1. (a) The Resource Utilization Group (RUG-III) 34-group classification system has seven major classification groups. The groups represent the recipient's relative direct care resource requirements.
2. (b) The Activities of Daily Living (ADL) score is based on the recipient's care needs that are provided by the nursing facility staff. The ADL score is used to determine a recipient's placement in a RUG-III category and is based on the recipient's care needs provided by the nursing facility staff. The score is incorporated into acuity measurements established under the RUG-III recipient classification methodology. The clinical record must support items claimed for Medicaid reimbursement on the Minimum Data Set (MDS).
3. (c) The state-specific Long-Term Care Medicaid Information Section is a part of the MDS assessment Resident Assessment Instrument (RAI) in Texas and must be completed for Medicaid reimbursement. The Long-Term Care Medicaid Information Section must include the last name and license number of the registered nurse (RN) assessment coordinator.

4. (d) The Basic Tracking Form must include:

   1. (1) the signature and title of each licensed nurse or health care professional completing any section of the MDS assessment for Medicaid reimbursement; and
   2. (2) the section(s) and completion date(s) corresponding to the signature of the nurse or health care professional.
5. (e) Each individual signing the signature section on the Basic Tracking Form is certifying that the information entered on the MDS assessment is accurate. A facility that submits false or inaccurate information is subject to sanctions under Subchapter G of this chapter (relating to Administrative Actions and Sanctions).

6. (f) If the nursing facility recipient is a hospice recipient, the nursing facility must comply with the requirements of 40 TAC §19.1926 (relating to Medicaid Hospice Services) and maintain in the recipient's clinical record copies of the completed Texas Medicaid Hospice Program Recipient Election/Cancellation/Discharge Notice (Form 3071), and the DADS Medicaid/Medicare Hospice Program Physician Certification of Terminal Illness (Form 3074).

   1. (1) The nursing facility must acknowledge a recipient's admission to hospice services on the Special Treatments, Procedures, and Programs section when completing an MDS full, comprehensive, or quarterly assessment.
   2. (2) An MDS assessment indicating that a recipient has elected hospice services is not processed until the Texas Medicaid Hospice Program Recipient Election/Cancellation/Discharge Notice (Form 3071), and the DADS Medicaid/Medicare Hospice Program Physician Certification of Terminal Illness (Form 3074) are received by the Texas Medicaid Claims Administrator.
   3. (3) When a recipient is admitted to hospice and there has not been a significant change in condition, a significant change in status assessment does not have to be completed. The recipient's next scheduled assessment may be used.
7. (g) Each nurse's license number submitted on the MDS assessment, Long-Term Care Medicaid Information Section, is validated with the Texas Board of Nursing or as applicable as a nurse compact license with the licensing state. An MDS assessment is rejected for Medicaid reimbursement if an invalid or delinquent license number is submitted on the MDS assessment, Long-Term Care Medicaid Information Section.

8. (h) Nursing facility staff must complete the HHSC-approved MDS training in accordance with this subsection.

   1. (1) The nursing facility RN Assessment Coordinator must complete the HHSC-approved online MDS training course prior to completing an MDS assessment for Medicaid payment. All other staff completing the MDS assessment for Medicaid payment are encouraged to take the MDS Training prior to completing the MDS assessment.
   2. (2) The nursing facility RN Assessment Coordinator must repeat the MDS online training every two years. A certificate of completion is issued at the conclusion of the training.
   3. (3) If the nursing facility RN Assessment Coordinator does not complete the MDS training every two years as required by HHSC, the license number of the RN Assessment Coordinator is not accepted into the state database and the MDS assessment is rejected by the Medicaid claims administrator.

9. (i) An admission assessment, a quarterly assessment, significant change in status assessment, annual assessment, significant correction to a prior quarterly assessment, or a significant correction to a prior annual assessment establishes a RUG-III group.

   1. (1) A significant change in status assessment, which requires a comprehensive MDS with Resident Assessment Protocols, must be completed by the end of the 14th calendar day following determination that a significant change has occurred.
   2. (2) A significant change in status assessment resets the schedule for the next annual assessment.
10. (j) Permanent medical necessity is determined by DADS in accordance with 40 TAC §19.2403 (relating to Medical Necessity Determination).

11. (k) When correcting errors in an MDS assessment, the nursing facility staff must use the MDS Correction Policy in Chapter 5 of the Minimum Data Set, Resident Assessment Instrument User's Manual, published by CMS.

    1. (1) Documentation must be maintained in the clinical record to support the corrected MDS assessment form and be available for review by the OIG staff during MDS utilization reviews.
    2. (2) The Correction Request Form attestation of accuracy of signatures must contain the RN assessment coordinator's and Director of Nursing's signatures, and the date the correction was completed.
    3. (3) A correction to a RUG reclassification error identified during an on-site review is considered an assessment error as described in subsection (r)(2) of this section. This does not negate the facility's responsibility to make quality of care corrections pursuant to the CMS MDS Correction Policy referenced in this section.
12. (l) The MDS assessment establishes the rate(s) at which the Texas Medicaid program pays a nursing facility or hospice provider for the facility's hospice residents to support the care the nursing facility's residents receive and any information on the MDS RAI is considered part of each corresponding claim for Medicaid reimbursement.

13. (m) Prior to entering a nursing facility for review, the OIG identifies a population of paid claims from which a sample is drawn.

    1. (1) The population is defined as claims associated with RUG classifications:

       1. (A) paid to the nursing facility, or hospice provider for the facility's hospice residents, for a specified time period; and
       2. (B) that meet certain criteria, such as dollar or claim volume, as determined by the OIG.
    2. (2) The OIG identifies the population of paid claims, along with their related RUG classifications and MDS assessment claim forms, from which a statistically valid random sample is drawn for review. The sample generated is a statistically valid random sample generated at a minimum confidence level of 90 percent and a maximum precision of ten percent. Related extrapolations are done at the lower limit of the applicable confidence interval.

14. (n) Utilization reviews are conducted in accordance with this subsection.

    1. (1) OIG nurse reviewers conduct unannounced on-site MDS utilization reviews of nursing facilities. The OIG selects nursing facilities for an on-site review by conducting a comprehensive annual review of all facilities, considering factors such as:

       1. (A) length of time since the last on-site review;
       2. (B) whether the nursing facility has ever been reviewed;
       3. (C) previous review results;
       4. (D) compliance history of the nursing facility;
       5. (E) nursing facilities with claims in high-dollar reimbursement categories such as rehabilitation, extensive services, and special care services;
       6. (F) variances in billing patterns;
       7. (G) data analytics indicating potential fraud, waste, or abuse; and
       8. (H) complaints and referrals.

    2. (2) The unannounced on-site review period begins when an OIG nurse reviewer presents an entrance letter to the facility, and ends when the OIG nurse reviewer informs the facility that the unannounced on-site review is completed. The unannounced on-site review period is subject to the provisions in subparagraphs (A) - (D) of this paragraph. The unannounced on-site review period does not include the exit conference, which is described in paragraph (3) of this subsection.

       1. (A) The nursing facility shall provide the OIG nurse reviewer initial access to clinical records and resources the OIG nurse reviewer determines are necessary to initiate the unannounced on-site review process within two hours of entrance to the nursing facility. Although the facility is not required to produce all records within two hours, documentation to be reviewed must continue to be made available to the OIG nurse reviewer during the unannounced on-site review period. If the facility indicates that necessary records or resources are located off-site or otherwise unavailable for immediate retrieval, and the facility can substantiate this fact, the OIG grants an extension to the two-hour initial production of records requirement.
       2. (B) The nursing facility, upon the OIG nurse reviewer request, must provide the signed and notarized Records Affidavit described in subsection (q)(4) of this section for each MDS assessment for which copies of clinical record documentation are provided to the nurse reviewer, attesting that the facility used its best efforts to obtain all relevant records, and that the documentation provided to the OIG nurse reviewer is as complete a compilation as was possible during the unannounced on-site review period. If the nursing facility refuses to provide the required Records Affidavit, the nursing facility must state the refusal in writing and attach the statement to the records provided to the nurse reviewer.
       3. (C) The nursing facility must ensure an assigned staff member knowledgeable of the MDS and clinical record is available at the facility to the OIG nurse reviewer during the entire unannounced on-site review.

       4. (D) When the OIG nurse reviewer identifies an item coded on the assessment that cannot be substantiated or does not accurately reflect the recipient's status during the applicable look back period, the OIG nurse reviewer notifies the assigned nursing facility staff and requests supporting documentation.

          1. (i) The nursing facility must provide the requested supporting documentation to validate the coded items to the OIG during the unannounced on-site review period and prior to the exit conference.

             1. (I) If the unannounced on-site review period is more than one day, the nursing facility must provide the requested information during regular business hours to the OIG reviewer by the end of the day the documentation was requested, provided, however, that the facility will be allowed a minimum of six business hours in which to provide requested information.
             2. (II) Nothing in this provision shall be construed to affect the timing of an exit conference or require the reviewer to incorporate an overnight stay near the facility. It shall be the facility's responsibility to submit the supplemental records to the reviewer's place of business. The reviewer's exit conference conclusions and error rates may change after reviewing the supplemental records. Any such changes are communicated to the provider within one business day.
             3. (III) If a facility cannot produce or make available the requested information, the facility must provide a written statement explaining why the information cannot be provided as requested. The submission of a written statement does not negate the OIG's authority to take enforcement action under Subchapter G of this chapter.
          2. (ii) Lack of documentation to validate the items claimed on the MDS as described in this paragraph may be the basis for an error and RUG III group reclassification.
          3. (iii) Lack of documentation, inconsistent documentation that misrepresents the patient's actual condition at the time it is documented, or altered documentation, which does not follow generally accepted error correction guidelines such as the MDS Correction Policy in Chapter 5 of the Minimum Data Set, may be the basis for an error and adjustment in the RUG-III group. The error or adjustment is made based on a review of the clinical record documentation provided for the look-back period of the MDS assessment.

    3. (3) The OIG nurse reviewer holds an exit conference with nursing facility staff.

       1. (A) The exit conference is held with the nursing facility staff at the conclusion of the unannounced on-site review period. Hospice staff is encouraged to attend to discuss the review findings of the MDS assessments for hospice recipients for whom the representative provided hospice services.

       2. (B) The OIG nurse reviewer provides the nursing facility representative(s) in a leadership position(s) (e.g., the administrator, Director of Nursing, charge nurse) formal written notification of all MDS validation findings during the exit process.

          1. (i) If a hospice representative is present at the exit conference, written notification is provided only on recipients to whom they provided services.
          2. (ii) If the hospice representative is not present during the exit conference, the OIG provides formal written notification of all RUG-III changes within 15 calendar days of the exit conference.
          3. (iii) If the nursing facility disagrees with the HHSC RUG-III determination or assessment of errors, the nursing facility may submit a request for reconsideration as provided in subsection (q) of this section.

15. (o) The OIG may sanction any provider or person as defined in §371.1 of this title (relating to Definitions), including a managed care organization or subcontractor, pursuant to Subchapter G of this chapter that:

    1. (1) fails to grant immediate access upon reasonable request to:

       1. (A) the OIG;
       2. (B) the OAG's Medicaid Fraud Control Unit or Civil Fraud Division;
       3. (C) any state or federal agency authorized to conduct compliance, regulatory, or program integrity functions on the provider, person, or the services rendered by the provider or person; or
       4. (D) any agent or consultant of any agency or division within an agency described in subparagraph (A) of this paragraph;
    2. (2) fails to allow the OIG or any other federal or state agency, division, agent, or consultant, as described in paragraph (1) of this subsection to conduct any duties that are necessary to the performance of their statutory functions; or

    3. (3) fails to provide to the OIG or any other federal or state agency, division, agent, or consultant, as described in paragraph (1) of this subsection, upon request and as requested, for the purpose of reviewing, examining, and securing custody of records, access to, disclosure of, and custody of:

       1. (A) copies or originals of any records, documents, or other requested items, as determined necessary by the OIG or those specified in paragraph (1) of this subsection to perform statutory functions;
       2. (B) any records the provider or person is required to maintain;
       3. (C) any records necessary to verify items or services furnished and delivered under Medicaid, any other HHS program, or any state health care program to determine whether payment for those items or services is due or was properly made; or

       4. (D) information that includes, without limitation:

          1. (i) clinical patient records;
          2. (ii) other records pertaining to the patient;
          3. (iii) any other records of services provided to Medicaid or other HHS program recipients and payments made for those services;
          4. (iv) documents related to diagnosis, treatment, service, lab results, charting, billing records, invoices, documentation of delivery of items, equipment, or supplies, and radiographs, and all requirements of Subchapter G, Division 2, of this chapter (relating to Grounds for Enforcement);
          5. (v) business and accounting records with backup support documentation, statistical documentation, computer records and data, patient sign-in sheets, and schedules; or
          6. (vi) any records necessary to fulfill its duty under the Improper Payments Information Act of 2002, Public Law 107-300, 116 Stat. 2350 (November 26, 2002) requiring state agencies take action to reduce improper payments. The term "improper payment" means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements, including any payment to an ineligible recipient, any payment for an ineligible service, any duplicate payment, any payment for services not received, or any payment that does not account for credit for applicable discounts.

16. (p) A facility that uses an electronic clinical record system and electronic submissions must comply with this subsection.

    1. (1) A nursing facility that elects to submit electronic or digital signatures on MDS assessments is required to have a policy in effect on the date of transmission that ensures it has proper security measures to protect against the use of an electronic or digital signature by anyone other than the individual to whom the electronic or digital signature belongs. The policy must also ensure that clinical records are made available to the OIG and others who are authorized by law.
    2. (2) In order to receive Medicaid reimbursement, a nursing facility that utilizes a clinical record system that is entirely electronic must maintain a hard copy of all MDS assessments in the recipient's clinical record. The hard copy of an MDS assessment must include the signatures, title, and date of all individuals completing the MDS.

17. (q) The OIG conducts a reconsideration review upon receipt of a written request for reconsideration.

    1. (1) The reconsideration request must be sent in the form of a letter. The letter must describe in detail the reason a reconsideration review is requested for each specified assessment error. A copy of each signed affidavit executed during the unannounced on-site review for which reconsideration is requested must be attached to the letter. The reconsideration request must be submitted in the order outlined in the reconsideration request requirements provided to the nursing facility staff during the exit conference and must include all of the information required for a reconsideration request.

    2. (2) The reconsideration request must be mailed to the OIG Utilization Review unit at the address indicated on the exit documentation provided to facility staff at the exit conference.

       1. (A) The reconsideration request must be postmarked on or before the 15th calendar day after the date of the exit conference, provided, however, that if the 15th calendar day falls on a Sunday or national holiday as defined in Texas Government Code §662.003(a), the request must be postmarked on the next following business day.
       2. (B) A reconsideration request that does not meet the requirements of this paragraph is not granted.
    3. (3) An MDS assessment error that is not identified in the request is not reconsidered.
    4. (4) A nursing facility may submit additional clinical records along with a timely request for reconsideration review. Any such additional records must be accompanied by a notarized Fact and Records Affidavit that properly authenticates the documents as true and correct duplicates of business records pursuant to TEX. R. EVID. 803(6) and TEX. R. EVID. 902(10). Additionally, the Fact Affidavit must specify: why the records were not produced during the unannounced on-site review, when the records were obtained, where the records were located, who located the records, and the circumstances under which the records were obtained. If recipient medical record documentation that was not provided during the unannounced on-site review is submitted for reconsideration, the weight to be given any supplemental documentation remains within the discretion of the reviewer.
    5. (5) If the reconsideration review establishes that the OIG has changed an MDS RUG-III group in error, the OIG directs the Texas Medicaid claims administrator to correct the error retroactively.
    6. (6) If the provider disagrees with the reconsideration determination, the provider may request a formal appeal as described in Chapter 357, Subchapter I of this title (relating to Hearings Under the Administrative Procedure Act).
    7. (7) The RUG-III group and the associated per diem rate specified in the reconsideration determination remain in effect during the formal appeal process.

18. (r) The OIG recovers overpayments based on unannounced on-site review findings associated with an administrative or assessment error in accordance with this subsection.

    1. (1) An administrative error occurs if a requirement in subsections (c) and (d) of this section are not met, or the Long-Term Care Medicaid Information Section or Basic Tracking Form is not made available to the OIG during regular business hours of the unannounced on-site review period and prior to the exit conference.

       1. (A) If the unannounced on-site review period is more than one day, the nursing facility must provide the requested information to the OIG reviewer by the end of the day information is requested, during regular business hours.
       2. (B) If a facility cannot produce or make available the requested information, the facility must provide a written statement explaining why the information cannot be provided as requested. The submission of a written statement does not negate the OIG's authority to take enforcement action under Subchapter G of this chapter.
       3. (C) An administrative error may be reconsidered as described in subsection (q) of this section.

    2. (2) An assessment error is a RUG reclassification resulting in an overpayment or underpayment of an MDS assessment claim(s) identified during a utilization review of a facility.

       1. (A) During the MDS assessment utilization review of a facility, the OIG identifies each assessment error (e.g., overpayment amount or underpayment amount of an MDS assessment claim) from the population as that term is described in subsection (m) of this section.
       2. (B) Following the unannounced on-site review of the sampled MDS assessment claim forms, an assessment error rate is calculated as follows:
          Attached Graphic
          

       3. (C) The OIG processes all RUG reclassifications identified as a result of the unannounced on-site utilization review.

          1. (i) The OIG recovers from the facility any overpayment(s) associated with an MDS assessment claim. The recovered amount is a debt owed by the facility to the Texas Medicaid program. The facility is reimbursed for any underpayment(s) identified.
          2. (ii) To calculate any overpayment, the OIG extrapolates to the population and the extrapolation is applied only to the RUG classifications found in error. An adjustment equal to the net value of the identified overpayment(s) and underpayment(s) is made. Any net overpayments constitute a debt owed by the facility/provider, as applicable, to the Texas Medicaid program. Net underpayments are reimbursed to the facility/provider, as applicable. The OIG Utilization Review extrapolates to the population in all cases of overpayment, and the extrapolation is applied only to the RUG classifications found in error.
          3. (iii) An error rate greater than 25 percent or suspected program violation described in Subchapter G, Division 2, of this chapter, results in a referral for investigation to the OIG Medicaid Program Integrity Division. This referral is made part of the state's method for identification, investigation and referral for fraud under Chapter 357, Subchapter M, of this title (relating to Fraud or Abuse Involving Medical Providers) and Chapter 371, Subchapter G of this title (relating to Administrative Actions and Sanctions).

       4. (D) An assessment error is subject to reconsideration in accordance with subsection (q) of this section.

          1. (i) If the facility timely requests reconsideration of the unannounced on-site review results, the assessment error rate is based on the results of the reconsideration.
          2. (ii) If the facility does not timely request reconsideration of the unannounced on-site review, the assessment error rate is based on the results of the unannounced on-site review.
19. (s) Suspected fraudulent documentation, such as medical or clinical records that appear to have been altered, falsified, or fabricated, results in a referral for investigation to the OIG Medicaid Program Integrity Division. This referral is made part of the state's method for identification, investigation, and referral for fraud under Chapter 357, Subchapter M, of this title.

Source Note:The provisions of this §371.214 adopted to be effective October 9, 2008, 33 TexReg 8311; amended to be effective May 1, 2016, 41 TexReg 2941; amended to be effective January 1, 2019, 43 TexReg 8582.