When I get calls from healthcare providers, hospital administrators, and health system executives, they often start with the same frustration. They’re trying to run their practices or facilities while being pulled in multiple directions by overlapping federal mandates and Texas state requirements.
You went into healthcare to help people, not to spend your evenings trying to decipher whether a new regulation from Washington applies to your practice or whether Texas has its own version you need to follow instead.
I’m Elissa Brewster Langston, a lawyer at Brewster Law Firm, and I’ve spent my career helping healthcare providers make sense of the constantly shifting terrain of health policy. Whether you’re dealing with Medicare conditions of participation, Texas Medicaid reimbursement rules, or new state legislation that just passed in Austin, I’m here to help you stay on the right side of the law while focusing on what you do best.
What You Need to Know Right Now
- Texas healthcare providers must comply with both federal regulations from agencies like CMS and state laws administered by the Texas Health and Human Services Commission, which often overlap but sometimes conflict in their requirements.
- The Texas Health and Safety Code governs facility licensing and operations across the state, while federal law controls Medicare and Medicaid participation requirements under Title 42 of the Code of Federal Regulations.
- Recent legislative changes in Texas have introduced new requirements in areas such as electronic health records, artificial intelligence in healthcare, and healthcare provider contract arrangements during the 2025 legislative session. Be sure to confirm the specific bills and effective dates, as details are still being implemented through HHSC rulemaking.
- When federal and state health policies appear to conflict, there are established legal processes for determining which law applies, but you need someone who knows how to analyze these situations before you make compliance decisions.
How Do Federal and State Health Policies Actually Work Together?
Let me break this down in a way that makes sense. Think of federal health policy as the foundation. Congress passes laws like the Social Security Act, which created Medicare and Medicaid back in 1965. Then federal agencies like the Centers for Medicare & Medicaid Services write detailed regulations explaining how those laws work in practice. You’ll find these regulations in Title 42 of the Code of Federal Regulations.
But here’s where it gets interesting. Texas also has its own health policy setup. Our state legislature passes laws that get codified in the Texas Health and Safety Code and other statutes. Then the Texas Health and Human Services Commission takes those state laws and creates administrative rules that appear in the Texas Administrative Code.
So you’re dealing with four layers at any given time. Federal statutes, federal regulations, Texas statutes, and Texas administrative rules. Sometimes they work together smoothly. Other times they create tension. For example, Texas might have licensing requirements for a particular type of healthcare facility that go beyond what federal law requires. You need to meet both sets of standards if you want to operate in Texas and participate in federal programs.
The relationship between these layers follows a hierarchy based on the Supremacy Clause of the U.S. Constitution. Federal law wins when there’s a direct conflict. But in reality, most of what you deal with day to day involves situations where federal and state law each regulate different aspects of your operations. Federal law might control how you bill Medicare, while Texas law controls how you dispose of medical waste. You need to comply with both.
So Texas Passed a New Law—Now What?
Every two years, the Texas Legislature meets in Austin for its regular session, where most new healthcare laws get passed. In the 2025 session, lawmakers addressed electronic health records and new contract arrangements between insurers and providers.
From Bill to Law
Once the legislature passes a bill and the governor signs it, the statute becomes law. But statutes are often broad, which is where the Texas Health and Human Services Commission (HHSC) steps in.
HHSC handles the rulemaking process. They publish proposed rules in the Texas Register, and there’s a public comment period where anyone can submit feedback. After reviewing comments, HHSC revises and issues final rules. This process usually takes months.
Why the Rulemaking Stage Matters
This stage can make a real difference. I keep track of the Texas Register for my clients and flag proposals that might impact their operations. By submitting comments, we can influence how the final rule looks. I’ve seen major changes happen because providers spoke up.
What Changed in 2025
In 2025, lawmakers also passed measures regulating electronic health records and artificial intelligence in healthcare. These included rules for secure data handling, proper documentation, and standards for AI diagnostic tools.
The new requirements took effect September 1, 2025. Providers who prepared ahead ended up in a better position.
Why Federal Law isn’t Something You Can Ignore
Federal policy changes can quickly affect healthcare providers. When CMS adjusts Medicare payment rules, hospitals and provider groups can see major shifts in revenue. Updates to conditions of participation may require changes to facilities or operations. Federal agencies use a rulemaking process like Texas, but with longer timelines under the Administrative Procedure Act. For example, Section 1557 of the Affordable Care Act prohibits discrimination, and providers had compliance deadlines in 2025 for reviewing decision-making tools, updating policies, and training staff. Missing these could jeopardize Medicare participation.
Medicaid also shows how federal changes impact Texas providers. Since it is a joint federal-state program, the federal government sets the baseline and offers matching funds, while Texas manages its own program. When federal rules change, Texas must revise its state plan and update provider rules. This creates a ripple effect that providers must track closely to stay compliant and avoid disruptions.
Let’s Talk About How Texas Medicaid Really Works
Texas Medicaid has unique characteristics. HHSC administers the program and contracts with managed care organizations to deliver most services. You’ve probably dealt with the Texas Medicaid Provider Procedures Manual (TMPPM) if you serve Medicaid patients. That manual gets updated regularly and currently contains all policy changes updated through late September 2025.
Medicaid Policy Controls
Texas Medicaid policy affects everything from who qualifies for coverage to how much you get paid for services to what documentation you need to maintain. HHSC can change payment rates, add or remove covered services, and modify prior authorization requirements through the regulatory process.
Provider Contracts
One thing I see healthcare providers miss is that Texas Medicaid contracts incorporate both state law and federal law by reference. So when you sign a provider agreement to participate in Texas Medicaid, you’re agreeing to comply with a whole body of federal and state law that can change over time. You don’t get to renegotiate your contract every time a regulation changes. The contract terms automatically incorporate those changes.
Payment Methodologies Matter
This matters especially with reimbursement. Texas Medicaid uses different payment methodologies for different types of providers. Hospitals might get paid based on diagnosis-related groups. Physicians might get paid based on fee schedules. Home health agencies might have case-based payment. Knowing which payment methodology applies to you and how HHSC calculates rates can mean the difference between financial success and financial difficulty.
Directed Payment Programs
There are also Directed Payment Programs (DPPs), which replaced the discontinued Delivery System Reform Incentive Payment (DSRIP) program after 2021. Programs like CHIRP, QIPP, and TIPPS can provide significant additional revenue if you qualify and submit the right documentation. But the rules for these programs are complex and change periodically.
What Do You Do When the Rules Just Don’t Match?
This is where things get technical, but it’s really important.
The basic rule is that federal law preempts conflicting state law under the Supremacy Clause. But figuring out whether there’s actually a conflict requires legal analysis.
Three Types of Preemption
- Sometimes there’s express preemption, where Congress explicitly says federal law preempts state law on a particular subject.
- Sometimes there’s field preemption, where federal regulation is so thorough that it leaves no room for state law.
- Sometimes there’s conflict preemption, where it’s impossible to comply with both federal and state law.
But often, federal and state law can coexist. Federal law might set a floor, and state law might set a higher standard. For example, federal law might require certain patient safety measures, and Texas law might require additional safety measures. You need to meet both standards.
Here’s a practical example. The Health Insurance Portability and Accountability Act, better known as HIPAA, sets federal standards for protecting patient health information. But Texas also has its own medical privacy laws in the Texas Health and Safety Code.
In most situations, HIPAA and Texas law work together. You comply with whichever law is more protective of patient privacy in a given situation. But there are some specific situations where the laws pull in different directions, and you need legal advice on which applies.
Can You Really Shape the Rules Before They’re Final?
Yes, and you should. Both the federal and Texas rulemaking processes include opportunities for public input. When an agency publishes a proposed rule, there’s a comment period. Your comments become part of the official record. The agency has to consider them and respond to significant comments when they publish the final rule.
What Makes Comments Effective. I help clients prepare substantive comments that actually get attention. Generic statements don’t help. But specific comments explaining why a proposed requirement is unworkable in practice, supported by data or concrete examples, can lead to changes.
Working Through Trade Associations. You can also work with trade associations. Groups like the Texas Hospital Association or the Texas Medical Association track legislation and regulations affecting their members. They submit comments, meet with legislators and agency officials, and coordinate advocacy campaigns. Being part of these associations gives you a voice in the process.
Timing Is Everything. The key is getting involved early, before a rule is finalized or a bill passes. Once something becomes law, changing it is much harder. But during the development process, there’s real opportunity to shape the outcome.
The Latest Laws You Need on Your Radar Today
Several significant changes came out of the 2025 Texas legislative session. Let me highlight the ones that are affecting most of my clients.
House Bill 2254 – New Contract Flexibility
House Bill 2254 authorized health insurance plans to enter into new types of contracts for primary care services. This includes fee-for-service arrangements, risk-sharing arrangements, and capitation arrangements.
If you’re negotiating contracts with payers, you now have more flexibility in how those contracts are structured. But you also need to know the implications of different payment models for your financial risk and regulatory compliance.
Senate Bill 1188 – EHRs and AI Requirements
Senate Bill 1188 addresses both electronic health records and artificial intelligence in healthcare.
On the EHR side, it requires accurate documentation of biological sex and secure handling of sensitive data. It ensures parents can access their minor child’s health records and prohibits storage of non-medical data in medical systems.
On the AI side, it introduces specific requirements for healthcare providers using AI in diagnostic contexts. If you’re using any AI tools in your practice, you need to review whether SB 1188’s requirements apply to you.
Federal Regulatory Review
At the federal level, regulatory review continues under directives from the current administration. Agencies have been instructed to identify regulations that might create barriers to market competition or limit healthcare access. This could lead to significant changes in how federal health programs are administered over the next few years.
What You’re Signing Up for When You Take Medicare
Medicare is the federal health insurance program primarily for people 65 and older and certain younger people with disabilities. If you want to treat Medicare patients and bill Medicare for your services, you need to meet Medicare’s conditions of participation or conditions for coverage.
These conditions are detailed regulatory requirements that appear in Title 42 of the Code of Federal Regulations. Different types of facilities have different conditions. Hospitals have conditions in 42 CFR Part 482. Skilled nursing facilities have conditions in 42 CFR Part 483. Home health agencies have conditions in 42 CFR Part 484.
How CMS Enforces Compliance
CMS enforces these conditions through a survey process. State survey agencies, including the Texas Health and Human Services Commission (HHSC) for most facility types, conduct surveys on behalf of CMS.
If you’re found not to be in compliance with conditions of participation, CMS can terminate your Medicare provider agreement. That means you can no longer treat Medicare patients and bill Medicare. For most facilities, losing Medicare participation would severely harm operations.
Medicare Fraud and Abuse Laws
Medicare also requires compliance with the Medicare fraud and abuse laws. This includes the False Claims Act, the Anti-Kickback Statute, the Stark Law, and the Civil Monetary Penalties Law.
These laws regulate everything from billing practices to financial relationships with physicians to marketing activities. Violations can result in substantial fines, exclusion from federal healthcare programs, and even criminal prosecution.
How I Walk Clients Through New Compliance Changes
First, don’t panic. Most new regulations come with a transition period. Use that time wisely. Read the actual text of the law or regulation, not just summaries. Know what’s required, when it takes effect, and whether there are any exceptions that might apply to you.
Second, assess the impact on your operations. What systems or processes need to change? What’s the timeline? What’s the cost? Do you have the internal resources to implement the changes, or do you need outside help?
Third, document your compliance efforts. When you make changes to comply with a new requirement, document what you did and when. If there’s ever a question later about whether you were in compliance, you’ll have a record.
Fourth, get legal advice if there’s any ambiguity. New regulations often leave room for interpretation. Having an attorney review how the regulation applies to your specific situation can save you from costly mistakes.
Key Takeaways
- Health policy in Texas combines federal law, state statutes, and agency rules from bodies like CMS and Texas HHSC, shaping how providers must operate.
- The 2025 legislative session introduced changes to electronic health records, AI in healthcare, and provider contracts, with new regulations still in development.
- Providers can influence policy through public comments, trade associations, and legislators. Strong compliance programs not only avoid penalties but also support efficient care. Understanding the overlap of federal and state rules helps providers focus on patients instead of compliance worries.
Frequently Asked Questions
How do I know which regulations apply to my facility or practice?
It depends on your facility type, services, and payment programs. Texas licenses healthcare facilities under different parts of the Health and Safety Code. If you’re in Medicare or Medicaid, you must also meet federal conditions. Start with your license type, then layer on federal requirements. A healthcare attorney can help you sort it all out.
Can Texas create stricter health regulations than federal law?
Yes, as long as they don’t conflict with federal law. Texas can require more staffing, tougher facility standards, or added patient protections. What it can’t do is make compliance with federal law impossible. In practice, Texas rules are often stricter.
What if I get a survey deficiency?
Read the notice carefully, submit a plan of correction, and show how you’ll fix each issue. Implement and document compliance. You can appeal if you disagree, but still submit your plan to avoid penalties. Talk to a lawyer before appealing.
How often do regulations change?
Federal rules may shift anytime, often with new laws or administrations. Texas laws change every two years. Some areas change quickly, others remain stable—so regular monitoring is key.
Do I need a compliance program?
Yes, especially if you’re in Medicare. Large organizations need formal programs; smaller practices still need policies, training, and someone handling compliance.
Let’s Get Ahead of Compliance Headaches Together
If you’re dealing with federal or state health policy questions, I’m here to help. Whether you’re trying to figure out how a new regulation affects your facility, need someone to review your compliance program, or want representation in an enforcement matter, Brewster Law Firm has the knowledge and experience to support your healthcare practice or organization.
Healthcare regulation doesn’t have to keep you up at night. With the right legal support, you can stay compliant while focusing on what matters most—providing excellent patient care. Let’s talk about how I can help your organization manage the legal and regulatory challenges you’re facing.
Don’t wait until a compliance problem becomes a crisis. Reach out to Brewster Law Firm today for a free consultation, and let’s start building a relationship that protects your practice and your patients.