Revision 23-1, Effective Nov. 13, 2023

8.1 Internal Controls

Revision 23-1, Effective Nov. 13, 2023

The term internal controls refers to a process implemented and designed to provide reasonable assurance that the necessary objectives under the following categories will be achieved:

  • effectiveness and efficiency of operations;
  • reliability of reporting for internal and external use; and
  • compliance with applicable laws and regulations.

The service provider must:

  • Establish and maintain effective internal control that provides reasonable assurance that the federal funds awarded under the contract are being managed in compliance with federal statutes, regulations, and the terms and conditions of the award.
  • Comply with federal statutes, state laws, ILS Standards for Providers, regulations, and the terms and conditions of the awards.
  • Evaluate and monitor compliance with statutes, regulations, and the terms and conditions of awards.
  • Take prompt action when instances of noncompliance are discovered, including when identified in audit findings.

The service provider must establish internal controls to promote employee awareness of the nature of workplace fraud. The controls may include employee training programs and policies that ensure careful oversight when purchasing goods and services for the Independent Living Services Program.

8.2 Confidentiality of Information

Revision 23-1, Effective Nov. 13, 2023

The service provider adopts and implements written policies and procedures to safeguard confidential personal information, including photographs and lists of names.

These policies and procedures comply with 45 Code of Federal Regulations and assure that:

  • specific safeguards protect current and stored personal information;
  • all people applying for independent living services and, as appropriate, their representatives and other designated parties, are informed and the conditions for gaining access to and releasing this information; and
  • all people and their representatives are informed about the service provider’s need to collect personal information, and the policies governing its use.

8.2.1 Data Encryption

Revision 23-1, Effective Nov. 13, 2023

HHSC policy and federal law mandates all emails containing personal or agency confidential information must be sent under encryption. Contractors must send confidential information securely when emailing information to HHSC employees or to any other person.

HHSC requires FIPS 140-2 level of encryption. If a contractor does not have this level of data encryption, the provider shall ask HHSC staff to send an encrypted email related to the person to the contractor's email address and this email can be used to send encrypted information back to HHSC if the directions are followed accurately.

8.3 Records

Revision 23-1, Effective Nov. 13, 2023

Upon request, the contractor must make available to HHSC any documents, papers, and records that are directly pertinent to the goods or services being provided through this program.

Examples include, but are not limited to:

  • invoices;
  • service authorizations;
  • service reports;
  • company financials;
  • insurance certificates;
  • staff information sheets;
  • any documentation required under the entity’s contract; and
  • the HHSC Standard Procurement Terms and Conditions, or Independent Living Services Standards.

8.3.1 Record Storage

Revision 23-1, Effective Nov. 13, 2023

When original records are electronic and cannot be altered, there is no need to create and retain paper copies. When original records are paper, electronic versions may be created using duplication or other forms of electronic media, if they are subject to periodic quality control reviews, provide reasonable safeguards against alteration and remain readable. However, the original paper record including invoices and medical records, must be maintained. If records are maintained on company or personal server(s) or computer(s), these records must be protected in a secure manner.

8.3.2 Record Retention

Revision 23-1, Effective Nov. 13, 2023

All records must be maintained in a paper format for seven years from the date of submission of the final bill or until all billing-related questions are resolved, whichever is later. Local servers and personal computers may be used to complete records and to store copies of records. All local servers or personal computers must maintain a level of security that ensures records are maintained in a safe and confidential manner, as defined in the HHS Information Security and Privacy Initial Inquiry (SPI).

In addition to the requirements above, the service provider complies with the information and security and confidentiality requirements in the contract uniform terms and conditions.

8.4 Staff Qualifications

Revision 23-1, Effective Nov. 13, 2023

8.4.1 General Independent Living Services Staff Requirements

Revision 23-1, Effective Nov. 13, 2023

The service provider organizational and personnel assignment practices, as documented in written board policy, must comply with Section 503 of the Act, including taking affirmative action to employ and promote qualified people with significant disabilities.

A service provider must also document that the majority of its staff members, including members in decision-making positions, are people with disabilities.

8.4.1.1 Staff Qualifications

Revision 23-1, Effective Nov. 13, 2023

The service provider staff members must include specialists in developing and providing independent living services and in developing and supporting a service provider. To the greatest extent possible, staff should be available who can communicate:

  • with people with significant disabilities who rely on alternative modes of communication, such as manual communication, nonverbal communication devices, braille, or audiotapes;
  • with people who apply for or receive independent living services under Title VII of the Act; and
  • in the native languages of people with significant disabilities whose English proficiency is limited and who apply for or receive independent living services under Title VII of the Act.

8.4.1.2 Staff Training and Development

Revision 23-1, Effective Nov. 13, 2023

The service provider must establish and maintain a program of staff development for those involved in providing independent living services. Staff development programs should emphasize improving the skills of staff members directly responsible for providing independent living services, including knowledge and practice of the independent living philosophy and person-centered planning and services. The service provider must provide training to its staff on how to serve unserved and underserved populations, including minority groups, urban populations, rural populations, and underserved disabilities such as significant visual impairment and deaf-blindness, as evidenced by in-service training records.

8.4.1.3 Contractors Standards of Conduct

Revision 23-1, Effective Nov. 13, 2023

Service providers must maintain and implement written standards of conduct for staff members.

8.4.1.4 Professionalism

Revision 23-1, Effective Nov. 13, 2023

Service providers are expected to always perform contractual services in a professional manner including:

  • interaction with people and HHSC staff in a professional manner;
  • wearing appropriate, often business casual, attire when providing services;
  • maintaining the confidentiality of all information in full compliance with state and federal regulations and per sound professional practices;
  • obtaining a confidentiality release for anyone attending the meeting with the person who is not their legal guardian;
  • accepting liability for the actions or contract performance of all people, sub-contractors, and other personnel who may be working for the contractor; and
  • not performing acts which are or could be perceived as being inappropriate behavior with any person or the person’s family member, including, but not limited to:
    • abuse of any person or person’s family member;
    • negative impacts to the health, safety, or welfare of any person or their family member;
    • relationships with a person or HHSC staff that would impair the contractor's objectivity in performing their duties or that would endanger confidentiality;
    • allowing the presence of any third party when meeting with the person at their home or business unless that third party is an attendant to the contractor; or
    • contacting the liaison for verification of confidentiality releases when other parties are present.

8.4.1.5 Conflict of Interest

Revision 23-1, Effective Nov. 13, 2023

Service providers and potential contractors may not offer, give, or agree to give HHSC staff anything of value. This includes, but is not limited to, prepared foods, gift baskets, promotional items, gift cards or meals. If a violation occurs, corrective action may be required, up to and including contract termination or disqualification from receiving a future contract.

8.4.2 Qualifications for Staff Members Who Provide Services to People with Significant Disabilities

Revision 23-1, Effective Nov. 13, 2023

Staff members managing independent living services cases, determining eligibility, writing ILPs and providing or coordinating services for people who have a significant disability, must have a bachelor’s degree in an appropriate field. This qualification also requires a minimum of one year of experience in rehabilitation services or two years of experience providing similar independent living services, such as education, human services or counseling, for people who have a significant disability.

The qualifications for subcontractor and vendor staff members are covered in the Appendices for Purchased Services, as referenced under 6.3 Description of Purchased Services.

8.4.3 Qualifications for Staff Members Who Provide Services to People Who are Deafblind

Revision 23-1, Effective Nov. 13, 2023

Staff members must have a bachelor's degree in education or a related field, with a working knowledge of the following:

  • The medical, psychological, social, and independent living issues faced by people who are deafblind, visually impaired or hard of hearing, or otherwise disabled with a dual sensory loss
  • Assessment techniques and tools
  • American Sign Language, augmentative communication, manual communication, and other appropriate communication systems, as well as knowledge of agencies, people, and facilities that serve people who are deafblind with or without other disabilities, or serve the culture and adaptive needs of people who are deafblind

The ability to:

  • adapt teaching methods to the needs of people who are deafblind or multiply disabled and are elderly;
  • help people to adapt or modify common items in the home to make the items accessible; 
  • assess, formulate, organize, and implement an individualized program of instruction with people; 
  • teach people to read and write all aspects of uncontracted braille;
  • communicate using American Sign Language, including tactile sign language;
  • teach assistive technology, as required for the person’s access to independent living skills; and
  • deliver, install, and set up adaptive aids or devices.

8.4.4 Qualifications for Staff Members Who Provide Orientation and Mobility (O&M) Services

Revision 23-1, Effective Nov. 13, 2023

Staff members must to meet one of the following requirements:

  • The service provider is certified by either the Academy for Certification of Vision Rehabilitation and Education Professionals (ACVREP) or the National Blindness Professional Certification Board (NBPCB).
  • The service provider is not certified at the start of employment, but he or she:
    • has a degree in O&M from an accredited college or university with an established O&M training curriculum and will be certified within one year of the contract date by ACVREP or NBPCB; or
    • has at least two years of full-time work experience teaching O&M skills for a recognized entity, such as a rehabilitation center, Veterans Affairs Hospital, or educational system; and:
      • has three professional references indicating the person's ability to teach O&M skills to blind or visually impaired people; and
      • will be certified within one year of the hire date by ACVREP or NBPCB.

8.4.5 Qualifications for Staff Members Who Provide Diabetes Education or Self-Management Skills Training

Revision 23-1, Effective Nov. 13, 2023

Staff members must be health professionals who meet all the following requirements:

  • Be licensed or registered, as required by the staff members profession
  • Have completed the basic academic requirements for his or her field
  • Have practiced for at least one year
  • Have one year of diabetes education experience

A diabetes educator must be a registered nurse (RN), registered dietician (RD), or certified diabetes educator (CDE). For RNs and RDs, the educator must keep a copy of the employee’s active license on file. For a CDE, the educator keeps a copy of the service provider’s current certification from the National Certification Board for Diabetes Education or the American Association of Diabetes Educators on file.

Through academic preparation, continuing education, or on-the-job training, the employee develops:

  • a knowledge and understanding of diabetes and its management, including the nutritional and pharmaceutical aspects of care;
  • a knowledge and understanding of basic educational and behavioral science;
  • a knowledge of the evidence-based nutritional, pharmaceutical, and therapeutic care needed for a person with diabetes; and
  • the additional skills necessary to work in a thorough and efficient manner, such as planning, organizing, communicating, cooperating, delegating, and working without direct supervision.

A CDE, RN, or RD must have at least one year of paid experience providing diabetes education. RNs and RDs must have completed 15 hours of continuing education units (CEUs) on diabetes from an accredited agency within the 12 months immediately preceding employment. A CDE must have completed 10 hours of CEUs on diabetes from an accredited agency within the 12 months immediately preceding employment.

The CEUs must be from an agency approved by the individual's licensing or certifying body. 

8.5 Accessibility

Revision 23-1, Effective Nov. 13, 2023

All services purchased by the service provider for people must be provided in an accessible manner.

Each service provider subject to the Independent Living Services Standards for Providers will provide the results of a self-evaluation along with a written explanation, if necessary, of how its services will be provided in an accessible manner:

  • before the renewal of the service provider’s contract;
  • before being approved to provide services to people for the first time or at a new address; or 
  • at the request of HHSC.

A self-evaluation instrument is available on the ADA Checklist for Existing Facilities page of the New England ADA Center’s website.

If HHSC receives a complaint about the accessibility of the services of a particular service provider, HHSC investigates to determine if a violation of contract terms has taken place.

The Architectural and Transportation Barriers Compliance Board has issued ADA Accessibility Guidelines (ADAAG), which must be applied during the design, construction, and alteration of buildings and facilities covered by titles II and III of the Americans with Disabilities Act (ADA). These guidelines have been adopted by the U.S. Department of Justice as Appendix A to its ADA Title III rules.

The guidelines are published on the ADA Standards page of the United States Access Board’s website.

Call 800-514-0301 for voice, 202-514-0381 or 800-514-0383 for TTY, to get a copy of the ADAAG or other information from the U.S. Department of Justice. Contact the Architectural and Transportation Barriers Compliance Board at 800-USA-ABLE for technical questions.

In addition, the Texas Department of Licensing and Regulation administers the state Architectural Barriers Act, Article 9102, Texas Civil Statutes. The Texas Accessibility Standards (TAS) are based on the ADAAG standards and apply to buildings and facilities constructed on or after April 1, 1994.

The TAS are published on the Architectural Barriers Texas Accessibility Standards page of the Texas Department of Licensing and Regulation’s website.

Copies of TAS can be purchased from the:

Office of the Secretary of State Texas Register Division
PO Box 13824
Austin, Texas 78711-3824
512-463-5561
512-463-5569 (Fax)
800-735-2989 (TDD)

8.6 Financial Management System

Revision 23-1, Effective Nov. 13, 2023

The financial management system of the service provider must provide the following:

  • Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. Federal award Catalog of Federal Domestic Assistance numbers will be provided as invoices are received and reimbursements are made.
  • Accurate, current, and complete disclosure of the financial results of each federal award or program, per  the reporting requirements set forth under 45 CFR Part 75.341-75.350.
  • Records that identify adequately the source and application of funds for federally funded activities and contain information about federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest, and are supported by source documentation.
  • Effective control over, and accountability for, all funds, property and other assets.
  • Comparison of expenditures with budget amounts for each federal award.
  • Written procedures to implement the requirements of 45 CFR Part 75.305.
  • Written procedures for determining the allowability of costs, per 45 CFR, Part 75, Subpart E—Cost Principles, and the terms and conditions of the federal award.

The service provider must maintain an accounting system and records where separate records are maintained for each funding source provided by HHSC and other funding sources. A cost center objective must be set up for the Independent Living Services (ILS) Program contract separate from other HHSC grants or contracts.

The service provider must be able to account for ILS Program costs applicable to consumers served per the rules in the 1 TAC, Part 15, Chapter 392, Subchapter J, Independent Living Services, and with the Independent Living Services Standards.

The methods used to account for these costs, as documented, recorded and tracked, include:

  • identifying the eligible people served and recording the services provided from intake to closure;
  • setting up separate account codes for budget categories applicable to costs for the services provided and other non-purchased service costs
  • establishing a system for employees to record the time or resources spent and the costs for salaries, wages and fringe benefits, based on records that accurately reflect the work performed;
  • recording and allocating all expenses applicable to program activities by budget category;
  • reporting separate expenses by funding sources on invoices that bill for ILS Program costs; and
  • entering information in the Independent Living Services Data Reporting System, as required.

8.6.1 Request for Payment

Revision 23-1, Effective Nov. 13, 2023

Service providers can request payment as a cost reimbursement contract or an advance payment contract.  

  • Cost Reimbursement – Service providers classified as cost reimbursement are reimbursed for allowable incurred costs. Monthly expenses will be reported using the HHSC ILS Request for Advancement or Reimbursement (RAR). The HHSC ILS RAR  must be submitted by the 10th day of the month following the month the expenses were incurred or paid. Service providers classified as cost reimbursement contracts are not eligible to receive advance payments.
  • Advance Payment – Service providers classified as advance payment may request advance payments. Advance payment for operating funds for no more than 90 days in advance may be requested each quarter. If advanced funds are not expended during the quarter of the request, they must be adjusted on the next request. Advance requests will be made using the RAR. The RAR must be submitted when requesting an advance. Service providers classified as advance payment must submit the RAR by the 5th day of each month, even if the service provider would not be owed money for that month. For both cost reimbursement and advance payment service providers, Form 3008, Cost Share Collections/Refund Report must be submitted with the RAR.   

If the service provider does not meet the requirements of the contract, HHSC may:

  • adjust payments;
  • reimburse based on actual costs already incurred;
  • require additional supporting documentation to make payments; and
  • take other action as appropriate.

8.6.2 Cost Allocation

Revision 23-1, Effective Nov. 13, 2023

The service provider is reimbursed for allowable budgeted expenses incurred and is paid for providing services that are consistent with the terms of the contract.

Title 2 Code of Federal Regulations (CFR), Subtitle A, Chapter II, Part 200, Subpart E Cost Principles, part of the Uniform Guidance, provides guidance for allowability of contract award costs. All costs are billed and reimbursed based on the approved cost allocation plan, during the contract application or updated after the award.

For facilities and administration (F&A) costs, the service provider can charge a de minimis rate of 10 percent of modified total direct costs (MTDC) or use a federally or state approved indirect cost rate. The service provider must submit a copy of the federally or state approved indirect cost rate to the HHSC provider mailbox to allow that rate. Any indirect cost rate in the budget workbook should be included on the approved cost allocation plan.

Service providers may submit a cost allocation plan for approval of a set rate or de minimis rate either to the Texas HHSC Federal Funds Office Landing Page or to the U.S. Health and Human Services Program Support Center

All service providers must maintain up-to-date cost allocation methodologies, which detail how all types of administrative costs benefitting more than one program will be allocated equitably.

8.6.3 Program Income

Revision 23-1, Effective Nov. 13, 2023

Program income is gross income earned and directly generated by a supported activity of the contract award. Program income will supplement the funds awarded by HHSC and be expended for purchased services during the fiscal year it is earned. Program income funds will be applied to purchases before HHSC funds are expended. Program income not expended in the fiscal year it  is earned shall be refunded to HHSC or deducted from future payments.

When a person participates in the purchase of goods or services, as required by the Independent Living Services Standards, such as purchasing complex rehabilitation technology, the service provider is must record the funds received from the people as program income applicable to the Independent Living Services Program.

The service provider must ensure that it has sufficient controls for:

  • billing people for their share of financial participation;
  • receiving the funds from the person; 
  • depositing the monies with other funds;
  • properly recording the monies in Independent Living Services Program accounts; and
  • reporting on the program income, through cost share reports and quarterly financial reports 

The service provider must ensure that program income is spent during the current fiscal year to provide the independent living services outlined in Chapter 6 and the appendices. 

Records must include:

  • the sources of the program income;
  • cost share reports;
  • the amount of the program income received; and
  • the quarterly financial reports, consistent with accounting records.

8.7 Records Management

Revision 23-1, Effective Nov. 13, 2023

The service provider must establish records management policies and procedures that ensure compliance with the HHSC contract and applicable recordkeeping requirements under 45 CFR Part 75.361-75.370, including applicable safeguards for confidential information.

The service provider’s records must fully disclose and document:

  • the amount and disposition of grant funds;
  • the cost of the project for which grant funding is given or used;
  • the amount of project cost funding supplied by other sources, to include comparable services or benefits, insurance, and individual financial participation; and
  • compliance with the requirements of 29 U.S.C. 796c(m)(4) and 45 CFR part 75, for maintenance and management of records.

The service provider’s recordkeeping system must contain data concerning the grant program's funds, including the information necessary to receive payment.

Other program records requirements are covered under the service delivery process.

8.8 Veterans Services

Revision 23-1, Effective Nov. 13, 2023

The service provider must include the following statement created by HHSC, based on Texas Senate Bill 1677, 85th Legislature, Regular Session, 2019, in the application process: 

Men and women who serve or have ever served in any branch of the United States Armed Forces, including Army, Navy, Marines, Air Force, Coast Guard, Reserves or National Guard may be eligible for additional services. Visit www.tvc.texas.gov, the Texas Veterans Portal or call TexVets at 800-252-8387 for more information.

8.9 Physical Locations

Revision 23-1, Effective Nov. 13, 2023

All service providers must maintain a physical location for serving people, whether that be through owning, leasing, or using dedicated space. HHSC must be notified within one business day when moving to a new location, adding another location, or emergency closures of the current location.

8.9.1 Occupation Permit or Building Permit

Revision 23-1, Effective Nov. 13, 2023

Environmental safety must comply with local building occupancy codes. Providers must provide documentation of compliance to HHSC at application and to the liaison whenever the physical location changes. Renters should contact their landlords to obtain such documentation.

8.9.2 Fire Safety

Revision 23-1, Effective Nov. 13, 2023

Each provider must:

  • comply with the local fire code to gain a fire inspection report, or gain an inspection by the fire marshal with local jurisdiction; and
  • provide a copy of the appropriate certificate of compliance at application and to the HHSC liaison when updated.

Providers who rent must contact their landlords for appropriate documentation.

Most fire departments conduct inspections but need advance notice to schedule an inspection. If the contractor's local fire department does not conduct inspections, the contractor may request an inspection from the:

Texas Department of Insurance
State Fire Marshal's Inspection Services Division
333 Guadalupe, Austin, Texas 78701
Phone: 512-305-7900

In each physical location where services are provided, the provider must have:

  • working smoke detectors;
  • visible (flashing) and audible fire warning signals;
  • fire extinguishers that are "in date" with annual inspections placed in accessible locations; and
  • identified accessible fire escape routes free and clear of obstructions.

Each entity must have a policy that requires all fires to be reported to the HHSC liaison within one workday.

8.9.3 General Building Safety

Revision 23-1, Effective Nov. 13, 2023

Aisles and work safety zones must be accessible.

Hazardous or flammable materials must be appropriately identified, used and stored in a safe manner. These materials should be stored in a secured metal cabinet.

Machinery with moving parts must be equipped with appropriate protective guarding and instructions for safety.

8.9.4 Safety Plan

Revision 23-1, Effective Nov. 13, 2023

Each provider must have a safety plan for each physical location that ensures the safety and health of the staff, the people and the visiting public. The plan must include:

  • quarterly fire drills;
  • emergency evacuation procedures;
  • emergency exit diagrams;
  • procedures for obtaining emergency medical services from a doctor, hospital or emergency medical service unit; and
  • special procedures for people with disabilities who require particular attention or action, including those whose behavior may be detrimental to the health, safety, or require help from others to successfully engage in services.

Each provider must have an incident reporting system in place. A form for staff reporting of incidents must be developed.

The minimum information required on the incident report form must include:

  • date, time and place of the incident;
  • nature of the incident;
  • names of HHSC people, witnesses or others involved;
  • name of the person making the report;
  • description of the incident; and
  • actions taken and planned by the provider as a result of the incident.

Upon request, copies of incident reports pertinent to the ILS program must be made available to HHSC staff members.

The following incidents must be reported to the referring HHSC liaison and program manager by close of business the next workday:

  • emergency evacuations;
  • emergency medical services (EMS);
  • emergency room treatment;
  • hospitalization; or
  • death.

8.10 HHSC Provider Mailbox

Revision 23-1, Effective Nov. 13, 2023

Direct email communications with HHSC to the ILS service provider mailbox. Service providers may copy specific HHSC staff when emailing the ILS service provider mailbox. The ILS service provider mailbox is checked multiple times per day and emails are forwarded to the appropriate HHSC staff.