Hospital Payment Advisory Committee, a subcommittee of the Medical Care Advisory Committee, advises that committee and HHS about hospital reimbursement methodologies for inpatient hospital prospective payment and on adjustments for disproportionate share hospitals.
Members:
| Frank L. Beaman (RHAC member) Faith Community Health System JacksboroJohn Henderson (RHAC member) Texas Organization of Rural and Community Hospitals (TORCH) Round Rock Michael L. Nunez Jerry Pickett (RHAC member) Todd Scroggins (RHAC member) Stuart Archer James Blasingame |
Andres Duran Dimmit Regional Hospital Carrizo SpringsSteven Maddux UMC Health System Lubbock Susan Parker Kent Pickering Kathleen Sweeney Emilee Stratton James Bacon
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- Welcome, introductions, and opening remarks. The meeting was convened by the Chair, Michael Nunez. A quorum was present.
- Consideration of February 3, 2026, draft meeting minutes. The minutes were approved as drafted.
- Rural Hospital Advisory Committee (RHAC) report out from May 5, 2026. (See Texas Insight Report on the RHAC May 5, 2026 Rural Hospital Advisory Committee – Texas Insight ). RHAC (Rural Hospital Advisory Committee) met earlier the same day at 10:30 AM. RHAC updates included:
- new staff announcement (Office of Rural Hospital Finance), ethics reminder, and vendor interaction policy.
- Rural Texas Strong program update was shared
- House Bill 18 (Rural Health Stabilization and Innovation Act) update was provided.
- HPAC Rulemaking update. Victoria Grady) provided the update:
HHSC wants a three-part feedback process to develop an HPAC rule.
- Written feedback invited via email to the Provider Finance hospital resource mailbox through June 15.
- Draft proposed rule to be distributed before the August meeting for discussion.
- Goal: finalize and publish a proposed rule to the Texas Register before calendar year-end (noting member terms expiring at year-end).
HHSC Reminded members to avoid “walking quorums” when discussing feedback outside the meeting.
- Comprehensive Hospital Increase Reimbursement Program (CHIRP). State Fiscal Year (SFY) 2026 CHIRP amendment update affecting Alternate Participating Hospital Reimbursement for Improving Quality Award (APHRIQA) baselines; One Big Beautiful Bill Act (OBBBA) Average Commercial Rate (ACR) to Medicare Equivalency definition update; SFY 2027 Preprint submission request and timeline.
CHIRP SFY26 technical correction/amendment status. There is an ongoing back-and-forth with CMS and all correspondence is posted on the Provider Finance website. The CMS response is due May 11and the state response is anticipated May 15 (due May 16).
Calls are occurring every two days but there is no decision yet. HHSC intends to continue scheduled interim payments however CMS direction could change this.
Centers for Medicare and Medicaid (CMS) approval of SFY 2026 CHIRP amendment affecting APHRIQA baselines, Fiscal year 2026 upcoming payment timeline
HHSC/CMS discussions include exploring whether to separate approval of “APHRIQUA baselines” from other CMS concerns to avoid broader program disruption. There was; no update beyond prior week.
HR1 / “Average Commercial Rate to Medicare Equivalency” definition update.
HHSC is building the capability to re-price Medicaid claims as if priced under Medicare. They are awaiting final federal rules which expected in the summer; There are still outstanding CMS questions.
A question was raised: whether implementation starts January 1, 2028 or aligns with a program/fiscal year start. HHSC is awaiting guidance.
FY27 directed payment program (DPP) preprint submissions and timeline:
The plan is to submit RHPs and DPP-BHS preprints this week; TIPS and CHIRP next week. Declarations of intent were sent for RHPs and DPP-BHS; CHIRP and TIPS declarations expected imminently. The timeline is driven by Texas Administrative Code requirements (publication timing for declarations and IGT calls).
CMS may ask extensive questions and approvals may be delayed (possibly later than the fiscal year start).
IGT collection schedule: There is no current plan to reduce or push back CHIRP IGT collection despite concerns about large early-year IGT outlay; HHSC noted IGT submissions are voluntary and program structure relies on established timing.
CMS has emphasized getting submissions “deemed complete” so the review clock can start; a new quality plan will be submitted with preprints (submitted every three years).
- Alternate Participating Hospital Reimbursement for Improving Quality Award (APHRIQUA)
Alternate participating hospital reimbursement / improving quality awards (APHRIQUA) payment timeline–Second interim payment has been made; final payment is planned for October; HHSC is assuming timeline holds.
DSH and UC impacts from APHRIQUA delay: no expected changes at this time; the downstream hypotheticals posed by members are hard to answer.
- Aligning Technology by Linking Interoperable Systems (ATLIS) 2026 program year The IGT call has been completed; IGT received as of Friday.
The program is generally on track and is currently a little short and may require a supplemental IGT call in a couple months. HHSC will publish payment and reporting dates on the payments calendar soon. FY27 Atlas is expected to look similar; Atlas is a five-year program that is entering year three next year.
- Disproportionate Shares Hospitals (DSH)/ Uncompensated Care (UC) SFY 2026 second DSH Interim Advance Payment, SFY 2026 third and Final Payment timeline; Minimum dollar thresholds for teaching and non-teaching facilities; FY 2026 Uncompensated Care (UC) update; Final payment scheduled for September 2026; HICH pool size; Proposed 2027 DSH Interim Payment revision update
DSH second advance payment should have been made April 20 (20% of estimated FFY26 DSH allotment of $2.3B). The second interim DSH payment is based on a full funding pool. The first interim payment was based on a reduced pool.
DSH final payment moved up to July 22 (from July 30) and posted to the calendar.
UC final payment was also moved up to September 23 (from September 30) and has a calendar update pending later in the week.
The IGT call dates are unchanged. HHSC adjusted internal review timelines instead.
Minimum dollar thresholds (teaching/non-teaching) and UC “pool size” have not yet been established.
Proposed FY27 DSH interim payment revisions / advance-payment revisions:
HHSC is evaluating options to reduce future DSH recoupments (e.g., different advance structures/thresholds). The year-over-year data variance makes advance-payment accuracy difficult. HHSC hopes to bring a proposal by the August meeting; may reach out earlier.
- State of Texas Electronic Provider System (STEPS) Current system status and implementation updates; Future filings being submitted through STEPS
The rollout is ongoing and HHSC is working tickets and requests; feedback suggests the system works once users are in. The UC ambulance cost report submissions due May 7.
FY27 DSH/UC applications and HARP submissions will be through STEPS. DSH/UC timeline is expected to remain the same with STEPS.
Users who are inactive ~60 days may be locked out and there is a recommendation to onboard additional staff in early fall/September. CHIRP and TIPS IGT declarations will remain outside STEPS; QIP declarations are in STEPS
- General Medicaid funding and supplemental payment updates:
Inpatient Rebasing update; All-Patient Diagnosis Related Group (AP-DRG) Grouper update; Discussion of Advanced Payments revisions for supplemental payment programs
Inpatient rebasing: HHSC not moving forward with previously discussed inpatient rebasing this summer (per stakeholder request).
Outpatient APDRG grouper update: HHSC evaluating impacts and a decision is pending; effects may differ since rebasing is not occurring.
- Public comment.
Maureen Mulligan, Teaching Hospitals of Texas Teaching Hospitals of Texas – Savings Lives Today, Preparing for Tomorrow congratulated Megan Wolf on promotion; and expressed support for HHSC work on addressing problematic consequences of advanced DSH payments.
- Proposed next meeting.
Future Meetings.
- August 6, 2026
- November 5, 2026
- Adjourn. There being no further business, the meeting was adjourned.
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