7100  Contract Management

Contract management includes activities that provide reasonable assurance that the provider agency complies with the terms, conditions, and specifications of the contract.

Because each provider agency is entitled to rely on one source for all contract-related matters, a single point of contact (which is usually the contract manager), is assigned to each contract. A contract manager has the authority and responsibility to coordinate and document all department activities related to a contract.

The contract manager must be informed about any communications between the Department of Aging and Disability Services (DADS) and the provider agency and/or any other activities of the agency that affect the contract.

The contract manager is responsible for

• arranging and/or providing technical assistance and/or orientation/training for the provider agency, and
• monitoring and analyzing information to determine if performance is consistent with the contract provisions.

7200  Compliance Monitoring

The contract manager monitors to determine if the provider agency is complying with the terms of the contract. Some provisions are the specific responsibility of other agencies. Therefore, the contract manager should notify the appropriate agency of noncompliance with these provisions.

The provider agency's operations are monitored for compliance with

• federal and state laws and regulations,
• departmental policies and procedures, and
• contract/program compliance with the terms of the contract.

A risk assessment process is used to establish fiscal and program contract monitoring plans. The risk assessment process is used to determine which

• provider agencies and what provider agency activities are the most at risk, or
• would provide the best information to assess provider agency performance.

The type and amount of contract, including previous experience with DADS and other state contracts, may be used to determine the degree of monitoring.

More frequent monitoring may be needed for contracts that

• involve large dollar amounts,
• are for a new type of service (less than six months in the program),
• are with providers that have new and/or high staff turnover,
• are with providers who were not at previously established compliance levels, or
• have a history of contract/program compliance problems.

Reference Sections 7400, Contract/Program Monitoring (Service Control), and 7500, Fiscal Monitoring.

Coordination of monitoring for contract/program compliance will be done to the extent possible. Coordination may include a team of reviewers from:

• different state agencies conducting combined reviews,
• the same agency conducting combined reviews from different service providers, or
• one reviewer conducting statewide reviews for the same service provider.

Section 7300, Onsite Monitoring Reviews, outlines procedures used by DADS staff when scheduling/conducting routine contract/program compliance, fiscal monitoring reviews, etc.

Information to compare actual achievements of performance objectives and measures in the contract to assess the degree to which they are being met can be gathered from:

• contract/program compliance monitoring. The contract manager performs contract/program compliance monitoring to ensure that clients receive services from provider agencies that meet at least a minimum level of compliance with program standards.

  Section 7400, Contract/Program Monitoring (Service Control), defines the scope and outlines the requirements of contract/program compliance based on a minimum of compliance with program standards.

• fiscal monitoring. Fiscal monitoring is conducted to ensure that the provider agency has the documentation to support reimbursement of services and that there are no errors in documentation of service delivery.

  Section 7500, Fiscal Monitoring, defines the scope and outlines the requirements of fiscal monitoring.

• Consumer Satisfaction Surveys. Consumer satisfaction surveys are conducted to determine how well services are meeting the client's needs and to promote the most effective and appropriate use of available services. Consumer surveys may be conducted face-to-face or by telephone contact. Consumer surveys may be conducted by caseworkers, contract managers, and/or regional nurses.

  Consumer satisfaction surveys are done to:

  • ensure services are necessary and appropriate.
  • assess client's satisfaction with services provided.
  • assess the quality of services provided.
  • safeguard against excess payments for services.
  • safeguard against misuse of services.
  • identify exceptional patterns of utilization so that client misuse and facility misuse can be corrected.
  • ensure identification and referral of suspected fraud or abuse or both.
• client complaint investigations. Complaints received from a client, family member, interested parties, etc. are investigated to determine validity.
• audits. DADS performs two types of financial audits; financial and cost report audits.
  1. Financial audits help assure that:
     • contracted amounts are not exceeded.
     • management is taking timely and proper action to correct any deficiencies in the expenditure patterns.
     • the provider agency maintains the records necessary to account for their use of contract funds.
     • the provider agency is reimbursed only for authorized services.

     Financial audit ensures that state and federal funds are spent properly and are accurately accounted for. The level of financial audit should provide some assurance that the provider agency's internal controls are effective and that financial data is accurately and properly reported.

     Section 7800, Audits, defines the audit process.

  2. Desk reviews and field audits of provider cost reports are conducted to ensure that financial and statistical information reported in the cost reports conforms to all applicable rules and instructions.

     The cost report data is the basis for determining a program's reimbursement amount. Therefore, it is important that only allowable costs are included and unallowable costs are excluded from the cost reports.

     Item 7820, Desk and Field Audits of Cost Reports, defines the basic objective criteria for cost reports.

• licensure. Coordination with other state agencies or departments about licensure problems and/or corrective actions about provider agencies may also be done to ensure an agency is complying with all aspects of service.

The results of monitoring activities are formally documented and used to

• support whether provider agencies are in compliance with all contract provisions, and
• determine if a sanction needs to be applied against the provider agency or if the provider agency's contract should be continued.

The contract manager may apply sanctions for noncompliance with the provider agency contract. Noncompliance may result in one or more of the following sanctions (not all inclusive):

• vendor holds,
• client holds,
• recoupment of funds, and
• termination of contracts.

7300  Onsite Monitoring Reviews

7310  Provider Agency Training

§49.25 —

(e)

After the effective date of this section or after entering into a contract, if later, DHS will schedule each provider agency to receive an orientation and/or training on the use of the monitoring guide.

DADS staff may conduct training sessions for new provider agencies on a one-to-one basis or by having several agencies trained at the same time. Although DADS is required to offer this training to you only once, your agency may request additional training sessions.

7320  Provider Agency Support

7321  Initial Support

§49.25(a) — Within 30 days from either the effective date of this section or the receipt of a fully-executed contract, the provider agency is responsible for providing the appropriate Texas Department of Human Services (DHS) staff with the location where DHS staff will conduct reviews. Unless otherwise specified, reviews must occur in the same geographical area where DHS has contracted for service delivery.

It is the provider agency's responsibility to collect and transport records to the review location on the dates specified in the review notification. Additionally the provider must obtain approval from DADS before changing the agency review location.

The following applies when a home and community support services (HCSS) provider has one or more licensed office(s) that support the contract scheduled for monitoring, and all the licensed offices supporting the contract are in the same DADS region where the contract is held.

The provider must have client records available at each licensed office location for clients served by the licensed office for the required months of review. Client records, both active and inactive, must be made available at the licensed sites.

The following applies when the HCSS contract has one or more licensed office(s) that support the contract scheduled for monitoring and at least one of the licensed offices supporting the contract is located outside the DADS region where the contract is held:

• The HCSS provider agency must have client records available at each licensed office location for clients served by that licensed office for the required months of review. The provider agency must make both active and inactive client records available to the reviewer at the licensed sites.
• When some or all client records are at licensed offices outside the region where the contract is held, regional DADS staff may negotiate with the DADS regions where the licensed offices are located to arrive at a strategy for completing the review. Records in the licensed office may be reviewed either by staff from the DADS region where the contract is held or by staff from the DADS region where the licensed offices are located.

When there are multiple licensed sites, the review team(s) may choose to split up and cover all licensed sites simultaneously or visit licensed sites sequentially. If the contract is supported by two or more licenses, the HCSS provider agency must provide a comprehensive list of clients supported by each license within two DADS work days of request by DADS.

If not all support documents corresponding to the onsite client records are available at the review site (example: attendant time records), the provider must send these support documents via facsimile to the contract review site within two hours of being asked for the record. The original copies of the support documents must be made available at the review site within 24 hours.

If the client records and the accounting records are at different locations in the region, contract manager/review teams will conduct the monitoring at the different locations. The compliance monitoring will be conducted at the licensed office(s) where the client records exist. Fiscal monitoring will be conducted at the location where the accounting records are kept with a separate random client sample.

When accounting records are at licensed offices located outside the region where the contract is held, regional DADS staff may negotiate with the DADS region where the licensed office is located to arrive at a strategy for completing the review. Records in the licensed office may be reviewed either by staff from the DADS region where the contract is held or by staff from the DADS region where the licensed office is located.

A provider agency's failure to provide information to DADS may result in DADS taking adverse action against the agency's contract, up to and including termination.

7322  Support During Review

§49.25(d) — The provider agency must provide:

(a)

to DHS's review team, upon request, specific records necessary for the conduct of the provider agency review; and

(b)

adequate working space for the number of staff specified in the review notification. Lighting, heating, and cooling must be consistent with that provided to provider agency staff.

Standards under service control are determined to be met or unmet according to activities that occurred in the review period. It may be necessary, however, to review activities that occurred before the review period. The provider agency should also make available:

• for Home and Community Support Services:
  • service delivery records (timesheets) for the month immediately preceding the quarter being reviewed (the reading quarter); and
  • the most recent Form 3671 and all the attachments received for each client in the sample prior to the period being reviewed.
• for Assisted Living/Residential Care Services:
  • the copayment and room/board receipts for each client in the sample for the month immediately preceding the period being reviewed;
  • Form 3251, Daily Census Record, for the calendar year(s) covered by the period being reviewed; and
  • all trust fund records.
• for Emergency Response Services: a legend for the log, monthly tape, and/or computer readout.

7323  Notice of Review

§49.25 —

(g)

The provider agency is entitled to receive written notice of a provider agency review at least 14 calendar days before the review. The notification includes:

(1)

the date(s) and time that DHS staff plan to arrive at the agreed-upon review site(s);

(2)

the number of DHS staff to conduct the review; and

(3)

the approximate number of days necessary to complete the review.

(h)

The provider agency is not entitled to receive the list of cases in the sample before DHS staff arrive for the review.

DADS staff must ensure that notice of review letters are sent by both certified mail and either regular mail or facsimile (fax) to the provider agency at least 20 calendar days before the review. This should allow ample time for the provider agency to receive the written notice at least 14 calendar days before the review. Sending the letters by both certified mail and either regular mail or fax will also ensure the provider agency receives the letter by the required timeframe even if provider agency staff do not pick up their certified mail.

At the top of the notice of review letter, please indicate whether letter was sent by regular mail or by fax under the certified mail information. Examples:

Certified Mail No. xxxx xxxx xxxx xxxx xxxx - Return Receipt Requested And Regular Mail

or

Certified Mail No. xxxx xxxx xxxx xxxx xxxx - Return Receipt Requested And Facsimile (FAX# (xxx) xxx–xxxx)

7324  Review Period

§49.25(f) — The service quarter for all reviews begins no earlier than two full months after the provider agency has received its orientation/training. The period to be reviewed:

(a)

consists of at least one, but no more than, three consecutive months; and

(b)

ends one full month before the month in which case readings occur.

To confirm correct AL/RC copay credits, monitor the review period and one month prior to the first month of the review period. Personal leave is monitored only during the review period.

DADS determines the order in which agencies are reviewed and decides when circumstances warrant agency reviews conducted more frequently.

7330  Conducting the Review

7331  Entrance Conference/General Guidelines

The reviewer meets with designated provider agency staff to explain the monitoring process.

The evaluation guide consists of the following forms and their use:

For AL/RC providers:

• Form 3240, Assisted Living/Residential Care Fiscal Monitoring, pages 1-2;
• Form 3241, Compliance Monitoring Guide on Contract Performance for Assisted Living/Residential Care Agencies, pages 1-3;
• Form 3687, Provider Agency Findings of Fiscal Monitoring Review, pages 1 and 2; and
• Form 3853, Contract/Program Compliance Provider Agency Evaluation Summary.

Form 3240 is used to evaluate financial errors, administrative errors/billing standards and Form 3241 is used to evaluate compliance standards.

Form 3853, Contract/Program Compliance Provider Agency Evaluation Summary, is used to summarize the provider agency's compliance findings.

Form 3687, page 1, is used to summarize the provider agency's fiscal monitoring findings. Page 2 is used to summarize findings by client.

7332  The Review

The review is conducted according to the requirements specified in Sections 7300, 7400, and 7500.

7333  Missing Documents

§49.25(j)(1) — Using the monitoring guide, the reviewer identifies missing documents. A missing document is defined as a document that existed in either the DHS or provider agency files prior to the date of a DHS review. Within three workdays after DHS staff leave the review site, the missing documents must be received in the office of the reviewer, or the provider agency may submit a written request for some or all the missing documents to be copied from DHS files. The request must be addressed to the appropriate DHS staff with a copy to the reviewer. DHS-provided documents are used to adjust the agency's findings even if the documents are received after the three-day period. The provider agency is entitled to receive its adjusted result within 21 work days after the review team leaves the review site.

During an agency review, DADS may identify missing documents. Missing documents identified by DADS must be received by DADS, or the provider agency must submit a written request for some or all of the missing documents to be copied from DADS files, within three workdays after DADS staff leave the review site. A missing document is defined as a document that existed in your files prior to the date of a DADS review. If located, the document is photocopied as it was found.

Missing records must be mailed or delivered to the office of the reviewer so that he receives them within three workdays after DADS staff leave the review site. Copies of all correspondence concerning the review must be sent to the reviewer because he is responsible for ensuring that all pertinent information is considered in determining your agency's findings.

§49.25(k) — The provider agency is solely responsible for maintaining all necessary service documentation; secondary documentation is not acceptable.

Missing Documents Under Service Control

Documents received according to the requirements in §49.25(k)(1) are used to adjust findings in the following manner:

• First formal review. DADS staff adjust your findings upon receipt of the missing documents. DADS-provided documents, requested as stated in this paragraph, are used to adjust your agency's findings even if the documents are received after the three-day period.
• Second formal review. DADS does not accept missing documents from any source after the three-day period expires. DADS staff adjust your agency's findings using only those documents received within the three-day period.
• Receipt of adjusted scores. You are entitled to receive your adjusted score within 21 calendar days after the review team leaves the review site.

As the service control reviewer reads a case, he identifies missing documents and unmet standards. Although the reviewer identifies for you any missing document(s), he defers discussion of or identification of unmet standards until all cases in the sample are read. If a determination on a standard is dependent upon missing documents, the standard is considered unmet unless the missing documents provide the information necessary to meet the standard. If a missing document is integrally related to other documents that must be reviewed together, failure to submit all the required related documents may result in the standard remaining unmet.

Examples of missing documents are:

For AL/RC providers:

• Form 2065-B, Notification of Community Based Alternatives;
• Form 2067, Case Information;
• Form 3251, Daily Census Record, including Form 3251 that is not the original or Form 3251 with missing service month and year.
• Copayment and Room and Board receipts; and
• Trust fund records.

For HCSS providers: Form 2065-B, Notification of Community Based Alternatives.

For ERS providers:

• Form 2065-B, Notification of Community Based Alternatives (CBA) Services;
• Form 2067, Case Information; and
• Installation record, monthly tape, computer readout, or monthly systems check.

In determining timeframes for receipt of documents, DADS begins counting the day after the request.

For fiscal monitoring purposes, the only missing document DADS accepts from the provider agency:

• For HCSS services: Form 3670, Documentation of Services Delivered (or approved substitute Form 3670); and
• For AL/RC providers: Form 3251, Daily Census Record.

7334  Pre-Exit Conference

§49.25(j)(2) — Using the monitoring guide, the reviewer provides the provider agency its tentative results and findings before leaving the review site. The results remain tentative until the exit conference. The provider agency is responsible for identifying and correcting any deficiency identified. DHS does not evaluate or measure corrective action plans but limits reviews to determining compliance with contract/program requirements.

At the end of the review, the tentative results are shared with the provider agency. The DADS reviewer

• explains that an exit conference will be held within 21 workdays after the review team leaves the review site. If the provider does not wish to have a formal exit conference, the provider must indicate on Form 3687 that you are waiving your rights to the exit conference; and
• discusses the process for requesting an administrative review. See Item 7336, Administrative Reviews. The administrative review is requested after the exit conference.

7335  Exit Conference

§49.25 —

(l)

The provider agency is entitled to an exit conference with DHS staff within 21 work days after the review team leaves the review site. The provider agency may receive written suggestions from DHS to improve its performance level during the exit conference and must acknowledge, in writing, receipt of the agency review findings and suggestions to correct any deficiencies.

(m)

The provider agency receives from DHS during the exit conference for the first formal agency review:

(1)

written findings and problem areas identified; and

(2)

if the provider agency failed to meet the acceptable performance level, notice that a second formal agency review will be conducted.

(n)

The provider agency receives from DHS during the exit conference for the second formal agency review:

(1)

written findings and problem areas identified; or

(2)

an intent to terminate letter. The letter states:

(A)

the effective date of the contract termination;

(B)

that the provider agency does not receive additional referrals beginning the date of the exit conference;

(C)

that DHS will initiate client transfers to other providers if an appeal is not filed;

(D)

that the provider agency may not recontract to provide services in the region covered by the terminated contract for six months after the termination date;

(E)

the appeal procedures; and

(F)

that DHS will place a vendor hold on the contract effective:

(i)

15 days from receipt of the intent to terminate letter if an appeal is not filed; or

(ii)

the date the appeal decision is made if an appeal is filed and DHS upholds the decision to terminate the contract.

The provider agency will receive a copy of the findings for each reviewed case that is in error. Using the monitoring guide, the provider agency may do an analysis of each case reviewed. If, in your opinion, the review was not conducted according to the monitoring guide, you may submit a written request for an administrative review. The request must include the information required by Item 7336, Administrative Reviews.

7336  Administrative Reviews

§49.25(o) — The provider agency may request an administrative review of the methodology employed by the review team if the provider agency has reason to suspect that the formal agency review was not conducted according to published rules and the monitoring guide. The request must be in writing and received by the appropriate DHS staff within 10 calendar days of the date of the exit conference.

Upon receipt of a request for an administrative review, the regional director for services to aged and disabled refers it to the administrative reviewer who conducts the review. The administrative review must be conducted independently from the formal agency review and must be conducted within 30 days from the receipt of the administrative request from the provider agency.

The provider agency will receive written results within 10 days after the review is completed. The findings contain one of the following determinations:

• The review was conducted according to DADS rules and procedures.
• The review was not conducted according to DADS rules and procedures and your agency's adjusted findings remain below compliance.
• The review was not conducted according to DADS rules and procedures and your agency's findings were changed to meet compliance.

The purpose of the administrative review is to determine if the review team followed DADS rules and procedures in conducting the review. The administrative review may consist of one or more of the following activities:

• meeting with provider agency representatives;
• reviewing procedures or rules followed by the review team; and
• re-reading applicable cases.

The request must

• be in writing;
• be received by DADS within 10 calendar days of the date of the exit conference; and
• specify the procedures or rules that were not followed, as well as the cases affected.

DADS staff performing the administrative review must:

• have received training on the use of the monitoring guide;
• not have participated in the formal agency review; and
• if not trained by state office, be determined competent by the reviewer's supervisor to perform the administrative review.

7340  Termination of Contracts Due to Failing to Meet Acceptable Performance Levels

§49.25 —

(p)

If the provider agency fails to provide services at a minimally acceptable performance level, DHS may not renew the contract or may terminate it.

(q)

If a provider agency is identified by DHS for contract termination, termination occurs no sooner than 46 days from the date of the termination letter and no later than the end of the month in which the 46th day occurs. If DHS is unable to successfully transfer all clients by the contract termination date due to another responsible provider not being available, DHS may:

(1)

delete all counties from the contract where there is another provider of the same service; or

(2)

extend the termination date for another six months or until placement is found for every client served through the contract.

(r)

For six months from the date DHS initially deletes counties from the contract or extends the contract, DHS:

(1)

does not add counties to the contract;

(2)

may delete additional counties if another provider agency begins to provide services in the county(ies) to be deleted; or

(3)

may terminate the provider agency's contract before the extension period expires.

(s)

The provider agency may not recontract or add counties for six months from the date of contract termination or initial deletion of counties, unless service specific rules allow exceptions.

You may appeal the contract termination according to DADS rules and procedures. Reference Item 8280, Right to Appeal.

Until DADS gives an appeal decision, a hold on referrals is implemented. (See TAC §49.19(b)(2)(D) and (E).) DADS may initiate client transfers and/or apply a vendor hold until an appeal decision is reached. (See TAC §49.19(d)(1) and (2).)

§§49.25(q)(1), 49.25(r)(1)-(3), and 49.25(s) do not apply to AL/RC provider agencies.

7400  Contract/Program Monitoring (Service Control)

This section

• describes how DADS measures your compliance with contract/program standards; and
• only relates to contract termination for failure to meet the minimum compliance level under service control. It does not limit DADS from taking other sanctions against you for noncompliance with standards in your contract.

DADS performs program/contract compliance monitoring to ensure that clients receive services from provider agencies that meet at least a minimum level of compliance with program standards. This section defines the scope and outlines the requirements of program/contract compliance based on a minimum of compliance with program standards. Throughout this section, the term "program/contract compliance monitoring" is synonymous with the term "service control." Service control is not considered an audit.

DADS will make available to you a training session on the purpose and use of the monitoring guide. After the training and/or review, DADS staff will systematically review your records to determine whether the minimum compliance level is being met.

7410  (Reserved)

7420  Formal Agency Reviews

§49.25(b) — Each provider agency is subject to a systematic review of client case records to determine if the provider agency's performance meets the minimum compliance level.

When all agencies in a region have been reviewed, DADS conducts periodic reviews.

7421  Minimum Compliance Level

§49.25(c) — The provider agency must attain a minimum compliance level of 90% or above, unless otherwise specified in program requirements. If the provider agency fails to meet the 90% minimum compliance level, DHS determines the provider agency to be in overall noncompliance.

7430  Samples

§49.25 —

(h)

The provider agency is not entitled to receive the list of cases in the sample before DHS staff arrive for the review.

(i)

The review will be based on consistent and reliable sampling techniques.

7431  Subsample

The subsample is read before the other cases during the first formal review. If the subsample compliance is 90% or greater, DADS may choose not to read the full sample. If the subsample compliance is less than 90%, the full sample is read. If the compliance is less than 90% for the full sample, a second formal review is required, during which another full sample is read.

7432  (Reserved)

7440  Areas to Be Reviewed

DADS reviews a sample of the provider agency's cases to determine the compliance with the contract and the provider manual.

7450  Conducting the Review

7451  (Reserved)

7452  Noncompliance with Standards

DADS determines the provider agency to be in noncompliance with a standard when the standard is not met or when the record that documents compliance is illegible, missing, or not completed according to department rules and procedures. The provider agency must present to DADS all missing records and documentation according to Item 7333, Missing Documents; DADS does not accept records and documentation provided by you at a later date. The provider agency is responsible for identifying and correcting any deficiency(ies) in your organization which result in noncompliance with one or more standards.

Using the monitoring guide, the service control monitor determines which standards are not met. At the conclusion of case readings, the tentative compliance level is determined and shared with agency representative(s). This determination remains tentative until the exit conference.

7453  (Reserved)

7454  Exit Conference

DADS provides, in addition to the information described in this section, the final findings and the rationale for refusing to accept missing documents or for determining that standards are unmet as a result of the documents being submitted.

The provider agency will receive a copy of the results for each reviewed case that is in error. Using the monitoring guide and the provider manual, you may do your own analysis of each standard. If, in your opinion, the review was not conducted according to the monitoring guide, you may submit a written request for an administrative review. The request must include the information required in Item 7336, Administrative Reviews.

§49.25(n) — The provider agency receives from DHS during the exit conference for the second formal agency review:

(1)

written findings and problem areas identified; or

(2)

an intent to terminate letter. The letter states:

(A)

the effective date of the contract termination;

(B)

that the provider agency does not receive additional referrals beginning the date of the exit conference;

(C)

that DHS will initiate client transfers to other providers if an appeal is not filed;

(D)

that the provider agency may not recontract to provide services in the region covered by the terminated contract for six months after the termination date;

(E)

the appeal procedures; and

(F)

that DHS will place a vendor hold on the contract effective:

(i)

15 days from receipt of the intent to terminate letter if an appeal is not filed; or

(ii)

the date the appeal decision is made if an appeal is filed and DHS upholds the decision to terminate the contract.

7460  Contract Terminations

A provider agency may appeal the contract termination according to DHS rules and procedures. Both first and second reviews may be considered in the appeal process. Reference Item 8280, Right to Appeal.

7500  Fiscal Monitoring

Fiscal monitoring is only one part of various monitoring activities conducted by regional contract management staff. Fiscal monitoring (or monitoring for billing) includes the monitoring of documentation which supports reimbursement to the provider agency. Two types of errors may be identified:

• financial errors, and
• administrative errors.

Financial errors monitoring is conducted to ensure that you have the documentation to support reimbursement from DADS. Administrative error monitoring is conducted to ensure you have no errors in documentation of service delivery.

Financial errors result in exceptions applied to the total amount paid for the unit of service. Administrative errors result in exceptions applied to the administrative portion of the unit of service. For fiscal monitoring, no secondary documentation is acceptable. Only billed and reimbursed transactions are reviewed during fiscal monitoring.

Although DADS takes exceptions and/or recoups funds for noncompliance with program standards during the review period, this

• does not limit other departments, etc., from identifying and/or taking exceptions for other deficiencies identified during this monitoring review, nor
• does not limit DADS from taking other sanctions against the provider agency for noncompliance with standards in your contract.

Upon contract termination, DADS may choose to perform a fiscal monitoring review. (See §49.17(4) in Item 8260, Renewals/Terminations.)

7510  (Reserved)

7520  Agency Reviews

7521  Order for Conducting Fiscal Monitoring Reviews

For HCSS and ERS providers:

Initial monitoring reviews are conducted in the following order:

1. provider agencies that provide services to 200 or more clients;
2. new provider agencies (less than six months in the program) that have at least five clients and have been reimbursed for services;
3. provider agencies that provide services to less than 200, but more than 100 clients;
4. provider agencies that provide services to less than 100, but more than 50 clients; and
5. all other agencies.

For AL/RC and RC providers:

Initial monitoring reviews must be conducted in the following order:

1. provider agencies that provide services to 60 or more clients;
2. new provider agencies (less than six months in the program) that have at least five clients and have been reimbursed for services;
3. provider agencies that provide services to less than 60, but more than 30 clients;
4. provider agencies that provide services to less than 30, but more than 10 clients; and
5. all other agencies.

The order for conducting initial reviews is based on the number of clients per vendor number, not legal entity. It is anticipated that every provider agency will be reviewed within 18 months of fiscal monitoring implementation.

7530  Sample

§49.17 — Fiscal Monitoring. Texas Department of Human Services staff responsible for assuring provider agency compliance with contract/program requirements conduct periodic fiscal monitoring reviews.

(1)

The review will be based on consistent and reliable sampling techniques.

(2)

Financial errors and administrative errors will be identified and recouped without extrapolation.

(3)

Frequency of fiscal monitoring will depend on program specific minimum acceptable levels of performance and other risk factors.

7531  (Reserved)

7540  Conducting the Review

7541  (Reserved)

7542  Exit Conference

The contract manager conducts the exit conference according to Item 7335, Exit Conference.

7543  Waiving of Exit Conference

If you do not wish to have a formal exit conference, you may waive the conference by indicating on Form 3687, Provider Agency Findings of Fiscal Monitoring Review, that you are waiving your rights to the exit conference.

If you waive your rights to the exit conference

• the administrative review must be requested within 10 calendar days of the date of the pre-exit conference; and
• you must reimburse DADS within 30/60 calendar days of the date of the exit conference.

7544  (Reserved)

7550  (Reserved)

7560  Recoupment

Financial errors result in exceptions applied to the total amount paid for the unit of service. Financial errors are recouped without extrapolation. Based on the review findings, you must submit negative bills (by clients) to offset reimbursement by the amount of the financial amount determined by the review.

7561  Administrative Error

An exception of 12% of the paid unit rate is the administrative portion applied to the unit of service. Emergency Response Services does not have administrative errors. Based on the review findings, you must submit a check for the amount of administrative error determined by the review. DADS recoups only if administrative errors amount to more than $10.

DADS does not apply an administrative error to errors already recouped as financial errors. If an error is considered both an administrative and a financial error, DADS uses the financial error in determining the exception.

If you have more than one administrative error per service delivery record, the contract manager recoups only for the administrative error that results in the highest units in error. The contract manager may ask you to develop a corrective action plan indicating how you will ensure this type of error will not occur again.

You may correct administrative (form completion) errors after you have reimbursed DADS for errors identified during the fiscal monitoring review. However, if the auditors select an audit period that includes a month previously reviewed through fiscal monitoring, and the same errors are noted for one or more clients, the auditors will project the error(s) across the universe. The amount that was reimbursed by you for the clients on the sample will be deducted from the total exception amount reflected in the audit.

DADS may consider an administrative error as a financial error if you fail to:

• comply with DADS corrective action plans; or
• correct deficiencies referenced in previous audits and/or reviews.

See §49.15(c) and (d) in Item 7570, Documentation Errors.

Failure to comply with the recoupment procedures may result in vendor hold and lead to contract cancellation.

7562  Corrective Action Plan (CAP)

You may be asked to develop a corrective action plan indicating how you will ensure that identified financial and/or administrative errors do not occur again.

DADS may schedule additional fiscal monitoring reviews to evaluate corrective action plan compliance.

7563  Appeal of Recoupment

Because recoupment or taking money back is considered an adverse action, you may appeal exceptions applied for financial and/or administrative errors. You may appeal recoupment of monies even if you waive your right to an exit conference. See Item 8370.

7570  Documentation Errors

Documentation errors, both administrative and financial, may cause claims for services to be disallowed and may cause monetary exceptions.

§49.15 —

(b)

Documentation errors may cause claims for services to be disallowed. Two types of documentation errors that may cause monetary exceptions are:

(1)

administrative errors, which result in exceptions applied to the administrative portion of the unit of service, which is a specific percentage of the paid unit rate; and

(2)

financial errors, which result in exceptions applied to the total amount paid for the unit(s) of service.

(c)

If an error is considered both an administrative and a financial error, DHS uses the financial error in determining the exception.

(d)

DHS may consider an administrative error as a financial error if the provider agency fails to:

(1)

comply with DHS corrective action plans; or

(2)

correct deficiencies referenced in previous audits and/or reviews.

See Item 7560, Recoupment.

7571  Administrative Errors

For AL/RC and RC providers:

§46.8001 — Administrative Errors. Administrative errors result in exceptions applied to the administrative portion of the unit of service. An exception of 12% of the paid unit rate is the administrative portion applied to the unit of service.

§46.8002 — Administrative errors include, but are not limited to, the following:

(1)

The facility enters a date of signature on the Texas Department of Human Services' (DHS's) Daily Census Record form that is before the date of the last day services are provided. DHS applies the error to the total number of units reimbursed after the signature date.

(2)

The facility fails to sign DHS's Daily Census Record form. DHS applies the error to the total number of units reimbursed on the unsigned form.

(3)

The facility fails to enter a date of signature on DHS's Daily Census Record Form to certify total number of units provided to the client. DHS applies the error to the number of units reimbursed on the undated form.

(4)

The facility corrects the date of signature on DHS's Daily Census Record form, but fails to initial the correction. DHS applies the error to the total number of units reimbursed after the earliest signature date.

(5)

The facility uses a signature stamp, but fails to initial the stamped signature. DHS applies the error to the total number of units reimbursed on the signature stamped form.

(6)

The facility makes an illegible entry or illegible correction to any portion of the record of time of the DHS's Daily Census Record form. DHS applies the error to the total number of units reimbursed for the days in which entries are illegible.

(7)

The facility enters an illegible date of signature or makes an illegible correction to the date of signature of DHS's Daily Census Record Form. DHS applies the error to the total number of units on the form.

(8)

The facility completes DHS's Daily Census Record Form in pencil. DHS applies the error to the total number of units reimbursed that were completed in pencil.

(9)

The facility uses liquid paper/correction fluid to correct an entry in DHS's Daily Census Record form. DHS applies the error to the total number of units reimbursed that were corrected for the billing period.

An administrative error is applied to all sample and nonsample clients listed on an incorrectly completed Form 3251, Daily Census Record. If the error involves the entire form (e.g., Form 3251 is undated), the error would apply to all sample and nonsample clients the form. If the error is client specific, the error would apply only to the incorrect entry(ies). For example, if the facility corrects several entries with liquid paper, the error would apply only to the entries corrected with liquid paper, whether sample or nonsample.

For ERS providers:

There are no administrative errors for ERS providers.

For HCSS providers:

§48.6090 — Fiscal Monitoring and Recoupment.

(a)

Administrative errors. A recoupment of 12% of the paid unit rate is the administrative error exception for services billed on an hourly basis. It represents the administrative portion of the rate. Administrative errors are applied to the documentation reviewed and are not extrapolated. Administrative errors include, but are not limited to, the items in paragraphs (1)-(2) of this subsection:

(1)

administrative errors on the documentation of services delivered form:

(A)

The provider agency leaves the month and year of service blank. The Texas Department of Human Services (DHS) applies the error to the total number of units documented on the time sheet.

(B)

The timekeeper fails to enter a date of signature to certify the total number of hours the attendant, nurse, or therapist worked. DHS applies the error to the total number of units documented on the time sheet.

(C)

The timekeeper corrects the date of signature, but fails to initial the correction. DHS applies the error to the number of units reimbursed after the earliest signature date.

(D)

The timekeeper enters an illegible date of signature or makes an illegible correction to the date. DHS applies the error to the total number of units documented on the time sheet.

(E)

The timekeeper enters a date of signature that is before the date of the last day services are delivered. DHS applies the error to the total number of units reimbursed after the signature date.

(F)

The timekeeper fails to sign the time sheet. DHS applies the error to the total number of units documented on the time sheet.

(G)

The timekeeper uses a signature stamp, but fails to initial the stamped signature. DHS applies the error to the total number of units documented on the time sheet.

(H)

The attendant, nurse, therapist, and/or timekeeper uses liquid paper/correction fluid to correct an entry in the record of time, signature, or date portion of the time sheet. DHS applies the error to the total number of units documented on the time sheet. If the liquid paper/correction fluid is used only on a daily entry in the record of time, DHS applies the error only to the total number of units reimbursed for that day.

(I)

The attendant, nurse, therapist, and/or timekeeper makes an illegible entry in or an illegible correction to any portion of the record of time column. DHS applies the error to the total number of units reimbursed for the days in which entries are illegible.

(J)

The attendant fails to initial an increase in the daily time or the monthly total of hours for the pay period. DHS applies the error to the number of units reimbursed in excess of the original entry.

(K)

The attendant, nurse, therapist, or other agency representative fails to sign the documentation of services delivered form or facsimile. DHS applies the error to the total number of units documented on the time sheet.

(L)

DHS reimburses the provider agency for nursing, therapies, personal assistance services, or in-home respite, but a valid individual service plan, pages 1-3 and all pertinent attachments, signed by the case manager, is missing for the period reimbursed by the agency. DHS applies the error to the total number of units of nursing, therapies, personal assistance services, or in-home respite, claimed and not covered by a valid individual service plan.

(M)

DHS reimburses the provider agency for nursing services and there is no other documentation available to determine whether the nurse provided billable nursing services during the visit.

(2)

The following items are administrative errors resulting in recoupment of the entire requisition fee:

(A)

There is no Community Based Alternatives documentation of completion of purchase form, but there is a receipt for the purchase of adaptive aids, medical supplies, or for the completion of the minor home modification.

(B)

Bids were required for the purchase of an adaptive aid or the completion of a minor home modifications and bids were not solicited.

(C)

DHS reimburses the provider agency for the purchase of medical supplies, but there is no documentation available that price list/price quotes were obtained from three suppliers for the items for which the provider has been reimbursed or the price list/price quotes were obtained more than 12 months before the purchase.

(D)

DHS reimburses the provider agency for the purchase of adaptive aids, but there is no documentation available that price list/price quotes were obtained from three suppliers for the items for which the provider has been reimbursed or there is no documentation available that the supplier selected on an annual basis to deliver the adaptive aids had the lowest prices for the main type of adaptive aids the agency has purchased.

7600  (Reserved)

7700  (Reserved)

7800  Audits

Section 7800 does not pertain to activities done by regional contract management staff.

§49.15(a) — Desk audits and on-site audits are performed periodically on provider agencies contracting with the Texas Department of Human Services (DHS). The frequency and nature of the audits are determined by DHS (but not less than that required by federal regulations relating to the administration of the program). Failure to allow DHS to perform an audit or failure to provide documentation in sufficient detail to verify reported information may result in DHS withholding the provider's payments.

7810  Financial Audits

Financial audits are conducted to ensure that state and federal funds are spent properly and are accurately accounted for. The level of financial audit provides some assurance that your agency's internal controls are effective and that financial data is accurately and properly reported.

§69.208 — Methods for Auditing Contracts.

(a)

All services for which the Texas Department of Human Services (DHS) is charged are subject to review and audit. During a review or audit, the contractor must give DHS or its authorized representative information about his claims for payment. The contractor is responsible for proving he is entitled to payments. The contractor must make restitution if a review or audit reveals that improper payments were made or that the contractor's records do not support the payments according to federal, state, and local laws and rules, DHS procedures, and the contract provisions.

7811  Error Extrapolation

§69.208(b) — DHS procedures for contract reviews or audits may include the use of sampling and extrapolation. In this procedure, DHS selects a statistically valid sample of the cases or claims for which the contractor received payment for the time under review and examines records for those cases or claims. All improper payments or units of service in the sample are then totaled and extrapolated to all of the cases or claims for which the contractor has been paid during the audit period. After being notified and given the opportunity for a hearing according to the hearing requirements, the contractor is required to pay DHS 93% of the total extrapolated amount of the improper payments.

For HCSS providers:

On a case-by-case basis, the DADS auditor may consider one or more of the following as secondary documentation depending upon the consistencies/inconsistencies in your records:

• an affidavit from the attendant or the client to verify that services were delivered,
• supervisory notes and cancelled checks,
• home visits by DADS staff or the auditor, or
• any other documentation that the auditor believes is necessary to prove that services were delivered and to justify the amount you claimed.

In evaluating secondary documentation, the auditor must answer the following questions to his satisfaction:

• Is the documentation presented in a format that can be easily audited?
• Is the documentation believable to a prudent person? (The magnitude and type of errors must be considered.)
• Are these legitimate claims? (Fraud must not be suspected.)

7812  (Reserved)

7813  Resolution of Audit Exceptions

§69.209 —

(a)

The Texas Department of Human Services (DHS) recovers improper payments when it is verified that contractors have been overpaid because of improper billing or accounting practices or failure to comply with the contract terms. The determination of impropriety is based on federal, state, and local laws and rules; DHS procedures; contract provisions; or statistical data on program use compiled from paid claims.

(b)

DHS notifies the contractor in writing of the types of discrepancies, the method of computing the reasonable dollar amount to be refunded, and any other actions DHS may take.

(c)

The contractor may request that DHS conduct an audit of 100% of the records or conduct an additional audit of the records by sampling. The contractor may also request a presentation of the audit results at an appeal hearing with DHS. When a contractor requests additional audit work, he must agree to pay the cost of performing the work at current DHS costs. DHS absorbs the cost for additional audit work if the work reduces the exception by more than 15%.

7820  Desk and Field Audits of Cost Reports

Desk and field audits are conducted to ensure that information reported in your cost reports conforms to all applicable rules and instructions.

§20.106 — Basic Objectives and Criteria for Audit and Desk Review of Cost Reports.

(a)

The Texas Department of Human Services (DHS) conducts desk reviews and field audits of provider cost reports in order to ensure that all financial and statistical information reported in the cost reports conforms to all applicable rules and instructions.

(1)

For cost reports pertaining to providers' fiscal years ending in calendar year 1994, 1995 or 1996, completion must be according to instructions and rules. DHS may require supporting documentation other than that contained in the cost report to substantiate reported information.

(A)

For nursing facilities, failure to complete cost reports according to instructions and rules may result in vendor hold as specified in §19.1810 of this title (relating to Vendor Hold).

(B)

For all other programs, failure to complete cost reports according to instructions and rules constitutes an administrative contract violation. In the case of an administrative contract violation, procedural guidelines and informal reconsideration and/or appeal processes are specified in §20.111 of this title (relating to Administrative Contract Violations).

(2)

For cost reports pertaining to providers' fiscal years ending in calendar year 1997 and subsequent years, completion must be according to instructions and rules in accordance with §20.105(b)(4) of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures). DHS may require supporting documentation other than that contained in the cost report to substantiate reported information.

(A)

For nursing facilities, failure to complete cost reports according to instructions and rules in accordance with §20.105(b)(4) of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures) may result in vendor hold as specified in §19.2703 of this title (relating to Vendor Hold).

(B)

For all other programs, failure to complete cost reports according to instructions and rules in accordance with §20.105(b)(4) of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures) constitutes an administrative contract violation. In the case of an administrative contract violation, procedural guidelines and informal reconsideration and/or appeal processes are specified in §20.111 of this title (relating to Administrative Contract Violations).

(b)

The basic objective of audits and desk reviews is to verify that each provider's cost report:

(1)

displays financial and other statistical information in the format required by DHS;

(2)

reports expenses in conformity with DHS's lists of allowable and unallowable costs;

(3)

follows generally accepted accounting principles, except as otherwise specified in DHS's lists of allowable and unallowable costs, and other pertinent rules or as otherwise permitted in the case of governmental entities operating on a cash or modified accrual basis; and

(4)

is completed in accordance with each program's cost report instructions and rules.

(c)

DHS verifies the information specified in subsection (b) of this section by:

(1)

comparing each provider's reported costs to:

(A)

past patterns of expenditures for similar services;

(B)

the results of previous field audits;

(C)

normal operating cost relationships; and

(D)

industry average costs, when available;

(2)

reviewing each provider's reported costs for:

(A)

reported unallowable costs;

(B)

omitted allowable costs, if discovered during the course of the audit or desk review; and

(C)

understated or overstated allowable costs, if discovered during the course of the audit or desk review;

(3)

checking for completion of required information;

(4)

checking the format for proper cost classification;

(5)

checking for mathematical accuracy; and

(6)

adjusting the cost report, or notifying the provider that research and/or corrections are required.

(d)

In accordance with methodology rules, cost report instructions or policy clarifications, DHS may reassign allowable costs to the appropriate line items of a cost report.

(e)

DHS seeks to maximize the number of field audited cost reports available for use in its cost projections. In addition to cost reports selected for field audit based upon risk analysis, other specific criteria and random sampling, DHS may conduct field audits of cost reports that show unusual fluctuations or trends in costs or other statistics. DHS may also conduct field audits when desk reviews are insufficient to verify the accuracy of reported costs.

(f)

For cost reports pertaining to providers' fiscal years ending in calendar year 1994, 1995 or 1996, each provider entity or its designated agent(s) must allow access to any and all records necessary to verify information submitted to DHS on cost reports. This requirement includes records pertaining to related party transactions or other business activities engaged in by the provider.

(1)

For nursing facilities, failure to allow access to any and all records necessary to verify information submitted to DHS on cost reports may result in vendor hold as specified in §19.1810 of this title (relating to Vendor Hold).

(2)

For all other programs, failure to allow access to any and all records necessary to verify information submitted to DHS on cost reports constitutes an administrative contract violation. In the case of an administrative contract violation, procedural guidelines and informal reconsideration and/or appeal processes are specified in §20.111 of this title (relating to Administrative Contract Violations).

(g)

For cost reports pertaining to providers' fiscal years ending in calendar year 1997 and subsequent years, each provider entity or its designated agent(s) must allow access to any and all records necessary to verify information submitted to DHS on cost reports. This requirement includes records pertaining to related party transactions or other business activities engaged in by the provider.

(1)

For nursing facilities, failure to allow access to any and all records necessary to verify information submitted to DHS on cost reports may result in vendor hold as specified in §19.2703 of this title (relating to Vendor Hold).

(2)

For all other programs, failure to allow access to any and all records necessary to verify information submitted to DHS on cost reports constitutes an administrative contract violation. In the case of an administrative contract violation, procedural guidelines and informal reconsideration and/or appeal processes are specified in §20.111 of this title (relating to Administrative Contract Violations).

(h)

A contracted provider may request an informal review, and subsequently an appeal, of a desk review or field audit disallowance in accordance with §20.110 of this title (relating to Informal Reviews and Formal Appeals).