Miles ‘Texas Solution’ Medicaid Bill Mostly Waits On Washington

The text as introduced · 3,270 words

89R384 MM-F

By: Miles
S.B. No. 289

A BILL TO BE ENTITLED

AN ACT

relating to a "Texas solution" to reforming and addressing issues

related to the Medicaid program, including the creation of an

alternative program designed to ensure health benefit plan coverage

to certain low-income individuals through the private marketplace;

requiring a fee.

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

ARTICLE 1. BLOCK GRANT FUNDING SYSTEM FOR STATE MEDICAID PROGRAM

SECTION 1.01. Subtitle I, Title 4, Government Code, is

amended by adding Chapter 532A to read as follows:

CHAPTER 532A. BLOCK GRANT FUNDING SYSTEM FOR STATE MEDICAID

PROGRAM

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 532A.0001. DEFINITIONS. Notwithstanding Section

521.0001, in this chapter:

(1) "Health benefit exchange" means an American Health

Benefit Exchange administered by the federal government or an

exchange created under Section 1311(b) of the Patient Protection

and Affordable Care Act (42 U.S.C. Section 18031(b)).

(2) "Medicaid program" means the medical assistance

program established and operated under Title XIX, Social Security

Act (42 U.S.C. Section 1396 et seq.).

(3) "State Medicaid program" means the medical

assistance program provided by this state under the Medicaid

program.

Sec. 532A.0002. FEDERAL AUTHORIZATION TO REFORM MEDICAID

REQUIRED. If the federal government establishes, through

conversion or otherwise, a block grant funding system for the

Medicaid program or otherwise authorizes the state Medicaid program

to operate under a block grant funding system, including under a

Medicaid program waiver, the commission, in cooperation with

applicable health and human services agencies, shall, subject to

Section 532A.0003, administer and operate the state Medicaid

program in accordance with this chapter.

Sec. 532A.0003. CONFLICT WITH OTHER LAW. To the extent of a

conflict between a provision of this chapter and:

(1) another provision of state law, the provision of

this chapter controls, subject to Section 545A.0002(b); and

(2) a provision of federal law or any authorization

described under Section 532A.0002, the federal law or authorization

controls.

Sec. 532A.0004. ESTABLISHMENT OF REFORMED STATE MEDICAID

PROGRAM. The commission shall establish a state Medicaid program

that provides benefits under a risk-based Medicaid managed care

model.

Sec. 532A.0005. RULES. The executive commissioner shall

adopt rules necessary to implement this chapter.

SUBCHAPTER B. ACUTE CARE

Sec. 532A.0051. ELIGIBILITY FOR MEDICAID ACUTE CARE. (a)

An individual is eligible to receive acute care benefits under the

state Medicaid program if the individual:

(1) has a household income at or below 100 percent of

the federal poverty level;

(2) is under 19 years of age and:

(A) is receiving Supplemental Security Income

(SSI) under 42 U.S.C. Section 1381 et seq.; or

(B) is in foster care or resides in another

residential care setting under the conservatorship of the

Department of Family and Protective Services; or

(3) meets the eligibility requirements that were in

effect in this state on August 31, 2025.

(b) The commission shall provide acute care benefits under

the state Medicaid program to each individual eligible under this

section through the most cost-effective means, as determined by the

commission.

(c) If an individual is not eligible for the state Medicaid

program under Subsection (a), the commission shall refer the

individual to the program established under Chapter 545A that helps

connect eligible residents with health benefit plan coverage

through private market solutions, a health benefit exchange, or any

other resource the commission determines appropriate.

Sec. 532A.0052. MEDICAID SLIDING SCALE SUBSIDIES. (a) An

individual who is eligible for the state Medicaid program under

Section 532A.0051 may receive a Medicaid sliding scale subsidy to

purchase a health benefit plan from an authorized health benefit

plan issuer.

(b) A sliding scale subsidy provided to an individual under

this section must:

(1) be based on:

(A) the average premium in the market; and

(B) a realistic assessment of the individual's

ability to pay a portion of the premium; and

(2) include an enhancement for individuals who choose

a high deductible health plan with a health savings account.

(c) The commission shall ensure that counselors are made

available to individuals receiving a subsidy to advise the

individuals on selecting a health benefit plan that meets the

individuals' needs.

(d) An individual receiving a subsidy under this section is

responsible for paying:

(1) any difference between the premium costs

associated with the purchase of a health benefit plan and the amount

of the individual's subsidy under this section; and

(2) any copayments associated with the health benefit

plan, except to the extent the individual receives an additional

subsidy under Section 532A.0053 to pay the copayments.

(e) If the amount of a subsidy received by an individual

under this section exceeds the premium costs associated with the

individual's purchase of a health benefit plan, the individual may

deposit the excess amount in a health savings account that may be

used only in the manner described by Section 532A.0054(b).

Sec. 532A.0053. ADDITIONAL COST-SHARING SUBSIDIES. In

addition to providing a subsidy to an individual under Section

532A.0052, the commission shall provide additional subsidies for

coinsurance payments, copayments, deductibles, and other

cost-sharing requirements associated with the individual's health

benefit plan. The commission shall provide the additional

subsidies on a sliding scale based on income.

Sec. 532A.0054. DELIVERY OF SUBSIDIES; HEALTH SAVINGS

ACCOUNTS. (a) The commission shall determine the most appropriate

manner for delivering and administering subsidies provided under

Sections 532A.0052 and 532A.0053. In determining the most

appropriate manner, the commission shall consider depositing

subsidy amounts for an individual in a health savings account

established for that individual.

(b) A health savings account established under this section

may be used only to:

(1) pay health benefit plan premiums and cost-sharing

amounts; and

(2) if appropriate, purchase health care-related

goods and services.

Sec. 532A.0055. MEDICAID HEALTH BENEFIT PLAN ISSUERS AND

MINIMUM COVERAGE. The commission shall allow any health benefit

plan issuer authorized to write health benefit plans in this state

to participate in the state Medicaid program. The commission in

consultation with the commissioner of insurance shall establish

minimum coverage requirements for a health benefit plan to be

eligible for purchase under the state Medicaid program, subject to

the requirements specified by this chapter.

Sec. 532A.0056. REINSURANCE FOR PARTICIPATING HEALTH

BENEFIT PLAN ISSUERS. (a) The commission in consultation with the

commissioner of insurance shall study a reinsurance program to

reinsure participating health benefit plan issuers.

(b) In examining options for a reinsurance program, the

commission and the commissioner of insurance shall consider a plan

design under which:

(1) a participating health benefit plan is not charged

a premium for the reinsurance; and

(2) the health benefit plan issuer retains risk on a

sliding scale.

SUBCHAPTER C. LONG-TERM SERVICES AND SUPPORTS

Sec. 532A.0101. PLAN TO REFORM DELIVERY OF LONG-TERM

SERVICES AND SUPPORTS. The commission shall develop a

comprehensive plan to reform the delivery of long-term services and

supports that is designed to achieve the following objectives under

the state Medicaid program or any other program created as an

alternative to the state Medicaid program:

(1) encourage consumer direction;

(2) simplify and streamline the provision of services;

(3) provide flexibility to design benefits packages

that meet the needs of individuals receiving long-term services and

supports under the program;

(4) improve the cost-effectiveness and sustainability

of the provision of long-term services and supports;

(5) reduce reliance on institutional settings; and

(6) encourage cost-sharing by family members when

appropriate.

ARTICLE 2. IMMEDIATE REFORM: PROGRAM TO ENSURE HEALTH BENEFIT

COVERAGE FOR CERTAIN INDIVIDUALS THROUGH PRIVATE MARKETPLACE

SECTION 2.01. Subtitle I, Title 4, Government Code, is

amended by adding Chapter 545A to read as follows:

CHAPTER 545A. PROGRAM TO ENSURE HEALTH BENEFIT PLAN COVERAGE FOR

CERTAIN INDIVIDUALS THROUGH PRIVATE MARKET SOLUTIONS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 545A.0001. DEFINITION. In this chapter, "state

Medicaid program" has the meaning assigned by Section 532A.0001.

Sec. 545A.0002. CONFLICT WITH OTHER LAW. (a) Except as

provided by Subsection (b), to the extent of a conflict between a

provision of this chapter and:

(1) another provision of state law, the provision of

this chapter controls; and

(2) a provision of federal law or any authorization

described under Subchapter B, the federal law or authorization

controls.

(b) The program operated under this chapter is in addition

to the state Medicaid program operated under Chapter 32, Human

Resources Code, or under a block grant funding system under Chapter

532A.

Sec. 545A.0003. PROGRAM FOR HEALTH BENEFIT PLAN COVERAGE

THROUGH PRIVATE MARKET SOLUTIONS. Subject to the requirements of

this chapter, the commission in consultation with the commissioner

of insurance shall develop and implement a program that helps

connect certain low-income residents of this state with health

benefit plan coverage through private market solutions.

Sec. 545A.0004. NOT AN ENTITLEMENT. This chapter does not

establish an entitlement to assistance in obtaining health benefit

plan coverage.

Sec. 545A.0005. RULES. The executive commissioner shall

adopt rules necessary to implement this chapter.

SUBCHAPTER B. FEDERAL AUTHORIZATION

Sec. 545A.0051. FEDERAL AUTHORIZATION FOR FLEXIBILITY TO

ESTABLISH PROGRAM. (a) The commission in consultation with the

commissioner of insurance shall negotiate with the United States

secretary of health and human services, the Centers for Medicare

and Medicaid Services, and other appropriate persons for purposes

of seeking a waiver or other authorization necessary to obtain the

flexibility to use federal matching funds to help provide, in

accordance with Subchapter C, health benefit plan coverage to

certain low-income individuals through private market solutions.

(b) Any agreement reached under this section must:

(1) create a program that is made cost neutral to this

state by:

(A) leveraging premium tax revenues; and

(B) achieving cost savings through offsets to

general revenue health care costs or the implementation of other

cost savings mechanisms;

(2) create more efficient health benefit plan coverage

options for eligible individuals through:

(A) program changes that may be made without the

need for additional federal approval; and

(B) program changes that require additional

federal approval;

(3) require the commission to achieve efficiency and

reduce unnecessary utilization, including duplication, of health

care services;

(4) be designed with the goals of:

(A) relieving local tax burdens;

(B) reducing general revenue reliance so as to

make general revenue available for other state priorities; and

(C) minimizing the impact of any federal health

care laws on Texas-based businesses; and

(5) afford this state the opportunity to develop a

state-specific solution with benefits that specifically meet the

unique needs of this state's population.

(c) An agreement reached under this section may be:

(1) limited in duration; and

(2) contingent on continued funding by the federal

government.

SUBCHAPTER C. PROGRAM REQUIREMENTS

Sec. 545A.0101. ENROLLMENT ELIGIBILITY. (a) Subject to

Subsection (b), an individual may be eligible to enroll in a program

designed and established under this chapter if the person:

(1) is younger than 65;

(2) has a household income at or below 133 percent of

the federal poverty level; and

(3) is not otherwise eligible to receive benefits

under the state Medicaid program, including through a program

operated under Chapter 32, Human Resources Code, or under Chapter

532A through a block grant funding system or a waiver, other than a

waiver granted under this chapter, to the program.

(b) The executive commissioner may modify or further define

the eligibility requirements of this section if the commission

determines it necessary to reach an agreement under Subchapter B.

Sec. 545A.0102. MINIMUM PROGRAM REQUIREMENTS. A program

designed and established under this chapter must:

(1) if cost-effective for this state, provide premium

assistance to purchase health benefit plan coverage in the private

market, including health benefit plan coverage offered through a

managed care delivery model;

(2) provide enrollees with access to health benefits,

including benefits provided through a managed care delivery model,

that:

(A) are tailored to the enrollees;

(B) provide levels of coverage that are

customized to meet health care needs of individuals within defined

categories of the enrolled population; and

(C) emphasize personal responsibility and

accountability through flexible and meaningful cost-sharing

requirements and wellness initiatives, including through

incentives for compliance with health, wellness, and treatment

strategies and disincentives for noncompliance;

(3) include pay-for-performance initiatives for

private health benefit plan issuers that participate in the

program;

(4) use technology to maximize the efficiency with

which the commission and any health benefit plan issuer, health

care provider, or managed care organization participating in the

program manage enrollee participation;

(5) allow recipients under the state Medicaid program

to enroll in the program to receive premium assistance as an

alternative to the state Medicaid program;

(6) encourage eligible individuals to enroll in other

private or employer-sponsored health benefit plan coverage, if

available and appropriate;

(7) encourage the utilization of health care services

in the most appropriate low-cost settings; and

(8) establish health savings accounts for enrollees,

as appropriate.

SECTION 2.02. The Health and Human Services Commission in

consultation with the commissioner of insurance and the Medicaid

Reform Task Force established under Article 4 of this Act shall

actively develop a proposal for the authorization from the

appropriate federal entity as required by Subchapter B, Chapter

545A, Government Code, as added by this article. As soon as

possible after the effective date of this Act, the Health and Human

Services Commission shall request and actively pursue obtaining the

authorization from the appropriate federal entity.

ARTICLE 3. MEDICAID: INCREMENTAL REFORM

SECTION 3.01. Subchapter B, Chapter 546, Government Code,

as effective April 1, 2025, is amended by adding Section 546.0059 to

read as follows:

Sec. 546.0059. CUSTOMIZED BENEFITS PACKAGE. The commission

shall, for individuals receiving home and community-based services

and supports instead of institutional long-term services and

supports, develop and implement customized benefits packages that

are designed to prevent the overutilization of services.

Customized benefits packages under this section must be based on an

individualized needs assessment administered at a single point of

entry.

SECTION 3.02. Subchapter B, Chapter 32, Human Resources

Code, is amended by adding Sections 32.0501, 32.0642, and 32.078 to

read as follows:

Sec. 32.0501. DUAL ELIGIBLE INTEGRATED CARE DEMONSTRATION

PROJECT. (a) In this section:

(1) "ICF-IID" has the meaning assigned by Section

531.002, Health and Safety Code.

(2) "Nursing facility" has the meaning assigned by

Section 546.0351, Government Code.

(3) "State supported living center" has the meaning

assigned by Section 531.002, Health and Safety Code.

(b) Subject to Subsection (c), the commission shall

establish a dual eligible integrated care demonstration project

that would allow appropriate individuals described by Section

32.050(a), as determined by the commission, to receive long-term

services and supports under both the medical assistance program and

the Medicare program through a single managed care plan.

(c) An individual who is a resident of a nursing facility,

ICF-IID, or state supported living center is exempt from

participation in the demonstration project.

Sec. 32.0642. PARENTAL FEE PROGRAM. (a) To the extent

allowed by federal law, the commission shall establish a parental

fee program that requires the parent or legal guardian of a child

receiving institutional long-term services and supports or home and

community-based services and supports under the medical assistance

program established under this chapter to pay a fee that:

(1) correlates with the services and supports

provided; and

(2) takes into consideration the child's household

income.

(b) Failure to pay a fee under this section may not affect a

child's eligibility for benefits under the medical assistance

program.

(c) The executive commissioner shall adopt rules necessary

to implement this section.

Sec. 32.078. HOUSING BENEFITS FOR CERTAIN RECIPIENTS. To

the extent allowed by federal law, the commission shall provide

housing payment assistance for recipients receiving home and

community-based services and supports under the medical assistance

program established under this chapter.

SECTION 3.03. (a) The Health and Human Services Commission

shall conduct a study to examine the estate recovery program

implemented by this state under 42 U.S.C. Section 1396p(b)(1) and

determine options the state has to improve recovery under and

increase the efficacy of the program.

(b) Not later than December 1, 2026, the commission shall

submit a written report containing the findings of the study

conducted under this section together with the commission's

recommendations to the governor, the lieutenant governor, and the

standing committees of the senate and house of representatives

having primary jurisdiction over Medicaid.

SECTION 3.04. (a) The Health and Human Services Commission

shall conduct a study on imposing alternative income and asset

limits for purposes of determining eligibility for long-term

services and supports under the medical assistance program under

Chapter 32, Human Resources Code. The commission shall consider:

(1) imposing greater restrictions on exempt assets;

(2) limiting the amount of income that an individual

may transfer into a qualified trust under 42 U.S.C. Section

1396p(d)(4)(B) to an amount equal to the average cost of nursing

home care; and

(3) reducing the income eligibility limit to qualify

for Medicaid institutional long-term services and supports or home

and community-based waiver services under the medical assistance

program under Chapter 32, Human Resources Code.

(b) Not later than December 1, 2026, the commission shall

submit a written report containing the findings of the study

conducted under this section together with the commission's

recommendations to the governor, the lieutenant governor, and the

standing committees of the senate and house of representatives

having primary jurisdiction over Medicaid.

ARTICLE 4. MEDICAID REFORM TASK FORCE

SECTION 4.01. (a) In this section:

(1) "Commission" means the Health and Human Services

Commission.

(2) "Medicaid program" and "state Medicaid program"

have the meanings assigned by Section 532A.0001, Government Code,

as added by this Act.

(3) "Task force" means the Medicaid Reform Task Force

established under this section.

(b) The Medicaid Reform Task Force is established for

purposes of advising the commission in designing a state Medicaid

program and a program for ensuring health benefit plan coverage for

low-income individuals that are:

(1) consistent with Articles 2 and 3 of this Act; and

(2) if the federal government establishes a block

grant funding system in accordance with Section 532A.0002,

Government Code, as added by this Act, consistent with Article 1 of

this Act.

(c) The task force consists of 12 members appointed as

follows:

(1) one member appointed by the governor;

(2) two members of the senate appointed by the

lieutenant governor;

(3) two members of the house of representatives

appointed by the speaker of the house of representatives;

(4) one member of the Senate Committee on Finance,

appointed by the presiding officer;

(5) one member of the House Appropriations Committee,

appointed by the presiding officer;

(6) one member of the Senate Committee on Health and

Human Services, appointed by the presiding officer;

(7) one member of the House Public Health Committee,

appointed by the presiding officer;

(8) the executive commissioner of the commission or

the executive commissioner's designee;

(9) the commissioner of insurance or the

commissioner's designee to represent the Texas Department of

Insurance; and

(10) the director of the Legislative Budget Board or

the director's designee.

(d) The lieutenant governor and the speaker of the house of

representatives shall each appoint a member of the task force to act

as co-presiding officers.

(e) A member of the task force serves without compensation.

(f) Not later than January 1, 2026, the appropriate

appointing officers shall appoint the members of the task force.

(g) Not later than December 1, 2026, the task force shall

submit a report to the legislature regarding its activities under

this section.

(h) This section expires September 1, 2027.

ARTICLE 5. FEDERAL AUTHORIZATION AND EFFECTIVE DATE

SECTION 5.01. Subject to Section 2.02 of this Act, 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 5.02. This Act takes effect September 1, 2025.