Texas Administrative Code
Title 1 - ADMINISTRATION
Part 15 - TEXAS HEALTH AND HUMAN SERVICES COMMISSION
Chapter 353 - MEDICAID MANAGED CARE
Subchapter O - DELIVERY SYSTEM AND PROVIDER PAYMENT INITIATIVES
Section 353.1306 - Comprehensive Hospital Increase Reimbursement Program for Program Periods on or after September 1, 2021
Universal Citation: 1 TX Admin Code § 353.1306
Current through Reg. 50, No. 13; March 28, 2025
(a) Introduction. This section establishes the Comprehensive Hospital Increase Reimbursement Program (CHIRP) for program periods on or after September 1, 2021, wherein the Health and Human Services Commission (HHSC) directs a managed care organization (MCO) to provide a uniform reimbursement increase to hospitals in the MCO's network in a designated service delivery area (SDA) for the provision of inpatient services, outpatient services, or both. This section also describes the methodology used by HHSC to calculate and administer such reimbursement increases. CHIRP is designed to incentivize hospitals to improve access, quality, and innovation in the provision of hospital services to Medicaid recipients through the use of metrics that are expected to advance at least one of the goals and objectives of the state's managed care quality strategy.
(b) Definitions. The following definitions apply when the terms are used in this section. Terms that are used in this section may be defined in § 353.1301 of this subchapter (relating to General Provisions).
(1) Average
Commercial Reimbursement (ACR) gap--The difference between what an average
commercial payor is estimated to pay for the services and what Medicaid
actually paid for the same services.
(2) Average Commercial Reimbursement (ACR)
Upper Payment Limit (UPL)--A calculated estimation of what an average
commercial payor pays for the same Medicaid services.
(3) Children's hospital--A children's
hospital as defined by §
355.8052 of this title (relating to
Inpatient Hospital Reimbursement).
(4) Inpatient hospital services--Services
ordinarily furnished in a hospital for the care and treatment of inpatients
under the direction of a physician or dentist, or a subset of these services
identified by HHSC. Inpatient hospital services do not include skilled nursing
facility or intermediate care facility services furnished by a hospital with
swing-bed approval, or any other services that HHSC determines should not be
subject to the rate increase.
(5)
Institution for mental diseases (IMD)--A hospital that is primarily engaged in
providing psychiatric diagnosis, treatment, or care of individuals with mental
illness. IMD hospitals are reimbursed as freestanding psychiatric facilities
under §
355.8060 of this title (relating to
Reimbursement Methodology for Freestanding Psychiatric Facilities).
(6) Medicare payment gap--The difference
between what Medicare is estimated to pay for the services and what Medicaid
actually paid for the same services.
(7) Outpatient hospital services--Preventive,
diagnostic, therapeutic, rehabilitative, or palliative services that are
furnished to outpatients of a hospital under the direction of a physician or
dentist, or a subset of these services identified by HHSC. HHSC may, in its
contracts with MCOs governing rate increases under this section, exclude from
the definition of outpatient hospital services such services as are not
generally furnished by most hospitals in the state, or such services that HHSC
determines should not be subject to the rate increase.
(8) Program period--A period of time for
which HHSC will contract with participating MCOs to pay increased capitation
rates for the purpose of provider payments under this section. Each program
period is equal to a state fiscal year beginning September 1 and ending August
31 of the following year.
(9) Rural
hospital--A hospital that is a rural hospital as defined in §
355.8052 of this title.
(10) State-owned non-IMD hospital--A hospital
that is owned and operated by a state university or other state agency that is
not primarily engaged in providing psychiatric diagnosis, treatment, or care of
individuals with mental disease.
(11) Urban hospital--An urban hospital as
defined by §
355.8052 of this title.
(c) Conditions of Participation. As a condition of participation, all hospitals participating in CHIRP must allow for the following.
(1) The hospital must
submit a properly completed enrollment application by the due date determined
by HHSC. The enrollment period must be no less than 21 calendar days and the
final date of the enrollment period will be at least nine days prior to the IGT
notification.
(A) In the application, the
hospital must select whether it will participate in the optional program
components described in subsections (g)(3) and (g)(4) of this section. A
hospital cannot participate in the program component described in subsection
(g)(3) or (g)(4) of this section without also participating in the program
component described in subsection (g)(2) of this section. In the application,
the hospital must also select whether the hospital elects to receive interim
payments described by subsection (h)(2)(D) of this section.
(B) All hospitals must submit certain
necessary data to calculate the ACR gap. However, a hospital may indicate that
it does not wish to participate in the optional program component described in
subsection (g)(3) of this section.
(C) A hospital is required to maintain all
supporting documentation at the hospital for any information provided under
subparagraph (B) of this paragraph for a period of no less than 5
years.
(D) For a program period
that begins on or after September 1, 2021, any hospital that did not report the
data described in subparagraph (B) of this paragraph in the application for the
program must report the data within four months of Centers for Medicare and
Medicaid Services (CMS) approval of the program.
(2) The entity that owns the hospital must
certify, on a form prescribed by HHSC, that no part of any payment made under
the CHIRP will be used to pay a contingent fee and that the entity's agreement
with the hospital does not use a reimbursement methodology that contains any
type of incentive, directly or indirectly, for inappropriately inflating, in
any way, claims billed to the Medicaid program, including the hospitals'
receipt of CHIRP funds. The certification must be received by HHSC with the
enrollment application described in paragraph (1) of this subsection.
(3) If a provider has changed ownership in
the past five years in a way that impacts eligibility for this program, the
provider must submit to HHSC, upon demand, copies of contracts it has with
third parties with respect to the transfer of ownership or the management of
the provider and which reference the administration of, or payment from, this
program.
(4) All quality metrics
for which a hospital is eligible based on class, as described in subsection (d)
of this section, must be reported by the participating hospital.
(5) Failure to meet any conditions of
participation described in this subsection will result in removal of the
provider from the program and recoupment of all funds previously paid during
the program period.
(d) Classes of participating hospitals.
(1) HHSC
may direct the MCOs in an SDA that is participating in the program described in
this section to provide a uniform percentage rate increase or another type of
payment to all hospitals within one or more of the following classes of
hospital with which the MCO contracts for inpatient or outpatient services:
(A) children's hospitals;
(B) rural hospitals;
(C) state-owned non-IMD hospitals;
(D) urban hospitals;
(E) non-state-owned IMDs; and
(F) state-owned IMDs.
(2) If HHSC directs rate increases or other
payments to more than one class of hospital within the SDA, the percentage rate
increases or other payments directed by HHSC may vary between classes of
hospital.
(e) Eligibility. HHSC determines eligibility for rate increases and other payments by SDA and class of hospital.
(1) Service
delivery area. Only hospitals in an SDA that includes at least one sponsoring
governmental entity are eligible for a rate increase.
(2) Class of hospital. HHSC will identify the
class or classes of hospital within each SDA described in paragraph (1) of this
subsection to be eligible for a rate increase or other payment. HHSC will
consider the following factors when identifying the class or classes of
hospital eligible for a rate increase or other payment and the percent increase
applicable to each class:
(A) whether a class
of hospital contributes more or less significantly to the goals and objectives
in HHSC's managed care quality strategy, as required in
42 C.F.R. §
438.340, relative to other classes;
(B) which class or classes of hospital the
sponsoring governmental entity wishes to support through IGTs of public funds,
as indicated on the application described in subsection (c) of this
section;
(C) the estimated Medicare
gap for the class of hospitals, based upon the upper payment limit
demonstration most recently submitted by HHSC to CMS;
(D) the estimated ACR gap for the class or
individual hospitals, as indicated on the application described in subsection
(c) of this section; and
(E) the
percentage of Medicaid costs incurred by the class of hospital in providing
care to Medicaid managed care clients that are reimbursed by Medicaid MCOs
prior to any rate increase administered under this section.
(f) Services subject to rate increase and other payment.
(1) HHSC may
direct the MCOs in an SDA to increase rates for all or a subset of inpatient
services, all or a subset of outpatient services, or all or a subset of both,
based on the service or services that will best advance the goals and
objectives of HHSC's managed care quality strategy.
(2) In addition to the limitations described
in paragraph (1) of this subsection, rate increases for a state-owned IMD or
non-state-owned IMD are limited to inpatient psychiatric hospital services
provided to individuals under the age of 21 and to inpatient hospital services
provided to individuals 65 years or older.
(3) CHIRP rate increases will apply only to
the in-network managed care claims billed under a hospital's primary National
Provider Identifier (NPI) and will not be applicable to NPIs associated with
non-hospital sub-providers owned or operated by a hospital.
(g) CHIRP capitation rate components. For program periods beginning on or before September 1, 2023, but on or after September 1, 2021, CHIRP funds will be paid to MCOs through two components of the managed care per member per month (PMPM) capitation rates. For program periods beginning on or after September 1, 2024, CHIRP funds will be paid to MCOs through three components of the managed care per member per month (PMPM) capitation rates. The MCOs' distribution of CHIRP funds to the enrolled hospitals may be based on each hospital's performance related to the quality metrics as described in § 353.1307 of this subchapter (relating to Quality Metrics for the Comprehensive Hospital Increase Reimbursement Program). The hospital must have provided at least one Medicaid service to a Medicaid client for each reporting period to be eligible for payments.
(1) In determining the percentage
increases described under subsection (h)(1) of this section, HHSC will
consider:
(A) information from the
participants in the SDA (including hospitals, managed-care organizations, and
sponsoring governmental entities) on the amount of IGT the sponsoring
governmental entities propose to transfer to HHSC to support the non-federal
share of the increased rates for the first six months of a program period, as
indicated on the applications described in subsection (c) of this
section;
(B) the class or classes
of hospital determined in subsection (e)(2) of this section;
(C) the type of service or services
determined in subsection (f) of this section;
(D) actuarial soundness of the capitation
payment needed to support the rate increase;
(E) available budget neutrality room under
any applicable federal waiver programs;
(F) hospital market dynamics within the SDA;
and
(G) other HHSC goals and
priorities.
(2) The
Uniform Hospital Rate Increase Payment (UHRIP) is the first component.
(A) The total value of UHRIP will be equal to
a percentage of the estimated Medicare gap on a per class basis.
(B) Allocation of funds across hospital
classes will be proportional to the combined Medicare gap of each hospital
class within an SDA to the total Medicare gap of all hospital classes within
the SDA.
(3) The Average
Commercial Incentive Award (ACIA) is the second component.
(A) The total value of ACIA will be equal to
a percentage of the ACR gap less payments received under UHRIP, subject to the
limitations described by subparagraph (B) of this paragraph. For program
periods beginning on or before September 1, 2024, for the purposes of this
subparagraph, the ACR gap and UHRIP payment are based on the individual
hospital's data. For program periods beginning on or after September 1, 2025,
for the purposes of this subparagraph, the ACR gap and the UHRIP payment are
based on the aggregated amounts by class; and the allocation of available funds
across hospital classes will be proportional to the combined ACR gap less UHRIP
payments of each hospital class within an SDA to the total ACR gap of all
hospital classes within the SDA.
(B) The maximum ACIA payments for each class
will be equal to a percentage of the total estimated ACR UPL for the class,
less what Medicaid paid for the services and any payments received under UHRIP,
including hospitals that are not participating in ACIA. The percentage for each
program period is as follows.
(i) For program
periods beginning on or before September 1, 2023, but on or after September 1,
2021, the percentage is 90 percent.
(ii) For the program periods beginning on
September 1, 2024, and September 1, 2025, the percentage may not exceed 90
percent.
(iii) For the program
period beginning on September 1, 2026, the percentage may not exceed 95
percent.
(iv) For program periods
beginning on or after September 1, 2027, the percentage may not exceed 100
percent.
(C) The ACIA
payment for the class will be equal to the minimum of the sum of the ACIA
payment in subparagraph (A) of this paragraph and the limit in subparagraph (B)
of this paragraph. If the amount calculated under subparagraph (B) of this
paragraph is negative, the maximum, aggregated ACIA payments for that class
will be equal to zero.
(D) For
program periods beginning on or before September 1, 2024, the ACIA payment for
each provider will be equal to the amount in subparagraph (A) of this paragraph
multiplied by the amount determined in subparagraph (C) of this paragraph for
the class divided by the sum of the preliminary ACIA payment determined in
subparagraph (A) of this paragraph for the class, rounded down to the nearest
percentage. For example, if two hospitals in a class in an SDA both have
anticipated base payments of $100 and UHRIP payments of $50, but one hospital
has an estimated ACR UPL of $400 and an ACR gap of $300 between its base
payment and ACR UPL, and the other hospital has an estimated ACR UPL of $600
and an ACR gap of $500, HHSC will first reduce the gaps by the UHRIP payment of
$50 to a gap of $250 and $450, respectively. The preliminary ACIA rates are 250
percent and 450 percent. These are the amounts available under subparagraph (A)
of this paragraph. HHSC would then sum the ACR UPLs for the two hospitals to
get $1000 available to the class and apply the percentage in subparagraph (B)
of this paragraph (e.g., 50 percent of the gap), which results in an ACR UPL of
$500. Then, HHSC will subtract the $200 in base payments and $100 in UHRIP
payments from the reduced ACR UPL for a total of $200 of maximum ACIA payments
under subparagraph (B) of this paragraph. The amount under subparagraph (A) for
the class was $700 and the limit under subparagraph (B) of this paragraph is
$200, so all provider in the SDA will have their ACIA percentage multiplied by
$200 divided by $700 to stay under the $200 cap. The individual ACIA rates
would be 71 percent (e.g., 200/700*250 percent) and 128 percent (e.g.,
200/700*450 percent), respectively. The estimated ACIA payments would be $71
and $128. HHSC will then direct the MCOs to pay a percentage increase for the
first hospital of 71 percent in addition to the 50 percent increase under UHRIP
for the first hospital for a total increase of 121 percent above the contracted
base rate, and 128 percent in addition to the 50 percent increase under UHRIP
for the second hospital for a total increase of 178 percent.
(4) For program periods beginning
on or after September 1, 2024, the Alternate Participating Hospital
Reimbursement for Improving Quality Award (APHRIQA) is the third component.
(A) The total value of APHRIQA will be equal
to the sum of:
(i) a percentage of the
Medicare gap, not to exceed 100 percent, on a per class basis less the amount
determined in paragraph (2)(A) of this subsection; and
(ii) a percentage of the total estimated ACR
UPL, not to exceed the applicable percentage specified in paragraph (3)(B) of
this subsection, on a per class basis less what Medicaid paid for the services
and any payments received under UHRIP, including hospitals that are not
participating in ACIA and less any payments received under ACIA.
(B) Allocation of funds across
hospitals will be calculated by allocating to each hospital the sum of:
(i) the difference in the amount the hospital
is estimated to be paid under paragraph (2)(A) of this subsection and the
amount they would be paid if the percentage described in paragraph (2)(A) of
this subsection were the same percentage cited in subparagraph (A)(i) of this
paragraph; and
(ii) the difference
in the amount the hospital is estimated to be paid under paragraph (3)(C) of
this subsection and the amount they would be paid if the percentage described
in paragraph (3)(B) of this subsection were the same percentage cited in
subparagraph (A)(ii) of this paragraph.
(h) Distribution of CHIRP payments.
(1) CHIRP payments for UHRIP and
ACIA components will be based upon actual utilization and will be paid as a
percentage increase above the contracted rate between the MCO and the hospital.
The determination of percentage of rate increase will be as follows.
(A) HHSC will determine the percentage of
rate increase applicable to one or more classes of hospital by program
component.
(B) UHRIP rate increases
will be determined by HHSC to be the percentage that is estimated to result in
payments for the class that are equivalent to the amount described under
subsection (g)(2)(A) of this section.
(C) ACIA will be determined by HHSC to be a
percentage that is estimated to result in payments for the hospital that are
equivalent to the amount described under subsection (g)(3)(D) of this
section.
(2) For program
periods beginning on or after September 1, 2024, CHIRP final payments for the
APHRIQA component will be based on achievement of performance measures
established in accordance with §
353.1307 of this subchapter.
(A) Except as otherwise provided by
subparagraph (D) of this paragraph, MCOs will be directed by HHSC to pay
hospitals on a monthly, quarterly, semi-annual, or annual basis that aligns
with the applicable performance achievement measurement period under §
353.1307 of this
subchapter.
(B) MCOs will be
required to distribute payments to providers within 20 business days of
notification by HHSC of provider achievement results.
(C) Funds that are not earned by a provider
due to failure to achieve performance requirements will be redistributed to
other hospitals in the same hospital SDA and class based on each hospital's
proportion of total earned APHRIQA funds in the SDA. If no other hospital in
the SDA and class receives performance payments, unearned funds will be
redistributed to all hospitals in the SDA based on each hospital's proportion
of total earned APHRIQA funds and projected to be paid to the hospitals through
UHRIP and ACIA.
(D) For any
performance measures for which achievement is determined on an annual basis, a
hospital may elect, on the hospital's enrollment application, to receive two
interim payments the amount of each which will be equal to 20 percent of the
total estimated value of the hospital's potential APHRIQA payment if the
hospital were to earn 100 percent of available payments under the APHRIQA
component.
(i) Any interim payments will be
reconciled with final payment for APHRIQA after measurement achievement has
been determined under §
353.1307 of this subchapter. If a
hospital's final payment is calculated to be less than the amount that the
hospital was paid on an interim basis, the interim payments are subject to
recoupment as described by this subparagraph. If a hospital's final payment is
calculated to be greater than the amount that the hospital was paid on an
interim basis, the hospital's final payment will be an amount equal to the
amount the hospital earned for measurement achievement under §
353.1307 of this subchapter minus
the amount the hospital was paid on an interim basis.
(ii) Prior to the beginning of the program
period, for hospitals that make the election described by this subparagraph,
HHSC will calculate the total estimated value of the hospital's potential
APHRIQA payment if the provider were to earn 100 percent of available payments
under the APHRIQA component. MCOs will distribute interim payments described by
this subparagraph to enrolled hospitals as directed by HHSC.
(iii) Interim payments made under this
subparagraph are not an indication of presumed measurement achievement by a
provider under §
353.1307 of this
subchapter.
(iv) If a provider is
notified by HHSC that an interim payment, or any portion of an interim payment,
is being recouped under this subparagraph, the provider must return all funds
subject to recoupment to the MCO that made the interim payment subject to
recoupment within 20 business days of notification by HHSC.
(3) HHSC will
limit the amounts paid to providers determined pursuant to this subsection to
no more than the levels that are supported by the amount described in
subsection (i)(3) of this section. Nothing in this section may be construed to
limit the authority of the state to require the sponsoring governmental
entities to transfer additional funds to HHSC following the reconciliation
process described in §
353.1301(g) of
this subchapter, if the amount previously transferred is less than the
non-federal share of the amount expended by HHSC in the SDA for this
program.
(4) After determining the
percentage of rate increase using the process described in paragraph (1) of
this subsection, HHSC will modify its contracts with the MCOs in the SDA to
direct the percentage rate increases.
(i) Non-federal share of CHIRP payments. The non-federal share of all CHIRP payments is funded through IGTs from sponsoring governmental entities. No state general revenue is available to support CHIRP.
(1) HHSC will communicate suggested IGT
responsibilities for the program period with all CHIRP hospitals at least 10
calendar days prior to the IGT declaration of intent deadline. Suggested IGT
responsibilities will be based on the maximum dollars to be available under the
CHIRP program for the program period as determined by HHSC, plus eight percent;
and forecast member months for the program period as determined by HHSC. HHSC
will also communicate estimated revenues each enrolled hospital could earn
under CHIRP for the program period with those estimates based on HHSC's
suggested IGT responsibilities and an assumption that all enrolled hospitals
will meet 100 percent of their quality metrics and maintain consistent
utilization with the prior year.
(2) Sponsoring governmental entities will
determine the amount of IGT they intend to transfer to HHSC for the entire
program period and provide a declaration of intent to HHSC no later than 21
business days before the first half of the IGT amount is transferred to HHSC.
(A) The declaration of intent is a form
prescribed by HHSC that includes the total amount of IGT the sponsoring
governmental entity intends to transfer to HHSC.
(B) The declaration of intent is certified to
the best knowledge and belief of a person legally authorized to sign for the
sponsoring governmental entity but does not bind the sponsoring governmental
entity to transfer IGT.
(3) HHSC will issue an IGT notification to
specify the date that IGT is requested to be transferred no fewer than 14
business days before IGT transfers are due. Sponsoring governmental entities
will transfer the first half of the IGT amount by a date determined by HHSC,
but no later than June 1. Sponsoring governmental entities will transfer the
second half of the IGT amount by a date determined by HHSC, but no later than
December 1. HHSC will publish the IGT deadlines and all associated dates on its
Internet website no later than March 15 of each year.
(j) Effective date of rate increases. HHSC will direct MCOs to increase rates under this section beginning the first day of the program period that includes the increased capitation rates paid by HHSC to each MCO pursuant to the contract between them.
(k) Changes in operation. If an enrolled hospital closes voluntarily or ceases to provide hospital services in its facility, the hospital must notify the HHSC Provider Finance Department by hand delivery, United States (U.S.) mail, or special mail delivery within 10 business days of closing or ceasing to provide hospital services. Notification is considered to have occurred when the HHSC Provider Finance Department receives the notice.
(l) Data correction request. Any provider-requested data or calculation correction must be submitted prior to the date on which the first half of the IGT amount is due under subsection (i)(3) of this section.
(m) Reconciliation. HHSC will reconcile the amount of the non-federal funds actually expended under this section during the program period with the amount of funds transferred to HHSC by the sponsoring governmental entities for that same period using the methodology described in § 353.1301(g) of this subchapter.
(n) Recoupment. Payments under this section may be subject to recoupment as described in § 353.1301(j) and § 353.1301(k) of this subchapter.
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