Starting on Tuesday, Texas hospitals anticipate losing$ 27 million a day in Medicaid money.

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Texas hospitals anticipate losing$ 27 million in extra Medicaid money each day when the state’s new fiscal year kicks off on Tuesday.

The Trump administration made the decision to withhold Texas’s approval for about$ 9.8 billion over the course of the next year from three programs, the majority of which impact the Comprehensive Hospital Increase Reimbursement Program ( CHIRP ). This system provides hospitals with more money to cover the difference between the actual costs that hospitals pay to offer services to Medicaid patients. In essence, hospitals are losing out on their extra insurance for 2027, which frequently receive less than what they spend on Medicaid people because of state-imposed outdated transaction costs.

The Texas Hospital Association estimates that local government organizations collect about$ 4 billion in taxes annually from hospitals, and the federal government matches those funds to allow Texas hospitals to use those funds to cover the actual costs associated with providing Medicaid services. Hospitals claim that the money from the CHIRP is crucial, and that they will probably have to reduce patient services.

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Four million low-income Texans are covered by Medicaid, the majority of whom are kids.

” Regardless of what type of insurance a patient has, it is difficult for a doctor to get a sizable decline on the Medicaid part of their investment and not have that effect services across the board,” said Sara González, a THA vice president of advocacy, public policy, and political strategy.

The impact in Houston alone could result in at least$ 258 million less for the region’s public healthcare system, known as Harris Health, and as much as$ 1.4 billion less for the region overall in the coming year.

According to senior vice president of communications Julie Cromeens,” the consequences would be catastrophic for Texas ‘ safety-net healthcare system.” If this deadlock persists,” We are carefully monitoring every penny and would be forced to make tough decisions about maintaining essential services.”

Because they are putting the national government’s method into problem, the government is withholding these crucial funds.

The stalemate, which started slowly last December, has gotten so bad that Gov. Greg Abbott stated in a sharp notice to U.S. Health Secretary Robert F. Kennedy Jr. that the way local taxes are collected for Texas hospitals is in good shape.

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Abbott refers to the financing freeze as an economical “gun to the mind” in it.

Abbott wrote in the letter that” the tax structure that was recently enacted by the Texas Legislature and is now being implemented by local governments regularly fully complies with national law.” What CMS is requesting is never, it seems.

Abbott said that the federal government must first ensure Texas would hardly face penalties in the future for doing so if the federal government insisted that Texas should reorganize the way local governments revenue facilities.

According to Abbott,” Any voluntary change that the State makes should be understood as the result of a desire to work with CMS and not as any kind of admission about a legal defect in Texas ‘ broad-based healthcare-related taxes,” adding that the state estimates the anticipated loss could be as much as$ 12 billion in 2027.

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The governor’s office, the Texas Health and Human Services Commission, the Centers for Medicare and Medicaid Services, and the Texas Health and Human Services Commission, both of whom administer the Medicaid program, did not make any comments by Monday regarding the practically$ 10 billion decline or whether the functions are moving closer to resolving it. The expected money may be delayed for months, according to THA officials, even if a new partnership between Texas and the federal government were reached by Tuesday.

Let’s assume they approve it on September 1st, according to Anna Stetler, senior policy analyst at THA. We’re now a month, or essentially two months, from those payments because HHSC needs to load the rates.

The One Big Beautiful Bill Act, which was passed a year ago, contained$ 900 billion in nationwide Medicaid funding cuts by 2034, according to the THA. According to Stetler, the OBBA effectively eliminated Texas ‘ hospital taxing structure, which was a provision of the legislation that Congress passed to prevent states from expanding Medicaid and from abruptly reducing the amount of additional funding that hospitals, rural clinics, and hospital-affiliated providers use to maintain existing services.

Due to the fact that Texas is one of the few states that did not expand Medicaid, many officials believed the state was shielded from the bill’s significant funding cuts and stricter regulations. The Affordable Care Act has allowed Texas, Florida, and eight other states to refuse to give more people access to Medicaid health insurance coverage. According to the Texas A&M Bush School of Government and Public Service, Texas annually loses more than$ 5 billion in new federal funding as a result of its decision to withdraw from expanding Medicaid coverage.

These Medicaid-expansion states are subject to stricter work requirements that will become effective in January for people who are working.

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Texas, like Florida, is currently facing federal government questions about how hospitals pay taxes despite its refusal to expand. Florida only received additional Medicaid funding after 11 months to fix its delay. There have been 11 round exhausting back and forth inquiries between CMS and HHSC regarding local taxation, according to the HHSC website.

High on the CMS’s list during the most recent round of inquiries were Texas ‘ assurances that none of the nearly$ 10 million would be used to pay for non-citizen healthcare. The state confirms and assures CMS that the state directed payment does not include, nor does it make any direct plans to make, payments to providers for costs or utilization for those who have not demonstrated satisfactory immigration status, according to HHSC on August 17.

Texas has fought to keep this additional funding for the first time. Before the OBBA was passed, Texas had successfully won its legal battles with CMS regarding the funding in 2023.

Hospitals are well aware of this federal funding gap, according to Carrie Kroll, a THA vice president of advocacy, public policy, and political strategy.

” I think we are under no illusion that there is a significant amount of money in GR ( general revenue ) ready to save us from the situation,” she said.

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Disclosure: The Texas Hospital Association has provided significant financial support to The Texas Tribune. The Texas Tribune is a non-partisan, nonprofit news organization that receives funding from members, foundations, and corporate sponsors. Financial supporters are not involved in our journalism. Here are a list of them, along with more details about our financial and disclosure procedures.

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Aug 31, 2026Hill Country Post

Starting on Tuesday, Texas hospitals anticipate losing$ 27 million a day in Medicaid money.

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