Nearly $12 billion in Medicaid funding is being restored to Texas, ending months of negotiation between the state and CMS.
The funding authorizes payments to hospitals, physicians, rural clinics, nursing facilities and behavioral health providers across the state, according to a Sept. 17 news release from Gov. Greg . Abbott’s office.
The announcement follows a nearly yearlong standoff in which CMS withheld approval of three Texas Medicaid state-directed payment programs — the Comprehensive Hospital Increase Reimbursement Program, the Texas Incentives for Physicians and Professional Services program and the Rural Access to Primary and Preventive Services program — worth a combined $9.8 billion for fiscal 2027.
CMS had raised questions about how Texas calculates the local hospital provider taxes used to draw down the federal match. The Texas Hospital Association had projected the delay was costing hospitals $27 million a day starting Sept. 1. Mr. Abbott warned in an Aug. 7 letter to HHS Secretary Robert F. Kennedy Jr. that total 2027 losses could approach $12 billion.
The approval removes the immediate threat of billions of dollars in lost healthcare funding that would have upended the state’s healthcare safety net and shuttered critical hospital service lines, the Texas Hospital Association said in a Sept. 17 news release shared with Becker’s.
“We can breathe easier today,” Texas Hospital Association CEO John Hawkins said in the release. “The Medicaid crisis hanging over our heads has been averted. We are deeply grateful to Gov. Abbott and other state and federal leaders who listened, took our concerns seriously and acted with urgency to protect Texas patients.”
