Current through Reg. 49, No. 38; September 20, 2024
(a) Prospective Payment System Methodology.
Rural health clinics (RHCs) employing the Prospective Payment System (PPS)
methodology, in accordance with section 1902(bb) of the Social Security Act as
amended by the Benefits Improvement and Protection Act (BIPA) of 2000
(RSA
1396a(bb)) , will be
reimbursed a prospective rate for Medicaid covered services. The Alternative
Prospective Payment System (APPS) methodology is an option through August 31,
2010. Starting September 1, 2010, all RHCs will be reimbursed using the PPS
methodology as described in this section. RHCs are reimbursed a prospective per
visit encounter rate for a visit that meets the requirements of subsections (m)
and (n) of this section.
(b) The
final base rate for both hospital-based and freestanding RHCs existing in 2000
was calculated based on one hundred percent (100%) of the average of the RHC's
reasonable costs for providing Medicaid covered services as determined from
audited cost reports for the RHC's 1999 and 2000 fiscal years. The final base
rates were calculated by adding the total audited reimbursable costs as
determined from the 1999 and 2000 cost reports and dividing by the total
audited visits for these same two periods. In the event an audited cost report
was not received from the Medicare Intermediary, the final base rate for both
hospital-based and freestanding RHCs was calculated based on one hundred
percent (100%) of the average of the RHC's reasonable costs for providing
Medicaid covered services as determined from audited or unaudited cost reports
for the RHC's 1999 and 2000 fiscal years.
(c) For hospital-based RHCs existing in 2000,
an interim base rate for each RHC was calculated from the latest finalized cost
report settlement, adjusted as provided for in subsection (l) of this section.
For freestanding RHCs existing in 2000, the interim base rate for each RHC was
based upon the per-visit rate in the Medicaid payment system as of December 31,
2000, adjusted as provided for in subsection (l) of this section. When the
Texas Health and Human Services Commission (HHSC) determined a final base rate,
interim payments were reconciled back to January 1, 2001. For RHCs that agreed
to the APPS methodology prior to August 31, 2010, adjustments were made to the
RHCs' interim rates only if the interim payments were less than what would have
occurred under the final base rate. Subsection (k) of this section contains the
interim and final base rate methodology for new RHCs.
(d) Reasonable costs, as used in setting the
interim or final base rate, or any subsequent effective rate, are defined as
those costs that are allowable under Medicare Cost Principles as outlined in 42
CFR Part 413 . The cost limits that were in place on December 31, 2000, shall
be maintained in determining reasonable costs. Reasonable costs do not include
unallowable costs.
(e) Unallowable
costs are expenses that are incurred by an RHC and that are not directly or
indirectly related to the provision of covered services, according to
applicable laws, rules, and standards. An RHC may expend funds on unallowable
cost items, but those costs must not be included in the cost report/survey, and
they are not used in calculating an interim or final base rate determination.
Unallowable costs include, but are not necessarily limited to, the following:
(1) compensation in the form of salaries,
benefits, or any form of compensation given to individuals who are not directly
or indirectly related to the provision of covered services;
(2) personal expenses not directly related to
the provision of covered services;
(3) management fees or indirect costs that
are not derived from the actual cost of materials, supplies, or services
necessary for the delivery of covered services, unless the operational need and
cost-effectiveness can be demonstrated;
(4) advertising expenses other than those for
advertising in the telephone directory yellow pages, for employee or contract
labor recruitment, and for meeting any statutory or regulatory
requirement;
(5) business expenses
not directly related to the provision of covered services. For example,
expenses associated with the sale or purchase of a business or expenses
associated with the sale or purchase of investments;
(6) political contributions;
(7) depreciation and amortization of
unallowable costs, including amounts in excess of those resulting from the
straight-line depreciation method; capitalized lease expenses, less any
maintenance expenses, in excess of the actual lease payment; and goodwill or
any excess above the actual value of the physical assets at the time of
purchase. Regarding the purchase of a business, the depreciable basis will be
the lesser of the historical but not depreciated cost to the previous owner or
the purchase price of the assets. Any depreciation in excess of this amount is
unallowable;
(8) trade discounts
and allowances of all types, including returns, allowances, and refunds
received on purchases of goods or services. These are reductions of costs to
which they relate and thus, by reference, are unallowable;
(9) donated facilities, materials, supplies,
and services including the values assigned to the services of unpaid workers
and volunteers whether directly or indirectly related to covered services,
except as permitted in 42 CFR Part 413;
(10) dues to all types of political and
social organizations and to professional associations whose functions and
purpose are not reasonably related to the development and operation of patient
care facilities and programs or the rendering of patient care
services;
(11) entertainment
expenses except those incurred for entertainment provided to the staff of the
RHC as an employee benefit. An example of entertainment expenses is lunch
during the provision of continuing medical education on-site;
(12) board of directors' fees, including
travel costs and meals, provided for these directors;
(13) fines and penalties for violations of
statutes, regulations, and ordinances of all types;
(14) fund-raising and promotional expenses,
except as noted in paragraph (4) of this subsection;
(15) interest expenses on loans pertaining to
unallowable items, such as investments. Also, the interest expense on that
portion of interest paid that is reduced or offset by interest
income;
(16) insurance premiums
pertaining to items of unallowable cost;
(17) any accrued expenses that are not a
legal obligation of the provider or are not clearly enumerated as to dollar
amount;
(18) mileage expense
exceeding the current reimbursement rate set by the federal government for its
employee travel;
(19) cost for
goods or services that are purchased from a related party and which exceed the
original cost to the related party;
(20) out-of-state travel expenses not related
to the provision of covered services, except out-of-state travel expenses for
training courses that increase the quality of medical care and/or the operating
efficiency of the RHC; and
(21)
over-funding contributions to self-insurance funds that do not represent
payments based on current liabilities.
(f) Increases in an RHC's final base rate or
the effective rate shall be the rate of change in the Medicare Economic Index
(MEI) for Primary Care.
(g) The
effective rate is the rate paid to the RHC for the RHC's fiscal year. The
effective rate equals the final base rate plus the MEI for each of the RHC's
fiscal years since the setting of its final base rate. The effective rate shall
be calculated at the start of each RHC's fiscal year and shall be applied
prospectively for that fiscal year.
(h) Final Base Rate Reimbursement and
adjustments.
(1) Reimbursement. It is the
intent of the state to ensure each RHC is reimbursed at one hundred percent
(100%) of its reasonable costs .
(2) Adjustments.
(A) A rate adjustment shall be made to the
effective rate if the RHC can show that an increase is due to a change in scope
as defined in subsection (i)(1) - (6) of this section.
(B) An RHC may request an adjustment of the
effective rate equal to one hundred percent (100%) of reasonable costs by
submitting a cost report to HHSC and including the necessary documentation to
support a claim that the RHC has undergone a change in scope.
(i) A cost report filed to request an
adjustment in the effective rate may be filed at any time during an RHC's
fiscal year but no later than five (5) calendar months after the end of the
RHC's fiscal year.
(ii) All
requests for adjustment in the RHC's effective rate must include at least 6
months of financial data.
(iii) Any
effective rate adjustment granted as a result of such a filing must be
completed within sixty (60) days of receipt of a workable cost report and
documentation supporting the RHC's claim that it has undergone a change in
scope.
(iv) Within sixty (60) days
of receiving a workable cost report, HHSC or its designee shall make a
determination regarding a new effective rate.
(C) HHSC also may adjust the effective rate
of an RHC on its own initiative if it is determined that a change in scope has
occurred and an adjustment to the effective rate is warranted based on the
audit of the cost report defined in subsection (l) of this section. The new
effective rate shall become effective the first day of the month immediately
following its determination and shall not be applied retroactively.
(3) Final base rate
Reconciliation.
(A) When HHSC determines a
final base rate, interim payments will be reconciled back to the beginning of
the interim period.
(B) If the
final base rate is greater than the interim base rate, HHSC will compute and
pay the RHC a settlement payment that represents the difference in rates for
the services provided during the interim period.
(C) If the final base rate is less than the
interim base rate, HHSC will compute and recover from the RHC a recoupment
payment that represents the difference in rates for the services provided
during the interim period.
(i) Any request to adjust an effective rate
must be accompanied by documentation showing that the RHC has had a change in
scope. A change in scope of services provided by an RHC includes the addition
or deletion of a service or a change in the magnitude, intensity, or character
of services currently offered by an RHC or one of the RHC's sites. A change in
scope includes:
(1) an increase in service
intensity attributable to changes in the types of patients served, including
but not limited to, patients with HIV/AIDS, the homeless, the elderly,
migrants, those with other chronic diseases or special populations;
(2) any changes in services or provider mix
provided by an RHC or one of its sites;
(3) changes in operating costs that have
occurred during the fiscal year and which are attributable to capital
expenditures, including new service facilities or regulatory
compliance;
(4) changes in
operating costs attributable to changes in technology or medical practices at
the RHC;
(5) indirect medical
education adjustment and a direct graduate medical education payment that
reflects the costs of providing teaching services to interns and residents;
or
(6) any changes in scope
approved by the Health Resources and Service Administration (HRSA).
(j) A complete and workable cost
report includes the following:
(1) for a
hospital-based RHC, complete Form CMS-2552-10 and include the attached data :
(A) M-1 (analysis of provider-based RHC
costs);
(B) M-2 (allocation of
overhead to RHC services);
(C) M-3
(calculation of reimbursement settlement for RHC services);
(D) M-5 (analysis of payments to
hospital-based RHC services rendered to program beneficiaries);
(E) S-8 (statistical data/information
purposes);
(F) RHC net expenses for
allocation of costs for services rendered on or after January 1, 1998, reported
on the hospital's worksheet A, column 7 traced properly to the RHC's total
facility costs on line 32, column 7 on M-1 worksheet; and
(G) hospital's overhead worksheet expenses
allocated to each of the hospital-based RHC cost centers on worksheet B, Part I
(column 27 minus column 0) traced properly to line 15, column 5 on M-2
worksheet for each hospital-based RHC.
(2) for a freestanding RHC, a complete and
accurate Form CMS-222-17 .
(k) Once the final base rate for an RHC has
been calculated, the RHC will be paid its effective rate without the need to
file a cost report unless requested by HHSC. A cost report will be required if
the RHC is seeking to adjust its effective rate as an RHC or the state may
request, on a periodic basis, that an RHC file a cost report for its most
current fiscal year, within five (5) months of notification by HHSC or its
designee. HHSC or its designee may delay or withhold vendor payment to a
provider upon failure to submit a requested cost report until a complete and
workable cost report has been received by HHSC or its designee.
(l) New hospital-based and new freestanding
RHCs cost report requirements, rate calculations, and cost settlements.
(1) Projected Cost Report.
(A) Cost reports containing reasonable costs
anticipated to be incurred during the RHC's initial fiscal year may be filed by
new RHCs within 90 days of enrollment.
(B) New hospital-based RHCs interim base
rate.
(i) RHCs associated with a hospital
with 50 beds or less, the interim base rate will be set at eighty percent (80%)
of the anticipated reasonable cost.
(ii) RHCs associated with a hospital with
more than 50 beds, the interim base rate will be the lesser of the anticipated
reasonable costs or the Medicare maximum payment rate (federal
ceiling).
(C) New
freestanding RHCs interim base rate will be set at the lesser of the
anticipated reasonable costs or the Medicare maximum payment rate (federal
ceiling).
(2) All RHCs
opting not to file a projected cost report will have its interim base rate set
at seventy-five percent (75%) of the federal ceiling.
(3) Cost settlement.
(A) The cost settlement must be completed
within six (6) months of receipt of the first 12-month cost report.
(B) The rate established by the cost
settlement process shall be the final base rate. When HHSC determines a final
base rate, interim payments will be reconciled back to the beginning of the
interim period.
(C) If the final
base rate is greater than the interim base rate, HHSC will compute and pay the
RHC a settlement payment that represents the difference in rates for the
services provided during the interim period.
(D) If the final base rate is less than the
interim base rate, HHSC will compute and recover from the RHC a recoupment
payment that represents the difference in rates for the services provided
during the interim period.
(E) Each
RHC must file a cost report with HHSC or its designee within five (5) months of
the end of the RHC's initial fiscal year.
(F) If a provider fails to submit a cost
report, HHSC or its designee may delay or withhold vendor payment to the
provider until a complete and workable cost report has been received by HHSC or
its designee.
(4) A new
Freestanding RHC location established by an existing Freestanding RHC
participating in the Medicaid program will receive the same effective rate as
the RHC establishing the new location.
(5) A Freestanding RHC establishing a new
location may request an adjustment to its effective rate as provided herein if
its costs have increased as a result of establishing a new location.
(m) A medical visit is a
face-to-face or telemedicine medical service encounter between an RHC patient
and a physician, physician assistant, advanced nurse practitioner, certified
nurse-midwife, visiting nurse, or clinical nurse practitioner. Encounters with
more than one health professional and multiple encounters with the same health
professional that take place on the same day and at a single location
constitute a single visit, except where one of the following conditions exists:
(1) after the first encounter, the patient
suffers illness or injury requiring additional diagnosis or treatment;
or
(2) the RHC patient has a
medical visit and an "other" health visit as defined in subsection (n) of this
section.
(n) An "other"
health visit includes, but is not limited to, a face-to-face or telehealth
service encounter between an RHC patient and a clinical social
worker.
