88R6189 BDP-F
	By: Collier	H.B. No. 1701

	A BILL TO BE ENTITLED
	AN ACT
	relating to administrative and judicial review of certain Medicaid
	reimbursement disputes; authorizing a fee.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Subchapter A, Chapter 533, Government Code, is
	amended by adding Section 533.0057 to read as follows:
	Sec. 533.0057.  CONFISCATORY REIMBURSEMENT RATES
	PROHIBITED; ADMINISTRATIVE AND JUDICIAL REVIEW OF CERTAIN
	REIMBURSEMENT DISPUTES. (a)  In this section, "confiscatory"
	means, with respect to the reimbursement rate paid by a managed care
	organization to a provider, a rate that is below the rate necessary
	to:
	(1)  recover the provider's reasonable operating
	expenses;
	(2)  realize a reasonable return on the provider's
	costs; and
	(3)  ensure confidence in the provider's continued:
	(A)  financial integrity; and
	(B)  participation in Medicaid.
	(b)  A managed care organization may not pay a confiscatory
	reimbursement rate to a provider under a Medicaid managed care
	model or arrangement implemented under this chapter.
	(c)  Notwithstanding any other law, a provider, including a
	pharmacy provider, has the right to a contested case hearing under
	Chapter 2001 to dispute the amount of a reimbursement rate paid to
	the provider by a managed care organization or the organization's
	pharmacy benefit manager if, subject to Subsection (f), the
	provider believes the rate is confiscatory in violation of
	Subsection (b), except that the decision of the hearing officer or
	the administrative law judge, as applicable, is not subject to
	judicial review under Chapter 2001. Solely for purposes of this
	section, a managed care organization is to be treated as a state
	agency under Chapter 2001.
	(d)  A contested case hearing under Subsection (c) shall be
	conducted by an administrative law judge, unless the commission's
	appeals division employs at least one full-time hearing officer
	whose sole duty is to preside over contested cases. If the
	commission's appeals division employs a hearing officer described
	by this subsection, that officer shall conduct the contested case
	hearing under Subsection (c).
	(e)  Parties to a contested case brought under this section:
	(1)  must include:
	(A)  the provider; and
	(B)  the managed care organization and any
	appropriate agent of the organization, including a pharmacy benefit
	manager; and
	(2)  may not include the commission.
	(f)  If the provider's contract with the managed care
	organization or the organization's agent contains a process for
	handling disputes relating to provider reimbursement, the provider
	may request a contested case hearing under Subsection (c) only if:
	(1)  the provider first submits the dispute for
	resolution through the contractual process; and
	(2)  the managed care organization or the
	organization's agent, as appropriate, fails to resolve the dispute
	through the contractual process not later than the 45th day after
	the day the dispute is submitted, or if the provider is dissatisfied
	with the resolution of the contractual process.
	(g)  In a contested case brought under this section, the
	hearing officer or administrative law judge, as applicable, shall
	determine whether the reimbursement rate is confiscatory and may
	order the managed care organization or the organization's agent to
	pay a rate that is not confiscatory. A hearing officer or
	administrative law judge, as applicable, may not award an amount:
	(1)  to any one provider that, as a percentage of the
	provider's average net income before taxes, exceeds the managed
	care organization's percentage of net income before taxes that is
	computed in accordance with the contract between the organization
	and the commission and is authorized to be retained by the
	organization under that contract, averaged over all financial
	statistical reporting periods; or
	(2)  that, in the aggregate, exceeds the amount of
	resources maintained by the managed care organization to reasonably
	accommodate program changes at no additional cost to the commission
	in accordance with the contract between the organization and the
	commission.
	(h)  In a contested case brought under this section, the
	hearing officer or administrative law judge, as applicable, has the
	discretion:
	(1)  considering the interest of judicial economy and
	efficiency, to combine cases wholly or partly that involve the same
	type of provider and the same or substantially similar
	reimbursement issues; or
	(2)  to impose part or all of the costs for the hearing
	against the party or parties that do not substantially prevail.
	(i)  In awarding costs in a contested case brought under this
	section, the hearing officer or administrative law judge, as
	applicable:
	(1)  shall consider whether the position of the party
	was taken in good faith and had a reasonable basis in fact and law;
	and
	(2)  may not award attorney's fees.
	(j)  The commission or the State Office of Administrative
	Hearings may impose a fee in an amount not to exceed $500 on each
	party to a contested case brought under this section for the purpose
	of offsetting the costs of the hearing.
	SECTION 2.  The change in law made by this Act applies only
	to a reimbursement paid to a Medicaid provider on or after the
	effective date of this Act.
	SECTION 3.  If before implementing any provision of this Act
	a state agency determines that a waiver or authorization from a
	federal agency is necessary for implementation of that provision,
	the agency affected by the provision shall request the waiver or
	authorization and may delay implementing that provision until the
	waiver or authorization is granted.
	SECTION 4.  This Act takes effect immediately if it receives
	a vote of two-thirds of all the members elected to each house, as
	provided by Section 39, Article III, Texas Constitution.  If this
	Act does not receive the vote necessary for immediate effect, this
	Act takes effect September 1, 2023.