Texas hospitals stand to lose an estimated $27 million in Medicaid funding each day beginning Sept. 1 as CMS has yet to approve three directed payment programs for the state’s 2027 fiscal year, according to the Texas Hospital Association.
The association said CMS has not approved the Comprehensive Hospital Increase Reimbursement Program, Texas Incentives for Physicians and Professional Services program and Rural Access to Primary and Preventive Services program after months of negotiations.
Together, the programs represent about $9.8 billion in funding. CHIRP accounts for about $9.15 billion, TIPPS represents $643.8 million and RAPPS represents $15.1 million, according to a Texas Hospital Association report. The funding helps bridge the gap between Medicaid base payment rates and hospitals’ 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,” Texas Hospital Association CEO John Hawkins said in a Sept. 1 news release. “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.”
Mr. Hawkins said prolonged delays could force hospitals to consider reductions to service lines including neonatal intensive care and labor and delivery, with hospitals that serve large Medicaid populations and those already under financial strain facing the most immediate pressure.
The association’s report identified neonatology and obstetrics as the inpatient service lines most vulnerable to Medicaid payment losses. Dental care, allergy and immunology, and obstetrics ranked as the most vulnerable outpatient services. Behavioral health also ranked among the six most vulnerable service lines in both settings.
The report also said 41% of rural Texas hospitals have fewer than 30 days of cash on hand, raising concerns that payment delays could push some organizations to take on debt or make staffing and service reductions.
The association said the Medicaid funding dispute comes amid other financial pressures, including CMS’ interruption of $1.4 billion in 2026 CHIRP quality incentive payments, federal Medicaid reductions and the expiration of enhanced premium tax credits.
“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,” Mr. Hawkins said. “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.”
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