FIX HB 2401 — It Now Protects Harris County Commissioners and Their MCO

HB 2401 Is Now a Vendor Bill for Harris County and Other Urban County Hospital Districts

HB 2401 Has NO Impact on Rural Hospitals

Despite what county-controlled Managed Care Organizations (MCOs) and hospitals are saying, there is no connection whatsoever between HB 2401, mandatory contracts, and rural hospital funding. This basic fact has been and will be confirmed by:

  • The Texas Health and Human Services Commission (HHSC);
  • The Texas Organization of Rural and Community Hospitals (which is neutral on the bill and will verify that it will not affect rural hospital funding); and
  • Hospital finance experts.

MCOs that are controlled by commissioners courts in urban counties are pushing this falsehood in order to protect the mandatory contracts that these MCOs currently receive. 



A recent court case forces Texas to award mandatory multibillion-dollar contracts to managed care organizations controlled by urban county commissioners courts — such as Community Health Choice, which Harris County Commissioners control through the Harris Health System.


This year, Texas awarded multibillion-dollar Mandatory Medicaid Contracts to three MCOs operated by county commissioners in Harris, El Paso and Bexar Counties — even though those MCOs scored lowest in the state’s competitive bidding process. 


HB 2401 was initially written to fix this problem by eliminating mandatory contracts in Texas Medicaid. But the bill was ultimately gutted in the House after a misinformation campaign falsely alleged the bill would affect rural hospitals and federal Medicaid funding, raising false constitutionality issues.

Other Misinformation about HB 2401: 

> Two national MCOs are quietly working to uphold the current bidding system. 

Once supportive of repealing mandatory contracts, two national health plans have actively undermined the effort in recent days. The reason: they want to preserve the flawed contracting process that will likely result in the award of multibillion-dollar Medicaid contracts to them and to county-controlled MCOs

These self-interested motives have distorted the widespread support for a truly competitive process that ensures Texas’ most vulnerable population is served by only the best-scoring MCOs.

> The Legislature can change course on an unfinished Medicaid contract process. It is FALSE to say such efforts are unconstitutional.

  1. No contractor of the state of Texas has a vested right to business with the state.
  2. HHSC itself can cancel or amend a procurement or even an operational contract at any time — and it’s done so repeatedly. The Legislature has these rights as well.
  3. In Logos, Texas Supreme Court has set a standard for valid legislative intervention that is in the public interest. HB 2401 clearly meets this standard.

Regardless, before the House Floor amendment, HB 2401 would only have affected Medicaid contracts before they were operationally active. The bill would change nothing midstream — on these contracts, nothing has even started running.