Texas hospitals are confronting an escalating funding crisis as the Centers for Medicare & Medicaid Services (CMS) continues to withhold approval of critical Medicaid directed payment programs (DPPs), threatening to disrupt funding for state fiscal year 2027.
After months of negotiations, CMS has still not approved three DPPs – the Comprehensive Hospital Increase Reimbursement Program (CHIRP), Texas Incentives for Physicians and Professional Services (TIPPS) and Rural Access to Primary and Preventive Services (RAPPS) – for the fiscal year beginning Sept. 1. Without urgent federal action, Texas hospitals and other Medicaid providers stand to lose an estimated $27 million per day – funding hospitals rely on to help bridge the persistent gap between Medicaid’s low base payment rates and the actual cost of providing care.
“We’re bracing for a crisis that will crack the Texas healthcare safety net. No industry can withstand $27 million in losses per day,” said Texas Hospital Association President/CEO John Hawkins. “The numbers are seismic and will shake the Texas economy, eliminate thousands of jobs statewide and diminish Texas health. There is no more business-as-usual in the world of hospitals.”
In the Crosshairs: Texas Hospitals Face $10 Billion Crisis
This funding directly supports the care Texans depend on and is already budgeted to help keep hospitals staffed and emergency rooms running. Without these funds, hospitals cannot continue to operate at full strength, forcing difficult decisions about which services can remain available and whether staff reductions are necessary – decisions that would worsen an already severe healthcare workforce shortage.
Furthermore, the services most at risk are those Texas families rely on most, including labor and delivery, neonatal intensive care, emergency services and other essential care.
“If the federal government continues to withhold payment approvals, Texas hospitals will be forced to make difficult decisions about cuts to service lines, such as NICU and labor and delivery units,” Hawkins said. “No community wants that. Hospitals that serve primarily Medicaid patients – and hospitals that are already barely scraping by – will be hurt hard and fast, and we need federal action now.”
Texas hospitals cannot absorb $27 million in losses every day without consequences for patients, healthcare workers and communities. These funds are a critical part of financing that hospitals depend on to provide care to Medicaid patients and maintain essential services. The longer this uncertainty continues, the greater the threat to hospital services, jobs and access to care across Texas.
Editor’s note: The Texas Tribune published an analysis of how this will impact Texas hospitals. Read the story here.
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