Texas hospitals are expected to lose about $27 million a day in Medicaid funding starting Tuesday.
Why it matters: The hit could squeeze one of the country’s largest health systems and ripple into staffing, services and access to care. Rural and safety-net hospitals are likely to feel the pressure first.
- The funding loss starts Tuesday, Sept. 1, 2026, when Texas’ new fiscal year begins.
- The shortfall is tied to CMS withholding approval for three directed payment programs: CHIRP, TIPPS and RAPPS.
- The Texas Hospital Association says about $27 million a day is at stake, or roughly $9.8 billion over the next year.
- Texas has about four million low-income residents enrolled in Medicaid, most of them children.
Texas hospitals are bracing for a Medicaid funding drop of about $27 million a day starting Tuesday, the first day of the state’s fiscal 2027 year. The shortfall stems from federal CMS not approving three directed payment programs - CHIRP, TIPPS and RAPPS - in time for the new year, according to the Texas Hospital Association and reporting from The Texas Tribune.
The Texas Hospital Association says hospitals depend on the programs to cover the gap between Medicaid reimbursement and the actual cost of care. CEO John Hawkins said, "No industry can withstand $27 million in losses per day."
AP reported the loss could be a direct operational and financial shock for hospitals, with possible effects on staffing, services and access to care, especially in safety-net settings. Sara González, the association’s vice president of advocacy, public policy and political strategy, said, "It is impossible for a hospital to take a huge loss on a Medicaid side of their portfolio and not have that impact services across the board, regardless of what type of insurance a patient has." AP
The Tribune reported about $9.8 billion is at stake over the next year, with most of the exposure tied to the Comprehensive Hospital Increase Reimbursement Program, or CHIRP. The Texas Hospital Association warned the cuts could be especially damaging to the state’s healthcare safety net and rural care network.
Texas’ Medicaid financing structure includes directed payment programs administered through the Texas Health and Human Services Commission. Federal guidance on state-directed payments has also tightened scrutiny of the programs, according to CMS and Medicaid.gov.
By the numbers
- $27 million per day - Texas hospitals' expected Medicaid-related funding loss starting Tuesday
- $9.8 billion - total threatened funding over the next year, per The Texas Tribune
- About 4 million - Texans enrolled in Medicaid, most of them children
Yes, but: The exact mechanism behind the federal action is not fully clear from the available reporting, and the size of the hit may vary by hospital and region.
What's next: Texas’ fiscal 2027 begins Sept. 1, 2026, and the key question is whether CMS approves the programs before hospitals absorb the loss.