Texas: The Monopoly Contract — One Corporation, All 254 Counties, $816 Million a Year
One corporation, one contract, all 254 counties. $816 million a year. And the CEO who got caught spying on the legislators investigating him.
Investigation by Project Milk Carton
Texas: The Monopoly Contract
Texas has the second-largest foster care system in the country. It's also the state where the financial architecture is most transparent — not because Texas wanted it that way, but because public records requests and a series of scandals forced the numbers into the open.
What those numbers reveal: a single Centene Corporation subsidiary has held a monopoly contract covering the Medicaid healthcare of every foster child in Texas since 2008. The current per-member-per-month rate is $1,556.08. The estimated annual revenue from this single contract exceeds $800 million. And in March 2025, the CEO of that subsidiary was fired after it was revealed he had hired private investigators to spy on Texas state legislators, journalists, and Medicaid beneficiaries.
The STAR Health Monopoly
Since April 1, 2008, every child who enters DFPS conservatorship in Texas is automatically enrolled in STAR Health — a Medicaid managed care program administered exclusively by Superior HealthPlan, a wholly owned subsidiary of Centene Corporation.
There is no competing MCO. There is no choice of health plan. When a child is removed from their family in any of Texas's 254 counties, that child becomes a Superior HealthPlan member. The capitation payments begin immediately.
The numbers, from the Texas Health and Human Services Commission's own rate schedule:
That's $18,672.96 per child per year in Medicaid capitation alone — before foster care maintenance payments, before Title IV-E federal reimbursement, before any services are rendered. For approximately 35,000 enrolled beneficiaries, the annual contract value is roughly $816 million.
For comparison, standard Texas Medicaid managed care rates for low-income children range from $200-$400 per member per month. Foster care children generate four to seven times the revenue of a standard Medicaid enrollee.
The PMPM rate jumped 60% in a single year — from $969.42 in FY2024 to $1,556.08 in FY2025. The explanation: post-pandemic enrollment unwinding reduced the member population, concentrating costs on the remaining higher-acuity members. Fewer children, more money per child.
How Removal Generates Revenue
When a Texas child enters state custody, the following revenue streams activate simultaneously:
Stream 1: STAR Health capitation. $1,556.08/month to Superior HealthPlan. Begins at enrollment, continues for the duration of custody. No substantiation required.
Stream 2: Foster care maintenance payments. Daily rates to the placement provider. For a basic-level foster family placement: $57.71/day ($21,064/year). For an intense-level residential treatment center: $480.86/day ($175,514/year).
Stream 3: Title IV-E federal reimbursement. The federal government matches 60% of Texas's eligible foster care costs through an open-ended entitlement. Every qualifying dollar the state spends on foster care maintenance is matched without limit.
Stream 4: Community-Based Care contractor payments. Texas is privatizing foster care through a Community-Based Care model, with 9 of 14 regions now contracted to private Single Source Continuum Contractors. Each contractor receives a blended daily per-diem rate for every child in their census. Each child reunified is revenue lost.
For a child at the basic level, the combined annual revenue across all streams: approximately $52,375. At the moderate level: $78,107. At the intense level: $146,049. For a child in residential treatment at the highest tier: nearly $300,000 per year.
There is no financial incentive anywhere in the Texas system that rewards faster reunification. Every financial stream rewards continued custody. The asymmetry is total.
The $166 Million Settlement Nobody Announced
In 2021, states across the country began settling with Centene over pharmacy benefit manager (PBM) Medicaid overbilling. Ohio settled for $88 million. Mississippi for $55.5 million. Kansas for $27.6 million. More than 20 states recovered over $1 billion combined.
Texas Attorney General Ken Paxton's office reached a settlement with Centene for $165.6 million — the largest state settlement in the entire PBM case. It was signed on July 11, 2022.
Four days later, HHSC awarded Superior HealthPlan a new six-year STAR Health contract.
Neither event was publicly announced. The settlement was only revealed after journalists obtained it through public records requests. When it surfaced on September 19, 2022, Centene had already announced the new STAR Health contract on September 15.
The timeline:
July 11, 2022: Texas settlement secretly signed ($165.6M)
September 15, 2022: Centene announces new six-year STAR Health contract
September 19, 2022: Settlement becomes public through records request
The same company that overbilled Texas Medicaid by at least $165.6 million was simultaneously awarded a new six-year monopoly contract worth approximately $800 million per year.
The CEO Who Spied on Legislators
In March 2025, Superior HealthPlan CEO Mark Sanders was fired after it was revealed that the company had hired private investigators to surveil Texas state legislators, journalists covering Medicaid managed care, and Medicaid beneficiaries.
The discovery emerged during a Texas DOGE (Government Oversight and Efficiency) committee hearing chaired by Representative Giovanni Capriglione. The committee subsequently requested a pause on all Superior HealthPlan Medicaid contracts pending investigation.
A detail from PMC's FEC database: Mark Sanders contributed $12,571 to CentenePAC over 62 pay-period deductions — the largest individual contribution from a Texas-based Centene employee. And Centene had donated $500 to Representative Capriglione, the legislator who would later chair the very committee that exposed Sanders's surveillance operation.
The Political Investment
Centene's political investment in Texas is documented across multiple channels:
State-level PAC. The Centene Texas PAC (GPAC #52985) has distributed $1,434,897 to Texas state candidates and committees. In the first half of 2024 alone: $25,000 to Lieutenant Governor Dan Patrick, who presides over the Texas Senate; $3,500 to Representative Stephanie Klick, who chairs the House Public Health Committee and sits on Human Services — the two committees with direct oversight of Medicaid managed care contracts.
Federal PAC. CentenePAC (FEC ID: C00397851) raised $1,907,487 in the 2023-2024 cycle. PMC's FEC database identifies 119 unique Texas-based Centene employees donating a combined $206,332 to the federal PAC.
Subsidiary amplification. Centene operates over 300 U.S. subsidiaries, each a separate legal entity. KFF Health News documented the practice nationally: in South Carolina, Governor McMaster received $66,500 from Centene and 17 subsidiaries. In Nevada, 10 separate $10,000 contributions from different Centene health plans arrived on a single day.
RAGA access. Centene Management Company donated $350,000 to the Republican Attorneys General Association in Q2 2022 alone — the same quarter the Texas settlement was secretly signed. RAGA offers tiered access to GOP attorneys general: $125,000/year buys "private issue briefings."
Revolving door. Superior HealthPlan CFO Kia Biller previously worked as an auditor at HHSC — the same state agency that sets STAR Health capitation rates and oversees the contract. She contributed $6,617 to CentenePAC from her position at Superior.
The Data Integrity Problem
In 2021, Texas passed HB 567, which significantly changed CPS removal criteria and investigation practices. Supporters claimed it would protect families from unnecessary government intervention. The results, as documented by a Pulitzer Center-funded investigation by Texas Public Radio in March 2025:
Texas reported a 53% decline in child fatalities
Simultaneously, the state redefined neglect to require "blatant disregard" (previously "substantial risk")
Investigations dropped 30%
Anonymous reporting was banned — the number of anonymous reporters fell from over 13,000 to approximately 300
63% of families with confirmed abuse or neglect received no services
The fatality decline was not because fewer children were dying. It was because fewer deaths were being classified as child welfare fatalities under the new definitions.
This matters for the structural incentive analysis because Texas's declining foster care numbers — which have been cited as evidence of successful reform — may reflect reduced investigation rather than reduced harm. The system appears to be shrinking its visible intake while the underlying conditions that trigger removal remain unchanged.
The Medicalization Problem
Foster children in Texas are prescribed psychotropic medications at rates 2.7 to 4.5 times higher than non-foster Medicaid children, according to multiple GAO reports. In 2022, 21.4% of foster children ages 0-17 were receiving psychiatric drugs — 11,160 children.
Hundreds were on regimens of five or more concurrent psychotropic medications, a practice with no evidence base even for adults. Foster and non-foster children under one year old were prescribed psychotropic drugs, which GAO experts said have "no established use for mental health conditions in infants."
Under the capitation model, Superior HealthPlan receives $1,556.08 per month per child regardless of services rendered. But children classified at higher service levels due to behavioral health diagnoses generate higher placement maintenance payments — $218.11/day for "intense" versus $57.71/day for "basic." The MCO's capitation is flat, but the overall system revenue increases with medicalization because higher-acuity classifications drive higher per-diem rates to providers.
There is no financial penalty for over-prescribing and no financial reward for reducing medication use. The utilization review parameters were last updated in June 2019 — six years ago.
What This Means
Texas is the clearest example in our analysis of what happens when a single corporation achieves monopoly control over the healthcare revenue stream for an entire state's foster care population. The numbers are not hidden — they're published on HHSC's own rate schedule. The contract is sole-source. The political investments are documented in FEC filings and state campaign finance records. The overbilling settlement is public record.
Every child removed from a Texas family generates a minimum of $52,000 per year flowing to a private corporation, a placement provider, and the federal treasury. At the highest levels, that figure approaches $300,000. There is no financial mechanism that rewards reunification. Every financial stream terminates the day a child goes home.
The machine runs on children. In Texas, one company controls the meter.
This is Part 3 of the Forensic Structural Analysis Series by Project Milk Carton.
Next: Florida — The Privatized State
Key Sources:
Texas HHS Provider Finance Department, FFY 2025 STAR Health Rates
Texas HHS Provider Finance Department, FFY 2024 STAR Health Rates
Superior HealthPlan STAR Health program documentation
Centene Corporation 2024 Annual Results; CentenePAC FEC filings (C00397851)
Centene Political Activity Report, January-June 2024
PMC CivicOps FEC individual contributions database
KFF Health News, "Centene Showers Politicians With Millions" (November 2022)
Texas Public Radio / Pulitzer Center, DFPS investigation findings (March 2025)
GAO-12-201, "Foster Children: HHS Guidance Could Help States Improve Oversight of Psychotropic Prescriptions" (2011)
GAO-14-362, "Foster Care: Additional Federal Guidance Could Help States Better Plan for Oversight of Psychotropic Medications" (2014)
DFPS 24-Hour Residential Child Care Reimbursement Rates (September 2025)
DFPS Community-Based Care documentation
Transparency USA, Centene Corporation Texas PAC (#52985)
EXPOSEDbyCMD, "Republican AG Pay-to-Play Group" (July 2022)
Houston Health Law Journal, "Prescribed Injustice: State-Sanctioned Over-Medication of Foster Youth in Texas" (2023)