As Texas hospitals learned this week that the Trump administration was currently holding up their $10 billion in Medicaid payments, the state’s attorney general and U.S. Senate hopeful Ken Paxton was noticeably silent.

Three years ago, Paxton’s office was quick to come to the state’s defense when the Biden administration threatened to withhold the same type of Medicaid funding to hospitals called the Comprehensive Hospital Increase Reimbursement Program, also known as CHIRP. If Texas’ payment that year had been disallowed, the Centers for Medicare and Medicaid Services could have withheld all the CHIRP funding that year, which is the same problem Texas is facing this year.

“This is not only a win for the integrity of Texas health care, but it’s also a defeat of Joe Biden’s unlawful overreach,” Paxton said almost a year ago in a news release declaring his “major nationwide legal victory.” “This rule is just one example of the Biden administration’s misuse of CMS, which was employed to target conservative states.”

But now confronted with facing off the Trump administration, Paxton has not used a tool — filing a lawsuit to retain the CHIRP funds — that has proved successful in the past even as Gov. Greg Abbott, another staunch Trump ally, has come out publicly that there’s nothing illegal about what Texas is doing to get those funds. Neither the attorney general’s office or Paxton’s political campaign have commented on the sudden halt of the money, which is costing Texas hospitals $27 million a day.

The silence is not surprising, said Brandon Rottinghaus, a professor of political science at the University of Houston. Paxton is facing a tight race for incumbent Sen. John Cornyn’s seat against a moneyed Democratic challenger, state Rep. James Talarico, and defying Trump and his loyalists is a liability, Rottinghaus said.

Early voting starts Oct. 19 and the 2026 Republican Midterm Convention starts in Dallas next week.

“You know, he’s in a very politically delicate situation, and he doesn’t want the story to be, Trump versus Paxton,” Rottinghaus said. “He’s biding his time in a way that is useful as a delay tactic to not make this a story that could splash back up on him.”

Last month, Abbott quietly stepped in to throw his support behind the Texas Health and Human Services Commission which has news of the behind-the-curtain impasse between Texas and Washington. The Texas Tribune was the first to report on the letter and the cuts facing hospitals.

On Wednesday, a spokesperson for Abbott reiterated that Texas was not backing down, a rare public example of a Republican in Texas fighting for Medicaid, which covers 4 million people statewide, most of them low-income. About a third of all children in Texas and two-thirds of Texans in nursing homes receive Medicaid.

According to the Texas Hospital Association, if they do not receive this Medicaid funding stream, hospitals are at risk of closing down their NICUs and maternity wards, which are among the most expensive services to maintain.

Rottinghaus said the amount of money at risk is too much not to fight for it, which Abbott’s campaign seems to be taking into account.

“It’s gonna be politically messy for the Republicans, especially for Greg Abbott and for Ken Paxton, but it’s a fight that they have to have,” he said. “This might be one of the first instances we’ve seen for a while where Texas would go to battle against a Republican administration in D.C.”

CMS unhappy with Texas hospitals sharing funding

Compared to doctors, hospitals receive a lower Medicaid reimbursement rate, which Texas lawmakers indirectly limit when they set the overall budget for Medicaid.

Under CHIRP, CMS provides additional funding to hospitals to help cover the gap between their cost and the money they get under that rate if states make a good faith effort to also help out.

That help comes from about $4.2 billion annually in taxes that Texas hospitals pay and the Texas Health and Human Services Commission administers.

The way Texas’ hospital taxing structure works is at the heart of the most recent dispute with the Trump administration as well as the one with the Biden administration three years ago.

Beginning in 2013, the Texas Legislature authorized certain hospital districts, counties, and municipalities to collect taxes to be used for the state’s portion of CHIRP. It also allowed hospitals to enter informal agreements with one another so that a hospital hurt more by the Medicaid funding gap can get funds from another one that is in a better position. Taxes collected from hospitals are based on their net patient revenue and the money is deposited into a Local Provider Participation Fund, often referred to by health officials as LPPF.

CMS insists that a tax must be broad-based and uniform and its concern is that Texas’ LPPF model is somehow holding hospitals harmless from the taxes.

But last year, Paxton’s team convinced a federal judge that Texas’ informal agreements are permissible and that the federal funding to Texas must continue. Texas has maintained that LPPF tax collections and payments are allowable and the federal government does not have jurisdiction among private arrangements.

“These agreements were permitted by the Legislature in 2013 and are allowed by federal law. With the rule and various other bulletins, Biden’s CMS attempted to force Texas and other states to police purely private contracts, imposing unlawful federal overreach that could have led to a massive cut in critical Medicaid funding,” Paxton said in last year’s news release after the ruling.

This time around CMS appears to want Texas to change its tax structure entirely, something state officials insist is not necessary. Paxton has not answered whether he plans on suing Trump’s CMS over the decision.

Hospitals already considering impact on $10 billion cut

On Tuesday, when the $27-million-a-day cuts went into effect, it was the first question Dallas County Commissioner John Wiley Price posed to Parkland Health CEO Dr. Frederick Cerise at the commissioners meeting.

“What does this whole piece that’s hitting Texas, with reference to hospitals and Medicaid, what is that going to do to you?” Price asked.

Cerise responded that it would cost Parkland Health, which includes Parkland Memorial Hospital where a third of its patients are on Medicaid, $528,000 every day for the fiscal year.

Parkland Health’s fiscal year starts Oct. 1. Cerise said there are no immediate cuts to Parkland service, but that could change the longer this stalemate continues. This would result first in delaying needed capital improvements, he said.

Cerise pointed out that if these funds were cut for good, he doubts the state could suddenly step in to make up the difference.

“The state depends heavily on this (CHIRP) as a financing mechanism and the state, you know, it’s hard to imagine the state’s going to backfill that with general revenue,” he said.

Cerise said he’s even less optimistic that this latest disagreement with the feds will be resolved quickly.

“Now, in the past, we’ve been able to rely on those getting approved and sort of retroactively applying those funds but there’s a lot more uncertainty right now than we’ve ever had,” he said.

Disclosure: Texas Hospital Association has been a major financial supporter of The Texas Tribune. University of Houston has been a financial supporter within the past five years. The Texas Tribune is a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in our journalism. Find a complete list of them and more information about our financial and disclosure policies here.