PART 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION
CHAPTER 355. REIMBURSEMENT RATES
SUBCHAPTER J. PURCHASED HEALTH SERVICES
The Texas Health and Human Services Commission (HHSC) adopts amendments to §355.8061, concerning Outpatient Hospital Reimbursement, §355.8121, concerning Reimbursement to Ambulatory Surgical Centers, §355.8610, concerning Reimbursement for Clinical Laboratory Service, and §355.8660, concerning Renal Dialysis Reimbursement.
The amendments are adopted without changes to the proposed text as published in the June 23, 2023, issue of the Texas Register (48 TexReg 3375). The rules will not be republished.
BACKGROUND AND JUSTIFICATION
The amendments implement the outpatient prospective payment system (OPPS) reimbursement as required by Texas Government Code §536.005, (enacted in the 82nd Texas Legislature, 1st Called Session, 2011) which requires that HHSC "convert outpatient hospital reimbursement systems to an appropriate prospective payment system." In addition, the 2014-15 General Appropriations Act, Senate Bill 1, 83rd Legislature, Regular Session, 2013 (Article II, HHSC, Rider 38) stated that "in order to ensure that access to emergency and outpatient services remain in rural parts of Texas, it is the intent of the Legislature that when HHSC changes its outpatient reimbursement methodology to a 3M(™) Enhanced Ambulatory Patient Groups (EAPG) or similar methodology, HHSC shall promulgate a separate or modified payment level for the above defined providers." HHSC has been unable to implement EAPGs in the current Medicaid Management Information System (MMIS) without significant technology costs. Now that the agency is moving to a modernized MMIS, EAPGs are being implemented on the same timeframe. The contracts related to the modernized MMIS anticipated the new system would become operational on September 1, 2023, but the implementation date has been delayed and the OPPS transition to EAPGs is expected to occur in conjunction with the MMIS modernization implementation. At this time, the implementation is projected to occur on December 1, 2024. Public notices will be issued if there are changes to the implementation timeframe that result from additional modifications to contracts associated with the MMIS modernization implementation.
The OPPS that HHSC will implement in fee-for-service is the EAPG grouper methodology. EAPGs are a visit-based classification system intended to reflect the type of resources utilized in outpatient encounters for patients with similar clinical characteristics. EAPGs are used in outpatient prospective payment systems for a variety of outpatient settings, including hospital emergency rooms, outpatient clinics, and same-day surgery. EAPGs are proprietary to 3M Health Information Systems and 3M initially developed Ambulatory Patient Groups prior to 2000. In 2007, 3M made significant changes to its earlier variant of the grouper to reflect current clinical practice, including coding and billing practices, and to describe a broader, non-Medicare population, which resulted in what we now call EAPGs. EAPGs group procedures and medical visits that share similar clinical characteristics, resource utilization patterns, and cost so that payment is based on the relative intensity of the entire visit. The EAPG grouping system is designed to recognize clinical and resource variations in severity, which results in higher payments for higher-intensity services and lower payments for less-intensive services. While each claim may receive multiple EAPGS, each procedure is assigned to only one EAPG.
HHSC continues to work through the evaluation of the potential impacts in payments to hospitals and other impacted providers and shared the results of the preliminary financial models in September 2023. The financial impact models will continue to be refreshed as additional data becomes available prior to implementation of EAPGs. The rule amendments update the reimbursement methodology in each of the four rules to clarify the transition to EAPGs.
COMMENTS
The 31-day comment period ended July 24, 2023.
During this period, HHSC received 11 comments from three providers, two managed care associations, one managed care organization, and five provider associations. Comments on the proposed rules were received from the following entities: Texas Organization of Rural and Community Hospitals (TORCH), Children's Hospital Association of Texas (CHAT), Teaching Hospitals of Texas (THOT), Texas Hospital Association (THA), Texas Association of Health Plans (TAHP), Parkland Community Health Plan (PCHP), Texas Children's Hospital (TCH), DaVita, Fresenius Medical Care, and the Texas Ambulatory Surgery Center Society (TASCS).
A summary of comments relating to the rules and HHSC's responses follow.
Comment: Multiple commenters from Medicaid Managed Care Organizations (MCOs) suggested that HHSC should delay the transition to the OPPS methodology. MCOs noted that they believe this transition will have a significant impact on payments to Hospitals and MCOs in Medicaid and respectfully requested that HHSC delay the transition to EAPGs pending the development of a workgroup and a possible phased implementation plan.
Response: HHSC appreciates this suggestion and plans to continue communication with stakeholders, including MCOs and hospitals, prior to implementation of EAPGs and the MMIS modernization initiative. HHSC published preliminary financial modeling in September 2023 and an updated notice regarding the timeline from the MMIS modernization initiative. The implementation date of the OPPS methodological change will coincide with the implementation of the MMIS modernization, currently projected to occur on December 1, 2024. No changes were made to the rule text in response to this comment.
Comment: Multiple commenters in different provider groups suggested that HHSC should delay the transition, citing substantial system and operational modifications on the part of MCOs--including updating payment systems, aligning policies, reconfiguring claims processing, and training staff--but also comprehensive provider engagement. Transitioning to the EAPG rate methodology will also require renegotiating contracts with the MCO's network providers and thoroughly educating them on the new payment system.
Response: HHSC appreciates this suggestion and plans to continue communication with stakeholders, including MCOs and hospitals, prior to implementation of EAPGs and the MMIS modernization initiative. HHSC published preliminary financial modeling in September 2023 and an updated notice regarding the timeline from the MMIS modernization initiative. The implementation date of the OPPS methodological change will coincide with the implementation of the MMIS modernization, currently projected to occur on December 1, 2024. No changes were made to the rule text in response to this comment.
Comment: Multiple commenters suggested that HHSC should delay the transition. Adequate time is required to undertake these complex tasks while maintaining open, constructive dialogue with Medicaid providers to address any concerns or issues that may arise. Importantly, the original proposal indicated a 12-18-month implementation timeline was needed. Now that Medicaid-managed care represents 96% of enrollees, it underscores the importance of collaboration between HHSC and Texas MCOs when planning and implementing such significant changes.
Response: HHSC appreciates this suggestion and plans to continue communication with stakeholders, including MCOs and hospitals, prior to implementation of EAPGs and the MMIS modernization initiative. HHSC published preliminary financial modeling in September 2023 and an updated notice regarding the timeline from the MMIS modernization initiative. The implementation date of the OPPS methodological change will coincide with the implementation of the MMIS modernization, currently projected to occur on December 1, 2024. No changes were made to the rule text in response to this comment.
Comment: Multiple commenters asked that HHSC provide their usual standards to the transition to the new OPPS EAPG system so that providers have sufficient notice and detail regarding the changes to the outpatient payments.
Response: HHSC appreciates this suggestion and plans to continue communication with stakeholders, including MCOs and hospitals, prior to implementation of EAPGs and the MMIS modernization initiative. HHSC published preliminary financial modeling in September 2023 and an updated notice regarding the timeline from the MMIS modernization initiative. The implementation date of the OPPS methodological change will coincide with the implementation of the MMIS modernization, currently projected to occur on December 1, 2024. The financial modeling published by HHSC is intended to allow interested parties to evaluate the impact on their particular hospital(s) and provide feedback on policy decisions made by HHSC for consideration prior to implementation. No changes were made to the rule text in response to this comment.
Comment: One commenter expressed concern the proposed methodology for renal dialysis facilities is not based upon a Medicare methodology and the proposed new methodology using the outpatient prospective payment system should be separate from the End-Stage Renal Disease (ESRD) payment system. The commenter requested a minimum rate of $350 per treatment to cover costs of care and noted they believed a lower reimbursement rate would be detrimental to clinic operations. Since dialysis is not paid for using this system, the commenter is not sure what aspect of Medicare payment this proposal is using as an anchor for Medicaid dialysis rates. Commenters requested financial modeling of results for renal facilities using the EAPG methodology since that is not how dialysis is paid for in Medicare. Providers expressed concerns that a reduction in reimbursement may result in clinic closures as COVID has negatively impacted the renal dialysis industry.
Response: HHSC recognizes the ESRD facilities' concerns and plans to publish further detail on the expected implementation timeline and fiscal impacts through modeling as well as in Medicaid policy. This modeling will allow interested parties to evaluate the impact on their particular organization, the estimated rate to be paid, and provide feedback on policy decisions. No changes were made to the rule text in response to this comment.
Comment: Multiple commenters expressed concerns related to the proposed use of a proprietary software that will require hospitals to purchase a proprietary system as a basis for understanding (to the degree 3M allows through that purchase) how provider rates are established and what they will be reimbursed through 3M and the state.
Response: Providers will not be required to purchase EAPG software to receive reimbursement. No changes were made in response to this comment.
Comment: One commenter recommended that HHSC seek a no-or reduced cost fee for providers in its current or future contracts with 3M.
Response: Providers will not be required to purchase EAPG software to receive reimbursement. No changes were made in response to this comment.
Comment: One commenter recommended that HHSC create tools for providers such as what Nebraska and Florida developed: essentially an online EAPG calculator so that providers can understand and assess their payments.
Response: HHSC appreciates the recommendation and will evaluate the posted calculators for Nebraska and Florida to determine applicability as the OPPS transition continues. No changes were made to the rule text in response to this comment.
Comment: One commenter questioned the statement "...no adverse impact to small businesses..." since Ambulatory Surgical Centers (ASCs) are small businesses and are struggling with the post-COVID environment. The commenter encouraged HHSC to reach a full and complete understanding of the impact of this initiative on providers prior to mandating its implementation.
Response: HHSC is moving to implement the transition to OPPS rates as legislatively directed. The OPPS system applies to many services and providers of various sizes. While the overall impact will be fiscally neutral, it is probable that there will be shifts that may result in increases in revenue for some small or rural hospitals and decreases in revenue for others, but it is not possible to know the precise impact as it will be based on the services provided by each entity following implementation. No changes were made to the rule text in response to this comment.
Comment: Multiple commenters requested modification of the rule before adoption to specify whether the exceptions to OPPS listed are an all-inclusive list and describe the reimbursement methodology applicable to all exceptions or refer to other regulations or written policy. A request was also made to exempt orphan drugs, oncology drugs, high-cost medical equipment, and implants from the OPPS. The following language was suggested: "Any other item or service designated by the Executive Commissioner upon 90 days' notice to providers."
Response: The exemptions listed in the rule text are specifically excluded from the OPPS methodology in order to clearly distinguish what is included and what is not. HHSC plans to use the rule text to communicate specific services and providers that will be included in the OPPS methodology and will update if that list changes prior to the implementation. No changes were necessary in response to this comment.
Comment: One commenter requested class-specific base rates similar to the inpatient hospital methodology.
Response: HHSC did develop base rates based on current hospital classes (children's, urban, and rural) for implementation of the OPPS methodology. No changes were necessary in response to this comment.
Comment: One commenter urged HHSC to include both non-covered and covered charges where there are daily limits in the data.
Response: HHSC included claims for only allowable services under the OPPS methodology. HHSC is not making adjustments to include more allowable procedure codes than currently a benefit in Medicaid fee for service. No changes were made in response to this comment.
Comment: One commenter requested add-ons for geographic location, patient acuity level, and a transitional teaching add-on until a future rebasing.
Response: HHSC did not create any new add-ons when completing the initial modeling as HHSC did not receive appropriations to use for the payment of such an add-on. HHSC will collect additional public comments on financial impacts of the modeling and, if the creation of an add-on is deemed appropriate, HHSC will consider that for future rule changes. No changes were made in response to this comment.
Comment: One commenter recommended the 3M model include social factor assessments as well as clinical intensity in the EAPG system.
Response: The 3M model is an OPPS model used in other states currently. HHSC can change weights as clinically appropriate based on Texas Medicaid policies but cannot modify the 3M software structure. No changes were made in response to this comment.
Comment: One commenter recommended the proposed rules be updated to include details for hospitals to assess the impact of this transition, such as information about base rates methodology, policy adjustments, and any outlier or carved out payments.
Response: HHSC appreciates the recommendation. The level of detail in the rule is consistent with other initiatives and allows HHSC to adapt and more quickly implement federal coding changes or directives. No changes were necessary in response to this comment.
Comment: One commenter recommended that HHSC change the proposed rule implementation timeline to at least 12 months after the implementation of the MMIS to provide time for policy decisions, modeling of impact, stakeholder input, testing, and for outpatient providers to plan for and implement this significant change in payment methodologies.
Response: HHSC appreciates the commenter's perspective and plans to publish further detail on expected implementation timelines and fiscal impacts through modeling as well as in Medicaid policy. This modeling will allow interested parties to evaluate the impact on their particular hospital(s) and provide feedback if preferred. No changes were made to the rule text in response to this comment.
Comment: One commenter recommended that HHSC beta test the OPPS methodology and estimate impacts before HHSC schedules the implementation.
Response: HHSC is required by legislative direction to implement an OPPS methodology and plans to do so in conjunction with the modernized MMIS system. This has been pending MMIS modernization and HHSC does not plan to beta test prior to implementation. No changes were made to the rule text in response to this comment.
Comment: One commenter asked for policy adjustments and add-ons that recognize highly utilized Medicaid hospitals, as they are heavily reliant on Medicaid payments, and include outlier payments for children, similar to what is provided for inpatient services.
Response: HHSC appreciates the commenter's perspective and plans to publish further detail on the expected implementation timeline and fiscal impacts through modeling as well as in Medicaid policy. This modeling will allow interested parties to evaluate the impact on their particular hospital(s). No changes were made to the rule text in response to this comment.
Comment: One commenter asked for guardrails on the program - at least that the system will accomplish the legislative direction given to the agency on adopting an OPPS and that HHSC does not intend to harm hospitals through the adoption of the EAPG system.
Response: HHSC is adopting the changes to implement the OPPS methodology using EAPGs as directed by the Texas Legislature. HHSC plans to publish further detail on expected implementation timelines and fiscal impacts through modeling as well as in Medicaid policy. This modeling will allow interested parties to evaluate the impact on their particular hospital(s) and provide feedback if preferred. This rule adoption and subsequent implementation will demonstrate that HHSC is implementing an OPPS system as directed. No changes were made to the rule text in response to this comment.
DIVISION 4. MEDICAID HOSPITAL SERVICES
STATUTORY AUTHORITY
The amendment is adopted under Texas Government Code §531.033, which authorizes the Executive Commissioner of HHSC to adopt rules necessary to carry out HHSC's duties; Texas Human Resources Code §32.021 and Texas Government Code §531.021(a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas; and Texas Government Code §531.021(b-1), which establishes HHSC as the agency responsible for adopting reasonable rules governing the determination of fees, charges, and rates for medical assistance payments under the Texas Human Resources Code Chapter 32.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on November 6, 2023.
TRD-202304080
Karen Ray
Chief Counsel
Texas Health and Human Services Commission
Effective date: November 26, 2023
Proposal publication date: June 23, 2023
For further information, please call: (737) 867-7813
STATUTORY AUTHORITY
The amendment is adopted under Texas Government Code §531.033, which authorizes the Executive Commissioner of HHSC to adopt rules necessary to carry out HHSC's duties; Texas Human Resources Code §32.021 and Texas Government Code §531.021(a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas; and Texas Government Code §531.021(b-1), which establishes HHSC as the agency responsible for adopting reasonable rules governing the determination of fees, charges, and rates for medical assistance payments under the Texas Human Resources Code Chapter 32.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on November 6, 2023.
TRD-202304081
Karen Ray
Chief Counsel
Texas Health and Human Services Commission
Effective date: November 26, 2023
Proposal publication date: June 23, 2023
For further information, please call: (737) 867-7813
STATUTORY AUTHORITY
The amendment is adopted under Texas Government Code §531.033, which authorizes the Executive Commissioner of HHSC to adopt rules necessary to carry out HHSC's duties; Texas Human Resources Code §32.021 and Texas Government Code §531.021(a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas; and Texas Government Code §531.021(b-1), which establishes HHSC as the agency responsible for adopting reasonable rules governing the determination of fees, charges, and rates for medical assistance payments under the Texas Human Resources Code Chapter 32.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on November 6, 2023.
TRD-202304082
Karen Ray
Chief Counsel
Texas Health and Human Services Commission
Effective date: November 26, 2023
Proposal publication date: June 23, 2023
For further information, please call: (737) 867-7813
STATUTORY AUTHORITY
The amendment is adopted under Texas Government Code §531.033, which authorizes the Executive Commissioner of HHSC to adopt rules necessary to carry out HHSC's duties; Texas Human Resources Code §32.021 and Texas Government Code §531.021(a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas; and Texas Government Code §531.021(b-1), which establishes HHSC as the agency responsible for adopting reasonable rules governing the determination of fees, charges, and rates for medical assistance payments under the Texas Human Resources Code Chapter 32.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on November 6, 2023.
TRD-202304083
Karen Ray
Chief Counsel
Texas Health and Human Services Commission
Effective date: November 26, 2023
Proposal publication date: June 23, 2023
For further information, please call: (737) 867-7813