Relating to Medicaid and child health plan program coverage and reimbursement for childhood cranial remolding orthosis.
ModeratePlan for compliance
Low Cost
Effective:2025-09-01
Enforcing Agencies
Health and Human Services Commission (HHSC)
01
Compliance Analysis
Key implementation requirements and action items for compliance with this legislation
Implementation Timeline
Effective Date: September 1, 2025 (Statutory enactment).
Compliance Deadline:September 1, 2026 (Projected Operational Start). The Legislative Budget Board indicates HHSC requires 12–18 months for rate hearings and policy revisions. Do not budget for this revenue in FY 2025.
Agency Rulemaking: HHSC must establish the specific reimbursement rate and update the *Texas Medicaid Provider Procedures Manual*. The period between Sept 2025 and Sept 2026 is the "regulatory gray zone" where definitions for "conservative therapy" will be codified.
Immediate Action Plan
1.Calculate Margins: Run a cost analysis against the projected $1,864 reimbursement rate. If your current cost structure is higher, initiate vendor renegotiations now.
2.Update Intake Forms: Add a mandatory field for "Date Conservative Therapy Initiated" and a checkbox for "Supporting Documentation Attached" to your referral intake forms.
3.Standardize Measurement: Issue a clinical directive requiring all evaluations for cranial deformities to include specific millimeter measurements or Cephalic Index calculations in the SOAP notes.
4.Manage Expectations: Inform referring pediatricians that while the law has passed, Medicaid billing availability is delayed until FY 2026.
Operational Changes Required
Contracts
Managed Care Organizations (MCOs): Expect contract amendments or provider manual updates from Texas Medicaid MCOs (e.g., Superior, Amerigroup, Texas Children’s) to include this benefit.
Vendor Negotiations: The state estimates a reimbursement rate of $1,864 per utilizer. You must immediately audit your fabrication vendor contracts. If your cost of goods sold (COGS) plus clinical labor exceeds this margin, renegotiate fabrication rates or adjust internal manufacturing processes before the 2026 go-live.
Hiring/Training
Clinical Staff: Orthotists must be trained to document specific anthropometric measurements (in millimeters) rather than qualitative assessments. "Visible flattening" is insufficient; the chart must reflect asymmetry >6mm or a cephalic index >2 SD from the mean.
Intake Coordinators: Staff must be retrained to screen referrals for the statutory age window (3 to 18 months). Referrals for children outside this window must be flagged immediately as non-reimbursable.
Reporting & Record-Keeping
Evidence of Failed Therapy: You must implement a document intake process that secures proof of two months of failed conservative therapy (repositioning/PT) prior to the helmet prescription. Without this paper trail from the referring pediatrician or therapist, the claim will be denied or recouped.
Audit-Proofing: Patient files must explicitly link the diagnosis code (e.g., Plagiocephaly) with the specific statutory measurement criteria.
Fees & Costs
Revenue Impact: This is a reimbursement expansion, not a fee increase.
Cash Flow Warning: Expect initial claims denials in late 2026 as MCO adjudication systems adjust to the new logic. Maintain sufficient cash reserves to cover the lag in receivables.
Strategic Ambiguities & Considerations
HHSC rulemaking will define the following critical operational details. Monitor the *Texas Register* for:
1.Definition of "Conservative Therapy": The statute requires "documented failure." It is currently unclear if a pediatrician’s note stating "repositioning failed" is sufficient, or if formal Physical Therapy records will be required.
2.Measurement Methodology: The law requires measurements but does not specify the tool. We must verify if HHSC will accept 3D scanning data as the primary evidence of asymmetry, or if manual caliper measurements will be required for the medical record.
3.The "Gap" Cohort: The law does not address children who are currently eligible (e.g., 5 months old) but will age out (pass 18 months) before the program becomes operational in September 2026.
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The bill author has informed the committee that a cranial remolding orthosisor a remolding helmetis considered an effective treatment by pediatricians for addressing certain conditions, including brachycephaly and plagiocephaly, which refer to flat spots or misshapen heads, but insurers often consider this treatment cosmetic and do not provide coverage. Another condition, craniosynostosis, is potentially life‑threatening and requires surgery that is often followed by two separate cranial orthoses. The bill author has further informed the committee that the surgery performed and the first helmet used to treat craniosynostosis are often covered by insurance, but a child needing a second helmet is often left without coverage. C.S.H.B. 426 seeks to improve the quality of life for affected children by providing Medicaid and CHIP reimbursement for the full cost of a cranial remolding orthosis for a covered child who either has craniosynostosis or who has plagiocephaly or brachycephaly and meets certain other clinical criteria.
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
C.S.H.B. 426 amends the Human Resources Code to require the Health and Human Services Commission to ensure Medicaid reimbursement is provided to cover the full cost of a cranial remolding orthosis for a child who is a Medicaid recipient and has been diagnosed with the following:
·craniosynostosis; or
·plagiocephaly or brachycephaly if the child is not less than 3 months of age and not more than 18 months of age, has had documented failure to respond to conservative therapy for at least two months, and has one of the following sets of measurements or indications:
oasymmetrical appearance confirmed by a right/left discrepancy of greater than six millimeters in a craniofacial anthropometric measurement; or
obrachycephalic or dolichocephalic disproportion in the comparison of head length to head width confirmed by a cephalic index of two standard deviations above or below mean.
The bill prohibits the coverage from being less favorable than the coverage required for other orthotics under Medicaid. The bill defines "cranial remolding orthosis" as a custom-fitted or custom-fabricated medical device that is applied to the head to correct a deformity, improve function, or relieve symptoms of a structural cranial disease.
C.S.H.B. 426 amends the Health and Safety Code to require CHIP to cover in full the cost of a cranial remolding orthosis for a CHIP enrollee in the same manner that Medicaid coverage is provided for that treatment under the bill.
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.
EFFECTIVE DATE
September 1, 2025.
COMPARISON OF INTRODUCED AND SUBSTITUTE
C.S.H.B. 426 differs from the introduced only by including a Texas Legislative Council draft number in the footer.
Honorable Lacey Hull, Chair, House Committee on Human Services
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HB426 by Bernal (Relating to Medicaid and child health plan program coverage and reimbursement for childhood cranial remolding orthosis.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB426, As Introduced: a negative impact of ($2,265,870) through the biennium ending August 31, 2027.
General Revenue-Related Funds, Five- Year Impact:
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2026
$0
2027
($2,265,870)
2028
($2,189,911)
2029
($2,284,535)
2030
($2,311,446)
All Funds, Five-Year Impact:
Fiscal Year
Probable Savings/(Cost) from GR Match For Medicaid 758
Probable Savings/(Cost) from Federal Funds 555
Probable Revenue Gain/(Loss) from General Revenue Fund 1
Probable Revenue Gain/(Loss) from Foundation School Fund 193
2026
$0
$0
$0
$0
2027
($2,333,647)
($3,475,780)
$50,833
$16,944
2028
($2,361,363)
($3,517,060)
$128,589
$42,863
2029
($2,389,015)
($3,558,246)
$78,360
$26,120
2030
($2,416,730)
($3,599,526)
$78,963
$26,321
Fiscal Analysis
The bill would require the Health and Human Services Commission (HHSC) to provide Medicaid and Children's Health Insurance Program (CHIP) reimbursement for childhood cranial remolding orthosis for certain children and requires that such reimbursement not be less favorable than the coverage required for other orthotics under the Medicaid program.
Methodology
According to HHSC, necessary policy revisions and rate hearings associated with creating a new benefit can take approximately 12 to 18 months to complete; therefore, HHSC assumes that services would begin September 1, 2026.
The additional annual Medicaid caseload associated with the new benefit is estimated to be 3,114 in fiscal year 2027, increasing to 3,225 by fiscal year 2030, with an assumed annual cost of $1,864 per utilizer. The additional annual CHIP caseload associated with the new benefit is estimated to be 3 in fiscal year 2027 through 2030, with an assumed annual cost of $1,865 per utilizer. This analysis assumes a total client services cost of $2,333,647 from the General Revenue Fund ($5,809,427 from All Funds) in fiscal year 2027.
This analysis assumes that these costs would be partially offset by an estimated $50,833 to the General Revenue Fund in fiscal year 2027 from client services payments through managed care that are assumed to result in an increase to the General Revenue Fund from insurance premium tax revenue and revenue adjusted for assumed timing of payments and prepayments, resulting in increased revenue collections. Additionally, this analysis assumes an offset of $16,944 in fiscal year 2027 to be deposited to the credit of the Foundation School Fund, pursuant to Section 227.001(b), Insurance Code.
This analysis assumes that any administrative costs to HHSC associated with development and implementation of the new benefits could be absorbed using existing resources.
Technology
No significant technology cost is anticipated.
Local Government Impact
No significant fiscal implication to units of local government is anticipated.
Source Agencies:
529 Health and Human Services Commission
LBB Staff:
JMc, NPe, ER, ESch, NV
Related Legislation
Explore more bills from this author and on related topics
Texas has mandated Medicaid and CHIP coverage for cranial remolding orthosis (helmets) for infants with craniosynostosis, plagiocephaly, or brachycephaly, creating a new reimbursement stream for O&P and DME providers. However, reimbursement is contingent upon strict, statutory clinical gates—specifically age limits, anthropometric measurements, and proof of failed conservative therapy—which will require immediate updates to intake and documentation protocols to survive future audits. Implementation Timeline Effective Date: September 1, 2025 (Statutory enactment).
Q
Who authored HB426?
HB426 was authored by Texas Representative Diego Bernal during the Regular Session.
Q
When was HB426 signed into law?
HB426 was signed into law by Governor Greg Abbott on June 20, 2025.
Q
Which agencies enforce HB426?
HB426 is enforced by Health and Human Services Commission (HHSC).
Q
How urgent is compliance with HB426?
The compliance urgency for HB426 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.
Q
What is the cost impact of HB426?
The cost impact of HB426 is estimated as "low". This may vary based on industry and implementation requirements.
Q
What topics does HB426 address?
HB426 addresses topics including health, health--children's insurance, human services, human services--child services and human services--medical assistance.
Legislative data provided by LegiScanLast updated: November 25, 2025
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