89th Texas Legislative Session: Medicaid Managed Care Procurement and Contracting Recap

In 2024, after successfully re-procuring two previous Medicaid managed care programs using the same process, the Texas Health and Human Services Commission announced intent to award new STAR and CHIP contracts. Health plans that did not win contracts, or did not win as much as they wanted, filed suit against HHSC to delay the state from moving forward with the new contracts. HHSC agreed to abate their appeal of a Travis County Court's decision to restrain HHSC from moving forward with the awarded contracts to allow the Legislature the opportunity to address the law governing Medicaid managed care procurement.

While the losing plans made every attempt to get the legislature to intervene in the contracting process, a move which would have been unprecedented, the 89th Texas Legislature rightfully chose not to cancel or amend the STAR and CHIP Medicaid managed care procurement, and no legislation was passed to change HHSC’s awards or procurement processes.

Budget Riders

Losing health plans pushed budget riders directing the agency to cancel the procurement were also pushed. Budget authors held the position that it was inappropriate to cancel a procurement via the budget, resulting in no cancellation rider being included in the final budget.

Procurement & Contracting Bills

Ten bills were filed by several legislators related to Medicaid managed care procurements and contracts, but not even a single bill received an initial committee hearing. The bills' impacts would have ranged from canceling open procurements and giving children hospital affiliated health plans mandatory contracts to changing HHSC’s successful and award-winning procurement process and/or implementing an application or no-bid procurement model instead of a competitive procurement process.

There were also attempts to add amendments to Medicaid related bills on the House floor to cancel the procurement but none of the attempts were successful. There was a final attempt to influence the STAR and CHIP awards during the last month of session with a push to have the Senate suspend rules and file a last-minute bill to require HHSC to give health plans affiliated with children’s hospitals a mandatory STAR and CHIP contract. Ultimately, the bill was not filed and no bill passed during the 89th Legislative Session.

HB 3538 (Geren, et al) / HB 5184 (Frank) / SB 2331 (Parker and Chuy Hinojosa): Relating to the Managed Care Consumer Choice Program.

These bills would have transitioned Texas’ managed care procurement process to an application, no-bid, or any-willing health plan model rather than a competitive procurement process that is currently required by state law.

HB 5183 (Frank): Relating to contracts with managed care organizations, including the procurement of managed care contracts, under Medicaid and the child health plan program.

HB 5183 was an attempt to implement evergreen contracts along with benchmarks and would have changed how HHSC contracts with health plans today.

HB 5184 (Frank): Relating to contracts with managed care organizations, including the procurement of managed care contracts, under Medicaid and the child health plan program.

This bill included the same language as HB 5183 but did not include any direction to HHSC regarding applicability.

HB 5284 (Gina Hinojosa): Relating to considerations in awarding contracts under the Medicaid managed care program to managed care organizations that are public benefit corporations.

This bill would have required HHSC to give “public benefit corporations” a 5% increase to the bid score. If 2 or more bids receive the same scores the preference is given to the “public benefit corporation”. Texas statute defines a public benefit corporation as a domestic for-profit corporation that is intended to produce a public benefit or benefits and to operate in a responsible and sustainable manner.

SB 2388 (Chuy Hinojosa, Flores, Gutierrez, Adam Hinojosa, Parker, Perry, Zaffirini): Relating to managed care contracts, including the procurement of managed care contracts, under Medicaid and CHIP.

This bill would have implemented an application model or any willing health plan model instead of a competitive procurement process for managed care contracts in Texas. SB 2388 directed HHSC to implement a “managed care client choice program” by which HHSC would annually issue a request for applications.

SB 2547 (Chuy Hinojosa): Relating to imposing a moratorium on the awarding of certain contracts by the Health and Human Services Commission under Medicaid and CHIP.

SB 2547 would have implemented a moratorium on HHSC awarding a STAR and/or CHIP contract until after the Legislature completes HHSC’s Sunset review. HHSC would have been required to either renew contracts or re-procure following Sunset.

SB 2548 (Chuy Hinojosa): Relating to awarding contracts to managed care organizations under Medicaid and the child health plan program.

This bill was an attempt to create mandatory contracts for health plans affiliated with children’s hospitals.

SB 2988 (Perry): Relating to certification by the commission prior to the award of health plan provider contracts under Medicaid managed care.

This bill aimed to strengthen the current certification process that HHSC must conduct before awarding managed care contracts. This bill would have taken effect immediately but did not impact any of the current awards or contracts or open procurements.