SECTION 355.8443. Reimbursement Methodology for School Health and Related Services (SHARS)

(a) Introduction. Reimbursement is available to a Local Education Agency (LEA) for providing certain direct medical and transportation services, known as SHARS, to a Medicaid-enrolled student with a disability age 20 years of age or younger. SHARS services are described in and must be prescribed in accordance with §354.1341 of this title (relating to Benefits and Limitations).

(b) Definitions. The following words and terms, when used in this section, have the following meanings, unless the context clearly indicates otherwise.

(1) Cost report--An annual report documenting the LEA's Medicaid-allowable costs for all SHARS delivered during the previous federal fiscal year. The cost report is due on or before April 1 of the year following the reporting period and must be certified in a manner specified by the Texas Health and Human Services Commission (HHSC). The primary purposes of the cost report are to:

(A) document the LEA's total Medicaid-allowable costs for delivering SHARS, including direct costs and indirect costs, based on federally mandated cost allocation methodologies; and

(B) reconcile interim payments to total Medicaid-allowable costs based on approved cost allocation methodology procedures.

(2) Eligible student--A Medicaid-enrolled student with a disability age 20 years of age or younger that receives a direct medical or transportation service as prescribed by §354.1341 of this title.

(3) Interim claim--A claim for a direct medical or transportation service paid at the interim rate that is provisional in nature pending the completion of a cost reconciliation and cost settlement for the cost reporting period.

(4) Local Education Agency (LEA)--A Texas independent school district or public charter school.

(5) Time study--A statistically valid random sampling method used to identify the percentage of time spent performing actual direct medical services irrespective of payer and administrative cost.

(c) Parental Consent. Prior to submitting its annual cost report, the LEA must meet the parental consent requirements in §354.1342 of this title (relating to Conditions for Participation) for each student included in the numerator of the following ratios required in the cost report.

(1) IEP ratio--A comparison of the total number of students enrolled in Medicaid with individualized education programs (IEPs) requiring direct medical services to the total number of students with IEPs requiring direct medical services.

(2) One-way trip ratio--A comparison of the total one-way trips for students enrolled in Medicaid with IEPs requiring specialized transportation services, who received direct medical services the same day, to the total one-way trips for all students with IEPs requiring specialized transportation services.

(3) Section 504 Plan ratio--A comparison of the total number of students enrolled in Medicaid with Section 504 Plans requiring audiology services to the total number of students with Section 504 Plans requiring audiology services.

(d) Time study. The LEA must participate in the HHSC-administered time study in the manner prescribed by HHSC.

(e) Reimbursement methodology. LEAs are reimbursed for direct medical and transportation services provided under the SHARS program on a cost basis.

(1) Interim rates. The interim rate is developed based on a percentage of the average per-unit cost for each SHARS service using actual cost data collected on cost reports and is subject to change under §355.109 of this chapter (relating to Adjusting Reimbursement When New Legislation, Regulations, or Economic Factors Affect Costs). Interim rates are updated annually or as determined by HHSC.

(2) Interim claims.

(A) LEAs must submit:

(i) at least one interim claim for each direct medical service that an eligible student receives within the cost report period;

(ii) interim claims for all personal care services that an eligible student receives within the cost report period; and

(iii) interim claims for all eligible specialized transportation trips provided within the cost report period.

(B) Requirements for interim claims will be adjusted as needed based on direction from the Centers for Medicare and Medicaid Services.

(C) Interim claims must be valid and reimbursed to meet the requirements in this paragraph.

(3) Interim payment. LEAs are reimbursed for SHARS direct medical services and transportation services per unit of service at the lesser of:

(A) the LEA's billed charges; or

(B) the interim rate.

(4) Final reimbursement. The LEA's final reimbursement amount is arrived at by a cost reconciliation and cost settlement process. As reported in the cost report, the LEA's total costs for both direct medical and transportation services are adjusted using the federally mandated allocation methodologies.

(A) Direct medical services costs. Salary and contract costs must be reported in the manner prescribed by HHSC.

(i) Direct costs. From the annual cost report, HHSC aggregates allowable costs for direct medical services, resulting in total direct costs. Direct costs for direct medical services include payroll costs and other costs that can be directly charged to direct medical services provided by contractors and LEA staff (i.e., salaries, benefits, and contract compensation). Direct medical services costs do not include transportation personnel costs.

(ii) Indirect costs. Indirect costs are determined by applying the LEA's specific unrestricted indirect cost rate to its net direct costs. Texas LEAs use predetermined fixed rates for indirect costs. The Texas Education Agency (TEA) has, in cooperation with the United States Department of Education (USDE), developed an indirect cost plan to be used by LEAs in Texas. As authorized in 34 CFR §75.561(b), TEA approves unrestricted indirect cost rates for LEAs for the USDE, which is the cognizant agency for LEAs.

(iii) Net allowable cost. Direct and indirect costs are added together and adjusted by the direct medical time study percentage, the IEP ratio, and the 504 Plan ratio, resulting in a net Medicaid allowable cost for direct medical services.

(B) Transportation services. Salary and contract costs must be reported in the manner prescribed by HHSC.

(i) Direct costs. From the annual cost report, HHSC aggregates allowable direct costs for transportation, resulting in total direct costs. Direct costs for covered transportation services include payroll costs and other costs that can be directly charged to covered transportation services. Direct payroll costs include total compensation (i.e., salaries, benefits, and contract compensation) of bus drivers and mechanics. Other direct costs include costs directly related to the delivery of covered transportation services, such as professional and contracted services, contracted transportation costs, gasoline and other fuels, other maintenance and repair costs, vehicle insurance, interest, rentals, and vehicle depreciation.

(ii) Indirect costs. Indirect costs are determined by applying the LEA's specific unrestricted indirect cost rate to its net direct costs. Texas public LEAs use predetermined fixed rates for indirect costs. TEA has, in cooperation with the USDE, developed an indirect cost plan to be used by LEAs in Texas. As authorized in 34 CFR §75.561(b), TEA approves unrestricted indirect cost rates for LEAs for the USDE, which is the cognizant agency for LEAs.

(iii) Net allowable cost. Net direct costs and indirect costs are added together and adjusted by the one-way trip ratio, resulting in a net Medicaid allowable cost for transportation services.

(f) Cost reporting requirements. HHSC excludes from reimbursement determinations any unallowable expenses included in the cost report and makes the appropriate adjustments to expenses and other information reported by LEAs.

(1) Certification. Each LEA certifies through the cost report process its total actual federal and non-federal costs and expenditures.

(2) Reimbursement determinations and allowable costs. LEAs are responsible for reporting only allowable costs on the cost report, except where HHSC prescribes that other costs are to be reported in specific lines or sections. Only allowable cost information is used to determine recommended reimbursement. All costs relating to Shared Service Arrangements and Co-operatives must be allocated to each respective LEA.

(g) Cost reconciliation. The Medicaid-allowable costs for direct medical and transportation services are added together and adjusted by the federal Medicaid assistance percentage (FMAP) to arrive at the federal share owed to the LEA. This amount is then reconciled with interim payments already made to the LEA.

(h) Cost settlement. HHSC uses a cost settlement process as follows.

(1) HHSC retains one percent of the federal share of the total certified Medicaid allowable cost as an administrative fee to be used for Health and Human Services administrative activities, including compliance monitoring, technical assistance, and to establish and maintain an audit reserve fund.

(2) If an LEA's interim payments exceed 99 percent of the LEA's federal portion of the total certified Medicaid allowable costs, HHSC recoups the overpayment using one of these two methods:

(A) HHSC offsets all future claims payments from the LEA until the amount is recovered; or

(B) the LEA returns an amount equal to the amount owed.

(3) If 99 percent of the LEA's federal portion of the total certified Medicaid allowable costs exceeds the interim Medicaid payments, HHSC pays the difference to the LEA.

(4) HHSC issues a notice of settlement within 24 months of the end of the reporting period.

(i) Informal review. An LEA who disputes an action or determination under this chapter may request an informal review under §355.110 of this title (relating to Informal Reviews and Formal Appeals). This section provides clarification unique to the SHARS program.

(1) HHSC Provider Finance must receive a written request for an informal review in a manner prescribed by HHSC no later than 30 calendar days from the date on the written notification of the adjustments. If the 30th calendar day is a weekend day, national holiday, or state holiday, then the first business day following the 30th calendar day is the final day the receipt of the written request will be accepted. HHSC Provider Finance will extend this deadline if it receives a written request for the extension in a manner prescribed by HHSC, no later than 30 calendar days from the date of the written notice of adjustments. The extension gives the requester a total of 45 calendar days from the date of the written notice of adjustment to file a request for an informal review. If the 45th calendar day is a weekend day, national holiday, or state holiday, then the 45th day is considered the next business day following the 45th calendar day. A request for an informal review or extension that is not received by the stated deadline will not be accepted.

(2) An LEA must, with its request for an informal review, submit a concise statement of the specific actions or determinations it disputes, its recommended resolution, and any supporting documentation the LEA deems relevant to the dispute. It is the responsibility of the LEA to render all pertinent information at the time of its request for an informal review. Disputed actions or determinations that are not explicitly stated in the request will not be considered by HHSC, and failure of HHSC to act on implied items of dispute will not be considered grounds for a formal appeal. A request for an informal review that does not meet the requirements of this paragraph will not be accepted.

(3) The written request for the informal review or extension must be signed by an individual legally responsible for the conduct of the LEA or a legal representative for the LEA. The administrator or director of the LEA is not authorized to sign the request unless the administrator or director has this legal authority. A request for an informal review that is not signed by an individual legally responsible for the conduct of the LEA or a legal representative for the LEA will not be accepted.

(j) General information. In addition to the requirements of this section, the cost reporting guidelines will be governed by the information in: §355.101 of this chapter (relating to Introduction); §355.102 of this chapter (relating to General Principles of Allowable and Unallowable Costs); §355.103 of this chapter (relating to Specifications for Allowable and Unallowable Costs); §355.104 of this chapter (relating to Revenues); §355.105 of this chapter (relating to General Reporting and Documentation Requirements, Methods, and Procedures); §355.106 of this chapter (relating to Basic Objectives and Criteria for Audit and Desk Review of Cost Reports); §355.107 of this chapter (relating to Notification of Exclusions and Adjustments); §355.108 of this chapter (relating to Determination of Inflation Indices); §355.109 of this chapter; and §355.110 of this chapter. If there is a conflict between an applicable section of Chapter 355, Subchapter A of this title (related to Cost Determination Process) and the provisions of this section, the provisions of this section will prevail.

(k) In addition to the requirements of this section, the LEA must comply with all provisions outlined in §354.1341 of this title and §354.1342 of this title.

(l) Administrative contract violations. HHSC may take the following actions against an LEA for administrative contract violations.

(1) Time study. For failure to participate in or meet all time study requirements, HHSC will recoup all interim payments made during the cost reporting period and will not allow the LEA to submit a cost report for that reporting period.

(2) Interim claims. The LEA is ineligible to submit a cost report if they fail to submit interim claims in the manner and format prescribed by HHSC, or its designee, including the requirements in subsection (e)(2) of this section. If a service category, student, employee, or related cost is claimed in the cost report without having been appropriately claimed in compliance with program requirements, that specific service category, student, employee, or related cost will be disallowed from the cost report.

(3) Cost reports.

(A) For failure to submit a cost report by the due date, HHSC will recoup all interim payments made during the cost reporting period.

(B) HHSC will remove all unallowable costs and reserve the right to update a certified cost report if inaccurate information is identified or reported by the LEA.

(4) Other administrative contract violations. For all other administrative contract violations, HHSC will recoup all interim payments made during the cost reporting period.

(5) Appeals. An LEA may request a hearing to appeal HHSC's action concerning an administrative contract violation. Formal appeals are conducted in accordance with the provisions of Chapter 357, Subchapter I of this title (relating to Hearings under the Administrative Procedure Act). If there is a conflict between an applicable section of Chapter 357 of this title (relating to Hearings) and the provisions of this chapter, the provisions of this chapter will prevail.

Source Note: The provisions of this §355.8443 adopted to be effective October 1, 2011, 36 TexReg 4656; amended to be effective May 17, 2015, 40 TexReg 2527; amended to be effective November 27, 2017, 42 TexReg 6615; amended to be effective October 9, 2022, 47 TexReg 6425