89th Legislature Regular Session

HB 541

Overall Vote Recommendation
Yes
Principle Criteria
Free Enterprise
Property Rights
Personal Responsibility
Limited Government
Individual Liberty
Digest
HB 541 proposes a substantial update to Texas law governing “direct patient care” arrangements between individuals and licensed health professionals. The bill transfers and redesignates existing provisions from Subchapter F, Chapter 162 of the Occupations Code to a new standalone Chapter 117, providing clearer statutory guidance and expanding the legal framework for these healthcare agreements. These arrangements—commonly known as “direct primary care” or “membership medicine”—allow patients to pay healthcare providers a recurring fee (such as a monthly retainer) in exchange for agreed-upon medical services, bypassing traditional insurance.

The bill revises and broadens definitions to reflect modern practice, explicitly including telemedicine and telehealth services and expanding the scope to allow participation by both physicians and non-physician health care practitioners. It defines key terms such as “direct fee,” “direct patient care agreement,” and “health care service” to ensure clarity and legal enforceability. Importantly, the bill clarifies that such agreements do not constitute health insurance and are therefore not subject to regulation by the Texas Department of Insurance.

Additionally, HB 541 prohibits healthcare providers operating under a direct care agreement from billing insurance companies or health maintenance organizations for services covered by such agreements. The bill also prevents state agencies, including the Texas Medical Board, from interfering with the formation or operation of these private agreements. This change is intended to promote healthcare innovation and accessibility by reducing regulatory barriers for practitioners offering nontraditional models of care.
Author
Matthew Shaheen
Sponsor
Judith Zaffirini
Co-Sponsor
Cesar Blanco
Donna Campbell
Nathan Johnson
Fiscal Notes

According to the Legislative Budget Board (LBB), HB 541 is not expected to have any significant fiscal implications for the State of Texas. The Texas Medical Board, the primary agency referenced, has determined that the responsibilities created by the bill, such as recognizing or adjusting to changes in direct patient care arrangements, can be handled with current resources and staffing levels.

Similarly, no significant fiscal impact is anticipated for local governments. The bill does not impose new mandates or administrative burdens on counties or municipalities that would require additional expenditures or staffing. Its focus on deregulating certain aspects of physician-patient agreements, especially outside the traditional insurance model, further supports the absence of fiscal strain at the local level.

In summary, HB 541 is a policy-focused measure with minimal financial impact. It promotes private-sector flexibility in healthcare delivery without creating new regulatory obligations that would necessitate additional state or local government funding.

Vote Recommendation Notes

HB 541 represents a prudent expansion of the direct primary care model in Texas, modernizing the statutory framework to support broader access to healthcare through direct contractual relationships. By extending this model beyond physicians to include all licensed healthcare practitioners—such as psychologists, nurses, and dentists—the bill removes a statutory limitation that restricted the benefits of simplified, insurer-free care to a narrow class of providers. This change empowers more patients and practitioners to enter into transparent, fee-based agreements that bypass the costly administrative overhead associated with insurance billing.

The fiscal note from the Legislative Budget Board confirms that the bill would have no significant fiscal impact on the state or local governments. The Texas Medical Board can implement the bill using existing resources, and no new regulatory burdens or funding mechanisms are created. From a policy standpoint, the bill increases access to affordable care, particularly in rural or underserved areas where traditional insurance networks are limited. It also safeguards the right of patients and providers to engage in mutually agreed-upon healthcare arrangements, aligning with the principles of individual liberty and limited government.

The bill avoids granting any new rulemaking authority, imposes no mandates on providers or agencies, and makes clear that direct patient care agreements are not insurance products. This ensures a minimal regulatory footprint while creating meaningful opportunities for healthcare innovation. By promoting a free-market solution to healthcare delivery challenges and ensuring regulatory clarity for all parties, HB 541 advances patient choice, practitioner autonomy, and system efficiency—all consistent with core liberty principles. As such, Texas Policy Research recommends that lawmakers vote YES on HB 541.

  • Individual Liberty: The bill enhances individual freedom by giving Texans more control over their healthcare decisions. It allows patients to contract directly with a physician or any licensed healthcare practitioner (not just doctors) for care, without interference from insurance companies or state agencies. By clarifying that these agreements are not considered insurance, the bill protects patients from being forced into third-party payer systems they may not want or afford.
  • Personal Responsibility: The bill encourages patients to take responsibility for managing their own healthcare by establishing clear, upfront payment agreements with providers. This model incentivizes patients to be more mindful about cost, preventative care, and continuity in their medical relationships. It also reduces reliance on government programs and employer-sponsored insurance.
  • Free Enterprise: The bill promotes a more competitive and open healthcare market by reducing regulatory barriers and allowing providers to offer services through innovative business models like membership-based or subscription care. Including a broader range of licensed practitioners fosters competition and increases the variety of healthcare services available to consumers.
  • Private Property Rights: The bill reinforces the rights of healthcare practitioners to freely use their professional services, considered a form of property, in contractual relationships without unnecessary state oversight. It supports their ability to define the terms of service, set prices, and operate independently, provided the patient agrees voluntarily.
  • Limited Government: By explicitly removing direct patient care agreements from the jurisdiction of the Texas Department of Insurance and prohibiting interference by the Texas Medical Board or other state agencies, the bill limits the reach of government in private healthcare transactions. It respects the role of the state as a referee rather than a controller in voluntary market interactions.
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