Bill Text: TX SB1443 | 2025-2026 | 89th Legislature | Introduced

---

Bill Title: Relating to the continuation and operation of a health care provider participation district created by certain local governments to administer a health care provider participation program.

Spectrum: Partisan Bill (Republican 2-0)

Status: (Introduced) 2025-02-19 - Filed [SB1443 Detail]

Download: Texas-2025-SB1443-Introduced.html

---

89R2690 SRA-F
By: Hughes, Nichols S.B. No. 1443

A BILL TO BE ENTITLED
AN ACT
relating to the continuation and operation of a health care
provider participation district created by certain local
governments to administer a health care provider participation
program.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle D, Title 4, Health and Safety Code, is
amended by adding Chapter 300C to read as follows:
CHAPTER 300C. HEALTH CARE PROVIDER PARTICIPATION DISTRICTS CREATED
BY CERTAIN LOCAL GOVERNMENTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 300C.0001. PURPOSE. The purpose of this chapter is to
authorize a health care provider participation district created by
certain local governments to administer a health care provider
participation program to provide additional compensation to
certain hospitals in the district by collecting mandatory payments
from each of those hospitals in the district to be used to provide
the nonfederal share of a Medicaid supplemental payment program and
for other purposes as authorized under this chapter.
Sec. 300C.0002. DEFINITIONS. In this chapter:
(1) "Board" means the board of directors of a
district.
(2) "Director" means a member of the board.
(3) "District" means a health care provider
participation district created under Chapter 300A and operating
under this chapter.
(4) "Institutional health care provider" means a
nonpublic hospital that provides inpatient hospital services.
(5) "Local government" means a hospital district,
county, or municipality to which this chapter applies.
(6) "Paying hospital" means an institutional health
care provider required to make a mandatory payment under this
chapter.
(7) "Program" means a health care provider
participation program authorized by this chapter.
Sec. 300C.0003. APPLICABILITY. This chapter applies only
to a local government that jointly created a health care provider
participation district by concurrent order under Chapter 300A and
is:
(1) a county with a population of more than 80,000 and
less than 90,000 that borders the Trinity River;
(2) a county with a population of more than 45,000 and
less than 55,000 that borders Oklahoma; or
(3) a hospital district located in a county that has a
population of more than 30,000 and contains a portion of Jim Chapman
Lake.
SUBCHAPTER B. OPERATION AND DISSOLUTION OF DISTRICT
Sec. 300C.0021. OPERATION. (a) A health care provider
participation district created under Chapter 300A may operate under
and be governed by the provisions of this chapter instead of Chapter
300A if:
(1) each local government that jointly created the
district adopts a concurrent order authorizing the district to
operate under and be governed by the provisions of this chapter; and
(2) the district's board ratifies the concurrent order
adopted by each participating local government.
(b) A concurrent order authorizing a district to operate
under this chapter must:
(1) be approved by the governing body of each
participating local government;
(2) contain provisions that are identical to the
provisions of the concurrent order adopted by each other
participating local government;
(3) affirm that the district's territory is the area
contained within the boundaries of each participating local
government; and
(4) provide that the district begins to operate under
this chapter immediately on the expiration of the district's
authority to administer and operate a program under Chapter 300A.
Sec. 300C.0022. POWERS. (a) A district may authorize and
administer a health care provider participation program in
accordance with this chapter.
(b) Notwithstanding Section 300A.0155, a district that
complies with the provisions of this chapter may administer and
operate a health care provider participation program under this
chapter after its authority to administer and operate a program
under Chapter 300A has expired.
Sec. 300C.0023. BOARD OF DIRECTORS. (a) If three or more
local governments adopt concurrent orders authorizing a health care
provider participation district to operate under this chapter, the
presiding officer of the governing body of each local government
that created the district shall appoint one director.
(b) If two local governments adopt concurrent orders
described by Subsection (a):
(1) the presiding officer of the governing body of the
most populous local government shall appoint two directors; and
(2) the presiding officer of the governing body of the
local government not described by Subdivision (1) shall appoint one
director.
(c) Directors serve staggered two-year terms, with as near
as possible to one-half of the directors' terms expiring each year.
(d) A vacancy in the office of director shall be filled for
the unexpired term in the same manner as the original appointment.
(e) The board shall elect from among its members a president
and a vice president.
(f) The president may vote and may cast an additional vote
to break a tie.
(g) The board shall appoint a secretary, who need not be a
director.
(h) Each officer of the board serves for a term of one year.
(i) The board shall fill a vacancy in a board office for the
unexpired term.
(j) A majority of the members of the board voting must
concur in a matter relating to the business of the district.
Sec. 300C.0024. QUALIFICATIONS FOR OFFICE. (a) To be
eligible to serve as a director, a person must be a resident of the
local government that appoints the person.
(b) An employee of the district may not serve as a director.
Sec. 300C.0025. COMPENSATION. (a) Directors and officers
serve without compensation but may be reimbursed for actual
expenses incurred in the performance of official duties.
(b) Expenses reimbursed under this section must be:
(1) reported in the district's minute book or other
district records; and
(2) approved by the board.
Sec. 300C.0026. AUTHORITY TO SUE AND BE SUED. The board may
sue and be sued on behalf of the district.
Sec. 300C.0027. DISTRICT FINANCES. (a) Except as
otherwise provided by this section, Subchapter F, Chapter 287,
applies to a district in the same manner that the provisions of that
subchapter apply to a health services district created under
Chapter 287.
(b) Sections 287.129 and 287.130 do not apply to a district.
(c) This section does not authorize a district to issue
bonds.
Sec. 300C.0028. DISSOLUTION. A district shall be dissolved
if the local governments that created the district adopt concurrent
orders to dissolve the district and the concurrent orders contain
identical provisions.
Sec. 300C.0029. ADMINISTRATION OF PROPERTY, DEBTS, AND
ASSETS AFTER DISSOLUTION. (a) After dissolution of a district
under Section 300C.0028, the board shall continue to control and
administer any property, debts, and assets of the district until
all of the district's property and assets have been disposed of and
all of the district's debts have been paid or settled.
(b) As soon as practicable after the dissolution of the
district, the board shall transfer to each institutional health
care provider in the district the provider's proportionate share of
any remaining money in any local provider participation fund
created by the district.
(c) If, after administering the district's property and
assets, the board determines that the property and assets are
insufficient to pay the debts of the district, the district shall
transfer the remaining debts to the local governments that created
the district in proportion to the money contributed to the district
by each local government, including a paying hospital in the local
government.
(d) If, after complying with Subsections (b) and (c) and
administering the district's property and assets, the board
determines that unused money remains, the board shall transfer the
unused money to the local governments that created the district in
proportion to the money contributed to the district by each local
government, including a paying hospital in the local government.
Sec. 300C.0030. ACCOUNTING AFTER DISSOLUTION. After the
district has paid or settled all its debts and has disposed of all
its property and assets, including money, as prescribed by Section
300C.0029, the board shall provide an accounting to each local
government that created the district. The accounting must show the
manner in which the property, assets, and debts of the district were
distributed.
SUBCHAPTER C. HEALTH CARE PROVIDER PARTICIPATION PROGRAM; POWERS
AND DUTIES OF DISTRICT BOARD
Sec. 300C.0051. HEALTH CARE PROVIDER PARTICIPATION
PROGRAM. The board of a district may authorize the district to
participate in a health care provider participation program on the
affirmative vote of a majority of the board, subject to the
provisions of this chapter.
Sec. 300C.0052. LIMITATION ON AUTHORITY OF BOARD TO REQUIRE
MANDATORY PAYMENT. (a) The board may require a mandatory payment
authorized under this chapter by an institutional health care
provider in the district only in the manner provided by this
chapter.
(b) The board may not require a mandatory payment under this
chapter during a period for which the board requires a mandatory
payment under Chapter 300A.
Sec. 300C.0053. RULES AND PROCEDURES. The board may adopt
rules relating to the administration of the health care provider
participation program in the district, including collection of the
mandatory payments, expenditures, audits, and any other
administrative aspects of the program.
Sec. 300C.0054. INSTITUTIONAL HEALTH CARE PROVIDER
REPORTING. If the board authorizes the district to participate in a
health care provider participation program under this chapter, the
board shall require each institutional health care provider located
in the district to submit to the district a copy of any financial
and utilization data required by and reported to the Department of
State Health Services under Sections 311.032 and 311.033 and any
rules adopted by the executive commissioner of the Health and Human
Services Commission to implement those sections.
SUBCHAPTER D. GENERAL FINANCIAL PROVISIONS
Sec. 300C.0101. HEARING. (a) In each year that the board
authorizes a health care provider participation program under this
chapter, the board shall hold a public hearing on the amounts of any
mandatory payments that the board intends to require during the
year and how the revenue derived from those payments is to be spent.
(b) Not later than the fifth day before the date of the
hearing required under Subsection (a), the board shall publish
notice of the hearing in a newspaper of general circulation in each
local government that created the district and provide written
notice of the hearing to the chief operating officer of each
institutional health care provider in the district.
(c) A representative of a paying hospital is entitled to
appear at the time and place designated in the public notice and be
heard regarding any matter related to the mandatory payments
authorized under this chapter.
Sec. 300C.0102. LOCAL PROVIDER PARTICIPATION FUND;
DEPOSITORY. (a) The board shall deposit all mandatory payments
received by a district in the local provider participation fund
created by the district under Chapter 300A.
(b) The board may designate one or more banks at which to
locate the local provider participation fund.
(c) The board may withdraw or use money in the district's
local provider participation fund only for a purpose authorized
under this chapter.
(d) All funds collected under this chapter shall be secured
in the manner provided for securing public funds.
Sec. 300C.0103. DEPOSITS TO FUND; AUTHORIZED USES OF MONEY.
(a) The local provider participation fund described by Section
300C.0102 consists of:
(1) all revenue received by the district attributable
to mandatory payments authorized under this chapter;
(2) money received from the Health and Human Services
Commission as a refund of an intergovernmental transfer from the
district to the state for the purpose of providing the nonfederal
share of Medicaid supplemental payment program payments, provided
that the intergovernmental transfer does not receive a federal
matching payment;
(3) money received by the district and deposited to
the fund in accordance with Chapter 300A that remains in the fund on
the date the district begins to operate under this chapter; and
(4) the earnings of the fund.
(b) Money deposited to the local provider participation
fund may be used only to:
(1) fund intergovernmental transfers from the
district to the state to provide the nonfederal share of Medicaid
payments for:
(A) uncompensated care payments to nonpublic
hospitals, if those payments are authorized under the Texas
Healthcare Transformation and Quality Improvement Program waiver
issued under Section 1115 of the federal Social Security Act (42
U.S.C. Section 1315);
(B) uniform rate enhancements for nonpublic
hospitals in the Medicaid managed care service area in which the
district is located;
(C) payments available under another waiver
program authorizing payments that are substantially similar to
Medicaid payments to nonpublic hospitals described by Paragraph (A)
or (B); or
(D) any reimbursement to nonpublic hospitals for
which federal matching funds are available;
(2) subject to Section 300C.0151(d), pay the
administrative expenses of the district in administering the
program, including collateralization of deposits;
(3) refund all or a portion of a mandatory payment
collected in error from a paying hospital, regardless of whether
the payment was collected under this chapter or Chapter 300A;
(4) refund to paying hospitals a proportionate share
of the money that the district:
(A) receives from the Health and Human Services
Commission that is not used to fund the nonfederal share of Medicaid
supplemental payment program payments; or
(B) determines cannot be used to fund the
nonfederal share of Medicaid supplemental payment program
payments;
(5) transfer funds to the Health and Human Services
Commission if the district is required by law to transfer the funds
to address a disallowance of federal matching funds with respect to
payments, rate enhancements, and reimbursements for which the
district made intergovernmental transfers described by Subdivision
(1); and
(6) reimburse the district if the district is required
by the rules governing the uniform rate enhancement program
described by Subdivision (1)(B) to incur an expense or forego
Medicaid reimbursements from the state because the balance of the
local provider participation fund is not sufficient to fund that
rate enhancement program.
(c) Money in the local provider participation fund may not
be commingled with other district money or other money of a local
government that created the district.
(d) Notwithstanding any other provision of this chapter,
with respect to an intergovernmental transfer of funds described by
Subsection (b)(1) made by the district, any funds received by the
state, district, or other entity as a result of the transfer may not
be used by the state, district, or any other entity to expand
Medicaid eligibility under the Patient Protection and Affordable
Care Act (Pub. L. No. 111-148) as amended by the Health Care and
Education Reconciliation Act of 2010 (Pub. L. No. 111-152).
Sec. 300C.0104. ACCOUNTING. The district shall maintain an
accounting of the money received from each local government that
created the district, including a paying hospital located in a
hospital district, county, or municipality that created the
district, as applicable.
SUBCHAPTER E. MANDATORY PAYMENTS
Sec. 300C.0151. MANDATORY PAYMENTS BASED ON PAYING HOSPITAL
NET PATIENT REVENUE. (a) Except as provided by Subsection (e), if
the board authorizes a health care provider participation program
under this chapter, the district shall require an annual mandatory
payment to be assessed on the net patient revenue of each
institutional health care provider located in the district. The
board shall provide that the mandatory payment is to be assessed at
least annually, but not more often than quarterly. In the first
year in which the mandatory payment is required, the mandatory
payment is assessed on the net patient revenue of an institutional
health care provider located in the district as determined by the
data reported to the Department of State Health Services under
Sections 311.032 and 311.033 in the most recent fiscal year for
which that data was reported. If the institutional health care
provider did not report any data under those sections, the
provider's net patient revenue is the amount of that revenue as
contained in the provider's Medicare cost report submitted for the
previous fiscal year or for the closest subsequent fiscal year for
which the provider submitted the Medicare cost report. The
district shall update the amount of the mandatory payment on an
annual basis.
(b) The amount of a mandatory payment authorized under this
chapter must be uniformly proportionate with the amount of net
patient revenue generated by each paying hospital in the district
as permitted under federal law. A health care provider
participation program authorized under this chapter may not hold
harmless any institutional health care provider, as required under
42 U.S.C. Section 1396b(w) and 42 C.F.R. Section 433.68.
(c) The board shall set the amount of a mandatory payment
authorized under this chapter. The aggregate amount of the
mandatory payments required of all paying hospitals in the district
may not exceed six percent of the aggregate net patient revenue from
hospital services provided by all paying hospitals in the district.
(d) Subject to Subsection (c), the board shall set the
mandatory payments in amounts that in the aggregate will generate
sufficient revenue to cover the administrative expenses of the
district for activities under this chapter and to fund an
intergovernmental transfer described by Section 300C.0103(b)(1).
The annual amount of revenue from mandatory payments that shall be
paid for administrative expenses by the district for activities
under this chapter may not exceed $150,000, plus the cost of
collateralization of deposits, regardless of actual expenses.
(e) A paying hospital may not add a mandatory payment
required under this section as a surcharge to a patient.
(f) For purposes of any hospital district that participates
in a district authorized to operate under this chapter, a mandatory
payment assessed under this chapter is not a tax for hospital
purposes for purposes of the applicable provision of Article IX,
Texas Constitution.
Sec. 300C.0152. ASSESSMENT AND COLLECTION OF MANDATORY
PAYMENTS. (a) The district may designate an official of the
district or contract with another person to assess and collect the
mandatory payments authorized under this chapter.
(b) The person charged by the district with the assessment
and collection of mandatory payments shall charge and deduct from
the mandatory payments collected for the district a collection fee
in an amount not to exceed the person's usual and customary charges
for like services.
(c) If the person charged with the assessment and collection
of mandatory payments is an official of the district, any revenue
from a collection fee charged under Subsection (b) shall be
deposited in the district's general fund and, if appropriate, shall
be reported as fees of the district.
Sec. 300C.0153. LIMITATION ON AUTHORITY; CORRECTION OF
INVALID PROVISION OR PROCEDURE. (a) This chapter does not
authorize the district to assess and collect mandatory payments for
the purpose of raising general revenue or any amount in excess of
the amount reasonably necessary to:
(1) fund the nonfederal share of a Medicaid
supplemental payment program or Medicaid managed care rate
enhancements for nonpublic hospitals; and
(2) cover the administrative expenses of the district
associated with activities under this chapter and other uses of the
fund described by Section 300C.0103(b).
(b) The district may assess and collect a mandatory payment
authorized under this chapter only if a waiver program, uniform
rate enhancement, or reimbursement described by Section
300C.0103(b)(1) is available to the district.
(c) To the extent any provision or procedure under this
chapter causes a mandatory payment authorized under this chapter to
be ineligible for federal matching funds, the board may provide by
rule for an alternative provision or procedure that conforms to the
requirements of the federal Centers for Medicare and Medicaid
Services. A rule adopted under this section may not create, impose,
or materially expand the legal or financial liability or
responsibility of the district or an institutional health care
provider in the district beyond the provisions of this chapter.
This section does not require the board to adopt a rule.
Sec. 300C.0154. REPORTING REQUIREMENTS. (a) The board of a
district that authorizes a program under this chapter shall report
information to the Health and Human Services Commission regarding
the program on a schedule determined by the commission.
(b) The information must include:
(1) the amount of the mandatory payments required and
collected in each year the program is authorized;
(2) any expenditure of money attributable to mandatory
payments collected under this chapter, including:
(A) any contract with an entity for the
administration or operation of a program authorized by this
chapter; or
(B) a contract with a person for the assessment
and collection of a mandatory payment as authorized under Section
300C.0152; and
(3) the amount of money attributable to mandatory
payments collected under this chapter that is used for a purpose
other than a purpose described by Subdivisions (1) and (2).
(c) The executive commissioner of the Health and Human
Services Commission shall adopt rules to administer this section.
Sec. 300C.0155. AUTHORITY TO REFUSE FOR VIOLATION. The
Health and Human Services Commission may refuse to accept money
from a local provider participation fund administered under this
chapter if the commission determines that acceptance of the money
may violate federal law.
SECTION 2. A director of a district appointed, or a board
officer elected, under Chapter 300A, Health and Safety Code, may
continue to serve the remainder of the director's or officer's term
in accordance with that chapter after the district begins to
operate under Chapter 300C, Health and Safety Code, as added by this
Act. A director or board officer that serves on the board of
directors of a health care provider participation district created
under Chapter 300A, Health and Safety Code, is eligible for
reappointment or re-election, as applicable, under Chapter 300C,
Health and Safety Code, as added by this Act, unless otherwise
disqualified.
SECTION 3. 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 4. 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.