Overall Vote Recommendation

Principle Criteria

Free Enterprise

Property Rights

Personal Responsibility

Limited Government

Individual Liberty

Digest

HB 3902 would require the Texas Health and Human Services Commission (HHSC) to ensure that Medicaid reimbursement to a nursing facility continues without interruption when the facility changes ownership, provided the new owner satisfies specified eligibility and compliance requirements. To qualify for uninterrupted reimbursement, the new owner must be properly enrolled in Medicare (when required) and Medicaid, comply with applicable state Medicaid and licensing laws, assume the existing Medicaid contract when required by the contract terms, execute an HHSC-approved successor liability agreement, and meet any additional commission requirements.

The bill requires the successor liability agreement to obligate the new owner to repay any outstanding Medicaid-related liabilities identified by HHSC, including liabilities incurred by the previous owner regardless of when the underlying services were provided, when claims were submitted, or whether the liabilities were identified by HHSC or another authorized entity, such as a Medicaid managed care organization. The legislation expressly excludes Medicaid supplemental payment programs and directed payment programs from these requirements. If federal approval is required, HHSC must seek the necessary waiver or authorization before implementation.

The Committee Substitute for HB 3902 substantially narrows the scope of the originally filed bill. Rather than restructuring both the nursing facility licensure process and Medicaid contracting requirements, the committee substitute focuses exclusively on ensuring uninterrupted Medicaid reimbursement when a nursing facility changes ownership. It accomplishes this by creating a new provision in Government Code Chapter 532 directing the Health and Human Services Commission (HHSC) to continue Medicaid payments when specified conditions are met.

The originally filed version imposed new requirements on both HHSC and the Department of State Health Services by amending the Human Resources Code and Health and Safety Code. It required Medicaid contracts to be issued on terms no more stringent than federal Medicare certification standards, directed the department to create a single application process for licensure and Medicaid contracting, required Medicaid contracts to be issued within 30 days of a temporary change-of-ownership license, and required managed care organizations to complete expedited credentialing and make their contracts effective simultaneously with the state's Medicaid contract. Those administrative process reforms and statutory deadlines are removed entirely from the committee substitute.

The Committee Substitute also revises the successor liability provisions. While both versions require a new owner to assume responsibility for outstanding liabilities through a successor liability agreement, the substitute provides significantly greater detail. It expressly authorizes HHSC to require payment of liabilities incurred by the previous owner regardless of when services were provided, when claims were filed, or whether the liabilities are identified by HHSC or another authorized entity, including a Medicaid managed care organization. It also adds an express exemption for Medicaid supplemental payment and directed payment programs, which was not included in the originally filed bill.

Finally, the Committee Substitute adds a federal implementation provision requiring HHSC to seek any necessary federal waiver or authorization before implementing the bill.

Author (2)

Toni Rose Richard Raymond

Contact the Author

Rep. Toni Rose

Capitol Phone:

(512) 463-0664

Capitol Office:

CAP 4N.5

E-Mail:

[email protected]

Visit Official Website

Fiscal Notes

According to the Legislative Budget Board (LBB), no significant fiscal implication to the state is anticipated from HB 3902. The bill requires the Health and Human Services Commission (HHSC) to ensure that Medicaid reimbursement to nursing facilities continues without interruption following a change in ownership, provided the new owner satisfies the bill's eligibility and compliance requirements.

The LBB notes that implementing the bill will require one-time information technology modifications to HHSC's Centralized Accounting and Payroll/Personnel System (CAPPS) Financials and the System of Contract Operations and Reporting (SCOR). However, HHSC indicated these system updates can be completed using existing agency resources, and the LBB therefore assumes that no additional state appropriations will be necessary.

The fiscal note also concludes that the legislation is not expected to have a significant fiscal impact on local governments. As a result, the bill is expected to be implemented through existing administrative resources at both the state and local levels without creating meaningful new costs or savings.

Vote Recommendation Notes

HB 3902 seeks to address delays in Medicaid reimbursement when a nursing facility changes ownership by requiring the Health and Human Services Commission (HHSC) to ensure uninterrupted payments for qualifying facilities. While the bill responds to a legitimate administrative concern and is significantly narrower than the originally filed version, it nevertheless expands the statutory responsibilities of HHSC by creating a new affirmative obligation to administer payment continuity and authorizing the agency to impose additional requirements beyond those expressly enumerated in statute.

The bill does not materially increase the burden on taxpayers. According to the Legislative Budget Board, implementation requires only one-time information technology updates that can be absorbed within existing agency resources, and no significant fiscal impact is anticipated for either state or local government. However, from a limited-government perspective, the absence of new spending does not eliminate concerns over expanding statutory authority and agency discretion.

The bill also modestly increases the regulatory burden on nursing facilities by requiring an HHSC-approved successor liability agreement and allowing HHSC to prescribe additional conditions for uninterrupted reimbursement. Although many of the bill's eligibility requirements already exist under current law, codifying these new obligations and expanding the agency's discretion establishes additional regulatory authority rather than reducing the complexity of the existing Medicaid reimbursement process. A more liberty-oriented approach would focus on eliminating unnecessary administrative barriers to ownership transfers instead of creating new statutory mandates governing how the state administers Medicaid payments.

For these reasons, while the bill is fiscally modest and intended to improve administrative efficiency, it incrementally expands the role and authority of state government without meaningfully reducing the underlying regulatory framework. From a limited-government perspective, these concerns outweigh the operational benefits of the proposal, and Texas Policy Research recommends that lawmakers vote NO on HB 3902.

Individual Liberty: The bill does not directly affect the rights or freedoms of individuals. It neither imposes new mandates on citizens nor expands government authority over personal conduct. Its provisions are limited to the administration of Medicaid reimbursement for nursing facilities.
Personal Responsibility: The bill does not materially alter incentives for individuals or private entities to assume responsibility for their own decisions. While it requires new owners to accept successor liability for outstanding Medicaid obligations, this reinforces existing contractual accountability rather than shifting responsibility to the state.
Free Enterprise: Although the bill is intended to reduce administrative disruptions during ownership transfers, it further codifies government involvement in the Medicaid reimbursement process and authorizes HHSC to impose additional requirements on facilities seeking uninterrupted payments. Rather than reducing regulatory barriers, it expands the statutory framework governing participation in a government-funded healthcare market.
Private Property Rights: The bill does not affect ownership, use, or disposition of private property, nor does it create new takings authority or land-use restrictions. While acquiring nursing facilities must accept successor liability as a condition of uninterrupted Medicaid reimbursement, participation in Medicaid remains voluntary and does not alter underlying property rights.
Limited Government: The bill creates a new statutory duty requiring HHSC to ensure uninterrupted Medicaid reimbursement following ownership changes and grants the agency authority to prescribe additional eligibility requirements. Although the fiscal impact is minimal, the legislation incrementally expands agency responsibilities and administrative discretion instead of reducing the complexity of the existing regulatory system.

Related Legislation

SB 2578 (Similar To)

View Bill Text and Status