Texas hospitals are losing an estimated $27 million (£20.4 million) a day after the Trump administration withheld approval for almost $9.8 billion in Medicaid funding at the start of the state’s new financial year.
The payments are intended to help hospitals cover the gap between what Medicaid reimburses them and the cost of treating patients. The dispute centres on the way Texas raises its share of the funding through taxes paid by hospitals to local government bodies.
The Centers for Medicare and Medicaid Services (CMS) has not approved three payments programmes for the year beginning on September 1: the Comprehensive Hospital Increase Reimbursement Program, known as CHIRP, along with TIPPS and RAPPS.
Texas hospitals pay about $4.2 billion a year to local taxing districts, with the federal government providing matching funds for additional Medicaid payments. Federal officials have questioned how those taxes are calculated and whether the arrangements comply with Medicaid rules.
The Texas Health and Human Services Commission is negotiating with CMS in an effort to secure approval. State officials have maintained that the financing system is lawful and that no changes have been made to the way the taxes are collected.
Texas Medicaid funding dispute threatens safety-net hospitals
There is no immediate indication that Medicaid patients will lose their cover or that hospital services will stop. However, hospital leaders and community organisations have warned that a prolonged shortfall could eventually affect staffing, services and patient care.
“I can tell you the safety net hospital and children’s hospitals will be hit very hard,” Stephen Love, president and chief executive of the Dallas-Fort Worth Hospital Council, said.
The Texas Hospital Association said the delayed payments were needed to maintain care for millions of low-income residents. Its chief executive, John Hawkins, warned that hospitals could be forced to consider cuts to services including neonatal intensive care, maternity units and other specialist provision if the impasse continues.
In Houston, the dispute could leave Harris Health, the area’s public healthcare system, at least $258 million short, with the wider region facing a potential loss of up to $1.4 billion next year, according to an analysis reported by The Texas Tribune.
Governor Greg Abbott has defended Texas’s hospital tax system and urged the federal government to release the money. His spokesman, Andrew Mahaleris, said: “Texas’ financing fully complies with federal law, and Texas health care providers should receive the funding they are due.”
CMS has said it is working with states to ensure compliance with existing and recently introduced legal requirements, while monitoring the potential effect on access to care for Medicaid beneficiaries.
Wes Keyes, chief executive of the Dallas non-profit Brother Bill’s Helping Hand, said there did not appear to be an immediate disruption but warned that community organisations could face greater demand if hospitals or government-funded services were affected.
“I really hope that this gets resolved because if it does trickle down to patient care, or even the people who are employed by the hospital, this could be devastating,” he said.
Neither Texas officials nor the federal government has set a deadline for resolving the dispute or said when the withheld Medicaid funding will be released.
