(a) Introduction. Notwithstanding other provisions of this subchapter and subject to the availability of funds, supplemental payments are available under this section for nursing facility services provided by eligible non-state government-owned nursing facilities.
(b) Definitions. When used in this section, the following definitions apply:
  (1) Adjudicated claim--A claim for a covered Medicaid nursing facility service that has been paid by HHSC.
  (2) HHSC--The Texas Health and Human Services Commission or its designee.
  (3) Intergovernmental transfer (IGT)--A transfer of public funds from a non-state governmental entity to HHSC.
  (4) Medicaid supplemental payment limit--The maximum supplemental payment available to a participating non-state government-owned nursing facility for a specific quarterly calculation period as calculated in subsection (f) of this section.
  (5) Medicaid supplemental payment limit calculation period--The federal fiscal quarter determined by HHSC for which supplemental payment amounts are calculated based on adjudicated claims for days of service provided in the same quarter in the prior federal fiscal year.
  (6) Non-state governmental entity--A hospital authority, hospital district, healthcare district, city, or county.
  (7) Non-state government-owned nursing facility--A nursing facility where a non-state governmental entity holds the license and is party to the facility's Medicaid contract.
  (8) Public funds--Funds derived from taxes, assessments, levies, investments, and other public revenues within the sole and unrestricted control of a non-state governmental entity that holds the license and is party to the Medicaid contract of the nursing facility identified in subsection (c) of this section. Public funds do not include gifts, grants, trusts, or donations, the use of which is conditioned on supplying a benefit solely to the donor or grantor of the funds.
  (9) Upper payment limit--A reasonable estimate of the amount that would be paid for the services furnished by a non-state government-owned nursing facility under Medicare payment principles, as calculated in subsection (f) of this section.
  (10) Upper payment limit calculation period--The federal fiscal quarter one year prior to the Medicaid supplemental payment limit calculation period. For example, October 1 - December 31, 2011, is the upper payment limit calculation period for the October 1 - December 31, 2012, Medicaid supplemental payment limit calculation period.
(c) Eligible nursing facilities.
  (1) Supplemental payments are available under this section to all non-state government-owned nursing facilities that comply with the requirements described in subsection (d) of this section.
  (2) A nursing facility participating in this supplemental payment program must notify the HHSC Rate Analysis Department of changes in ownership that may affect the nursing facility's continued eligibility within 30 days after such change.
  (3) A nursing facility that has not received a payment under this supplemental payment program for four consecutive quarters is ineligible for future supplemental payments unless the nursing facility applies again for the supplemental payment program in accordance with subsection (d) of this section.
(d) Required application. Before a non-state government-owned nursing facility may receive supplemental payments under this section, the appropriate non-state governmental entity must certify certain facts, representations, and assurances regarding program requirements.
  (1) The appropriate non-state governmental entity must certify the following facts on a form prescribed by HHSC before the first day of the next scheduled Medicaid supplemental payment limit calculation period in order for the nursing facility to receive a supplemental payment for that period:
    (A) That it is a non-state government-owned nursing facility where a non-state governmental entity holds the license and is party to the facility's Medicaid contract.
    (B) That all funds transferred to HHSC via IGT for use as the state share of supplemental payments are public funds.
    (C) That no part of any supplemental payment paid to the nursing facility under this section will be used to pay a contingent fee, consulting fee, or legal fee associated with the nursing facility's receipt of the supplemental funds.
    (D) That the person signing the certification on behalf of the nursing facility is legally authorized to bind the nursing facility and to certify the matters described in the application.
  (2) The nursing facility is eligible for supplemental payments for Medicaid supplemental payment limit calculation periods that begin after HHSC receives completed application forms from the appropriate non-state governmental entity. A non-state governmental entity that has submitted a change of ownership (CHOW) application to the Department of Aging and Disability Services (DADS) may submit a provisional application for participation in the supplemental payment program. If the CHOW is finalized by DADS within six months of the submission of the provisional application for participation, the facility will be eligible for payments beginning on the effective date of the CHOW. If the CHOW is not finalized by DADS within six months of the submission of the provisional application for participation, the provisional application is denied and the facility will not be eligible for payments until the first day of the Medicaid supplemental payment limit calculation period that begins after the submission of a new application for participation.
(e) Source of funding.
  (1) State funding for supplemental payments authorized under this section is limited to and obtained through IGTs of public funds from the non-state governmental entity that holds the license and is party to the Medicaid contract of the nursing facility identified in subsection (c) of this section.
  (2) An IGT that is not received by the date specified by HHSC may not be accepted. In such a situation, the IGT will be returned to the non-state governmental entity and the NF will not be eligible to receive a supplemental payment.
(f) Medicaid supplemental payment limits. A quarterly supplemental payment amount for each non-state government owned nursing facility is calculated using the most recent reliable data available at the time the calculation is made by taking the difference between the upper payment limit from paragraph (1) of this subsection and the Medicaid payment from paragraph (2) of this subsection:
  (1) The upper payment limit for each non-state government-owned nursing facility will be calculated based on Medicare payment principles and in accordance with the Medicaid upper payment limit provisions codified at Title 42 Code of Federal Regulations (CFR) §447.272. A total Medicare-equivalent payment is determined for each non-state government-owned facility as the sum of the products of Medicaid days of service by Resource Utilization Group (RUG) for adjudicated Medicaid days of service provided by the facility during the upper payment limit calculation period multiplied by the Medicare payment rate for that RUG that will be in effect during the associated Medicaid supplemental payment limit calculation period. If the Center for Medicare and Medicaid Services has not adopted Medicare RUG rates for the Medicaid supplemental payment limit calculation period at the time the calculation is performed, the Medicaid days of service by RUG will be multiplied by the Medicare payment rate for that RUG in effect on the last day of the upper payment limit calculation period.
  (2) The Medicaid payment for each non-state government-owned nursing facility prior to the supplemental payment will be the sum of the following components calculated for that nursing facility from data derived from upper payment limit calculation period:
    (A) The sum of Medicaid RUG payments for all adjudicated Medicaid days of service provided by the facility during the upper payment limit calculation period adjusted to reflect any changes in Medicaid RUG rates between the upper payment limit calculation period and the Medicaid supplemental payment limit calculation period; and
    (B) Medicaid payments for pharmacy services as defined in 40 TAC Chapter 19, Subchapter P (relating to Pharmacy Services), specialized services as defined in 40 TAC §19.1303 (relating to Specialized Services in Medicaid-certified Facilities), customized equipment as defined in 40 TAC §19.2614 (relating to Customized Power Wheelchairs) and emergency dental services as defined in 40 TAC §19.1402 (relating to Medicaid-certified Nursing Facility Emergency Dental Services), not included in the Medicaid nursing facility rate in effect during the upper payment limit calculation period.
      (i) Medicaid payments for pharmacy services are based on Texas specific pharmacy payment and rebate data for Texas Medicaid nursing facility residents during the upper payment limit calculation period.
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