Relating to the regulation of certain nursing facilities, including licensing requirements and Medicaid participation and reimbursement requirements.
SB 457 makes several changes to Texas law governing nursing facilities that participate in Medicaid. It requires the Health and Human Services Commission to keep Medicaid reimbursement flowing to a nursing facility during a pending change-of-ownership application, so long as the new owner accepts the prior provider agreement, meets licensing and other legal requirements, and enters into an approved successor-liability agreement. The bill also tightens ownership disclosure rules for nursing facility license applications by requiring identification of persons with at least a 5 percent direct or indirect ownership interest in the facility and related real property, and it requires license holders to report changes to that ownership information.
The bill creates a new annual patient care expense ratio for Medicaid reimbursement of certain nursing facility providers. Under that ratio, at least 80 percent of the portion of Medicaid reimbursement attributable to patient care expenses must be spent on reasonable and necessary patient care expenses, as defined in the bill. HHSC is authorized to recoup reimbursement amounts if a facility fails to meet the ratio, with exceptions for certain higher-performing facilities, lower-occupancy facilities that still meet a 70 percent threshold, and facilities with disaster-related expenses. The bill also requires HHSC to publish a list of facilities from which recoupments are made and to report to the Legislature by November 1, 2027 on the ratio’s effects on cost and quality of care.
SB 457 also amends Medicaid managed care rules for nursing facilities, including STAR+PLUS. It requires prompt payment of clean claims, a claims portal, care coordination and discharge planning efforts, and contract provisions requiring nursing facility provider agreements to comply with the patient care expense ratio. The bill repeals existing provisions in Human Resources Code Section 32.028 and delays implementation of the new patient care expense ratio until September 1, 2025, with contract changes for managed care organizations applying to new or renewed contracts and, where possible, existing contracts.
The overall sentiment around the bill appears generally favorable, as reflected by strong passage in both chambers and final conference committee approval. The Senate passed the bill unanimously, while the House approved it with meaningful but not majority opposition, indicating broad support with some reservations. The conference report also passed the House by a comfortable margin, suggesting the final version resolved enough differences to secure enactment.
The main points of contention appear to center on the new patient care expense ratio, the recoupment authority, and the bill’s impact on nursing facility operations and Medicaid managed care contracts. Facilities may be concerned about how the ratio is calculated, what counts as patient care versus administrative or capital costs, and the possibility of repayment demands for prior liabilities during ownership changes. Managed care organizations and providers may also have concerns about contract compliance, ownership disclosure burdens, and the practical effects of the new reimbursement and reporting requirements.
The bill amends the Government Code, Health and Safety Code, and Human Resources Code to impose new Medicaid reimbursement, ownership disclosure, and licensing-related requirements on nursing facilities. It creates a new statutory framework for patient care expense ratios, authorizes HHSC to recoup Medicaid payments for noncompliance, requires continued reimbursement during ownership transitions under specified conditions, and expands disclosure obligations for facility and real-property ownership interests. It also affects Medicaid managed care contracts, especially STAR+PLUS, by requiring provider agreements to incorporate the new patient care expense ratio and related payment and care-coordination provisions.
The bill’s legislative history suggests broad support with some opposition. It passed the Senate unanimously and ultimately cleared the House after conference committee negotiations, though the House votes on the bill and conference report show a notable minority of nays. That pattern indicates general agreement with the bill’s goals of improving nursing facility accountability and Medicaid spending oversight, while also reflecting concern about the regulatory and financial burden on providers and managed care participants.
The most likely areas of disagreement are the new 80 percent patient care expense ratio, HHSC’s authority to recoup Medicaid reimbursements, and the bill’s treatment of ownership changes and successor liability. Nursing facility operators may object to the definition of patient care expenses, the exclusion of certain administrative and capital costs, and the public posting of recoupment actions. There may also be concern about requiring new owners to assume liabilities tied to prior ownership and about how the bill interacts with existing managed care contracts, especially where contract terms conflict with the new statutory requirements.