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HB 5734

Health: licensing; references to licenses for certain substance use disorder services programs in the nonprofit health care corporation reform act; modify to include those exempt from licensure. Amends sec. 414a of 1980 PA 350 (MCL 550.1414a). TIE BAR WITH: HB 5729'26

2025-2026 Regular Session Introduced by Nancy DeBoer and 2 co-sponsors

Allows exempt Part 62 SUD programs to contract with nonprofit health care corporations for inpatient, intermediate, and outpatient treatment, modernizing licensure rules.

referred to second reading
#health:controlledsubstances #health:licensing #health:substanceusedisorder #health:substanceusedisordertreatment
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Bill Summary · HB 5734

Overview

HB 5734 (2025-2026, Michigan) would amend the nonprofit health care corporation reform act (Public Act 350 of 1980) to modify licensure references for substance use disorder (SUD) services programs. It ties to HB 5729 and would adjust how SUD services programs that are exempt from licensure under Part 62 of the Public Health Code may contract with health care corporations. The bill also repeals obsolete 1994-era requirements related to a demonstration project and advisory committee.

Primary purpose and intent

  • Align licensing and contracting rules to accommodate SUD services programs that are exempt from licensure under Part 62 of the Public Health Code.
  • Allow exempt SUD services programs to contract with health care corporations for inpatient, intermediate, and outpatient substance abuse treatment services.
  • Remove outdated language relating to an adolescent demonstration project and the associated advisory committee reporting requirements.

Key provisions and changes

  • Section 414a amendments:

    • Health care corporations must offer inpatient treatment benefits for substance abuse by licensed physicians in state-operated or department-approved facilities.
    • Corporations may contract with providers for inpatient, intermediate, and outpatient SUD treatment, subject to certain licensure standards.
    • For inpatient treatment contracted with providers serving adolescents, those providers must meet specified criteria (accreditation, possible certificate of need, licensure status or exemption under Part 6, child-caring institution licensure, and agreement to follow generally accepted accounting principles and to provide required data).
    • A substance abuse advisory committee is defined, including representation from state offices and contracted providers, with duties to evaluate demonstration projects and report to legislature. The section references would be updated to remove the long-standing 1994 reporting obligations.
    • Coverage requirements, rate adequacy, and nondiscrimination between substance abuse services and other benefits are reiterated, including protections around deductibles and copays for substance abuse services, with a minimum $1,500/year benefit floor (adjusted over time via CPI).

  • Definitions and scope (as applied to adolescent services and licensure):

    • Includes inpatient, intermediate, and outpatient care definitions for substance use disorder services.
    • Clarifies licensure status: Part 62-exempt programs can contract with health care corporations to provide SUD services.

  • Administrative and fiscal notes:

    • Rulemaking: Department of Licensing and Regulatory Affairs (LARA) would set standards governing licensure categories, program operation, staffing, facilities, audits, quality control, and related requirements for SUD services programs.
    • The act preserves consistency in standards across licensure categories where feasible.
    • Fiscal impact is indeterminate for HB 5729 (which drives HB 5734’s changes), with potential license fee revenue reductions if fewer entities require licensure under Part 62.

Who would be affected

  • Health care corporations (nonprofit) that contract for SUD inpatient, intermediate, and outpatient services.
  • Substance use disorder services programs that are exempt from Part 62 licensure (e.g., hospitals, psychiatric facilities, crisis stabilization units) would gain the ability to contract with health care corporations for SUD services without obtaining a Part 62 license.
  • Providers serving adolescent SUD patients that contract under the demonstration project framework (requiring accreditation, readiness, and data sharing) would be subject to established criteria.
  • Agencies and programs related to the substance abuse advisory committee, though the concrete reporting requirements would be updated/removed.

Procedural and timeline notes

  • Enacting clause indicates HB 5734 takes effect only if HB 5729 (the companion bill) becomes law.
  • The bill is introduced and referred to the House Health Policy Committee; as of the latest action, it has been reported with recommendation without amendment and placed on second reading.
  • The bill is part of a package (HBs 5728–5738) involving companion legislation across related codes (Prudent Purchaser Act, Municipal Health Facilities Act, Mental Health Code, Zoning, Vehicle Code, etc.), all contingent on HB 5729’s enactment.

Summary assessment

HB 5734 seeks to streamline contracting for SUD services by health care corporations with entities exempt from licensure under Part 62, while phasing out obsolete reporting requirements tied to a 1990s-era demonstration program. It preserves core protections around coverage, cost, and quality, and expands flexibility for providers to deliver inpatient, intermediate, and outpatient SUD care through corporate contracting. The measure would be enacted only if HB 5729 advances, reflecting a coordinated package of reforms affecting licensure, health care contracting, and related administrative rules.

Compiled from official sources — confirm details with the bill’s official record.

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