(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 Health and Human Services Commission (HHSC) 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 HHSC 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 HHSC 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 HHSC under Chapter 242 of the Texas Health and Safety Code and for Medicaid certification;
    (B) licensed by HHSC 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-- HHSC 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 HHSC 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 HHSC transfers or assigns the beds.
  (2) When HHSC allocates Medicaid beds to a nursing facility as a result of actions by the licensee, HHSC requires that the beds remain allocated to the physical plant, even when the licensee ceases operating the nursing facility, unless HHSC 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, HHSC allocates beds to the physical plant and the owner of that property controls the Medicaid beds subject to HHSC rules and requirements and all valid physical plant liens.
(d) Control of beds. Except as specified in this section, HHSC 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) HHSC 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) HHSC 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. HHSC 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) If an applicant for an allocation of additional Medicaid beds or a controlling person of an applicant is a multiple-facility owner or a multiple-facility owner owns the applicant, the multiple-facility owner must demonstrate an overall record of complying with level of acceptable care requirements. HHSC considers the number of facilities that have received sanctions listed in paragraph (1) of this subsection in relation to the number of facilities that the multiple-facility owner owns to determine if a multiple-facility owner meets level of acceptable care requirements. HHSC only considers sanctions that are final and are not subject to appeal when determining whether the multiple-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, HHSC 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.
Cont'd...