According to the Legislative Budget Board (LBB), the fiscal implications of HB 2402, are presently indeterminate. The core fiscal issue lies in the bill’s directive to exclude fees, charges, or rates offered through fee-based membership discount programs when calculating Medicaid’s “usual and customary” reimbursement rates. This exclusion has the potential to influence payment rates, especially for services like prescription drugs, where pricing can be heavily affected by these discount models​.

The Health and Human Services Commission (HHSC) notes that removing such discounted rates from reimbursement calculations could lead to higher Medicaid payments. This is particularly true if these discount programs are currently lowering the benchmark against which Medicaid payment ceilings are evaluated. However, because usual and customary rates are determined by individual pharmacies at the point of sale—and rely on proprietary data from coupons and discount programs—the state lacks the transparency needed to quantify these effects. As a result, HHSC and the LBB cannot definitively project whether costs will increase and by how much​.

There are no anticipated significant fiscal effects on local governments. The uncertainty around the scope and frequency of discounted rates being used today makes it difficult to assess how widespread the potential fiscal impact may be across Medicaid services. In essence, while the bill may ultimately lead to higher Medicaid expenditures by eliminating the influence of artificially low rates, the lack of access to relevant market data and pharmacy-level pricing behavior makes any concrete fiscal projection speculative at this time​.

HB 2402 aims to amend Medicaid reimbursement policy by excluding pricing from monthly fee-based membership discount programs when determining the “usual and customary” rate. While intended to preserve the financial integrity of Medicaid reimbursements and ensure provider participation, the bill imposes new restrictions on private sector pricing models and introduces regulatory and fiscal uncertainty that outweigh its intended benefits.

Most notably, this bill targets market-driven innovations—such as pharmacy subscription discount programs—that offer consumers transparent, upfront pricing outside of government or insurance structures. By statutorily excluding these programs from rate-setting considerations, the legislation interferes with private sector flexibility and weakens an increasingly relevant alternative to traditional care financing. Such intervention in voluntary, consumer-facing business models is incompatible with the principle of free enterprise.

Additionally, the bill increases the regulatory burden on the Health and Human Services Commission, tasking it with identifying and filtering out specific types of pricing arrangements. This adds complexity to Medicaid administration and imposes compliance obligations on pharmacies and providers without a corresponding reduction in state spending or system inefficiencies. At the same time, the fiscal note makes clear that the bill's budgetary impact cannot be determined due to a lack of access to proprietary pricing data—raising legitimate concerns that the policy could increase costs to taxpayers without sufficient justification.

In sum, while the intent to safeguard Medicaid pricing is understandable, HB 2402 elevates government control over private transactions, increases regulatory scope, and invites unknown fiscal consequences. These issues run counter to the core principles of limited government, free enterprise, and fiscal responsibility. Texas Policy Research recommends that lawmakers vote NO on HB 2402.

• The bill does not directly restrict the liberty of individuals to choose providers or participate in discount programs. Medicaid recipients will still have access to services; however, the bill could have indirect effects on access if it influences pharmacies to alter or discontinue low-cost programs. On balance, the bill maintains current options but does not expand individual liberty in a meaningful way.
• The legislation neither incentivizes nor discourages individuals from making responsible choices regarding healthcare. It does not change eligibility, co-pays, or access models. Its focus is institutional—targeting how Medicaid sets reimbursement rates—so the principle of personal responsibility is not meaningfully advanced or eroded.
• Free enterprise is the most negatively affected liberty principle. By explicitly excluding pricing from monthly membership discount programs in Medicaid rate calculations, the bill undermines a form of voluntary, consumer-driven market innovation. These programs have emerged as private alternatives to traditional insurance and offer affordable access for many consumers. Penalizing their influence in public reimbursement calculations amounts to state interference in a legitimate market dynamic, discouraging private competition and innovation.
• The bill does not alter property ownership or restrict how businesses operate beyond one aspect of price reporting. Providers retain autonomy over their pricing models and participation in Medicaid. However, by setting boundaries on which prices can be recognized for reimbursement purposes, the state is nudging providers toward certain models over others—suggesting some modest regulatory encroachment, though not a direct infringement on property rights.
• While the bill doesn’t create new programs or agencies, it expands the scope of regulatory oversight within Medicaid. The Health and Human Services Commission must now distinguish and exclude a specific category of pricing—introducing complexity, discretion, and potentially new compliance mechanisms. This growth in administrative responsibility reflects a move away from minimal government involvement and adds regulatory weight without demonstrable public benefit or cost justification.

• SB 1112 (Same As)