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• THHSC Publishes Hospital Payment Rules, Advances Medicaid Reform
• Final Push: Urge Extension of Medicaid Moratoria
• Joint Commission Board Delays Medical Staff Standard
• TMB LIST Program Streamlines Licensure Application Process
• Special Election Scheduled for Senate District 17
• Hotel Deadline Extended for THA's Psychiatric Conference
• Important Dates
• Educational Opportunities
• Legal Update
• Texas Register Highlights
• Federal Register Highlights

THHSC Publishes Hospital Payment Rules,
Advances Medicaid Reform

Over the past few weeks, a number of critical developments have emerged related to reform of the Texas Medicaid program and hospital Medicaid payments. Four important reform-related initiatives under consideration by the Texas Health and Human Services Commission include: 

• Preparation of the state fiscal year 2010-2011 Legislative Appropriation Request;
• Publication of newly proposed hospital inpatient payment rules;
• Redesign of the non-state hospital Medicaid disproportionate share payment program; and
• Establishment of the Texas Health Opportunity Pool Trust Fund through approval of the Medicaid federal waiver.

THHSC Appropriation Request
In late spring, THHSC began work on the agency's 2010-2011 Legislative Appropriations Request. Scheduled for submission to the Legislative Budget Board later this summer, the LAR represents the first step in what promises to be a lengthy budget process that will be overseen by the Texas Legislature. The Texas Hospital Association submitted a formal comment letter and is hopeful that the agency will consider some of its recommendations.

Medicaid Inpatient Rules
On May 30, THHSC published five Medicaid proposed payment rules affecting Texas hospitals, including proposed rules on THHSC's $356 million proposal to rebase Medicaid MS-DRG payments effective Sept. 1, 2008:

• 1 TAC §355.8052 Inpatient Hospital Reimbursement is a new rule defining the administrative policies that THHSC will use to calculate Medicaid MS-DRG payments beginning Sept. 1, 2008;
• 1 TAC §355.8054 Children's Hospital Reimbursement Methodology is a new rule that defines the methodology used to reimburse children's hospitals in the Texas Medicaid program;
• 1 TAC §355.8056 State-Owned Teaching Hospital Reimbursement Methodology defines the methods used by THHSC to reimburse state-owned teaching hospitals;
• 1 TAC §355.8061 Payment for Hospital Services is an existing rule modified by THHSC to reference newly created rules proposed by the agency; and
• 1 TAC §355.8063 Reimbursement Methodology for Inpatient Hospital Services is the existing inpatient payment rule which has been modified to reflect and accommodate changes made in other rules proposed by THHSC. 

    Hospitals have 30 days to comment on the proposed rules, and it is likely that the proposed rules will be discussed during the THHSC Council meeting set for June 18. As outlined below, THHSC has linked the rebasing of Medicaid inpatient rates to reform of the Medicaid DSH program and establishment of the Texas Health Opportunity Pool Trust Fund.

Medicaid DSH Reform
THHSC has not yet published the much-anticipated Medicaid disproportionate share payment rules. Introduced at last month's Hospital Payment Advisory Committee meeting, the proposed DSH payment rules dramatically modify the non-state hospital disproportionate share payment program. Key initiatives of the proposed rules include:

• Reducing Medicaid DSH payments by approximately $250 million;
• Revising the Medicaid DSH weights used to reimburse the large public hospitals that transfer state monies used to fund the DSH program; and
• Modifying other provisions in the rule including:
• • Revising the appeals process;
  • Limiting revenues that can be counted as state and local revenues in the payment formula; and
  • Restricting hospitals from voluntary nonparticipation in the program.   

    Since the rules were approved by the Medical Care Advisory Committee in May, hospital representatives met several times with THHSC personnel to discuss the agency's draft rule, and to provide comments on proposals contained in the rule. The Texas Hospital Association and other hospital industry groups continue to monitor the development of the proposed DSH rule, to suggest modifications prior to publication, and to press the agency for additional financial impact analysis related to DSH and MS-DRG rate rebasing. The draft DSH rules are expected to be debated during the June 18 THHSC council meeting.  

Texas Health Opportunity Pool
If THHSC successfully negotiates the terms of a Medicaid reform waiver, the commission likely will reduce Medicaid DSH payments made to non-state owned hospitals by approximately $250 million annually. Under the Medicaid reform plan laid out by the agency, the funds will be placed into the Texas Health Opportunity Pool. Proceeds from the pool will be used to:

• Provide grants for infrastructure improvements and innovative programs to reduce uncompensated care;
• Implement a limited catastrophic care program for parents and caretakers;
• Implement a health care subsidy program for low-income uninsured;
• Support hospital safety-net funding consistent with state health policy goals; and
• Support new seamless funding options for the Medicaid Health Insurance Premium Payment program, CHIP Premium Assistance and Health Opportunity Pool programs to facilitate family coverage under employer-sponsored insurance.

    Though specific details for the initiatives listed above remain sketchy, it is clear that the development of a robust catastrophic care program built around hospital inpatient care will begin to address the state's uninsured crisis. It is anticipated that the catastrophic care program under consideration by THHSC will provide coverage for physician and inpatient Medicaid care. (John Hawkins/Charles Bailey, J.D./John Berta).

• Trends in behavioral health;
• Hospital-based inpatient psychiatric services core measures;
• Common complaints reviewed by surveyors;
• Mental health regulations;
• Ethical considerations;
• Anti-addiction vaccines; and
• Much more!

 For more information, view the brochure or register online. (Mitzi Ressmann, RN, FACHE/Ernie Schmid, FACHE).

Important Dates 

June 9-10
TMB licensing seminar, Brownsville

June 13
Deadline to comment on proposed IPPS rules

June 17-18
TMB licensing seminar, Midland

June 18
Texas Health and Human Services Commission Council meeting, Austin

June 23-24
TMB licensing seminar, Austin

June 24
AHA conference call on never events policies

June 26
HOSPAC Special Leadership Reception, South Padre Island

Audioconference: Establishing Fair Market Value in Hospital-Physician Arrangements
(Part 2, Keeping Current on Compliance)
June 12
View details.

Webinar Series: Managing Joint Commission Standards for Environment of Care
June 13
July 11
Aug. 22
Sept. 19
Oct. 17
Nov. 14

THA Psychiatric Services Conference
July 14-15, San Antonio
View details.

THT Conference
July 24-26, San Antonio
View details.

Audioconference: Observation Services: Coding, Billing and Compliance
July 31
View details.

Rural Health Trifecta
Aug. 5-7, Austin 
View details.

THA offers
audioconferences and webinars on a wide range of topics. View a complete listing of webinars. For information on all of THA's upcoming educational events, visit THA's online Education Calendar.

Legal Update

By Fulbright & Jaworski, of counsel to THA

CMS Clarifies Physician Supervision Requirements. Earlier this year, the Centers for Medicare & Medicaid Services published Transmittal 82 (Change Request 5946), with an implementation date of March 10, to “clarify existing policy” regarding physician supervision for hospital outpatient services incident to services performed in certain provider-based facilities. The Medicare regulations codified at 42 CFR 410.27 contain the coverage requirements for hospital outpatient therapeutic “incident to” services, which include surgery, infusion therapy and cardiac rehabilitation. The regulations provide that “services furnished at a department of a provider” as defined in the provider-based status regulations (42 CFR 413.65) “must be under the direct supervision of a physician. ‘Direct supervision' means the physician must be present and on the premises of the location and immediately available to furnish assistance and direction throughout the performance of the procedure. It does not mean that the physician must be present in the room when the procedure is performed.”  
    In Transmittal 82, encompassed in Medicare Benefit Policy Manual, Chapter 6, Section 20.5.1, CMS clarifies this regulatory requirement: “The physician supervision requirement is generally assumed to be met where the services are performed on hospital premises. The hospital medical staff that supervises the services need not be in the same department as the ordering physician. However, if the services are furnished at a department of the hospital which has provider-based status in relation to the hospital under 42 CFR 413.65 of the Code of Federal Regulations, the services must be rendered under the direct supervision of a physician who is treating the patient.” Strict application of this provision would require the supervising physician to be the treating physician, arguably inconsistent with the regulatory requirement. One CMS analyst explained informally that for off-campus provider-based clinics, a hospital should ensure that the supervising physician is either the treating physician or a physician qualified to render care to patients in such setting. For example, if pediatric services are furnished in a hospital off-campus provider-based facility, the supervising physician is a pediatrician. Further guidance from CMS on this subject may be forthcoming. 

CMS Issues Final Rule Changing PRRB Regulations. On May 23, CMS published its final rule relating to provider reimbursement determinations and appeals. This final rule includes several notable changes to the Provider Reimbursement Review Board appeals process, including a requirement that providers preserve their right to appeal a Medicare reimbursement determination by either claiming the item on the provider's cost report or, where the provider believes the reimbursement may not be in accordance with Medicare reimbursement policy, self-disallowing the item by filing a cost report under protest. The final rule also revises the regulations governing the amount-in-controversy requirement and the way the PRRB determines jurisdiction. Significantly, in an effort to alleviate PRRB scheduling problems, the new rule limits a provider's right to add issues to an appeal by limiting the time period of adding issues to no later than 60 days after the expiration of the applicable 180-day filing deadline. Generally, the rule is effective for appeals filed on or after Aug. 21, 2008. The provision limiting the time period for adding issues to an appeal will be applied immediately to currently filed appeals, requiring that any new issues be added to existing appeals within 60 days of the final rule's effective date.

Court Bars Implementation of Medicaid Reimbursement Rule. A federal district court on May 23 held that the U.S. Department of Health and Human Services issued a final Medicaid reimbursement rule in spite of Congress' plain intent to prohibit such an action. The U.S. District Court for the District of Columbia vacated and remanded the May 2007 final public provider rule to the Centers for Medicare & Medicaid Services. The district court ruled that the secretary of HHS violated a one-year moratorium on the Medicaid reimbursement rule by attempting to issue the regulation in final form on May 25, 2007, the same day the moratorium was signed into law. The court's opinion does not address whether the substance of the rule exceeded the agency's authority. The final rule at issue, which would limit Medicaid payments public providers receive, would narrow the definition of a public provider, limit payments to public providers to the cost of treating Medicaid patients and restrict the use of intergovernmental transfers. CMS issued the Medicaid rules being targeted by Congress in an effort to curb fraud and waste, but opponents say the rules would result in cuts to vital services for beneficiaries. The secretary for HHS announced on May 28 that CMS plans to pursue appropriate procedures to delay the effective date of the rule until Aug. 1, 2008.

The Texas Health and Human Services Commission proposes rules concerning prescription requirements relating to the new federal requirement that written prescriptions for covered outpatient drugs for Medicaid recipients must be executed on tamper-resistant prescription pads. (May 30)

The Texas Health and Human Services Commission proposes a rule concerning inpatient hospital reimbursement. The rule describes the prospective payment system methodology used to reimburse hospitals other than children's hospitals, state-owned teaching hospitals and freestanding psychiatric hospitals. (See related article above.) (May 30)

The Texas Health and Human Services Commission proposes a rule concerning children's hospital reimbursement methodology. This rule will supersede the children's hospital reimbursement methodologies for in-state and out-of-state children's hospitals. This rule will separate the Medicaid reimbursement methodologies for children's hospitals into a stand-alone rule to clarify definitions, processes and timing related to children's hospital reimbursement. The proposed rule will become effective for claims approved for payment for admissions in state fiscal year 2009. The requirements will continue to apply to claims approved for payment through state fiscal year 2008. (See related article above.) (May 30)

The Texas Health and Human Services Commission proposes a rule concerning state-owned teaching hospital reimbursement methodology. This rule will change the Medicaid reimbursement methodology for state-owned teaching hospitals from the current prospective payment reimbursement methodology to a Tax Equity and Fiscal Responsibility Act cost-based reimbursement methodology. Creating a new rule for state-owned teaching hospitals will distinguish the TEFRA methodology from the prospective payment methodology used for most other hospitals. This rule will become effective for claims approved for payment in state fiscal year 2009. The methodology will continue to apply to claims approved for payment through state fiscal year 2008. (See related article above.) (May 30)

The Texas Health and Human Services Commission proposes a rule concerning payment for hospital services. This proposal is part of a larger revision to Medicaid inpatient hospital reimbursement rules. The proposed rule adds references to inpatient hospital reimbursement methodology; children's hospital reimbursement methodology; and state-owned teaching hospital reimbursement methodology. Concurrently, THHSC is proposing three new rules to govern Medicaid inpatient hospital reimbursement. (See related article above.) (May 30)

The Texas Health and Human Services Commission proposes a rule concerning reimbursement methodology for inpatient hospital services. This proposal discontinues Medicaid high-volume payments and restores Disproportionate Share Hospital funds to approximately 60 private urban hospitals. (See related article above.) (May 30)

The Texas State Board of Examiners of Psychologists proposes rules concerning complaint disposition. The rules clarify notice to a licensee of a pending complaint. (May 30)

The Texas Department of Licensing and Regulation adopts rules, effective June 1, regarding elevators, escalators and related equipment program application fees for initial and renewal inspector registrations, fees for certificate of compliance, and fees for initial and renewal contractor registrations. The rules lower the application fee for an initial and a renewal inspector registration from $100 to $50. The rules lower the fee for a certificate of compliance from $30 to $20. In addition, the rules lower the fees for an original and renewals of contractor registrations from $300 to $115. (May 30)

The Texas State Board of Pharmacy adopts rules, effective June 8, concerning considerations for criminal offenses and sanctions for criminal offenses. The rules clarify that the crime of driving while intoxicated is considered to be directly related to the duties and responsibilities of licensees and registrants, and clarify that the sanction guidelines apply to licensees and registrants, including applicants. In addition, the rules change the title from Sanctions for Applicants with Criminal Offenses to Sanctions for Criminal Offenses. (May 30)

The Texas State Board of Pharmacy adopts rules, effective June 8, concerning purpose, definitions, internship requirements, pharmacist-intern duties, preceptor requirements and ratio of preceptors of pharmacist-interns. The rules further clarify the definition of an intern-trainee and the ratio of preceptors to pharmacist-interns. The rules implement recommendations from the Task Force on Internship Requirements; update definitions and add a new definition for an intern-trainee; update the goals and objectives to be consistent with new guidelines established by the Accreditation Council for Pharmacy Education; outline the requirements for individuals applying to the board as an intern-trainee; authorize the executive director to extend the terms of an extended internship if the administration of the North American Pharmacy Licensing Examination and/or Texas Jurisprudence Examinations is delayed; clarify the duties that may be performed by an intern-trainee working under a pharmacist preceptor serving as an instructor for a Texas college/school-based internship program; define the ratios of preceptors to pharmacist-interns; and rename Preceptor Requirements and Ratio of Preceptors of Pharmacist-Interns. (May 30)

The Texas State Board of Pharmacy adopts rules, effective June 8, concerning operation standards. The rules clarify the labeling requirements for Class E (non-resident) pharmacies shipping prescriptions to Texas residents. (May 30)

The Texas State Board of Pharmacy adopts rules, effective June 8, concerning exemption from pharmacy certification requirements. The rules clarify that pharmacy technicians exempted from the certification requirements are required to register with the board and are not exempted from registration requirements. (May 30)

The Texas State Board of Pharmacy adopts rules, effective June 8, concerning generic substitution. The rules implement legislation passed in 2007 requiring a joint committee comprised of an equal number of members from the Texas State Board of Pharmacy and the Texas Medical Board to make a recommendation to TSBP on whether to include a drug on the list of narrow therapeutic index drugs. The joint committee met twice – once to consider adding immunosuppressant drugs to the NTI list, and a second time to consider adding certain epileptic drugs to the NTI list. On both occasions, the joint committee recommended that no drugs be added to the NTI list. (May 30) (Sharon D. Johnson)

The U.S. Department of Health and Human Services issues a notice of proposed rulemaking: extension of public comment period. On April 21, HHS published a 30-day extension to the public comment period and provided clarification on the notice of proposed rulemaking, “Designation of Medically Underserved Populations and Health Professional Shortage Areas.” HHS and the Health Resources and Services Administration have received requests for a further extension to the comment period. In consideration of these requests, HHS is extending the comment period an additional 30 days, with a new closing date of June 30. (June 2)

The Centers for Medicare & Medicaid Services issues a final rule that revises the existing conditions of participation that hospices must meet to participate in the Medicare and Medicaid programs. The final conditions address the comments received on the proposed rule published on May 27, 2005. This final rule focuses on the care delivered to patients and their families by hospices, and the outcome of that care. The final requirements continue to reflect the unique interdisciplinary view of patient care and allow hospices flexibility in meeting quality standards. These changes are an integral part of the administration's efforts to achieve broad-based improvements in the quality of health care and efforts to improve the quality of care furnished through the Medicare and Medicaid programs. (June 5) (Sharon D. Johnson)