A network representing 45 rural and community hospitals across Texas is moving to terminate its contracts with UnitedHealthcare, a standoff that turns on the reimbursement rates rural facilities say are too low to keep their doors open.
The dispute, still unresolved this week, puts a spotlight on one of the least visible drivers of health-care cost and access in rural Texas: what insurers pay the hospitals that serve small communities.
The Texas Organization of Rural and Community Hospitals’ Clinically Integrated Network, known as TORCH CIN, announced on June 12 that it would end its participation agreements with UnitedHealthcare, calling the insurer’s rates “unsustainable.”
Paul Aslin, executive director of TORCH CIN, told KERA News his organization had negotiated with UnitedHealthcare for more than 550 days, with biweekly meetings, but had received no formal response to a proposal it submitted in January.
“If they don’t pay our hospitals a sustainable rate, our hospitals will close and those patients will be without access to local health care,” Aslin said.
The cost stakes are concrete. TORCH CIN pointed to data from the Texas A&M Health Rural & Community Health Institute and Turquoise Health showing that rural hospitals are paid up to 53 percent less than metropolitan hospitals for emergency-department visits under commercial contracts, and up to 44 percent less for labor-and-delivery services.
Aslin said rural hospitals have absorbed the same underpayments for a decade even as labor and clinician costs rose, and that the rates the network is seeking are not close to what the insurer already pays urban hospitals for the same care.
The financial pressure is widespread. More than half of Texas’ 154 rural inpatient hospitals are at risk of closing, according to the Center for Healthcare Quality and Payment Reform, and nearly 70 percent of those hospitals have already dropped some services.
When a rural hospital cuts labor and delivery or closes outright, patients drive farther for care and the remaining facilities treat more uninsured patients — costs that ripple back into local economies. Texas has the highest uninsured rate in the nation, which thins the revenue rural hospitals collect from patient care.
UnitedHealthcare disputed the framing. In a statement to KERA News, the insurer called the termination a negotiating tactic that does not reflect ongoing discussions, and said it remains committed to using the remaining contract term to reach an agreement that “maintains long-term access to quality, affordable care for the families we serve throughout rural Texas communities.”
The company said it had supported the creation of TORCH CIN with a multi-million-dollar investment and pointed to recent prior-authorization reforms aimed at easing administrative burdens on rural providers.
The clash arrives as state leaders weigh how to steady rural health finances. Texas is receiving roughly $281 million a year over five years — about $1.4 billion total — through the federal Rural Health Transformation Program under the One Big Beautiful Bill Act, the largest state allocation in the country, with the Texas Health and Human Services Commission directing the funds toward rural infrastructure and prevention. A Texas House select committee on health-care affordability has also spent recent hearings examining hospital and drug-pricing drivers behind rising costs.
The termination is not immediate, leaving room for a deal. According to TORCH CIN’s filing, agreements tied to Medicaid-based plans would end December 31, 2026, while the primary commercial network agreement would terminate no earlier than June 2027. Aslin said the network would return to the table if UnitedHealthcare offers what he called a fair, sustainable rate.
“Our hope is that we can solve this with United,” he said, “but if not, then those folks are going to be looking for a different alternative to who they use for their insurance.”