Texas health officials open the floor to public comment today on a proposed Medicaid pay increase aimed at the rural hospitals still delivering babies — one of a slate of rate changes the state wants in effect by Sept. 1.
The Texas Health and Human Services Commission scheduled a public hearing for 9 a.m. on proposed updates to Medicaid payment rates that include a Rural Hospital OB-GYN Standard Dollar Amount add-on, according to the commission’s notice. The hearing is being held in person at the North Austin Complex and online, with written comments accepted by the agency’s Provider Finance Department.
The add-on aims at a specific piece of math that has closed rural maternity wards across the state. The “standard dollar amount” is the base figure Medicaid uses to pay a hospital for an inpatient stay; an add-on raises that figure for a defined service — here, obstetric care at rural hospitals.
Most rural hospitals that still deliver babies lose money doing it, because Medicaid pays less than the cost of round-the-clock obstetric staffing and too few births occur to cover the expense, the Texas Tribune reported June 29. The proposed rates were calculated under Texas Medicaid State Plan Amendment pages 4.19-A 8h and 8h.1 and are proposed to take effect Sept. 1, 2026, the commission said.
The commission did not publish the per-discharge dollar figure in its notice; the specific proposed amount appears in a briefing packet the agency posted July 10 at its rate-packets page. Provider Finance maintains a separate status page tracking which hospitals qualify for add-on payments. Today’s hearing is a comment step, not a final action; HHSC adopts the rates after reviewing testimony.
Nearly half of Texas counties are maternity care deserts — no hospital or birth center offering labor and delivery and no obstetric provider — a share the Texas Medical Association and March of Dimes have documented as roughly double the national rate. The closures are part of a national retreat: 139 rural hospitals have stopped delivering babies or announced they will stop by the end of 2026, a 13% reduction in rural labor-and-delivery units since the end of 2020, according to the Center for Healthcare Quality and Payment Reform’s Saving Rural Hospitals analysis.
Public Health Watch, in a June 24 report, described Texas women in those counties driving hours for prenatal care and delivery. Texas first added extra Medicaid money for rural obstetrics in 2019, which the Tribune reported stabilized some units but did not reopen those already shuttered.
For a state trying to hold down health-care costs, a Medicaid rate that reflects the true cost of rural delivery could be the cheaper option: paying a local hospital to keep a labor-and-delivery unit open costs less than the emergency transfers, complications and out-of-county births that follow when it closes. The honest limit is that the add-on raises pay only to hospitals still delivering — it does not reopen closed units, recruit obstetricians or nurses, or close the gap left by commercial insurers that also pay rural hospitals below cost.
Advocates in the 2025 Rural Texas Maternal Health Rescue Plan have pressed for sustained operating support and workforce investment, not one-time rate fixes.
The rate proposal also feeds the larger affordability debate lawmakers have queued for 2027, when the House Select Committee on Health Care Affordability, chaired by Rep. James Frank, R-Wichita Falls, is due to report recommendations, and as roughly $281 million a year in federal Rural Health Transformation Program money begins reaching Texas counties. What the OB-GYN add-on is actually worth, and whether it is enough to keep a delivery room open, will turn on the figure inside HHSC’s packet — and on the comments the agency hears today.