(a) Except as otherwise provided by this section and notwithstanding any other law, the commission shall provide Medicaid acute care services through the most cost-effective model of Medicaid capitated managed care as the commission determines. The commission shall require mandatory participation in a Medicaid capitated managed care program for all individuals eligible for Medicaid acute care benefits, but may implement alternative models or arrangements, including a traditional fee-for-service arrangement, if the commission determines the alternative would be more cost-effective or efficient.
(b) In determining whether a model or arrangement described by Subsection (a) is more cost-effective, the executive commissioner must consider:
(1) the scope, duration, and types of health benefits or services to be provided in a certain part of this state or to a certain recipient population;
(2) administrative costs necessary to meet federal and state statutory and regulatory requirements;
(3) the anticipated effect of market competition associated with the configuration of Medicaid service delivery models the commission determines; and
(4) the gain or loss to this state of a tax collected under Chapter 222, Insurance Code.

(c) If the commission determines that it is not more cost-effective to use a Medicaid managed care model to provide certain types of Medicaid acute care in a certain area or to certain recipients as prescribed by this section, the commission shall provide Medicaid acute care through a traditional fee-for-service arrangement.
(d) The commission shall determine the most cost-effective alignment of managed care service delivery areas. The executive commissioner may consider:
(1) the number of lives impacted;
(2) the usual source of health care services for residents in an area; and
(3) other factors that impact health care service delivery in the area.

Text of section effective on April 01, 2025