HHS Ranks $119M Medicaid Modernization as High Priority

As a human-centered organization touching millions of lives, the Texas Health and Human Services Commission (HHSC) continues its work to optimize technology and create more streamlined processes to enhance services, evident in its budget requests for the next biennium.

The commission has asked for twice the number of exceptional items in the 2026-27 biennial budget than it did for the 2024-25 budget, and a top priority is to modernize the Medicaid enterprise system using more than $30 million each year.

Overall, according to the 1,691-page document, this project will set the system up for future enhancements and to meet fast-approaching federal reporting and compliance requirements.

It is listed as the agency’s fourth priority overall and involves touching 20 legacy systems, relieving technical debt, enhancing human and computing productivity and optimizing costs across the board. There are hardware, software and human resources listed.

Project cost estimates are:

• $32.7 million in 2026
• $31 million in 2027
• $60.2 million “out-of-year costs” in 2028-30
• $119.4 million total

The agency plans to procure a vendor to assist in developing a modernization road map, upgrade technology for new compliance rules and standards, and fund a procurement assistance vendor to assist with an array of complex contracts. The funds will support additional full-time employees, and HHS will use the Department of Information Resources shared technology services and cooperative contracts.

Like all state agencies, HHSC has been working on the budget process for months. Submitting a legislative appropriations request is one step and includes regularly expected funding but also exceptional requests, such as long-term IT projects.