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The administration withheld billions in Medicaid funding for Texas hospitals due to disputes over local tax calculations

The administration announced a funding hold on approximately $9.8 billion in Medicaid reimbursement for Texas hospitals, resulting in a daily loss of $27 million for the state's healthcare facilities. The federal government is withholding these funds because it questions how local jurisdictions in Texas calculate the taxes collected from hospitals to generate the state's share for federal matching. Texas officials, including Governor Greg Abbott, maintain that the current tax structure fully complies with federal law. If the federal government insists on a restructuring of the tax system, the state must be guaranteed that it will not be penalized in the future. Hospital executives warn that the funding shortfall threatens the safety-net and pediatric healthcare systems. While there is no immediate disruption to patient services, prolonged delays could lead to service cuts, staff layoffs, and facility closures. The Texas Health and Human Services Commission is currently working to reach an agreement with the Centers for Medicare and Medicaid Services to resolve the impasse.

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