1. (a) The Texas Department of Mental Health and Mental Retardation (TDMHMR) or its successor agency reimburses qualified authorities for service coordination provided to Medicaid-eligible individuals who are eligible for service coordination and are enrolled in the MR program in accordance with program rules. HHSC determines reimbursement for MR service coordination. Reimbursement is:

   1. (1) uniform statewide;
   2. (2) prospective; and
   3. (3) cost related with a year-end settlement.
2. (b) Service coordination rates are set for services provided to individuals with mental retardation or a related condition as defined in program rules established by TDMHMR or its successor agency.
3. (c) Local authority qualifications. 42 U.S.C. §1396n(g) is invoked to limit the provision of service coordination to the state mental retardation authorities, TDMHMR or its successor agency, or its designated local authorities authorized under §534.054 of the Texas Health and Safety Code, which offer a service delivery system of required services as outlined in §534.053 of the Texas Health and Safety Code.
4. (d) Rules and procedures. TDMHMR or its successor agency has implemented rules and procedures to ensure that service coordination is provided by persons who meet the requirements specified by TDMHMR or its successor agency and is provided in compliance with federal and state laws, rules, and regulations.

5. (e) Reimbursement methodology. HHSC determines reimbursement according to §355.101 of this title (relating to Introduction). HHSC may also adjust reimbursement if new legislation, regulations, or economic factors effect costs, as described in §355.109 of this title (relating to Adjusting Reimbursement When New Legislation, Regulations, or Economic Factors Affect Costs).

   1. (1) Local authorities will be reimbursed a statewide rate consisting of a modeled rate plus a statewide weighted average associated service add-on.

      1. (A) The modeled rate is based on cost calculations that include a statewide weighted average hourly wage for persons who provide service coordination as 100 percent of their job responsibilities, a predetermined caseload size, a statewide weighted average supervisory wage rate and span of control, and a statewide weighted average benefits factor.
      2. (B) The associated service add-on includes clerical and support costs, travel and training costs, and other allowable operating costs (e.g., rent, utilities, office supplies, administration, and depreciation) necessary to provide service coordination.

   2. (2) At the end of each reimbursement period HHSC will compare the difference between the statewide rate and each Local authority's service coordination costs as submitted on its cost report in accordance with subsection (g) of this section.

      1. (A) If a Local authority's costs are less than 95 percent of the statewide rate, the Local authority will pay TDMHMR or its successor agency the difference between that Local authority's costs and 95 percent of the statewide rate. The Local authority will be notified of the amount due to TDMHMR by certified mail.

         1. (i) The Local authority will have 30 days to make payment. If payment is not received from the local authority within 30 days of the date that the notice was received, as specified on the certified mail receipt, HHSC will notify TDMHMR or its successor agency to place the local authority on vendor hold.
         2. (ii) A local authority that has been placed on vendor hold may request an administrative hearing in accordance with §355.110 of this title (relating to Informal Reviews and Formal Appeals).
      2. (B) If a Local authority's costs exceed the statewide rate, TDMHMR or its successor agency will reimburse the local authority its costs up to 125 percent of the statewide rate. TDMHMR or its successor agency will notify the Local authority by certified mail within 30 days of the date that the notice of the amount due to the local authority was received, as specified on the certified mail receipt.

   3. (3) At such time as HHSC determines that cost data collected as described in subsection (g) of this section are reliable, statewide reimbursement rates will be developed based on the cost data submitted by Local authorities in the following manner:

      1. (A) Total allowable costs for each provider for each rate will be determined from analyzing the allowable historical costs reported on the cost report.
      2. (B) Each provider's total allowable costs are projected from the historical cost reporting period to the prospective reimbursement period using inflation factors according to §355.108 of this title (relating to Determination of Inflation Indices) for each covered contact.
      3. (C) Each provider's projected cost per unit of service is calculated. The mean provider cost per contact is calculated, and the statistical outliers (those providers whose cost per contact exceeds plus or minus (+/-) two standard deviations from the mean provider cost per contact) are removed. After removal of the statistical outliers, the mean cost per contact is calculated. This mean cost per contact becomes the recommended cost per contact. Following each annual reimbursement period, allowable costs will be compared to reimbursement and any resulting monetary reconciliation will be made in accordance with paragraph (2) of this subsection.

6. (f) Reimbursable unit of service.

   1. (1) The unit of service upon which reimbursement is made is a face-to-face contact with a Medicaid-eligible individual eligible for MR service coordination in accordance with program rules established by TDMHMR or its successor agency.
   2. (2) Reimbursement is limited to one unit of service per Medicaid-eligible individual per month.

7. (g) Reporting of costs. HHSC or its designee collects from Local authorities statistical and cost data. The statistical data include, but are not limited to, the total number of individuals receiving service coordination, and the number of Medicaid-eligible individuals receiving service coordination. The cost data include direct costs, programmatic indirect costs, and general and administrative costs including salaries, benefits, and non-labor costs.

   1. (1) Cost reports. Each Local authority must submit financial and statistical information in a cost report or survey format designated by HHSC or its designee. The cost report will capture the expenses of the Local authority including salaries and benefits, administration, building and equipment, utilities, supplies, travel, and indirect overhead costs related to the provision of service coordination. Only allowable cost information is used to compile the cost base. Each Local authority must follow the guidelines in determining whether a cost is allowable or unallowable as specified in §355.102 & §355.103 of this title (relating to General Principles of Allowable and Unallowable Costs and Specifications for Allowable and Unallowable Costs). Local authorities must follow the cost-reporting guidelines as specified in §355.105 of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures). Revenues must be reported on the cost report in accordance with §355.104 of this title (relating to Revenues).

      1. (A) Accounting requirements. All information submitted on the cost reports must be based upon the accrual method of accounting unless the governmental entity operates on a cash or modified accrual basis. The Local authority must complete the cost report according to the prescribed statement of allowable and unallowable costs in accordance with §355.102 & §355.103 of this title (relating to General Principles of Allowable and Unallowable Costs and Specifications for Allowable and Unallowable Costs). Cost reporting should be consistent with generally accepted accounting principles (GAAP) in this subchapter. In cases in which cost reporting rules conflict with GAAP, Internal Revenue Service, or other authorities, the cost reporting rules take precedence.
      2. (B) Reporting period. The Local authority must prepare the cost report according to §355.105 of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures.
   2. (2) Exclusions or adjustments. Local authorities must exclude unallowable costs from the cost report. HHSC or its designee excludes from the cost reimbursement base any unallowable costs included in the cost report and makes adjustments to expenses reported by Local authorities to ensure that the cost reimbursement base reflects costs that are consistent with efficiency, economy, and quality care, are necessary for the provision of service coordination services, and are consistent with federal and state Medicaid regulations as specified in §355.102 & §355.103 of this title (relating to General Principles of Allowable and Unallowable Costs and Specifications for Allowable and Unallowable Costs). If there is doubt as to the accuracy of allowability of a significant part of the information reported, individual cost reports may be eliminated from the cost base.
   3. (3) Desk reviews. As specified in §355.106 of this title (relating to Basic Objectives and Criteria for Audit and Desk Review of Cost Reports), HHSC or its designee reviews such cost reports or surveys. Cost reports not completed according to instructions or rules will be corrected and resubmitted by the Local authority within the time frame prescribed by HHSC.

   4. (4) On-site audit of cost reports. HHSC or its designee performs a sufficient number of audits each year to ensure the fiscal integrity of the service coordination reimbursement. The number of on-site audits actually performed each year may vary.

      1. (A) HHSC or its designee notifies Local authorities of disallowances and adjustments to reported expenses made during desk reviews and on-site audits of cost reports according to §355.107 of this title (relating to Notification of Exclusions and Adjustments).
      2. (B) Reviews of cost report disallowances. A Local authority which disagrees with HHSC or its designee on cost report disallowances may request a review of the disallowances as specified in §355.110 of this title (relating to Informal Reviews and Formal Appeals).
   5. (5) Recordkeeping requirements. Each Local authority must maintain records according to the requirements specified in program rules established by TDMHMR or its successor agency and the provider agreement. The Local authority must ensure that the records are accurate and sufficiently detailed to support the financial and statistical information reported in the cost report. If a Local authority does not maintain records that support the financial and statistical information submitted on the cost report, the Local authority will be notified by certified mail that the local authority has 90 days to correct this recordkeeping. HHSC will notify TDMHMR or its successor agency to place the Local authority on vendor hold if the correction is not made within 90 days from the date the Local authority receives notification.
   6. (6) Access to records. The Local authority must allow HHSC access to any and all records necessary to verify information on the cost report.

8. (h) Billing and payment reviews. The provider must allow TDMHMR or its successor agency access to any and all records regarding service coordination.

   1. (1) TDMHMR or its successor agency will conduct periodic billing and payment reviews utilizing TDMHMR's or its successor agency Billing and Payment Review Protocol.
   2. (2) Recoupment will be taken according to the application of error calculations contained in TDMHMR's or its successor agency Billing and Payment Review Protocol.

Source Note:The provisions of this §355.746 adopted to be effective October 13, 2002, 27 TexReg 9308; amended to be effective August 31, 2004, 29 TexReg 8266.