Overall Vote Recommendation

Yes

Principle Criteria

Free Enterprise

Property Rights

Personal Responsibility

Limited Government

Individual Liberty

Digest

HB 1612 establishes a legal framework allowing Texas patients who are not enrolled in a health benefit plan to directly pay hospitals for healthcare services, bypassing traditional insurance arrangements. Specifically, it adds Section 311.006 to the Texas Health and Safety Code, which requires licensed hospitals (excluding ambulatory surgical centers) to accept direct full payment from non-enrolled patients upon their request. This request must be made within 60 days of receiving a bill or final accounting from the hospital.

The bill defines key terms such as “enrollee,” “health benefit plan,” and “healthcare service,” and specifies the range of entities considered health benefit plans—including private insurers, health maintenance organizations, and state-run coverage programs. However, the direct pay provision only applies to patients who are not enrolled in such plans. Importantly, the bill sets pricing caps for hospitals when accepting direct payments: charges must not exceed either (1) 25% more than the amount generally billed by the hospital, as defined by IRS guidelines for nonprofit hospitals, or (2) 50% more than the hospital’s lowest contracted commercial rate, excluding government programs like Medicaid, CHIP, and Medicare.

Overall, this bill seeks to expand patient choice and pricing transparency in healthcare transactions. It provides an option for uninsured individuals or those opting out of insurance to directly engage in simplified payment arrangements with hospitals, while putting modest guardrails in place to prevent excessive billing.

The Committee Substitute introduces notable changes to the originally filed bill, primarily focused on expanding hospital pricing flexibility while still allowing uninsured patients to pay directly for services. Both versions establish a framework that permits patients who are not enrolled in a health benefit plan to pay hospitals directly, bypassing third-party insurance. However, the two versions differ significantly in how they regulate the maximum amount a hospital may charge for such direct payment arrangements.

In the originally filed version, the bill imposed a single pricing cap: hospitals could not charge more than 25% above the lowest contracted rate they accept from any private insurer or commercial plan (excluding government programs like Medicaid, CHIP, and Medicare). This structure was intended to prevent hospitals from inflating prices for uninsured patients compared to what insurers pay, promoting fairness and cost protection for consumers.

The Committee Substitute, however, added an alternative pricing option that increases flexibility for hospitals. Under the new version, hospitals may instead choose to charge up to 25% more than their “generally billed” amount, as defined by IRS regulations used for nonprofit hospitals. Alternatively, they may still use the original benchmark—up to 50% more than the lowest contracted commercial rate. This dual-pricing structure gives hospitals greater discretion and may allow them to receive higher reimbursements from direct-paying patients under certain circumstances.

Overall, the substitute version preserves the patient’s right to direct pay but softens the regulatory guardrails originally intended to keep pricing in line with insurer-negotiated rates. This reflects a policy shift toward balancing patient affordability with hospital financial sustainability.

Author (1)

James Frank

Sponsor (1)

Lois Kolkhorst

Co-Sponsor (1)

Cesar Blanco

Contact the Author

Rep. James Frank

Capitol Phone:

(512) 463-0534

Capitol Office:

CAP 1N.9

E-Mail:

[email protected]

Visit Official Website

Fiscal Notes

The Legislative Budget Board (LBB) indicates that HB 1612 is not expected to have a significant fiscal impact on the state. The analysis assumes that any administrative costs necessary to implement the bill—such as updating hospital billing systems or clarifying payment procedures—can be absorbed by relevant agencies using existing resources.

Additionally, the fiscal note concludes that there would be no financial impact on local governments. Since the bill primarily affects the transactional relationship between individual patients and hospitals, and does not mandate any new programs, benefits, or infrastructure for state or local agencies, it does not require appropriations or result in new costs for governmental units.

The analysis included input from a range of state agencies, such as the Health and Human Services Commission, Department of Insurance, Teacher Retirement System, and public university systems, all of which confirmed that their operations would not be materially affected. In summary, while the bill may shift healthcare billing practices, particularly by expanding the option of direct patient payments, it does so in a manner that avoids significant fiscal consequences for the state or its subdivisions.

Vote Recommendation Notes

HB 1612 addresses a longstanding concern in healthcare billing: the significant pricing disparities hospitals may impose on uninsured patients compared to insured ones. The bill creates a legal framework allowing uninsured patients to request and make direct payments to hospitals, while also establishing clear pricing caps to protect these patients from arbitrary or excessively high charges. The legislative intent, as noted in the bill analysis, is to address inconsistencies in hospital billing practices and to offer a more equitable system for individuals without health insurance.

The committee substitute improves upon the originally filed version by offering hospitals greater flexibility in pricing, while maintaining important consumer protections. Rather than a strict cap of 25% above the lowest contracted commercial rate (as in the introduced version), the substitute allows hospitals to use one of two benchmarks: up to 25% above their "generally billed" amount (per IRS guidelines), or up to 50% above the lowest contracted rate from a commercial payer. This compromise better balances the goals of protecting patients from predatory pricing while acknowledging hospitals' varying cost structures and reimbursement needs.

There are no anticipated significant fiscal implications for the state or local governments, and no additional rulemaking authority is required to implement the legislation. Furthermore, the bill does not create any criminal offenses or regulatory burdens, supporting the principle of limited government. From a policy standpoint, HB 1612 advances individual liberty by empowering patients to control their healthcare transactions and promotes transparency in healthcare pricing. Texas Policy Research recommends that lawmakers vote YES on HB 1612.

The bill strengthens individual liberty by giving patients who are not enrolled in a health benefit plan the legal right to directly pay hospitals for services. This empowers individuals to make autonomous healthcare decisions without being dependent on or restricted by third-party insurance networks. It ensures that Texans who choose to remain uninsured, self-pay, or use alternative health cost-sharing arrangements can still access hospital services under transparent and predictable terms.
By creating a pathway for direct payment, the bill encourages patients to take ownership of their healthcare costs and budgeting. Patients can opt out of often complex and opaque insurance billing cycles and instead engage directly with providers. This promotes a culture of personal responsibility, where individuals are more aware of and accountable for the cost of care they receive.
HB 1612 supports market-driven principles by fostering more open and competitive pricing in the hospital sector. While the bill places certain limits on how much hospitals can charge uninsured patients, it avoids price-fixing and instead uses market-referenced benchmarks (e.g., “generally billed” amounts or contracted commercial rates). This maintains room for competition while curbing price discrimination against uninsured consumers. It also encourages hospitals to innovate and adapt their pricing structures to attract direct-paying customers.
The bill respects private property rights by allowing hospitals to continue setting their own prices within reasonable constraints. It does not mandate service delivery or impose rigid pricing formulas; instead, it balances patient protections with institutional discretion. Hospitals remain free to manage their operations and enter into voluntary payment arrangements, preserving the integrity of private enterprise.
HB 1612 exemplifies limited government by avoiding the creation of new agencies, bureaucracies, or expansive mandates. It imposes minimal regulatory burden and does not require rulemaking authority for implementation. Instead, it sets straightforward statutory boundaries that promote fairness without expanding the role of the state in healthcare decision-making.

View Bill Text and Status