Short answer: Texas requires a medical necessity determination: the person’s condition must need care beyond what an untrained person can give, with licensed nurse supervision available only in an institution. The nursing facility submits the MDS assessment, and the state’s Medicaid claims administrator approves or denies it.
Under Texas rules, a person meets medical necessity when:
- Their medical condition is serious enough that their needs exceed routine care an untrained person could give, and requires licensed nurses’ supervision, assessment, planning and intervention available only in an institution; and
- They need medical or nursing services that are ordered by a physician, tied to documented conditions, require the skills of a registered nurse or licensed vocational nurse, and are needed on a regular basis.
For a nursing facility resident, the facility completes the federal MDS assessment (an RN signs it), and the state Medicaid claims administrator (TMHP) reviews it. The facility cannot be paid by Medicaid until medical necessity is approved, and it is re-reviewed on the MDS schedule.
This is a separate test from income and assets. A dementia diagnosis or an empty bank account alone does not settle it.