(a) Introduction. The Texas Health and Human Services Commission (HHSC) uses the methodology described in this section to establish Nursing Facility (NF) Liability Insurance Coverage Rate Add-ons.
(b) Definitions.
  (1) Provider--A person who has a written agreement with HHSC to provide Medicaid NF services to an individual or a person who is contracted with a managed care organization as defined in §353.2 of this title (relating to Definitions) to provide Medicaid NF services.
  (2) Independently procured insurance--An insurance transaction involving an insurance contract independently procured from an insurance company not licensed in Texas through negotiations occurring entirely outside the state of Texas that is reported and on which premium tax is paid.
  (3) Open enrollment period--Open enrollment period begins on the first day of July and ends on the last day of that same July preceding the rate year for which payments are being determined.
  (4) Purchased captive insurance--General or professional liability insurance purchased from a non-admitted captive insurance company that insures solely directors and officer's liability insurance for the directors and officers of the company's parent and affiliated companies and the risks of the company's parent and affiliated companies, if applicable.
  (5) Purchased commercial liability insurance--Either general or professional liability insurance from a commercial carrier or a non-profit service corporation in an arm's-length transaction that provides for the shifting of risk to the unrelated party. The commercial carrier or non-profit service corporation must meet the requirements as set by the Texas Department of Insurance (TDI) for authorized insurance.
  (6) Rate year--The rate year begins on the first day of September and ends on the last day of August of the following year.
  (7) Self-insurance--Self-insurance is a means whereby a provider undertakes the risk to protect itself against anticipated liabilities by providing funds equivalent to liquidate those liabilities. If a provider enters into an arrangement with an unrelated party that does not provide for the shifting of risk to the unrelated party, such an agreement shall be considered self-insurance. Self-insurance is not purchased liability insurance.
(c) Eligibility. To be eligible to receive and retain liability insurance coverage rate add-ons from HHSC under this section:
  (1) the provider must be enrolled as a Medicaid provider;
  (2) the provider must be actively providing and billing for NF services provided to Medicaid clients; and
  (3) the provider must maintain acceptable liability insurance coverage as described in this section during the rate year for which the liability insurance add-ons will be paid.
(d) Payment rates. Payment rates for purchased general and professional liability insurance will be determined as follows.
  (1) Determine the portion of the general and administration rate component from §355.307 of this subchapter (relating to Reimbursement Setting Methodology) attributable to allowable liability insurance costs.
  (2) Determine the amount of total dollars that would be expended if the liability rate component from paragraph (1) of this subsection were paid uniformly to all providers during the rate effective period.
  (3) Estimate the number of days of service that will be covered by purchased liability insurance during the rate period.
  (4) Divide the total dollars available for liability insurance from paragraph (2) of this subsection by the estimated number of days of service that will be covered by purchased liability insurance during the rate period from paragraph (3) of this subsection. Estimate the proportion of this per diem amount accruing from general liability insurance and the proportion accruing from professional liability insurance to determine the payment rate for each day of purchased general liability insurance and the payment rate for each day of purchased professional liability insurance.
  (5) Payment rates for purchased general and professional liability insurance may be adjusted as often as HHSC determines is necessary to ensure that the total dollars expended during the rate period do not exceed the amount appropriated for this purpose.
  (6) Since these payment rates are determined through an allocation of available appropriations among estimated units of service covered by purchased liability insurance, a public rate hearing is not required when adjustments are made to the payment rates.
  (7) Providers will be notified, in a manner determined by HHSC, of adjustments to the payment rates for purchased general and professional liability insurance.
  (8) Providers who purchase general liability insurance without professional liability insurance are only eligible to receive payment of the rate for purchased general liability insurance. Providers who purchase professional liability insurance without general liability insurance are only eligible to receive payment of the rate for purchased professional liability insurance. Providers who purchase both general and professional liability insurance are eligible to receive payment of both rates.
(e) Open enrollment. Each rate year, HHSC notifies providers of open enrollment for providers to receive the liability insurance rate add-ons via email sent to an authorized representative per the signature authority designation form applicable to the provider's contract or ownership type. If open enrollment has been postponed or canceled, HHSC will notify providers by email before the first day of the open enrollment period. Should conditions warrant, HHSC may conduct additional enrollment periods during a rate year. A provider must submit an attestation in accordance with subsection (f) of this section during an open enrollment period to receive the liability rate add-ons for each rate year. The HHSC Provider Finance Department must receive the attestation by the last day of the open enrollment period. If the last day of open enrollment is on a weekend day, state holiday, or national holiday, the HHSC Provider Finance Department must receive the attestation by the next business day. A provider who fails to submit an acceptable attestation of agreement in accordance with this section will not receive the add-on rates during the rate year.
(f) Attestation of agreement. The provider must submit an electronic attestation of agreement to comply with subsection (c)(3) of this section during the open enrollment period prior to the rate year the liability insurance add-ons will be paid. The electronic attestation will include the following.
  (1) The provider must indicate that it is carrying general liability and professional liability insurance; general liability insurance without professional liability insurance; or professional liability insurance only.
  (2) The provider must attest that it has purchased liability insurance issued through an entity meeting any one of the following criteria. These entities have been determined by the TDI to be authorized to issue liability insurance policies in the State of Texas.
    (A) An insurance company identified as an admitted, licensed insurer authorized to write liability insurance in Texas. This type of insurance company is designated as "active" on the TDI website. This designation includes risk retention groups chartered inside the State of Texas.
    (B) An insurance company that is an eligible surplus lines insurer which requires that there be a Texas licensed surplus lines agent placing the coverage with the insurance company. This type of insurance company is designated as "eligible" on the TDI website.
    (C) The Texas Medical Liability Insurance Underwriting Association (JUA). This insurance arrangement is designated as "active" on the TDI website.
    (D) A risk retention group chartered outside the State of Texas that is registered with the TDI and which is designated as "registered" on the TDI website.
  (3) The provider must attest that if it purchased independently procured insurance, the coverage was purchased through an independently procured insurance arrangement. The provider must also attest that taxes on the premiums of independently procured insurance were paid to and received by the Texas Comptroller for the calendar year in which the policy was procured, continued or renewed.
  (4) The provider must agree that if it purchased insurance through a captive insurance company that taxes on the premiums of captive insurance were paid to and received by the Texas Comptroller for the calendar year in which the policy was procured, continued or renewed.
Cont'd...