Medicaid update from Texas: ‘No feasible way’ to survive proposed cuts

AUSTIN, Texas – Proposed Medicaid cuts of up to 85% by the Texas Health and Human Services Commission (HHSC) would destroy the state’s durable medical equipment (DME) infrastructure – and patient access along with it, say providers. 

Proposed rates published in October include cuts of 18.66% to 39.47% for oxygen, depending on modality, 78.25% for pulse oximeters and 51.06% for adult formula. The cuts are tied to federal funding rules, including the 21st Century Cures Act, which prevent states from reimbursing Medicaid DME at higher rates than Medicare’s aggregate limits. 

“We understand what they're trying to do – they're trying to align Medicaid rates to Medicare – but I think it's a fundamental misunderstanding about what the equipment does and what type of equipment they're paying for,” says Victoria Peterson, president of the Texas Medical Equipment Providers Association (TexMEP). 

Adding to concerns: Because Texas Medicaid is administered by managed care organizations (MCOs), the rates would be further reduced per an individual company’s contract, says Peterson. 

“I think a lot of the HHSC staff doesn’t understand that MCOs are going to take a percentage off (the rates) as a discount, and in certain areas those contracts can have discounts of up to 50%,” she said. “So, when you are already cutting a pulse oximeter by (nearly) 80%, it’s going to be reduced by another 40% to 50%. There’s just no feasible way to provide the care that they are requiring.” 

At a Nov. 10 hearing of the Texas Health and Human Services Commission, more than 50 people spoke out against the rates, including provider Larry Moorman, who says his primary concern is patient access to care. 

“We’re one of the very few providers in the state managing the most critical patients,” said Moorman, owner of Coastal Pediatrics in League City. “We do it with grace and dignity, but it takes resources. It’s already a challenge with all the additional costs of doing business in today’s landscape.” 

A final announcement on the proposed rate cuts is expected possibly in the spring, with an effective date of Sept. 1, 2026. TexMEP is working as many channels as it can to get HHSC to reconsider, says Peterson. 

“We’ve already started reaching out to legislators to make sure they understand what these rate cuts are going to do,” she said. “It’s going to destroy patient access and it’s going to destroy the already small DME infrastructure altogether.”