The bill amends Section 540.0204 of the Government Code, effective April 1, 2025, to establish new considerations for awarding contracts to managed care organizations (MCOs) under the Medicaid managed care program. The amendments introduce specific criteria that the Health and Human Services Commission must follow, including giving preference to organizations with significant participation from local healthcare providers who have historically served Medicaid and charity care patients, ensuring continuity of care for at least three months post-Medicaid eligibility, and considering the diverse needs of different populations.

Additionally, the bill stipulates that if an MCO is a public benefit corporation, a five percent increase will be applied to its bid score when awarding contracts. In cases where multiple bids receive the same score, preference will be given to the public benefit corporation. The provisions of this act will only apply to contracts awarded on or after its effective date, and implementation may be delayed if a federal waiver or authorization is required. The act is set to take effect on September 1, 2025.