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									                   TO:            Medical Care Advisory Committee

                   DATE:          February 9, 2012

                   FROM:          Don Mann, Health and Human Services Commission


Agenda Item No.: 15

SUBJECT: SSI Inpatient Hospital Particiaption

Amendment to: Title 1, Part 15, Chapter 354, Medicaid Health Services, Subchapter A,
Purchased Health Services, Division 6, Hospital Services, § 354.1077.

BACKGROUND:              Federal Requirement      Legislative Requirement       Other: HHSC
Initiative

The Texas Health and Human Services Commission (HHSC) proposes to amend §354.1077
within Title 1, Part 15, Chapter 354, Subchapter A, Division 6, Hospital Services.

The amendment is proposed to remove obsolete language in §354.1077(c) stating that hospitals
located in the Bexar, Dallas, El Paso, Harris, Lubbock, Nueces, Tarrant, or Travis service areas
may not participate in Texas Medicaid unless they agree to provisions in §355.8064 relating to
reimbursement adjustments for inpatient services provided to Supplemental Security Income
(SSI) and SSI-related clients. With the expansion of managed care statewide, to be implemented
on March 1, 2012, the provisions of §355.8064 will become obsolete. Therefore, §355.8064
was proposed for repeal in the January XX, 2012, issue of the Texas Register. The proposed
amendment to §354.1077 is a conforming change that will remove the obsolete reference to
§355.8064.

The provisions in §354.1077(c) and §355.8064, the reimbursement rule to which it refers, were
initially implemented as a cost savings initiative based on the 2006-07 General Appropriates Act
(Article II, Special Provisions, Section 49, S.B. 1, 79th Legislature, Regular Session 2005) (Act),
which directed HHSC to achieve savings for services provided to Medicaid aged, blind and
disabled clients and utilize cost-effective models to better manage the care of these clients in the
following service areas: Bexar, Dallas, El Paso, Harris, Lubbock, Nueces, Tarrant and Travis.
The reimbursement rule reduced Medicaid fee-for-service reimbursement for inpatient hospital
services provided to SSI and SSI-related clients to hospitals in the eight urban service areas
listed above by 8 percent to achieve savings required in the Act.

Currently, SSI and SSI-related clients in the eight service areas are served through STAR+PLUS,
a partially capitated managed care program. Inpatient hospital services are carved out of
STAR+PLUS. With the planned Medicaid managed care expansion on March 1, 2012, HHSC
will no longer continue to carve out inpatient hospital services in the managed care service areas.
With inpatient services no longer carved out of managed care, the original savings achieved
through the 8 percent reduction to Medicaid fee-for-service payments for inpatient hospital
services will be achieved within the managed care model and the reduction will no longer be
applicable.

ISSUES AND ALTERNATIVES:
There are no alternatives to the proposed repeal.

STAKEHOLDER INVOLVEMENT:

HHSC Rate Analysis Division staff provided copies of the proposed repeal of §355.8064 to the
various hospital associations. The repeal of §355.8064 necessitates the deletion of text in
§354.1077, therefore, HHSC Contract Administration Oversight staff did not seek additional
comment from external stakeholders.

FISCAL IMPACT:

   None

RULE DEVELOPMENT SCHEDULE:

February 9, 2012      Present to the Medical Care Advisory Committee
February 22, 2012     Present to HHSC Council
May 2012              Publish proposed rule in Texas Register
August 2012           Publish adopted rule in Texas Register
August 2012           Effective date

REQUESTED ACTION:

   The MCAC recommends approval of the proposed rule for publication.
   The Council recommends approval of this rule.
   Information Only
TITLE 1                ADMINISTRATION
PART 15                TEXAS HEALTH AND HUMAN SERVICES COMMISSION
CHAPTER 354            MEDICAID HEALTH SERVICES
SUBCHAPTER A           PURCHASED HEALTH SERVICES
DIVISION 6             HOSPITAL SERVICES
RULE 354.1077          Provider Participation Requirements

                                    PROPOSED PREAMBLE

The Texas Health and Human Services Commission (HHSC) proposes to amend §354.1077,
concerning provider participation requirements.

Background and Justification

The amendment is proposed to remove obsolete language in §354.1077(c) stating that hospitals
located in the Bexar, Dallas, El Paso, Harris, Lubbock, Nueces, Tarrant, or Travis service areas
may not participate in Texas Medicaid unless they agree to provisions in §355.8064 relating to
reimbursement adjustments for inpatient services provided to Supplemental Security Income
(SSI) and SSI-related clients. With the expansion of managed care statewide to be implemented
on March 1, 2012, the provisions of §355.8064 will become obsolete. Therefore, §355.8064
was proposed for repeal in the January XX, 2012, issue of the Texas Register. The proposed
amendment to §354.1077 is a conforming change that will remove the obsolete reference to
§355.8064.

The provisions in Section 354.1077(c) and §355.8064, the reimbursement rule to which it refers,
were initially implemented as a cost savings initiative based on the 2006-2007 General
Appropriates Act (Article II, Special Provisions, Section 49, S.B. 1, 79th Legislature, Regular
Session 2005) (Act), which directed HHSC to achieve savings for services provided to Medicaid
aged, blind and disabled clients and utilize cost-effective models to better manage the care of
these clients in the following service areas: Bexar, Dallas, El Paso, Harris, Lubbock, Nueces,
Tarrant and Travis. The reimbursement rule reduced Medicaid fee-for-service reimbursement
for inpatient hospital services provided to SSI and SSI-related clients to hospitals in the eight
urban service areas listed above by 8 percent to achieve savings required in the Act.

Currently, SSI and SSI-related clients in the eight services areas are served through
STAR+PLUS, a partially capitated managed care program. Inpatient hospital services are carved
out of STAR+PLUS. With the planned Medicaid managed care expansion on March 1, 2012,
HHSC will no longer continue to carve out inpatient hospital services in the managed care
service areas. With inpatient services no longer carved out of managed care, the original savings
achieved through the 8 percent reduction to Medicaid fee-for-service payments for inpatient
hospital services will be achieved within the managed care model and the reduction will no
longer be applicable.

Section-by-Section Summary

The proposed amendment deletes subsection (c) to remove obsolete language.

Fiscal Note

Greta Rymal, Deputy Executive Commissioner for Financial Services, has determined that
during the first five years the rule will be in effect, there will be no fiscal impact to state
government as a result of amending this rule. The amended rule will not result in any fiscal
implications for local health and human services agencies or local governments.

Ms. Rymal anticipates there will not be an economic cost to persons who are required to comply
with the amended section. There is no anticipated negative impact on local employment.

Small and Micro-business Impact Analysis

Ms. Rymal has also determined that the proposed amendment will not have an adverse economic
effect on small businesses or micro-businesses. The change will remove an 8 percent reduction
applied to fee-for-service inpatient hospital services for the service areas listed above because the
services will be carved into managed care.

Public Benefit

Billy Millwee, Deputy Executive Commissioner for Health Services Operations, has determined
that for each year of the first five years after the amended rule is in effect, the anticipated public
benefit expected as a result of enforcing the amendment is that obsolete language will be
removed from the rule.

Regulatory Analysis

HHSC has determined that this proposal is not a “major environmental rule” as defined by
§2001.0225 of the Texas Government Code. A “major environmental rule” is defined to mean a
rule the specific intent of which is to protect the environment or reduce risk to human health
from environmental exposure and that may adversely affect, in a material way, the economy, a
sector of the economy, productivity, competition, jobs, the environment, or the pubic health and
safety of a state or a sector of the state. This proposal is not specifically intended to project the
environment or reduce risks to human health from environmental exposure.

Takings Impact Assessment

HHSC has determined that this proposal does not restrict or limit an owner’s right to his or her
property that would otherwise exist in the absence of government action and, therefore, does not
constitute a taking under §2007.043 of the Government Code.

Public Comment

Written comments on the proposal may be submitted to Rhonda Hites, Senior Policy Analyst,
Medicaid/CHIP Division, Health and Human Services Commission at 4900 N. Lamar Boulevard,
P.O. Box 13247, Austin, Texas 78711, Mail Code XXX; by fax to (512) 249-3707; or by e-mail
to rhonda.hites@hhsc.state.tx.us within 30 days of publication of this proposal in the Texas
Register.

Public Hearing

A public hearing is scheduled for date from time to time (central time) in the John H. Winters
Building, Public Hearing Room, 125-E, located at 701 W. 51st Street, Austin, Texas. Persons
requiring further information, special assistance, or accommodations should contact Leigh A.
Van Kirk at (512) 491-2813.
Statutory Authority

The amendment is proposed under the Texas Government Code §531.033, which providers the
Executive Commissioner of HHSC with broad rulemaking authority; Texas Human Resources
Code, §32.021, and the Texas Government Code, §531.021(a), which provide HHSC with the
authority to administer the federal medical assistance (Medicaid) program in Texas.

The amendment affects Texas Human Resources Code, Chapter 32, and the Texas Government
Code, Chapter 531. No other statutes, articles, or codes are affected by this proposal.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to
be within the agency’s legal authority to adopt.
TITLE I                ADMINSTRATION
PART 15                TEXAS HEALTH AND HUMAN SERVICES COMMISSION
CHAPTER 354            MEDICAID HEALTH SERVICES
SUBCHAPTER A           PURCHASED HEALTH SERVICES
DIVISION 6             HOSPITAL SERVICES
RULE §354.1077         Provider Participation Requirements

        (a) A hospital must comply with each of the following requirements to qualify for
participation as a hospital in the Texas Medical Assistance (Medicaid) Program. A hospital must:

               (1) be licensed by the Department of State Health Services (department) as a
general or special hospital, unless exempt from licensure by the appropriate licensing authority.
This requirement does not apply to military hospitals providing inpatient emergency hospital
services;

               (2) be enrolled and participating in the Medicare Program as a hospital;

                (3) sign a written provider agreement with the department or its designee to
participate in the Medicaid program. The provider agreement requires the hospital to comply
with the terms of the agreement and all requirements of the Medicaid program, including
regulations, rules, handbooks, standards, and guidelines published by the department or its
designee; and

               (4) comply with the utilization review plan approved by the department or its
designee.

        (b) Effective December 1, 1991, the hospital must maintain policies and procedures
regarding the following policies with respect to all adult individuals receiving inpatient services
provided by the hospital:
                (1) provide all adult individuals the following information regarding advance
directives at the time of the individual's admission as an inpatient:

                        (A) the individual's rights under Texas law, whether statutory or as
recognized by the courts of the state, to make decisions concerning medical care, including the
right to accept or refuse medical or surgical treatment and the right to formulate advance
directives (directive to physicians/living will or durable power of attorney for health care); and

                     (B) the hospital's policies respecting the implementation of such rights;
              (2) document in the individual's medical record whether or not the individual has
executed an advance directive;

               (3) not condition the provision of care or otherwise discriminate against an
individual based on whether or not the individual has executed an advance directive;

               (4) ensure compliance with the requirements of Texas law, whether statutory or as
recognized by the courts of Texas, respecting advance directives at facilities of the provider or
organization; and

               (5) provide for education for staff and the community on issues concerning
advance directives.
        [(c) Notwithstanding subsections (a) and (b) of this section, effective September 1, 2006,
a hospital in the Bexar, Dallas, El Paso, Harris, Lubbock, Nueces, Tarrant or Travis Service
Areas will not be permitted to participate in the Texas Medical Assistance (Medicaid) Program
unless the hospital agrees in writing to comply with the provisions of §355.8064 of this title
(relating to Reimbursement Adjustment for Hospitals Providing Inpatient Services to SSI and
SSI-Related Clients).]

								
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