Hinojosa Medicaid Bill Scraps Bidding, Some Contracts Wait Until 2030

The text as introduced · 3,321 words

89R3600 SCF-D

By: Hinojosa of Hidalgo, et al.
S.B. No. 2388

A BILL TO BE ENTITLED

AN ACT

relating to managed care contracts, including the procurement of

managed care contracts, under Medicaid and the child health plan

program.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subtitle I, Title 4, Government Code, is amended

by adding Chapter 527 to read as follows:

CHAPTER 527. MANAGED CARE CLIENT CHOICE PROGRAM

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 527.0001. DEFINITIONS. In this chapter:

(1) "Client" means a recipient or an enrollee, as

appropriate.

(2) Notwithstanding Section 521.0001(2), "commission"

means the Health and Human Services Commission or an agency

operating part of the Medicaid managed care program or the child

health plan program, as appropriate.

(3) "Contracted managed care organization" means a

managed care organization that contracts with the commission to

provide health care services to clients under Medicaid or the child

health care program, as appropriate.

(4) "Enrollee" means a child enrolled in the child

health plan program.

(5) "Health care service region" or "region" means a

managed care service area under Medicaid or the child health plan

program, as delineated by the commission.

(6) "Managed care contract" means a contract entered

into by the commission and a managed care organization under which

the organization agrees to provide comprehensive health care

services to clients under a managed care program.

(7) "Managed care organization" means a person that is

authorized or otherwise permitted by law to arrange for or provide a

managed care plan.

(8) "Managed care plan" means a plan under which a

person undertakes to provide, arrange for, pay for, or reimburse

any part of the cost of any health care service. A part of the plan

must consist of arranging for or providing health care services as

distinguished from indemnification against the cost of those

services on a prepaid basis through insurance or otherwise. The

term includes a primary care case management provider network. The

term does not include a plan that indemnifies a person for the cost

of health care services through insurance.

(9) "Managed care program" means a managed care

program under Medicaid or the child health plan program, including

the:

(A) STAR Medicaid managed care program;

(B) STAR+PLUS Medicaid managed care program;

(C) STAR Kids managed care program established

under Subchapter R, Chapter 540; and

(D) STAR Health program.

(10) "Recipient" means a Medicaid recipient.

Sec. 527.0002. APPLICABILITY OF CHAPTER. This chapter

applies only to a managed care contract, including the procurement

of a managed care contract, under Medicaid and the child health plan

program.

Sec. 527.0003. APPLICABILITY OF OTHER LAW; CONFLICT. (a)

The requirements of this chapter are in addition to the applicable

requirements of Chapter 540, including Subchapter F of that

chapter, Chapters 540A and 2155 of this code, Chapter 62, Health and

Safety Code, Chapter 32, Human Resources Code, and other law

relating to managed care contracts and the procurement of those

contracts under Medicaid and the child health plan program.

(b) If a requirement of this chapter conflicts with a

requirement of other law relating to managed care contracts under

Medicaid or the child health plan program, as applicable, the

stricter requirement prevails.

Sec. 527.0004. MANAGED CARE CLIENT CHOICE PROGRAM. (a) In

accordance with the requirements of this chapter, the commission

shall implement a managed care client choice program under which

the commission shall contract with managed care organizations to

provide health care services to clients under Medicaid or the child

health plan program, as applicable, in a manner that emphasizes

strong client choice among multiple managed care plans in all

health care service regions of this state.

(b) In implementing this chapter, the commission shall

ensure that each client, including a client residing in a rural

region, has a sufficient number of contracted managed care

organizations providing services in the region from which to

choose.

SUBCHAPTER B. CONTRACT PROCUREMENT

Sec. 527.0051. ANNUAL REQUEST FOR APPLICATIONS. The

commission shall annually issue a request for applications for each

health care service region to solicit multiple managed care

organizations to contract with the commission to provide health

care services to clients under a managed care program in the region.

Sec. 527.0052. CONTRACT ELIGIBILITY REQUIREMENTS. A

managed care organization is eligible to be awarded a managed care

contract only if the commission has:

(1) certified the organization is reasonably able to

fill the contract terms under Section 527.0053; and

(2) made a written determination that the

organization:

(A) is financially solvent based on the

commission's review of and satisfactory assurances made by the

organization; and

(B) meets the performance and quality standards

established under Section 527.0054.

Sec. 527.0053. CERTIFICATION BY COMMISSION. (a) Before

the commission may award a managed care contract to a managed care

organization, the commission shall evaluate and certify that the

organization is reasonably able to fulfill the contract terms,

including all applicable federal and state law requirements.

(b) Notwithstanding any other law, the commission may not

award a managed care contract to an organization that does not

receive the certification required under this section.

(c) A managed care organization may appeal the commission's

denial of certification by the commission under this section.

(d) After a managed care organization is certified by the

commission to provide health care services in a health care service

region, the organization is not required to obtain a separate

certification to be awarded another contract to provide health care

services in the same region.

Sec. 527.0054. PERFORMANCE AND QUALITY STANDARDS. (a) The

commission shall:

(1) subject to Subsection (b), adopt performance and

quality standards each managed care organization must meet to be

awarded a managed care contract; and

(2) evaluate each managed care organization that

submits an application in response to a request for applications

under Section 527.0051 to verify that the organization meets the

standards adopted under Subdivision (1).

(b) Performance and quality standards adopted by the

commission under this section must be designed to evaluate and

assess:

(1) if applicable, a managed care organization's past

performance under Medicaid and the child health plan program, based

on reviews conducted under Section 527.0103, and the organization's

experience in a given Medicaid or child health plan program market

or health care service region;

(2) the quality-of-care provided by the organization;

(3) the organization's cost-efficiency;

(4) the results of customer satisfaction surveys

completed by clients who have received health care services under a

managed care plan offered by the organization; and

(5) the results of satisfaction surveys completed by

providers participating in the provider network under the

organization's managed care plan.

Sec. 527.0055. REQUIRED CONTRACT AWARDS. If a managed care

organization submits a complete application in response to a

request for applications under Section 527.0051 and the

organization meets the requirements of Section 527.0052, the

commission shall award a contract to the organization to provide

health care services to clients under the managed care program in

the health care service region for which the application was

submitted, provided the contract substantially complies with the

terms contained in the written solicitation for the contract and

applicable state and federal law.

Sec. 527.0056. CONTRACT AWARDS NOT LIMITED. The commission

may not limit the number of managed care organizations awarded a

managed care contract in a health care service region of this state.

SUBCHAPTER C. CONTRACT ADMINISTRATION

Sec. 527.0101. INITIAL CONTRACT READINESS REVIEW. (a) The

commission shall review each managed care organization awarded a

managed care contract to determine whether the organization is

prepared to meet the organization's contractual obligations.

(b) A managed care organization may not begin providing

health care services under a managed care contract and the

commission may not issue a payment to the organization under the

contract until the commission conducts the review required under

this section and other applicable state or federal law.

Sec. 527.0102. MINIMUM CRITERIA FOR EVALUATING MANAGED CARE

CONTRACT PERFORMANCE. (a) The executive commissioner by rule

shall adopt criteria for measuring the performance of a contracted

managed care organization. The criteria must include:

(1) the same performance measures developed by the

commission under Section 540.0504(3);

(2) the same quality-of-care and cost-efficiency

benchmarks developed under Section 543A.0052(b);

(3) if applicable, the results of the organization's

performance under the most recent quality care and consumer

satisfaction measures included in the Consumer Assessment of

Healthcare Providers and Systems survey required under federal law;

and

(4) not more than six additional criteria for

measuring a managed care organization's performance, as determined

by the commission.

(b) A managed care organization shall provide to the

commission all data and information necessary for the commission to

measure the organization's performance under this section.

Sec. 527.0103. CONTRACT PERFORMANCE EVALUATION: ANNUAL

REVIEW. (a) Using the minimum criteria developed under Section

527.0102, the commission shall annually conduct a review to

evaluate each managed care organization's performance in the health

care service region in which the organization provides health care

services to clients.

(b) The commission shall post on the commission's Internet

website the results of each managed care organization's annual

evaluation conducted under this section in a format that is easily

accessible to and understandable by the public.

Sec. 527.0104. DURATION OF CONTRACT. An initial managed

care contract entered into in accordance with this chapter between

the commission and a managed care organization in a health care

service region may have an initial term of six years with an option

to annually extend the contract based on the organization's

performance under the preceding annual performance review

conducted under Section 527.0103.

Sec. 527.0105. EFFECT OF NONCOMPLIANCE. If the executive

commissioner determines a contracted managed care organization has

failed to comply with this chapter or other applicable law or a

material requirement of the organization's contract with the

commission, the commission may:

(1) pursue any remedy available under the contract,

including recovery of actual or liquidated damages;

(2) require the organization to submit to the

commission and comply with a corrective action plan approved by the

commission;

(3) suspend the organization's enrollment of clients

in one or more regions where the organization provides health care

services under a managed care program; or

(4) under the terms of the contract, terminate the

organization's contract.

Sec. 527.0106. RULES. The executive commissioner shall

adopt rules necessary to implement this chapter.

SECTION 2. The heading to Section 540.0206, Government

Code, as effective April 1, 2025, is amended to read as follows:

Sec. 540.0206. MANAGED CARE ORGANIZATIONS: CERTIFICATE OF

AUTHORITY REQUIRED [ MANDATORY CONTRACTS ].

SECTION 3. Section 540.0206(a), Government Code, as

effective April 1, 2025, is amended to read as follows:

[ (a) ] The [ Subject to the certification required under

Section 540.0203 and the considerations required under Section

540.0204, in providing health care services through Medicaid

managed care to recipients in a health care service region, the ]

commission shall contract with [ a ] managed care organizations in

accordance with Chapter 527. A managed care organization , other

than a state administered primary care case management network, in

a health care service [ that ] region must hold [ that holds ] a

certificate of authority issued under Chapter 843, Insurance Code,

to provide health care in that region [ and that is:

[ (1) wholly owned and operated by a hospital district

in that region;

[ (2) created by a nonprofit corporation that:

[ (A) has a contract, agreement, or other

arrangement with a hospital district in that region or with a

municipality in that region that owns a hospital licensed under

Chapter 241, Health and Safety Code, and has an obligation to

provide health care to indigent patients; and

[ (B) under the contract, agreement, or other

arrangement, assumes the obligation to provide health care to

indigent patients and leases, manages, or operates a hospital

facility the hospital district or municipality owns; or

[ (3) created by a nonprofit corporation that has a

contract, agreement, or other arrangement with a hospital district

in that region under which the nonprofit corporation acts as an

agent of the district and assumes the district's obligation to

arrange for services under the Medicaid expansion for children as

authorized by Chapter 444 (S.B. 10), Acts of the 74th Legislature,

Regular Session, 1995 ].

SECTION 4. Section 540.0502, Government Code, as effective

April 1, 2025, is amended to read as follows:

Sec. 540.0502. AUTOMATIC ENROLLMENT IN MEDICAID MANAGED

CARE PLAN. (a) The [ If the ] commission shall [ determines that it

is feasible and notwithstanding any other law, the commission may ]

implement an automatic enrollment process under which an applicant

determined eligible for Medicaid is automatically enrolled in a

Medicaid managed care plan the applicant chooses.

(b) The commission shall ensure recipients are allowed to

change the managed care plan in which the recipient enrolls as

frequently as is permitted under federal law. A Medicaid managed

care organization may not prohibit, limit, or interfere with a

recipient's selection of a managed care plan [ may elect to

implement the automatic enrollment process for certain recipient

populations ].

SECTION 5. Section 540A.0101(b), Government Code, as

effective April 1, 2025, is amended to read as follows:

(b) The commission may temporarily waive the applicability

of Subsection (a) to a Medicaid managed care organization as

necessary based on the results of a review conducted under Sections

527.0103 [ 540.0207 ] and 540.0209 and until enrollment of recipients

in a Medicaid managed care plan offered by the organization is

permitted under that section.

SECTION 6. Section 540A.0151(d), Government Code, as

effective April 1, 2025, is amended to read as follows:

(d) The commission may waive the applicability of

Subsection (a) to a Medicaid managed care organization for not more

than three months as necessary based on the results of a review

conducted under Sections 527.0103 [ 540.0207 ] and 540.0209 and until

enrollment of recipients in a Medicaid managed care plan offered by

the organization is permitted under that section.

SECTION 7. Section 543A.0052(d), Government Code, as

effective April 1, 2025, is amended to read as follows:

(d) In awarding contracts to managed care organizations

under the child health plan program and Medicaid, the commission

shall, in addition to considerations under Chapter 527 [ Section

540.0204 ] of this code and Section 62.155, Health and Safety Code,

give preference to an organization that offers a managed care plan

that:

(1) successfully implements quality initiatives under

Subsection (a) as the commission determines based on data or other

evidence the organization provides; or

(2) meets quality-of-care and cost-efficiency

benchmarks under Subsection (b).

SECTION 8. Section 62.055(f), Health and Safety Code, is

amended to read as follows:

(f) The commission shall:

(1) procure all contracts with a third party

administrator through a competitive procurement process in

compliance with all applicable federal and state laws or

regulations; and

(2) ensure that all contracts with child health plan

providers under Section 62.155 are procured through a [ competitive ]

procurement process in accordance with this chapter, Chapter 527,

Government Code, and other [ compliance with all ] applicable federal

and state laws or regulations.

SECTION 9. Subchapter C, Chapter 62, Health and Safety

Code, is amended by adding Section 62.1041 to read as follows:

Sec. 62.1041. AUTOMATIC ENROLLMENT WITH HEALTH PLAN

PROVIDER. (a) The commission shall implement an automatic

enrollment process under which an applicant determined eligible for

the child health plan is automatically enrolled with a child health

plan provider the applicant chooses.

(b) The commission shall ensure enrollees under the child

health plan are allowed to change the managed care plan in which

enrolled as frequently as is permitted under federal law. A health

plan provider may not prohibit, limit, or interfere with an

enrollee's choice of health plan providers.

SECTION 10. Section 62.155(a), Health and Safety Code, is

amended to read as follows:

(a) The commission shall contract with [ select the ] health

plan providers under the program in accordance with Chapter 527,

Government Code [ through a competitive procurement process ]. A

health plan provider, other than a state administered primary care

case management network, must hold a certificate of authority or

other appropriate license issued by the Texas Department of

Insurance that authorizes the health plan provider to provide the

type of child health plan offered and must satisfy, except as

provided by this chapter, any applicable requirement of the

Insurance Code or another insurance law of this state.

SECTION 11. The following provisions are repealed:

(1) Sections 540.0203, 540.0204, and 540.0207,

Government Code, as effective April 1, 2025;

(2) Sections 540.0206(b), (c), (d), and (e),

Government Code, as effective April 1, 2025;

(3) Sections 62.155(c) and (d), Health and Safety

Code; and

(4) Section 32.049(a), Human Resources Code.

SECTION 12. The Health and Human Services Commission shall

conduct public hearings for purposes of determining the six

additional criteria required under Section 527.0102(a)(4),

Government Code, as added by this Act, for measuring the

performance of managed care organizations described by that

section.

SECTION 13. (a) In this section:

(1) "Child health plan program" and "Medicaid" have

the meanings assigned by Section 521.0001, Government Code.

(2) "Client," "health care service region," "managed

care contract," "managed care organization," and "managed care

program" have the meanings assigned by Section 527.0001, Government

Code, as added by this Act.

(b) Subject to this section, the changes in law made by this

Act apply only to a managed care contract entered into on or after

the effective date of this Act. A contract entered into before the

effective date of this Act is governed by the law as it existed

immediately before the effective date of this Act, and that law is

continued in effect for that purpose.

(c) The procurement of a managed care contract that was

initiated before the effective date of this Act and that is pending

on the effective date of this Act is terminated on that date.

(d) As soon as practicable after the effective date of this

Act, the Health and Human Services Commission shall seek to extend

the effective date of termination of a managed care contract in

effect on the effective date of this Act until the date a managed

care organization is authorized to provide health care services to

clients under the managed care program in the health care service

region under a contract entered into in accordance with Subsection

(e) of this section.

(e) The Health and Human Services Commission shall issue a

request for applications to enter into a managed care contract with

the commission procured in accordance with Chapter 527, Government

Code, as added by this Act, and other applicable law as follows:

(1) subject to Subsection (f) of this section, a

contract to provide health care services to clients under the STAR

Medicaid managed care program, the STAR Kids Medicaid managed care

program established under Subchapter R, Chapter 540, Government

Code, and the child health plan program, must have an anticipated

operational start date on or after September 1, 2027; or

(2) a contract to provide health care services to

clients under the STAR Health program or the STAR+PLUS Medicaid

managed care program must have an anticipated operational start

date on or after September 1, 2030.

(f) The commission shall issue a request for applications

under Subsection (e)(1) of this section as soon as practicable

after the effective date of this Act, but not later than September

1, 2026.

SECTION 14. If before implementing any provision of this

Act a state agency determines that a waiver or authorization from a

federal agency is necessary for implementation of that provision,

the agency affected by the provision shall request the waiver or

authorization and may delay implementing that provision until the

waiver or authorization is granted.

SECTION 15. This Act takes effect immediately if it

receives a vote of two-thirds of all the members elected to each

house, as provided by Section 39, Article III, Texas Constitution.

If this Act does not receive the vote necessary for immediate

effect, this Act takes effect September 1, 2025.