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 Medicaid supplemental payments and other authorized uses. It outlines the governance structure, including the appointment of a board of directors, their qualifications, and the financial management of the district, while also detailing the process for public hearings and the dissolution of the district.

The bill also creates a Local Provider Participation Fund (LPPF) to manage the mandatory payments collected, specifying that these funds can only be used for designated purposes such as Medicaid funding and administrative costs. It sets limits on the mandatory payments based on the net patient revenue of health care providers, ensuring they do not exceed six percent and are uniformly applied. Additionally, it clarifies that these payments are not classified as taxes under the Texas Constitution. The bill includes provisions for continuity in leadership by allowing reappointment of current board members and mandates that state agencies seek necessary federal waivers for implementation. The Act will take effect immediately with a two-thirds legislative vote or on September 1, 2025, if not passed.

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