Hospital Financing

Financing and financial policies at the federal and state levels affect our capacity to provide care including significant levels of care for uninsured Texans as well as Trauma, Disaster and Public Health Response, Graduate Medicaid Education and workforce training.

HHSC’s December 2020 Uncompensated Care Report

HHSC published its biennial UC report in December, using hospital reporting data hospitals submit for DSH/UC programs. This report methodology marks a change from the 2018 report which relied on unaudited hospital survey data that reached conclusions and used methodologies about which THOT voiced concern. We appreciate HHSC’s approach to the current UC report which uses the best available data and more accurately reflects uncompensated care in Texas. HHSC reports that hospital Medicaid costs in Texas exceed Medicaid payments by $2.7 billion in 2020; overall uninsured costs exceed payments by $5.2 billion (nearly twice the Medicaid shortfall); and uninsured charity care costs exceed payments by $3.5 billion. (Uninsured charity care costs are those CMS uses for the waiver Uncompensated Care program and excludes bad debt and uninsured costs not documented as incurred through a charity care program. Over one-third of the uninsured charity care costs ($1.2 billion of $3.5 billion) are borne by just six large public hospitals in Texas including THOT members: Harris Health, Parkland, University Health System, University Medical Center in El Paso, and Dell Seton Medical Center.

Report – Hospital Uncompensated Care Report

Texas Medicaid Hospital Funding – Waiver Related Changes: 

As part of its waiver related work, HHSC is finalizing proposals for submission to CMS by 12.31.2020 on how to transition $2.49 billion in DSRIP through managed care and other programs to support services and delivery system improvements. (See THOT’s 1115 Waiver page for more information.)

These changes will affect Texas’ supplemental programs, excluding DSH (which is not in the waiver), but including:  physician, hospital UHRIP, Community Mental Health Center, Rural Hospital, Local Health Department and Public Health related services, programs and funding. (See THOT’s 1115 page for details on these proposals.)


Medicaid Fee For Service Program Work Continues Progress 

THOT continues work with HHSC on a Medicaid Fee for Service supplemental payment program. Under proposed changes to the hospital rate enhancement program known as UHRIP, and based on discussions with CMS, HHSC proposes to exclude services provided outside Medicaid managed care, i.e., in the Traditional or Fee for Service program.  This exclusion would significantly reduce payments for hospitals with a higher than average percent of Fee for Services patients. Large and some other public hospitals and many hospitals in the Valley see more Fee for Services patients and would be disproportionately hurt by excluding their care costs from UHRIP payments.  The Medicaid Fee for Service supplemental program would provide offsetting support for these important services and patients. Also – good news– because Fee for Service is outside the waiver, program costs don’t affect budget neutrality. More soon as this program option develops.


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