Several state bills occurred during the 89th regular session of the Texas Legislature that ended on June 2, 2025, affecting the healthcare industry. This GT alert provides an overview of these bills and effective dates.
HB 2254 – Insurance companies and healthcare providers can enter into healthcare service contract arrangements
HB 2254 allows health insurance plans to enter into contracts for primary care services using service fee arrangements, risk sharing arrangements, surrender arrangements, or any combination of these models. However, primary care physicians and physician groups do not need to enter into such arrangements, and the insurance company may not discriminate against those who choose not to participate. The law also prohibits global surrender arrangements.
Furthermore, payer provider agreements under these arrangements must not interfere with the provision of medically necessary medical services or interfere with the physician's independent medical judgment regarding medically appropriate or necessary services. This law came into effect as soon as it was signed on June 20, 2025.
SB 31 – Modify treatment guidance for pregnant women with life-threatening emergencies
The law, also known as the mother's life, provides that if a pregnant woman has a physical condition that is exacerbated by pregnancy or has life-threatening conditions that result from pregnancy, doctors do not have to wait for an imminent risk or suffer physical harm before the pregnant woman can act. When treating life-threatening conditions, doctors should provide a way to provide the best opportunity for the fetus to survive, balancing the risk of death or substantial impairment of major physical functions in pregnant women. The law was an attempt to address certain criticisms of Texas abortion law, resulting in uncertainty among physicians about when an emergency exception to the law would be triggered. SB 31 came into effect as soon as it was signed on June 20, 2025.
SB 815 – Limiting AI use to determine medical need or appropriateness
The bill places restrictions on the use of artificial intelligence algorithms by usage review agents to determine whether medical services are medically necessary or appropriate. Under the law, usage review agents cannot use AI algorithms as the sole basis for rejecting, delaying or modifying healthcare services, either entirely or partially. The bill makes it clear that only a physician or authorized health care provider may determine medical needs or suitability. SB 815 will come into effect on September 1, 2025.
SB 1236 – Managing relationships between a pharmacist or pharmacy and a health benefit plan issuer or pharmacy benefit manager
SB 1236 provides that the issuer or Pharmacy Benefit Manager (PBM) of a Health Benefits Plan is not the case in order to refuse or reduce the payment of a claim to the pharmacist or pharmacy after the claim is awarded, except for fraud, duplicate, false prescription, or secret errors, as a result of the audit, as a result of the audit, as a result of the audit, as a result of the audit, or as a result of the audit, or as a result of the audit, or as a result of the audit, or as a result of the request. Additional Term Details: Whether insurance plan insurance company or PBM can make changes to its contract with a pharmacy or pharmacist, including strengthening changes, reduce coverage, move the pharmacist or pharmacy less to the reference tier, change management procedures to increase costs, and reduce coverage. The law limits certain potentially forced tactics by PBMs, such as fines for non-network participants and charging pharmacies and pharmacists to participate in the network. SB 1236 will come into effect on September 1, 2025.
HB 2038 – Restricting the issuance of interim medical licenses to foreign license holders
This Act establishes circumstances in which foreign licensees can receive interim medical licenses, including certain restrictions on individuals in the country deemed to pose national security risks, settings that interim licensees may practice, and conditions on which the board may issue full licenses. For doctor alumni, the law provides the standard for receiving a limited license, prohibits practice without entering into a supervisory practice agreement with sponsored doctors, sets practice restrictions that can only be practiced in counties with less than 100,000, and excludes graduates from limited licenses and avoids avoidable circumstances. HB 2038 also sets rules regarding when a physician is eligible to enter into a supervisory practice agreement as a sponsored physician. The law will come into effect on September 1, 2025.
HB 2747 – Medical institution material change transaction notification requirements
In February 2025, Texas legislators introduced HB 2747. This would have required certain healthcare agencies to notify them of a state 90 days prior to a particular “material change transactions” that included “significant changes to ownership, operational or governance structures.” Notification requirements apply to a wide range of transactions, including, but not limited to: The amount of material for the medical institution's acquisition or healthcare institution's assets or operations. The formation of joint ventures, partnerships, responsible care organizations, or management services organizations provides those who directly or indirectly manage all or a significant portion of the healthcare entity. Real estate sales that contain significant amounts of healthcare entity assets. Similar to other state laws, this bill did not require approval from the Attorney General or agency of such transactions. The bill eventually died on the committee.
SB 1595 & HB 4408 – Healthcare Entities Annual Ownership and Management Reporting Requirements
Between February and April 2025, Texas Senators and the House of Representatives considered the same bill that certain healthcare providers needed to report ownership and management information annually. The bill covers designated types of “material change transactions” that include healthcare institutions with total assets and annual revenues of at least $10 million. The transactions involved were included, but were not limited to. Acquisitions; Changes in control; Formation of joint ventures or management organizations. Important asset transfers. Real estate sales that contain significant amounts of healthcare entity assets. Medical facilities closed. A significant reduction in the critical healthcare services provided by healthcare facilities. In addition to reporting on material change transactions, the bill would have required healthcare agencies to submit an annual report to the state listing each person with ownership, investment or control. Management services organizations affiliated with the entity and key equity investors. Like other state laws, these bills aim to address concerns about increased ownership or partnerships for private equity in medical practices. Neither bill made it to the full vote in either room.
