HB3348

HB3348 authorizes certain counties to collect mandatory payments from nonpublic hospitals providing inpatient services, place the money in a separate local fund, and use it toward the nonfederal share of specified Medicaid payments. The aim is to support hospital funding by making eligible local money available for federal matching funds—not to guarantee every hospital gets its payment back. The law took effect June 20, 2025. Final law; history.

A county must not be served by a hospital district and must meet one of three population/geography descriptions:

• Category A: more than 46,000 but fewer than 50,000 residents, adjacent to the county containing the state capital.
• Category B: at least 900,000 residents, bordering two counties that each have at least two million residents.
• Category C: at least one million residents, containing all or part of a city of at least one million, and adjacent to a county of at least 2.5 million.

The county commissioners court may authorize participation by order; collecting payments requires a majority vote. Participation is not automatically imposed on every qualifying county. The official Senate analysis describes continuing Denton County’s hospital-funding arrangement as the original purpose, but the final statutory categories—not that description of intent—control eligibility. Senate analysis.

Once authorized, annual hospital payments must be assessed quarterly, uniformly in proportion to net patient revenue. The aggregate state-law ceiling is 6% of participating hospitals’ aggregate net patient revenue from hospital services; it is a ceiling, not a required rate or a guarantee of federal approval. First-year calculations use the latest reported state hospital data, or the latest Medicare cost report if state data were not reported; amounts are updated annually. Hospitals receive written assessments and must pay within 30 days of receipt. A hospital may not add the payment as a patient surcharge.

The fund may finance transfers to the state for specified uncompensated-care, directed-payment, similar waiver and other federally matchable hospital reimbursement purposes; authorized administration; and specified error or unused-funds refunds. It may not be mixed with other county money. Resulting funds may not support Affordable Care Act Medicaid eligibility expansion or the nonfederal share of the Medicaid disproportionate-share hospital program. The law does not authorize general-revenue fundraising or collections beyond reasonably necessary program and administrative amounts.

Annual administrative spending from these payments is capped at $20,000 for Category A, $150,000 for B, and $300,000 for C, plus collateralization of deposits—the cost of securing deposited funds. Collection agents may deduct usual-and-customary collection fees; if the collector is a county official, those fees go to the county general fund. Delinquent payments may carry interest and penalties within the county’s applicable maximums.

Each payment year requires a public hearing on amounts and spending, with newspaper notice and written hospital notice at least five days beforehand; hospital representatives have a right to be heard. Counties must obtain the hospitals’ required financial/utilization reports and may inspect records for compliance. They must report collections and uses to HHSC, which may issue reporting rules. Local administration may include rules on collections, spending and audits, and county funds must be secured in designated bank depositories.

Federal limits remain decisive. Collection is permitted only when a qualifying waiver, rate enhancement or reimbursement is available to the county. HHSC may refuse money that may violate federal law. The program cannot guarantee hospitals protection from their payment burden through prohibited “hold harmless” arrangements. Counties may adjust procedures to meet federal requirements, but cannot materially expand county or hospital legal/financial liability beyond this chapter. If federal permission is needed, the state agency must request it and may delay implementation until granted. State authorization alone is not federal approval.