TO: DATE: Health and Human Services Commission Executive Council February 17, 2022 FROM: Frances Morgan, Provider Finance Department AGENDA ITEM: 2.a.iii SUBJECT: Local Funds Monitoring and Reporting Program BACKGROUND: ☒ Federal ☒ Legislative ☐ Other: Program Initiative The Texas Health and Human Services Commission (HHSC) proposes the repeal of §355.8068, concerning Local Provider Participation Fund Reporting, in Subchapter J, Division 4 of the Texas Administrative Code and new Subchapter L comprising of §§355.8701 - 355.8706, concerning Local Funds Monitoring requirements, in Subchapter L of the TAC. The proposal implements the 2022-23 General Appropriations Act, S.B. 1, 87th Legislature, Regular Session, 2021 (Article II, HHSC, Rider 15(b)), which requires HHSC to create an annual report to include: • information on all mandatory payments to a Local Provider Participation Fund (LPPF) and all uses for such payments, including the amount of funds from an LPPF for each particular use; • the total amount of intergovernmental transfers used to support Medicaid; • the total amount of certified public expenditures used to support Medicaid; • a summary of any survey data collected by HHSC to provide oversight and monitoring of the use of local funds in the Medicaid program; and • all financial reports submitted to the Centers for Medicare and Medicaid Services (CMS). The repeal of §355.8068 is necessary as the content of the rule is encompassed in the new proposed rules. The proposal is also necessary to comply with the requirements of 42 CFR §433.51, Public Funds as the State Share of Financial Participation, 42 CFR §433.68, Permissible Health Care-Related Taxes, 42 CFR §433.74, Reporting Requirements, and 1903(w)(1)(A)(i), 1903(w)(1)(A)(i)(I), and 1903(w)(1)(A)(ii) of the Social Security Act. Compliance includes the requirement for HHSC to maintain, in readily reviewable form, supporting documentation that provides a detailed description and legal basis for local funds, as well as the source and use of all mandatory assessments. 1 ISSUES AND ALTERNATIVES: HHSC does not have additional regulatory flexibility. STAKEHOLDER INVOLVEMENT: Stakeholders have seen a prior version of the proposed oversight plan. Stakeholder response is expected to be negative due to the inclusion of reporting requirements. Stakeholders submitted comments on a draft monitoring plan, and those comments have been incorporated here, to the extent possible while still accomplishing the goal of meeting federal and state oversight responsibilities. HHSC will ensure the data we are requesting is not repetitive or cannot be gathered internally, prior to the request. FISCAL IMPACT: ☒ Yes HHSC anticipates the need for full-time equivalents (FTEs) and the development of a portal to collect information from governmental entities to effectively administer the local funds monitoring as prescribed by Rider 15. There is no anticipated cost to the state as HHSC has authority to expend funds received via intergovernmental transfer as Appropriated Receipts-Match for Medicaid No. 8062 for the purpose of matching Medicaid Federal Funds for payments to Medicaid providers and to offset administrative costs for the applicable programs HHSC administers. SFY 22 SFY 23 SFY 24 SFY 25 SFY 26 State $0 $0 $0 $0 $0 Other $3,042,771 $2,932,057 $2,293,938 $2,293,938 $2,293,938 Federa l Total $3,042,771 $2,932,057 $2,293,938 $2,293,938 $2,293,938 $6,085,542 $5,864,114 $4,587,876 $4,587,876 $4,587,876 SERVICES IMPACT STATEMENT: The proposed rules are not expected to directly affect the provision of services to the Health and Human Services client population. RULE DEVELOPMENT SCHEDULE: January 14, 2022 February 17, 2022 April 2022 April 2022 Publish proposed rules in Texas Register Present to HHSC Executive Council Publish adopted rules in Texas Register Effective date 2 TITLE 1 PART 15 CHAPTER 355 SUBCHAPTER J SUBCHAPTER L ADMINISTRATION TEXAS HEALTH AND HUMAN SERVICES COMMISSION REIMBURSEMENT RATES PURCHASED HEALTH SERVICES LOCAL FUNDS MONITORING PROPOSED PREAMBLE The Executive Commissioner of the Texas Health and Human Services Commission (HHSC) proposes the repeal of §355.8068, concerning Local Provider Participation Fund Reporting in Subchapter J, Division 4 and proposes new Subchapter L comprised of §355.8701, concerning Purpose; §355.8702, concerning Definitions; §355.8703, concerning Applicability; §355.8704, concerning

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