texas Human Resources Code
^almqba oribp gune NSI OMOP QU qexoeg POUP
§42.042(a) requires HHSC to adopt rules to carry out the require-
ments of Chapter 42 of the Texas Human Resources Code.
§748.751. What are the requirements for obtaining and verifying an
applicant's employment history?
(a) Before hiring an applicant for a position, you must:
(1) Obtain in writing the applicant's employment history
for the last fve years, which may include:
(A) Any history for an applicant who has not continu-
ously been employed during the last fve years; or
(B) A statement that the applicant has no employment
history during the last fve years; and
(2) When the applicant's employment history indicates the
applicant has been employed within the last fve years, verify whether
the applicant was employed as described in the applicant's employment
history by contacting:
(A) Each employer included in the fve-year employ-
ment history; or
(B) The applicant's three most recent employers, at a
minimum, if the fve-year employment history includes more than three
employers; and
(b) If you hire the applicant, you must maintain documentation
of the following in the applicant's personnel fle:
(1) The applicant's employment history required by sub-
section (a)(1) of this section; and
(2) If the applicant has been employed in the last fve years,
the results of any contact with an applicant's previous employers related
to employment verifcation. If you are unable to contact an employer
or obtain the information described in subsection (a)(2) of this section
from an employer:
(A) Any refusal by the employer to provide the infor-
mation; or
(B) Your diligent efforts to contact the employer, which
must include more than one attempt to contact an employer who is not
permanently unreachable. If the employer is permanently unreachable,
your documentation must include the reason why you made that deter-
mination. Examples of an employer being unreachable include:
(i) The employer is out of business and there is no al-
ternative contact information to obtain information from the employer;
or
(ii) The employer is deceased.
(c) This rule applies only to applicants who seek employment
with your operation on or after August 9, 2023.
§748.753. What are the requirements for completing an applicant's
reference checks?
(a) Before hiring an applicant for a position, you must com-
plete the applicant's reference checks by:
(1) Obtaining from the applicant the name and contact in-
formation of at least two individuals unrelated to the applicant who can
serve as references by answering questions related to the applicant's
suitability to work with or around children; and
(2) Contacting each of the two required references to verify
that the applicant is suitable to work with or around children. You may
contact the reference through an interview or in writing.
(b) For an applicant who is currently or was previously em-
ployed in a position responsible for providing care or services to chil-
dren within the past fve years, at least one of the reference checks
required in subsection (a) of this section must be a current or prior em-
ployer who has supervised or is otherwise familiar with the history and
performance of the applicant in that capacity.
(c) For any reference check you are unsuccessful in complet-
ing as required by subsection (a) or (b) of this section, you must docu-
ment:
(1) Any refusal by the reference to provide the information;
or
(2) Your diligent efforts to contact the reference, which
must include more than one attempt to contact a reference who is not
permanently unreachable. If the reference is permanently unreachable,
your documentation must include the reason why you made that deter-
mination. Examples of a reference being unreachable include:
(A) The reference is out of business and there is no al-
ternative contact information to obtain information from the employer;
or
(B) The reference is deceased; and
(3) Your assessment of the applicant's suitability to work
with or around children.
(d) For each person you hire, you must maintain in the em-
ployee's personnel fle:
(1) Documentation of each reference check that includes:
(A) The reference's name;
(B) The relation of the reference to the applicant;
(C) The reference's contact information;
(D) The date you completed the check;
(E) Information you obtained from the check, docu-
mented as:
(i) A summary of the interview; or
(ii) A copy of the written information provided by
the reference; and
(F) If you conducted the check through an interview, the
name of the person who interviewed the reference; and
(2) If you were unsuccessful in completing a reference
check, documentation required by subsection (c) of this section.
(e) This rule applies only to applicants who seek employment
with your operation on or after August 9, 2023.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on June 2, 2023.
TRD-202302045
Karen Ray
Chief Counsel
Health and Human Services Commission
Effective date: August 9, 2023
Proposal publication date: March 17, 2023
For further information, please call: (512) 438-3269
♦ ♦ ♦
TITLE 28. INSURANCE
QU qexoeg POUQ gune NSI OMOP qex~s oegister
PART 1. TEXAS DEPARTMENT OF
INSURANCE
CHAPTER 19. LICENSING AND REGULA-
TION OF INSURANCE PROFESSIONALS
The commissioner of insurance adopts the repeal of 28 TAC
§§19.703, 19.1019, 19.1303, 19.1320, 19.1905, 19.3001 -
19.3005, and 19.4001 - 19.4017.
The commissioner also adopts amendments to 28 TAC
§§19.103, 19.602, 19.702, 19.704 - 19.706, 19.708, 19.709,
19.712, 19.801, 19.802, 19.805, 19.902, 19.906, 19.1002,
19.1003, 19.1012, 19.1304, 19.1308, 19.1403, 19.1407,
19.1604, 19.1605, 19.1704, 19.1810, 19.1820, 19.1902,
19.1908, and 19.2004.
The repeal of 28 TAC §§19.703, 19.1019, 19.1303, 19.1320,
19.1905, 19.3001 - 19.3005, and 19.4001 - 19.4017 and
§§19.103, 19.602, 19.702, 19.705, 19.706, 19.708, 19.709,
19.801, 19.802, 19.805, 19.902, 19.906, 19.1012, 19.1304,
19.1308, 19.1604, 19.1605, 19.1902, and 19.1908 are adopted
without changes to the proposed text published in the January
13, 2023, issue of the Texas Register (48 TexReg 111) and will
not be republished. Sections 19.704, 19.712, 19.1002, 19.1003,
19.1403, 19.1407, 19.1704, 19.1810, 19.1820, and 19.2004 are
adopted with nonsubstantive changes to the proposed text to
refect TDI style preferences and proper punctuation and will be
republished.
REASONED JUSTIFICATION. The repeal of §19.703 imple-
ments Senate Bill 1060, 84th Legislature, 2015. The repeals of
§§19.1019, 19.1905, and 19.3001 - 19.3005 implement House
Bill 4030, 87th Legislature, 2021. The repeal of §19.1303
eliminates the forms adopted by reference in that section that
are now obsolete. The repeal of §19.1320 refects that copies of
the Texas Insurance Code and Texas Administrative Code are
readily available online through the Secretary of State website.
The repeals of §§19.4001 - 19.4017 remove Subchapter W,
which implemented former Chapter 4154 of the Insurance
Code. That chapter expired on September 1, 2017, rendering
Subchapter W obsolete.
The amended sections implement HB 4030 as well as Senate
Bills 1060 and 876, both of the 84th Legislature, 2015. HB
4030 removed the subagent designation, references to life and
health insurance counselor and insurance service representa-
tive licenses, the affdavit requirement for nonresident public in-
surance adjusters, and the requirement to report and register
each branch location; discontinued the registration for home of-
fce salaried employees; and increased ethics continuing educa-
tion requirements. SB 1060 eliminated the trainee designation,
and SB 876 changed the expiration date for a license issued to
an individual.
In addition to amendments to implement the referenced legis-
lation, the amendments also include nonsubstantive changes
to conform to plain language standards and current department
language preferences and drafting practices. The amendments
also update citations to statutes and rules by inserting their titles,
and update or eliminate obsolete email and mailing addresses.
The amended sections are described in the following para-
graphs, organized by subchapter.
Subchapter B. Medicare Advantage Plans, Medicare Advantage
Prescription Drug Plans, and Medicare Part D Plans.
Section 19.103. Reporting Requirement. Amendments to
§19.103 replace a mailing address with a reference to contact
information on TDI's website and replace "subchapter" with
"title."
Subchapter G. Licensing of Insurance Adjusters.
Section 19.602. Types of Adjuster's Licenses. Amendments to
§19.602 update a code reference and insert the title of a cited
provision; remove subsection (c), which addresses an expira-
tion date for adjusters' licenses, to conform with Insurance Code
§4003.001; redesignate the subsections that follow subsection
(c) as appropriate to refect removal of the subsection; replaces
the words "pursuant to" with "under" and the word "shall" with
"must"; and correct the title of §19.801.
Subchapter H. Licensing of Public Insurance Adjusters.
Section 19.702. Types of Public Insurance Adjuster Licenses.
Amendments to §19.702 update a code reference and insert the
title of the provision cited, and they replace "shall" with "will" and
"pursuant to" with "under."
Section 19.704. Public Insurance Adjuster Licensing. Amend-
ments to §19.704 update code references; insert the titles of the
provisions cited; remove paragraph (5) of subsection (c), which
addresses a branch offce registration requirement; and renum-
ber the paragraphs that follow paragraph (5) as appropriate to
refect its removal. The amendments also replace "10 percent"
with "10%." The amendments replace "shall" with more appropri-
ate words under the context of the provision. The amendments
to §19.704(l) add a comma between "Disciplinary Action" and "or
Insurance Code §4102.201."
Proposed amendments to capitalize the word "commissioner"
throughout the section are not adopted, based on a change to
TDI's rule drafting preferences.
Section 19.705. Financial Responsibility Requirement. Amend-
ments to §19.705 remove subsection (b) and all references to
"trainee,"; update a code reference; and insert the title of a cited
provision.
Section 19.706. Demonstrating Financial Responsibility.
Amendments to §19.706 remove a reference to "trainee" and
replace "shall" with "must."
Section 19.708. Public Insurance Adjuster Contracts. Amend-
ments to 19.708 update the mailing address in subsection
(b)(10) with the current mailing address, replace "10 percent"
with "10%," replace "prior to" with "before," and replace "in
determining" with "to determine." Amendments also remove a
reference to a former Insurance Code provision, insert the title of
another Insurance Code provision, and revise notice language
to remove the use of all capital letters, to improve readability.
Section 19.709. Nonresident Applicants and License Hold-
ers. Amendments to §19.709 remove subsection (b), which
addresses a nonresident affdavit requirement in order to imple-
ment HB 4030 and replaces the word "shall" with "will."
Section 19.712. Advertisement. Amendments to §19.712 up-
date a code reference, insert the title of the provision cited, re-
place the phrase "internet web sites" with "websites" and replace
the words "audio visual" with "audiovisual."
The text of §19.712(a) as proposed has been changed to delete
an unnecessary comma.
Subchapter I. General Provisions Regarding Fees, Applications,
and Renewals.
^almqba oribp gune NSI OMOP QU qexoeg POUR
Section 19.801. General Provisions. Amendments to §19.801
remove portions of the section concerning subagents and redes-
ignates subsections as appropriate for consistency with the pro-
posed removal of text. The amendments replace a reference to
"Texas.gov" with a reference to the department's website. The
amendments also add the titles of Administrative Code and In-
surance Code provisions cited in the section.
Section 19.802. Amount of Fees. Amendments to §19.802 re-
move portions of text concerning insurance service representa-
tives, full-time home offce salaried employee registration, and
life and health insurance counselors. The amendments also re-
move language concerning subagent appointment fees. In ad-
dition, amendments renumber paragraphs as appropriate to re-
fect the removal of text, and they add the titles of cited Insurance
Code provisions.
Section 19.805. Application for a New Individual License.
Amendments to §19.805 insert the titles of Insurance Code and
Administrative Code provisions cited in the section, remove
a paragraph concerning home offce salaried employees, and
renumber a paragraph as appropriate to refect this change.
The amendments also replace "12 month" with "12-month,"
"preceding" with "before," "being" with "is," and "at the time of
submitting to TDI" with "with." The amendments delete sub-
section (d), as that subsection is now outdated and anyone
required to provide the information listed in it would have done
so by now. Finally, the amendments replace a reference to
§§19.1901 - 19.1910 with a reference to the subchapter where
those sections are located.
Subchapter J. Standards of Conduct for Licensed Agents.
Section 19.902. One Agent, One License. Amendments to
§19.902 update references to the State Board of Insurance,
and they remove the branch offce registration requirement.
The amendments remove a reference to a form that no longer
exists and instead reference instructions for registration of an
agent's assumed name on TDI's website. The amendments
also replace the words "shall" with "must," "utilized" with "used,"
"thereunder" with "under it," "which" with "that," update a code
reference, and insert the titles of a Business and Commerce
Code provision and an Insurance Code provision cited in the
section.
Section 19.906. Last Known Address. Amendments to §19.906
update references to the State Board of Insurance, clarify that
an agent's address is presumed to be the most recent address
on fle with the department, and replace a mailing address with
a reference to fling instructions on TDI's website. The amend-
ments also replace "shall" with "must" or "will," as appropriate.
Subchapter K. Continuing Education, Adjuster Prelicensing Ed-
ucation Programs, and Certifcation Courses.
Section 19.1002. Defnitions. Amendments to §19.1002 re-
move references to life and health insurance counselors and
insurance service representatives. The amendments correct
improper citations to §19.1009(c) and §19.1009(d) by instead
citing to §19.1009(g) and §19.1009(h), respectively. The
amendments also remove nine uses of the word "the" and two
unnecessary uses of a comma in statutory citations, remove
an instance of the word "shall," replace "shall be" with "is,"
replace the word "subchapter" with "title," replace "as set forth
in" with "under," move the word "only" to a more grammatically
appropriate place, replace the word "which" with "that," update
code references, and insert titles of Insurance Code provisions
and other code provisions cited in the section. For clarifcation
the amendments replace "and" with "or" in §19.1002(b)(17)(A)
and newly numbered §19.1002(b)(17)(C) and insert the word
"or" between newly numbered §19.1002(b)(17)(D) and (E).
The text of §19.1002(b)(5) as proposed has been changed to
remove a comma between "Insurance Code" and "§101.051."
The text of §19.1002(b)(17)(A) as proposed has been changed
to add a comma between "Subchapter I" and "concerning."
Section 19.1003. Licensee Hour and Completion Requirements.
Amendments to §19.1003 change the ethics requirement speci-
fed in the section from two hours to three hours, as mandated by
HB 4030. The amendments also replace the terms "prior to" with
"before," "10 hour" and "24 hour" with "10-hour" and "24-hour,"
and "50 percent" with "50%." Finally, the amendments insert ti-
tles for Insurance Code and Administrative Code provisions cited
within this section and cite subchapters in lieu of specifc sections
in §19.1003(a).
The text of §19.1003(a) as proposed has been changed to
correct an incorrect reference to "Limited Life, Life, Accent and
Health License," and change it to "Limited Life, Accident, and
Health License."
Section 19.1012. Forms and Fees. Amendments to §19.1012
amend the section to generally refer interested persons to TDI's
website for information on provider registration and courses.
The amendments also remove an outdated mailing address
and email address, and they replace "shall" with "will" where
appropriate.
Subchapter N. Licensing and Regulation of Risk Managers.
Section 19.1304. Last Known Address. Amendments to
§19.1304 update reference to the State Board of Insurance,
clarify that a risk manager's address is presumed to be the
most recent address on fle with the department, and remove
a mailing address, adding a reference to fling instructions on
TDI's website in its place. The amendments also replace "shall"
with "must" or "will," as appropriate.
Section 19.1308. Application for License. Amendments to
§19.1308 update references to the State Board of Insurance
and remove a mailing address, adding a reference to fling
instructions on TDI's website in its place. The amendments also
replace "shall" with "must."
Subchapter O. Procedures and Requirements for Reinsurance
Intermediaries (Brokers and Managers).
Section 19.1403. Requirements for Bond or Errors and Omis-
sions Policy. Amendments to §19.403 update the mailing ad-
dress and recipient, and they replace "shall" with "must" or "will,"
as appropriate.
A proposed amendment to capitalize the word "commissioner"
is not adopted, based on a change to TDI's rule drafting prefer-
ences.
Section 19.1407. Approval of Reinsurance Intermediary Man-
ager's Contracts. Amendments to §19.1407 remove a mailing
address, adding a reference to fling instructions on TDI's web-
site in its place. The amendments also update outdated code
references, insert titles of Insurance Code provisions referenced
in the section, replace "shall" with "must" or "will," as appropriate,
replace "which" with "that," and replace "occur in the provisions
set forth in" with "are made to."
A proposed amendment to capitalize the word "commissioner"
is not adopted, based on a change to TDI's rule drafting prefer-
ences.
QU qexoeg POUS gune NSI OMOP qex~s oegister
Subchapter Q. Discount Health Care Program Registration and
Renewal Requirements.
Section 19.1604. Renewal. Amendments to §19.1604 amend
the section to provide that TDI will send renewal notices by
email rather than mail. The amendments clarify that a discount
health care program operator's current address is presumed to
be the address on fle with TDI. The amendments also clarify
the renewal submission requirements by using plain language
and replacing an address with references to TDI's website.
The amendments replace "shall" with "will" and "subchapter"
and "chapter" with "title," update the title of an Occupations
Code section, and delete fve unnecessary uses of the word
"the." Finally, the amendments insert titles of Insurance Code
provisions referenced in the section.
Section 19.1605. Requirements Related to Discount Health
Care Program Information. Amendments to §19.1605 clarify fl-
ing requirements by removing a mailing address, email address,
phone number, and fax number and instead reference TDI's
website. The amendments also replace "shall" with "must,"
"subchapter" with "title," and delete four unnecessary uses of
the word "the." Finally, the amendments insert the title of an
Insurance Code provision referenced in the section.
Subchapter R. Utilization Reviews for Health Care Provided Un-
der a Health Beneft Plan or Health Insurance Policy.
Section 19.1704. Certifcation or Registration of URAs. Amend-
ments to §19.1704 update a mailing address with a current mail-
ing address. The amendments also insert titles of Insurance
Code provisions referenced in the section.
Proposed amendments to capitalize the word "commissioner"
are not adopted, based on a change to TDI's rule drafting pref-
erences.
Subchapter S. Forms to Request Prior Authorization.
Section 19.1810. Prior Authorization Request Form for Health
Care Services, Required Acceptance, and Use. Amendments
to §19.1810 replace an outdated or old mailing address with a
current mailing address and insert the title of an Administrative
Code section cited within the section.
Proposed amendments to capitalize the word "commissioner"
are not adopted, based on a change to TDI's rule drafting pref-
erences.
Section 19.1820. Prior Authorization Request Form for Prescrip-
tion Drug Benefts, Required Acceptance, and Use. Amend-
ments to §19.1820 replace an outdated or old mailing address
with a current mailing address. The amendments also replace
"facsimile (fax)" with "fax."
Proposed amendments to capitalize the word "commissioner"
are not adopted, based on a change to TDI's rule drafting pref-
erences.
Subchapter T. Specialty Insurance License.
Section 19.1902. Defnitions. Amendments to §19.1902 remove
the defned term "registered location" and renumber the follow-
ing paragraph as appropriate. The amendments also update In-
surance Code citations, replace "10 percent" with "10%," and
remove "shall" as appropriate. Finally, the amendments insert
titles of Insurance Code provisions referenced in the section.
Section 19.1908. Notice to Department. Amendments to
§19.1908 remove a paragraph addressing locations from which
insurance sales are conducted under a specialty license and
renumbers the following paragraphs as appropriate. The
amendments also replace "shall" with "must" and insert "or"
where appropriate.
Subchapter U. Utilization Reviews for Health Care Provided Un-
der Workers' Compensation Insurance Coverage.
Section 19.2004. Certifcate or Registration of URAs. Amend-
ments to §19.2004 insert the word "and" and they replace an old
or out of date mailing address with a current mailing address.
The amendments also insert titles of Insurance Code and Ad-
ministrative Code provisions referenced in the section.
Proposed amendments to capitalize the word "commissioner"
are not adopted, based on a change to TDI's rule drafting pref-
erences.
SUMMARY OF COMMENTS. The department did not receive
any comments on the proposed amendments and repeals.
SUBCHAPTER B. MEDICARE ADVANTAGE
PLANS, MEDICARE ADVANTAGE
PRESCRIPTION DRUG PLANS, AND
MEDICARE PART D PLANS
28 TAC §19.103
STATUTORY AUTHORITY. The commissioner adopts amend-
ments to §19.103 under Insurance Code §36.001.
Insurance Code §36.001 provides that the commissioner may
adopt any rules necessary and appropriate to implement the
powers and duties of the department under the Insurance Code
and other laws of this state.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on May 30, 2023.
TRD-202301966
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: June 19, 2023
Proposal publication date: January 13, 2023
For further information, please call: (512) 676-6587
♦ ♦ ♦
SUBCHAPTER G. LICENSING OF
INSURANCE ADJUSTERS
28 TAC §19.602
STATUTORY AUTHORITY. The commissioner adopts amend-
ments to §19.602 under Insurance Code §4101.005 and
§36.001.
Insurance Code §4101.005 provides that the commissioner may
adopt rules necessary to implement Insurance Code Chapter
4101 and meet the minimum requirements of federal law, includ-
ing regulations.
Insurance Code §36.001 provides that the commissioner may
adopt any rules necessary and appropriate to implement the
powers and duties of the department under the Insurance Code
and other laws of this state.
^almqba oribp gune NSI OMOP QU qexoeg POUT
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on May 30, 2023.
TRD-202301967
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: June 19, 2023
Proposal publication date: January 13, 2023
For further information, please call: (512) 676-6587
♦ ♦ ♦
SUBCHAPTER H. LICENSING OF PUBLIC
INSURANCE ADJUSTERS
28 TAC §§19.702, 19.704 - 19.706, 19.708, 19.709, 19.712
STATUTORY AUTHORITY. The commissioner adopts amend-
ments to §§19.702, 19.704 - 19.706, 19.708, 19.709, and 19.712
under Insurance Code §§4001.005, 4102.004, and 36.001.
Insurance Code §4001.005 provides that the commissioner may
adopt any rules necessary to implement Title 13 of the Insurance
Code and to meet the minimum requirements of federal law, in-
cluding regulations.
Insurance Code §4102.004 provides that the commissioner may
adopt reasonable and necessary rules to implement Insurance
Code Chapter 4102.
Insurance Code §36.001 provides that the commissioner may
adopt any rules necessary and appropriate to implement the
powers and duties of the department under the Insurance Code
and other laws of this state.
§19.704. Public Insurance Adjuster Licensing.
(a) Any individual that desires a public adjuster license must
fle with the department a fully completed license application, on a
form as required by the commissioner, and otherwise meet the licensing
qualifcation requirements of Insurance Code Chapter 4102, Subchap-
ter B, concerning License Requirements, and this subchapter.
(b) Any corporation or partnership that desires a public insur-
ance adjuster license must fle with the department a fully completed
license application on a form as required by the commissioner.
(c) The department will issue a license to a resident or nonres-
ident corporation or partnership if the department fnds that:
(1) the corporation or partnership is:
(A) organized under the laws of this state or any other
state or territory of the United States;
(B) admitted to conduct business in this state by the sec-
retary of state, if required; and
(C) authorized by its articles of incorporation or its part-
nership agreement to act as a public insurance adjuster;
(2) the corporation or partnership meets the defnition of
that entity adopted under Insurance Code §4001.003, concerning Def-
initions;
(3) at least one offcer of the corporation or one active part-
ner of the partnership and all other persons performing any acts of a
public insurance adjuster on behalf of the corporation or partnership in
this state are individually licensed by the department separately from
the corporation or partnership;
(4) the corporation or partnership intends to be actively en-
gaged in the business of public insurance adjusting;
(5) the corporation or partnership has submitted the appli-
cation, appropriate fees, proof of fnancial responsibility, and any other
information required by the department; and
(6) no offcer, director, member, manager, partner, or any
other person who has the right or ability to control the license holder
has:
(A) had a license suspended or revoked or been the sub-
ject of any other disciplinary action by a fnancial or insurance regulator
of this state, another state, or the United States; or
(B) committed an act for which a license may be denied
under Insurance Code §4005.101, concerning Grounds for License De-
nial or Disciplinary Action, or §4102.201, concerning Denial, Suspen-
sion, or Revocation of License.
(d) Nothing contained in this section may be construed to per-
mit any unlicensed employee or representative of any corporation or
partnership to perform any act of a public insurance adjuster without
obtaining a public insurance adjuster license.
(e) Each corporation or partnership applying for a public in-
surance adjuster license must fle, under oath, on a form developed by
the department, biographical information for each of its executive of-
fcers and directors or unlicensed partners who administer the entity's
operations in this state, and shareholders who are in control of the cor-
poration, or any other partners who have the right or ability to control
the partnership. If any corporation or partnership is owned, in whole
or in part, by another entity, a biographical form is required for each
individual who is in control of the parent entity.
(f) Each corporation or partnership must notify the department
not later than the 30th day after the date of:
(1) a felony conviction of a licensed public insurance ad-
juster of the entity or any individual associated with the corporation or
partnership who is required to fle biographical information with the
department;
(2) an event that would require notifcation under Insurance
Code §81.003, concerning Notifcation of Certain Disciplinary Actions
Occurring in Other States; Civil Penalty; and
(3) the addition or removal of an offcer, director, partner,
member, or manager.
(g) A person may not acquire in any manner any ownership
interest in an entity licensed as a public insurance adjuster under this
subchapter if the person is, or after the acquisition would be directly or
indirectly in control of the license holder, or otherwise acquire control
of or exercise any control over the license holder, unless the person has
fled the following information with the department under oath:
(1) a biographical form for each person by whom or on
whose behalf the acquisition of control is to be effected;
(2) a statement certifying that no person who is acquiring
an ownership interest in or control of the license holder has been the
subject of a disciplinary action taken by a fnancial or insurance regu-
lator of this state, another state, or the United States;
(3) a statement certifying that, immediately on the change
of control, the license holder will be able to satisfy the requirements
for the issuance of the public insurance adjuster license; and
QU qexoeg POUU gune NSI OMOP qex~s oegister
(4) any additional information that the commissioner may
prescribe as necessary or appropriate to the protection of the insurance
consumers of this state or as in the public interest.
(h) If a person required to fle a statement under subsection (g)
of this section is a partnership, limited partnership, syndicate, or other
group, the commissioner may require that the information required by
paragraphs (1) - (4) of that subsection for an individual be provided
regarding each partner of the partnership or limited partnership, each
member of the syndicate or group, and each person who controls the
partner or member. If the partner, member, or person is a corporation
or the person required to fle the statement under subsection (g) of this
section is a corporation, the commissioner may require that the infor-
mation required by paragraphs (1) - (4) of that subsection be provided
regarding:
(1) the corporation;
(2) each individual who is an executive offcer or director
of the corporation; and
(3) each person who is directly or indirectly the benefcial
owner of more than 10% of the outstanding voting securities of the
corporation.
(i) The department may disapprove an acquisition of control if,
after notice and opportunity for hearing, the commissioner determines
that:
(1) immediately on the change of control the license holder
would not be able to satisfy the requirements for the public insurance
adjuster license;
(2) the competence, trustworthiness, experience, and in-
tegrity of the persons who would control the operation of the license
holder are such that it would not be in the interest of the insurance con-
sumers of this state to permit the acquisition of control; or
(3) the acquisition of control would violate the Insurance
Code or another law of this state, another state, or the United States.
(j) Notwithstanding subsection (h) of this section, a change in
control is considered approved if the department has not proposed to
deny the requested change before the 61st day after the date the depart-
ment receives all information required by this section.
(k) The commissioner is the corporation's or partnership's
agent for service of process in the manner provided by Insurance Code
Chapter 804, concerning Service of Process, in a legal proceeding
against the corporation or partnership if:
(1) the corporation or partnership licensed to transact busi-
ness in this state fails to appoint or maintain an agent for service in this
state;
(2) an agent for service cannot with reasonable diligence
be found; or
(3) the license of a corporation or partnership is revoked.
(l) If a license holder does not maintain the qualifcations nec-
essary to obtain the license, the department will revoke or suspend
the license or deny the renewal of the license under Insurance Code
§4005.101, concerning Grounds for License Denial or Disciplinary Ac-
tion, or Insurance Code §4102.201, concerning Denial, Suspension, or
Revocation of License.
(m) Each public insurance adjuster must maintain all insur-
ance records, including all records relating to customer complaints re-
ceived from customers and the department, separate from the records
of any other business in which the person may be engaged and in the
manner specifed in Insurance Code Chapter 4102, concerning Public
Insurance Adjusters.
(n) The department may license a depository institution or en-
tity chartered by the federal Farm Credit Administration under the farm
credit system established under 12 U.S.C. Section 2001 et seq., as
amended, to act as a public insurance adjuster in the manner provided
for the licensing of a corporation under this section.
§19.712. Advertisement.
(a) As used in Insurance Code Chapter 4102, concerning Pub-
lic Insurance Adjusters, "advertisement" includes:
(1) printed and published material, audiovisual material
and descriptive literature of a public insurance adjuster used in direct
mail, newspapers, magazines, radio, telephone and television scripts,
websites, billboards, and similar displays;
(2) descriptive literature and promotional aids of all kinds
issued by a public insurance adjuster for presentation to members of the
public, including circulars, leafets, booklets, depictions, illustrations,
and form letters;
(3) prepared promotional talks, presentations and materials
for use by a public insurance adjuster, and those representations made
on a recurring basis by a public insurance adjuster to members of the
public;
(4) material used to:
(A) solicit contracts from insureds; or
(B) modify existing contracts;
(5) material included with a contract when the contract is
delivered and materials used in the solicitation of contract renewals,
extensions or reinstatements, except those extensions or reinstatements
provided for in the contract;
(6) lead card solicitations, defned as communications dis-
tributed to the public which, regardless of form, content, or stated pur-
pose, are intended to result in the compilation or qualifcation of a list
containing names or other personal information regarding insureds who
have expressed a specifc interest in obtaining assistance with having
their claims settled, and which are intended to be used to solicit resi-
dents of this state for the execution of a contract for a public insurance
adjuster's services; and
(7) any other communication directly or indirectly related
to a public insurance adjuster contract, and intended to result in the
eventual execution of such a contract.
(b) "Advertisement" does not include:
(1) communications or materials used within a public in-
surance adjuster's own organization, not used as promotional aids and
not disseminated to the public;
(2) communications with insureds other than materials so-
liciting insureds to enter, renew, extend or reinstate a contract for a
public insurance adjuster's services; and
(3) material used solely for the recruitment, training, and
education of a public insurance adjuster's personnel and subcontractors,
provided it is not also used to induce the public to enter, renew, extend
or reinstate a contract for a public insurance adjuster's services.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on May 30, 2023.
^almqba oribp gune NSI OMOP QU qexoeg POUV
TRD-202301968
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: June 19, 2023
Proposal publication date: January 13, 2023
For further information, please call: (512) 676-6587
♦ ♦ ♦
28 TAC §19.703
STATUTORY AUTHORITY. The commissioner adopts the repeal
of §19.703 under Insurance Code §4102.004 and §36.001.
Insurance Code §4102.004 provides that the commissioner may
adopt reasonable and necessary rules to implement Insurance
Code Chapter 4102.
Insurance Code §36.001 provides that the commissioner may
adopt any rules necessary and appropriate to implement the
powers and duties of the department under the Insurance Code
and other laws of this state.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on May 30, 2023.
TRD-202302028
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: June 19, 2023
Proposal publication date: January 13, 2023
For further information, please call: (512) 676-6587
♦ ♦ ♦
SUBCHAPTER I. GENERAL PROVISIONS
REGARDING FEES, APPLICATIONS, AND
RENEWALS
28 TAC §§19.801, 19.802, 19.805
STATUTORY AUTHORITY. The commissioner adopts amend-
ments to §§19.801, 19.802, and 19.805 under Insurance Code
§4001.005 and §36.001.
Insurance Code §4001.005 provides that the commissioner may
adopt any rules necessary to implement Title 13 of the Insurance
Code and to meet the minimum requirements of federal law, in-
cluding regulations.
Insurance Code §36.001 provides that the commissioner may
adopt any rules necessary and appropriate to implement the
powers and duties of the department under the Insurance Code
and other laws of this state.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on May 30, 2023.
TRD-202301970
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: June 19, 2023
Proposal publication date: January 13, 2023
For further information, please call: (512) 676-6587
♦ ♦ ♦
SUBCHAPTER J. STANDARDS OF CONDUCT
FOR LICENSED AGENTS
28 TAC §19.902, §19.906
STATUTORY AUTHORITY. The commissioner adopts amend-
ments to §19.902 and §19.906 under Insurance Code §4001.005
and §36.001.
Insurance Code §4001.005 provides that the commissioner may
adopt any rules necessary to implement Title 13 of the Insurance
Code and to meet the minimum requirements of federal law, in-
cluding regulations.
Insurance Code §36.001 provides that the commissioner may
adopt any rules necessary and appropriate to implement the
powers and duties of the department under the Insurance Code
and other laws of this state.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on May 30, 2023.
TRD-202301971
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: June 19, 2023
Proposal publication date: January 13, 2023
For further information, please call: (512) 676-6587
♦ ♦ ♦
SUBCHAPTER K. CONTINUING
EDUCATION, ADJUSTER PRELICENSING
EDUCATION PROGRAMS, AND
CERTIFICATION COURSES
28 TAC §§19.1002, 19.1003, 19.1012
STATUTORY AUTHORITY. The commissioner adopts amend-
ments to §§19.1002, 19.1003, and 19.1012 under Insurance
Code §4001.005 and §36.001.
Insurance Code §4001.005 provides that the commissioner may
adopt any rules necessary to implement Title 13 of the Texas In-
surance Code and to meet the minimum requirements of federal
law, including regulations.
Insurance Code §36.001 provides that the commissioner may
adopt any rules necessary and appropriate to implement the
powers and duties of the department under the Insurance Code
and other laws of this state.
§19.1002. Defnitions.
QU qexoeg POVM gune NSI OMOP qex~s oegister
(a) Words and terms defned in Insurance Code §4001.003,
concerning Defnitions; §4004.151, concerning Agent Education Pro-
grams; or §4004.201, concerning Defnition have the same meaning
when used in this subchapter.
(b) The following words and terms, when used in this subchap-
ter, have the following meanings, unless the context clearly indicates
otherwise.
(1) Adjuster--An individual licensed under Insurance Code
Chapter 4101, concerning Insurance Adjusters.
(2) Application level--Demonstration of the ability to use
learned materials in a new situation, usually involving the application
of rules, policies, methods, computations, laws, theories, or any other
relevant and available information.
(3) Assignee--Any provider that is authorized under
§19.1008(f) of this title (relating to Certifed Course Advertising,
Modifcation, and Assignment).
(4) Authorized provider representative--The individual a
provider designates as the contact individual responsible for all of the
provider's communications and flings with the department.
(5) Business of insurance--Has the same meaning as set
forth in Insurance Code §101.051, concerning Conduct that Constitutes
the Business of Insurance.
(6) Classroom course--A course complying with
§19.1009(g) of this title (relating to Types of Courses).
(7) Classroom equivalent course--A course complying
with §19.1009(h) of this title.
(8) Certifcate of completion--A document complying with
§19.1007(a)(7) of this title (relating to Course Certifcation Submission
Applications, Course Expirations, and Resubmissions).
(9) Certifcation course--A course designed to enhance the
student's knowledge, understanding, and professional competence re-
garding specifed subjects for an insurance product. The term includes
courses that satisfy the requirements for the Long-Term Care Certifca-
tion required by Insurance Code Chapter 1651, Subchapter C, concern-
ing Partnership for Long-Term Care Program and Human Resources
Code Chapter 32, Subchapter F, concerning Partnership for Long-Term
Care Program; the Medicare-Related Product Certifcation required by
Insurance Code Chapter 4004, Subchapter D, concerning Agent Edu-
cation Programs; the Small Employer Health Beneft Plan Specialty
Certifcation required by Insurance Code Chapter 4054, Subchapter
H, concerning Specialty Certifcation for Agents Serving Certain Em-
ployer Groups; and the Annuity Certifcation required by Insurance
Code §1115.056, concerning Agent Training Requirements.
(10) Certifed course--A classroom, classroom equivalent,
or self-study course offered by a registered provider that the department
or its designee has determined meets the requirements of this subchap-
ter.
(11) Department--Texas Department of Insurance.
(12) Disinterested third party--An individual who is:
(A) not related to a student by blood, adoption, or mar-
riage as a parent, child, grandparent, sibling, niece, nephew, aunt, un-
cle, or frst cousin; or
(B) not an employee or subordinate of the student.
(13) Ethics course--A course that deals with usage and
customs among members of the insurance profession, involving their
moral and professional duties toward one another, toward clients,
toward insureds, and toward insurers.
(14) Insurance course--A course primarily focused on
teaching subjects related to the business of insurance.
(15) Interactive inquiries--An interactive electronic com-
ponent that complies with §19.1009(g)(2) of this title.
(16) Knowledge level--Recall of specifc facts, patterns,
methods, rules, dates, or other information that must be committed to
memory.
(17) Licensee--An individual licensed under one or more
of the following Insurance Code provisions:
(A) Chapter 4051, Subchapter B, concerning General
Property and Casualty License; Subchapter C, concerning Limited
Property and Casualty License; Subchapter E, concerning County
Mutual Agent License; or Subchapter I, concerning Personal Lines
Property and Casualty Agent;
(B) Chapter 4053, concerning Managing General
Agents;
(C) Chapter 4054, Subchapter B, concerning General
Life, Accident, and Health License; Subchapter C, concerning Lim-
ited Life, Accident, and Health License; Subchapter E, concerning Life
Insurance Not Exceeding $25,000; or Subchapter G, concerning Life
Agent;
(D) Chapter 4101, concerning Insurance Adjusters; or
(E) Chapter 4102, concerning Public Insurance Ad-
justers.
(18) Long-term care partnership insurance policy--For pur-
poses of §19.1022 of this title (relating to Long-Term Care Partnership
Certifcation Course) and §19.1023 of this title (relating to Long-Term
Care Partnership Continuing Education) only, a policy established un-
der Human Resources Code Chapter 32, Subchapter F, and Insurance
Code Chapter 1651, Subchapter C.
(19) National designation certifcation--A professional
designation that is:
(A) nationally recognized in the insurance industry; and
(B) issued by an entity that maintains a not-for-proft
status and has been in existence for at least fve years.
(20) One-time-event--A type of classroom course comply-
ing with §19.1009(j) of this title.
(21) Provider--An individual or organization including a
corporation, partnership, depository institution, insurance company, or
entity chartered by the Farm Credit Administration as defned in Insur-
ance Code §4001.108, concerning Issuance of License to Entity Char-
tered by Federal Farm Credit Administration, registered with the de-
partment to offer continuing education courses for licensees, prelicens-
ing instruction for adjusters, or long-term care partnership certifcation
courses for licensees.
(22) Provider registration--The process of a provider seek-
ing permission to offer continuing education courses for licensees, pre-
licensing education for adjusters, or long-term care partnership certif-
cation courses for licensees.
(23) Qualifying course--Insurance courses for which a li-
censee may receive continuing education credit and are:
(A) offered for credit by accredited colleges, universi-
ties, or law schools;
^almqba oribp gune NSI OMOP QU qexoeg POVN
(B) part of a national designation certifcation program;
(C) approved for classroom, classroom equivalent, or
participatory credit by the continuing education approval authority of
a state bar association or state board of public accountancy; or
(D) certifed or approved for continuing education
credit under the guidelines of the Federal Crop Insurance Corporation.
(24) Reporting period--The period from the issue date or
last renewal date of the license to the expiration date of the license,
generally a two-year period.
(25) Self-study--A course complying with §19.1009(i) of
this title.
(26) Speaker--An individual who is speaking from special
knowledge regarding the business of insurance obtained through expe-
rience and position in professional or social organizations, industry, or
government.
(27) Student--A licensee or adjuster applicant enrolled in
and attending a certifed course for credit.
(28) TDI license number--An identifcation number the de-
partment assigns to the licensee and found on the license certifcate.
(29) Visually monitored environment--An environment
permitting visual identifcation of students and visual confrmation of
attendance, including observation by camera.
§19.1003. Licensee Hour and Completion Requirements.
(a) Continuing education hour requirement. Except as pro-
vided in subsections (c) - (e) of this section, for each license and report-
ing period that the individual is licensed, each licensee must complete
24 hours of continuing education, except that licensees holding only a
license issued under Insurance Code Chapter 4051, Subchapter C, con-
cerning Limited Property and Casualty License; Chapter 4051, Sub-
chapter E, concerning County Mutual Agent License; Chapter 4054,
Subchapter C, concerning Limited Life, Accident, and Health License;
or Chapter 4054, Subchapter E, concerning Life Insurance not Exceed-
ing $25,000 must complete 10 hours of continuing education. The fol-
lowing requirements apply:
(1) licensees must:
(A) complete all required continuing education hours
during the reporting period to avoid fnes and be eligible to renew the
license. A licensee who obtains a new license during the reporting pe-
riod for an existing license held by the licensee may count all prior con-
tinuing education credits earned in the reporting period for the active
license towards the new license if the licenses have the same expiration
date;
(B) complete at least two hours of the licensee's contin-
uing education requirement in certifed ethics or consumer protection
courses;
(C) complete at least 50% of the licensee's required con-
tinuing education hours in certifed classroom or classroom equivalent
courses; and
(D) complete the remainder of the continuing education
requirement by completing certifed courses applicable to any license
type.
(2) Continuing education credit will not be granted for:
(A) any continuing education course credit received be-
fore the date the license is issued by TDI, including course credit earned
while acting under a temporary license or a provisional permit, towards
complying with the licensee's applicable continuing education require-
ment, except as provided in §19.1021 of this title (relating to Flood
Insurance Education Course) and subsection (e) of this section;
(B) carry forward excess hours completed in one report-
ing period to a subsequent reporting period; or
(C) the current reporting period for any credit hours
completed under Insurance Code §4004.055, concerning Conse-
quences of Failure to Complete Continuing Education Requirement,
to correct a shortage of hours in a previous reporting period.
(b) Maximum hour requirement. Licensees holding more than
one license issued under the Insurance Code are not required to com-
plete more than the number of continuing education hours required un-
der their greatest single license requirement for a license held by the li-
censee during the reporting period, three hours of which must be in cer-
tifed ethics or consumer protection courses, within each reporting pe-
riod. This requirement applies even if the licensee chooses to cancel or
nonrenew the license with the requirement. If the licensee is required to
complete certain continuing education courses or course hours to main-
tain a voluntary certifcation, including certifcations under §19.1022 of
this title (relating to Long-Term Care Partnership Certifcation Course),
§19.1023 of this title (relating to Long-Term Care Partnership Contin-
uing Education), §19.1024 of this title (relating to Medicare-Related
Product Certifcation Course), §19.1025 of this title (relating to Medi-
care-Related Product Continuing Education), §19.1026 of this title (re-
lating to Small Employer Health Beneft Plan Specialty Certifcation
Course), §19.1027 of this title (relating to Small Employer Health Ben-
eft Plan Specialty Continuing Education), §19.1028 of this title (relat-
ing to Annuity Certifcation Course), and §19.1029 of this title (relating
to Annuity Continuing Education), the licensee must complete the re-
quirement to maintain the certifcation even if the total number of hours
would exceed the limit specifed in this subsection.
(c) Adjuster prelicensing education. Adjuster applicants seek-
ing an examination exemption under Insurance Code §4101.056(a)(4),
concerning Exemption from Examination Requirement, must com-
plete both a certifed adjuster prelicensing education course of not less
than 40 hours, and pass the course examination testing the applicant's
knowledge and qualifcations set forth in this subchapter. Adjuster
applicants must complete at least 30 hours of the course requirement
through classroom or classroom equivalent course work.
(d) Prorated requirement. Licensees holding a license that was
issued with a term of less than two years and those licensees who con-
vert from nonresident to resident licenses during a reporting period,
excluding adjusters with a license under which Texas is the designated
home state, must complete continuing education hours based on a pro-
rated schedule, as follows:
(1) for license types with a 24-hour requirement, one hour
for each whole month between the issue or last renewal date of the
license, or the date of Texas residency, to the end of the license period
up to the maximum number of hours required for the license type during
the reporting period; and
(2) for license types with a 10-hour requirement, the num-
ber of hours required in Figure: 28 TAC §19.1003(d)(2) for the license
period between the issue date or last renewal date of the license, or the
date of Texas residency, to the end of the license period up to the maxi-
mum number of hours required for the license type during the reporting
period.
Figure: 28 TAC §19.1003(d)(2)
(3) Notwithstanding paragraphs (1) and (2) of this subsec-
tion, a licensee is not required to complete continuing education for the
reporting period if the prorated reporting period is less than six months;
and
QU qexoeg POVO gune NSI OMOP qex~s oegister
(4) a licensee may not apply hours completed before be-
coming a Texas resident licensee towards compliance with the contin-
uing education requirement.
(e) Texas designated home state adjuster requirement. A des-
ignated home state adjuster licensee under which Texas is the desig-
nated home state must complete continuing educations under the same
requirements as a Texas resident adjuster. A licensee that converts from
the Texas designated home state adjuster license to a Texas resident ad-
juster license during the reporting period:
(1) must complete continuing education in the same man-
ner as a Texas resident adjuster for the combined period the individual
held the Texas designated home state adjuster license and the Texas
resident adjuster license; and
(2) does not qualify for completing continuing education
on a prorated basis if the licensee becomes a Texas resident between
renewals of the Texas designated home state adjuster license.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on May 30, 2023.
TRD-202301972
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: June 19, 2023
Proposal publication date: January 13, 2023
For further information, please call: (512) 676-6587
♦ ♦ ♦
28 TAC §19.1019
STATUTORY AUTHORITY. The commissioner adopts the repeal
of §19.1019 under Insurance Code §4001.005 and §36.001.
Insurance Code §4001.005 provides that the commissioner may
adopt any rules necessary to implement Title 13 of the Insurance
Code and to meet the minimum requirements of federal law, in-
cluding regulations.
Insurance Code §36.001 provides that the commissioner may
adopt any rules necessary and appropriate to implement the
powers and duties of the department under the Insurance Code
and other laws of this state.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on May 30, 2023.
TRD-202302030
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: June 19, 2023
Proposal publication date: January 13, 2023
For further information, please call: (512) 676-6587
♦ ♦ ♦
SUBCHAPTER N. LICENSING AND
REGULATION OF RISK MANAGERS
28 TAC §19.1303, §19.1320
STATUTORY AUTHORITY. The commissioner adopts the repeal
of §19.1303 and §19.1320 under Insurance Code under Insur-
ance Code §4153.003 and §36.001.
Insurance Code §4153.003 provides that the commissioner may
adopt rules necessary to carry out Chapter 4153 and to regulate
risk managers.
Insurance Code §36.001 provides that the commissioner may
adopt any rules necessary and appropriate to implement the
powers and duties of the department under the Insurance Code
and other laws of this state.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on May 30, 2023.
TRD-202302031
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: June 19, 2023
Proposal publication date: January 13, 2023
For further information, please call: (512) 676-6587
♦ ♦ ♦
28 TAC §19.1304, §19.1308
STATUTORY AUTHORITY. The commissioner adopts amend-
ments to §19.1304 and §19.1308 under Insurance Code
§4153.003 and §36.001.
Insurance Code §4153.003 provides that the commissioner may
adopt rules necessary to carry out Chapter 4153 and to regulate
risk managers.
Insurance Code §36.001 provides that the commissioner may
adopt any rules necessary and appropriate to implement the
powers and duties of the department under the Insurance Code
and other laws of this state.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on May 30, 2023.
TRD-202301974
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: June 19, 2023
Proposal publication date: January 13, 2023
For further information, please call: (512) 676-6587
♦ ♦ ♦
SUBCHAPTER O. PROCEDURES AND
REQUIREMENTS FOR REINSURANCE
INTERMEDIARIES (BROKERS AND
MANAGERS)
28 TAC §19.1403, §19.1407
^almqba oribp gune NSI OMOP QU qexoeg POVP
STATUTORY AUTHORITY. The commissioner adopts amend-
ments to §19.1403 and §19.1407 under Insurance Code
§4152.004 and §36.001.
Insurance Code §4152.004 provides that the commissioner
may adopt reasonable rules as necessary to implement Chapter
4152.
Insurance Code §36.001 provides that the commissioner may
adopt any rules necessary and appropriate to implement the
powers and duties of the department under the Insurance Code
and other laws of this state.
§19.1403. Requirements for Bond or Errors and Omissions Policy.
Any reinsurance intermediary must fle and maintain a bond with the
commissioner for the protection of all insurers represented or fle and
maintain an errors and omissions policy, meeting the following criteria.
(1) The bond must be executed by the reinsurance interme-
diary as principal and by a surety company authorized to do business
in this state, as surety, or surplus lines insurer eligible in this state, in
the principal sum of $100,000 for a broker and in the principal sum
of $250,000 for a manager, payable to the Texas Department of Insur-
ance for the use and beneft of all insurers represented. The bond must
provide that a copy of any cancellation or nonrenewal notice must be
mailed to Agent and Adjuster Licensing Offce, Texas Department of
Insurance, MC: CO-AAL, P.O. Box 12030, Austin, Texas 78711-2030.
The executed bond must be furnished to the Texas Department of In-
surance.
(2) The errors and omissions policy must be in a form ac-
ceptable to the Texas Department of Insurance, and must be fled with
Agent and Adjuster Licensing Offce at the address listed in paragraph
(1) of this section. The policy must provide that the Texas Department
of Insurance will be a certifcate holder and will receive a copy of any
cancellation or nonrenewal notice, which must be mailed to the deputy
commissioner for licensing at the address listed in paragraph (1) of this
section. The errors and omissions policy must cover all negligent acts
or omissions of the reinsurance intermediary and any person acting on
its behalf and must provide coverage of at least $100,000 for each oc-
currence for brokers and must provide coverage of at least $250,000
for each occurrence for managers.
(3) The commissioner may determine that special circum-
stances require an additional amount of coverage for the bond or policy.
§19.1407. Approval of Reinsurance Intermediary Manager's Con-
tracts.
(a) A written contract, which specifes the responsibilities of
each party, must be approved by the insurer's board of directors or at-
torney in fact and executed by a responsible offcer of an insurer and
a manager prior to entering into any transaction between the manager
and the insurer.
(b) A copy of the executed contract and the approval of the
insurer's board of directors or attorney in fact must be fled by the man-
ager with the commissioner for approval at least 30 days before the
insurer assumes or cedes any business through the manager.
(c) The contract must include the minimum requirements
specifed in Insurance Code §4152.201, concerning Contract Between
Manager and Insurer. A contract that does not comply with the min-
imum requirements of the Insurance Code or this section will not be
considered to have been fled with the commissioner for approval. The
contract will be approved or disapproved within 30 days of its fling.
(d) A failure to fle complete and accurate information in all
material respects is grounds for disapproval of the contract by the com-
missioner under Insurance Code §4152.201.
(e) Any disapproval by the commissioner of any contract fled
under this section will set forth the specifc reasons for such disap-
proval.
(f) If any material changes are made to the contract fled with
the commissioner, an amended contract setting forth such changes must
be fled with the commissioner for approval as if it were a new contract.
(g) Contracts subject to this section and Insurance Code
§4152.201, must be fled using the method described on the depart-
ment's website for the purpose of determining compliance with this
section. Telephonic or fax transmissions will not constitute proper
fling under this section.
(h) This section will be cumulative of and in addition to the
requirements of Insurance Code Chapter 4053, concerning Managing
General Agents; Chapter 4152, concerning Reinsurance Interme-
diaries; and Chapter 823, concerning Insurance Holding Company
Systems, and related regulations. Nothing contained in this section is
intended to exempt an insurer or its reinsurance intermediary manager
from other provisions of the Insurance Code.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on May 30, 2023.
TRD-202301975
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: June 19, 2023
Proposal publication date: January 13, 2023
For further information, please call: (512) 676-6587
♦ ♦ ♦
SUBCHAPTER Q. DISCOUNT HEALTH CARE
PROGRAM REGISTRATION AND RENEWAL
REQUIREMENTS
28 TAC §19.1604, §19.1605
STATUTORY AUTHORITY. The commissioner adopts amend-
ments to §19.1604 and §19.1605 under Insurance Code
§7001.003 and §36.001.
Insurance Code §7001.003 provides that the commissioner will
adopt rules in the manner prescribed by Subchapter A, Chapter
36, as necessary to implement Chapter 7001.
Insurance Code §36.001 provides that the commissioner may
adopt any rules necessary and appropriate to implement the
powers and duties of the department under the Insurance Code
and other laws of this state.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on May 30, 2023.
TRD-202301976
QU qexoeg POVQ gune NSI OMOP qex~s oegister
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: June 19, 2023
Proposal publication date: January 13, 2023
For further information, please call: (512) 676-6587
♦ ♦ ♦
SUBCHAPTER R. UTILIZATION REVIEWS
FOR HEALTH CARE PROVIDED UNDER
A HEALTH BENEFIT PLAN OR HEALTH
INSURANCE POLICY
DIVISION 1. UTILIZATION REVIEWS
28 TAC §19.1704
STATUTORY AUTHORITY. The commissioner adopts amend-
ments to §19.1704 under Insurance Code §4201.003(a) and
§36.001.
Insurance Code §4201.003(a) provides that the commissioner
may adopt rules to implement Chapter 4201.
Insurance Code §36.001 provides that the commissioner may
adopt any rules necessary and appropriate to implement the
powers and duties of the department under the Insurance Code
and other laws of this state.
§19.1704. Certifcation or Registration of URAs.
(a) Applicability of certifcation or registration requirements.
A person acting as or holding itself out as a URA under this subchapter
must be certifed or registered, as applicable, under Insurance Code
§4201.057, concerning Health Maintenance Organizations; Insurance
Code §4201.058, concerning Insurers; or Insurance Code §4201.101,
concerning Certifcate of Registration Required, and this subchapter.
(1) If an insurance carrier or HMO performs utilization re-
view for an individual or entity subject to this subchapter for which it
is not the payor, the insurance carrier or HMO must be certifed.
(2) If an insurance carrier or HMO performs utilization re-
view only for coverage for which it is the payor, the insurance carrier
or HMO must be registered.
(b) Application form. The commissioner adopts by reference
the:
(1) URA application, for application for, renewal of, and
reporting a material change to a certifcation or registration as a URA
in this state; and
(2) Biographical affdavit, to be used as an attachment to
the URA application.
(c) Original application fee. The original application fee spec-
ifed in §19.802 of this title (relating to Amount of Fees) must be sent
to TDI with the application for certifcation. A person applying for reg-
istration is not required to pay a fee.
(d) Where to obtain and send the URA application form.
Forms may be obtained from www.tdi.texas.gov/forms and must
be sent to: Texas Department of Insurance, Managed Care Quality
Assurance Offce, MC: LH-MCQA, P.O. Box 12030, Austin, Texas
78711-2030.
(e) Original application process. Within 60 calendar days after
receipt of a complete application, TDI will process the application and
issue or deny a certifcation or registration. TDI will send a certifcate
or a letter of registration to an entity that is granted certifcation or
registration. The applicant may waive the time limit described in this
subsection.
(f) Omissions or defciencies. TDI will send the applicant
written notice of any omissions or defciencies in the application. The
applicant must correct the omissions or defciencies in the application
or request additional time in writing within 15 working days of the
date of TDI's latest notice of the omissions or defciencies. If the
applicant fails to do so, the application will not be processed and the
fle will be closed as an incomplete application. The application fee is
not refundable. The request for additional time must be approved by
TDI in writing to be effective.
(g) Certifcation and registration expiration. Each URA reg-
istration or certifcation issued by TDI and not suspended or revoked
by the commissioner expires on the second anniversary of the date of
issuance.
(h) Renewal requirements. A URA must apply for renewal of
certifcation or registration every two years from the date of issuance
by submitting the URA application form to TDI. The URA must also
submit a renewal fee in the amount specifed by §19.802(b)(19) of this
title for renewal of a certifcation. A person applying for renewal of a
registration is not required to pay a fee.
(1) Continued operation during review. If a URA submits
the required information and fees specifed in this subsection on or be-
fore the expiration of the certifcation or registration, the URA may
continue to operate under its certifcation or registration until the re-
newal certifcation or registration is denied or issued.
(2) Expiration for 90 calendar days or less. If the certifca-
tion or registration has been expired for 90 calendar days or less, a URA
may renew the certifcation or registration by sending a completed re-
newal application and fee, as applicable. The URA may not operate
from the time the certifcation or registration has expired until the time
TDI has issued a renewal certifcation or registration.
(3) Expiration for longer than 90 calendar days. If a URA's
certifcation or registration has been expired for longer than 90 calendar
days, the URA may not renew the certifcation or registration. The
URA must obtain a new certifcation or registration by submitting an
application for original issuance of the certifcation or registration and
an original application fee as applicable.
(i) Contesting a denial. If an application for an original or re-
newal certifcation or registration is denied, the applicant may contest
the denial under the provisions of Chapter 1, Subchapter A, of this ti-
tle (relating to Rules of Practice and Procedure) and Government Code
Chapter 2001, concerning Administrative Procedure.
(j) Updating information on effective date. A URA that is cer-
tifed or registered before the effective date of this rule must submit an
updated application to TDI to comply with this subchapter within 90
calendar days after the effective date of this rule. However, the sub-
mission of an updated application does not change the URA's existing
renewal date, and this section still governs the URA's renewal process.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on May 30, 2023.
TRD-202301977
^almqba oribp gune NSI OMOP QU qexoeg POVR
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: June 19, 2023
Proposal publication date: January 13, 2023
For further information, please call: (512) 676-6587
♦ ♦ ♦
SUBCHAPTER S. FORMS TO REQUEST
PRIOR AUTHORIZATION
DIVISION 2. TEXAS STANDARDIZED PRIOR
AUTHORIZATION REQUEST FORM FOR
HEALTH CARE SERVICES
28 TAC §19.1810
STATUTORY AUTHORITY. The commissioner adopts amend-
ments to §19.1810 under Insurance Code §1217.004(a)(1) and
§36.001.
Insurance Code §1217.004(a)(1) provides that the commis-
sioner by rule prescribe a single, standard form for requesting
prior authorization of health care services.
Insurance Code §36.001 provides that the commissioner may
adopt any rules necessary and appropriate to implement the
powers and duties of the department under the Insurance Code
and other laws of this state.
§19.1810. Prior Authorization Request Form for Health Care Ser-
vices, Required Acceptance, and Use.
(a) Form requirements. The commissioner adopts by refer-
ence the Prior Authorization Request Form for Health Care Services,
to be accepted and used by an issuer in compliance with subsection (b)
of this section. The form and its instruction sheet are posted on the TDI
website at www.tdi.texas.gov/forms/form10.html; or the form and its
instruction sheet can be requested by mail from the Texas Department
of Insurance, Rate and Form Review Offce, MC: LH-MCQA, P.O. Box
12030, Austin, Texas 78711-2030. The form must be reproduced with-
out changes. The form provides space for the following information:
(1) the plan issuer's name, telephone number, and facsimile
(fax) number;
(2) the date the request is submitted;
(3) the type of review, whether:
(A) nonurgent; or
(B) urgent. An urgent review should only be requested
for a patient with a life-threatening condition or for a patient who is
currently hospitalized, or to authorize treatment following stabilization
of an emergency condition. A provider or facility may also request an
urgent review to authorize treatment of an acute injury or illness if the
provider determines that the condition is severe or painful enough to
warrant an expedited or urgent review to prevent a serious deterioration
of the patient's condition or health;
(4) the type of request (whether an initial request or an ex-
tension, renewal, or amendment of a previous authorization);
(5) the patient's name, date of birth, sex, contact telephone
number, and identifying insurance information;
(6) the requesting provider's or facility's name, NPI num-
ber, specialty, telephone and fax numbers, contact person's name and
telephone number, and the requesting provider's signature and date, if
required (if a signature is required, a signature stamp may not be used);
(7) the service provider's or facility's name, NPI number,
specialty, and telephone and fax numbers;
(8) the primary care provider's name and telephone and fax
numbers, if the patient's plan requires the patient to have a primary care
provider and that provider is not the requesting provider;
(9) the planned services or procedures and the associated
CPT, CDT, or HCPCS codes, and the planned start and end dates of the
services or procedures;
(10) the diagnosis description, ICD version number (if
more than one version is allowed by the U.S. Department of Health
and Human Services), and ICD code;
(11) identifcation of the treatment location (inpatient, out-
patient, provider offce, observation, home, day surgery, or other spec-
ifed location);
(12) information about the duration and frequency of treat-
ment sessions for physical, occupational, or speech therapy, cardiac
rehabilitation, mental health, or substance abuse;
(13) if requesting prior authorization for home health care,
information about the requested number of home health visits and their
duration and frequency, and an indication whether a physician's signed
order or a nursing assessment is attached;
(14) if requesting prior authorization for durable med-
ical equipment, an indication whether a physician's signed order
is attached, a description of requested equipment or supplies with
associated HCPCS codes, duration, and, if the patient is a Medicaid
benefciary, an indication whether a Title 19 Certifcation is attached;
(15) a place for the requester to include a brief narrative
of medical necessity or other clinical documentation. A requesting
provider or facility may also attach a narrative of medical necessity and
supporting clinical documentation (medical records, progress notes,
lab reports, radiology studies, etc.); and
(16) if a requesting provider wants to be called directly
about missing information, a place to list a direct telephone number
for the requesting provider or facility the issuer can call to ask for ad-
ditional or missing information if needed to process the request. The
phone call can only be considered a peer-to-peer discussion required by
§19.1710 of this title (relating to Requirements Prior to Issuing an Ad-
verse Determination) if it is a discussion between peers that includes,
at a minimum, the clinical basis for the URA's decision and a descrip-
tion of documentation or evidence, if any, that can be submitted by the
provider of record that, on appeal, might lead to a different utilization
review decision.
(b) Acceptance and use of the form.
(1) If a provider or facility submits the form to request prior
authorization of a health care service for which the issuer's plan requires
prior authorization, the issuer must accept and use the form for that
purpose. An issuer may also have on its website another electronic
process a provider or facility may use to request prior authorization of
a health care service.
(2) This form may not be used by a provider or facility:
(A) to request an appeal;
(B) to confrm eligibility;
(C) to verify coverage;
QU qexoeg POVS gune NSI OMOP qex~s oegister
(D) to ask whether a service requires prior authoriza-
tion;
(E) to request prior authorization of a prescription drug;
or
(F) to request a referral to an out of network physician
facility or other health care provider.
(c) Effective date. An issuer must accept a request for prior
authorization of health care services made by a provider or facility us-
ing the form on or after September 1, 2015.
(d) Availability of the form.
(1) A health beneft plan issuer must make the form avail-
able on paper and electronically on its website.
(2) A health beneft plan issuer's agent that manages or ad-
ministers health care services benefts must make the form available on
paper and electronically on its website.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on May 30, 2023.
TRD-202301978
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: June 19, 2023
Proposal publication date: January 13, 2023
For further information, please call: (512) 676-6587
♦ ♦ ♦
DIVISION 3. TEXAS STANDARD PRIOR
AUTHORIZATION REQUEST FORM FOR
PRESCRIPTION DRUG BENEFITS
28 TAC §19.1820
STATUTORY AUTHORITY. The commissioner adopts amend-
ments to §19.1820 under Insurance Code §1369.304(a)(1) and
§36.001.
Insurance Code §1369.304(a)(1) provides that the commis-
sioner by rule prescribe a single, standard form for requesting
prior authorization of prescription drug benefts.
Insurance Code §36.001 provides that the commissioner may
adopt any rules necessary and appropriate to implement the
powers and duties of the department under the Insurance Code
and other laws of this state.
§19.1820. Prior Authorization Request Form for Prescription Drug
Benefts, Required Acceptance, and Use.
(a) Form requirements. The commissioner adopts by ref-
erence the Prior Authorization Request Form for Prescription Drug
Benefts form, to be accepted and used by an issuer in compliance
with subsection (b) of this section. The form and its instruction sheet
are on TDI's website at www.tdi.texas.gov/forms/form10.html; or
the form and its instruction sheet can be requested by mail from the
Texas Department of Insurance, Rate and Form Review Offce, MC:
LH-MCQA, PO Box 12030, Austin, Texas 78711-2030. The form
must be reproduced without changes. The form provides space for the
following information:
(1) the name of the issuer or the issuer's agent that manages
prescription drug benefts, telephone number, and fax number;
(2) the date the request is submitted;
(3) a place to request an expedited or urgent review if the
prescribing provider or the prescribing provider's designee certifes that
applying the standard review time frame may seriously jeopardize the
life or health of the patient or the patient's ability to regain maximum
function;
(4) the patient's name, contact telephone number, date of
birth, sex, address, and identifying insurance information;
(5) the prescribing provider's name, NPI number, specialty,
telephone and fax numbers, address, and contact person's name and
telephone number;
(6) for a prescription drug:
(A) drug name;
(B) strength;
(C) route of administration;
(D) quantity;
(E) number of days' supply;
(F) expected therapy duration; and
(G) to the best of the prescribing provider's knowledge,
whether the medication is:
(i) a new therapy; or
(ii) continuation of therapy, and if so, to the best of
the prescribing provider's knowledge:
(I) the approximate date therapy was initiated;
(II) whether the patient is adhering to the drug
therapy regimen; and
(III) whether the drug therapy regimen is effec-
tive;
(7) for a provider administered drug, the HCPCS code,
NDC number, and dose per administration;
(8) for a prescription compound drug, its name, ingredi-
ents, and each ingredient's NDC number and quantity;
(9) for a prescription device, its name, expected duration
of use, and, if applicable, its HCPCS code;
(10) the patient's clinical information, including:
(A) diagnosis, ICD version number (if more than one
version is allowed by the U.S. Department of Health and Human Ser-
vices), and ICD code;
(B) to the best of the prescribing provider's knowledge,
the drugs the patient has taken for this diagnosis, including:
(i) drug name, strength, and frequency;
(ii) the approximate dates or duration the drugs were
taken; and
(iii) patient's response, reason for failure, or allergic
reaction;
(C) the patient's drug allergies, if any; and
(D) the patient's height and weight, if relevant;
(11) a list of relevant lab tests, and their dates and values;
^almqba oribp gune NSI OMOP QU qexoeg POVT
(12) a place for the prescribing provider to:
(A) include pertinent clinical information to justify re-
quests for initial or ongoing therapy, or increases in current dosage,
strength, or frequency;
(B) explain any comorbid conditions and contraindica-
tions for formulary drugs; or
(C) provide details regarding titration regimen or oncol-
ogy staging, if applicable; and
(13) a directive to the prescribing provider stating that:
(A) for a request for prior authorization of continuation
of therapy (other than a request for a step-therapy exception as provided
in subparagraph (B) of this paragraph), it is not necessary to complete
the sections of the form regarding patient clinical information and jus-
tifcation for the therapy unless there has been a material change in the
information previously provided; and
(B) for a request for a step-therapy exception, the sec-
tion of the form regarding justifcation for the step-therapy exception
must be completed.
(b) Acceptance and use of the form.
(1) If a prescribing provider submits the form to request
prior authorization of a prescription drug beneft for which the issuer's
plan requires prior authorization, the issuer must accept and use the
form for that purpose. An issuer may also have on its website another
electronic process a prescribing provider may use to request prior au-
thorization of a prescription drug beneft.
(2) This form may be used by a prescribing provider to re-
quest prior authorization of:
(A) a prescription drug;
(B) a prescription device;
(C) formulary exceptions;
(D) quantity limit overrides; and
(E) step-therapy requirement exceptions.
(3) This form may not be used by a prescribing provider to:
(A) request an appeal;
(B) confrm eligibility;
(C) verify coverage;
(D) ask whether a prescription drug or device requires
prior authorization; or
(E) request prior authorization of a health care service.
(c) Effective date. An issuer must accept a request for prior au-
thorization of prescription drug benefts made by a prescribing provider
using the form on or after the effective date of this section. An issuer
must accept a request using the form that was in place prior to the ef-
fective date of this section for 90 days after the effective date.
(d) Availability of the form.
(1) A health beneft plan issuer must make the form avail-
able electronically on its website.
(2) A health beneft plan issuer's agent that manages or ad-
ministers prescription drug benefts must make the form available elec-
tronically on its website.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on May 30, 2023.
TRD-202301979
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: June 19, 2023
Proposal publication date: January 13, 2023
For further information, please call: (512) 676-6587
♦ ♦ ♦
SUBCHAPTER T. SPECIALTY INSURANCE
LICENSE
28 TAC §19.1902, §19.1908
STATUTORY AUTHORITY. The commissioner adopts amend-
ments to §19.1902 and §19.1908 under Insurance Code
§§4055.003, 4102.004, and 36.001.
Insurance Code §4055.003 provides that the commissioner may
adopt rules necessary to implement Insurance Code Chapter
4055 and to meet the minimum requirements of federal law, in-
cluding regulations.
Insurance Code §4102.004 provides that the commissioner may
adopt reasonable and necessary rules to implement Insurance
Code Chapter 4102.
Insurance Code §36.001 provides that the commissioner may
adopt any rules necessary and appropriate to implement the
powers and duties of the department under the Insurance Code
and other laws of this state.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on May 30, 2023.
TRD-202301980
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: June 19, 2023
Proposal publication date: January 13, 2023
For further information, please call: (512) 676-6587
♦ ♦ ♦
28 TAC §19.1905
STATUTORY AUTHORITY. The commissioner adopts the repeal
of §19.1905 under Insurance Code §§4055.003, 4102.004, and
36.001.
Insurance Code §4055.003 provides that the commissioner may
adopt rules necessary to implement Insurance Code Chapter
4055 and to meet the minimum requirements of federal law, in-
cluding regulations.
Insurance Code §4102.004 provides that the commissioner may
adopt reasonable and necessary rules to implement Insurance
Code Chapter 4102.
QU qexoeg POVU gune NSI OMOP qex~s oegister
Insurance Code §36.001 provides that the commissioner may
adopt any rules necessary and appropriate to implement the
powers and duties of the department under the Insurance Code
and other laws of this state.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on May 30, 2023.
TRD-202302032
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: June 19, 2023
Proposal publication date: January 13, 2023
For further information, please call: (512) 676-6587
♦ ♦ ♦
SUBCHAPTER U. UTILIZATION REVIEWS
FOR HEALTH CARE PROVIDED UNDER
WORKERS' COMPENSATION INSURANCE
COVERAGE
28 TAC §19.2004
STATUTORY AUTHORITY. The commissioner adopts amend-
ments to §19.2004 under Insurance Code §4201.003 and
§36.001.
Insurance Code §4201.003 provides that the commissioner may
adopt rules to implement Insurance Code Chapter 4201.
Insurance Code §36.001 provides that the commissioner may
adopt any rules necessary and appropriate to implement the
powers and duties of the department under the Insurance Code
and other laws of this state.
§19.2004. Certifcate or Registration of URAs.
(a) Applicability of certifcation or registration requirements.
A person acting as or holding itself out as a URA under this subchapter
must be certifed or registered, as applicable, under Insurance Code
§4201.057, concerning Health Maintenance Organizations; Insurance
Code §4201.058, concerning Insurers; or Insurance Code §4201.101,
concerning Certifcate of Registration Required, and this subchapter.
(1) If an insurance carrier performs utilization review for
an individual or entity subject to this subchapter for which it is not the
payor, the insurance carrier must be certifed.
(2) If an insurance carrier performs utilization review only
for coverage for which it is the payor, the insurance carrier must be
registered.
(b) Application form. The commissioner adopts by reference
the:
(1) URA application, for application for, renewal of, and
reporting a material change to a certifcation or registration as a URA
in this state; and
(2) Biographical affdavit, to be used as an attachment to
the URA application.
(c) Original application fee. The original application fee spec-
ifed in §19.802 of this title (relating to Amount of Fees) must be sent
to TDI with the application for certifcation. A person applying for reg-
istration is not required to pay a fee.
(d) Where to obtain and send the URA application form.
Forms may be obtained from www.tdi.texas.gov/forms and must
be sent to: Texas Department of Insurance, Managed Care Quality
Assurance Offce, MC: LH-MCQA, P.O. Box 12030, Austin, Texas
78711-2030.
(e) Original application process. Within 60 calendar days after
receipt of a complete application, TDI will process the application and
issue or deny a certifcation or registration. TDI will send a certifcate
or a letter of registration to an entity that is granted certifcation or
registration. The applicant may waive the time limit described in this
subsection.
(f) Omissions or defciencies. TDI will send the applicant
written notice of any omissions or defciencies in the application. The
applicant must correct the omissions or defciencies in the application,
or request additional time in writing, within 15 working days of the
date of TDI's latest notice of omissions or defciencies. If the applicant
fails to do so, the application will not be processed and the fle will
be closed as an incomplete application. The application fee is not
refundable. The request for additional time must be approved by TDI
in writing to be effective.
(g) Certifcation and registration expiration. Each URA reg-
istration or certifcation issued by TDI and not suspended or revoked
by the commissioner expires on the second anniversary of the date of
issuance.
(h) Renewal requirements. A URA must apply for renewal of
certifcation or registration every two years from the date of issuance
by submitting the URA application to TDI. A URA must also submit a
renewal fee in the amount specifed by §19.802 of this title (relating to
Amount of Fees) for renewal of a certifcation. A person applying for
renewal of a registration is not required to pay a fee.
(1) Continued operation during review. If a URA submits
the required information and fees specifed in this subsection on or be-
fore the expiration of the certifcation or registration, the URA may
continue to operate under its certifcation or registration until the re-
newal certifcation or registration is denied or issued.
(2) Expiration for 90 calendar days or less. If the certif-
cation or registration has been expired for 90 calendar days or less,
the URA may renew the certifcation or registration by sending a com-
pleted renewal application and fee as applicable. The URA may not
operate from the time the certifcation or registration has expired until
the time TDI has issued a renewal certifcation or registration.
(3) Expiration for longer than 90 calendar days. If a URA's
certifcation or registration has been expired for longer than 90 calendar
days, the URA may not renew the certifcation or registration. The
URA must obtain a new certifcation or registration by submitting an
application for original issuance of the certifcation or registration and
an original application fee as applicable.
(i) Contesting a denial. If an application for an original or re-
newal certifcation or registration is denied, the applicant may contest
the denial under the provisions of Chapter 1, Subchapter A, of this ti-
tle (relating to Rules of Practice and Procedure) and Government Code
Chapter 2001, concerning Administrative Procedure.
(j) Updating information on effective date. A URA that is cer-
tifed or registered before the effective date of this rule must submit an
updated application to TDI to comply with this subchapter within 90
calendar days after the effective date of this rule. However, the sub-
^almqba oribp gune NSI OMOP QU qexoeg POVV
mission of an updated application does not change the URA's existing
renewal date, and this section still governs the URA's renewal process.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on May 30, 2023.
TRD-202301982
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: June 19, 2023
Proposal publication date: January 13, 2023
For further information, please call: (512) 676-6587
♦ ♦ ♦
SUBCHAPTER V. REGISTRATION OF FULL
TIME HOME OFFICE SALARIED EMPLOYEES
28 TAC §§19.3001 - 19.3005
STATUTORY AUTHORITY. The commissioner adopts the re-
peal of Subchapter V of Chapter 19, consisting of §§19.3001 -
19.3005, under Insurance Code §§4001.005 and §36.001.
Insurance Code §4001.005 provides that the Commissioner may
adopt any rules necessary to implement Title 13 of the Insurance
Code and to meet the minimum requirements of federal law, in-
cluding regulations.
Insurance Code §36.001 provides that the Commissioner may
adopt any rules necessary and appropriate to implement the
powers and duties of TDI under the Insurance Code and other
laws of this state.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on May 30, 2023.
TRD-202301964
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: June 19, 2023
Proposal publication date: January 13, 2023
For further information, please call: (512) 676-6587
♦ ♦ ♦
SUBCHAPTER W. REGULATION OF
NAVIGATORS FOR HEALTH BENEFIT
EXCHANGES
28 TAC §§19.4001 - 19.4017
STATUTORY AUTHORITY. The commissioner adopts the repeal
of Subchapter W, consisting of §§19.4001 - 19.4017, under In-
surance Code §36.001.
Insurance Code §36.001 provides that the Commissioner may
adopt any rules necessary and appropriate to implement the
powers and duties of TDI under the Insurance Code and other
laws of this state.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on May 30, 2023.
TRD-202301965
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: June 19, 2023
Proposal publication date: January 13, 2023
For further information, please call: (512) 676-6587
♦ ♦ ♦
TITLE 34. PUBLIC FINANCE
PART 1. COMPTROLLER OF PUBLIC
ACCOUNTS
CHAPTER 7. PREPAID HIGHER EDUCATION
TUITION PROGRAM
SUBCHAPTER N. TEXAS ACHIEVING A
BETTER LIFE EXPERIENCE (ABLE) PROGRAM
34 TAC §§7.181, 7.182, 7.187
The Comptroller of Public Accounts adopts amendments to
§7.181, concerning defnitions, §7.182, concerning tax exempt
status requirements and §7.187, concerning contributions, with-
out changes to the proposed text as published in the February
10, 2023, issue of the Texas Register (48 TexReg 641). The
rules will not be republished.
The amendments to §7.181 revise the defnition of excess con-
tribution in subsection (a)(13) to defne it as any contribution that
would cause the aggregate balance of an ABLE account to ex-
ceed the limit set by the board under Section 529(b)(6) of the
Internal Revenue Code, or the aggregate contributions from all
contributors in a taxable year to exceed the annual contribution
limit set by the Internal Revenue Code.
The amendments to §7.182 clarify in paragraphs (3) and (4) that
the board will monitor contributions during each taxable year to
the ABLE account and the aggregate balance of an ABLE ac-
count to ensure that no excess contribution is made to an ABLE
account.
The amendment to §7.187 provides in subsection (b)(3) that an
excess contribution will not be accepted for an ABLE account.
The comptroller did not receive any comments regarding adop-
tion of the amendments.
These amendments are adopted under Education Code,
§54.904(a), which authorizes the Prepaid Higher Education
Tuition Board in the Comptroller of Public Accounts to adopt
rules to implement Education Code, Chapter 54, Subchapter J
(Texas Achieving a Better Life Experience (ABLE) Program).
These amendments implement Education Code, Chapter 54,
Subchapter J.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
QU qexoeg PPMM gune NSI OMOP qex~s oegister
♦ ♦ ♦
Filed with the Offce of the Secretary of State on June 2, 2023.
TRD-202302048
Victoria North
General Counsel for Fiscal and Agency Affairs
Comptroller of Public Accounts
Effective date: June 22, 2023
Proposal publication date: February 10, 2023
For further information, please call: (512) 475-2220
♦ ♦ ♦
TITLE 40. SOCIAL SERVICES AND ASSIS-
TANCE
PART 1. DEPARTMENT OF AGING
AND DISABILITY SERVICES
CHAPTER 9. INTELLECTUAL DISABILITY
SERVICES--MEDICAID STATE OPERATING
AGENCY RESPONSIBILITIES
SUBCHAPTER D. HOME AND COMMUNITY-
BASED SERVICES (HCS) PROGRAM AND
COMMUNITY FIRST CHOICE (CFC)
40 TAC §§9.153, 9.171 - 9.175, 9.177 - 9.180, 9.182, 9.183,
9.187, 9.188
As required by Texas Government Code §531.0202(b), the
Department of Aging and Disability Services (DADS) was
abolished effective September 1, 2017, after all its functions
were transferred to the Texas Health and Human Services
Commission (HHSC) in accordance with Texas Government
Code §531.0201 and §531.02011. Rules of the former DADS
are codifed in Title 40, Part 1, and will be repealed or admin-
istratively transferred to Title 26, Health and Human Services,
as appropriate. Until such action is taken, the rules in Texas
Administrative Code (TAC) Title 40, Part 1 govern functions
previously performed by DADS that have transferred to HHSC.
Texas Government Code §531.0055, requires the Executive
Commissioner of HHSC to adopt rules for the operation and
provision of services by the health and human services system,
including rules in 40 TAC Part 1. Therefore, the Executive
Commissioner of HHSC repeals in 40 TAC Part 1, Chapter 9,
Subchapter D, Home and Community-based Services (HCS)
Program and Community First Choice (CFC) §§9.153, 9.171 -
9.175, 9.177 - 9.180, 9.182, 9.183, 9.187, and 9.188.
The repeal of §§9.153, 9.171 - 9.175, 9.177 - 9.180, 9.182,
9.183, 9.187, and 9.188 is adopted without changes as pub-
lished in the February 17, 2023, issue of the Texas Register (48
TexReg 835). These rules will not be republished.
BACKGROUND AND JUSTIFICATION
The repeals are necessary to remove the rules in 40 TAC Part
1, Chapter 9, Subchapter D, and adopt new rules in 26 TAC Part
1, Chapter 565, Home and Community-based Services (HCS)
Program Certifcation Standards.
COMMENTS
The 31-day comment period ended March 20, 2023. During this
period, HHSC did not receive any comments regarding the re-
pealed rules.
STATUTORY AUTHORITY
The repeals are 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
Government Code §531.021, which provides HHSC with the
authority to administer federal funds and plan and direct the
Medicaid program in each agency that operates a portion of
the Medicaid program; and Texas Human Resources Code
§32.021, which provides that HHSC shall adopt necessary rules
for the proper and effcient operation of the Medicaid program.
The agency certifes that legal counsel has reviewed the adop-
tion and found it to be a valid exercise of the agency's legal au-
thority.
Filed with the Offce of the Secretary of State on June 1, 2023.
TRD-202302017
Karen Ray
Chief Counsel
Department of Aging and Disability Services
Effective date: June 21, 2023
Proposal publication date: February 17, 2023
For further information, please call: (512) 438-3161
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