H.B. No. 3505 introduces Chapter 300C to the Health and Safety Code, establishing a framework for health care provider participation districts created by local governments. This chapter allows these districts to implement a health care provider participation program that provides additional compensation to certain hospitals through mandatory payments collected from them. The bill outlines the governance structure, including the appointment of a board of directors, their qualifications, and their powers, while ensuring that directors serve without compensation but may be reimbursed for expenses. It also details the operational guidelines for the districts, including financial management, public hearing requirements, and compliance with reporting obligations.

Additionally, the bill creates a Local Provider Participation Fund (LPPF) for the districts, mandating that all collected mandatory payments be deposited into this fund for specific authorized uses, such as Medicaid payments and administrative expenses. It sets limits on the mandatory payments based on the net patient revenue of health care providers, ensuring they do not exceed six percent of the aggregate revenue and are uniformly assessed. The bill clarifies that these payments are not classified as taxes under the Texas Constitution and includes provisions for the reappointment of directors from existing health care provider participation districts. It also stipulates that implementation may be delayed pending necessary federal waivers or authorizations. The Act will take effect immediately upon a two-thirds legislative vote or on September 1, 2025, if not passed.

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