(a) The commission has authority to adjudicate claims of contested cases in accordance with Chapter 2001, Government Code. When the commission intends to cancel its contract or impose monetary penalties under a contract with a person providing medical assistance, the commission shall give reasonable notice and an opportunity for hearing if one is requested. The executive commissioner shall adopt rules consistent with Chapter 2001, Government Code, to implement this section, and hearings under this section are contested cases under that act.
(b) The commission may not terminate a contract during the pendency of a hearing under this section. The commission may withhold payments during the pendency of a hearing, but the commission shall pay the withheld payments and resume contract payments if the final determination is favorable to the contractor. The commission’s authority to withhold payments shall be established by contract.

(c) The section does not apply if federal matching funds are not available to pay the facility whose contract is being cancelled. If federal matching funds cannot be used, no state funds may be used to pay the facility.