What's in the bill, piece by piece
The bill creates a new Chapter 166 in the Texas Occupations Code, next to the Medical Practice Act. Here is each part in everyday terms.
| Part of the bill | What it means |
|---|---|
| Subchapter A · Definitions | Defines the players: the doctor, the practice, the management company (MSO), the staffing company, the hospital, the medical director, and the private equity fund. The key word is "control": if you own 10 percent or more of a practice, or can fire the doctor who owns it on paper, the law treats you as in control no matter what the contract says. |
| Subchapter B · Decisions that belong to doctors | Nobody without a license may direct a doctor's diagnosis, treatment, prescribing, referrals, coding, chart notes, or what the doctor tells the patient. No patient-per-hour quotas or billing targets as a condition of pay or scheduling. No replacing the physicians in an ER or ICU with lesser-trained staff without the physicians' and medical staff's written consent. Every ER must have a physician physically present (small rural hospitals can apply for a published waiver). Patients have the right to know whether the person treating them is a physician and to ask for one. |
| Subchapter B · Who may work in an ER | Any Texas-licensed physician may staff an emergency room if the hospital's medical staff finds him or her individually qualified. No hospital, staffing company, or insurer may require emergency-medicine board certification, exclude a family medicine or internal medicine doctor because of specialty, or pay that doctor less per hour or per shift than an emergency-medicine doctor for the same work. Pay can still differ for individual reasons such as years of ER experience. A doctor underpaid this way can recover the difference up to what the highest-paid physician doing the same work at that facility earns. Existing trauma-center rules are left alone. |
| Subchapter B · Medical directors | Must be trained in the specialty, have at least five years of practice after residency (for an ER, five years of ER practice in any specialty qualifies), still work shifts in that department, and be approved by a majority vote of the doctors he or she will direct. Those doctors can remove the director by a two-thirds vote. No bonus for cutting physician staffing or pushing volume; cannot be fired for refusing an order the law forbids. |
| Subchapter B · The right to say no (Sec. 166.059) | A doctor may decline to perform, order, continue, or supervise a surgery, procedure, treatment, admission, discharge, transfer, or prescription that he or she judges not medically indicated, unsafe for the patient, unsafe with the staff and equipment on hand, or outside his or her training. A hospital, executive, administrator, management company, or staffing company may not fire, suspend, cut the hours or pay of, pull privileges from, drop from the schedule, open a peer review on, or report to the Data Bank or Medical Board a doctor for saying no, for demanding safe staffing, for advocating for a patient, or for refusing a volume or billing target. Any such action within one year is presumed retaliation; to rebut it, the hospital must prove by clear and convincing evidence a documented competence or conduct reason, recommended by physicians in the same specialty after a hearing where the doctor had a lawyer. A retaliatory peer review loses its state-law confidentiality and immunity; anyone claiming federal peer-review immunity (HCQIA) must prove the review met every federal standard, and a retaliation finding is evidence it did not (Sec. 166.059(e)). The hospital board may act on privileges only on the medical staff’s recommendation (or for license, exclusion, or criminal reasons), and privileges cannot depend on employment, referrals, admissions, or finances. The doctor gets reinstatement, back pay, damages, and attorney’s fees, and a judge must restore privileges and schedule while the case is pending, with bond capped at $1,000. |
| Subchapter C · Management companies | Stay legal. May provide offices, equipment, payroll, billing, IT, marketing, contract help, purchasing, HR. May not own any piece of the practice, employ doctors to practice medicine, control the sale of the practice, sit on both sides of the table, or take a share of profits. Fees set in advance at fair market price. Companies owned entirely by Texas doctors are exempt from the ownership rules. |
| Subchapter C · Who keeps the money | Fees for medical care belong to the doctor's practice the moment they are earned. Someone without a license and without malpractice risk may be paid only a fair fee for services, fair rent, or ordinary loan interest. Any deal where an outsider's take rises as the doctor sees more patients is fee splitting, is void, and the doctor can sue to get the money back. |
| Subchapter D · Noncompetes and gag clauses | A doctor's noncompete is void. The one exception: a doctor who sells his or her own practice to another doctor can agree not to reopen nearby for one year within five miles; it never applies to a sale to a corporation, investor, or hospital. A departing doctor may notify patients and keep treating them. Contracts cannot stop a doctor from reporting unsafe conditions to the Medical Board, talking to patients about who owns the practice, or testifying. Firing within a year of a protected complaint is presumed retaliation. |
| Subchapter E · Sunlight | Every management agreement and side agreement is filed with the Texas Medical Board. The Board posts who owns the management company and the practice; the contracts stay confidential and are used only for enforcement. Practices with outside owners post a plain-language lobby notice. The Board reports to the Legislature every year. |
| Subchapter F · Enforcement | A contract that breaks the rules is void. The Attorney General can sue, seek fines up to $10,000 per day per practice, and claw back money. Harmed doctors, practices, and patients can sue for damages, an injunction, and attorney's fees, with triple damages for knowing violations. Doctors who knowingly front for an illegal arrangement face Board discipline, with leniency for those who come forward. Anyone who gives the Attorney General original information that leads to a recovery gets 15 to 30 percent of it (Sec. 166.252(e)). |
| Subchapter F · Executives who practice medicine | Practicing medicine without a license has been a felony in Texas for a century. A CEO, COO, or other executive who knowingly sets a policy that controls a doctor's medical, staffing, or patient-volume decisions is doing exactly that, whether the policy is set directly or pushed through a contract, subsidy condition, contractor, or other middleman. So is an executive who punishes a doctor for refusing an unsafe case, or orders someone else to do a procedure the doctor declined (Sec. 166.257(b-1)). It is a third-degree felony; if the policy causes a patient bodily injury, second degree; if it causes a death, first degree. The company is prosecuted alongside the executive, cannot insure or reimburse the fine, and is barred from managing practices or holding hospital contracts for ten years. The local district or county attorney prosecutes, with the Attorney General's help. |
| Subchapter G · Exemptions | Hospitals, nonprofit health organizations, community health centers, medical schools, and government hospitals keep the employment authority they already have. But no exemption lets anyone override a doctor's medical decisions, appoint an unqualified medical director, or divert professional fees. Sec. 166.302: no hiding behind a nonprofit. Many Texas hospitals employ doctors through a state-certified "nonprofit health organization" (often called a 501(a)) that is supposed to be physician-run. Under T-PIPPA, any deal between that organization and a management company or investor is covered by the management-company rules; if it serves a hospital or is funded or managed by outsiders, its board must be physicians elected by the doctors it employs, it keeps its own professional fees, and its doctors vote on their pay plan and productivity standards. Using a nonprofit or any other entity as a front is itself a violation, and the Texas Medical Board must pull its certification if it is used that way. |
| Subchapter H · Hospital contracts | A hospital, freestanding ER, or surgery center may get physician coverage only from a doctor, a group owned entirely by doctors, its own lawful employees, or a medical school, not from a staffing company or private-equity-owned group. Doctors already working there get notice and a chance to bid; the medical staff gets 90 days' notice and a say before a department contract is cancelled; the hospital must post who provides its ER physicians. |
| Subchapter H · Executive bonuses (Sec. 166.356) | A hospital may not pay its CEO or any administrator a bonus, equity, or incentive tied to patients seen per doctor, RVUs or throughput, cutting doctor hours, staffing, or pay, the ratio of NPs and PAs to physicians, shrinking the payment to the ER or other physician group, or billing and coding intensity. Bonuses tied to safety, quality, mortality, infections, readmissions, patient experience, access to a doctor, or the hospital’s overall finances are fine. Executives also may not push those targets on a physician group through its contract, subsidy, renewal, rebid, or any middleman, in writing or not. Doctors ratify the bonus plan (Sec. 166.356(d)): by December 1 each year the board must give the medical staff the next year’s bonus plan for the CEO, COO, CFO, chief nursing officer, and every administrator over a physician contract, listing every metric, its definition, and its weight. The plan takes effect only if a majority of the active medical staff approves it by secret ballot by January 31. A rejected plan, or one changed after the vote, is void and pays nothing. By March 1 the hospital files the plan, the vote, and the bonuses actually paid with HHSC, and the state posts them. Punishing a doctor for his or her vote counts as retaliation under Sec. 166.059. The bill’s own finding: hospital revenue is earned under physicians’ licenses, so physicians get to approve how it is paid out as bonuses to people who hold no license. Bonuses paid without ratification are clawed back by the Attorney General or recovered by the medical executive committee in court, and anyone who reports a violation is protected from retaliation and gag clauses. |
| Loopholes closed | No hidden stakes: nonvoting, convertible, or "synthetic" ownership counts as control at 10 percent. No liens on a practice’s fees or records, no insurer-owned management companies, and total payments to a management company above 40 percent of collections are presumed too high. Disguised noncompetes (repayment clauses, forfeitures, tail-coverage bills, long notice periods) are void. Out-of-state contracts and arbitration clauses can’t dodge the law. Doctors keep privileges 180 days after a contract ends. Anyone can bring a whistleblower (qui tam) suit and share 25 to 30 percent, medical staffs can sue, and violations carry $25,000 in damages each. Public hospital districts are covered too. |
Questions people ask
Isn't this already illegal in Texas?
The principle is. The enforcement is not. No statute says what a management company may and may not do, the Medical Board has no clear power to investigate non-physician companies, and no one has ever had to file these contracts anywhere.
Won't this cut off money small practices need?
No. A practice can still borrow, lease, and buy services from anyone. It cannot sell its decision-making or its profits to someone without a license, the same rule that applies to law firms in every state.
How will hospitals staff ERs?
The way most did fifteen years ago and many still do: by contracting with emergency physicians who own their own practice. Those groups can be large and can use a management company for billing and scheduling.
Why ban noncompetes after the 2025 law?
The 2025 law (one year, five miles, buyout capped at a year's pay) still means a doctor who objects to a quota has to pay a year's salary or move. A doctor who cannot leave cannot push back. The ban applies only to new contracts.
Does the physician-in-every-ER rule close rural hospitals?
It is not meant to. It takes effect September 2028, and a hospital in a county under 50,000 people can get a published waiver if no physician is reasonably available.
What's wrong with a corporate-appointed medical director?
Nothing, if qualified and answerable to the doctors. The bill sets a floor: trained in the specialty, five years of practice, still seeing patients there, confirmed by a vote of the doctors being directed.