1. (a) For cost reports pertaining to providers' fiscal years ending in calendar year 1997 and subsequent years, providers who were required to comply with the provisions of this subchapter must comply with the provisions of Subchapter A of this chapter (relating to Cost Determination Process).

2. (b) For cost reports pertaining to providers' fiscal years ending in calendar year 1994, 1995, or 1996, providers who were required to comply with the provisions of this chapter will be governed by §§355.101 of this title (relating to Introduction), 355.106 of this title (relating to Basic Objectives and Criteria for Audit and Desk Review of Cost Reports), 355.107 of this title (relating to Notification of Exclusions and Adjustments), 355.108 of this title (relating to Determination of Inflation Indices), 355.109 of this title (relating to Adjusting Reimbursement When New Legislation, Regulations, or Economic Factors Affect Costs), 355.110 of this title (relating to Informal Reviews and Formal Appeals), and 355.111 of this title (relating to Administrative Contract Violations), and the following.

   1. (1) Amended cost report due dates. All contracted providers must submit cost reports to the Texas Department of Human Services (DHS) in a manner prescribed by DHS. DHS accepts amended cost reports submitted on the request of the provider until 180 days after the due date of the cost report or 15 working days prior to the public hearing on proposed reimbursements, whichever occurs first. Since this is a prospective reimbursement system without a provision for reconciliation, amended cost reports filed after this date have no effect on the reimbursement and are not accepted. Amended cost report information that cannot be verified by ten working days prior to the hearing will not be used in reimbursement determination.
   2. (2) Out-of-state audits. DHS conducts either desk reviews and/or field audits of the cost reports that it receives. Although the number of field audits performed each year may vary, DHS seeks to maximize the number of field audited cost reports available for use in its cost projections. Whenever possible, the records necessary to verify information submitted to DHS on Medicaid cost reports, including related-party transactions and other business activities engaged in by the provider, must be accessible to DHS audit staff in the State of Texas. When records are not available to DHS audit staff within the state, the provider must pay the actual costs for DHS staff to travel and review the records out of state. If a provider fails to reimburse DHS for these costs within 60 days of the request for payment, DHS may place a hold on the vendor payments until the costs are paid in full. Providers may be notified about exclusions and adjustments to reported expenses made during desk reviews and field audits.
   3. (3) Exclusions and adjustments. In addition to the exclusions and adjustments made during desk reviews and field audits, DHS may exclude or adjust certain expenses in the cost report data base in order to base reimbursements on the reasonable and necessary costs that an economical and efficient provider must incur. These adjustments include, but are not necessarily limited to, revenue offsets, fixed-capital-asset cost limits, percentile cap limits on administration and facility costs, occupancy adjustments and cost projections.
   4. (4) Public hearings. DHS must hold a public hearing before the Texas Board of Human Services determines reimbursement. The purpose of the hearing is to give interested persons an opportunity to comment on DHS's proposed reimbursements. DHS must provide notice of the hearing to the public and, at least ten working days before the hearing takes place, must make material pertinent to the proposed reimbursements available to the public. At a minimum, this material must include DHS's proposed reimbursements, the inflation factors used to determine them, and the impact on reimbursements of the major cost limits applied under the provisions of paragraph (3) of this subsection. DHS must furnish this material to anyone who requests it from the DHS division responsible for reimbursement recommendations. After the hearing, DHS must provide the Texas Board of Human Services with a written summary of the comments made during the public hearing.
   5. (5) Pro-forma analysis. If, in the professional opinion of DHS staff, an insufficient number of accurate, full-year cost reports is submitted or there is information that causes doubt about the accuracy or applicability of the available data, the Texas Board of Human Services may promulgate payment reimbursements based on a pro-forma analysis by DHS staff. A pro-forma analysis is defined as an item by item calculation of the essential expenses necessary for an economic and efficient provider to operate. The analysis may involve assumptions about the salary of the administrator, staff salaries, employee benefits and payroll taxes, facility depreciation, mortgage interest, dietary expenses, and other facility and administration expenses. To determine the cost per unit of service, DHS adds all the pro-forma expenses and divides the total by the estimated number of units of service that a fully operational provider is likely to provide. The pro-forma analysis must be based on all the information available, including valid cost report data and survey data, in a way that ensures that the resultant reimbursements are sufficient to support an economic and efficient provider. When DHS staff determine that sufficient and reliable cost report data have become available, the Texas Board of Human Services may replace pro-forma reimbursements with cost report based reimbursements.

Source Note:The provisions of this §355.201 adopted to be effective September 1, 1996, 21 TexReg 7887; duplicated effective September 1, 1997, as published in the Texas Register October 17, 1997, 22 TexReg 10311.