SECTION 355.314. Supplemental Payments to Non-State Government-Owned Nursing Facilities

(a) Introduction. Notwithstanding other provisions of this subchapter and subject to the availability of funds, supplemental payments are available under this section for nursing facility services provided by eligible non-state government-owned nursing facilities.

(b) Definitions. When used in this section, the following definitions apply:

(1) Adjudicated claim--A claim for a covered Medicaid nursing facility service that has been paid by HHSC.

(2) HHSC--The Texas Health and Human Services Commission or its designee.

(3) Intergovernmental transfer (IGT)--A transfer of public funds from a non-state governmental entity to HHSC.

(4) Medicaid supplemental payment limit--The maximum supplemental payment available to a participating non-state government-owned nursing facility for a specific quarterly calculation period as calculated in subsection (f) of this section.

(5) Medicaid supplemental payment limit calculation period--The federal fiscal quarter determined by HHSC for which supplemental payment amounts are calculated based on adjudicated claims for days of service provided in the same quarter in the prior federal fiscal year.

(6) Non-state governmental entity--A hospital authority, hospital district, healthcare district, city, or county.

(7) Non-state government-owned nursing facility--A nursing facility where a non-state governmental entity holds the license and is party to the facility's Medicaid contract.

(8) Public funds--Funds derived from taxes, assessments, levies, investments, and other public revenues within the sole and unrestricted control of a non-state governmental entity that holds the license and is party to the Medicaid contract of the nursing facility identified in subsection (c) of this section. Public funds do not include gifts, grants, trusts, or donations, the use of which is conditioned on supplying a benefit solely to the donor or grantor of the funds.

(9) Upper payment limit--A reasonable estimate of the amount that would be paid for the services furnished by a non-state government-owned nursing facility under Medicare payment principles, as calculated in subsection (f) of this section.

(10) Upper payment limit calculation period--The federal fiscal quarter one year prior to the Medicaid supplemental payment limit calculation period. For example, October 1 - December 31, 2011, is the upper payment limit calculation period for the October 1 - December 31, 2012, Medicaid supplemental payment limit calculation period.

(c) Eligible nursing facilities.

(1) Supplemental payments are available under this section to all non-state government-owned nursing facilities that comply with the requirements described in subsection (d) of this section.

(2) A nursing facility participating in this supplemental payment program must notify the HHSC Rate Analysis Department of changes in ownership that may affect the nursing facility's continued eligibility within 30 days after such change.

(3) A nursing facility that has not received a payment under this supplemental payment program for four consecutive quarters is ineligible for future supplemental payments unless the nursing facility applies again for the supplemental payment program in accordance with subsection (d) of this section.

(d) Required application. Before a non-state government-owned nursing facility may receive supplemental payments under this section, the appropriate non-state governmental entity must certify certain facts, representations, and assurances regarding program requirements.

(1) The appropriate non-state governmental entity must certify the following facts on a form prescribed by HHSC before the first day of the next scheduled Medicaid supplemental payment limit calculation period in order for the nursing facility to receive a supplemental payment for that period:

(A) That it is a non-state government-owned nursing facility where a non-state governmental entity holds the license and is party to the facility's Medicaid contract.

(B) That all funds transferred to HHSC via IGT for use as the state share of supplemental payments are public funds.

(C) That no part of any supplemental payment paid to the nursing facility under this section will be used to pay a contingent fee, consulting fee, or legal fee associated with the nursing facility's receipt of the supplemental funds.

(D) That the person signing the certification on behalf of the nursing facility is legally authorized to bind the nursing facility and to certify the matters described in the application.

(2) The nursing facility is eligible for supplemental payments for Medicaid supplemental payment limit calculation periods that begin after HHSC receives completed application forms from the appropriate non-state governmental entity. A non-state governmental entity that has submitted a change of ownership (CHOW) application to the Department of Aging and Disability Services (DADS) may submit a provisional application for participation in the supplemental payment program. If the CHOW is finalized by DADS within six months of the submission of the provisional application for participation, the facility will be eligible for payments beginning on the effective date of the CHOW. If the CHOW is not finalized by DADS within six months of the submission of the provisional application for participation, the provisional application is denied and the facility will not be eligible for payments until the first day of the Medicaid supplemental payment limit calculation period that begins after the submission of a new application for participation.

(e) Source of funding.

(1) State funding for supplemental payments authorized under this section is limited to and obtained through IGTs of public funds from the non-state governmental entity that holds the license and is party to the Medicaid contract of the nursing facility identified in subsection (c) of this section.

(2) An IGT that is not received by the date specified by HHSC may not be accepted. In such a situation, the IGT will be returned to the non-state governmental entity and the NF will not be eligible to receive a supplemental payment.

(f) Medicaid supplemental payment limits. A quarterly supplemental payment amount for each non-state government owned nursing facility is calculated using the most recent reliable data available at the time the calculation is made by taking the difference between the upper payment limit from paragraph (1) of this subsection and the Medicaid payment from paragraph (2) of this subsection:

(1) The upper payment limit for each non-state government-owned nursing facility will be calculated based on Medicare payment principles and in accordance with the Medicaid upper payment limit provisions codified at Title 42 Code of Federal Regulations (CFR) §447.272. A total Medicare-equivalent payment is determined for each non-state government-owned facility as the sum of the products of Medicaid days of service by Resource Utilization Group (RUG) for adjudicated Medicaid days of service provided by the facility during the upper payment limit calculation period multiplied by the Medicare payment rate for that RUG that will be in effect during the associated Medicaid supplemental payment limit calculation period. If the Center for Medicare and Medicaid Services has not adopted Medicare RUG rates for the Medicaid supplemental payment limit calculation period at the time the calculation is performed, the Medicaid days of service by RUG will be multiplied by the Medicare payment rate for that RUG in effect on the last day of the upper payment limit calculation period.

(2) The Medicaid payment for each non-state government-owned nursing facility prior to the supplemental payment will be the sum of the following components calculated for that nursing facility from data derived from upper payment limit calculation period:

(A) The sum of Medicaid RUG payments for all adjudicated Medicaid days of service provided by the facility during the upper payment limit calculation period adjusted to reflect any changes in Medicaid RUG rates between the upper payment limit calculation period and the Medicaid supplemental payment limit calculation period; and

(B) Medicaid payments for pharmacy services as defined in 40 TAC Chapter 19, Subchapter P (relating to Pharmacy Services), specialized services as defined in 40 TAC §19.1303 (relating to Specialized Services in Medicaid-certified Facilities), customized equipment as defined in 40 TAC §19.2614 (relating to Customized Power Wheelchairs) and emergency dental services as defined in 40 TAC §19.1402 (relating to Medicaid-certified Nursing Facility Emergency Dental Services), not included in the Medicaid nursing facility rate in effect during the upper payment limit calculation period.

(i) Medicaid payments for pharmacy services are based on Texas specific pharmacy payment and rebate data for Texas Medicaid nursing facility residents during the upper payment limit calculation period.

(ii) Medicaid payments for emergency dental, customized equipment and specialized services are based on Texas specific emergency dental, customized equipment and specialized services payment data for Texas Medicaid nursing facility residents during the upper payment limit calculation period.

(3) Changes of ownership.

(A) For a nursing facility that changed ownership prior to the first day of the Medicaid supplemental payment limit calculation period but after the first day of the upper payment limit calculation period, the data used for the calculations described in paragraphs (1) and (2) of this subsection will include data from the facility for the entire upper payment limit calculation period including data relating to payments for days of service provided under the prior owner. The inclusion of data relating to payments for days of service provided under the prior owner will ensure that the calculation of the supplemental payment amount for the Medicaid supplemental payment limit calculation period reflects a full quarter of services.

(B) For a nursing facility that changes ownership on or after the first day of the Medicaid supplemental payment limit calculation period, the data used for the calculations described in paragraphs (1) and (2) of this subsection will include data from the facility for the entire upper payment limit calculation period relating to payments for days of service provided under the prior owner, pro-rated to reflect only the number of calendar days during the Medicaid supplemental payment limit calculation period that the facility is owned by the new owner.

(g) Payment frequency. HHSC will distribute supplemental payments to participating non-state government-owned nursing facilities on a quarterly basis subsequent to the Medicaid supplemental payment limit calculation period.

(h) Supplemental payment methodology.

(1) HHSC will give notice of the non-state government-owned nursing facility quarterly Medicaid supplemental payment limits determined in subsection (f) of this section, the maximum IGT amount that can be provided for each participating nursing facility based on the Federal Medical Assistance Percentage (FMAP) in place at the time notice is given, and the deadline for completing the transfer.

(2) The amount of the supplemental payment to the nursing facility will be calculated in proportion to the amount transferred by the non-state governmental entity.

(A) For governmental entities that own a single nursing facility:

(i) If the non-state governmental entity transfers the maximum IGT described in paragraph (1) of this subsection, the nursing facility will receive the Medicaid supplemental payment limit amount calculated for it in subsection (f) of this section.

(ii) If the non-state governmental entity transfers less than the maximum IGT described in paragraph (1) of this subsection, the nursing facility will receive a supplemental payment that is proportionate to the percentage of the maximum IGT that was actually transferred.

(B) For governmental entities that own multiple nursing facilities:

(i) If the non-state governmental entity transfers the maximum IGT described in paragraph (1) of this subsection for all of the nursing facilities it owns, each of the nursing facilities will receive the Medicaid supplemental payment limit amount calculated for it in subsection (f) of this section.

(ii) If the non-state governmental entity transfers less than the maximum IGT described in paragraph (1) of this subsection for all of the nursing facilities it owns, each of the nursing facilities will receive a proportion of the Medicaid supplemental payment limit amount calculated for it in subsection (f) of this section based on the proportion of the total maximum IGT for all of the nursing facilities owned by the non-state governmental entity that was actually transferred.

(C) Supplemental payments to remaining non-state government-owned nursing facilities will not be increased due to the failure of a non-state governmental entity to transfer the maximum IGT described in paragraph (1) of this subsection.

(3) A non-state governmental entity that did not transfer the maximum IGT described in paragraph (1) of this subsection in one or more of the first three quarters in a federal fiscal year, but was eligible to do so will be allowed to fund the remaining Medicaid supplemental payment limit from those quarters during the fourth quarter of that fiscal year. HHSC will give notice of the remaining Medicaid supplemental payment limits and the maximum IGT that can be provided for each non-state government-owned nursing facility. Such notice will also contain instructions and deadlines for governmental entities to notify HHSC of the fourth-quarter transfer amount.

(4) The amount of the payment to the nursing facility will be calculated using the FMAP in place when HHSC gave notice as described in paragraph (1) or (3) of this subsection, as applicable.

(i) Recoupment.

(1) If payments under this section result in overpayment to a nursing facility, or in the event of a disallowance by the federal Centers for Medicare and Medicaid Services (CMS) of federal participation related to a nursing facility's receipt or use of supplemental payments authorized under this section, HHSC may recoup an amount equivalent to the amount of supplemental payments overpaid or disallowed.

(2) Supplemental payments under this section may be subject to any adjustments for payments made in error, including, without limitation, adjustments made under the Texas Administrative Code, the Code of Federal Regulations and state and federal statutes. HHSC may recoup an amount equivalent to any such adjustment.

(3) HHSC may recoup from any current or future Medicaid payments as follows:

(A) HHSC will recoup from the nursing facility to which an overpayment was made or against which any disallowance was directed.

(B) If, within 30 days of the nursing facility's receipt of HHSC's written notice of recoupment, the nursing facility has not paid the full amount of the recoupment or entered into a written agreement with HHSC to do so, HHSC may withhold any or all Medicaid payments from the nursing facility until HHSC has recovered an amount equal to the amount overpaid or disallowed. If funds identified for recoupment cannot be repaid from the nursing facility's Medicaid payments, the non-state governmental entity that owns the nursing facility will be liable for any additional payment due to HHSC or its designee. Failure to repay the amount due or submit an acceptable payment plan within 60 days of notification will result in the recoupment of the owed funds from other Medicaid contracts controlled by the non-state governmental entity and will bar the non-state governmental entity from receiving any new contracts with HHSC or its designees until repayment is made in full.

Source Note: The provisions of this §355.314 adopted to be effective September 1, 2012, 37 TexReg 5729; amended to be effective January 1, 2014, 38 TexReg 9243