1. (a) General information.

   1. (1) The Texas Health and Human Services Commission (HHSC) will reimburse qualified rehabilitative services providers for rehabilitative services provided to Medicaid-eligible persons with mental illness.
   2. (2) The HHSC establishes the reimbursement rate. The HHSC sets reimbursement rates that reflect cost-effective operations and are within State appropriation constraints.

2. (b) Definitions.

   1. (1) Interim rate--Rate paid to a rehabilitative services provider based on cost reports prior to settle-up conducted in accordance with subsection (d)(4) of this section.

   2. (2) Service type--Types of Medicaid reimbursable rehabilitative services as specified in program rules for the following:

      1. (A) Day programs for acute needs--adult;
      2. (B) Crisis intervention services--individual-child/adolescent and adult;
      3. (C) Medication training and support--individual-child/adolescent and adult;
      4. (D) Medication training and support--group-adult;
      5. (E) Medication training and support--group-child/adolescent;
      6. (F) Psychosocial rehabilitative services--individual-adult;
      7. (G) Psychosocial rehabilitative services--group-adult;
      8. (H) Rehabilitative counseling and psychotherapy--individual-adult;
      9. (I) Rehabilitative counseling and psychotherapy--group-adult;
      10. (J) Skills training and development--individual-child/adolescent and adult; and
      11. (K) Skills training and development--group-adult.

   3. (3) Unit of service--The amount of time an individual, eligible for Medicaid rehabilitative services or non-Medicaid rehabilitative services (or parent or guardian of the person of an eligible minor), is engaged in face-to-face contact with a person described in program rules established by TDMHMR or its successor agency. The units of service are as follows:

      1. (A) Day programs for acute needs--45-60 continuous minutes;
      2. (B) Crisis intervention services--15 continuous minutes;
      3. (C) Medication training and support--15 continuous minutes;
      4. (D) Psychosocial rehabilitative services--15 continuous minutes;
      5. (E) Rehabilitative counseling and psychotherapy--15 continuous minutes; and
      6. (F) Skills training and development--15 continuous minutes.

3. (c) Reporting of Costs.

   1. (1) Cost reporting. Rehabilitative services providers must submit information quarterly, unless otherwise specified, on a cost report formatted according to HHSC's specifications. Rehabilitative services providers must complete the cost report according to §§355.101, 355.102, 355.103, 355.104, and 355.105 of this title (relating to Introduction, General Principles of Allowable and Unallowable Costs, Specifications for Allowable and Unallowable Costs, Revenues, and General Reporting and Documentation Requirements, Methods, and Procedures).
   2. (2) Reporting period and due date. Rehabilitative services providers must prepare the cost report to reflect rehabilitative services provided during the designated cost report-reporting period. The cost reports must be submitted to the HHSC no later than 45 days following the end of the designated reporting period unless otherwise specified by the HHSC.
   3. (3) Extension of the due date. The HHSC may grant extensions of due dates for good cause. A good cause is one that the rehabilitative services provider could not reasonable be expected to control. Rehabilitative services providers must submit request for extensions in writing. Requests for extensions must be received by HHSC prior to the cost report due date. HHSC will respond to requests within 15 days of receipt.
   4. (4) Failure to file an acceptable cost report. If a rehabilitative services provider fails to file a cost report according to all applicable rules and instructions, HHSC will notify TDMHMR or its successor agency to place the rehabilitative services provider on vendor hold until the rehabilitative services provider submits an acceptable cost report.
   5. (5) Allocation method. If allocations of cost are necessary, rehabilitative services providers must use and be able to document reasonable methods of allocation. HHSC adjusts allocated costs if HHSC considers the allocation method to be unreasonable. The rehabilitative services provider must retain work papers supporting allocations for a period of three years or until all audit exceptions are resolved (whichever is longer).
   6. (6) Cost report certification. Rehabilitative services providers must certify the accuracy of cost reports submitted to HHSC in the format specified by HHSC. Rehabilitative services providers may be liable for civil and/or criminal penalties if they misrepresent or falsify information.
   7. (7) Cost data supplements. HHSC may require additional financial and statistical information other than the information contained on the cost report.
   8. (8) Allowable and unallowable costs. Cost reports may only include costs that meet the requirements as specified in §355.102 and §355.103 of this title (relating to General Principles of Allowable and Unallowable Costs and Specifications for Allowable and Unallowable Costs).
   9. (9) Review of cost reports. HHSC reviews each cost report to ensure that financial and statistical information submitted conforms to all applicable rules and instructions. The review of the cost report includes a desk review. HHSC reviews all cost reports according to the criteria specified in §355.106 of this title (relating to Basic Objectives and Criteria for Audit and Desk Review of Cost Reports). If a rehabilitative services provider fails to complete the cost report according to instructions or rules, HHSC returns the cost report to the rehabilitative services provider for proper completion. HHSC may require information other than that contained in the cost report to substantiate reported information. Providers will be notified of the results of a desk review or a field audit in accordance with §355.107 of this title (relating to Notification of Exclusions and Adjustments).
   10. (10) On-site audits. HHSC may perform on-site audits on all rehabilitative services providers that participate in the Medicaid program for rehabilitative services. HHSC determines the frequency and nature of such audits but ensures that they are not less than that required by federal regulations related to the administration of the program.
   11. (11) Notification of exclusions and adjustments. HHSC notifies rehabilitative services providers of exclusions and adjustments to reported expenses made during desk reviews and on-site audits of cost reports.
   12. (12) Reviews and administrative hearings. Rehabilitative services providers may request an informal review and, if necessary, an administrative hearing to dispute the action taken by HHSC under §355.110 of this title (relating to Informal Reviews and Formal Appeals).
   13. (13) Access to records. Each rehabilitative services provider must allow access to all records necessary to verify cost report information submitted to HHSC. Such records include those pertaining to related-party transactions and other business activities engaged in by the rehabilitative services provider. If a rehabilitative services provider does not allow inspection of pertinent records within 14 days following written notice HHSC will notify TDMHMR or its successor agency to place the rehabilitative services provider on vendor hold until access to the records is allowed. If the rehabilitative services provider continues to deny access to records, TDMHMR or its successor agency may terminate the rehabilitative services provider agreement with the rehabilitative services provider.
   14. (14) Record keeping requirements. Rehabilitative services providers must maintain service delivery records and eligibility determination for a period of five years or until any audit exceptions are resolved (whichever is later). Rehabilitative services providers must ensure that records are accurate and sufficiently detailed to support the financial and statistical information contained in cost reports.
   15. (15) Failure to maintain adequate records. If a rehabilitative services provider fails to maintain adequate records to support the financial and statistical information reported in cost reports, HHSC allows 30 days for the rehabilitative services provider to bring record keeping into compliance. If a rehabilitative services provider fails to correct deficiencies within 30 days from the date of notification of the deficiency, HHSC will notify TDMHMR or its successor agency to terminate the rehabilitative services provider agreement with the rehabilitative services provider.

4. (d) Reimbursement determination. HHSC determines reimbursement according to §355.101 of this title (relating to Introduction). Rehabilitative services providers are reimbursed a uniform, statewide interim rate with a cost-related year-end settle-up. The HHSC determines reimbursement in the following manner:

   1. (1) Inclusions of certain reported expenses. Rehabilitative services providers must ensure that all allowable costs are included in the cost report.
   2. (2) Data collection. The HHSC collects several different kinds of data. These include the number of units of service that individuals receive and cost data, including direct costs, programmatic indirect costs, and general and administrative overhead costs. These costs include salaries, benefits, and other costs. Other costs include non-salary related costs such as building and equipment maintenance, repair, depreciation, amortization, and insurance expenses; employee travel and training expenses; utilities; and material and supply expenses.

   3. (3) Interim rate methodology. The interim rate is determined biennially for each service type based on cost reports.

      1. (A) The HHSC projects and adjusts reported costs from the historical reporting period to determine the interim rate for the prospective reimbursement period. Cost projections adjust the allowed historical costs based on significant changes in cost-related conditions anticipated to occur between the historical cost period and the prospective reimbursement period. Changes in cost-related conditions include, but are not limited to, inflation or deflation in wage or price, changes in program utilization and occupancy, modification of federal or state regulations and statutes, and implementation of federal or state court orders and settlement agreements. Costs are adjusted for the prospective reimbursement period by a general cost inflation index as specified in §355.108 of this title (relating to Determination of Inflation Indices).
      2. (B) For each settle-up service, each rehabilitative services provider's projected cost per unit of service is calculated. The mean rehabilitative services provider cost per unit of service is calculated, and the statistical outliers (those rehabilitative services providers whose unit costs exceed plus or minus (+/-) two standard deviations of the mean rehabilitative services provider cost) are removed. After removal of the statistical outliers, the mean cost per unit of service is calculated. This mean cost per unit of service becomes the recommended reimbursement per unit of service.

   4. (4) Settle-up process. At the end of each reimbursement period, the HHSC will compare the amount reimbursed at the interim rate for each settle-up service and the rehabilitative services provider's costs for each service, as submitted on its cost report in accordance with subsection (c) of this section.

      1. (A) Rehabilitative service provider's, whose costs are less than 95% of the amount reimbursed at the interim rate, will be required to pay to TDMHMR or its successor agency 100% of the difference between its allowable costs and 95% of the amount reimbursed at the interim rate for each settle-up service. TDMHMR or its successor agency will notify the rehabilitative services provider of the amount due by certified mail and the rehabilitative services provider will remit the repayment amount within 60 days of notification. TDMHMR or its successor agency will apply a vendor hold on Medicaid payments to a rehabilitative services provider for not making the payment to TDMHMR or its successor agency within 60 days of receiving notice.
      2. (B) If a rehabilitative services provider's costs exceed the amount reimbursed at the interim rate, TDMHMR or its successor agency will reimburse the rehabilitative services provider the difference between its allowable costs and the reimbursement at the interim rate up to 125% of the interim rate for each settle-up service. TDMHMR or its successor agency will notify the rehabilitative services provider of the amount owed to the provider via certified mail. TDMHMR or its successor agency will make payment within 30 days of the date the notice was received, as indicated by the certified mail receipt.
   5. (5) Adjustments to the reimbursement determination methodology. HHSC may adjust reimbursement if new legislation, regulations, or economic factors affect costs as described in §355.109 of this title (relating to Adjusting Reimbursement When New Legislation, Regulations, or Economic Factors Affect Costs).

Source Note:The provisions of this §355.781 adopted to be effective January 1, 1997, 21 TexReg 8933; duplicated effective September 1, 1997, as published in the Texas Register December 11, 1998, 23 TexReg 12660; amended to be effective November 14, 1999, 24 TexReg 9825; amended to be effective March 1, 2001, 26 TexReg 1696; amended to be effective October 4, 2001, 26 TexReg 7525; amended to be effective September 18, 2003, 28 TexReg 7975; amended to be effective August 31, 2004, 29 TexReg 8268.