HB3505

HB3505 gives a narrowly eligible, existing health care provider participation district a way to continue collecting hospital payments after its earlier statutory authority expires. The money helps supply the nonfederal share of Medicaid hospital payments: local money transferred to the state to support payments eligible for federal matching funds. It is not a statewide hospital tax, a promise of federal approval or an expansion of Medicaid eligibility. Final law

The legislative analysis identifies the intended district as the Northeast Health Care Provider Participation District, serving Henderson County, Lamar County and the Hopkins County Hospital District. The law itself uses geographic and population conditions: a county with more than 80,000 but fewer than 90,000 residents bordering the Trinity River; a county with more than 45,000 but fewer than 55,000 bordering Oklahoma; or a hospital district in a county with more than 30,000 residents containing part of Jim Chapman Lake. The participating governments must already have jointly created the district under Chapter 300A. Legislative analysis

Continuation requires local action. Each participating government must approve an identical order, and the district board must ratify the orders. The territory stays the combined participating area, and operation under new Chapter 300C begins when the old program authority expires. The old law generally ends that authority on the September 1 following the second anniversary of the board’s program authorization. HB3505 supplies a continuing framework for eligible districts rather than extending every Chapter 300A district. Existing directors and officers may finish their terms and remain eligible for reappointment unless disqualified. Prior framework

Hospital payments are limited. If the board authorizes the program, nonpublic hospitals providing inpatient services must pay assessments proportionate to their net patient revenue, at least annually but no more often than quarterly. The aggregate cannot exceed 6% of the hospitals’ aggregate net patient revenue. The annual amount of assessment revenue used for administration is capped at $150,000 plus deposit-collateralization costs. Hospitals may not add these payments as a patient surcharge. The district cannot assess under both chapters for the same period or use the assessments to raise general revenue.

Money has restricted uses and oversight. Assessments, interest, penalties, relevant refunds, earnings and remaining old-program money go into a separate local provider participation fund. Authorized uses include eligible Medicaid transfers, limited administration and specified hospital refunds; the fund cannot be mixed with other district or local-government money. Transfers may support uncompensated care, managed-care rate enhancements and other qualifying hospital reimbursements, but funds resulting from these transfers cannot be used for Affordable Care Act Medicaid eligibility expansion. The board must hold an annual payment-and-spending hearing, with newspaper and hospital notice at least five days beforehand. It can inspect relevant hospital reporting records and must report collections, expenditures, other uses and contracts to the Health and Human Services Commission.

The new chapter also provides appointed directors, residency and employee-disqualification rules, unpaid service with approved expense reimbursement, officers, voting procedures and authority to sue or be sued. It incorporates annual budget, audit and public-record safeguards from Chapter 287, but excludes that chapter’s specified investment/debt and depository sections; it does not authorize bonds. Participating governments can dissolve the district through identical orders. The board then settles affairs, distributes remaining provider-fund money proportionately to hospitals, allocates any remaining debts or unused money as directed by the statute, and gives the governments a final accounting. Referenced financial safeguards

The act became effective June 20, 2025, without the governor’s signature. A state agency must seek any necessary federal waiver or authorization and may delay implementation until it is granted. The commission may refuse money that could violate federal law, and assessments depend on an eligible payment program being available. The state’s 6% ceiling is not a guarantee that federal rules permit a particular assessment. Official history