SECTION 355.8061. Outpatient Hospital Reimbursement

(a) Introduction. The Texas Health and Human Services Commission (HHSC), or its designee reimburses outpatient hospital services under the reimbursement methodology described in this section.

(1) For services provided on and after the date that the modernized Medicaid Management Information System (MMIS) becomes operational, HHSC, or its designee, will reimburse all hospital providers based on an outpatient prospective payment system (OPPS). This includes all hospitals as defined in §355.8052 of this division (relating to Inpatient Hospital Reimbursement), including rural, urban, and Children's. The OPPS used for reimbursement is the 3M™ Enhanced Ambulatory Patient Groups (EAPG) calculator. EAPGs are a visit-based classification system intended to reflect the type of resources utilized in outpatient encounters for patients with similar clinical characteristics.

(2) The following are exceptions to the OPPS reimbursement methodology.

(A) Reimbursement for Long-Acting Reversible Contraceptive devices.

(B) Human Breast Milk Processing, Storage and Distribution.

(C) Certain Drugs Paid to Managed Care Organizations on a Non-Risk Basis, as determined by HHSC.

(D) Cochlear implant devices and certain high cost nerve stimulators.

(E) Non-Emergent emergency room services as described in subsection (b)(1)(C) of this section.

(F) State owned teaching hospitals outpatient reimbursement is based on cost principals as described in subsection (b) of this section.

(3) For services prior to the date that the modernized MMIS becomes operational, reimbursement is outlined below in subsection (b) of this section except as described in subsections (c) and (d) of this section, HHSC will reimburse for outpatient hospital services based on a percentage of allowable charges and an outpatient interim rate.

(b) Interim reimbursement.

(1) HHSC will determine a percentage of allowable charges, which are charges for covered Medicaid services determined through claims adjudication.

(A) For high volume providers that received Medicaid outpatient payments equaling at least $200,000 during calendar year 2004.

(i) For children's hospitals and state-owned hospitals as defined in §355.8052 of this division, the percentage of allowable charges is 76.03 percent, except as described in subparagraph (C) of this paragraph.

(ii) For rural hospitals as defined in §355.8052 of this division, the percentage of allowable charges is 100 percent.

(iii) For all other providers, the percentage of allowable charges is 72.00 percent.

(B) For all providers not considered high volume providers as determined in paragraph (1)(A) of this subsection.

(i) For children's hospitals and state-owned hospitals as defined in §355.8052 of this division, the percentage of allowable charges is 72.27 percent.

(ii) For rural hospitals as defined in §355.8052 of this division, the percentage of allowable charges is 100 percent.

(iii) For all other providers, the percentage of allowable charges is 68.44 percent.

(C) For outpatient emergency department (ED) services that do not qualify as emergency visits are exempt from the OPPS reimbursement described in subsection (a)(1) of this section. For these services, which are listed in the Texas Medicaid Provider Procedures Manual and other updates on the claims administrator's website, HHSC will reimburse:

(i) rural hospitals, as defined in §355.8052 of this division, an amount not to exceed 65 percent of allowable charges after application of the methodology in paragraph (1)(A) and (1)(B) of this subsection, which will result in a payment that does not exceed 65 percent of allowable cost; and

(ii) all other hospitals, a flat fee set at a percentage of the Medicaid acute care physician office visit amount for adults.

(2) HHSC will determine an outpatient interim rate for each non-rural hospital, which is the ratio of Medicaid allowable outpatient costs to Medicaid allowable outpatient charges derived from the hospital's Medicaid cost report.

(A) For a non-rural hospital with at least one tentative cost report settlement completed prior to September 1, 2013, the interim rate is the rate in effect on August 31, 2013, except the hospital will be assigned the interim rate calculated upon completion of any future cost report settlement if that interim rate is lower.

(B) For a non-rural new hospital that does not have at least one tentative cost report settlement completed prior to September 1, 2013, the default interim rate is 50 percent until the interim rate is adjusted as follows.

(i) If the non-rural hospital files a short-period cost report for its first cost report, the hospital will be assigned the interim rate calculated upon completion of the hospital's first tentative cost report settlement.

(ii) The hospital will be assigned the interim rate calculated upon completion of the hospital's first full-year tentative cost report settlement.

(iii) The hospital will retain the interim rate calculated as described in clause (ii) of this subparagraph, except it will be assigned the interim rate calculated upon completion of any future cost report settlement if that interim rate is lower.

(C) Interim claim reimbursement for non-rural hospitals is determined by multiplying the amount of a hospital's outpatient allowable charges after applying any reductions to allowable charges made under paragraph (1) of this subsection by the outpatient interim rate in effect on the date of service.

(D) Interim claim reimbursement determined in subparagraph (C) of this paragraph will be cost-settled at both tentative and final audit of a non-rural hospital's cost report. The calculation of allowable costs will be determined based on the amount of allowable charges after applying any reductions to allowable charges made under paragraph (1) of this subsection.

(i) Interim payments for claims with a date of service prior to September 1, 2013, will be cost settled.

(ii) Interim payments for claims with a date of service on or after September 1, 2013, will be included in the cost report interim rate calculation, but will not be adjusted due to cost settlement unless the settlement calculation indicates an overpayment.

(iii) HHSC will calculate an interim rate at tentative and final cost settlement for the purposes described in subparagraph (B) of this paragraph.

(iv) If a hospital's interim claim reimbursement for all outpatient services, excluding imaging, clinical lab and outpatient emergency department services that do not qualify as emergency visits, for the hospital's fiscal year exceeded the allowable costs for those services, HHSC will recoup the amount paid to the hospital in excess of allowable costs.

(v) If a hospital's interim claim reimbursement for all outpatient services, excluding imaging, clinical lab and outpatient emergency department services that do not qualify as emergency visits, for the hospital's fiscal year was less than the allowable costs for those services, HHSC will not make additional payments through cost settlement to the hospital for service dates on or after September 1, 2013.

(3) HHSC will determine an outpatient interim rate for each rural hospital, which is the ratio of Medicaid allowable outpatient costs to Medicaid allowable outpatient charges derived from the hospital's Medicaid cost report.

(A) For a rural hospital with at least one tentative cost report settlement completed prior to September 1, 2021, the interim rate effective on September 1, 2021, is the rate calculated in the latest initial cost report with an additional percentage increase, not to exceed an interim rate of 100 percent. After September 1, 2021, a rural hospital will be assigned the interim rate calculated upon completion of each initial or amended initial cost report, with an additional percentage increase, not to exceed an interim rate of 100 percent.

(B) For a new rural hospital that does not have at least one initial cost report completed prior to September 1, 2021, the default interim rate is 50 percent until the interim rate is adjusted as follows.

(i) If the rural hospital files a short-period cost report for their first cost report, the hospital will continue to receive the default rate until completion of the first full-year initial cost report.

(ii) The rural hospital will be assigned the interim rate calculated upon completion of a review of the hospital's first full-year initial or amended initial cost report, with an additional percentage increase, not to exceed an interim rate of 100 percent.

(C) Interim claim reimbursement for a rural hospital is determined by multiplying the amount of a hospital's outpatient allowable charges after applying any reductions to allowable charges made under paragraph (1) of this subsection by the outpatient interim rate in effect on the date of service as described in subparagraph (A) of this paragraph.

(D) Interim claim reimbursement determined in subparagraph (C) of this paragraph will not be cost-settled for services rendered on or after September 1, 2021.

(c) Outpatient hospital surgery. Outpatient hospital non-emergency surgery is reimbursed in accordance with the methodology for ambulatory surgical centers as described in §355.8121 of this subchapter (relating to Reimbursement).

(d) Outpatient hospital imaging.

(1) For services provided on and after the date that the modernized MMIS becomes operational, all hospitals will be reimbursed based on an outpatient prospective payment system (OPPS). The OPPS used for reimbursement is the 3M™ Enhanced Ambulatory Patient Groups (EAPG) calculator.

(2) For services prior to the date that the modernized MMIS becomes operational, for all hospitals except rural hospitals, as defined in §355.8052 of this division, outpatient hospital imaging services are not reimbursed under the outpatient reimbursement methodology described in subsection (b) of this section. Outpatient hospital imaging services are reimbursed according to an outpatient hospital imaging service fee schedule that is based on a percentage of the Medicare Outpatient Prospective Payment System fee schedule for similar services. If a resulting fee for a service provided to any Medicaid beneficiary is greater than 125 percent of the Medicaid adult acute care fee for a similar service, the fee is reduced to 125 percent of the Medicaid adult acute care fee.

(3) For services prior to the date that the modernized MMIS becomes operational, for rural hospitals, outpatient hospital imaging services are reimbursed based on a percentage of the Medicare Outpatient Prospective Payment System fee schedule for similar services.

(e) Minimum Fee Schedule. Effective September 1, 2020, Managed Care Organizations are required to reimburse rural hospitals based on a minimum fee schedule. The minimum fee schedules are the rates specific to rural hospitals, as described in subsections (b) - (d) of this section.

Source Note: The provisions of this §355.8061 adopted to be effective May 30, 1977, 2 TexReg 1929; amended to be effective February 29, 1984, 9 TexReg 1041; amended to be effective April 19, 1985, 10 TexReg 1148; amended to be effective July 1, 1986, 11 TexReg 2754; transferred effective September 1, 1993, as published in the Texas Register September 7, 1993, 18 TexReg 5978; amended to be effective February 28, 1994, 19 TexReg 1041; amended to be effective December 7, 1995, 20 TexReg 9851; amended to be effective January 5, 1998, 22 TexReg 12763; transferred effective September 1, 1997, as published in theTexasRegister December 11, 1998, 23 TexReg 12660; amended to be effective October 21, 1999, 24 TexReg 8957; amended to be effective January 3, 2002, 26 TexReg 10847; amended to be effective December 4, 2002, 27 TexReg 11074; amended to be effective August 12, 2004, 29 TexReg 7667; amended to be effective April 1, 2007, 32 TexReg 1720; amended to be effective September 1, 2007, 32 TexReg 5343; amended to be effective August 3, 2008, 33 TexReg 5913; amended to be effective August 26, 2008, 33 TexReg 6779; amended to be effective September 1, 2009, 34 TexReg 5661; amended to be effective September 1, 2010, 35 TexReg 6512; amended to be effective September 1, 2011, 36 TexReg 5344; amended to be effective September 1, 2013, 38 TexReg 5448; amended to be effective September 1, 2015, 40 TexReg 5318; amended to be effective January 31, 2017, 42 TexReg 307; amended to be effective October 24,2021,46 TexReg 7206; amended to be effective November 26, 2023, 48 TexReg 6735