(a) Purpose. A recipient must have a determination of medical necessity for nursing facility care to participate in the Texas Medicaid Nursing Facility Program.      
        (1) The state Medicaid claims administrator makes a medical necessity determination by evaluating a recipient's medical and nursing needs based on the MDS assessment required by DADS.       
        (2) A recipient must have a determination of medical necessity for nursing facility care before the nursing facility can be paid for services, except as provided in §19.2413 of this subchapter (relating to Determination of Payment Rate Based on the MDS Assessment Submission) and §19.2611 of this chapter (relating to Retroactive Vendor Payment).       
      (b) Admission MDS assessment review.      
        (1) The admission MDS assessment review process is initiated when the state Medicaid claims administrator receives an MDS assessment and the Long-Term Care Medicaid Information Section, in accordance with §19.2413 of this subchapter, indicating that a Medicaid applicant or recipient is requesting vendor payment for care in a contracted nursing facility. A registered nurse must sign and certify that the MDS assessment is completed in accordance with §19.801 of this chapter (relating to Resident Assessment).       
        (2) The admission MDS assessment review determines medical necessity and establishes the authorization for payment of a calculated RUG rate.       
      (c) Role of the state Medicaid  claims administrator. The state Medicaid claims administrator reviews all MDS assessments, including significant change in status assessments, modifications, and significant corrections, and approves or denies medical necessity in accordance with §19.2401 of this subchapter (relating to General Qualifications for Medical Necessity Determinations).     
      (d) Effective period.      
        (1) A determination of medical necessity based on the admission MDS assessment review remains in effect for the time period determined by the federal MDS submission schedule.       
        (2) If a nursing facility submits a recipient's MDS assessment after the due date established by the federal MDS submission schedule, the recipient's medical necessity remains in  effect for the period between the due date and the date the state Medicaid claims administrator received the MDS assessment.       
        (3) If a nursing facility submits a recipient's MDS assessment after the due date established by the federal MDS submission schedule and, after reviewing the MDS assessment, the state Medicaid claims administrator determines that the recipient does not meet the criteria for medical necessity, the effective date of the denial of medical necessity is the date the state Medicaid claims administrator received the MDS assessment. A denial of medical necessity is conducted in accordance with §19.2407 of this subchapter (relating to Denied Medical Necessity).       
      (e) Permanent medical necessity.      
        (1) A  recipient's permanent medical necessity status is established on the completion date of any MDS assessment approved for medical necessity no less than 184 calendar days after the recipient's admission to the Texas Medicaid Nursing Facility Program.       
        (2) A nursing facility must submit a recipient's MDS assessment in compliance with the federal MDS submission schedule even after the recipient achieves permanent medical necessity status.       
        (3) A recipient's permanent medical necessity status moves with the recipient, unless the recipient is discharged to home for more than 30 days.       
        (4) If a recipient who has permanent medical necessity status transfers to another Medicaid-certified nursing facility, the nursing facility to  which the recipient transfers must complete a new MDS assessment in compliance with the federal MDS submission schedule.       
      (f) Insufficient information. If an MDS assessment does not have sufficient information for the state Medicaid claims administrator to make a medical necessity determination, the MDS assessment is put in suspense for 21 days with a message from the state Medicaid claims administrator informing the nursing facility that the MDS assessment has been put in suspense for 21 days. Unless the nursing facility provides sufficient information on the MDS assessment to determine medical necessity within 21 days, medical necessity is denied.     
     Source Note:        The provisions of this §554.2403 adopted to be effective September 1, 2008, 33 TexReg 7264; transferred effective January 15, 2021, as published in the Texas Register December 11, 2020, 45 TexReg 8871