## No. 03-15-00657-CV


# In the Court of Appeals for the Third Judicial District at Austin, Texas

C HRIS 

## T RAYLOR 

## , AS 

## E XECUTIVE 

## C OMMISSIONER OF THE 

## T EXAS 

## H EALTH AND 

## H UMAN 

## S ERVICES 

## C OMMISSION 

## , et al. Appellants ,
v. D IANA 

## D., AS 

## N EXT 

## F RIEND OF 

## KD, A 

## C HILD 

## , et al. Appellees

. On Appeal from the 200th Judicial District Cour t of Travis County, Texas

R EPLY 

## S UPPORTING 

## R ULE 

## 24.4 M OTION TO 

## V ACATE 

## C OUNTER 

## -S UPERSEDEAS 

## O RDER 

## O R 

## , IN THE 

## A LTERNATIVE 

## , I NCREASE 

## C OUNTER 

## -S UPERSEDEAS 

## B OND



## T O THE 

## H ONORABLE 

## T HIRD 

## C OURT OF 

## A PPEALS 

## : Plaintiffs misunderstand both the Comm ission’s argument and the relevant
administrative rules. The Commission does not argue, as plaintiffs suggest, that Armstrong v. Exceptional Child Center, Inc. , 135 S.Ct. 1378 (2015), somehow preempts state law as a general matter. Resp. at 13 ¶ 17. The Commission’s position is, rather, that 42 U.S.C. § 1396 c, as interpreted in Armstrong , preempts state-court remedies that change the amount of Medicaid rates . Mtn. at 13-17. Plaintiffs’ response ignores ACCEPTED 03-15-00657-CV 7774560 THIRD COURT OF APPEALS

AUSTIN, TEXAS 11/10/2015 5:14:45 PM JEFFREY D. KYLE

CLERK

## 2 the actual scope of the Commission’s argume nt and, as a result, fails to respond to
it. Although the Commission has drawn its motion narrowly, so as to address only the remedy of a counte r-supersedeas order as oppo sed to the merits of the underlying dispute, plaint iffs have brought that issue into this proceeding. See Resp. at 10-11. Plaintiffs misread or ignore the relevant statutes and rules. Substantively, plaintiffs’ position is that § 355.8021 (a)(2)(B) requires particular reporting requirements, because the rates in this case were adopted in a “periodic rate review,” see id. (citing 1 T EX


## . A DMIN


## . C ODE 

## § 355.8021(a)(2)(B)). But § 355.8021(a)(2)(B) does not apply. Th ese rates were chan ged through a rate “adjustment,” not a pe riodic rate review. 1 

## T EX


## . G OV 

## ’ T 

## C ODE 

## § 531.021(e); 1 T EX


## . A DMIN


## . C ODE 

## § 355.201(d)(1)(A), (D). The adjustment process occurs “notwi thstanding” other legal requirements, including the reporting requirement of § 355.8021(a)(2)(B) for periodic review. See
T EX


## . G OV 

## ’ T 

## C ODE 

## § 531.021(e); 1 T EX


## . A DMIN


## . C ODE 

## § 355.201(d). Nor is there a procedural basis for this lawsuit in El Paso Hospital District v. Tex. Health & Human

1 

### Plaintiffs attempt to capitalize on their confus ion between the APA and the ratemaking process to suggest that there was something improper in pulling down the first and second rates. See Resp. at 5 ¶¶ 6, 7. But the first two sets of rates (1 ) relied on commercial rates, which the Commission concedes is improper; and (2) failed to cite § 3 55.201, or present the rates as an “adjustment.” See CR.18-39, CR.212-233. The final, October 1 rates correctly invoke the adjustment process and Rider 50. See CR.351-373; see esp. CR.352 (rules are based on “ Rider 50” and “§ 355.201(d)(1)(A) and (D)”).

## 3 Services Commission , 247 S.W.3d 709, 711, 714-15 (Tex. 2008) (“ El Paso Hospital
District I ”). As this Court and the Supreme Court both recognized following remand, a § 2001.038 claim cannot be used to change Medicaid rates, only to challenge the unde rlying rules. El Paso Cnty. Hosp. Dist. v. Tex. Health & Human
Servs. Comm’n , 400 S.W.3d 72, 81 (Tex. 2013) (“ El Paso Hospital District II ”) (“our prior opinion and judgment did not crea te a remedy for the hospitals’ past reimbursement claims”); see also Tex. Health & Human Servs. Comm’n v. El Paso Cnty. Hosp. Dist. , 351 S.W.3d 460, 487 (Tex. App.—Austin 2011) aff’d 400 S.W.3d 72 (Section 2001.038’s scope is limited “s olely to the extent of permitting suits against state agencies for declaratory relief concerning the validity or applicability of their rules”). And because the Commissioner’s discretion is to se t rates, subject to
the limitations of the Medica id Act, there could be no ultra vires claim related to the amount of rates, and the discretion gr anted to proceed “not withstanding” other legal requirements set out in § 531.021(e) precludes any ultra vires act. See, e.g. , City of El Paso v. Heinrich , 284 S.W.3d 366, 372 (Tex. 2007).
A RGUMENT 

## I. P LAINTIFFS 

## ’ R ELIANCE ON 

## P OST 

## H OC 

## I NTENT 

## L ETTERS 

## S IGNED 

## B Y 

## I NDIVIDUAL 

## L EGISLATORS 

## I S AN 

## I MPROPER 

## A TTEMPT TO 

## B RING 

## P OLITICAL 

## P RESSURE ON THE 

## C OURT 

## V IA 

## I NCOMPETENT 

## E VIDENCE 

## . Before engaging with the substance of the counter-supersedeas issue, it is important to deal with the do cuments that constituted the bulk of plaintiffs’ filing:

## 4 the post hoc letters signed by individual legislat ors and their impact on the meaning
of Rider 50c. Those letters are at odds with the plain text of Ri der 50 and are, as a matter of law, incompetent to change the meaning of a stat ute. They appear to mark an attempt to bring political pressure on this Court to avoid the necessary implications of Rider 50.
A. The Text of Rider 50 Mandates these Rate Cuts. Rider 50, the relevant language from wh ich is attached to the Commission’s Rule 24 motion, makes clear that the cuts are not optional. 2016-17 General Appropriations Act, 84th Leg., R.S., 20 15 (Article II, Health & Human Servs. Comm’n) (“Rider 50”) (excerpts attached as appendix). Part 50a makes clear that funding has already been cut from the Medicaid portion of the budget. Rider 50a. (“Included in appropriations above in Goal B, Medicaid, is a reduction of . . . a biennial total of $373,000,000 in Ge neral Revenue Funds and $496,570,428 in Federal Funds.”) Portions of this larger cut “may” include various initiatives. Rider 50b (“This reduction shall be achieved through the implementation of the plan
described under subsection d which may include any or all of the following initiatives:”).
Rider 50c is the kicker . After requiring a change in reimbursement methodology to meet industry standards, “while considering stakeholder input and access to care,” the Rider makes specific requirements regarding Medicaid therapy

rates:

## 5 Out of the amount [already cut] in subsection (a), in each fiscal year at least $50,000,000 in General Reve nue Funds savings should be achieved through rate reductions. . . . . Rider 50(c). In short, plai ntiffs’ entire reading of th e Rider depends on the word “should,” which addresses “rat e cuts” that are to be used to account for money that was already cut from the budget, according to Rider 50a. 2


## Given that the funds have already been cut from the budget, the word
“should” is an instruction to the Commissi on regarding the prop ortion of the total
cuts that are to be directed to Medicaid therapy rate reductions. The word “should” is not included in the list of words gi ven a background meaning by the Code Construction Act, see T EX


## . G OV 

## ’ T 

## C ODE 

## § 311.016, nor is there a large body of case law governing its use as opposed to the more common statutory terms “shall” and “may,” see Thomas v. Groebl , 147 Tex. 70, 78-79, 212 S.W.2d 625, 630 (1948) (“shall” can mean “may,” and vice versa) . “Should” is the past tense of “shall,” and, though it is sometimes used to expr ess “probability or expectation,” it also serves to indicate “obligation or duty.” A MER


## . H ERITAGE 

## D ICTIONARY 

## (4th ed. 1994) 1612. Thus, like “shall” and “may ,” the word “should” can create a mandatory standard in some contexts. See A D ICTIONARY OF 

## M ODERN 

## L EGAL 

## U SAGE 

## (2d ed. 1995) (“Oddly, should , like may . . . is sometimes used to create mandatory

2 

### The response suggests that the word “may” also a pplies to the rate cuts. Resp. at 16 ¶ 21. This is wrong. The word “may” applies to the va rious initiatives in which the Commission is empowered to initiate to cut an additional $25 million in funding. Rider 50(c).

## 6 standards, as in the ABA Code of Judicial Conduct”). Texas courts have routinely applied decrees using the word “should” as creating mandatory duties in statutes, orders, and instructions. 3 

## It makes sense to do so in th is context: Rider 50a sets out a total amount of cuts, and Ri der 50c sets out instructions for how to achieve at least $100,000,000 of those cuts during the bien nium. Given that the word “should” is directed at a portion of the cuts already made, nothing in the co ntext suggests that the cuts themselves, or their amount, is either conditional or conditioned upon any particular data or analysis. Plaintiffs have implied that the reference to “access to care” impacts the rate changes. See Resp. at 16 ¶ 21 (putting “access to care” next to the ra te cuts with an ellipsis). This is misleading: Rider 50 ties access to reformation of reimbursement methodology, not to rate cuts . Rider 50(c). The rate cuts are in a separa te sentence. And even if the rate cuts were subject to procedural requirement to perform an “access to care” inquiry, the reference to “access to care” nece ssarily invokes the Medicaid Act’s interpretation of the term, because there is no contrary definition in

3 

### See City of Austin v. Cannizzo , 153 Tex. 324, 331, 267 S.W. 2d 808, 813 (1954) (“Whatever distinctions may be made between the words wi ll and should by lexicographers and between the phrases ‘the price which the property will bring’ and ‘the price which the property should bring’ by grammarians, the ordinary signification of the latter word and phrase would, by contrast at least, be calculated to lead the jury to award a greater sum, including purely speculative elements of damages.”); Ex Parte Mitchell , 783 S.W.2d 703, 705 (Tex. App.—E l Paso 1989, no writ) (support order enforceable even though it says obligor “should” pay); Cullen Center Bank & Trust Co. v. Tex. Commerce Bank , 841 S.W.2d 116, 125 (Tex. App.—Hous ton [14th Dist.] 1992, writ denied) (use of word “should” does no t render finding speculative).

## 7 Texas law and because Medicaid is a Spending Clause program. 42 U.S.C. § 1396a(30)(A); see Motion at 7-8. Thus, the only potential lega l question is whether the data supporting the adjustment pass mu ster under federal la w—and that inquiry
is in the hands of the Secretary.
B. The Post-Enactment Legislator Letters Cannot Change the Meaning of the Legislature’s Enactment. Plaintiffs appear to believ e that the number of legisl ator signatures they can marshal in support of their lawsuit changes the law. But such letters are of little, or no, value in determining the mean ing of a Legislative enactment. In re Doe , 19 S.W.3d 346, 352 (Tex.2000) (“[C]ourts construing statutory language should give little weight to post-enactment statements by le gislators. Explanations produced, after the fact, by individual legislators are not statut ory history, and can provide little guidance as to what the legislature collectively intended.”). “The very notion of post-enactment legislative history is oxymoronic.” Entergy Gulf States, Inc. v. Summers , 282 S.W.3d 433, 470 n.46 (Tex. 2009). Like all post-enactment legislative hist ory, the Legislator letters ar e of little use to the courts, because they represent the views of the Legi slators, not the Legisl ature as a body at
the time of enactment. See Ojo v. Farmers Group , 356 S.W.3d 421, 433 (Tex. 2011) (using Commissioner of Insurance report implemented pursuant to statute as evidence of Legislature’s knowledge of repo rt’s contents). The letters attached to plaintiffs reply are the type of oxymoronic attempt to sway the outcome of a case on

## 8 political grounds the Supreme Court has lo ng decried: they “are not statutory history.” Doe , 19 S.W.3d at 352. They should not sway the Court to take an unrealistic view of the word “should, ” read—as it must be—in light of the Legislature’s choice to cut far more money from the Medi caid budget and dedicate $100 million of that cut to rate cuts —as opposed to other aspects of therapy provision, which are subject to separate cuts of different amounts of money— addressed to home therapy.

II. T HE 

## R EMEDY OF 

## S USPENDING THE 

## O CTOBER 

## 1 R ATES IS 

## P REEMPTED BY 

## 42 U.S.C. § 1396 C 

## . Plaintiffs misrepresent the Commi ssion’s position as being that Armstrong somehow preempts state law. Resp. at 13-14 ¶ 17. In fact, the Commission’s position is that 42 U.S.C. § 1396c preempts state- court remedies that ch ange the amount of
Medicaid rates.
A. Plaintiffs Misunderstand the Commission’s Preemption Argument. Plaintiffs fundamentally misunder stand the Commission’s preemption argument with regard to th e counter-supersedeas order. See Resp. at 9-10 ¶ 14 (asserting that State attacks underlying temporary injuncti on); 13 ¶ 17 (“Appellants argue that Armstrong . . . preempts any ch allenges of any sort”). While the State’s arguments also impact the various causes of action plaintiffs have attempted (and failed) to plead, the attack on the counter-supersedeas order is an attack on a specific

## 9 remedy that changes the amou nt of Medicaid rates in derogation of 42 U.S.C. § 1396c. See Mtn. at 13-17. Implementing a co ntrary remedy, in cluding a countersupersedeas order, is “funda mental error” because it constitutes the exercise of a power denied to the courts by the fede ral and Texas constitu tions, by taking something from the executive and federal, and giving it to the state judiciary. See Mtn. at 17-21; e.g. , McCauley v. Consol. Underwriters , 157 Tex. 421, 477, 304 S.W.2d 265, 266 (1957) (per curiam). 4 

## It is the remedy of changing the rates that is preempted
in this case.
Nor does Armstrong preempt anything. The St ate’s position is that Armstrong ’s construction of 42 U.S.C. § 1396c causes that provision to preempt contrary remedies. This nece ssarily follows from the conc lusion that there is no separate cause of action to ch ange Medicaid rates. Mtn. at 11-15. Plaintiffs mistakenly suggest that Justice Breyer’s view of the issue renders the remainder of Armstrong non-precedential. Resp. at 14 ¶ 18 (relying on Planned Parenthood Gulf Coast, Inc. v.

4 

### Once again, plaintiffs misunderstand the Comm ission’s position when they suggest that the Commission relies on fundamental error as a procedural vehicle to raise a claim. See Resp. at 12- 13. It is, of course, unnecessary to do so because Rule 24 provides a vehicle for the Commission’s challenge to the underlying order. McCauley is significant because it recognizes the substantive significance of actions taken outside of a cou rt’s authority to act, which necessarily impact the validity of judicial action, 304 S.W.2d at 265 (appeal void because interlocutory); see City of Houston v. Rhule , 417 S.W.3d 440, 442 (Tex. 2013). The Supr eme Court routinely acts to prevent extrajudicial actions. E.g. , In re Vaishangi, Inc. , 442 S.W.3d 256, 260-61 (Tex. 2014) (mandamus appropriate to vacate appellate or ders based on Rule 11 agreement that did not constitute a final judgment).

## 10 Kliebert , 2015 U.S. Dist. LEXIS 14 6988 (M.D. La. Oct 29, 20 15) (applying rule from
rule from Marks v. United States , 430 U.S. 188, 193 (1977) to deem Justice Breyer’s concurrence controlling). 5 

## This is unhelpful, because the district court got the Marks rule analysis wrong. Justice Breyer joined Part III of Armstrong —the only part of the majority opinion he did not join was Part IV—so there is no need to apply the Marks
rule. 6 

## The Commission relies on the ma jority opinion in Part III. See Mtn. at 5-7. In light of the Fifth Circuit’s similar conc lusion regarding access-to-care claims, Equal Access for El Paso, Inc. v. Hawkins , 509 F.3d 697, 701 (5th Cir. 2007), it is clear that the relevant remedy when rate s are at a particular level is recourse to the federal Secretary of Health and Human Services.
B. Plaintiffs’ Assertion that the Remedy Remains Unpreempted Is Based on a Misunderstanding of the Relevant Texas Law. Plaintiffs simply misunderstand Texas law when they suggest that there is a separate, statutory right to have courts impose particular Medicaid rates in derogation of the Secretary’s arguments. See Resp. at 10-11 (asserting that there is a right to bring suit regarding Medicaid rates triggered by a claim regarding the

5 

### Like State district-court opinions in the Texas system, federal district court decisions are nonprecedential in the federal system.

6 

### And even under Justice Breyer’s view that there is potential for judicial review of the Secretary’s actions in federal court under the federal APA, th ose federal remedies would nonetheless preempt the counter-supersedeas order in th is case. As Justice Breyer has emphasized, judicial review under the APA is very different from the exercise of judicial policy making because, significantly, the APA allows the court only to reverse orders, not to issue relief mandating specific policy outcomes. See Douglas v. Indep. Living Ctr. of S. Calif. , 132 S. Ct. 1204, 1210 (2012).

## 11 relevant administrative rules) . As explained above, plaintiffs’ argument is foreclosed by El Paso Hospital District II . To establish a sepa rate entitlement to relief that is not preempted, plaintiffs would ha ve to show a substantive Texas statutory requirement that imposes an additional requirement rega rding the ultimate leve l of rates, beyond what the Medicaid Acts require. Plaintiffs are simply wron g when they suggest that the APA impacts Medicaid rates at all. The rate making process is not subject to th e APA—by statute it requires only a hearing to consider public inpu t, not the separate range of APA formal rulemaking. Compare T EX


## . G OV 

## ’ T 

## C ODE 

## §§ 2001.023, .024, .029 , .030 (notice and comment requirements for ru lemaking, including written response requirement),
with 1 T EX


## . A DMIN


## . C ODE 

## § 322.501 (containing dist inct notice and hearing requirements, with no requir ement to respond in writing to comments). There is no provision, as in the APA, for incorporat ing the public comments. If public comment suggests a need for a change, the proper re medy is to pull down the rates and start the process over. And plaintiffs are too cute by half wh en they suggest th at federal law is irrelevant because “[n]owhere in the pleadi ngs, briefing, or temporary injunction is there any reference to the federal statutory Medicaid ri ght to access to care.” Resp. at 15 ¶ 19. That is exactly the point. Under Armstrong there is no such federal right
to be enforced in the courts. To recognize an implicit right to do so in Texas courts, by injunction or supersedea s order, is to disrupt the balance of power between the

## 12 state and federal governments in the Spending Clause cont ext and, as a result, to
violate both constitutions. See Mtn. at 13-20.
* * * The Rule 24 motion presents a remedy preemption issue; the broader preemption issues are presented in the pend ing appeal. The Secretary’s authority to withhold funding is the only remedy related to rate amounts. It is, therefore, preemptive. Plaintiffs point to nothing in Texas law that creates a separate procedural or substantive requirement that impacts the amount of rates: their arguments are all based on inapplicable law an d rules. Because plaint iffs rely on their erroneous view of Texas law, rather than engage with the Commission’s constitutional arguments, th ey have provided no basis for their position. The Court
should reverse and vacate th e counter-supersedeas order.

III. P LAINTIFFS 

## M ISUNDERSTAND THE 

## N ATURE OF 

## A PPELLATE 

## R EVIEW 

## U NDER 

## R ULE 

## 24.4 AND THE 

## S COPE OF 

## A BUSE 

## - OF 

## -D ISCRETION 

## R EVIEW 

## . Plaintiffs’ view of both counter-supe rsedeas and the bond requirements for imposing counter-supersedeas are contrary to the text of the rule. Plaintiffs’ view is that counter-supersedeas is designed to protect the pa rty avoiding supersession. Resp. at 8-9 ¶ 13 (citing In re Board for Educator Certification , 452 S.W.3d 802 (Tex. 2014) for proposition that § 24.2(a)(3) is a substantive limit on the government’s ability to obtain supersedeas); Resp. at 23 ¶ 30 (improperly asse rting that separate provision governing supersedeas bonds related to money judgments requires

## 13 downward adjustment of counter-supersedea s bond to avoid econ omic harm in case involving injunctive relief). Accordingly, they argue that the evidence showing that the plaintiffs would be harmed determines the amou nt of the bond. Resp. at 23. That position bears no relationship to the text of Rule 24.
A. Rule 24.2(a)(3) Requires that the Bond Protect the Judgment Creditor (in this Case the State) from the Change in the Status Quo During the Appeal. In fact, Rule 24.2(a)(3) provides: When the judgment is for something ot her than money or an interest in property, the trial court must set the amount and type of security that the judgment debtor must post. The security must adequately protect the judgment creditor against loss or damage that the appeal might cause. But the trial court may declin e to permit the judgment to be superseded if the judgme nt creditor posts security ordered by the trial court in an amount and type that will secure the judgment debtor against any loss or damage caused by the relief granted the judgment creditor if an appellate court determines, on final disp osition, that that relief was improper

. T EX


## . R. A PP


## . P. 24.2(a)(3) (emphasis added). The pl ain text requires the bond to be set in an amount that will protect the State from the potential that it will not be able to implement Rider 50c’s cuts until after the end of th e biennium: the bond must protect the judgment debtor through resolution of litigation. Thus, the operative question is whether the Commission (and by extension the State of Texas) will be protected during the appeal from any ill e ffects of the status quo being changed before the appeal is final. See Mtn. at 21-24.

## 14 Because plaintiffs have proffered only evidence of potential harm to themselves, there has never been any pr obative evidence regarding the amount necessary to protect the State of Texas. Th ey are simply wrong to suggest that the counter-supersedeas bond should be set at a level that protects the judgment creditor—quite the opposite.
B. Plaintiffs Attempt to Obscure the Scope of the District Court’s Injunction in an Attempt to Mini mize the Importance of the Bond. Rule 24 provides that the court of appe als will not be prevented from changing the amount of the bond based on changed circumstances, merely because the issue has not been presented to the di strict court a second time. T EX


## . R. A PP


## . P. 24.4(b). There has been a change: in response to th e State’s motion to modify the injunction, the district court declined to provide a more specific ruling, and instead stated that the scope of the injunction would be made clear in subs equent sanctions proceedings. Supp. RR.36:17-38:10. This is, plainly, a violation of Rule 683 and a basis for vacating the temporary injunction in the underlying appeal. T EX


## . R. C IV


## . P. 683; Tex. Health & Human Servs. Comm’n v. Advocates for Patient Access, Inc. , 399 S.W.3d 615, 628-29 (Tex. App.—Austin 2013, no pet.). But, apart from that, the district court’s confirmation of the breadth, and uncertaint y, of its order impact s the potential harm to the State during appeal and, as a resu lt, the appropriate bond to be filed. Plaintiffs attempt strident ly to direct the Court’s attention away from the district court’s views on the scope of its injunction. See Resp. at 3 n.1 (asking the

## 15 Court to pretend the hearing did not happe n and is not in th e record). But the statements are already in the record, and they are relevant by operation of Rule 24.4(b). The district court’s statements, wi thout doubt, vitiate plaintiffs’ argument that the counter-supersedeas should be subject to a mini mal bond because it only imposes an obligation no t to violate the law. See Resp. at 23-24 ¶ 31.The Commission, and Rider 50, are held hostage by the district court’s order, in the absence of a constitutional violation, and without any meaningful guidelines as to how to proceed. $500 is not a sufficient bo nd to protect the State of Texas from potentially losing the entire ty of the $100,000,000 the Legislature already cut from the budget, if this case is not resolved and the mandate issued within the next 22 months. In short, the bond is not related to the factors that the rule says the bond should be based upon. That is a classic abuse of discretion. See Mtn. at 21-24. Nor is it an answer to argu e, as plaintiffs do, Resp. at 23 ¶ 30, that the cuts can be made up later in the biennium. Quite th e contrary: to achieve the total amount of cuts, the Commission would have to cut all providers’ rates even more to make up the
difference within the two year deadline for saving the $100 million. See Mtn. at 24.
C. There Is No Preservation Issue, Be cause this is a Challenge to the Initial Imposition of Counter-Supersedeas. Plaintiffs argue waiver. See Resp. at 19-20. But the preemption argument is not subject to waiver because it is jurisdicti onal and presents fundamental error, and the bond amount issue is not subject to waiver because of the district court’s statement

## 16 on the record regarding the scope of the in junction or, in the alternative, could not be waived by an Assi stant Attorney General. Preempted acts are outside the courts’ po wers. Actions outside of jurisdiction are subject to attack on appeal without regard to preservation. E.g. , Rusk State Hosp.
v. Black , 392 S.W.3d 88, 94 (Tex. 2012); see also McCauley , 157 Tex. at 477, 304 S.W.2d at 266. The counter-supersedeas remedy is at odds with the exclusive remedy overseen by the federal Secretary of Health and Human Services. Because it was outside the judicial power entirely, it can be challenged through any appropriate mechanism—including Rule 24.4. Plaintiffs further argue that the amount of bond cannot be challenged because there was no separate motion to change th e bond in the district court and because the assistant attorney general said that the bond was reasonable. Resp. at 21-22 ¶ 28. Neither claim is dispositive, because the district court’s st atements at the motion to modify have crystallized the lower court’s view of the injunction and plainly imposes two illegal requirements: (1) that § 3 55.8021(a)(2)(B) be applied to rate adjustments , as opposed to periodic rate reviews , see supra , introduction, and (2) that the
Commission find out whether its actions viol ate the injunction in future sanctions proceedings, see supra , Part III.B. That broad view of the scope of inju nctive relief expands the scope of the injunctive relief and the potential harm to the State of Texas. And, as explained abov e, harm to the State is the only relevant question in setting the counter-supersedeas bond. T EX


## . R. A PP


## . P. 24.2(a)(3); see supra , Part

## 17 III.A. Plaintiffs have never proffered an explanation of how $500 protects the State’s interests during appeal: they merely sugg est that the State’s interests are somehow
less than their own. Ther e is no balancing test.
Even absent the statements at the modi fication hearing, there would be no waiver, because an assistant attorney gene ral cannot waive the State’s substantive
interests. T EX


## . G OV 

## ’ T 

## C ODE 

## § 402.004; see Employees Retirement Sys. v. Bass , 840 S.W.2d 710, 714 (Tex. A pp.—Eastland 1992, no writ) (“An admission of the attorney general cannot prejud ice the rights of the State. ”). This injunction imposes a limitation on Legislative policy, based on a nominal bond. Even had the assistant attorney general in question been authorized to make this admission, it would violate § 402.004 to allow this admission to stand, because it would allow the attorney general to make policy, through the courts, in derogation of statutory language. See Tex. Health Care Information Council v. Seton Health Plan, Inc ., 94 S.W.3d 841,848 (Tex. App.—Austin 2002, pet. denied) (citing State v. Keeton Packing Co. , 487 S.W.3d 775, 780 (Tex. Civ. App.—Amarillo 1972, writ ref’d n.r.e.)). Allowing this waiver to preclude a subsequent challeng e to the amount of the bond would allow the Attorney General, by an affirmative statement, to bind the hands of both the Commission and the Legislature regarding implementation of the budget.
* * * The relevant question regarding the bond is whether it will protect the party seeking supersedeas from damage s resulting from changing the status quo . There is

## 18 no evidence explaining how the bond does this, so its issuance has always been an abuse of discretion. The scope of the in junction is, at least arguably, broader following the modification hearing. It is ce rtainly less clear. Thus, even though the assistant attorney general referred to the bo nd as “reasonable” in terms of plaintiffs’ evidence regarding harm to themselves, there is no ev idence supporting the bond under the relevant legal inquiry, which is the potential for damage to the State during the pendency of the appeal. Because the only legally relevant inquiry is whether the bond protects the State’s interests, the bo nd amount must be increased to cover the entire potential loss to the State if this litigation continues through the appellate process for two or more years.
PRAYER
The Court should vacate the counter-su persedeas order or, in the alternative, order the bond amount necessary to comply with Rule 24’s requirement that the party who is denied supersed eas be made entirely whol e for any harm caused by changing the status quo —$100,000,000 to cover both th e amount of general revenue Rider 50(c) was intended to remove from the Medicaid progra m and the cost of hiring 50 new employees to comply with the injunction ’s requirements.

## 19 Respectfully submitted.
K EN 

## P AXTON 

## Attorney General of Texas
C HARLES 

## E. R OY 

## First Assistant A ttorney General
S COTT 

## A. K ELLER 

## Solicitor General /s/ Kristofer Monson K RISTOFER 

## S. M ONSON 

## Assistant Solicitor General State Bar No. 24037129
OFFICE OF THE ATTORNEY GENERAL P.O. Box 12548 (MC 059) Austin, Texas 78711-2548 Tel.: (512) 936-1700 Fax: (512) 474-2697 kristofer.monson @ texasattorneygeneral.gov
COUNSEL FOR APPELLANTS

## 20 CERTIFICATE OF SERVICE On November 10, 2015 this document was served via File&Serve Xpress on: Ben Hathaway Kristofer S. Monson Dan Richards Office of the Attorney General Richards Rodriguez & Skeith P.O. Box 12548 (MC 059) 816 Congress Avenue Austin, Texas 78701 Suite 1200 kristofer.monson@texasattorneygeneral.gov drichards@rrsfirm.com bhathaway@rrsfirm.com
C OUNSEL FOR 

## A PPELLEES 

## C OUNSEL FOR 

## A PPELLANT 

## /s/ Kristofer S. Monson

## 21 

# A PPENDIX

# CONFERENCE COMMITTEE REPORT 3 RD 

## Printing



# H .B. NO. 1 GENERAL APPROPRIATIONS BILLTABLE OF CONTENTS

RECAPITULATION
- ALL ARTICLES

................................ ................................ ............................. i x ARTICLE I
- GENERAL GOVERNMENT Arts, Commission on the

................................ ................................ ................................ ....................... I

- 1 Att orney General, Office of the

................................ ................................ ................................ ............ I

- 3 Bond Review Board

................................ ................................ ................................ ............................ I

- 12 Cancer Prevention and Research Institute of Texas

................................ ................................ ............ I

- 13 Comptroller of Public Accounts

................................ ................................ ................................ ......... I

- 16 Fiscal Programs

- Com ptroller of Public Accounts

................................ ................................ ............ I

- 22 Informational Listing of Funds Appropriated to the Comptroller for Social Security BRP

....... I

- 27 Emergency Communic ations, Commission on State

................................ ................................ .......... I

- 28 Emergency Services Retirement System, Texas

................................ ................................ ................. I

- 31 Employees Retirement System

................................ ................................ ................................ ........... I

- 32 Ethics Comm ission, Texas

................................ ................................ ................................ .................. I

- 36 Facilities Commission

................................ ................................ ................................ ......................... I

- 38 Finance Authority, Public

................................ ................................ ................................ ................... I

- 46 Governor, Office of the

................................ ................................ ................................ ....................... I

- 51 Trusteed Program s within the Office of the Governor

................................ ................................ ........ I

- 52 Historical Commission

................................ ................................ ................................ ........................ I

- 61 Informati on Resources, Department of

................................ ................................ ............................... I

- 66 Library & Archives Commission

................................ ................................ ................................ ........ I

- 72 Pension Review Board

................................ ................................ ................................ ........................ I

- 76 Preservation Board

................................ ................................ ................................ .............................. I

- 77 Risk Management, State Office of

................................ ................................ ................................ ...... I

- 80 Secretary of State

................................ ................................ ................................ ................................ I

- 82 Veterans Commission

................................ ................................ ................................ ......................... I

- 85 Retirement and Gro up Insurance

................................ ................................ ................................ ..... ...I

- 89 Social Security and Benefit Replacement Pay

................................ ................................ .................... I

- 90 Bond Debt Service Payments

................................ ................................ ................................ .............. I

- 90 Lease Payments

................................ ................................ ................................ ................................ ... I

- 91 Recapitulation

- Article I

- General Revenue

................................ ................................ ...................... I

- 92 Recapitulation

- Article I

- General Rev enue
- Dedicated

................................ ................................ .. I

- 93 Recapitulation

- Article I

- Federal Funds

................................ ................................ .......................... I

- 94 Recapitulatio n
- Article I

- Other Funds

................................ ................................ ............................. I

- 95 Recapitulat ion

- Article I

- All Funds

................................ ................................ ................................ . I

- 96 ARTICLE II - HEALTH AND HUMAN SERVICES Aging and Disability Services, Department of

................................ ................................ .................... II

- 1 Assistive and Rehabilitative Services, Department of

................................ ................................ ....... II

- 18 Family and Protecti ve Services, Department of

................................ ................................ ................. II

- 30 State Heal th Services, Department of

................................ ................................ ................................ II

- 47 Health and Human Services Commission

................................ ................................ .......................... II

- 76 Retir ement and Group Insurance

................................ ................................ ................................ ..... II

- 107 Social Security an d Benefit Replacement Pay

................................ ................................ ................. II

- 108 Bond Debt Service Pay ments

................................ ................................ ................................ ........... II

- 108 Lease Payments

................................ ................................ ................................ ................................ II

- 109 Special Provisions Relating to All Health an d Human Services Agencies

................................ ...... II

- 109 R ecapitu lation

- Article II

- General Revenue

................................ ................................ ................. II

- 135 Recapitulation

- Article II

- Ge neral Revenue

- Dedicated

................................ .............................. II

- 136 Recapitulation

- A rticle II

- Federal Funds

................................ ................................ ...................... II

- 137 Recapitulation

- Article II

- Other Funds

................................ ................................ ......................... II

- 138 Recapitulation

- Article II

- All Funds

................................ ................................ ............................. II

- 139 ARTICLE III
- EDUCATION Education Agency, Texas

................................ ................................ ................................ ................... III

- 1 Blind and Visually Impaired, School for the

................................ ................................ .................... III

- 21 Deaf, School for the

................................ ................................ ................................ .......................... III

- 25 Special Provisions for the School for the Blind and Visually Impaired / School for the Deaf

................................ ................................ ................................ ........................... III

- 27 Teacher Retirement System

................................ ................................ ................................ .............. III

- 28 Op tional Retirement Program

................................ ................................ ................................ ........... III

- 33 Group Insurance Contributions, H igher Education Employees

................................ ........................ III

- 34 Higher Edu cation Coordinating Board

................................ ................................ ............................. III

- 39 Higher Educatio n Fund

................................ ................................ ................................ ..................... III

- 56 The University of Te xas System Administration

................................ ................................ .............. III

- 56 Available University Fund

................................ ................................ ................................ ................ III

- 58 

### iTABLE OF CONTENTS 

### (Continued)

Available National Rese arch University Fund

................................ ................................ .................. III

- 61 Permanent Fund Supporting Military and Veterans Exemptions

................................ ..................... III

- 62 The Univers ity of Texas at Arlington

................................ ................................ ............................... III

- 62 The Univ ersity of Texas at Austin

................................ ................................ ................................ .... III

- 65 The University of Texas at Dallas

................................ ................................ ................................ ..... III

- 69 The Unive rsity of Texas at El Paso

................................ ................................ ................................ ... III

- 71 The Univers ity of Texas at Rio Grande Valley

................................ ................................ ................. III

- 74 The University of T exas of the Permian Basin

................................ ................................ ................. III

- 78 The Universit y of Texas at San Antonio

................................ ................................ ........................... III

- 80 The University of Tex as at Tyler

................................ ................................ ................................ ...... III

- 83 Texas A&M University System Administr ative and General Offi ces
................................ .............. III

- 85 Texas A&M University

................................ ................................ ................................ ..................... III

- 86 Texas A& M University at Galveston

................................ ................................ ................................ III

- 88 Pr airie View A&M University

................................ ................................ ................................ .......... III

- 90 Tarleton State University

................................ ................................ ................................ .................. III

- 93 Texas A&M University

- Central Texas

................................ ................................ ........................... III

- 95 Texas A&M University

- Corpus Christi

................................ ................................ .......................... III

- 97 Texas A& M Universit y
- Kingsville

................................ ................................ ............................... III

- 100 Texas A&M University

– San Antonio

................................ ................................ ........................... III

- 102 Texas A&M International University

................................ ................................ ............................. III

- 104 W est Texas A&M University

................................ ................................ ................................ ......... III

- 106 Texas A &M University

- Commerce

................................ ................................ .............................. III

- 109 Texas A& M University

- Texarkana

................................ ................................ .............................. III

- 111 University of Houston System Adm inistratio n
................................ ................................ ............... III

- 113 University of Houston

................................ ................................ ................................ ..................... III

- 115 University of Houston

- Clear Lake

................................ ................................ ................................ III

- 117 Universi ty of Houston

- Downtown

................................ ................................ ................................ III

- 119 Universi ty of Houston

- Victoria

................................ ................................ ................................ .... III

- 121 Mid western State University

................................ ................................ ................................ ........... III

- 122 University of North Te xas System Administration

................................ ................................ ......... III

- 125 U niversity of North Texas

................................ ................................ ................................ .............. III

- 126 University of North Texas at Dallas

................................ ................................ ............................... III

- 128 Stephen F. Austin State University

................................ ................................ ................................ . III

- 130 T exas Southern University

................................ ................................ ................................ .............. III

- 132 Texas Tech Universi ty System Administration

................................ ................................ .............. III

- 135 Texas Tech University

................................ ................................ ................................ .................... III

- 136 Angelo State University

................................ ................................ ................................ .................. III

- 138 Texas Woman ’s University

................................ ................................ ................................ ............. III

- 140 Texas State University System

................................ ................................ ................................ ....... III

- 143 Lamar University

................................ ................................ ................................ ............................ III

- 144 Lamar Institute of Technology

................................ ................................ ................................ ........ III

- 146 Lamar State College

- Orange

................................ ................................ ................................ ......... III

- 148 Lamar State College

- Port Arthur

................................ ................................ ................................ .. III

- 150 Sam Hou ston State Univ ersity

................................ ................................ ................................ ........ III

- 151 Texas State University

................................ ................................ ................................ .................... III

- 154 S ul Ross State University

................................ ................................ ................................ ................ III

- 156 Sul Ross State Unive rsity Rio Grande College

................................ ................................ ............... III

- 158 The University of Texas Southwestern Medical Center

................................ ................................ . III

- 160 The University of Texas Medical Branch at Galves ton

................................ ................................ .. III

- 163 The University of Texas Health S cience Center at Houston

................................ ........................... III

- 167 The University of Texas Health Science Center at San Antonio

................................ .................... III

- 171 The University of Texas M. D. Anderson Cancer Center

................................ ............................... III

- 175 The University of Texas Health Center at Tyler

................................ ................................ ............. II I

- 179 Texas A&M University Syst em Health Science Center

................................ ................................ . III

- 182 University of North Texas Health Scie nce Center at Fort Worth

................................ ................... III

- 187 Texas Tech University Health Sciences Center

................................ ................................ .............. III

- 191 Texas Tech University Health Sciences Center at El Paso

................................ ............................. III

- 194 Public C ommunity/Junior Colleges

................................ ................................ ................................ III

- 198 Texas State Technical Colle ge System Administration

................................ ................................ .. III

- 207 Texas State Techn ical College

- Harlingen

................................ ................................ ..................... III

- 210 Texas State Techni cal College

- West Texas

................................ ................................ .................. III

- 211 Texas State Tech nical College

- Marshall

................................ ................................ ...................... III

- 213 Texas State Technical College

- Waco

................................ ................................ ........................... III

- 214 Special Provisions Relating Only to Components of Texas State Technical College

.................... III

- 216 Texas A&M Agrilife Research

................................ ................................ ................................ ....... III

- 218 Texas A&M Agrilife Extension Service

................................ ................................ ......................... III

- 221 Texas A&M Engine ering Experiment Station

................................ ................................ ................ III

- 22 4 Texas A&M Transportation Institute

................................ ................................ .............................. III

- 226 Texas A&M Engin eering Extension Service

................................ ................................ .................. III

- 229 Texas A&M Forest Service

................................ ................................ ................................ ............ III

- 231 Texas A&M Veterinary Medic al Diagnostic Laboratory

................................ ............................... III

- 234 

### iiTABLE OF CONTENTS 

### (Continued)

Retire ment and Group Insurance

................................ ................................ ................................ .... III

- 236 Social Security and Benefit Repl acement Pay

................................ ................................ ................ III

- 237 Bo nd Debt Service Payments

................................ ................................ ................................ .......... III

- 237 Lease Payments

................................ ................................ ................................ ............................... III

- 238 Special Provisions Relating Only to State Agen cies of Higher Education

................................ ..... III

- 238 Recapitulation

- Article III

- General Revenue

................................ ................................ ............... III

- 262 Recapitulation

- Article III

- Gen eral Revenue

- Dedicated

................................ ........................... III

- 264 Recapitulation

- Art icle III

- Federal Funds

................................ ................................ .................... III

- 266 Recapitulation

- A rticle III

- Other Funds

................................ ................................ ....................... III

- 267 Recapitulation

- Article III

- All Funds

................................ ................................ ........................... III

- 268 ARTICLE IV
- THE JUDICIARY Supreme Court of Texas

................................ ................................ ................................ .................... IV

- 1 Court of Criminal Appeals

................................ ................................ ................................ ................. IV

- 3 First Court o f Appeals District, Houston

................................ ................................ ........................... IV

- 6 Second Court of A ppeals District, Fort Worth

................................ ................................ .................. IV

- 8 Third Court of Appeals District, Austin

................................ ................................ ............................. IV

- 9 Fourth Co urt of Ap peals District, San Antonio

................................ ................................ ............... IV

- 10 Fifth Court o f Appeals District, Dallas

................................ ................................ ............................ IV

- 11 Sixth Court of Appeals District, Texarkana

................................ ................................ ..................... IV

- 12 Seventh Court of Appeals District, Amarillo

................................ ................................ ................... IV

- 13 Eighth Court of Appeals District, El Paso

................................ ................................ ....................... IV

- 14 Ninth Court of Appea ls District, Beaumont

................................ ................................ ..................... IV

- 16 Tenth Court of Appeals District, Waco

................................ ................................ ........................... IV

- 17 Eleventh Court of Appeals District, Eastland

................................ ................................ .................. IV

- 18 Twelfth Court of Appeals District, Tyler

................................ ................................ ......................... IV

- 19 Thirteenth Court of Appeal s District, Corpus Christi

- Edinburg

................................ .................... IV

- 20 Fourteenth Court of Appeals District, Houston

................................ ................................ ............... IV

- 21 Office of Court Administrati on, Texas Judicial Council

................................ ................................ . IV

- 22 Office of Capital Writs

................................ ................................ ................................ ..................... IV

- 28 State Prosecuti ng Attorney, Office of the

................................ ................................ ........................ IV

- 29 State Law Library

................................ ................................ ................................ ............................ IV

- 30 Commission on Judicial Conduct, State

................................ ................................ .......................... IV

- 32 Judiciary Sec tion, Comptroller ’s Department

................................ ................................ .................. IV

- 33 Reti rement and Group Insurance

................................ ................................ ................................ ..... IV

- 37 Social Security a nd Benefit Replacement Pay

................................ ................................ ................. IV

- 38 Lease Payments

................................ ................................ ................................ ................................ IV

- 38 Spec ial Provisions

- Judiciary

................................ ................................ ................................ .......... IV

- 39 Recapitulation

- Ar ticle IV

- General Revenue

................................ ................................ ................ IV

- 40 Recapitulation

- Article IV

- G eneral Revenue

- Dedicated

................................ ............................ IV

- 41 Recapitulation

- Arti cle IV

- Federal Funds

................................ ................................ ..................... IV

- 42 Recapitulation

- Article IV

- Other Funds

................................ ................................ ....................... IV

- 43 Recapitulatio n
- Article IV

- All Funds

................................ ................................ ........................... IV

- 44 ARTICLE V
- PUBLIC SAFETY AND CRIMINAL JUSTICE
A lcoholic Beverage Commission

................................ ................................ ................................ ......... V

- 1 Criminal Justice , Department of

................................ ................................ ................................ .......... V

- 4 Fir e Protection, Commission on

................................ ................................ ................................ ......... V

- 21 Ja il Standards, Commission on

................................ ................................ ................................ .......... V

- 23 Juvenile Justice Department

................................ ................................ ................................ ............... V

- 24 Law Enforcement , Commission on

................................ ................................ ................................ .... V

- 36 Military Department

................................ ................................ ................................ ........................... V

- 39 Public Safety, Dep artment of

................................ ................................ ................................ ............. V

- 44 Ret irement and Group Insurance

................................ ................................ ................................ ....... V

- 60 Social Security and Benefit Replacement Pay

................................ ................................ ................... V

- 60 Bond Debt Service Payments

................................ ................................ ................................ ............. V

- 61 Lease Payments

................................ ................................ ................................ ................................ .. V

- 61 Special Provisions Relating to Public Safety an d Criminal Justice Agencies

................................ ... V

- 61 Recapitulation

- Article V

- General Revenue

................................ ................................ ................... V

- 62 Recapitulation

- Article V

- General Revenue

- Dedicated

................................ ................................ V

- 63 Recapitulation

- Article V

- Federal Funds

................................ ................................ ........................ V

- 64 Recapitulatio n
- Article V

- Other Funds

................................ ................................ ........................... V

- 65 Recapitulat ion

- Article V

- All Funds

................................ ................................ ............................... V

- 66 ARTICLE VI
- NATURAL RESOURCES Agriculture, Department of

................................ ................................ ................................ ................ VI

- 1 Animal Health Commission

................................ ................................ ................................ ............. VI

- 10 Commissio n on Environmental Quality

................................ ................................ ........................... VI

- 13 

### iiiTABLE OF CONTENTS 

### (Continued)

General Land Office and Veterans ’ Land Board

................................ ................................ ............. VI

- 24 Low

- Level Radioactive Waste Disposal Compact Commission

................................ ..................... VI

- 30 Parks and Wildli fe Department

................................ ................................ ................................ ........ VI

- 32 Railroad Commission

................................ ................................ ................................ ....................... VI

- 45 Soil an d Water Conservation Board

................................ ................................ ................................ . VI

- 50 Water Develop ment Board

................................ ................................ ................................ .............. VI

- 53 Retirement and Group Insurance

................................ ................................ ................................ ..... VI

- 61 Social Security a nd Benefit Replacement Pay

................................ ................................ ................. VI

- 62 Bond Debt Service Payments

................................ ................................ ................................ ........... VI

- 62 Lease Payments

................................ ................................ ................................ ................................ VI

- 62 Recapitulation

- Ar ticle VI

- General Revenue

................................ ................................ ................ VI

- 64 Recapitulation

- Article VI

- G eneral Revenue

- Dedicated

................................ ............................ VI

- 65 Recapitulation

- Article VI

- Fed eral Funds

................................ ................................ ..................... VI

- 66 Recapitulation

- Article VI

- Other Funds

................................ ................................ ....................... VI

- 67 Recapitulatio n
- Article VI

- All Funds

................................ ................................ ........................... VI

- 68 ARTIC LE VII - BUSINESS AND ECONOMIC DEVELOPMENT Housing and Community Affairs, Department of

................................ ................................ ............. VII

- 1 Lottery Commission, Texas

................................ ................................ ................................ .............. VII

- 7 Motor Vehicles, Department of

................................ ................................ ................................ ...... VII

- 11 Tran sportation, Department of

................................ ................................ ................................ ........ VII

- 14 Workforce Commission, Texas

................................ ................................ ................................ ....... VII

- 31 Reimbursements to the Unemployment Com pensation Benefit Account

.............................. VII

- 45 Retir ement and Group Insurance

................................ ................................ ................................ .... VII

- 46 Social Security an d Benefit Replacement Pay

................................ ................................ ................ VII

- 47 B ond Debt Service Payments

................................ ................................ ................................ .......... VII

- 47 Lease Payments

................................ ................................ ................................ ............................... VII

- 47 Recapitulation

- Article VII

- Ge neral Revenue

................................ ................................ ............. VII

- 49 Recapitulation

- Article VII

- Ge neral Revenue

- Dedicated

................................ .......................... VII

- 50 Recapitulation

- Ar ticle VII

- Federal Funds

................................ ................................ .................. VII

- 51 Recapitulation

- Article VII

- Other Funds

................................ ................................ ..................... VII

- 52 Recapitulation

- Article VII

- All Funds

................................ ................................ ......................... VII

- 53 ARTICLE VIII
- REGULATORY Administrative Hearings, State Office of

................................ ................................ ......................... VIII

- 1 Chiropra ctic Examiners, Board of

................................ ................................ ................................ ... VIII

- 5 Dental Examine rs, Texas State Board of

................................ ................................ ......................... VIII

- 7 F uneral Service Commission

................................ ................................ ................................ ........... VIII

- 9 Geoscientist s, Board of Professional

................................ ................................ ............................. VIII

- 11 He alth Professions Council

................................ ................................ ................................ ............ VIII

- 13 Injured Employee Counsel, Office of

................................ ................................ ............................ VIII

- 14 Insurance, Department of

................................ ................................ ................................ ............... VIII

- 16 Insurance C ounsel, Office of Public

................................ ................................ .............................. VIII

- 24 Land Surveyin g, Board of Professional

................................ ................................ ......................... VIII

- 26 Licensing and R egulation, Department of

................................ ................................ ..................... VIII

- 27 Texas Medical Board

................................ ................................ ................................ ..................... VIII

- 32 N ursing, Texas Board of

................................ ................................ ................................ ................ VIII

- 36 Optometry Board

................................ ................................ ................................ ........................... VIII

- 39 Pharmacy, Board of

................................ ................................ ................................ ....................... VIII

- 40 Physical Therapy & Occupational Therapy Examine rs, Executive Council of

............................. VIII

- 43 Plum bing Examiners, Board of

................................ ................................ ................................ ...... VII I

- 45 Podiatric Med ical Examiners, Board of

................................ ................................ ......................... VIII

- 46 Psychologist s, Board of Examiners of

................................ ................................ ........................... VIII

- 48 Racing Commission

................................ ................................ ................................ ....................... VIII

- 49 Securities Board

................................ ................................ ................................ ............................. VIII

- 53 Utility Com mission of Texas, Public

................................ ................................ ............................. VIII

- 55 Utility C ounsel, Office of Public

................................ ................................ ................................ ... VIII

- 59 Veterinary Medi cal Examiners, Board of

................................ ................................ ...................... VIII

- 60 Retire ment and Group Insurance

................................ ................................ ................................ ... VIII

- 62 Social Security and Benefit Replacement Pay

................................ ................................ ............... VIII

- 63 Lease Payments

................................ ................................ ................................ .............................. VIII

- 63 Special Provisions Relating to All Regulatory Agencies

................................ ............................... VIII

- 63 Recapitulation

- Articl e VIII

- General Revenue

................................ ................................ ........... VIII

- 67 Recapitulation

- Article VIII

- Gen eral Revenue

- Dedicated

................................ ........................ VIII

- 68 Recapitulation

- Arti cle VIII

- Federal Funds

................................ ................................ ................ VIII

- 69 Recapitulation

- Ar ticle VIII

- Other Funds

................................ ................................ ................... VIII

- 70 Recapitulation

- Article VIII

- All Funds

................................ ................................ ....................... VIII

- 71



### ivTABLE OF CONTENTS 

### (Continued)
ARTICLE IX
- GENERAL PROVISIONS
GENERAL PROVISIONS LEGISLATIVE INTENT

................................ ................................ ...... IX

- 1 Sec. 1.01. Limitations

................................ ................................ ................................ ............... IX

- 1
PROVISIONS RELATING TO THE POSITION CLASSIFICATION PLAN

................................ IX

- 1 Sec. 2.01. Position Classification Plan

................................ ................................ ...................... IX

- 1 C lassif ied Positions for the 201 6

- 1 7 Biennium

................................ ........................ IX

- 1 Schedule A Classification Salary Schedule

................................ ........................... IX

- 17 Schedule B Classification Salary Schedule

................................ ............................ IX

- 17 Schedule C Classification Salary Schedule

................................ ............................ IX

- 18
SALARY ADMINISTRATION AND O THER EMPLOYMENT PROVISIONS

......................... IX

- 18 Sec. 3. 01. Salary Rates

................................ ................................ ................................ ............ IX

- 18 Sec . 3. 02. Salary Supplementation

................................ ................................ ......................... IX

- 19 Sec. 3 .03. Salary Limits

................................ ................................ ................................ .......... IX

- 19 Sec. 3.04. S cheduled Exempt Positions.

................................ ................................ ................. IX

- 19 Sec. 3.05. Evening, Night, Weekend Shift Pay: Registered Nurses and Licensed Vocational Nurses

................................ ................................ ................................ .. IX

- 2 1 Sec. 3.06. Recruitment and Retention Bonuses

................................ ................................ ...... IX

- 2 1 Sec . 3.07. Equity Adjustments

................................ ................................ ................................ IX

- 21 Sec . 3.08. Classification Study on Scheduled Exempt Positions

................................ ............ IX

- 22 Sec . 3.09. Method of Salary Payments

................................ ................................ ................... IX

- 2 2 Sec. 3.10. Exception

- Con tracts Less than 12 Months

................................ ........................... IX

- 22 Se c. 3.11

. Exceptions for Certain Employees

................................ ................................ ......... IX

- 22 Sec. 3.12. Except ions for Salary Schedule C

................................ ................................ .......... IX

- 22 Sec. 3.13. Matching Retire ment and Certain Insurance

................................ .......................... IX

- 22
GRANT

- MAKING PROVISIONS

................................ ................................ ................................ .. IX

- 2 3 Sec. 4.01

. Grant Restriction

................................ ................................ ................................ .... IX

- 2 3 Sec. 4.02

. Grants

................................ ................................ ................................ ..................... IX

- 2 3 Sec. 4.03

. Grants for Po litical Polling P rohibited

................................ ................................ ... IX

- 23 Sec. 4.04. Limitation on Grants to Units of Local Government

................................ ............. IX

- 2 3
TRAVEL REGULATIONS

................................ ................................ ................................ ............. IX

- 2 4 Sec. 5.01. Travel Definitions.

................................ ................................ ................................ . IX

- 2 4 Sec. 5.02. General Travel Provisions

................................ ................................ ...................... IX

- 2 4 Se c. 5.03. Transportation Expenses

................................ ................................ ........................ IX

- 2 4 Sec. 5.0 4. Transportation in Personally Owned or Leased Aircraft

................................ ........ IX

- 2 4 Sec. 5 .05. Travel Meals and Lodging Expenses

................................ ................................ ..... IX

- 2 4 Sec. 5.06. Special Provisions Regarding Travel Expenses

................................ ..................... IX

- 2 5 Se c. 5.07. Travel and Per Diem of B oard or Commission Members

................................ ...... IX

- 2 5 Sec. 5.08. Travel of Advisory Committee Members

................................ .............................. IX

- 2 5
GENERAL L IMITATIONS ON EXPENDITURES

................................ ................................ ....... IX

- 2 6 Sec. 6.01. Unexpended Balance

................................ ................................ .............................. IX

- 2 6 Sec. 6.02. I nterp retation of Estimates

................................ ................................ ..................... IX

- 2 6 Sec. 6.03

. Exc ess Obligations Prohibited

................................ ................................ ............... IX

- 2 6 Sec. 6.04

. Interpreta tion of Legislative Intent

................................ ................................ ......... IX

- 2 6 Sec. 6.05

. Comptroller ’ s Duty to Pay

................................ ................................ ..................... IX

- 2 7 Sec. 6.06

. Last Quarter Expenditures

................................ ................................ ...................... IX

- 27 Se c. 6.07. Employee Benefit and Debt Service Items

................................ ............................ IX

- 2 7 Sec. 6.08

. Benefits Paid Proportional by Fund

................................ ................................ ....... IX

- 2 7 Sec. 6.09

. Appropr iations from Special Funds

................................ ................................ ....... IX

- 28 Sec. 6.10

. Limitation on State Employment Levels

................................ ................................ IX

- 28 Sec. 6.11. Purchases of Postage

................................ ................................ .............................. IX

- 31 Sec. 6.12. Expenditures for Sta te

- Federal Relations

................................ ............................... IX

- 31 Sec. 6.13. Performance Rewards and Penal ties

................................ ................................ ...... IX

- 31 Sec. 6.14. Bookkeeping Entries

................................ ................................ .............................. IX

- 3 2 Sec. 6.15. Account ing for St ate Expenditures

................................ ................................ ........ IX

- 3 2 Sec. 6.16. Fee Increase Notification

................................ ................................ ....................... IX

- 32 Sec . 6.17. Consolidated Funds

................................ ................................ ................................ IX

- 32 Sec. 6.18. Demograph ic a nd Statistical Studies

................................ ................................ ...... IX

- 3 2 S ec. 6.19. Cost Allocations

................................ ................................ ................................ ..... IX

- 33 Sec. 6.20. Use of Appropriati ons to Contract for Audits

................................ ........................ IX

- 3 3 Sec. 6.21. Limitations on Use of Appropriated Funds

................................ ............................ IX

- 33 Sec. 6.22. Informational Items

................................ ................................ ................................ IX

- 3 3 Sec. 6.23. Appropriati ons from State Tax Revenue

................................ ................................ IX

- 33 Sec. 6.24. Deposit and Notification Requirement for Certain RESTORE Act Funds

............ IX

- 33



### vTABLE OF CONTENTS 

### (Continued)

REPORTIN G REQUIREMENTS

................................ ................................ ................................ ... IX

- 34 Sec. 7.01. Budgeting and Report ing

................................ ................................ ....................... IX

- 3 4 Sec. 7.02. Annu al Reports and Inventories

................................ ................................ ............. IX

- 35 Sec. 7.03. Notification to Members of the Legislature

................................ ........................... IX

- 35 Sec. 7.04. Contract Notification: Am ounts Greater than $50,000

................................ .......... IX

- 35 Sec. 7. 05. Reports and References

................................ ................................ .......................... IX

- 35 Sec. 7. 06. Internal Assessments on Utilization of Historically Underutilized Businesses

................................ ................................ ................................ .............. IX

- 36 Sec. 7.07. Historically Underu tilized Business Policy Compliance

................................ ....... IX

- 36 Sec. 7.08. Reporting of Historically Underutilized Business (HUB) Key Mea sures
............. IX

- 36 Sec. 7.09. Fraud Reporting

................................ ................................ ................................ ..... IX

- 37 Sec. 7.10. Reporting Requirement for Deepwat er Horizon Oil Spill Funds

........................... IX

- 37 Sec. 7.11. Border Se curity

................................ ................................ ................................ ...... IX

- 37 Sec. 7.12. Notification of Certain Purchases or Contract Awards, Amendments, and Extensions

................................ ................................ ................................ ....... IX

- 38 Sec. 7. 13. Notification of Certain Expenditures Related to Mitigation of Adverse Environmental Impacts

................................ ................................ ............ IX

- 40
OTH ER APPROPRIATION AUTHORITY

................................ ................................ ................... IX

- 40 Sec. 8.01. Ac ceptance of Gifts of Money

................................ ................................ ............... IX

- 40 Sec. 8.0 2

. R eimbursements and Payments

................................ ................................ .............. IX

- 40 S ec. 8.0 3. Surp lus Property

................................ ................................ ................................ ..... IX

- 41 Sec. 8.04

. Refunds of D eposits

................................ ................................ ............................... IX

- 42 S ec. 8.0 5

. Vending Machines

................................ ................................ ................................ . IX

- 4 2 Sec. 8. 0 6

. Pay Station Telephones

................................ ................................ .......................... IX

- 4 2 Sec. 8.07

. Appropriation of Collections fo r Seminars and Conferences

................................ IX

- 4 2 Sec. 8.08

. Appr opriation of Bond Proceeds

................................ ................................ ............ IX

- 43 Sec . 8.09

. CMIA Interest Paymen ts

................................ ................................ ........................ IX

- 43 Sec. 8.10

. Appropriati on of Receipts: Credit, Charge, Debit Card, or Electronic Cost Recovery Service Fees

................................ ................................ ................... IX

- 43 Sec. 8.11

. E mployee Meal Authorization

................................ ................................ ............... IX

- 43 Sec. 8.12

. Bank Fees and Charges

................................ ................................ .......................... IX

- 43 Sec. 8.13

. Appropriation of Specia lty License Plate Receipts

................................ ................ IX

- 43 Sec. 8.14

. Cos t Recovery of Testing Fees

................................ ................................ ............... IX

- 43 Sec. 8.15

. Cost Recovery of Fees

................................ ................................ ........................... IX

- 44
INFORM ATION RESOURCES PROVISIONS

................................ ................................ ............. IX

- 4 4 Sec. 9.01. Purchases of Informat ion Resources Technologies

................................ ................ IX

- 4 4 Sec. 9.02. Quality Assurance Review of Major Informatio n Resources Projects

................... IX

- 4 4 Sec. 9.03

. Biennial Operating Plan and Information Resources Strategic Plan Approval

................................ ................................ ................................ ................. IX

- 45 Sec. 9.04

. Informat ion Technology Replacement

................................ ................................ ... IX

- 45 Sec. 9.05. Texas.g ov Project: Occupational Licenses

................................ ............................. IX

- 46 Sec. 9.06. Texas.g ov P roject: Cost Recovery Fees

................................ ................................ . IX

- 46 Sec. 9.07

. Payments to the Departmen t of Information Resources

................................ ......... IX

- 46 Sec. 9.08

. Computer Inventory Report

................................ ................................ ................... IX

- 47 Sec. 9.09

. Server C onsolidation Status Update

................................ ................................ ....... IX

- 47 Sec. 9.10

. Prioritization of Cyber s e curity and Legacy System Projects

................................ . IX

- 48 Sec. 9.11

. Cybersecurity Initiatives

................................ ................................ ........................ IX

- 48 Sec. 9.12

. Surplus Information Technology Hardware

................................ ........................... IX

- 49
HEALTH

- RELATED PROVISIONS

................................ ................................ .............................. IX

- 49 Sec. 10.01

. Full Appli cation for Health Coverage

................................ ............................... IX

- 49 Sec. 10.02. Appropriation of Disproportionate Share Hospital Payments to State

- Owned Hospitals

................................ ................................ .................... IX

- 49 Sec. 10.03

. Informational Listing on Use of Tobacco Settlement Receipts

........................ IX

- 49 Sec. 10.04. Statewide Behavioral Health S trategic Plan and Coordinated Expenditure s
................................ ................................ ................................ ...... IX

- 51 Sec. 10.05. Funding for Autism Services

................................ ................................ ............ IX

- 53
PROVISION S RELATED TO REAL PROPERTY

................................ ................................ ........ IX

- 54 Sec. 11.01. Limitation on Use of Fun ds for Personal Residence s
................................ ....... IX

- 54 Sec. 11.02. Reporting Related to State Owned Housing

................................ ..................... IX

- 5 4 Sec. 11.0 3

. Statewi de Capital Planning

................................ ................................ ............... IX

- 54 Sec. 11.0 4

. Efficient Use of St ate O wned and Leased Space

................................ .............. IX

- 55 Sec. 11.05

. State Agency Emergency Le ases
................................ ................................ ...... IX

- 55 Sec. 11.06

. Prepay ment of Annual Lease Costs

................................ ................................ ... IX

- 56 Sec. 11.07. Efficient Use of State Property to House State Facilities

................................ .. IX

- 56



### viTABLE OF CONTENTS 

### (Continued)

PROV ISIONS RELATED TO PROPERTY

................................ ................................ ................... IX

- 56 Sec. 12.01. Aircraft

................................ ................................ ................................ .............. IX

- 56 Sec. 12.02. Publication or Sale of Printed, Recorded, or Electronically Produced Matter or Records

................................ ................................ .............................. IX

- 57 Sec. 12.03. Limitation on Expenditures for Purchases and Conversions of Alt ernative Fuel Vehicles

................................ ................................ .................. IX

- 57 Sec. 12.04. Transfer of Master Lease Purchase Program Payments

................................ .... IX

- 57
FEDERAL FUNDS

................................ ................................ ................................ ......................... IX

- 58 Sec. 13.01. Federal Funds/Block Grants

................................ ................................ .............. IX

- 58 Sec. 13.02. Report of Additional Funding

................................ ................................ ........... I X

- 58 Sec. 13.03

. Report of Expanded Operational Capacity

................................ ........................ IX

- 58 Sec. 13.04

. Reports to Comptroller

................................ ................................ ...................... IX

- 58 Sec. 13.05. Deposit and Expenditure Limitations

................................ ................................ IX

- 58 Sec. 13.06. Reimbursements from Federal Funds

................................ ................................ IX

- 59 Sec. 13.07. Limitations on Positions

................................ ................................ .................... IX

- 59 Sec. 13.08. Funding Reductions

................................ ................................ ........................... IX

- 59 Sec. 13.09. Unexpended Balances

................................ ................................ ....................... IX

- 59 Sec. 13.10. Temporary Assistance for Needy Families (TANF) or Social Services Block Grant (SSBG)

................................ ............................ IX

- 59 Sec. 13.11. Definition, Appropriation, Reporting and Audit of Earned Federal Funds

................................ ................................ ........................ IX

- 60 Sec. 13.12. Reporting of Federal Homeland Security Funding

................................ ........... IX

- 62
AGENCY DISCRETIONARY TRANSFER PROVISIONS

................................ ......................... IX

- 62 Sec. 14.0 1. Appropriation Transfers

................................ ................................ .................... IX

- 62 Sec. 14.02

. Trans fers for Contract Services

................................ ................................ ......... IX

- 63 Sec. 14.03. Limitation on Exp enditures

– Capital Budget

................................ ................... IX

- 63 Sec. 14.04

. Disaster Related Transfer Authority

................................ ................................ .. IX

- 65 Sec. 14.05

. Unexpended Balance A uthority Between Fiscal Years within The Same Biennium

................................ ................................ .......................... IX

- 66
AGENCY NON

- DISCRETIONARY TRANSFER PROVISIONS

................................ ................ IX

- 67 Se c. 15.01. Reimbursements for Unemployment Benefits

................................ .................. IX

- 67 Sec. 15.02. Payments to the State Office of Risk Management (SORM)

............................ IX

- 68 Sec. 15.03. Contingency Appropria tion Reduction

................................ ............................. IX

- 69 Sec. 15.04. Appropriation Transfers: Billings for Statew ide Allocated Costs

..................... IX

- 70
LEGAL REPRESE NTATION AND JUDGMENTS PROVISIONS

................................ .............. IX

- 70 Sec. 16.01. Court Representation and Outside Legal Counsel

................................ ............. IX

- 70 Sec. 16.02. Contingent Fee Contract for Legal Services

................................ ..................... IX

- 71 Sec. 16.03. Proceeds of Litigation

................................ ................................ ....................... IX

- 72 Sec. 16.0 4

. Judgments and Settlements

................................ ................................ ............... IX

- 72 Sec. 16.05. Incidents Report: State Supported Living Centers and State Hospitals

................................ ................................ ............................ IX

- 74 Sec. 16.06. Professional and Legal Services

................................ ................................ ........ IX

- 74
MISCELLANEOUS PROVISIONS

................................ ................................ ................................ IX

- 74 Sec . 17.01. Contingency Rider

................................ ................................ ............................. IX

- 74 Sec. 17.02. Limitation on Substitution of General Obligation Bond Funded Projects

................................ ................................ ................................ . IX

- 74 Sec. 17.0 3

. Interagency Contract to Coordinate Use of PARIS Data t o Assist Veterans and Achieve Savings for State

................................ ........................... IX

- 74 Sec. 17.0 4

. Payroll Contribution for Group Health Insurance

................................ ............. IX

- 75 Sec. 17.0 5

. Appropriation for Salary Increase s for Certain State Employees in Salary Schedule C

................................ ................................ ......................... IX

- 75 Sec. 17.0 6

. Veterans Services at Other State Agencies

................................ ....................... IX

- 76 Sec. 17. 0 7

. Agency Coordination for Youth Prevention and Intervention S ervices

............ IX

- 76 Sec. 17.08

. Additional Payroll Contribution for Retirement Contribution

.......................... IX

- 76 Sec. 17.09. Border Security

– Informational Listing

................................ ........................... IX

- 77
CONTIN GENCY AND OTHER PROVISIONS

................................ ................................ ............ IX

- 79 Recapitulation

– Article IX

- General Pro visions

– General Revenue

................................ ............. IX

- 9 9 Recapitulation

– Article IX

– General Provisions

– Ge neral Revenue

– Dedicated

...................... IX

- 1 0 0 Recapitulation

– Article IX

- General P rovisions

– Federal Fun ds

................................ ............... IX

- 10 1 Recapitulation

– Article IX

– General Provisi ons

– Other Funds

................................ .................. IX

- 10 2 Recapitulation

– Article IX

– General Provisions

– All Funds

................................ ...................... IX

- 10 3
CONTIN GENCY PROVISIONS : ARTICLE AND AGENCY INDEX

................................ ....... IX

- 10 4



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ARTICLE X
- THE LEGISLATURE
Senate

................................ ................................ ................................ ................................ ................... X

- 1 House of Representatives

................................ ................................ ................................ ..................... X

- 2 Legislative Council

................................ ................................ ................................ .............................. X

- 4 Uniform State Laws, Commission on

................................ ................................ ................................ .. X

- 5 State Auditor ’s Office

................................ ................................ ................................ .......................... X

- 5 L egislative Reference Library

................................ ................................ ................................ .............. X

- 6 Retirement and Group Insurance

................................ ................................ ................................ ......... X

- 7 Social Security and Benefit Replacement Pay

................................ ................................ ..................... X

- 8 Lease Payments

................................ ................................ ................................ ................................ .... X

- 8 Special Provisions Relating to the Legislature

................................ ................................ ..................... X

- 8 Recapitulation

- Article X

- General Revenue

................................ ................................ ..................... X

- 9 Recapitulatio n
- Article X

- Other Funds

................................ ................................ ........................... X

- 10 Recapitulat ion

- Article X

- All Funds

................................ ................................ ............................... X

- 11 ARTICLE XI

– SAVINGS CLAUSE

................................ ................................ ................... XI

- 1 ARTICLE XII

– EMERGENCY CLAUSE

................................ ................................ ..................... XI

- 1



### viii

### HEALTH A ND HUMAN SERVICES COMMISSION (Continued)
(HHSC) in Goal B, Medicaid, and Goal C, Children's Health Insurance Program, HHSC m ay implement the following quality

- based reforms in the Medicaid and CHIP programs:

a. develop quality

- based outcome and process measures that promote the provision of efficient, quality health care and that can be used to implement quality

- based payments for acute and long

- term care services across delivery models and payment systems;
b. implement quality

- based payment systems for compensating a health care provider or facility participating in the Medicaid and CHIP programs;

c. implement quality

- based payment initiatives to reduce potentially preventable readmissions and potentially preventable complications; and
d. implement a bundled payment initiative in the Medicaid program, including a shared savings component for providers that meet quality

- based outcomes. The executive commissioner may select high

- cost and/or high

- volume services to bundle and may consider the experiences of other payers and other state of Texas programs that purchase healthcare services in making the selection.

e. Under the Health and Human Services Commission's authority in 1 T.A.C. Sec. 355.307(c), the commission may implement a Special Reimbursement Class for long term care commonly referred to as "small house facilities." Such a class may include a rate reimbursement mode l that is cost neutral and that adequately addresses the cost differences that exist in a nursing facility constructed and operated as a small house facility, as well as the potential for off

- setting cost savings through decreased utilization of higher cos t institutional and ancillary services. The payment increment may be based upon a provider incentive payment rate. Required Reporting: The commission shall provide annual reports to the Governor's Office of Budget, Planning, and Policy and Legislative Bud get Board on December 1, 2015 and December 1, 2016 that include (1) the quality

- based outcome and process measures developed; (2) the progress of the implementation of quality

- based payment systems and other related initiatives; (3) outcome and process mea sures by health service region; and (4) cost

- effectiveness of quality

based payment systems and other related initiatives.
47. Texas Office for the Prevention of Developmental Disabilities. Out of General Revenue Funds appropriated above in Strategy A. 1.1, Enterprise Oversight and Policy, the Health and Human Services Commission shall expend an amount not to exceed $200,000 each fiscal year for salaries, travel expenses, and other costs in order to support the Office for Prevention of Developmental Dis abilities. Grants and donations for the Texas Office for Prevention of Developmental Disabilities received through the authority provided by Article IX, Sec. 8.01, Acceptance of Gifts of Money, are not subject to this limit and shall be expended as they ar e received as a first source, and General Revenue shall be used as a second source to support the office.
48. Supplemental Payments. It is the intent of the Legislature that when the Health and Human Services Commission calculates supplemental payments, data be collected to provide transparency regarding claims associated with the supplemental payment program. An independent audit of the program, including a review of regional affiliations, uncompensated care claims for both uninsured and insur ed individuals, and contractual agreements, and a report with findings should be completed and distributed annually on March 1 to the Governor, the Lieutenant Governor, the Speaker of the House of Representatives, the Senate Finance Committee members, the House Appropriations Committee members, and the Legislative Budget Board.
49. Prevent Eligibility Determination Fraud. It is the intent of the Legislature that to prevent fraud and to maximize efficiencies, the Health and Human Services Commission shall use technology to identify the risk for fraud associated with applications for benefits. Within the parameters of state and federal law, the commission shall set appropriate verification and documentation requirements based on the application's risk to ensure agency resources are targeted to maximize fraud reduction and case accuracy.
50. Medicaid Funding Reduction and Cost Containment.

a. Included in appropriations above in Goal B, Medicaid, is a reduction of $186,500,000 in General Revenue Fun ds and $249,349,498 in Federal Funds in fiscal year 2016 and $186,500,000 in General Revenue Funds and $247,220,930 in Federal Funds in fiscal year

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### HEALTH A ND HUMAN SERVICES COMMISSION (Continued)

2017, a biennial total of $373,000,000 in General Revenue Funds and $496,570,428 in Federal Funds. The Healt h and Human Services Commission (HHSC) is authorized to transfer these reductions between fiscal years and to allocate these reductions among health and human services agencies as listed in Article II of this Act, pursuant to the requirement to submit a pl an included in Subsection (d) of this rider.
b. This reduction shall be achieved through the implementation of the plan described under subsection (d) which may include any or all of the following initiatives: (1) Continue strengthening and expanding prior authorization and utilization reviews, (2) Incentivize appropriate neonatal intensive care unit utilization and coding, (3) Fully implement dually eligible Medicare/Medicaid integrated care model and long

term services and supports quality payment initiative, (4) Maximize co

- payments in Medicaid programs, (5) Increase fraud, waste, and abuse prevention and detection, (6) Explore changes to premium structure for managed care organizations and contracting tools to reduce costs and increase efficien cy, (7) Renegotiate more efficient contracts, including reducing the administrative contract profit margin and establish rebate provisions where possible, (8) Develop a dynamic premium development process for managed care organizations that has an ongoin g methodology for reducing inappropriate utilization, improving outcomes, reducing unnecessary spending, and increasing efficiency, (9) Implement fee

- for

- service payment changes and managed care premium adjustments that incentivize the most appropriate and effective use of services, (10) Improve birth outcomes, including improving access to information and payment reform, (11) Increase efficiencies in the vendor drug program, (12) Increase third party recoupments, (13) Create a pilot program on mot or vehicle subrogation, (14) Assess options to reduce costs for retroactive Medicaid claims, (15) Review the cost effectiveness of including children with disabilities in dental managed care, (16) Review and determine the benefits of providing the mana ged care

- organizations with the ability to create a pharmacy lock

- in program, and (17) Implement additional initiatives identified by HHSC.

c. HHSC shall reform reimbursement methodology to be in line with industry standards, policies, and utilization f or acute care therapy services (including physical, occupational, and speech therapies) while considering stakeholder input and access to care. Out of the amount in subsection (a), in each fiscal year at least $50,000,000 in General Revenue Funds savings
s hould be achieved through rate reductions and $25,000,000 in General Revenue Funds savings may be achieved through various medical policy initiatives listed in items (1)

- (10), below. If $25,000,000 in savings is not achieved through various medical policy initiatives in fiscal year 2016, the amount of unrealized savings (the difference between $25,000,000 in General Revenue Funds and savings actually achieved in fiscal year 2016) should be achieved through additional rate reductions in fiscal year 2017 whil e continuing any

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### HEALTH A ND HUMAN SERVICES COMMISSION (Continued)
initiatives implemented in fiscal year 2016 that have been found to produce savings. HHSC may achieve savings through various medical policy initiatives, taking into consideration the following: (1) Clarifying policy language regarding co

- therapy definition, documentation, and billing requirements, (2) Clarifying who can participate in therapy sessions in policy that interns, aides, students, orderlies and technicians can participate in therapy sessions when they are directly and appropriately supervised according to provider licensure requirements, but they are not eligible to enroll as providers and bill Texas Medicaid for services, (3) Consolidate Traditional, Comprehensive Care Program and Home Health Agency therapy polici es into one policy, (4) Require a primary care or treating physician to initiate a signed order or referral prior to an initial therapy evaluation. The initial evaluation may require prior authorization and the signed order or referral must be dated prio r to the evaluation, (5) Require a primary care or treating physician to order the therapy services based on the outcomes of the evaluation, (6) Clarify medical necessity for therapy services to ensure prior authorization staff who are reviewing requests are using guidelines based on the nationally recognized standards of care, (7) Require licensed Medicaid enrolled therapists to document and support decisions for continued therapy based on professional assessment of a client's progress relative to their individual treatment plan and in concert with the client's primary care physician and the individual and/or family, (8) Ensure appropriate duration of services by aligning authorization periods with national standards, (9) Streamline prior authorization processes, and (10) Implement policies that ensure services are provided in the most cost

- efficient and medically appropriate setting, and implementation of other medical or billing policy changes.
d. HHSC shall develop a plan to allocate the reductions required by Subsection (a) of this rider by taking actions such as those suggested under Subsection (b) and (c) of this rider to the budgets of the health and human services agencies as listed in Chapter 531, Government Code. The plan shall include reduct ion amounts by strategy and fiscal year and shall be submitted in writing before December 1, 2015 to the Legislative Budget Board, the Governor, and the Comptroller of Public Accounts.
51. Improve Efficiencies in Benefit Applications. Out of funds appropriated above, in order to improve efficiencies, the Health and Human Services Commission shall promote online submissions of applications for benefits administered by the agency. HHSC shall develop standards and technical requirements to allow organi zations to electronically submit applications. It is the intent of the Legislature that HHSC only expend funds or utilize agency resources to partner with entities whose role in submitting benefit applications has been statutorily established, or with enti ties that provide in

- person assistance using the agency's website for clients.
52. Dental and Orthodontia Providers in the Texas Medicaid Program. It is the intent of the Legislature that the Health and Human Services Commission (HHSC) use funds appropriated above in Strategy G.1.1, Office of Inspector General, to strengthen the capacity of the HHSC Inspector General to detect, investigate, and prosecute abuse by dentists and orthodontists who participate in the Texas Medicaid program. Further, it is the intent of the Legislature that HHSC conduct more extensive reviews of medical necessity for orthodontia services in the Medicaid program.

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