Texas health officials have proposed letting the state take Medicaid payment room that some hospitals do not use and hand it to other hospitals in the same category, in a rule change open for public comment only until 11:59 p.m. Aug. 21.
The proposal, published Aug. 7 in the Texas Register, amends the rules governing the Hospital Augmented Reimbursement Program, a supplemental Medicaid payment program for hospitals treating patients the state pays for directly rather than through a managed care insurer. The Health and Human Services Commission filed it July 22 and could adopt it as soon as Sept. 6, with the change applying to program periods beginning Oct. 1.
Federal rules cap how much Medicaid can pay a hospital, and the ceiling is set by what Medicare would have paid for the same care. The distance between what Medicaid actually paid and that ceiling is unused room, and under current rules a hospital that cannot use its share simply leaves it unclaimed. Under the proposal, the state would sweep what is left over and divide it among other participating hospitals in the same class, in proportion to how far each sits below its own ceiling.
The commission stated the purpose plainly: “to establish a calculation to allow for any unused HARP payment room to be distributed to other eligible hospitals within the same class.” The new language caps the redistribution so a hospital’s total inpatient Medicaid payments cannot exceed what it actually billed Medicaid, counting supplemental payments. Hospitals the rules classify as nominal charge providers — those charging 60 percent or less of the reasonable cost of care — are exempt from that cap.
The rule states that the non-federal share “is funded through IGTs from sponsoring governmental entities” — intergovernmental transfers, meaning local public bodies such as hospital districts put up the state’s portion so federal matching money can flow — and adds flatly, “No state general revenue is available to support the program.” Payments are made twice a year.
What the proposal does not contain is any number. Across its fiscal note, its public-benefit analysis and its government growth statement, the filing gives no estimate of how much unused payment room exists, how much would move, or which hospitals would gain. The only figures in the document are definitional: the 60 percent threshold and the accounting ratio of 1.67 behind it.
Victoria Grady, the commission’s deputy chief of finance, determined that for each of the first five years “enforcing or administering the rule does not have foreseeable implications relating to costs or revenues of state or local governments,” and separately that there will be “no adverse economic effect on small businesses, micro-businesses, or rural communities.” Megan Wolfe, the director of provider finance, wrote that the public benefits because the change “will allow for any unused HARP payment room to be distributed to other hospitals within the same class.” Chief Counsel Karen Ray signed the filing.
The redistribution language was added to only two categories of hospital: those owned and operated by local governments other than the state, and private hospitals. The subsections covering state-owned hospitals and psychiatric facilities received only grammar and punctuation corrections. Written comments go to the commission’s Rules Coordination Office or to HHSRulesCoordinationOffice@hhs.texas.gov, marked “Comments on Proposed Rule 26R088.” A public hearing was held Aug. 14, on a date that appeared on the commission’s events calendar but not in the Register notice, which said only that one would be posted online.
Fourteen days is a short window by the commission’s own recent practice. A far larger package published a week later — a rewrite of how Texas pays nursing homes, replacing the long-standing resource utilization group system with a Texas version of the federal patient-driven payment model — carries a comment deadline of Sept. 14, or 31 days. A notice published the same day seeking federal renewal of the Texas Home Living waiver, which funds community services for people with intellectual disabilities, also allows until Sept. 14. When the commission took comment in July on higher Medicaid pay for rural hospitals delivering babies, it published the proposed rates themselves.
The state’s other big pending cost decision has not moved. The Texas Department of Insurance has published nothing on final 2027 individual-market rates: its rate review page still directs the public to the federal database, its newsroom has carried no item since March 17, and the Aug. 14 Register contained no department filings. It will be the first rate cycle decided by Commissioner Amanda Crawford, who took office Feb. 3.
No legislative hearing on health care costs falls in the next ten days. The House Select Committee on Health Care Affordability, chaired by Rep. James Frank, has nothing posted. The nearest health hearing is the House Public Health Committee on Aug. 20 at 9 a.m. in Room E2.030, taking invited testimony only — and its charges cover artificial intelligence in health care and youth social media, not prices. The comment window on the hospital payment rule closes first.