Children’s Hospital Association of Texas Urges CMS to Reconsider Medicaid Rules

CHAT warns rules will cost the state billions of dollars in funding for vulnerable children

 

Austin, Texas—July 21, 2026—The Children’s Hospital Association of Texas (CHAT) submitted comments today urging the Centers for Medicare & Medicaid Services (CMS) to reconsider drastic cuts to Medicaid funding for children’s hospitals.

 

In 2025, Congress passed the One Big Beautiful Bill Act (OBBBA), a federal budget law that put new limits on Medicaid spending. Congress provided CMS with the authority to determine a fair payment rate for children’s hospitals and to safeguard them from disproportionate Medicaid reductions. CMS is proposing a regulatory framework that could result in a $510 billion loss in Medicaid funding nationwide over 10 years—more than triple the $149.4 billion in federal cuts originally projected by the Congressional Budget Office (CBO).

“Around 50% of care provided at children’s hospitals in Texas is for patients covered by Medicaid,” said CHAT President Christina Hoppe. “As currently proposed, cuts of this magnitude will restrict access to lifesaving care for children. We urge CMS to align its rules with the original congressional intent of Section 71116 and protect these essential institutions.”

 

CMS is proposing implementation of OBBBA that goes beyond the Medicaid reductions that Congress enacted. Certain hospitals are more at risk of harm—including children’s hospitals, critical access hospitals, and some cancer hospitals. The proposed rules, which close for comment today, could result in payment reductions to children’s hospitals in Texas of up to $2.5 billion annually once fully phased in.

 

This implementation would cause a disproportionate harm on freestanding children’s hospitals, who provide specialized care to pediatric patients with the most serious conditions, including cancer, cerebral palsy, spina bifida, and organ failure. In Texas:

 

• More than 3 million children rely on Medicaid coverage.
• Children’s hospitals serve three times as many medically complex children as general hospitals.
• One-third of the care provided at these hospitals results from transfers from other hospitals that are not equipped to provide the necessary level of pediatric care.
• Nearly 60% of all inpatient care at children’s hospitals is covered by Medicaid, compared to just 17% at general acute care hospitals.

 

“CHAT firmly believes that Congress crafted and adopted this legislation to ensure continuity of care for vulnerable populations, particularly children,” said Hoppe. “We urge CMS to adopt rules that support our kids in Texas and nationwide.”

 

To learn more, visit www.chatexas.com.

About the Children’s Hospital Association of Texas (CHAT)

The Children’s Hospital Association of Texas (CHAT) is a non-profit organization dedicated to advancing children’s health by advocating for policy and funding initiatives that ensure access to high-quality, comprehensive health care. CHAT represents seven freestanding, nonprofit children’s hospitals that provide care for 97% of Texas’s 254 counties. For more information, visit www.chatexas.com.