Medicaid Managed Care Procurements
The Texas Health and Human Services Commission uses a transparent, competitive, award-winning procurement process to decide which health plans will receive a contract to serve Medicaid members in the upcoming years, as required by the Texas Legislature. Recent procurement outcomes have sparked a lot of questions and misinformation.
This is everything you need to know about Medicaid Managed Care procurements in Texas.
Procurement Reform
In 2019, following legislative direction via SB 65, and after a series of state audits, the Texas Health and Human Services Commission (HHSC) started the process to reform how it selects health plans to provide services to Texans covered by Medicaid and the Children's Health Insurance Program (CHIP).
HHSC hired two external independent consulting firms to review their procurement processes and provide recommendations to strengthen it. HHSC adopted all recommendations, revamped their procurement process, and even won an award from the National Procurement Institute for their new processes.​​
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The new procurement process was used to procure three contracts to date:​
STAR Health
New contract was procured and began on September 1, 2023.
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STAR+PLUS
New contract was procured and began on September 1, 2024.
STAR and CHIP
HHSC issued a Notice of Intent to Award to thireen health plans in 2024. A court order initiated by plans that did not win the awards they wanted has delayed final contracts and targeted start of operations.
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STAR Kids
Request for proposals were posted on May 10, 2024, and interested health plans submitted a bid. A Travis County judge directed HHSC to pause this procurement due to a lawsuit initiated by plans that did not win awards they wanted in the STAR and CHIP procurement.​​
Resources
The Truth About Managed Care Procurements
Health Plan Quality
Texas Managed Care Procurement Process
Myth vs. Fact
Myth
Texans currently receiving Medicaid services will lose their Medicaid insurance coverage due to the Medicaid managed care procurements.
Fact
Texans currently receiving Medicaid services will not lose their Medicaid insurance coverage due to the Medicaid managed care procurements.
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Medicaid works just like other types of insurance, which means sometimes people may have to change health plans. But unlike other types of insurance, Medicaid health plans have extensive requirements to ensure eligible individuals will maintain coverage regardless of heealth plan contract changes. The only change Texans will see is a new health plan card.
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Procurement is a competitive process that ensures taxpayer accountability, rewards better patient outcomes and fosters innovation to spur the continuous improvement of care in Texas. Procurement is designed to get the most effective care possible.
Myth
Members will receive a lower quality of care and will lose their providers and prior authorizations.
Fact
Members will continue to receive high quality health care and health care services will remain uninterrupted.
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Awarded health plans either already have the same in-network providers as exiting plans or are in the process of negotiating with providers to add them to their network. They will continue to serve all Texans and pay the same providers for the same services.
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90% of every Medicaid dollar will continue going to direct patient care.
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HHSC prioritizes quality in its oversight process and measures health plan performance using many quality and performance measures. Health plans are even held financially accountable for not meeting quality metrics and are not awarded with membership if they perform poorly.
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The state managed care contract requires health plans to collaborate on transitioning enrollees to new health plans, ensuring no disruption of services. For example, prior authorizations from a previous plan must be honored by new plans.
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Members and their families maintain the ability to select a health plan and to change plans at any time.
Myth
Cancelling the new STAR and CHIP contract is a fair business practice.
Fact
Cancelling sets a negative precedent for all industries, running counter to the predictable business climate that has made Texas an economic leader.
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Texas has long championed the importance of a predictable business and regulatory environment, which is one reason Texas is consistently ranked the top state for business.
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Changing a procurement decision because a particular entity did not win sets a dangerous precedent – a fact echoed by the 88th Texas Legislature in protecting the STAR+PLUS awards in 2023.
Myth
This is an new procurement process that doesn't work for Texas.
Fact
HHSC used the same, consistent process for the past three procurements — none were canceled.
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The new STAR Health (foster care) contract has been implemented and the new STAR+PLUS (older Texans and adults with disabilities) contract goes live September 2024 – both serve the state’s most vulnerable populations.
Myth
The procurement was unfair and evaluations did not consider quality.
Fact
The state’s procurement and evaluation process prioritizes quality.
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​STAR and CHIP RFPs require health plans to demonstrate their understanding of program requirements by providing historical data points, quality metrics, and their strategy for meeting requirements. Winning health plans included proof of their quality of care, and the RFP included two questions specific to quality of care.
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The law requires HHSC to outline best value for scoring RFPs. The best value criteria for the STAR/CHIP RFP graded health plans on their quality and their ability to demonstrate the following:
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​Proven strategies to monitor and manage healthcare quality and improve key quality metrics that align with the goals of the State.
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A system of care that identifies, invests in, and rewards desired outcomes for access and high-value care.
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Advances in value-based care and delivery system reform and supports Providers through the transition to value-based payment arrangements with necessary data and information.
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Per state law, all MCOs are required to have a nationally-recognized quality accreditation from either the National Committee for Quality Assurance (NCQA) or the Utilization Review Accreditation Commission (URAC).
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All of the MCOs that were awarded a contract scored highly on their national quality accreditations and demonstrated their current quality performance.
Myth
If a health plan exits a service area, it will take jobs away, and entering plans will not know how to serve those members.
Fact
Health plans entering the market will hire existing seasoned workers familiar with serving this membership.
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Areas of the state with exiting health plans will not see a reduction in jobs and wages — entering health plans need experienced local staff, so they offer positions to staff of exiting plans during every transition.
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Only one wining health plan is new to Medicaid in Texas; all other winning plans have served Texas Medicaid since the beginning of the program.
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The winning health plans CEOs, staff, and offices are all Texas based – they are Texans and they know Texas.
Myth
Most existing health plans were not awarded a contract.
Fact
80% of CURRENT health plans won a STAR and CHIP award, and a well-known plan will now enter Texas Medicaid.
Myth
The 2024 STAR Children Report Card determines the highest performing health plans.
Fact
There are many report cards and quality metrics that demonstrate performance — the STAR Children report card has been cherry picked to argue for cancellation.
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There are several managed care quality programs that encompass an array of metrics to measure health plan performance – learn more here. Different report cards are used depending on population and program served.
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No health plan performs well on all measures and every plan performs well on some measures. Performance also varies from year to year. The 2024 HHSC report cards are just a snap shot from one year and is based on performance from two years ago.
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It is important to recognize that looking at a subset of scorecards out of more than 60 is inherently misleading. In fact, when including all 2024 STAR Report Cards, the majority of service areas actually retain a high-quality plan or a plan with the highest report card rating.
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