TEXAS — The Texas Organization of Rural and Community Hospital’s Clinically Integrated Network (TORCH CIN), which represents 45 rural and community hospitals across Texas, announced it will terminate its contracts with UnitedHealthcare beginning at the end of 2026 for Medicaid-based plans and in June 2027 for private and employer-sponsored plans, citing reimbursement rates it says are unsustainable for rural hospitals.
TORCH CIN said the decision followed more than 550 days of negotiations with UnitedHealthcare over payment rates for healthcare services.
Paul Aslin, executive director of TORCH CIN, said the organization sought reimbursement rates that would support the financial stability of rural hospitals.
“We would like them to acknowledge that they do underpay us compared to people that have more leverage, especially, for example, the urban hospitals,” Aslin said. “We would like for them to give us a proposal that is sustainable for our hospitals.”
Aslin said TORCH CIN submitted a proposal to UnitedHealthcare in January but had not received a formal response despite biweekly meetings.
In a statement to KERA, UnitedHealthcare said it continues to negotiate with TORCH CIN and remains committed to reaching an agreement.
The insurer described TORCH CIN’s announcement as a negotiating tactic and said it does not reflect the status of ongoing discussions.
“While we are disappointed in TORCH CIN’s recent actions, we remain committed to using the time left on our contract to reach an agreement that maintains long-term access to quality, affordable care for the families we serve throughout rural Texas communities,” a UnitedHealthcare spokesperson said.
UnitedHealthcare said it must balance provider reimbursement with the need to keep healthcare affordable for consumers. The company also cited recent prior authorization reforms and a multi-million-dollar investment that helped establish TORCH CIN.
According to UnitedHealthcare, both parties continue to exchange proposals during negotiations.
Aslin said UnitedHealthcare initially served as a strong partner in creating TORCH CIN but negotiations over reimbursement rates have stalled.
“The hope was that they would treat us fairly and work with us, but just dragging their feet and not getting it done in a timely way, in a fair way, we had no other choice,” Aslin said.
TORCH CIN cited data from the Texas A&M Health Rural & Community Health Institute and Turquoise Health showing that rural hospitals receive up to 53% less than metropolitan hospitals for emergency department visits under commercial insurance contracts and up to 44% less for labor and delivery services.
Aslin said lower reimbursement rates place rural hospitals at greater risk of closure.
“We’ve been getting the same underpayments, in some cases, 10 plus years, while hospitals have to increase their costs because we have labor and clinicians that we pay,” he said.
According to the Center for Healthcare Quality and Payment Reform, more than half of Texas’ 154 rural inpatient hospitals face the risk of closure, and nearly 70% have reduced services.
TORCH CIN facilities serve more than 300,000 Texans through its network of 45 hospitals, Aslin said.
He said ending the contracts could affect patients if the two sides fail to reach a new agreement.
“Our hope is that we can solve this with United, but if not, then those folks are going to be looking for a different alternative to who they use for their insurance,” Aslin said.
TORCH CIN said it remains open to further negotiations before the contract termination dates.
“If they’re willing to, in good faith, come back to the table, we’re willing to negotiate,” Aslin said. “However, under the current circumstances we can’t continue because we really are trying to look out for our rural hospitals.”
He said adequate reimbursement is necessary to keep rural hospitals operating and maintain local access to healthcare services.
“If they don’t pay our hospitals a sustainable rate, our hospitals will close and those patients will be without access to local health care,” Aslin said.
