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 specific hospitals through mandatory payments collected from them. The funds generated will support the nonfederal share of a Medicaid supplemental payment program and other authorized purposes. The bill outlines the governance structure, including the appointment of a board of directors, their qualifications, and the powers and duties of the board. It also allows districts to operate under the new provisions if all participating local governments adopt concurrent orders for this transition.

The bill establishes a Local Provider Participation Fund (LPPF) to manage the mandatory payments from healthcare providers, ensuring that these funds are used solely for authorized purposes, such as intergovernmental transfers for Medicaid payments. It mandates that annual payments be assessed based on the net patient revenue of institutional healthcare providers, capping them at six percent of the aggregate net patient revenue. The bill also allows current directors and board officers from Chapter 300A to continue serving their terms under Chapter 300C, ensuring continuity in leadership. Furthermore, it includes provisions for delaying implementation if a federal waiver is required and specifies that the Act will take effect immediately upon a two-thirds legislative vote or on September 1, 2025, if not.

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