Home Article Texas Medicaid responds to feedback, reduces severity of cuts

Texas Medicaid responds to feedback, reduces severity of cuts

Texas Medicaid responds to feedback, reduces severity of cuts ‘It was about reeducation and I think they heard the message’

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By Theresa Flaherty, Managing Editor

Updated 11:51 AM CDT, Fri April 3, 2026

AUSTIN, Texas – After strong pushback, the Texas Health and Human Services Commission (HHSC) will limit most rate adjustments for Medicaid to 5% or less – a huge improvement over the agency’s original proposal of cuts up to 85%, say HME providers.

At a hearing in November, about 50 stakeholders testified against the proposed cuts, which originally included18.66% to 39.47% for oxygen (depending on modality), 78.25% for pulse oximeters and 51.06% for adult formula.

“It was about reeducation and I think they heard the message,” said Mark Gowen, president/CFO of Angel Medical Supply. “We think that there's just a lack of knowledge about how much it costs to run a DME business, especially the companies that provide ventilators, oxygen and custom rehab. You can't replace us with a website order.”

The cuts were driven by federal funding rules, including the 21st Century Cures Act. Enacted in 2016, the law restricts federal Medicaid matching funds for durable medical equipment to amounts tied to Medicare reimbursement.

Most of the new rate cuts will take effect Sept. 1, 2026. Adult formula cuts of approximately 5% have been delayed until Sept. 1, 2027. Product categories that will still see larger rate reductions include:

Nebulizers: about 18.33% over two years.
Negative pressure wound therapy (NPWT) pump rentals: about 27.6% over two years.
Oxygen concentrators: 24.8% over two years.

While it’s frustrating that providers will see rate cuts at all, especially as the cost of doing business continues to rise, it was heartening to see the industry band together, says Victoria Peterson, president of the Texas Medical Equipment Providers Association (TexMEP).

“I'm really proud that we have so many providers and other stakeholders come together and be able to say, ‘Hey, this isn't going to work for us,’” she said. “Thankfully, (HHSC) listened. We're looking forward to working with them more in the future and having hopefully some better dialogue with them.”

New enacted cuts (source: AAHomecare):