BILL ANALYSIS

Senate Research Center	H.B. 2254
	By: Hull (Sparks)
	Health & Human Services
	5/9/2025
	Engrossed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

Primary care physicians, health plans, and employers have expressed an interest in expanding the use of value-based health care delivery models to improve health care quality, while also constraining patient and payer costs. Currently, health maintenance organizations are the only type of health plan in Texas that can partner with physicians to provide risk-based, capitated value-based payments. As a result, employers and employees whose preference is a preferred provider organization or exclusive provider organization cannot benefit from participation in some innovative new models of care. H.B. 2254 seeks to resolve this issue by authorizing a preferred provider benefit plan or exclusive provider benefit plan to enter into voluntary capitated or risk-based arrangements with primary care physicians or primary care physician groups.

H.B. 2254 amends current law relating to certain health care services contract arrangements entered into by insurers and health care providers.

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Subchapter A, Chapter 1301, Insurance Code, by adding Section 1301.0065, as follows:

Sec. 1301.0065. VALUE-BASED AND CAPITATED PAYMENT ARRANGEMENTS WITH PRIMARY CARE PHYSICIANS OR PRIMARY CARE PHYSICIAN GROUPS NOT PROHIBITED. (a) Defines "primary care physician" and "primary care physician group."

(b) Authorizes a preferred provider benefit plan or an exclusive provider benefit plan to provide or arrange for primary health care services with a primary care physician or primary care physician group through a contract for compensation under:

(1) a fee-for-service arrangement;

(2) a risk-sharing arrangement;

(3) a capitation arrangement under which a fixed predetermined payment is made in exchange for the provision of, or for the arrangement to provide and the guaranty of the provision of, a contractually defined set of covered services to covered persons for a specified period without regard to the quantity of services actually provided; or

(4) any combination of arrangements described by Subdivisions (1) through (3).

(c) Provides that a primary care physician or primary care physician group that enters into a contract described by Subsection (b) is not considered to be engaging in the business of insurance.

(d) Provides that a primary care physician or primary care physician group is not required to enter into a payment arrangement under this section, and an insurer is prohibited from discriminating against a physician or physician group that elects not to participate in an arrangement under this section, including by reducing the fee schedule of a physician or physician group because the physician or physician group does not participate in the insurer's value-based or capitated payment arrangement or other payment arrangement provided under this section or by requiring a physician or physician group to participate in the insurer's value-based or capitated payment arrangement or other payment arrangement provided under this section as a condition of participation in the insurer's provider network.

(e) Authorizes a primary care physician or primary care physician group to file a complaint with the Texas Department of Insurance if the physician or physician group believes the physician or physician group has been discriminated against in violation of Subsection (d).

(f) Provides that a contract allowing for a value-based or capitated payment arrangement or other payment arrangement provided under this section is:

(1) prohibited from creating a disincentive to the provision of medically necessary health care services and prohibited from interfering with the physician's independent medical judgment on which services are medically appropriate or medically necessary;

(2) required to specify certain information;

(3) required, if payment involves capitation, to provide for the opportunity to renegotiate in good faith a revised capitation rate, or reimburse on a fee-for-service basis under a contractual fee schedule until a revised capitation rate is agreed to if there is a material increase in the scope of services provided by the physician or a material change by the payer in the benefit structure; and

(4) required to state whether catastrophic events are excluded from the final cost calculation for an attributed population when compared to the cost target for the measurement period, if applicable, and, if payment involves shared savings, whether the entire savings is shared when the minimum savings rate is reached, or whether only the amount in excess of the minimum savings rate is shared.

(g) Provides that this section does not authorize a preferred provider benefit plan or an exclusive provider benefit plan to provide or arrange for health care services with a primary care physician or primary care physician group through a contract for compensation under a global capitation arrangement.

(h) Provides that the parties to a contract under Subsection (b) are the primary care physician or primary care physician group and the preferred provider benefit plan or exclusive provider benefit plan. Prohibits a party to a contract under Subsection (b) from subcontracting.

SECTION 2. Effective date: upon passage or September 1, 2025.