Texas Department of Aging and Disability Services
Nursing Facility Requirements for Licensure and Medicaid Certification Handbook
Revision: 14-2

Subchapter X

§19.2301  Conditions for Participation as a Medicaid-Certified Facility

(a)
The facility must meet the following conditions to be approved by the Texas Department of Human Services (DHS) for participation in the Title XIX Texas Medical Assistance program and receive state and federal reimbursement for services to Title XIX residents:
(1)
the facility has been certified by DHS as meeting the conditions of participation, including the requirement to have a license from DHS, in the Title XIX Texas Medical Assistance program;
(2)
the entity licensed to operate the facility has filed a complete application with the Provider Enrollment Section of DHS for participation as a nursing facility in the Title XIX Texas Medical Assistance program; and
(3)
the beds for which the facility wishes to contract meet the requirements of §19.2322 of this title (relating to Medicaid Allocation Requirements).
(b)
Only a facility with a fully executed current contract with DHS may receive state and federal reimbursement for services to Title XIX recipients.

§19.2302  Requirements for a Contracted Medicaid Facility

(a)
This section applies to nursing facilities (NFs) that have been licensed and certified as eligible for participation under Title XIX.
(b)
Each nursing facility (NF) must comply with the state requirements for participation and the facility's contract on a continuing basis.
(c)
Each NF must comply with the Texas Health and Human Services Commission's (HHSC's) utilization review requirements as provided in 1 TAC §371.212 (relating to Minimum Data Set Assessments and §371.214 (relating to Resource Utilization Group Classification System).
(d)
A facility may not participate in the Texas Medical Assistance Program if it has restrictive policies or practices, including:
(1)
requiring the resident to make a will, with the facility named as legatee or devisee;
(2)
requiring the resident to assign his life insurance to the facility;
(3)
requiring the resident to transfer property to the facility;
(4)
requiring the resident to pay a lump sum entrance fee or make any other payment or concession to the facility beyond the recognized rate for board, room, and care as a condition for entry, departure, or continued stay;
(5)
controlling or restricting the resident, the resident's guardian, or responsible party in the use of the resident's personal needs allowance;
(6)
restricting the resident from leaving the facility at will except as provided by state law;
(7)
restricting the resident from applying for Medicaid for a specified period of time;
(8)
denying appropriate care to an individual on the basis of his race, religion, color, national origin, sex, age, disability, marital status, or source of payment; and
(9)
preventing terminally ill adult residents from exercising their will in making written or unwritten directives to reject life-sustaining procedures.
(e)
If the DADS has documentation showing good cause, it reserves the right to reject the facility's participation or to cancel an existing contract if the facility charges the Title XIX resident, any member of his family, or any other source for supplementation or for any item except as allowed within DADS policies and regulations.
(f)
If DADS suspends a facility's vendor payments or proposes to terminate a facility's contract, the facility may request an administrative hearing to challenge the action. If a facility requests a hearing, the facility must make the request in accordance with HHSC rules at 1 TAC Chapter 357, Subchapter I.
(g)
DADS' interpretations of the requirements for participation or the contract may not be appealed to HHSC's hearings department unless the interpretation has caused an adverse action for the facility.
(h)
Facilities must allow representatives of DADS, the Medicaid Fraud Control Unit, and the Department of Health and Human Services to enter the premises at any time to make inspections or to privately interview the residents receiving assistance from DADS.
(i)
Facilities must supply DADS complete information according to federal and state requirements about the identity of:
(1)
each person who directly or indirectly owns interest of 5% or more in the facility;
(2)
each owner (in whole or in part) of any property, assets, mortgage, deed of trust, note, or other obligation secured by the facility;
(3)
each officer and director, if the facility is organized as a corporation;
(4)
each partner, if the facility is organized as a partnership (A copy of the partnership agreement is required, but the dollar amount of capital contributions of the partners may be omitted); and
(5)
any director, officer, agency, or managing employee of the institution, agency, or organization, who has ever been convicted of a criminal offense related to the person's involvement in programs established by Title XVIII, XIX, and XX. (Effective dates for disclosure of any convictions are July 1, 1966, for Medicare, and January 1, 1969, for Medicaid.)
(j)
If a profit-making corporation operates the facility, a copy of the following material is required:
(1)
certificate of incorporation (for Texas corporations only);
(2)
certificate of authority to do business in Texas (for out-of-state corporations only);
(3)
a resolution from the board of directors authorizing a specific person or officer to sign contracts between DADS and the corporation; and
(4)
any management contract for the facility. If no stockholder owns, directly or beneficially, 5.0% or more of the corporate stock, the president and secretary of the corporation should state this on the department form.
(k)
If a nonprofit corporation operates the facility, a copy of the following material is required:
(1)
certificate of incorporation (for Texas corporations only);
(2)
certificate of authority to do business in Texas (for out-of-state corporations only);
(3)
a resolution from the board of directors authorizing a specific person or officer to sign contracts with DADS; and
(4)
a copy of any management contract for the facility.
(l)
Facilities other than those described in subsections (j) and (k) of this section must furnish a copy of:
(1)
charter or other legal basis for the organization which owns the facility;
(2)
any management contract or agreement for the facility;
(3)
by-laws of the organization (if applicable); and
(4)
other information required by DADS to determine the status of the legal entity that owns the facility.
(m)
Facilities must disclose business transaction information. A facility must send to DADS, within 35 days after the date of a written request, complete information on:
(1)
the ownership of a subcontractor with whom the facility has had, during the previous 12 months, business transactions totaling more than $25,000; and
(2)
any business transactions between the facility and any wholly owned supplier, or between the facility and any subcontractor during the five-year period ending on the date of the request.
(n)
The facility must report changes in the required information promptly to DADS.
(o)
Failure to provide this information may result in suspension, termination, or other contract action, including holding vendor funds. Payment to the facility is denied beginning on the day after the date information was due, and ending on the day before the date the information is received by DADS.
(p)
Each facility must comply with Government Code, §531.116. A facility that furnishes services under the Medicaid program is subject to Occupations Code, Chapter 102. The facility's compliance with that chapter is a condition of the facility's eligibility to participate as a facility under those programs.

§19.2304  Contract Requirements

(a)
The Texas Department of Human Services (DHS) may enter into a contract with the facility.
(b)
Nursing facilities (NFs) must comply with all state and federal requirements for participation.
(c)
The contracting nursing facility agrees to:
(1)
Comply with Title VI of the Civil Rights Act of 1964 (Public Law 88-352), §504 of the Rehabilitation Act of 1973 (Public Law 93-112), the Age Discrimination Act of 1975, the Americans with Disabilities Act of 1990 (Public Law 101-336), the Safe Medical Devices Act of 1990, and all amendments to each, and all requirements imposed by the regulations issued pursuant to these acts. In addition, the contractor agrees to comply with Title 40, Chapter 73, of the Texas Administrative Code. These provide in part that no persons in the United States shall, on the grounds of race, color, national origin, sex, age, disability, political beliefs or religion be excluded from participation in, or denied, any aid, care, service or other benefits provided by federal and/or state funding, or otherwise be subjected to discrimination.
(2)
Comply with Texas Health and Safety Code, Chapter 85, Subchapter E (relating to workplace and confidentiality guidelines regarding AIDS and HIV).
(3)
Comply with 42 Code of Federal Regulations, Part 455, Program Integrity: Medicaid.

§19.2306  Effective Dates of Provider Contracts

(a)
The effective date of the provider contract for an initial certification is the date the on-site survey is completed if the facility meets:
(1)
all federal health and safety standards; and
(2)
any other requirements imposed by the Texas Department of Human Services (DHS).
(b)
If the facility does not meet any of the requirements specified for an initial certification, the contract is effective on the earlier of the following dates:
(1)
the day the facility meets all requirements; or
(2)
the day the facility's correction plan, approvable waiver request, or both are accepted by DHS. The facility must have met all requirements imposed by DHS.

§19.2308  Change of Ownership

(a)
Definition. An ownership change is defined in §19.210(c) of this title (relating to Temporary Change of Ownership). For purposes of this section, prior owner is defined as the legal entity with a Medicaid contract for the facility before the change of ownership. The new owner is the legal entity to which DADS has assigned the contract (in accordance with 42 CFR §442.14 and subsection (d) of this section). The effective date of the ownership change is the effective date of the new owner's license for the facility.
(b)
Notice of ownership change. The prior owner must give DADS written notice of a change of ownership at least 30 days before the effective date of the change. If written notice of the change is not received 30 days before the agreed change date, DADS is not responsible for payments made to the prior owner or new owner that do not reflect the established change date. DADS will not make a duplicate payment. It is the responsibility of the prior and new owner to make arrangements between themselves for such contingencies.
(c)
Vendor holds based on a change of ownership.
(1)
Holds on payments due to a prior owner.
(A)
When DADS receives information about a proposed or actual change of ownership, DADS may place vendor payments to the prior owner on hold. Vendor payments will not be released until the Texas Health and Human Services Commission notifies DADS that the prior owner meets the final reporting requirements as specified in 1 TAC §355.306 (relating to Cost Finding Methodology) and 1 TAC §355.308(f)(1)(A) (relating to Direct Care Staff Rate Component).
(B)
Once the final reporting requirements in subparagraph (A) of this paragraph are met, vendor payments may still be held so that money owed to DADS can be recouped from the funds placed on hold. Vendor payments will be released after:
(i)
completion of a billing and claims reconciliation, or the passing of a time period of 12 months after the effective date of the change of ownership, whichever is sooner; or
(ii)
the prior owner provides, at DADS' option, either of the following documents in a format acceptable to DADS to cover possible liabilities of the prior owner:
(I)
a surety bond or an irrevocable letter of credit as described in §19.2312 of this title (relating to Surety Bonds or Letters of Credit); or
(II)
written authority by the prior owner to withhold and retain funds normally due the prior owner from other Medicaid contracts the prior owner may have with DADS.
(2)
Waiving holds on payments due to a prior owner.
(A)
DADS may waive placing vendor payments to the prior owner on hold, if, at least 60 days before the effective date of the change of ownership:
(i)
the prior owner notifies DADS of the change of ownership;
(ii)
the new owner provides DADS with a signed and notarized contract application;
(iii)
DADS receives information sufficient to verify that the ownership change is a reorganization of the prior owner's ownership structure and that the new owner's ownership structure:
(I)
consists of individuals who owned at least 51% of the ownership in the prior owner and own at least 51% of the ownership in the new owner;
(II)
does not consist of a change in a general partner, if the prior owner's ownership structure was a limited partnership; and
(III)
retains control of the prior owner's financial records; and
(iv)
the prior owner returns to DADS the nontransferable DADS Successor Liability Agreement (provided by DADS) signed by the prior and new owners indicating that the new owner has agreed to pay DADS for any liabilities that exist or may be found to exist during the period of the prior owner's contract with DADS.
(B)
Meeting the conditions in subparagraph (A) of this paragraph but not meeting the 60-day time frame may result in DADS placing vendor payments to the prior owner on hold; however, once all of the conditions listed in subparagraph (A) of this paragraph are met, the hold will be released.
(3)
Holds on payment due to the new owner.
(A)
During the period between the issuance of the temporary change of ownership license and the inspection or survey of the nursing facility, DADS may not place a hold on vendor payments to the temporary license holder.
(B)
If the nursing facility fails to pass the inspection or survey or fails to meet the requirements in §19.201 of this title (relating to Criteria for Licensing), DADS may place a hold on vendor payments to the new owner.
(d)
Contract assignment. When a change in ownership occurs, DADS automatically assigns the agreement to the new owner by issuing a new contract. By signing the contract, the new owner is representing to DADS that the new owner meets the requirements of the contract and the requirements for participation in the Medicaid program. The new owner's contract is subject to the prior owner's contract terms and conditions that were in effect at the time of transfer of ownership, including the following:
(1)
any plan of correction;
(2)
compliance with health and safety standards;
(3)
compliance with the ownership and financial interest disclosure requirements of 42 CFR §§455.104, 455.105, and 1002.3;
(4)
compliance with civil rights requirements in 45 CFR Parts 80, 84, and 90;
(5)
compliance with additional requirements imposed by DADS; and
(6)
any sanctions as specified in this chapter relating to remedies for violations of Title XIX nursing facility provider agreements, including deficiencies, vendor holds, compliance periods, accountability periods, monetary penalties, notification for correction of contract violations, probationary contracts, and history of deficiencies.
(e)
Medical assistance payments nontransferable. Neither medical assistance nor amounts payable to vendors out of public assistance funds are transferable or assignable at law or in equity. DADS will not allow non-split agreements in the case of ownership changes. Non-split agreements are arrangements where DADS does not interrupt payments to prior and new owners but continues reimbursements as though no ownership change has occurred. A split in pay agreement ensures that payments to the prior owner stop on a certain date and payments for services thereafter go to the new owner.
(f)
Owner agreements. The new owner and the prior owner of a nursing facility may reach any agreement they wish, but DADS will not participate in a non-split procedure which would allow the new owner to receive the prior owner's accrued vendor payments.
(g)
Financial records. The prior owner of the facility may remove the financial records pertaining to his period of ownership from the facility, but must maintain them for the time period prescribed by law or until such time as all audit exceptions are reconciled, whichever period is the longer. The original copies of the trust fund records, including ledger cards, may be removed by the prior owner if an exact duplicate of the trust fund records, including ledger cards, remains with the new owner.

§19.2310  Nursing Facility Ceases to Participate

A nursing facility may voluntarily terminate or be involuntarily terminated from Medicaid participation. A facility must have policies and procedures in place to ensure that the administrator's duties and responsibilities include providing the appropriate notices in the event of a Medicaid termination.
(1)
If a facility voluntarily closes and ceases providing nursing facility services, the facility must comply with this paragraph.
(A)
The facility must close on the first day of a month.
(B)
At least 75 days before closure, the administrator must submit to the DADS regional director a plan for relocation of all residents. The plan must:
(i)
provide for the transfer and adequate relocation of the residents;
(ii)
include assurances that residents are transferred to the most appropriate facility or other setting in terms of quality, services, and location, taking into consideration the needs, choice, and best interests of each resident; and
(iii)
be revised as necessary to obtain DADS approval.
(C)
At least 60 days before closure, the administrator must submit written notice of the closure that includes the approved closure plan and the closure date to:
(i)
the secretary or the secretary's designee;
(ii)
DADS Regulatory Services;
(iii)
the State Long-Term Care Ombudsman;
(iv)
each resident; and
(v)
each resident's legal representative or responsible party.
(D)
The notice to each resident and the resident's legal representative or responsible party must include the information required by §19.502(f) of this chapter (relating to Transfer and Discharge in Medicaid-certified Facilities).
(E)
The facility must not admit any new residents on or after the date the written notice is submitted.
(F)
The facility must have the resources to operate through the closure date.
(2)
If DADS or CMS terminates a facility's Medicaid provider agreement, the facility must comply with this paragraph.
(A)
At least 15 days before the notice date set by DADS or CMS, the administrator must submit to the DADS regional director a plan for relocation of all residents. The plan must:
(i)
provide for the transfer and adequate relocation of the residents;
(ii)
include assurances that residents are transferred to the most appropriate facility or other setting in terms of quality, services, and location, taking into consideration the needs, choice, and best interests of each resident; and
(iii)
be revised as necessary to obtain DADS approval.
(B)
By the date set by DADS or CMS, the administrator must submit written notice of the closure that includes the approved plan and the closure date to:
(i)
the secretary or secretary's designee;
(ii)
DADS Regulatory Services;
(iii)
the State Long-Term Care Ombudsman;
(iv)
each resident; and
(v)
each resident's legal representative or responsible party.
(C)
The notice to each resident and the resident's legal representative or responsible party must include the information required by §19.502(f) of this chapter.
(D)
The facility must not admit any new residents on or after the date the notice is submitted.
(3)
If a facility voluntarily withdraws from Medicaid but continues to provide nursing facility services, the facility must comply with this paragraph.
(A)
The facility may not use the withdrawal as a reason to transfer or discharge a resident who was residing in the facility on the day before the effective withdrawal date.
(B)
The facility is deemed to have a provider agreement with regard to any resident who was residing in the facility on the day before the effective withdrawal date and who is eligible for Medicaid or who later becomes eligible for Medicaid.
(C)
The facility must:
(i)
provide oral and written notice to an individual who is admitted after withdrawal from Medicaid that:
(I)
the facility is not participating in the Medicaid program with respect to new residents; and
(II)
the facility may transfer or discharge a resident if the resident does not pay the facility charges even though the resident may have become eligible for Medicaid nursing facility services;
(ii)
provide the written notice in a prominent manner on a separate page of the admission agreement when the resident is admitted; and
(iii)
have the resident sign a written receipt, separate from other signed documents, that the resident received the information in the written notice.

§19.2312  Surety Bonds or Letters of Credit

(a)
If the facility has a change in ownership or termination of a contract (voluntary or involuntary), the prior owner's and/or the new owner's vendor payments may be held. Usually, the amount held is equal to the facility's average monthly payments.
(b)
At its sole option, the Texas Department of Human Services (DHS) may allow the prior owner to obtain a surety bond or an irrevocable letter of credit (collateral) and release the vendor payments on hold. Money owed DHS by the prior owner for any reason will be recovered through the surety bond or the letter of credit. Usually, the surety bond equals the average monthly vendor payments paid to the facility. Facilities terminating a contract for long-term care services may furnish a surety bond or letter of credit only if:
(1)
all required long-term care facility cost reports have been filed with the Texas Health and Human Services Commission (HHSC) Rate Analysis Department;
(2)
all required long-term care facility staffing and compensation reports have been filed with HHSC's Rate Analysis Department; and
(3)
funds identified for recoupment from 1 TAC §355.803(n) or (o) or both (relating to Direct Care Staff Rate Component) have been repaid to HHSC or its designee.
(c)
If an acceptable surety bond or letter of credit is presented to DHS, the vendor payments may be released. Facilities must ensure that this bond or irrevocable letter of credit is in a format acceptable to DHS, and does not include requirements that DHS, as a condition of receiving payment, either:
(1)
return the original bond or letter; or
(2)
submit to any draft requirement of an irrevocable letter of credit or surety bond, in addition to DHS's letter demanding payment.

§19.2314  Financial Audits

(a)
The Texas Department of Human Services (DHS) may audit all facilities, including facilities' trust fund accounts, periodically. A facility is notified of audit plans and is given a report of the final audit findings. If vendor payment problems are found, Provider Enrollment requests that the Nursing Facility Billing Unit work with the facility to reconcile the discrepancies. If the findings show that refunds are due residents or their responsible parties, Provider Enrollment requests that the regional staff assist the facility in reconciling the audit findings. Facilities which fail to provide documentation for audit exceptions or evidence of federally-mandated surety bonds or fail to keep other records required for audit are subject to the withholding of vendor payments until such problems are resolved. Money owed to DHS will be recouped from the funds placed on hold.
(b)
Upon receipt of an audit exception, the facility must provide additional documentation, reach a final agreement, make restitution within 60 days, or request a hearing within 15 days. Requests for an informal hearing are to be directed to DHS, Provider Enrollment. Requests for a formal hearing are to be directed to DHS's Hearings Department, P.O. Box 149030 (W-613), Austin, Texas 78714-9030.
(c)
If the facility does not pay the amount due the resident within the specified time frame, DHS may withhold other funds due the facility beginning on the 60th day without providing advance notice. DHS releases funds when the facility produces documentation that it has refunded the proper amount to the resident or responsible party.
(d)
DHS may require the facility to pay the resident refund amount to DHS plus any anticipated cost, including personnel salaries, which is incurred by DHS in making the refund to the proper party.

§19.2316  Collection of Applied Income

(a)
Nursing facilities may collect from the recipient only the applied income that is specified on the recipient's payment plan forms, except when that amount exceeds the monthly vendor rate. In this event, the facility may collect only an applied-income amount equal to the maximum monthly Medicaid vendor rate.
(b)
If a payment plan appears incorrect, the facility administrator should contact the local Texas Department of Human Services(DHS) worker to correct the plan. Even if a recipient's income increases, the administrator must not collect an increased payment until the plan is changed. The administrator should not collect an increased payment in anticipation of a payment plan increase.
(c)
If an admitted recipient does not have a payment plan, the administrator should contact the local worker for help in determining how much applied income is owed. If the forthcoming forms indicate a lesser payment, the administrator should refund the excess immediately and notify the worker.
(d)
Facilities that collect payments (part applied income, part Medicaid) in excess of the vendor rate are in violation of DHS regulations and of Public Law 95-142 which makes "solicitation of supplementation" a felony.
(e)
Regional DHS staff must report any violations. If an investigation shows that the facility has violated this standard, a recommendation for withholding vendor payments, contract termination, referral to the courts, or other contract action may be made.
(f)
The nursing facility must refund the recipient's prorated applied income money when the recipient has paid in advance for the full month and is discharged from the facility any time during the month. The facility must make the refund within 30 calendar days from and including the date of discharge, even when vendor payment has not been received from DHS.

§19.2318  Computation of Daily Reimbursement Rate for Recipients with Applied Income

(a)
Reimbursement is computed by multiplying the established daily rate by the number of days in the month. The recipient's applied income is then subtracted and the result is divided by the number of days in the month.
(b)
A facility may not collect more than the applied income reported on the payment plan form in a 31-day month.

§19.2320  Medical Transportation

(a)
The nursing facility is responsible for providing normal transportation for the recipient to medical services outside the facility. The attending physician must have ordered the medical services.
(b)
Normal transportation is to and from the medical care provider of the recipient's choice, who is generally available and used by recipients of the locality for medical care included under the Texas Medical Assistance program. If a Title XIX provider is not in the locality, transportation is to and from the nearest appropriate Title XIX provider if the recipient so chooses. The term "locality" means the service area surrounding the nursing facility from which individuals ordinarily come or are expected to come for inpatient or outpatient services.
(c)
Transportation charges, including non-emergency, routine ambulance services, involved in the certification or recertification of a recipient are the responsibility of the nursing facility.
(d)
The facility may not charge the state's Medicaid health insuring agent, the recipient, the family, or responsible party for normal transportation as defined in this section. Normal transportation charges are covered in the monthly vendor rate. The facility may not use the state's Medicaid community-based Title XIX medical transportation program except to transport recipients for renal dialysis treatments.
(e)
Charges for the following medically necessary ambulance services, when provided by a Medicaid-enrolled provider, are not the responsibility of the nursing facility, but are payable by the state's Medicaid health insuring agent as a Medicaid benefit:
(1)
emergency transport, which is ambulance service for a Medicaid recipient with an emergency medical condition. Emergency medical condition is defined as one which manifests itself by acute symptoms of sufficient severity such that the absence of immediate medical attention could result in placing the recipient's health in serious jeopardy; and
(2)
nonemergency transport, under the following conditions:
(A)
the recipient is severely disabled, which is defined as a condition which limits mobility and requires confinement to bed at all times, prevents sitting unassisted at all times, or requires the monitoring of life support systems, including oxygen or intravenous infusion;
(B)
the severely disabled recipient cannot be transported by any means other than an ambulance without endangering the health or safety of the recipient; and
(C)
the nonemergency ambulance transportation of the severely disabled recipient is to or from a scheduled medical appointment and authorization has been received from the Texas Department of Health or its designee. If payment under the medical assistance program is denied because the facility failed to obtain prior authorization, the facility must pay for the service if presented a copy of the bill for which payment was denied.
(f)
If ambulance services are reimbursable by the state's Medicaid health insuring agent, they are not the responsibility of the recipient, the family, or the responsible party.
(g)
Nursing facilities are encouraged to use family, friends, sponsors, civic groups, or charitable organizations as resources for transportation services. If normal transportation is not obtainable from these sources, the facility must provide or purchase the appropriate services.

§19.2322  Medicaid Bed Allocation Requirements

(a)
Definitions. The words and terms, when used in this section, have the following meanings, unless the context clearly indicates otherwise.
(1)
Applicant — An individual or entity requesting a bed allocation waiver or exemption.
(2)
Assignment of rights — The Department of Aging and Disability Services (DADS) conveyance of a specific number of allocated Medicaid beds from a nursing facility or entity to another entity for purposes of constructing a new nursing facility or for any other use as authorized by this chapter.
(3)
Bed allocation — The process by which DADS controls the number of nursing facility beds that are eligible to become Medicaid-certified in each nursing facility.
(4)
Bed certification — The process by which DADS certifies compliance with state and federal Medicaid requirements for a specified number of Medicaid beds allocated to a nursing facility.
(5)
County or precinct occupancy rate — The number of residents, regardless of source of payment, occupying certified Medicaid beds in a county divided by the number of Medicaid beds allocated in the county, including Medicaid beds that are certified and Medicaid beds that have been allocated but are not certified. In the four most populous counties in the state, the occupancy rate is calculated for each county commissioner precinct.
(6)
Licensee — The individual or entity, including a controlling person, that is:
(A)
an applicant for licensure by DADS under Chapter 242 of the Texas Health and Safety Code and for Medicaid certification;
(B)
licensed by DADS under Chapter 242 of the Texas Health and Safety Code; or
(C)
licensed under Chapter 242 of the Texas Health and Safety Code and holds the contract to provide Medicaid services.
(7)
Lien holder — The individual or entity that holds a lien against a physical plant.
(8)
Multiple-facility owner — An individual or entity that owns, controls, or operates under lease two or more nursing facilities within or across state lines.
(9)
Occupancy rate — The number of residents occupying certified Medicaid beds divided by the number of certified Medicaid beds in a nursing facility.
(10)
Open solicitation period — A period during which an individual or entity may apply for an allocation of Medicaid beds in a high-occupancy county or precinct.
(11)
Physical plant — The land and attached structures to which beds are allocated or for which an application for bed allocation has been submitted.
(12)
Property owner — The individual or entity that owns a physical plant.
(13)
Transfer of beds — DADS conveyance of a specific number of allocated Medicaid beds from an existing nursing facility or entity to another existing licensed nursing facility. The nursing facility may use the transferred Medicaid beds to increase the number of Medicaid-certified beds currently licensed or to increase the number of Medicaid-certified beds when additional licensed beds are added to the nursing facility in the future.
(b)
Purpose. The purpose of this section is to control the number of Medicaid beds that DADS contracts, to improve the quality of resident care by selective and limited allocation of Medicaid beds, and to promote competition.
(c)
Bed allocation general requirements. The allocation of Medicaid beds is an opportunity for the property owner or the lessee of a nursing facility to obtain a Medicaid nursing facility contract for a specific number of Medicaid-certified beds.
(1)
Medicaid beds are allocated to a nursing facility and remain at the physical plant where they were originally allocated, unless DADS transfers or assigns the beds.
(2)
When DADS allocates Medicaid beds to a nursing facility as a result of actions by the licensee, DADS requires that the beds remain allocated to the physical plant, even when the licensee ceases operating the nursing facility, unless DADS assigns or transfers the beds.
(3)
Notwithstanding any language in subsections (f) and (g) of this section and the fact that applicants for bed allocation waivers and exemptions may be licensees or property owners, DADS allocates beds to the physical plant and the owner of that property controls the Medicaid beds subject to DADS rules and requirements and all valid physical plant liens.
(d)
Control of beds. Except as specified in this section, DADS does not accept applications for a Medicaid contract for nursing facility beds from any nursing facility that was not granted:
(1)
a valid certificate of need (CON) by the Texas Health Facilities Commission before September 1, 1985;
(2)
a waiver or exemption approved by the Department of Human Services before January 1, 1993; or
(3)
a valid order that had the effect of authorizing the operation of the nursing facility at the bed capacity for which participation is sought.
(e)
Level of acceptable care. Unless specifically exempted from this requirement, applicants and controlling persons of an applicant for Medicaid bed allocation waivers or exemptions must comply with level of acceptable care requirements. Level of acceptable care requirements apply only in determining bed allocation waiver and exemption eligibility and have no effect on other sections of this chapter.
(1)
DADS determines a waiver or exemption applicant or a controlling person of an applicant complies with level of acceptable care requirements if, within the preceding 24 months, the applicant or controlling person:
(A)
has not received any of the following sanctions:
(i)
termination of Medicaid or Medicare certification;
(ii)
termination of Medicaid contract;
(iii)
denial, suspension, or revocation of a nursing facility license;
(iv)
cumulative Medicaid or Medicare civil monetary penalties totaling more than $5,000 per facility;
(v)
civil penalties pursuant to §242.065 of the Texas Health and Safety Code; or
(vi)
denial of payment for new admissions;
(B)
does not have a pattern of substantial or repeated licensing and Medicaid sanctions, including administrative penalties or other sanctions; and
(C)
does not have a condition listed in §19.214(a) of this chapter (relating to Criteria for Denying a License or Renewal of a License).
(2)
DADS considers the criteria in paragraph (1) of this subsection to determine if local facilities provide a level of acceptable care in counties, communities, ZIP codes or other geographic areas that are the subject of a waiver application. DADS only considers sanctions that are final and are not subject to appeal when determining if a local facility complies with level of acceptable care requirements.
(3)
Nursing facilities that have received any of the sanctions listed in paragraph (1) of this subsection within the previous 24 months are not eligible for an allocation of Medicaid beds under subsection (h) of this section or an allocation of additional Medicaid beds under subsection (f) of this section. In the case of sanctions against the nursing facility to which the beds would be allocated that are appealed, either administratively or judicially, an application will be suspended until the appeal has been resolved. Sanctions that have been administratively withdrawn or were subsequently reversed upon administrative or judicial appeal are not considered.
(4)
When the applicant for an allocation of additional Medicaid beds is a multiple-facility owner or a multiple-facility owner owns an applicant nursing facility, the multiple-facility owner must demonstrate an overall record of complying with level of acceptable care requirements. DADS only considers sanctions that are final and are not subject to appeal when determining whether the multi-facility owner's facilities not receiving the new bed allocation comply with level of care requirements.
(5)
When the applicant is a licensee that has operated a nursing facility less than 24 months, the nursing facility must establish at least a 12-month compliance record immediately preceding the application in which the nursing facility has not received any of the sanctions listed under paragraph (1) of this subsection.
(6)
When the applicant has no history of operating nursing facilities, DADS will review the compliance record of health-care facilities operated, managed, or otherwise controlled by controlling parties of the applicant. If a controlling party or the applicant has never operated, managed, or otherwise controlled any health-care facilities, a compliance review is not required.
(7)
The commissioner, or the commissioner's designee, may make an exception to any of the requirements in this subsection if the commissioner or the commissioner's designee determines the needs of Medicaid recipients in a local community will be served best by granting a Medicaid bed allocation waiver or exemption. In determining whether to make an exception to the requirements, the commissioner or the commissioner's designee may consider the following:
(A)
the overall compliance record of the waiver or exemption applicant;
(B)
the current availability of Medicaid beds in facilities that comply with level of acceptable care requirements in the local community;
(C)
the level of support for the waiver or exemption from the local community;
(D)
the way a waiver or exemption will improve the overall quality of care for nursing facility residents; and
(E)
the age and condition of nursing facility physical plants in the local community.
(f)
Exemptions. DADS may grant an exemption from the requirements in subsection (d) of this section. All exemption actions must comply with the requirements in this subsection and with requirements of the Centers for Medicare and Medicaid Services (CMS) regarding bed capacity increases and decreases. When a bed allocation exemption is approved, the licensee must comply with the requirements in §19.201 of this chapter (relating to Criteria for Licensing) at the time of licensure and Medicaid certification of the new beds or nursing facility.
(1)
Replacement Medicaid nursing facilities and beds. An applicant may request that DADS approve replacement of allocated Medicaid beds by the construction of one or more new nursing facilities.
(A)
The applicant must own the physical plant where the beds are allocated or possess a valid assignment of rights to the Medicaid beds.
(B)
The applicant must obtain written approval by all lien holders of the physical plant where the beds are allocated before requesting DADS approval to relocate the Medicaid beds to the replacement facility if the replacement facility will be constructed at a different address than the current facility. The applicant must submit the lien holder approval with the replacement nursing facility request. If the physical plant where the Medicaid beds are allocated does not have a lien, the applicant must submit a written attestation of that fact with the replacement nursing facility request.
(C)
Replacement nursing facility applicants, including those who obtained the rights to the beds through a DADS assignment of beds, must comply with the level of acceptable care requirements in subsection (e) of this section, unless the applicant for a replacement nursing facility is the current property owner.
(D)
DADS may grant a replacement facility an increase of up to 25 percent of the currently allocated Medicaid beds, if the applicant complies with the level of acceptable care requirements in subsection (e) of this section. DADS will not transfer or assign the additional allocation of beds until they are certified at the replacement facility.
(E)
The physical plant of the replacement nursing facility must be located in the same county in which the Medicaid beds currently are allocated.
(2)
Transfer of Medicaid beds. An applicant may request DADS transfer allocated Medicaid beds certified or previously certified to another physical plant.
(A)
The applicant must own the physical plant where the beds are allocated, or the applicant must present DADS with:
(i)
a valid Medicaid bed transfer agreement that specifies the number of additional Medicaid beds the applicant is requesting DADS allocate to the receiving nursing facility; or
(ii)
a valid Medicaid bed assignment that specifies the number of additional Medicaid beds the applicant is requesting DADS allocate to the receiving nursing facility.
(B)
If the Medicaid beds are allocated to a specific physical plant, the applicant must obtain and submit written approval from the property owner and, if the physical plant has a lien, written approval from all lien holders to obtain a DADS transfer of the Medicaid beds to another facility. If the physical plant where the Medicaid beds are allocated does not have a lien, the applicant must submit a written attestation of that fact with the transfer request.
(C)
The receiving licensee must comply with level of acceptable care requirements in subsection (e) of this section.
(D)
Both facilities must be located in the same county.
(3)
High-occupancy facilities. Medicaid-certified nursing facilities with high occupancy rates may periodically apply to DADS to receive bed allocation increases.
(A)
The occupancy rate of the Medicaid beds of the applicant nursing facility must be at least 90.0 percent for nine of the previous 12 months prior to the application.
(B)
The application for additional Medicaid beds may be for no more than 10 percent (rounded to the nearest whole number) of the facility's Medicaid-certified nursing facility beds.
(C)
The applicant nursing facility must comply with level of acceptable care requirements in subsection (e) of this section.
(D)
The applicant nursing facility may reapply for additional Medicaid beds no sooner than nine months from the date of the previous allocation increase.
(E)
Medicaid beds allocated to a nursing facility under this requirement may only be certified at the applicant nursing facility. DADS does not transfer or assign the additional allocation of beds until they are certified at the applicant nursing facility.
(4)
Non-certified nursing facilities. Licensed nursing facilities that do not have Medicaid-certified beds may apply to DADS for an initial allocation of Medicaid beds.
(A)
The application for Medicaid beds may be for no more than 10 percent (rounded to the nearest whole number) of the facility's licensed nursing facility beds.
(B)
The applicant nursing facility must comply with level of acceptable care requirements in subsection (e) of this section.
(C)
After the applicant nursing facility receives an allocation of Medicaid beds, the facility may apply for additional Medicaid beds in accordance with paragraph (3) of this subsection.
(D)
Facilities that have Medicaid beds allocated under provisions of an Alzheimer’s waiver may apply for general Medicaid beds in accordance with paragraph (3) or (4) of this subsection. DADS does not count the beds allocated under an Alzheimer’s waiver provision in determining the allowable bed allocation increase. For example, a 120-bed nursing facility with 60 Alzheimer waiver beds would be eligible for 10 percent of the 60 remaining beds or six additional Medicaid beds.
(5)
Low-capacity facilities. For purposes of efficiency, nursing facilities with a Medicaid bed capacity of less than 60 may receive additional Medicaid beds to increase their capacity up to a total of 60 Medicaid beds.
(A)
The nursing facility must be licensed for less than 60 beds and have a current certification of less than 60 Medicaid beds.
(B)
The nursing facility must have been Medicaid-certified before June 1, 1998.
(C)
The applicant licensee must comply with level of acceptable care requirements in subsection (e) of this section.
(D)
Facilities that have a Medicaid capacity of less than 60 beds due to the loss of Medicaid beds under provisions in subsection (j) of this section are not eligible for this exemption.
(6)
Spend-down Medicaid beds. Licensed nursing facilities may apply to DADS for temporary spend-down Medicaid beds for residents who have “spent down” their resources to become eligible for Medicaid, but for whom no Medicaid bed is available. A DADS approval of spend-down Medicaid beds allows a nursing facility to exceed temporarily its allocated Medicaid bed capacity.
(A)
The applicant nursing facility must have a Medicaid contract with a Medicaid bed capacity of at least 10 percent of licensed capacity authorized in paragraph (4) of this subsection. If the nursing facility is not currently Medicaid-certified, the licensee must be approved for Medicaid certification and obtain a Medicaid contract with a Medicaid bed capacity at least as large as that authorized in paragraph (4) of this subsection.
(B)
All Medicaid or dually certified beds must be occupied by Medicaid or Medicare recipients at the time of application.
(C)
The application for a spend-down Medicaid bed must include documentation that the person for whom the spend-down bed is requested:
(i)
was not eligible for Medicaid at the time of the resident's most recent admission to the nursing facility; and
(ii)
was a resident of the nursing facility for at least the immediate three months before becoming eligible for Medicaid, excluding hospitalizations.
(D)
The nursing facility is eligible to receive Medicaid benefits effective the date the resident meets Medicaid eligibility requirements.
(E)
The nursing facility must assign a permanent Medicaid bed to the resident as soon as one becomes available.
(F)
Facilities with multiple residents in spend-down beds must assign permanent Medicaid beds to those residents in the same order the residents were admitted to spend-down beds.
(G)
The assignment of residents in spend-down beds to permanent Medicaid beds must precede the admission of new residents to permanent beds.
(H)
The nursing facility must notify DADS immediately upon the death or permanent discharge of the resident or transfer of the resident to a permanent Medicaid bed. Failure of the nursing facility to notify DADS of these occurrences in a timely manner is basis for denying applications for spend-down Medicaid beds.
(I)
The nursing facility is not required to comply with level of acceptable care requirements in subsection (e) of this section.
(g)
Waivers. The commissioner or the commissioner’s designee may grant a waiver of the requirements stated in subsection (d) of this section under certain conditions.
(1)
Applicants must meet the following conditions to be eligible for the specific waivers in subsection (h) of this section.
(A)
The applicant must meet the level of acceptable care requirement in subsection (e) of this section.
(B)
The applicant must submit a complete DADS waiver application.
(C)
At the time of licensure and Medicaid certification of the allocated beds, the licensee must comply with the requirements in §19.201 of this chapter.
(D)
A waiver recipient or a subsequent waiver assignee must, at the time of licensure and Medicaid certification, be the property owner or the licensee of the facility where Medicaid beds allocated through the waiver process are certified.
(2)
A waiver recipient may request that DADS approve the assignment of an approved waiver to another entity in accordance with this paragraph. A waiver recipient may request DADS approval of only one assignment. A waiver assignment is not valid unless and until it is approved by DADS.
(A)
The waiver recipient or the owner of the waiver recipient must maintain majority ownership and management control of the assignee.
(B)
The assignee must not have an owner or controlling person who was not an owner or controlling person of the waiver recipient.
(C)
The assignee must own the physical plant of the waiver facility at the time of licensure and certification (as landlord) or be the licensee at the time of licensure and certification (as the licensed operator). Under either circumstance, the allocated beds are subject to subsection (c) of this section.
(D)
The assignee must meet the requirements in subsection (e) of this section regarding level of acceptable care.
(3)
A waiver recipient entity may remove a controlling person from ownership of the entity, but the waiver recipient entity must not add an owner after the waiver is approved by DADS. A change to the ownership of the waiver recipient entity or the waiver assignment entity must be reported to DADS.
(4)
DADS may in its sole discretion determine that a waiver applicant that submits false or fraudulent information is not eligible for a waiver. DADS may, in its sole discretion, revoke a waiver issued and decertify Medicaid beds issued based on false or fraudulent information provided by the applicant.
(5)
Except as provided in paragraphs (6) – (9) of this subsection, DADS considers waiver applications in the order in which they are received. A waiver applicant may request that review of its application be deferred until one or more applications submitted after its application has been reviewed. This request must be in writing.
(6)
DADS gives priority to a small house waiver application submitted in accordance with subsection (h)(9) of this section over a pending community needs waiver application submitted in accordance with subsection (h)(2) of this section for the same county. If approved, DADS includes the small house facility beds when determining the need for a community needs waiver.
(7)
During any period in which DADS is processing a waiver application in accordance with subsection (h)(2), (4), (5), or (9) of this section, DADS may suspend processing the waiver application for up to six months if DADS determines the county or precinct occupancy rate of the county or precinct in which the site of the proposed waiver is located is at least 85 percent during at least six of the previous nine months. DADS calculates the occupancy rate based on the monthly Medicaid occupancy reports submitted to DADS by Medicaid-certified nursing facilities and includes the occupancy rate of certified Medicaid beds and allocated Medicaid beds that are encumbered for future certification as a result of approval of a waiver or exemption in the subject county or precinct.
(8)
DADS initiates the high occupancy county or precinct waiver process referenced in subsection (h)(1) of this section if DADS determines requirements for the open solicitation process for a high occupancy county or precinct waiver are met during the temporary suspension period referenced in paragraph (7) of this subsection. DADS does not process any pending waiver applications in the affected county or precinct until the open solicitation process referenced in subsection (h)(1) of this section is complete.
(9)
DADS continues to process a suspended waiver application in the affected county or precinct if DADS determines requirements for the open solicitation process of the high occupancy county or precinct waiver are not met during the suspension period referenced in paragraph (7) of this subsection.
(h)
Specific waiver types. DADS may grant a waiver if it determines that Medicaid beds are necessary for the following circumstances.
(1)
High occupancy waiver. A high occupancy waiver is designed to meet the needs of counties and certain precincts that have a high county or precinct occupancy rate for multiple months.
(A)
DADS monitors monthly county or precinct occupancy rates. If DADS determines that a county or precinct occupancy rate equals or exceeds 85 percent for at least nine of the previous twelve months, DADS may initiate a waiver process by placing a public notice in the Texas Register and the Electronic State Business Daily (ESBD) to announce an open solicitation period.
(B)
The public notice announces that DADS may allocate 90 additional Medicaid beds in the county or precinct.
(C)
The notice identifies the county or precinct and the beginning and end dates of the solicitation period. The notice also includes the DADS address to which the application for additional Medicaid beds must be submitted and specifies that the application must be received by DADS before the close of business on the end date of the solicitation period.
(D)
An applicant for additional Medicaid beds must comply with the level of acceptable care requirements in subsection (e) of this section.
(E)
An applicant must submit a complete DADS waiver application.
(F)
At the end of the solicitation period, DADS determines if an applicant is eligible for additional Medicaid beds. If multiple applicants are eligible, the applicant who will receive the allocation of beds will be chosen by a lottery selection.
(G)
If no application for the waiver process is received or if no applicant meets the requirements in this section, DADS conducts no further solicitation. DADS closes the process without allocating Medicaid beds.
(2)
Community needs waiver. A community needs waiver is designed to meet the needs of communities that do not have reasonable access to acceptable nursing facility care.
(A)
The applicant must submit a demographic or health needs study, prepared by an independent professional experienced at preparing demographic or health needs studies, that documents:
(i)
an immediate need for additional Medicaid beds in the community; and
(ii)
Medicaid residents in the community do not have reasonable access to acceptable nursing facility care.
(B)
The application must include a statement by the preparer of the study that the preparer has no interest, financial or otherwise, in the outcome of the waiver application.
(C)
The demographic or health needs study must include at least the following information pertaining to the community’s population:
(i)
population growth trends;
(ii)
population growth trends specific to the elderly, including income or financial condition;
(iii)
Medicaid bed occupancy data;
(iv)
level of acceptable care provided by local nursing facilities; and
(v)
any existing allocated Medicaid beds not currently certified but that could be used for a new Medicaid nursing facility.
(D)
The applicant must submit documentation of substantial community support for the new nursing facility or beds.
(E)
When determining the immediate need for additional Medicaid beds, and whether residents have reasonable access to acceptable nursing facility care, DADS considers:
(i)
the number and occupancy rate of certified Medicaid beds that comply with level of acceptable care requirements; and
(ii)
the number of encumbered Medicaid beds that have been approved by DADS but are not yet certified.
(F)
Replacement beds or waiver beds approved in accordance with subsection (f)(1) or (h) of this section will not be considered in the calculation in subparagraph (D) of this paragraph if the owner of the replacement beds or waiver beds has not purchased land for a new construction site within 24 months after the date DADS initially approves the replacement request or the waiver for the beds.
(G)
DADS considers an application withdrawn if it is not completed within 90 days after the application is submitted to DADS.
(H)
DADS notifies local nursing facilities when a complete community needs waiver application is received and affords local nursing facilities an opportunity to comment on the waiver application. The notification includes a deadline for submission of comments. DADS limits subsequent comments during the review process to facilities that submit timely comments in response to the notification of a completed application.
(3)
Criminal justice waiver. The criminal justice waiver is designed to meet the needs of the Texas Department of Criminal Justice (TDCJ). The applicant must document that:
(A)
the waiver is needed to meet the identified and determined nursing facility needs of TDCJ; and
(B)
the new nursing facility is approved by TDCJ to serve persons under their supervision who have been released on parole, mandatory supervision, or special needs parole in accordance with Texas Government Code, Chapter 508, Parole and Mandatory Supervision.
(4)
Economically disadvantaged waiver. The economically disadvantaged waiver is designed to meet the needs of residents of ZIP codes located in communities where a majority of residents have an average income below the countywide average income and do not have reasonable access to acceptable nursing facility care.
(A)
The applicant must submit a demographic or health needs study, prepared by an independent professional experienced at preparing demographic or health needs studies that documents:
(i)
the ZIP code in which the new nursing facility will be constructed has a population with an income that is at least 20 percent below the average income of the county according to the most recent U.S. census or more recent census projection;
(ii)
an immediate need for additional Medicaid beds in the ZIP code in which the new nursing facility will be constructed; and
(iii)
residents in the ZIP code in which the nursing facility or beds will be located do not have reasonable access to acceptable nursing facility care.
(B)
The application must include a statement by the preparer of the study that the preparer has no interest, financial or otherwise, in the outcome of the waiver application.
(C)
The demographic or health needs study must include at least the following information pertaining to the community’s population:
(i)
population growth trends;
(ii)
population growth trends specific to the elderly, including income or financial condition;
(iii)
Medicaid bed occupancy data;
(iv)
level of acceptable care provided by local facilities; and
(v)
any existing allocated Medicaid beds not currently certified but could be used for a new Medicaid nursing facility.
(D)
When determining the immediate need for additional Medicaid beds, and whether residents have reasonable access to acceptable nursing facility care, DADS considers:
(i)
the number and occupancy rate of certified Medicaid beds that comply with level of acceptable care requirements; and
(ii)
the number of encumbered Medicaid beds that have been approved by DADS but are not yet certified.
(E)
Replacement beds or waiver beds approved in accordance with subsection (f)(1) or (h) of this section will not be considered in the calculation in subparagraph (D) of this paragraph if the owner of the replacement beds or waiver beds has not purchased land for a new construction site within 24 months after the date DADS initially approves the replacement request or the waiver for the beds.
(F)
DADS considers an application withdrawn if it is not completed within 90 days after the application is submitted to DADS.
(G)
DADS notifies local nursing facilities when a complete economically disadvantaged waiver application is received and affords local nursing facilities an opportunity to comment on the waiver application. The notification includes a deadline for submission of comments. DADS limits subsequent comments during the review process to facilities that submit timely comments in response to the notification of a completed application.
(5)
Alzheimer’s waiver. The Alzheimer’s waiver is designed to meet the needs of communities that do not have reasonable access to Alzheimer’s nursing facility services.
(A)
The applicant must document that:
(i)
the nursing facility is affiliated with a medical school operated by the state;
(ii)
the nursing facility will participate in ongoing research programs for the care and treatment of persons with Alzheimer’s disease;
(iii)
the nursing facility will be designed to separate and treat residents with Alzheimer’s disease by stage and functional level;
(iv)
the nursing facility will obtain and maintain voluntary certification as an Alzheimer’s nursing facility in accordance with §§19.2204, 19.2206, and 19.2208 of this chapter (relating to Voluntary Certification of Facilities for Care of Persons with Alzheimer's Disease; General Requirements for a Certified Facility; and Standards for Certified Alzheimer's Facilities); and
(v)
only residents with Alzheimer’s disease or related dementia will be admitted to the Alzheimer’s Medicaid beds.
(B)
The applicant must submit a demographic or health needs study, prepared by an independent professional experienced at preparing demographic studies that documents the need for the number of Medicaid Alzheimer’s beds requested. The study must include a statement by the preparer of the study that the preparer has no interest, financial or otherwise, in the outcome of the waiver application.
(C)
DADS notifies local nursing facilities when a complete Alzheimer's waiver application is received and afford local nursing facilities an opportunity to comment on the waiver application. The notification will include a deadline for submission of comments. DADS limits subsequent comments during the review process to facilities that submit timely comments in response to the notification of a completed application.
(D)
DADS considers an application withdrawn if it is not completed within 90 days after the application is submitted to DADS.
(6)
Teaching nursing facility waiver. A teaching nursing facility waiver is designed to meet the statewide needs for providing training and practical experience for health-care professionals. The applicant must submit documentation that the nursing facility:
(A)
is affiliated with a state-supported medical school;
(B)
is located on land owned or controlled by the state-supported medical school; and
(C)
serves as a teaching nursing facility for physicians and related health-care professionals.
(7)
Rural county waiver. A rural county waiver is designed to meet the needs of rural areas of the state that do not have reasonable access to acceptable nursing facility care. For purposes of this waiver, a rural county is one that has a population of 100,000 or less according to the most recent census, and has no more than two Medicaid-certified nursing facilities. DADS approves no more than 120 additional Medicaid beds per county per year and no more than 500 additional Medicaid beds statewide in a calendar year under this waiver provision. DADS considers a waiver application on a first-come, first-served basis. Requests received in a year in which the 500-bed limit has been met will be carried over to the next year. The county commissioner’s court must request the waiver.
(A)
The commissioner’s court must notify DADS of its intent to consider a rural county waiver and obtain verification from DADS that the county complies with the definition of rural county.
(B)
The commissioner’s court must publish a notice in the Texas Register and in a newspaper of general circulation in the county. The notice must seek:
(i)
comments on whether a new Medicaid nursing facility should be requested; and
(ii)
proposals from persons or entities interested in providing additional Medicaid-certified beds in the county, including persons or entities currently operating Medicaid-certified facilities with high occupancy rates. DADS, in its sole discretion, may eliminate from participating in the process persons or entities that submit false or fraudulent information.
(C)
The commissioner’s court must determine whether to proceed with the waiver request after considering all comments and proposals received in response to the notices provided under subparagraph (B) of this paragraph. In determining whether to proceed with the waiver request, the commissioner’s court must consider:
(i)
the demographic and economic needs of the county;
(ii)
the quality of existing Medicaid nursing facilities in the county;
(iii)
the quality of the proposals submitted, including a review of the past history of care provided, if any, by the person or entity submitting the proposal; and
(iv)
the degree of community support for additional Medicaid nursing facility services.
(D)
The commissioner’s court must document the comments received, proposals offered and factors considered in subparagraph (C) of this paragraph.
(E)
If the commissioner’s court decides to proceed with the waiver request, it must submit a recommendation that DADS issue a waiver to a person or entity who submitted a proposal for new or additional Medicaid beds. The recommendation must include:
(i)
the name, address, and telephone number of the person or entity recommended for contracting for the Medicaid beds;
(ii)
the location, if the commissioner’s court desires to identify one, of the recommended nursing facility;
(iii)
the number of beds recommended; and
(iv)
the information listed in subparagraph (D) of this paragraph used to make the recommendation.
(8)
State veterans homes. State veterans homes, authorized and built under the auspices of the Texas Veterans Land Board, must meet all requirements for Medicaid participation.
(9)
Small house waiver. A small house waiver is designed to promote the construction of smaller nursing facility buildings that provide a homelike environment.
(A)
A facility must meet the requirements in §19.345 of this chapter (relating to Small House and Household Facilities) for DADS to grant a small house waiver for the facility.
(B)
An applicant for a small house waiver must submit an application to DADS and a schematic building plan of the proposed facility with sufficient detail to demonstrate that the proposed project meets the requirements in §19.345 of this chapter.
(C)
An applicant that is granted a small house waiver must submit final construction documents in accordance with §19.344 of this chapter (relating to Plans, Approvals, and Construction Procedures) before facility construction begins.
(D)
DADS notifies local nursing facilities when a complete small house waiver application is received and allows the local nursing facilities to comment on the waiver application. The notification includes the deadline for submitting comments. DADS limits subsequent comments during the review process to facilities that submit timely comments in response to the notification of a completed application.
(E)
DADS does not approve more than 16 beds for a small house facility or for a household in a facility that is granted a small house waiver.
(F)
DADS considers an application withdrawn if it is not completed within 90 days after the application is submitted to DADS.
(G)
Subject to subparagraph (E) of this paragraph, DADS approves the replacement or transfer of beds certified at a small house nursing facility in accordance with subsection (f)(1) or (2) of this section only to another small house or household facility.
(i)
Time Limits and Extensions.
(1)
Medicaid beds transferred in accordance with subsection (f)(2) of this section must be certified within six months after DADS grants the exemption.
(2)
Time limits applicable to temporary Medicaid beds are specified in subsection (f)(6) of this section.
(3)
All facilities and beds approved in accordance with waiver provisions of subsection (h) of this section and replacement nursing facilities approved in accordance with subsection (f)(1) of this section, must be constructed, licensed, and Medicaid-certified within 42 months after the waiver or replacement exemption is granted.
(4)
Recipients of a waiver approval or a replacement nursing facility approval must comply with the following benchmarks and submit evidence of compliance to DADS at the time of compliance.
(A)
The land must be under contract within 12 months after DADS approval of the waiver or replacement.
(B)
An architect or engineer must be under contract within 15 months after DADS approval of the waiver or replacement.
(C)
The facility’s preliminary plans must be completed within 18 months after DADS approval of the waiver or replacement.
(D)
The land must be purchased and a progress report submitted to DADS within 24 months after DADS approval of the waiver or replacement.
(E)
Entitlements (including municipality, planning and zoning, building permit) and the facility’s foundation must be completed within six months after land purchase or 30 months after DADS approval of the waiver or replacement, whichever is later.
(F)
A construction progress report confirming active and ongoing construction must be submitted within 12 months after land purchase or 36 months after DADS approval of the waiver or replacement, whichever is later, if the facility is not constructed, licensed and certified by that date.
(G)
The facility must be constructed, licensed, and certified within 18 months after land purchase or 42 months after DADS approval of the waiver or replacement, whichever is later.
(5)
DADS, in its sole discretion, may declare the exemption or the waiver void if the applicant fails or refuses to provide evidence of compliance with each benchmark or deadline, or the evidence of compliance submitted to DADS in accordance with paragraph (4) of this subsection contains false or fraudulent information.
(6)
Waiver or exemption recipients may request an extension of the deadlines in this section. At the discretion of the commissioner or the commissioner’s designee, deadlines specified in this section may be extended. The applicant must substantiate every element of its extension request with evidence of good-faith efforts to meet the benchmarks and construction deadlines or evidence confirming that delays were beyond the applicant’s control.
(7)
Waiver or exemption recipients who receive an extension of their waiver or exemption must submit a progress report every six months after approval of the extension until the nursing facility beds are certified. DADS may declare the waiver or exemption void if the applicant fails or refuses to provide the progress report as required or if the progress report contains false or fraudulent information.
(8)
DADS may revoke a bed allocation for failure to meet the requirements of this section.
(j)
Loss of Medicaid Beds.
(1)
Loss of Medicaid beds that are not available to be occupied.
(A)
Medicaid nursing facilities must report certified Medicaid beds that do not comply with requirements of §19.1701 of this chapter (relating to Physical Environment) and are not available for occupancy on monthly Medicaid occupancy reports.
(B)
DADS decertifies and de-allocates Medicaid beds that are intended for use in bedrooms that have been converted to other uses if the rooms are not being used for bedroom occupancy use on two consecutive standard surveys.
(C)
DADS does not decertify and de-allocate Medicaid beds that are intended for use in rooms that are licensed and certified for multi-occupancy use but are being used for single occupancy only.
(D)
DADS decertifies and de-allocates Medicaid beds granted through a small house waiver if the facility in which the beds are located does not continue to meet the requirements in §19.345 of this chapter.
(2)
Loss of Medicaid beds based on sanctions.
(A)
A Medicaid nursing facility operated by the person or entity who also owns the property will lose the allocation of all Medicaid beds assigned to the nursing facility property if the nursing facility’s license is denied or revoked.
(B)
A Medicaid nursing facility operated by one person or entity and owned by another person or entity will lose the allocation of Medicaid beds if two or more of the following actions occur within a 42-month period:
(i)
licensure denial;
(ii)
licensure revocation; or
(iii)
Medicaid termination.
(C)
DADS may waive this loss of allocation of Medicaid beds in order to facilitate a change of ownership or other actions that would protect the health and safety of residents or assure reasonable access to acceptable nursing facility care.
(3)
Voluntary decertification of Medicaid beds.
(A)
Facilities may request to voluntarily decertify Medicaid beds.
(B)
The licensee must submit written approval of the Medicaid bed reduction signed by the property owner and all physical plant lien holders.
(C)
DADS reduces the number of allocated Medicaid beds equal to the number of beds voluntarily decertified.
(D)
Facilities that voluntarily decertify Medicaid beds are eligible to receive an increased allocation of Medicaid beds if the facility qualifies for a bed allocation waiver or exemption.
(4)
Nursing facility ceases to operate or participate in Medicaid.
(A)
The property owner of a nursing facility that closes or ceases to participate in the Medicaid program must inform DADS in writing of the intended future use of the Medicaid beds within 90 days after closure or ceasing participation in Medicaid.
(B)
Unless the Medicaid beds will be used for a replacement nursing facility, the allocated beds must be re-certified within 12 months of the date the Medicaid contract was terminated.
(C)
Time limits in subparagraphs (A) and (B) of this paragraph may be extended in accordance with subsection (i)(6) of this section.
(D)
DADS may de-allocate Medicaid beds for failure to meet the requirements of this paragraph.
(5)
Loss of Medicaid beds based on low occupancy.
(A)
DADS may review Medicaid bed occupancy rates annually for the purpose of de-allocating and decertifying unused Medicaid beds. The Medicaid bed occupancy reports for the most recent six-month period that DADS has validated are used to determine the bed occupancy rate of each nursing facility.
(B)
DADS de-allocates and decertifies Medicaid beds in facilities with an average occupancy rate below 70 percent. The number of beds decertified is calculated by subtracting the preceding six-month average occupancy rate of Medicaid-certified beds from 70 percent of the number of allocated certified beds and dividing the difference by 2, rounding the final figure down if necessary. For example, for a facility with 100 Medicaid-certified beds and a 50 percent occupancy rate, the difference between 70 percent (70 beds) and 50 percent (50 beds) is 20 beds, divided by 2, is 10 beds to be decertified.
(C)
Medicaid beds in a nursing facility that has obtained a replacement nursing facility exemption are not subject to the de-allocation and decertification process.
(D)
Medicaid beds in a new or replacement physical plant or a newly constructed wing of an existing physical plant are exempt from this de-allocation and decertification process until the new physical plant or new wing has been certified for 24 months.
(E)
Medicaid beds that have been subject to a change of ownership within the past 24 months are exempt from the de-allocation and decertification process.
(F)
Medicaid beds in a county or in a precinct in one of the four most populous counties in the state in which a facility approved through the waiver process is constructed are exempt from the de-allocation and decertification process for 24 months after licensure and certification of the facility.
(G)
Medicaid beds allocated to a closed nursing facility are exempt from this de-allocation and decertification process.
(H)
Nursing facilities that lose Medicaid beds through this process are eligible to receive an additional allocation of Medicaid beds at a later date if the facility qualifies for a bed allocation waiver or exemption.
(I)
The de-allocation and decertification of unused beds does not affect the licensed capacity of a nursing facility.
(k)
Informal review procedures.
(1)
Applicants may request an informal review of DADS actions regarding bed allocations. The request must be submitted within 30 days after the date referenced on the notification of the proposed action.
(2)
An applicant must submit a request for an informal review and all documentation or evidence that forms the basis for the informal review in writing.
(3)
The commissioner or the commissioner’s designee conducts the informal review.
(l)
Medicaid occupancy reports.
(1)
Medicaid nursing facilities must submit occupancy reports to DADS each month.
(A)
The occupancy data must be reported on a form prescribed by DADS. The form must be completed in accordance with instructions and the occupancy data must be accurate and verifiable. The completed report must be received by DADS no later than the fifth day of the month following the reporting period.
(B)
DADS determines the Medicaid occupancy rate by calculating the monthly average of the number of persons who occupy Medicaid beds.
(C)
DADS includes all persons residing in Medicaid-certified beds, including Medicaid recipients, Medicare recipients, private-pay residents, or residents with other sources of payment, in the calculation.
(D)
Failure or refusal to submit accurate occupancy reports in a timely manner may result in the nursing facility's vendor payment being held in abeyance until the report is submitted.
(2)
DADS determines nursing facility and county occupancy rates based on the data submitted by the nursing facilities.
(A)
DADS uses the occupancy data to determine eligibility for or compliance with waiver and exemption requirements. DADS also uses the occupancy data to determine if Medicaid beds should be decertified based on low occupancy.
(B)
DADS makes the occupancy data available to nursing facilities, licensees, property owners, waiver or exemption applicants, and others in accordance with public disclosure requirements.
(C)
DADS may disqualify a facility that provides inaccurate or falsified occupancy data from eligibility for bed allocation exemptions and waivers. DADS may refuse to accept corrections to bed occupancy data submitted more than six months after the due date of the occupancy report.
(m)
School-age residents. Any bed allocation waiver or exemption applicant that serves or plans to serve school-age residents must provide written notice to the affected local education agency (LEA) of its intent to establish or expand a nursing facility within the LEA’s boundary.

§19.2326  Medicaid Swing Bed Program for Rural Hospitals

(a)
Program description. DADS operates the Medicaid Swing Bed Program for rural hospitals located in counties with populations of 100,000 or less. The Medicaid Swing Bed Program is modeled on Medicare's Swing Bed Program. The Medicaid Swing Bed Program permits participating rural hospitals to use their beds interchangeably to furnish both acute hospital care and nursing facility care to Medicaid recipients, when no care beds are available in nursing facilities (NFs) in the area. When a participating rural hospital furnishes NF nursing care to Medicaid recipients, DADS makes payment to the hospital using the same procedures and the same Resource Utilization Group daily rates that the Texas Health and Human Services Commission authorizes for reimbursing NFs participating in the Texas Medicaid Nursing Home Program.
(b)
Application to participate. Rural hospitals apply to DADS to participate in the Medicaid Swing Bed Program. Each applicant must be located in a county with a population of 100,000 or less and must meet the qualifying requirements of the Medicare Swing Bed Program. Hospitals approved for participation enter into swing bed provider agreements with DADS.
(c)
Parallel participation in Medicare. A rural hospital participating in the Medicaid Swing Bed Program must:
(1)
have a Medicare hospital provider agreement; and
(2)
be Medicare-certified by the Department of State Health Services (DSHS) as a swing bed hospital in the Medicare Swing Bed Program.
(d)
Applicability of Medicare requirements. Each participating rural hospital must satisfy all the requirements of the Medicare Swing Bed Program, except that Medicare's five-weekday transfer requirement, as stated in §482.66(b)(i)-(ii), 42 Code of Federal Regulations, and 15% payment limitation do not apply for Medicaid reimbursement purposes.
(e)
Applicability of NF requirements. From day one of the resident's stay, a rural hospital participating in the Medicaid Swing Bed Program must meet the requirements set forth in §19.101 of this title (relating to Definitions); §19.2304(c) of this title (relating to Contract Requirements); §§19.300-19.314 and 19.316 of this title (relating to General Requirements; Applicable Codes and Standards; Waivers; Emergency Power; Space and Equipment; Resident Rooms; Toilet Facilities; Resident Call System; Dining and Resident Activities; Other Environmental Conditions; Site and Grounds; Fire Service and Access; Means of Egress; Interior Finishes - Walls, Ceilings, and Floors; Fire Alarms, Detection Systems, and Sprinkler Systems; and Subdivision of Building Spaces - Smoke Barriers); §§19.1901-19.1914 and 19.1917 of this title (relating to Administration; Governing Body; Required Training of Nurse Aides; Proficiency of Nurse Aides; Staff Qualifications; Use of Outside Resources; Medical Director; Laboratory Services; Radiology and Other Diagnostic Services; Clinical Records; Contents of the Clinical Record; Additional Clinical Record Service Requirements; Clinical Records Service Supervisor; Disaster and Emergency Preparedness; and Quality Assessment and Assurance); §§19.2601-19.2608 and 19.2610 of this title (relating to Subchapter AA, Vendor Payment); Subchapter Y of this title (relating to Medical Necessity Determinations; and Appendix B, Cost Determination Process, and Appendix C, Reimbursement Methodology for Nursing Facilities, of DADS' Nursing Facility Requirements for Licensure and Medicaid Certification Handbook.
(f)
Rural hospital (Medicaid swing bed facility) licensure and certification requirements. Pursuant to Texas Health and Safety Code §§222.021, 222.024, and 222.025 concerning the duplication of health care inspections and licensing, a rural hospital participating in the Medicaid Swing Bed Program satisfies licensure and certification requirements referenced in this section when it is currently licensed and certified as a hospital by DSHS. However, in accordance with Texas Human Resources Code, §32.024, if the rural hospital's swing beds are used for more than one 30-day length of stay per year, per resident the hospital must comply with the full Nursing Facility Requirements.
(g)
Rural hospital (Medicaid swing bed facility) administrator. The governing body of a rural hospital participating in the Medicaid Swing Bed Program satisfies the requirement to appoint a qualified full-time nursing facility administrator, found at §19.1902(b) (relating to Governing Body), when it appoints a hospital administrator as its official representative and designates the administrator's responsibilities and authority, subject to the following exception. If the swing beds are used for more than one 30-day length of stay per year, per resident, the hospital's governing body must appoint a full-time licensed nursing facility administrator.
(h)
Rural hospital (Medicaid swing bed facility) staff development requirements. A rural hospital participating in the Medicaid Swing Bed Program satisfies the staff development requirements found at §19.1929 of this title (relating to Staff Development) if the swing beds are used for no more than one 30-day length of stay per year, per resident.
(i)
Rural hospital (Medicaid swing bed facility) transfer agreement. A rural hospital participating in the Medicaid Swing Bed Program is not required to have a transfer agreement with another hospital, as required by §19.1915 (relating to Transfer Agreement).
(j)
Rural hospital geographic region. The phrase "a participating rural hospital's geographic region" refers to an area that includes nursing facilities with which the hospital normally arranges transfers and all other nursing facilities in similar proximity to the hospital. If a hospital has no previous transfer practices on which to base a determination, the phrase "geographic region" refers to an area that includes all nursing facilities within 50 miles of the hospital except for facilities that the hospital demonstrates to be inaccessible to its patients.