(a) The commission may allow a managed care organization participating in the child health plan program or Medicaid increased flexibility to implement quality initiatives in a managed care plan offered by the organization, including flexibility with respect to financial arrangements, in order to:
(1) achieve high-quality, cost-effective health care;
(2) increase the use of high-quality, cost-effective delivery models;
(3) reduce the incidence of unnecessary institutionalization and potentially preventable events; and
(4) increase the use of alternative payment systems, including shared savings models, in collaboration with physicians and other health care providers.
(b) The commission shall develop quality of care and cost-efficiency benchmarks, including benchmarks based on a managed care organization’s performance with respect to reducing potentially preventable events and containing the growth rate of health care costs.

(c) The commission may include in a contract between a managed care organization and the commission financial incentives that are based on the organization’s successful implementation of quality initiatives under Subsection (a) or success in achieving quality of care and cost-efficiency benchmarks under Subsection (b).
(d) In awarding contracts to managed care organizations under the child health plan program and Medicaid, the commission shall, in addition to considerations under § 533.003 of this code and § 62.155, Health and Safety Code, give preference to an organization that offers a managed care plan that successfully implements quality initiatives under Subsection (a) as determined by the commission based on data or other evidence provided by the organization or meets quality of care and cost-efficiency benchmarks under Subsection (b).
(e) The commission may implement financial incentives under this section only if implementing the incentives would be cost-effective.

Text of section effective until April 01, 2025