Relating to the regulation of certain nursing facilities, including licensing requirements and Medicaid participation and reimbursement requirements, the official text

S.B. No. 457

AN ACT

relating to the regulation of certain nursing facilities, including

licensing requirements and Medicaid participation and

reimbursement requirements.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subchapter D, Chapter 532, Government Code, is

amended by adding Section 532.0159 to read as follows:

Sec. 532.0159. CONTINUED REIMBURSEMENT OF NURSING

FACILITIES WHILE CHANGE IN OWNERSHIP APPLICATION PENDING. (a)

Notwithstanding any other law, the commission shall ensure that a

nursing facility providing Medicaid services to recipients

continues to receive Medicaid reimbursement uninterrupted while a

change in ownership application for the facility is pending with

the commission, provided the facility under the new ownership:

(1) accepts assignment of the previous owner's

Medicaid provider agreement subject to applicable federal and state

law, including applicable federal and state regulations;

(2) satisfies applicable requirements under federal

and state law, including the licensing requirement under Chapter

242, Health and Safety Code;

(3) if required by the terms of and agreed to by the

parties to the contract, assumes the contract to deliver Medicaid

nursing facility services in effect before the change in ownership;

(4) subject to Subsection (b), enters into a successor

liability agreement, approved by the commission; and

(5) meets any additional requirements prescribed by

the commission.

(b) A successor liability agreement under Subsection (a)(4)

must require that the facility under the new ownership:

(1) pay the commission for any outstanding liabilities

under the contract in effect before the change in ownership that are

identified by the commission; and

(2) agree that an outstanding liability identified by

the commission may include a liability incurred by the previous

owner without regard to:

(A) when a service was provided or a claim was

filed; or

(B) whether the liability is identified by the

commission or another authorized entity, including a Medicaid

managed care organization.

(c) This section does not apply to a supplemental payment

program or a directed payment program, as defined by Section

532.0102, operated or administered by the commission.

(d) The executive commissioner shall adopt rules necessary

to implement this section.

SECTION 2. Section 540.0752(b), Government Code, is amended

to read as follows:

(b) Subject to Section 540.0701 and notwithstanding any

other law, the commission shall provide Medicaid benefits through

the STAR+PLUS Medicaid managed care program to recipients who

reside in nursing facilities. In implementing this subsection, the

commission shall ensure that:

(1) a nursing facility is paid not later than the 10th

day after the date the facility submits a clean claim;

(1-a) a nursing facility complies with the patient care

expense ratio adopted under Section 32.0286, Human Resources Code;

(2) services are used appropriately, consistent with

criteria the commission establishes;

(3) the incidence of potentially preventable events

and unnecessary institutionalizations is reduced;

(4) a Medicaid managed care organization providing

services under the program:

(A) provides discharge planning, transitional

care, and other education programs to physicians and hospitals

regarding all available long-term care settings;

(B) assists in collecting applied income from

recipients; and

(C) provides payment incentives to nursing

facility providers that:

(i) reward reductions in preventable acute

care costs; and

(ii) encourage transformative efforts in

the delivery of nursing facility services, including efforts to

promote a resident-centered care culture through facility design

and services provided;

(5) a portal is established that complies with state

and federal regulations, including standard coding requirements,

through which nursing facility providers participating in the

program may submit claims to any participating Medicaid managed

care organization;

(6) rules and procedures relating to certifying and

decertifying nursing facility beds under Medicaid are not affected;

and

(7) a Medicaid managed care organization providing

services under the program, to the greatest extent possible, offers

nursing facility providers access to:

(A) acute care professionals; and

(B) telemedicine, when feasible and in

accordance with state law, including rules adopted by the Texas

Medical Board[; and

[(8) the commission approves the staff rate

enhancement methodology for the staff rate enhancement paid to a

nursing facility that qualifies for the enhancement under the

program].

SECTION 3. Subchapter F, Chapter 540, Government Code, is

amended by adding Section 540.0283 to read as follows:

Sec. 540.0283. NURSING FACILITY PROVIDER AGREEMENTS:

COMPLIANCE WITH PATIENT CARE EXPENSE RATIO. (a) A contract to

which this subchapter applies must require that each provider

agreement between the contracting Medicaid managed care

organization and a nursing facility include a requirement that the

facility comply with the patient care expense ratio adopted under

Section 32.0286, Human Resources Code.

(b) This section does not apply to a state-owned facility.

SECTION 4. Section 242.032, Health and Safety Code, is

amended by adding Subsection (b-1) to read as follows:

(b-1) The application must:

(1) include the name of each person with a direct or

indirect ownership interest of five percent or more in:

(A) the nursing facility, including a subsidiary

or parent company of the facility; and

(B) the real property on which the nursing

facility is located, including any owner, common owner, tenant, or

sublessee; and

(2) describe the exact ownership interest of each of

those persons in relation to the facility or property.

SECTION 5. Subchapter B, Chapter 242, Health and Safety

Code, is amended by adding Section 242.0333 to read as follows:

Sec. 242.0333. NOTIFICATION OF CHANGE TO OWNERSHIP INTEREST

APPLICATION INFORMATION. A license holder shall notify the

commission, in the form and manner the commission requires, of any

change to the ownership interest application information provided

under Section 242.032(b-1).

SECTION 6. Subchapter B, Chapter 32, Human Resources Code,

is amended by adding Section 32.0286 to read as follows:

Sec. 32.0286. ANNUAL PATIENT CARE EXPENSE RATIO FOR

REIMBURSEMENT OF CERTAIN NURSING FACILITY PROVIDERS. (a) In this

section, "patient care expense":

(1) includes an expense incurred by a nursing facility

for:

(A) providing compensation and benefits to:

(i) direct care staff of a facility,

whether the staff are employees of or contract labor for the

facility, including:

(a) licensed registered nurses and

licensed vocational nurses, including directors of nursing and

assistant directors of nursing;

(b) medication aides;

(c) restorative aides;

(d) nurse aides who provide

nursing-related care to residents occupying medical assistance

beds;

(e) licensed social workers; and

(f) social services assistants;

(ii) additional staff associated with

providing care to facility residents with a severe cognitive

impairment;

(iii) nonprofessional administrative

staff, including medical records staff and accounting or

bookkeeping staff;

(iv) central supply staff and ancillary

facility staff;

(v) housekeeping staff and laundry staff;

and

(vi) food service staff;

(B) central supply costs and ancillary costs for

facility services and supplies, including:

(i) diagnostic laboratory and radiology

costs;

(ii) durable medical equipment costs,

including costs to purchase, rent, or lease the equipment;

(iii) costs for oxygen used to provide

oxygen treatment;

(iv) prescription and nonprescription drug

costs; and

(v) therapy consultant costs; and

(C) costs for dietary and nutrition services,

including costs for:

(i) food service and related supplies; and

(ii) nutritionist services; and

(2) does not include an expense for:

(A) administrative or operational costs, other

than administrative or operational costs described by Subdivision

(1); or

(B) fixed capital asset costs.

(b) The executive commissioner by rule shall establish an

annual patient care expense ratio, including a process for

determining the ratio, applicable to the reimbursement of nursing

facility providers for providing services to recipients under the

medical assistance program. In establishing the ratio, the

executive commissioner shall require that at least 80 percent of

the portion of the medical assistance reimbursement amount paid to

a nursing facility that is attributable to patient care expenses is

spent on reasonable and necessary patient care expenses.

(c) The executive commissioner shall adopt rules necessary

to ensure each nursing facility provider that participates in the

medical assistance program complies with the patient care expense

ratio adopted under this section.

(d) Except as provided by Subsection (e) and to the extent

permitted by federal law, the commission may recoup all or part of

the medical assistance reimbursement amount paid to a nursing

facility that is subject to the patient care expense ratio under

this section if the facility fails to spend the reimbursement

amount in accordance with the patient care expense ratio.

(e) The commission may not recoup a medical assistance

reimbursement amount under Subsection (d) if, during the period

patient care expenses attributable to the reimbursement amount are

calculated, the facility:

(1) held at least a four-star rating under the Centers

for Medicare and Medicaid Services five-star quality rating system

for nursing facilities in three or more of the following

categories:

(A) overall;

(B) health inspections;

(C) staffing; and

(D) long-stay quality measures;

(2) both:

(A) maintained an average daily occupancy rate of

75 percent or less; and

(B) spent at least 70 percent of the portion of

the reimbursement amount paid to the facility that was attributable

to patient care expenses on reasonable and necessary patient care

expenses; or

(3) incurred expenses related to a disaster for which

the governor issued a disaster declaration under Chapter 418,

Government Code.

(f) The commission shall publish and maintain on the

commission's Internet website a list of all nursing facilities from

which the commission recouped medical assistance reimbursement

amounts under Subsection (d).

(g) The commission may not require a nursing facility to

comply with the patient care expense ratio as a condition of

participation in the medical assistance program.

(h) This section does not apply to a state-owned facility.

SECTION 7. Sections 32.028(g), (i), and (m), Human

Resources Code, are repealed.

SECTION 8. (a) The Health and Human Services Commission

shall, subject to this section, require compliance with the initial

annual patient care expense ratio adopted under Section 32.0286,

Human Resources Code, as added by this Act, beginning on September

1, 2025.

(b) The Health and Human Services Commission shall, in a

contract between the commission and a managed care organization

under Chapter 540, Government Code, that is entered into or renewed

on or after the effective date of this Act, require the managed care

organization to comply with Section 540.0283, Government Code, as

added by this Act.

(c) The Health and Human Services Commission shall seek to

amend contracts entered into with managed care organizations under

Chapter 533 or 540, Government Code, before the effective date of

this Act to require those managed care organizations to comply with

Section 540.0283, Government Code, as added by this Act. To the

extent of a conflict between that section and a provision of a

contract with a managed care organization entered into before the

effective date of this Act, the contract provision prevails.

SECTION 9. Not later than November 1, 2027, the Health and

Human Services Commission shall prepare and submit to the

legislature a written report that includes an assessment of the

impact of the patient care expense ratio established under Section

32.0286, Human Resources Code, as added by this Act, on nursing

facility care provided to Medicaid recipients during the preceding

state fiscal biennium, including the impact on the cost and quality

of care and any other information the commission determines

appropriate.

SECTION 10. 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 11. This Act takes effect September 1, 2025.

______________________________
______________________________

President of the Senate
Speaker of the House

I hereby certify that S.B. No. 457 passed the Senate on

May 1, 2025, by the following vote: Yeas 31, Nays 0;

May 29, 2025, Senate refused to concur in House amendments and

requested appointment of Conference Committee; May 30, 2025, House

granted request of the Senate; May 31, 2025, Senate adopted

Conference Committee Report by the following vote: Yeas 31,

Nays 0.

______________________________

Secretary of the Senate

I hereby certify that S.B. No. 457 passed the House, with

amendments, on May 28, 2025, by the following vote: Yeas 104,

Nays 34, two present not voting; May 30, 2025, House granted

request of the Senate for appointment of Conference Committee;

May 31, 2025, House adopted Conference Committee Report by the

following vote: Yeas 111, Nays 19, two present not voting.

______________________________

Chief Clerk of the House

Approved:

______________________________

Date

______________________________

Governor