Primary care physicians in Texas can opt to enter value-based care (VBC) arrangements with state-regulated PPO and EPO health plans with the passage of a new state law, which reflects safeguards advocated by medicine.
House Bill 2254, passed by the Texas Legislature in 2025’s regular session and effective upon its June 20 signing, allows PPO and EPO health plans to contract with primary care physicians under specific value-based payment agreements, including risk-sharing and capitation arrangements. The law defines primary care physicians as specialists in family medicine, general internal medicine, and general pediatrics.
After monitoring an earlier iteration of the bill in the 2023 session, the Texas Medical Association convened a work group with members of its Council on Legislation, its Task Force on Alternative Payment Models, and cross-specialty representation to discuss needed safeguards. Tilden Childs, MD, former chair of the council, says the newly passed law reflects input gathered during that process.
“We just wanted to be sure that it was a good bill, that it didn’t favor insurance companies over physicians, and didn’t disadvantage physicians,” Dr. Childs said.
Safeguards in the new law include provisions that contracts between insurers and physicians and physician groups must:
- Clearly define performance measures;
- Clearly define patient attribution methods, determining which patients belong to each physician within a VBC arrangement;
- Spell out shared-savings procedures;
- Describe any applicable stop-loss thresholds or a guaranteed minimum level of payment per month; and
- Allow physicians the opportunity to renegotiate capitation rates should they need to increase patient services, or the payer changes its benefit structure.
The law also specifies such contracts are voluntary, and insurers are prohibited from discriminating against physicians who choose not to participate. It also includes language preventing either party to a VBC contract from subcontracting their rights or duties under the contract to other parties.
TMA staff point out that prior to the law’s passage, state-regulated insurers in the commercial market could only offer capitation and/or risk-based VBC contracts through HMOs. With PPOs and EPOs added to the mix, and with Medicare, Medicare Advantage, and Medicaid already offering similar payment models, primary care physicians now have multiple different avenues to pursue a VBC contract.
“These kinds of agreements in value-based care fit very nicely in how most of us do primary care,” said Troy Fiesinger, MD, an associate medical director with Kelsey-Seybold Clinic in Houston. “It aligns a payment system and contract with how we’re all trained to practice primary care [by] incentivizing prevention and wellness, preventing hospitalizations, managing chronic conditions … instead of rewarding us for seeing the patients a lot.”
“[HB 2254] gives [primary care physicians] a chance to enter some payment models that are different than traditional fee-for-service. It gives them access,” said Zeke Silva, MD, chair of TMA’s Council on Legislation. “When you have access to a different insurance product, you have access to different pools of beneficiaries, and so that was the goal.”
TMA will monitor the law’s implementation now that insurers have the green light to offer these contracts in Texas. Physician groups – especially those new to risk-based VBC – should utilize their own privately retained legal counsel and other appropriate professionals for contract reviews.
Learn more about TMA’s work on insurance issues during the 2025 session and visit its insurance resource page.
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Phil West
Associate Editor
(512) 370-1394
phil.west[at]texmed[dot]org
Phil West is a writer and editor whose publications include the Los Angeles Times, Seattle Times, Austin American-Statesman, and San Antonio Express-News. He earned a BA in journalism from the University of Washington and an MFA from the University of Texas at Austin’s James A. Michener Center for Writers. He lives in Austin with his wife, children, and a trio of free-spirited dogs.