1. (a) The information in §355.102 of this title (relating to General Principles of Allowable and Unallowable Costs), §355.103 of this title (relating to Specifications for Allowable and Unallowable Costs), §355.104 of this title (relating to Revenues), and §355.105 of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures) applies to cost reports pertaining to providers' fiscal years ending in calendar year 1997 and subsequent years.
2. (b) Whenever the terms "Texas Department of Human Services" or "DHS" occur, they each mean the Texas Department of Human Services or its designee.

3. (c) The Texas Department of Human Services (DHS) reimburses providers for contracted client services through reimbursement amounts determined as described in this chapter and in reimbursement methodologies for each program. Non-Medicaid, statewide, uniform reimbursements and reimbursement ceilings are approved by the Texas Department of Human Services. Medicaid, statewide, uniform reimbursements, and reimbursement ceilings are approved by the Texas Health and Human Services Commission (HHSC). In Medicaid programs where reimbursements are contractor-specific, the HHSC approves the reimbursement parameter dollar amounts, e.g., ceilings, floors, or program reimbursement formula limits. In approving reimbursement amounts DHS or the HHSC takes into consideration staff recommendations based on the application of formulas and procedures described in this chapter and in reimbursement methodologies for each program. However, DHS or the HHSC may adjust staff recommendations when DHS or the HHSC deems such adjustments are warranted by particular circumstances likely to affect achievement of program objectives, including economic conditions and budgetary considerations. Medicaid reimbursement methodology rules are developed and recommended for approval to the HHSC. The HHSC has oversight authority with respect to the state's Medicaid rules.

   1. (1) Reimbursement amounts will be determined coincident with the state's biennium based upon odd-year reports.

   2. (2) Objective of cost determination process. The objective of the cost determination process is to define direct and indirect costs which are allowable and, therefore, may be considered for use in the overall reimbursement determination process. The cost determination process seeks to collect accurate financial and other statistical data which constitute the foundation upon which reimbursements are determined.

      1. (A) Cost-reporting. In order to ensure adequate financial and statistical information upon which to base reimbursement, DHS requires that each contracted provider submit a periodic cost report or supplemental report. It is the responsibility of the provider to submit accurate and complete information, in accordance with all pertinent DHS cost reporting rules and cost report instructions, on the cost report and any supplemental reports required by DHS.
      2. (B) Pro forma costing. When historical costs are unavailable, such as in the case of a new program, reimbursement may be based on a pro forma approach. This approach involves using historical costs of delivering similar services, where appropriate data are available, and estimating the basic types and costs of products and services necessary to deliver services meeting federal and state requirements.

   3. (3) Relationship between cost determination and reimbursement determination processes. The cost determination process seeks to evaluate individual cost items of providers to determine their allowability and to determine whether individual cost reports are of reasonable accuracy for potential use in reimbursement determination. The reimbursement determination process takes the evaluation of allowable costs one step further by comparing allowable costs across providers to identify those levels of cost, either for individual cost items or groups of cost items, which must be incurred by efficient and economic providers of services meeting all state and federal standards. Thus, all costs allowed in the cost determination process may not necessarily be used in the reimbursement determination process. The basic objective of the reimbursement methodologies employed by DHS is to facilitate and balance the broader objectives of the programs administered by the agency by:

      1. (A) promoting reasonable access for eligible clients to services that meet federal and state quality standards via contracting with an adequate number of qualified providers; and
      2. (B) expending taxpayer dollars in a reasonable and prudent manner such that eligible clients are served at the lowest cost to taxpayers consistent with state and federal laws, standards and regulations, and with program objectives.

Source Note:The provisions of this §355.101 adopted to be effective September 1, 1996, 21 TexReg 7866; duplicated effective September 1, 1997, as published in the Texas Register October 17, 1997, 22 TexReg 10311; amended to be effective September 27, 1999, 24 TexReg 7397; amended to be effective September 1, 2000, 25 TexReg 7629; amended to be effective December 1, 2001, 26 TexReg 9565.