Relating to contracts with managed care organizations, including the procurement of managed care contracts, under Medicaid and the child health plan program.
HB 5185 would change how Texas contracts with managed care organizations (MCOs) under Medicaid and the Children’s Health Insurance Program (CHIP). The bill removes fixed contract terms for MCO and health plan provider contracts and instead allows contracts to continue without a set expiration date, while limiting termination to a defined performance-based process or at the contractor’s request. It also requires the Health and Human Services Commission (the commission) to adopt and publish clear performance measures for STAR, STAR Kids, STAR+Plus, and CHIP, using factors such as cost efficiency, quality of care, member and provider satisfaction, provider network strength, prior experience, CAHPS survey results, and HEDIS data.
The bill further directs the commission to evaluate MCO performance monthly by region and post the results publicly. If a plan performs poorly, the commission must use escalating remedies in order: corrective action plan, damages, suspension of default enrollment, and then termination if there is no significant improvement after 18 months. HB 5185 also requires the commission to limit the number of MCOs and health plan providers operating in each region, and it allows the commission to limit how many regions a plan may serve. In CHIP procurement, the bill changes the process so the commission may select providers through competitive procurement after a termination, rather than being required to do so in all cases, and it adds licensing and insurance-law compliance requirements for providers.
The bill would amend provisions in the Government Code and Health and Safety Code governing Medicaid managed care and CHIP procurement, and it would define “region” as a service area designated by the commission. It also revises contract-consideration rules to emphasize provider network participation, continuity of care, population-specific plan needs, and electronic claims processing. The effective date is September 1, 2025.
Overall, the bill appears aimed at tightening oversight of managed care contractors, improving transparency, and giving the state more leverage to manage underperforming plans. The available context shows no recorded votes or committee testimony, so there is no documented floor or committee sentiment in the provided materials. Based on the bill’s structure, the policy direction is generally pro-accountability and pro-competition management, with an emphasis on performance standards and public reporting.
The main points of potential contention are the bill’s stronger state control over MCO participation and contract duration, including limits on the number of plans in each region and the possibility of termination after performance failures. Managed care organizations may view the open-ended contracts, monthly evaluations, and mandatory remedy sequence as burdensome or uncertain, while supporters would likely argue these provisions protect enrollees, improve care quality, and reduce poor performance. Another possible issue is the commission’s expanded discretion in procurement and regional limits, which could affect market participation and network availability.
HB 5185 would substantially revise Texas Medicaid and CHIP managed care procurement rules by replacing fixed-term contracts with open-ended contracts subject to performance-based termination, requiring detailed performance standards and monthly public reporting, and authorizing the commission to limit the number of participating plans and the regions they may serve. It would amend the Government Code and Health and Safety Code provisions governing managed care organizations and CHIP health plan providers, and it would affect HHSC, MCOs, CHIP providers, Medicaid recipients, and network providers.
No committee transcript or vote record is provided, so there is no direct evidence of support or opposition from the legislative process in the materials supplied. The bill’s text suggests a policy preference for stronger oversight, transparency, and accountability in managed care contracting, which would likely be viewed favorably by those concerned about plan performance and consumer protection. At the same time, the bill’s tighter controls and termination framework could draw concern from managed care organizations and providers affected by procurement limits and increased compliance obligations.
The most notable contention points are likely to be the bill’s restrictions on contract duration, its mandatory performance-based termination process, and its requirement that the commission limit the number of plans operating in each region. Managed care organizations may object to the added regulatory burden, public performance reporting, and the risk of losing enrollment or contracts based on regional rankings. Supporters, by contrast, would likely emphasize that the bill creates clearer standards, improves accountability, and protects Medicaid and CHIP enrollees by pushing underperforming plans to improve or exit the market.