Effective April 10, 2011, nursing facilities that undergo Resource Utilization Group (“RUG”) reviews may request that the Health and Human Services Commission Office of Inspector General (“HHSC-OIG”) waive the use of extrapolation in the calculation of Medicaid overpayments. The waiver rule was formally issued in the April 1, 2011, edition of the Texas Register, and will be codified at 1 Texas Administrative Code § 371.216.

HHSC-OIG conducts periodic utilization reviews of nursing facilities’ level of care assessments of Medicaid residents to ensure that payments for Medicaid-covered services are appropriate. In 2008, HHSC converted from the Texas Index for Level of Effort (“TILE”) to the federal RUG classification system and provider payment methodology. One aspect of the RUG methodology allows HHSC-OIG, in calculating overpayments to a facility, to extrapolate error rates for the sample population to the entire population of RUG classification groups found to be in error.