H.B. No. 3505 introduces Chapter 300C to the Health and Safety Code, establishing health care provider participation districts that local governments can create to enhance financial support for specific hospitals. The bill allows these districts to implement a health care provider participation program funded by mandatory payments from hospitals, which will contribute to the nonfederal share of a Medicaid supplemental payment program. It outlines the governance structure, including the appointment of a board of directors who serve without compensation, and mandates public hearings to ensure transparency regarding the use of mandatory payments.

The bill also creates a Local Provider Participation Fund (LPPF) for the districts, stipulating that all mandatory payments must be deposited into this fund for authorized uses, such as Medicaid funding and administrative expenses. It sets guidelines for assessing and collecting these payments, ensuring they do not exceed six percent of the aggregate net patient revenue of providers and are uniformly applied. Additionally, it clarifies that these payments are not classified as taxes under the Texas Constitution. The bill includes provisions for the reappointment of directors from existing health care provider participation districts and requires state agencies to seek necessary federal waivers for implementation. The Act will take effect immediately upon a two-thirds legislative vote or on September 1, 2025, if not passed.

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