Relating to authorizing Medicaid managed care organizations to offer nutrition support services in lieu of other state Medicaid plan services.
ModeratePlan for compliance
Low Cost
Effective:2025-06-20
Enforcing Agencies
Health and Human Services Commission (HHSC) • State Medicaid Managed Care Advisory Committee
01
Compliance Analysis
Key implementation requirements and action items for compliance with this legislation
Implementation Timeline
Effective Date: June 20, 2025 (Immediate effect due to supermajority passage).
Compliance Deadline: Compliance is triggered upon the execution or renewal of a Medicaid managed care contract on or after June 20, 2025.
Agency Rulemaking:
Critical Gap: HHSC and the State Medicaid Managed Care Advisory Committee must approve a specific list of permitted nutrition services *before* they can be included in contracts.
Pilot Program: HHSC must define protocols for the MTM Pilot Program. Expect a delay in Pilot implementation pending potential CMS federal waiver approvals (likely Q4 2025 or Q1 2026).
Immediate Action Plan
1.Legal Review: Immediately draft Business Associate Agreements (BAAs) and liability waivers for potential food delivery vendors.
2.Network Development: Begin recruiting Registered Dietitians and identifying MTM vendors now; do not wait for the HHSC list to start vetting capacity.
3.Data Integration: Task IT with creating a "flag" in the member profile for high-risk pregnancy conditions (gestational diabetes/hypertension) to automate Pilot Program eligibility identification.
4.Monitor Rulemaking: Assign a regulatory affairs liaison to track the State Medicaid Managed Care Advisory Committee's upcoming meeting agenda for the release of the "Approved Nutrition Services List."
Operational Changes Required
Contracts
MCO-State Agreements: Prepare for amendments to the Uniform Managed Care Contract (UMCC) incorporating the new ILOS provisions.
Vendor Agreements (New): Legal teams must draft service agreements for Medically Tailored Meal providers. These contracts must include strict indemnification clauses regarding food safety, spoilage, and allergen control, as the MCO is effectively "prescribing" food.
Provider Amendments: Existing network agreements with Registered Dietitians (RDs) must be amended to include the specific fee schedules for the new "in lieu of" service codes once published by HHSC.
Hiring/Training
Credentialing: Network teams must establish credentialing workflows for MTM vendors (non-traditional medical providers).
Case Management Training: Intake staff must be trained to screen pregnant members for specific eligibility criteria: gestational diabetes, preeclampsia, hypertension, or obesity.
Referral Loops: Staff must be trained on "closed-loop" referrals—verifying not just that a meal was ordered, but that it was delivered and accepted by the member.
Reporting & Record-Keeping
Outcome Correlation: IT systems must be upgraded to link nutrition service claims with clinical health outcomes (e.g., maternal blood pressure, infant birth weight) to satisfy the legislative reporting mandate.
Compliance Tracking: For the Pilot Program, MCOs must track the member's *compliance rate* (i.e., did the patient actually consume the meals?). This requires data sharing integration with meal vendors.
Cost-Effectiveness: Finance teams must document that the ILOS provided was less expensive than the standard state plan service it replaced (e.g., nutrition counseling vs. hospitalization).
Fees & Costs
IT Overhaul: The Fiscal Note anticipates costs for "establishing a new provider type." MCOs should budget for internal claims system updates to recognize non-clinical meal vendors as payees.
Reimbursement Strategy: While the services are "in lieu of" (cost-neutral or savings-generating), there will be upfront administrative costs to establish the provider network.
Strategic Ambiguities & Considerations
"Cost-Effective" Definition: The statute requires services to be cost-effective but does not define the calculation window. Does the MCO calculate savings over one month or the duration of the pregnancy? Watch HHSC rulemaking closely for this formula.
Grocery vs. Meal Distinction: The bill explicitly bans "grocery support" for general ILOS but allows "medically tailored meals" for the Pilot. The regulatory line between a "meal kit" (groceries) and a "tailored meal" is currently undefined and presents a compliance risk for audit recoupment if categorized incorrectly.
Pilot Geography: It is unclear if the Pilot Program will be statewide or limited to specific Service Delivery Areas (SDAs).
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Currently, medical nutritional counseling is a Medicaid benefit provided to children with certain diseases who are referred for medically necessary nutritional counseling, a service offered by practicing licensed dietitians who are enrolled as Medicaid providers. However, the adult Medicaid population and children diagnosed with other diseases for whom nutritional counseling may improve health outcomes, decrease the risk of chronic disease, and decrease utilization of the healthcare system, are left without this same access to nutritional counseling. The federal Centers for Medicare and Medicaid Services (CMS) approves states to offer certain Medicaid services in lieu of other benefits if it can be demonstrated that the services are medically appropriate and more cost-effective than offering covered benefits. Currently, state law directs the Health and Human Services Commission (HHSC) to offer in-lieu-of services (ILOS) for mental health or substance use programs. ILOS are optional for Medicaid managed care organizations (MCOs) to provide, optional for Medicaid clients to participate in, and must be determined to be cost-effective with approval by CMS. H.B. 26 seeks to direct HHSC to permit Medicaid MCOs to provide nutritional counseling and instruction services in lieu of other services if determined to be medically appropriate and cost-effective. The bill excludes from nutritional counseling and instruction services any service that includes home-delivered meals, food prescriptions, or grocery support.
CRIMINAL JUSTICE IMPACT
It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS
H.B. 26 amends the Government Code to require a contract between a Medicaid managed care organization (MCO) and the Health and Human Services Commission for the provision of health care services to Medicaid recipients to contain language permitting the contracting MCO to offer medically appropriate, cost-effective, evidence-based nutrition counseling and instruction services from a list of services approved by the state Medicaid managed care advisory committee and included in the contract in lieu of services specified in the state Medicaid plan. The bill authorizes the state Medicaid managed care advisory committee, in approving the list of nutrition counseling and instruction services that are permitted in lieu of services specified in the state Medicaid plan, to include only nutrition counseling and instruction. The bill prohibits the list from including home-delivered meals, food prescriptions, or grocery support.
H.B. 26 applies to a contract entered into or renewed on or after the bill's effective date. A contract entered into or renewed before that date is governed by the law in effect on the date the contract was entered into or renewed, and that law is continued in effect for that purpose. If before implementing any provision of the bill a state agency determines that a waiver or authorization from a federal agency is necessary for implementation of that provision, the agency affected by the provision must request the waiver or authorization and may delay implementing that provision until the waiver or authorization is granted.
Honorable Lacey Hull, Chair, House Committee on Human Services
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HB26 by Hull (Relating to requiring contracts with Medicaid managed care organizations to permit the organizations to offer nutrition counseling and instruction services in lieu of other state Medicaid plan services.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB26, As Introduced: a negative impact of ($869,600) through the biennium ending August 31, 2027.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
General Revenue-Related Funds, Five- Year Impact:
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2026
($811,850)
2027
($57,750)
2028
($57,750)
2029
($57,750)
2030
($57,750)
All Funds, Five-Year Impact:
Fiscal Year
Probable Savings/(Cost) from GR Match For Medicaid 758
Probable Savings/(Cost) from Federal Funds 555
2026
($811,850)
($811,850)
2027
($57,750)
($57,750)
2028
($57,750)
($57,750)
2029
($57,750)
($57,750)
2030
($57,750)
($57,750)
Fiscal Analysis
The bill would require the Health and Human Services Commission (HHSC) to permit Medicaid managed care organizations to offer nutrition counseling and instruction services in lieu of services specified in the state Medicaid plan.
The bill would take effect September 1, 2025.
Methodology
This analysis assumes that HHSC would require $1,623,700 from All Funds in fiscal year 2026 for development costs associated with establishing a new provider type and $115,500 from All Funds in subsequent fiscal years for ongoing system updates.
Technology
The total technology cost is estimated to be $1,623,700 from All Funds in fiscal year 2026 and $115,500 from All Funds in fiscal year 2027.
Local Government Impact
No significant fiscal implication to units of local government is anticipated.
Source Agencies: b > td >
529 Health and Human Services Commission
LBB Staff: b > td >
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Related Legislation
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HB26 fundamentally alters Texas Medicaid Managed Care by statutorily authorizing "Food as Medicine" interventions. For the first time, Managed Care Organizations (MCOs) must be permitted to reimburse nutrition counseling as an "in lieu of" service (ILOS) and are mandated to implement a Pilot Program providing Medically Tailored Meals (MTMs) to high-risk pregnant recipients. This legislation transforms nutrition vendors and dietitians into critical, reimbursable network providers, requiring immediate updates to utilization management and vendor contracting protocols.
Q
Who authored HB26?
HB26 was authored by Texas Representative Lacey Hull during the Regular Session.
Q
When was HB26 signed into law?
HB26 was signed into law by Governor Greg Abbott on June 20, 2025.
Q
Which agencies enforce HB26?
HB26 is enforced by Health and Human Services Commission (HHSC) and State Medicaid Managed Care Advisory Committee.
Q
How urgent is compliance with HB26?
The compliance urgency for HB26 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.
Q
What is the cost impact of HB26?
The cost impact of HB26 is estimated as "low". This may vary based on industry and implementation requirements.
Q
What topics does HB26 address?
HB26 addresses topics including human services, human services--medical assistance, mental health & substance abuse, medicaid and nutrition.
Legislative data provided by LegiScanLast updated: November 25, 2025
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