SB 289

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;
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
SUBCHAPTER A.  GENERAL PROVISIONS
Sec. 532A.0001.  DEFINITIONS.  Notwithstanding Section
(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
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
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
Sec. 532A.0005.  RULES.  The executive commissioner shall
adopt rules necessary to implement this chapter.
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
(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
(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
(b)  A sliding scale subsidy provided to an individual under
(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
(d)  An individual receiving a subsidy under this section is
(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
(1)  pay health benefit plan premiums and cost-sharing
(2)  if appropriate, purchase health care-related
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
(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
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
(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
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
(1)  another provision of state law, the provision of
(2)  a provision of federal law or any authorization
described under Subchapter B, the federal law or authorization
(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
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
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
(A)  leveraging premium tax revenues; and
(B)  achieving cost savings through offsets to
general revenue health care costs or the implementation of other
(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
(3)  require the commission to achieve efficiency and
reduce unnecessary utilization, including duplication, of health
(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:
(2)  contingent on continued funding by the federal
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:
(2)  has a household income at or below 133 percent of
(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
(2)  provide enrollees with access to health benefits,
including benefits provided through a managed care delivery model,
(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
(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
(7)  encourage the utilization of health care services
in the most appropriate low-cost settings; and
(8)  establish health savings accounts for enrollees,
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
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
SECTION 3.02.  Subchapter B, Chapter 32, Human Resources
Code, is amended by adding Sections 32.0501, 32.0642, and 32.078 to
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
(2)  takes into consideration the child's household
(b)  Failure to pay a fee under this section may not affect a
child's eligibility for benefits under the medical assistance
(c)  The executive commissioner shall adopt rules necessary
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
(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
(2)  "Medicaid program" and "state Medicaid program"
have the meanings assigned by Section 532A.0001, Government Code,
(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
(c)  The task force consists of 12 members appointed as
(1)  one member appointed by the governor;
(2)  two members of the senate appointed by the
(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
(10)  the director of the Legislative Budget Board or
(d)  The lieutenant governor and the speaker of the house of
representatives shall each appoint a member of the task force to act
(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
(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
SECTION 5.02.  This Act takes effect September 1, 2025.