(a) Basis. The Texas Department of Human Services, hereinafter referred to as TDHS, the Texas Department of Health, hereinafter referred to as TDH, and the Texas Department of Mental Health and Mental Retardation, hereinafter referred to as TDMHMR, are required under the provisions of Human Resources Code, § 22.014, to enter into a memorandum of understanding regarding responsibilities, procedures, and standards involved in the provision, regulation, and/or funding of services in hospitals or long term care institutions. However, this agreement does not apply to state hospitals or to any TDMHMR service not funded under Title XIX of the Social Security Act.
(b) Provision of services.
  (1) Hospital and long term care services are provided by facilities under contract to TDHS as the Title XIX designated single state agency. TDHS contracts for intermediate care provided by facilities for the mentally retarded (ICF-MR) in community-based settings and in state schools and state centers, and for intermediate care (ICF) and skilled nursing facility (SNF) care in nursing homes.
  (2) TDHS is also responsible for reimbursing Title XIX participating hospitals and long term care facilities for covered Title XIX services provided to Title XIX eligible individuals. Reimbursement is subject to the specifications, conditions, limitations, and requirements established by the department or its designee.
(c) Regulation of service/standards and procedures of operations.
  (1) TDHS promulgates standards and policies, appropriate to complement and support federal regulations, to govern the participation of acute care hospitals and the operation of intermediate care and skilled nursing facility care in nursing homes. TDMHMR develops, with the approval of TDHS, standards and policies, appropriate to complement and support federal regulations, to govern the operation of community-based IFC-MR facilities and state schools for the mentally retarded.
  (2) TDH, under contract to TDHS, surveys, certifies, and monitors facilities providing services to ICF-MR clients and to ICF-SNF clients. TDH develops and publishes licensure requirements for all facilities providing health care. Consonant with federal regulations, TDH develops and publishes the certification procedures which govern the certification of facilities desiring to enter into contracts with TDHS as providers of ICF/SNF service. TDH has administrative penalties which provide sanctions for nursing home facilities who fail to provide acceptable care and to maintain compliance with state licensure requirements. TDHS' standards for participation contain sanctions requirements for facilities who fail to carry out their contractual responsibilities.
  (3) TDHS and TDH entered into contracts in 1972, whereby TDH agreed to survey and certify as meeting state and federal standards, all nursing facilities wishing to contract or continue to contract with TDHS as ICFs and SNFs under Title XIX. These contracts have been in force continuously since 1972. In 1977, pursuant to State Bill 9, 65th Legislature, 1st Called Session 1977, TDHS and TDH entered into a contract whereby TDH agreed to be responsible for monitoring and evaluating the quality of care provided by ICF, SNF, and ICF-MR facilities.
  (4) TDHS and TDMHMR, pursuant to House Bill 656, 67th Legislature, 1981, agreed that TDMHMR would develop and recommend policy and standards, and that TDMHMR would assume the responsibility for monitoring TDH's activities regarding quality of care review in community-based ICF-MR facilities and state schools.
(d) Funding of services.
  (1) TDHS requests state funds and matching federal funds in support of the Medicaid program in Title XIX participating hospitals and long term care facilities. TDHS also requests federal matching funds for expenditures made by TDH and TDMHMR on behalf of Medicaid.
  (2) TDMHMR requests state funds for its activities and certifies expenditures to TDHS for the purpose of drawing down federal matching funds under Title XIX. TDH requests state funds for its activities and certifies expenditures to TDHS for the purpose of drawing down federal matching funds as they relate to survey and certification of nursing facilities for Title XIX participation and quality of care in such facilities.
(e) Promulgation of rules.
  (1) TDHS, TDH, and TDMHMR agree that no new rules or regulations that would increase the cost of providing the required services or increase the number of personnel in hospitals or long term care facilities will be promulgated by the agencies unless:
    (A) the commissioner of health certifies that the new rules or regulations are urgent and necessary to protect the health or safety of recipients of hospital or long term care services; or
    (B) TDHS provides written verification that funds are available to adequately reimburse hospital or long term care service providers for any increased costs resulting from the rule or regulation and establishes reimbursement rates that are sufficient to cover the increased costs; or
    (C) the rules are required by state or federal law or federal regulations.
  (2) TDHS, TDH, and TDMHMR agree that any rules or regulations proposed by the agencies which would increase the costs of providing the required services or increase the number of personnel in hospital or long term care facilities will be accompanied by a preliminary fiscal note prepared for the agency promulgating the rules. The fiscal note will be submitted to TDHS and will state the expected impact on the cost of providing the required service and the anticipated impact on the number of personnel in hospital or long term care facilities. For a rule to be finally adopted, TDHS must provide written verification that funds are available to adequately reimburse hospital or long term care service providers for any increased costs resulting from the rule or regulation. Written verification is not required if the commissioner of health certifies that the new rule or regulation is urgent and necessary to protect the health or safety of recipients of hospital or long term care services. The provisions of this paragraph do not apply if the rules are required by state or federal law or federal regulations.
(f) Termination. In the event that federal and/or state laws or other requirements should be amended or judicially interpreted so as to render continued fulfillment of this agreement substantially unreasonable or impossible, or if the parties should be unable to agree upon any amendment which would therefore be needed to enable the substantial continuation of services contemplated herein, then, and in that event, the parties shall be discharged from any further obligation created under the terms of this agreement, except for the equitable settlement of the respective accrued interests or obligations incurred up to the date of termination.
(g) Annual review. TDHS, TDH, and TDMHMR shall review and, if necessary, update this memorandum of understanding prior to the close of each fiscal year.
(h) Effective date. For the faithful performance of this agreement, this agreement is executed by the commissioners of TDHS, TDMHMR, and TDH, to be effective January 1, 1988.

Source Note: The provisions of this §72.101 adopted to be effective August 22, 1988, 13 TexReg 3829.