McLennan County sets 6% mandatory hospital assessment to fund Medicaid match

McLennan County’s commissioners voted to set the fiscal year 2026 mandatory payment rate for the county’s Local Provider Participation Fund at 6% during a public meeting on Oct. 8, 2025, approving a resolution to collect assessments from non‑public hospitals to draw down federal Medicaid match.

The move follows an annual public hearing required by state law and implements a cap the county said is permitted under the Texas Health and Safety Code. County staff described the LPPF — Local Provider Participation Fund — as a mechanism through which assessed payments from private hospitals are pooled by the county, submitted to the Texas Health and Human Services Commission as an intergovernmental transfer (IGT), matched with federal Medicaid funds, and returned to hospitals as supplemental and directed payments.

“How the program works is the county collects mandatory assessments from non‑public hospitals, deposits those funds for an IGT with HHSC, and the federal match is used to support Medicaid services and uncompensated care locally,” said Heather (last name not provided), county staff who presented the program overview to the court. Heather told commissioners that the county’s LPPF was established in 2015 under House Bill 2809 and operates under Chapter 294 of the Texas Health and Safety Code.

Hospital representatives at the meeting said county providers requested the 6% rate. “The maximum rate able to be generated due to federal statute is 6%, and the providers within McLennan County are requesting that 6% again,” said Justin Flores of Alonzo Healthcare Ventures, who said he represents private hospitals in the county. Michael Neal, also with Alonzo Healthcare Ventures, added the firms advise hospitals on Medicaid and LPPF administration.

Commissioners asked whether funds collected remain in the county. Justin Flores and Michael Neal said the combination of local assessments and the federal match typically results in total payments to hospitals that exceed the local assessment amount. Flores said the county is expected to collect about $45,000,000 under the program in the coming year and that, after federal matching and program calculations, “that $45 million typically does come back in full force to the hospitals here.”

There was no public comment during the hearing. After the presentation and brief questions, a commissioner moved to adopt the 6% rate and commissioners approved the resolution by voice vote.

The court also ratified a related intergovernmental transfer under the Atlas program, approving a one‑time IGT of $422,941.89 for state fiscal year 2025, third round. County staff said the ratification was needed because the IGT submission deadline was close and staff had made the transfer in advance of formal court action; the court approved authorizing settlement up to the LPPF account balance on the day of the transfer.

County staff and hospital consultants emphasized the constraints on who must pay: only non‑public (private) hospitals that provide inpatient services in McLennan County are assessed under LPPF rules. Public hospitals and hospital districts use different statutory authorities to move funds and were not part of the assessment pool discussed at the hearing. The court’s action sets the rate for FY2026; commissioners may return to related LPPF administration items in future meetings.

Details recorded in the meeting packet show the LPPF framework used by McLennan County follows state guidance and has counterparts in 32 Texas counties. County staff said the LPPF avoids relying on local property taxes by leveraging local provider assessments to obtain federal Medicaid matching funds.

The county clerk recorded the vote as passed; no roll‑call tally was provided in the public minutes.