HB 5183

relating to contracts with managed care organizations, including
the procurement of managed care contracts, under Medicaid and the
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  Subchapter E, Chapter 540, Government Code, is
amended by adding Sections 540.02041, 540.02042, and
540.02043533.0038 to read as follows:
Sec. 540.02041.  DURATION OF CONTRACTS.  (a)  Contracts the
commission signs with managed care organizations do not have a set
(b)  A contract the commission signs with a managed care
organization shall not be terminated except through the process
described in Sec. 540.02042(h) and (i) or upon the request of the
Sec. 540.02042.  PERFORMANCE MEASURES.  (a)  The programs to
which this section applies include STAR, STAR Kids, STAR + Plus, and
(b)  The commission shall adopt and publish clear and
comprehensive measures by which the quality and performance of
managed care organizations will be measured.
(c)  In adopting the measures under Subsection (a), the
(1)  cost efficiency, quality of care, experience of
care, and member and provider satisfaction;
(2)  the size and quality of a managed care
organization's provider network; and
(3)  past experience of the managed care organization
in providing similar services in this or other states.
(d)  The measures shall include:
(1)  outcome-based performance measures described by
(2)  the most recent results from the Agency for
Healthcare Research and Quality's Consumer Assessment of
Healthcare Providers and Systems (CAHPS) Health Plan Survey; and
(3)  Healthcare Effectiveness Data and Information Set
(e)  The commission may adopt measures only after a public
hearing and comment process that considers proposed measures.
(f)  A managed care organization is responsible for
providing the commission with data necessary for the commission to
determine whether the applicant has met the qualifying criteria.
(1)  monthly evaluate a managed care organization
performance and quality by region; and
(2)  post on its Internet website the results of the
monthly evaluations conducted under this section in a format that
is readily accessible to and understandable by a member of the
(h)  If a managed care organization that has contracted with
the commission under this section fails to comply with the terms of
its contract and the commission determines the managed care
organization has not made substantial efforts to mitigate or remedy
the noncompliance, or if its results on the measurements described
in subsection (b) are in the bottom quartile of all plans operating
in the state in the same program, or if their results on the
measurements described in subsection (b) are the lowest in the
region, the commissioner shall pursue the following remedies in
addition to any remedies available to the commission under the
(1)  require submission of and compliance with a
(2)  seek recovery of actual damages or liquidated
damages specified in the contract;
(3)  suspend default enrollment of recipients to the
managed care organization in one or more regions; and
(i)  If the commission has taken remedies described in
(h)(1), (h)(2), and (h)(3), and the plan has not shown significant
improvement over 18 months, then the commission shall take the
Sec. 540.02043.  LIMITS ON MANAGED CARE ORGANIZATIONS.  (a)
The commission shall limit the number of managed care organizations
operating in each Medicaid program in each region.
(b) In each Medicaid program, the commission may limit the
number of regions in which a managed care organization may operate.
SECTION 3.  Section 62.002, Health and Safety Code, is
amended by adding Subsection (5) to read as follows:
(5)  "Region" means a service area delineated by the
SECTION 4.  Section 62.155, Health and Safety Code, is
amended by amending Subsection (a) and adding Subsections (e) and
(a)  Following the termination of a health plan provider's
contract in a region, the commission may select a health plan
provider to operate in that region [The commission shall select the
health plan providers] under the program 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
(e)  The commission shall limit the number of health plan
providers operating under the program in each region of the state.
(f)  The commission may limit the number of regions in which
a health plan provider may operate under the program.
(g)  Contracts the commission signs with health plan
providers do not have a set term length.
(h)  A contract the commission signs with a managed care
organization shall not be terminated except through the process
described in Sec. 540.02042(h) and (i) or upon the request of the
SECTION 5.  Section 540.0204, Government Code, is amended to
Sec. 540.0204.  CONTRACT CONSIDERATIONS RELATING TO MANAGED
CARE ORGANIZATIONS.  Following the termination of a managed care
organization's contract, [I]in awarding a contract[s] to a managed
care organization[s] in that region, the commission shall:
(1)  give preference to an organization that has significant
participation in the organization's provider network from each
health care provider in the region who has traditionally provided
care to Medicaid and charity care patients;
(2)  give extra consideration to an organization that agrees
to assure continuity of care for at least three months beyond a
recipient's Medicaid eligibility period;
(3)  consider the need to use different managed care plans to
meet the needs of different populations; and
(4)  consider the ability of an organization to process
Medicaid claims electronically.
SECTION 6.  (a) The Health and Human Services Commission
shall enter into contracts with the managed care organizations that
had contracts in effect as of January 1, 2025 for the STAR, CHIP,
and STAR Kids programs.  These contracts shall be subject to
Sections 540.0204, 540.02041, and 540.02042 of the Government Code
and Section 62.155 of the Health and Safety Code.  The commission
shall cancel all procurements for the STAR, CHIP, or STAR Kids
programs that were pending as of January 1, 2025.
(b)  As specified in the notice of intent to award, the
commission shall enter into contracts with managed care
organizations that are awardees designated in the notice of intent
to award of any pending procurements.  These contracts shall be
subject to Sections 540.0204, 540.02041, and 540.02042 of the
Government Code and Section 62.155 of the Health and Safety Code.
(c)  By January 1, 2030, the Health and Human Services
Commission shall have entered into contracts with the managed care
organizations for the Star + Plus program that had contracts in
effect as of January 1, 2029 for the Star + Plus program.  These
contracts shall be subject to Sections 540.0204, 540.02041, and
540.02042 of the Government Code and Section 62.155 of the Health
(d)  A Medicaid recipient or child health plan program
participant enrolled in a managed care plan with a contract
described by Subsection (a) shall continue enrollment in the
managed care plan until the recipient or participant chooses to be
enrolled in a different managed care plan, is no longer eligible for
services, or is enrolled in a plan subject to contract termination
in the region in which the recipient or participant resides.
SECTION 7.  This Act takes effect September 1, 2025.