In Tom Green County Commissioner’s Court this week, Treasurer Diana Spieker and Matt Gilbert, consultant and attorney representing Shannon Medical Center, came up to speak about amending the county’s rules and procedures regarding the Local Provider Participation Fund, or LPPF, which is one mechanism local governments in Texas use to collect mandatory assessments from private hospitals, which represent up to 6 percent of a facility’s net patient revenue (NPR).
These funds are transferred to the state to unlock federal Medicaid matching dollars for supplemental and directed payment programs like Uncompensated Care and Comprehensive Hospital Increase Reimbursement Program (CHIRP).
[Governed primarily under Texas Health and Safety Code Chapters 288 through 300C and Texas Administrative Code 1 TAC §355]
Under new rules from the Centers for Medicaid Services via Texas Health and Human Services, hospitals must keep net patient revenue (NPR) separately for inpatient and outpatient categories, where they had been combined since the current program was created in 2013.
According to watchdogs, the changes create some financial volatility for private hospitals, limit tax-structure flexibility, and increase compliance costs to protect critical federal Medicaid matching funds by moving local assessments away from a single, blended corporate revenue stream into isolated silos.
Commissioner Bacon asked if the change represented a net benefit or a net detriment, and Gilbert told him there’s really almost no difference, it’s just what HHS wants, and we have to do it this way now to remain in compliance.
“It’s a different way to calculate the rate on which the base is set,” Gilbert said, “And you still have the flexibility to set the rate anywhere in that range, it’s just a different way of calculating the total patient revenue base.”
Bacon then clarified the purpose of the change. “This is still just to help cover the shortfalls, in areas where there’s no insurance, or Medicaid and Medicare, where they can recoup some of those dollars back?”
“Yes, sir; that’s exactly right,” Gilbert said. “It’s two things; it’s the Medicaid program, which generally doesn’t pay near what it costs to treat a Medicaid patient, and there’s programs available that enhance Medicaid payments to offset some of that cost.
“And there are also substantial uninsured costs that hospitals incur, and there’s some money available for that as well.”
Gilbert said the program helps Shannon recover about 68 percent of their costs on these areas.
Pct. 4 Comm. Shawn Nanny asked “are we covering the rest with our indigent money?”
“No, sir,” Gilbert replied, “The gap that exists there; there’s no way to cover it.
“To give you a frame of reference, the Medicaid and uninsured costs that Shannon covers on an annual basis come to about $85 million, and about 68 percent of that is covered by [these funds].”
“It’s just something that Shannon has to make up in other areas, and that’s the same for every hospital in the state, that’s caring for an uninsured population that’s larger than any other state — both as a number and as a percentage of the population.
“We’ve also got the third-largest Medicaid population in the country, and that’s despite the fact that our Medicaid program only covers women, children and disabled people; we haven’t expanded Medicaid to include able-bodied adults, like other states have, but we still have one of the largest Medicaid populations in the country.”
According to industry insiders, CMS pushed for this change to enforce stricter compliance with federal Medicaid provider tax regulations.
By evaluating inpatient and outpatient revenue streams as entirely independent classes, CMS can better monitor and regulate the “indirect hold harmless” thresholds across healthcare-related taxes.
The indirect hold harmless threshold for Medicaid health care-related taxes sets the maximum percentage of net patient revenue that can be collected from provider taxes without triggering federal penalties or matching fund reductions.
Under the 2025 budget reconciliation legislation (Working Families Tax Cut legislation / P.L. 119-21) and subsequent proposed rules from the Centers for Medicare & Medicaid Services (CMS), the historical 6 percent flat safe-harbor limit is changing.
Effective Oct. 1, of this year, the threshold is replaced with a limit tied to the applicable percentage of net patient revenue for taxes that were formally enacted and imposed as of July 4, 2025. New provider taxes or increases above those July 4, 2025, levels are effectively prohibited.
The new rules also expand agency oversight and establish health insurers as an additional permissible class for health care-related taxes via CMS-2452-P introduces major structural shifts for state budgets, commercial health plans, and public health programs.
The changes were approved as presented.
In Other Business:
The county is moving to use counseling services from MHMR of the Concho Valley for the jail and the four specialty courts.
In renewing a medical services contract with La Esperanza Clinic, the Sheriff’s Office said they were only renewing the dental services half of the contract, and they would be using telehealth for mental health services from now on.
In a later item addressing a similar issue for the county’s four specialty courts, County Judge Lane Carter explained the situation.
“What we’ve been looking at for the past two months, since our specialty court counselor resigned, and the applications coming through, how do we address the counseling needs of all four courts?,” he asked.
“We have come to the conclusion, through many discussions about the availability of counseling services through MHMR, to seek out outside counseling services instead of hiring [internally,] and the feasibility of that to be held for all four of the courts.
“MHMR has a capability, between a hired counsellor and an intern, to be able to do these services.”
Carter said they had put in a compensation amount of $7,200 which represents $150 per court, per month for a year, a significant savings over a regular employee.
Carter explained that the sessions would be billed through a state grant system, and the $7,200 represents the amount that would not be covered through grant money.
Historical Markers
The court approved placement of two historical markers honoring the legacy of Fess Parker Jr. and his ties to the area and the famous Norden Bombsight that helped Americans win World War II.
Fess Parker Jr. was the son of a county commissioner and attended local schools before going on to television and film fame, and the Norden Bombsight will pay tribute to the role San Angelo played in training legions of bombardiers at Goodfellow AFB and Concho Field.
