An individual is eligible for MH rehabilitative services if:(1) the individual:(A) is a resident of the State of Texas;(B) is an adult with a serious mental illness or a child or adolescent with a serious emotional disturbance (SED); and(C) qualifies for an LOC; and(2) a determination that such services are medically necessary has been made by an LPHA who is:(A) an employee of the department;(B) an employee of an entity designated to make such determinations on behalf of the department; or(C) a contractor of an entity designated to make such determinations on behalf of the department, if the LPHA is not otherwise employed by or contracting with an entity providing MH rehabilitative services through a subcontract.