1. (a) Prospective payment rates. The Texas Health and Human Services Commission (HHSC) sets payment rates to be paid prospectively to Home and Community-based Services (HCS) and Texas Home Living (TxHmL) providers.

2. (b) Levels of need.

   1. (1) Variable rates. Rates vary by level of need (LON) for the following services:

      1. (A) HCS day habilitation (DH);
      2. (B) host home (HH)/companion care (CC);
      3. (C) residential support services (RSS);
      4. (D) supervised living (SL); and

      5. (E) effective upon service claims being made billable through the Texas Medicaid & Healthcare Partnership (TMHP):

         1. (i) HCS in-home DH;
         2. (ii) HCS out-of-home DH;
         3. (iii) HCS out-of-home respite (HCS OHR) in a DH facility;
         4. (iv) HCS OHR in a setting where SL or RSS is provided; and
         5. (v) HCS OHR in a setting where HH/CC is provided.

   2. (2) Non-variable rates. Rates do not vary by LON for the following services:

      1. (A) audiology;
      2. (B) behavioral support;
      3. (C) cognitive rehabilitative therapy (CRT);
      4. (D) community support services (CSS);
      5. (E) dietary;
      6. (F) employment assistance (EA);
      7. (G) high medical needs licensed vocational nurse (LVN);
      8. (H) high medical needs registered nurse (RN);
      9. (I) high medical needs support;
      10. (J) LVN;
      11. (K) occupational therapy (OT);
      12. (L) physical therapy (PT);
      13. (M) RN;
      14. (N) respite;
      15. (O) social work;
      16. (P) speech therapy;
      17. (Q) supported employment (SE);
      18. (R) supported home living (SHL); and

      19. (S) effective upon service claims being made billable through TMHP:

          1. (i) HCS in-home respite (IHR);
          2. (ii) HCS OHR in a camp;
          3. (iii) HCS OHR in a respite facility;
          4. (iv) TxHmL in-home DH;
          5. (v) TxHmL out-of-home DH;
          6. (vi) TxHmL OHR in a DH facility;
          7. (vii) TxHmL OHR in a setting where HH/CC is provided;
          8. (viii) TxHmL OHR in a setting where SL or RSS is provided; and
          9. (ix) HCS and TxHmL OHR in a setting that is not listed above.

3. (c) Recommended rates.

   1. (1) Rate models. The recommended modeled rates are determined for each HCS and TxHmL service listed in subsection (b)(1) - (2) of this section by type and, for services listed in subsection (b)(1) of this section, by LON to include the following cost components: direct care worker staffing costs (wages, benefits, modeled staffing ratios for direct care workers, direct care trainers and job coaches), other direct service staffing costs (wages for direct care supervisors, benefits, modeled staffing ratios); facility costs (for respite care only); room and board costs for overnight, OHR care; administration and operation costs; and professional consultation and program support costs. The determination of all components except for the direct care worker staffing costs component is based on cost reports submitted by HCS and TxHmL providers in accordance with §355.722 of this subchapter (relating to Reporting Costs by Home and Community-based Services (HCS) and Texas Home Living (TxHmL) Providers). The determination of the direct care worker staffing costs component is calculated as specified in §355.112 of this chapter (relating to Attendant Compensation Rate Enhancement).

   2. (2) SHL and CSS.

      1. (A) Effective July 1, 2017, the recommended modeled rates for HCS SHL and TxHmL CSS include the following cost components: direct care worker staffing costs, and administration and operation costs. The modeled rates for these two services do not include a cost component for other direct service staffing costs. The determination of the administration and operation cost component is calculated as specified in subsection (d)(10) of this section. The determination of the direct care worker staffing costs component is calculated as specified in §355.112 of this chapter.
      2. (B) Effective September 1, 2019, the recommended modeled rate for HCS SHL is calculated as specified in subsection (c)(1) and subsection (d) of this section.
      3. (C) Effective September 1, 2019, the recommended modeled rate for TxHmL CSS is equal to the rate that was in effect for these services on August 31, 2019.
   3. (3) High medical needs support. Payment rates for high medical needs support are developed based on payment rates determined for other programs that provide similar services. If payment rates are not available from other programs that provide similar services, payment rates are determined using a pro forma analysis in accordance with §355.105(h) of this chapter (relating to General Reporting and Documentation Requirements, Methods, and Procedures).

4. (d) Administration and operation cost component. The administration and operation cost component included in the recommended rates described in subsection (c) of this section for each HCS and TxHmL service type is determined as follows.

   1. (1) Step 1. Determine total projected administration and operation costs and projected units of service by service type using cost reports submitted by HCS and TxHmL providers in accordance with §355.722 of this subchapter.

   2. (2) Step 2. Determine the HH/CC coordinator component of the HH/CC rate as follows:

      1. (A) For fiscal years 2010 through 2013, the HH/CC coordinator component of the HH/CC rate was modeled using the weighted average HH/CC coordinator wage as reported on the most recently available and reliable audited HCS cost report plus 10.25 percent for payroll taxes and benefits inflated to the rate period and a consumer to HH/CC coordinator ratio of 1:15.
      2. (B) For fiscal years 2012 and 2013, the HH/CC coordinator component of the HH/CC rate was remodeled using a consumer to HH/CC coordinator ratio of 1:20.
      3. (C) For fiscal years 2014 and thereafter, this component is determined by summing total reported HH/CC coordinator wages and allocated payroll taxes and benefits from the most recently available audited HCS cost report, inflating those costs to the rate period, and dividing the resulting product by the total number of host home units of service reported on that cost report.
   3. (3) Step 3. Determine total HH/CC coordinator dollars as follows. Multiply the HH/CC coordinator component of the HH/CC rate from paragraph (2) of this subsection by the total number of HH/CC units of service reported on the most recently available, reliable audited HCS cost report database.
   4. (4) Step 4. Determine total projected administration and operation costs after offsetting total HH/CC coordinator dollars as follows. Subtract the total HH/CC coordinator dollars from paragraph (3) of this subsection from the total projected administration and operation costs from paragraph (1) of this subsection.

   5. (5) Step 5. Determine projected weighted units of service for each HCS and TxHmL service type as follows.

      1. (A) SL and RSS in HCS. Projected weighted units of service for SL and RSS equal projected SL and RSS units of service times a weight of 1.00.
      2. (B) DH in HCS and TxHmL. Projected weighted units of service for DH equal projected DH units of service times a weight of 0.25.
      3. (C) HH/CC in HCS. Projected weighted units of service for HH/CC equal projected HH/CC units of service times a weight of 0.50.
      4. (D) SHL in HCS, high medical needs support in HCS, and CSS in TxHmL. For each service, projected weighted units of service equal projected units of service times a weight of 0.30.
      5. (E) Respite in HCS and TxHmL. Projected weighted units of service for respite equal projected respite units of service times a weight of 0.20.
      6. (F) SE in HCS and TxHmL. Projected weighted units of service for SE equal projected units of service times a weight of 0.25.
      7. (G) Behavioral support in HCS and TxHmL. Projected weighted units of service for behavioral support equal projected behavioral support units of service times a weight of 0.18.
      8. (H) Audiology, CRT, OT, PT, and speech therapy in HCS and TxHmL. Projected weighted units of service for audiology, CRT, OT, PT, and speech therapy equal projected audiology, CRT, OT, PT, and speech therapy units of service times a weight of 0.18.
      9. (I) Social work in HCS. Projected weighted units of service for social work equal projected social work units of service times a weight of 0.18.
      10. (J) Nursing in HCS and TxHmL and high medical needs nursing in HCS. Projected weighted units of service for nursing and high medical needs nursing equal projected nursing and high medical needs nursing units of service times a weight of 0.25.
      11. (K) EA in HCS and TxHmL. Projected weighted units of service for EA equal projected EA units of service times a weight of 0.25.
      12. (L) Dietary in HCS and TxHmL. Projected weighted units of service for dietary equal projected dietary units of service times a weight of 0.18.
   6. (6) Step 6. Calculate total projected weighted units of service by summing the projected weighted units of service from paragraph (5)(A) - (L) of this subsection.
   7. (7) Step 7. Calculate the percent of total administration and operation costs to be allocated to the service type by dividing the projected weighted units for the service type from paragraph (5) of this subsection by the total projected weighted units of service from paragraph (6) of this subsection.
   8. (8) Step 8. Calculate the total administration and operation cost to be allocated to that service type by multiplying the percent of total administration and operation costs allocated to the service type from paragraph (7) of this subsection by the total administration and operation costs after offsetting total host home/companion care coordinator dollars from paragraph (4) of this subsection.
   9. (9) Step 9. Calculate the administration and operation cost component per unit of service for each HCS and TxHmL service type by dividing the total administration and operation cost to be allocated to that service type from paragraph (8) of this subsection by the projected units of service for that service type from paragraph (1) of this subsection.

   10. (10) Step 10. The final recommended administration and operation cost component per unit of service for each HCS and TxHmL service type is calculated as follows.

       1. (A) For the following services, multiply the administration and operation cost component from paragraph (9) of this subsection by 1.044:

          1. (i) CSS;
          2. (ii) EA;
          3. (iii) SE;
          4. (iv) SHL; and

          5. (v) effective upon service claims being made billable through TMHP:

             1. (I) in-home DH;
             2. (II) HCS OHR in a camp;
             3. (III) HCS OHR in a respite facility;
             4. (IV) HCS OHR in a setting where HH/CC is provided; and
             5. (V) HCS OHR in a setting that is not listed.

       2. (B) For the following services, multiply the administration and operation cost component from paragraph (9) of this subsection by 1.07:

          1. (i) RSS;
          2. (ii) SL; and

          3. (iii) effective upon service claims being made billable through TMHP:

             1. (I) out-of-home DH;
             2. (II) HCS OHR in a DH facility; and
             3. (III) HCS OHR in a setting where SL or RSS is provided.
   11. (11) Step 11. Effective July 1, 2017, the final recommended administration and operation cost component per unit of service for SHL in HCS, CSS in TxHmL, and high medical needs support in HCS is equal to the administrative and facility cost component of habilitation services in the Community Living Assistance and Support Services program as specified in §355.505 of this chapter (relating to Reimbursement Methodology for the Community Living Assistance and Support Services Waiver Program).
   12. (12) Step 12. Effective September 1, 2019, the recommended modeled rates for all TxHmL services except TxHmL CSS are equal to the rates that were in effect for these services on August 31, 2019. The recommended modeled rate for TxHmL CSS is calculated as specified in subsection (c)(2)(C) of this section.
5. (e) Refinement and adjustment. Refinement/adjustment of the cost components and model assumptions will be considered, as appropriate, by HHSC.

6. (f) Total Medicaid Spending Requirement. Effective for costs and revenues accrued on or after September 1, 2015, through August 31, 2017, all HCS and TxHmL providers are required to spend at least 90 percent of revenues received through the HCS and TxHmL waiver programs' Medicaid payment rates on Medicaid allowable costs under these programs.

   1. (1) Compliance with the total Medicaid spending requirement will be determined in the aggregate for all component codes controlled by the same entity across the HCS, TxHmL and Intermediate Care Facilities for Individuals with an Intellectual Disability or Related Conditions (ICF/IID) programs within the same cost report year.

   2. (2) Compliance with the spending requirement is determined on an annual basis using cost reports as described in Chapter 355, Subchapter A, of this title (relating to Cost Determination Process) and this subchapter.

      1. (A) When a provider changes ownership through a contract assignment, the prior owner must submit a report covering the period from the beginning of the provider's fiscal year to the effective date of the contract assignment as determined by HHSC or its designee. This report is used as the basis for determining compliance with the spending requirement.
      2. (B) Providers whose contracts are terminated voluntarily or involuntarily must submit a report covering the period from the beginning of the provider's fiscal year to the date recognized by HHSC or its designee as the contract termination date. This report is used as the basis for determining compliance with the spending requirement.
      3. (C) When part of a cost reporting period is subject to spending accountability and part is not subject to spending accountability, a provider may choose to have HHSC divide their costs for the entire cost reporting period between the part of the period subject to spending accountability and the part of the period not subject to spending accountability on a pro-rata basis (i.e., pro-rata allocation). For example, if six months of a twelve month cost reporting period are subject to spending accountability, HHSC would divide the provider's costs for the entire cost reporting period by two to determine the costs subject to spending accountability. Providers who do not choose to have HHSC divide their costs on a pro-rata basis must report their costs for the period subject to spending accountability separately from their costs for the period not subject to spending accountability (i.e., direct reporting). Once a provider indicates to HHSC their choice between a pro-rata allocation and direct reporting for a specific cost reporting period, that choice is irrevocable for that cost reporting period.
   3. (3) Allowable costs are those described in Chapter 355, Subchapter A, and this subchapter.
   4. (4) The total Medicaid revenue for an HCS or TxHmL provider participating in the attendant compensation rate enhancement is offset by any recoupment made under §355.112(s) of this title prior to determining compliance with the spending requirement.
   5. (5) Revenue and costs for the HCS and TxHmL waiver programs are combined for a component code for determination of compliance with the spending requirement.
   6. (6) Providers who fail to meet the 90 percent spending requirement are subject to a recoupment of the difference between the 90 percent spending requirement and their actual Medicaid allowable HCS and TxHmL costs. Recoupments for each rate period under this subsection are limited to the difference between the provider's Medicaid revenues for services provided at the rates subject to spending accountability and what the provider's Medicaid revenues would have been for services provided at the Medicaid rates in effect on August 31, 2015.
   7. (7) The contracted provider, owner, or legal entity which received the Medicaid payment is responsible for the repayment of the recoupment amount. Failure to repay the amount due or submit an acceptable payment plan within 60 days of notification results in placement of a vendor hold on all HHSC and Texas Department of Aging and Disability Services contracts controlled by the responsible entity.
   8. (8) If HHSC, or its designee, is unable to recoup owed funds using an automated system, providers are required to repay some or all of the funds to be recouped through a check, money order or other non-automated method. Providers are required to submit the required repayment amount within 60 days of notification.
   9. (9) Prior to each rate period through August 31, 2017, providers will be given the option of receiving the Medicaid rates adopted by HHSC for the rate period and the Medicaid rates that were in effect on August 31, 2015. Providers who choose to receive the Medicaid rates that were in effect on August 31, 2015, will not be subject to the spending accountability requirements described in this subsection.
   10. (10) For rate periods beginning on or after September 1, 2017, the Total Medicaid Spending Requirement described in this subsection will no longer apply. Additionally, providers who chose to receive the Medicaid rates that were in effect on August 31, 2015, will receive the rates that were adopted effective September 1, 2015.

Source Note:The provisions of this §355.723 adopted to be effective March 25, 1997, 22 TexReg 2772; transferred effective September 1, 1997, as published in the Texas Register December 26, 1997, 22 TexReg 12748; amended to be effective April 5, 1998, 23 TexReg 3255; amended to be effective March 1, 2000, 25 TexReg 1592; amended to be effective March 1, 2001, 26 TexReg 1696; amended to be effective September 1, 2007, 32 TexReg 5341; amended to be effective September 20, 2009, 34 TexReg 6317;amended to be effective September 1, 2010, 35 TexReg 5030; amended to be effective June 20, 2011, 36 TexReg 3709; amended to be effective September 1, 2011, 36 TexReg 5331; amended to be effective April 1, 2014, 39 TexReg 2062; amended to be effective September 1, 2015, 40 TexReg 5297; amended to be effective August 1, 2017, 42 TexReg 3359; amended to be effective March 1, 2018, 43 TexReg 339; amended to be effective September 2, 2019, 44 TexReg 4691; amended to be effective January 10, 2021, 46 TexReg 299.