Austin, Texas — Texas hospitals are entering the new state fiscal year without federal approval for nearly $10 billion in supplemental Medicaid funding, a delay hospital officials say could cost providers about $27 million each day.
The Centers for Medicare & Medicaid Services has not approved three state-directed payment programs for fiscal 2027, including the Comprehensive Hospital Increase Reimbursement Program, or CHIRP. The program supplements Texas’ Medicaid reimbursement rates, which hospitals say frequently fall below the actual cost of treating patients.
The Texas Hospital Association said the unresolved dispute threatens roughly $9.8 billion in funding across CHIRP and two other programs. One major Texas insurer has already announced that CHIRP payments will be suspended beginning Sept. 1 until the state receives additional federal authorization.
CMS has questioned how Texas structures hospital taxes used to draw federal matching funds. Gov. Greg Abbott has rejected the federal government’s position, arguing that Texas’ existing system complies with federal law and warning HHS Secretary Robert F. Kennedy Jr. that forcing changes amounts to putting an economic “gun to the head” of the state.
About 4 million low-income Texans receive Medicaid, most of them children.
Hospital officials warn prolonged delays could eventually force reductions in services, particularly at safety-net facilities. CMS and Texas officials have continued negotiations, but no agreement had been announced as the fiscal year began.
Sources
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