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Insurance & Benefits

CMS Rescinds Texas Medicaid Waiver

The waiver would have secured and extended charity care at hospitals for another decade, but the federal government says the request wasn't properly handled.

The Centers for Medicaid and Medicare Services has rescinded Texas’ 1115 waiver extension that would have provided needed funding to hospitals, physicians, rural health clinics, and community health centers which serve the uninsured and indigent. The state has a chance to reapply, but the decision reverses a move made in the final weeks of the Trump administration. 

In January, CMS approved a waiver that would have allowed the state to provide care to millions of Texans, securing $11 billion in supplemental or direct payments each year for Medicaid safety net funding, taking care of the poorest of the poor. According to a statement from the state health department, the funds would be “stabilizing Texas’ health care safety net while providers are continuing to respond to the ongoing public health pandemic,” according to a statement from the state health department. These services would have included behavioral health, immunizations, chronic disease prevention for uninsured individuals. 

But on April 16, CMS notified the Texas Health and Human Services Commission that the waiver would be rescinded. This means the current waiver that extends funding would be back in effect, but it ends in September next year, putting future funding in doubt.

Texas is one of the few states nationwide that has not expanded Medicaid. A Medicaid expansion would help Texas gain access to additional funds that would cover indigent care. Still, for those states that haven’t sought Medicaid expansion, the waiver is a workaround to ensure that the uninsured can receive care.

So why did they rescind the offer?

The letter said the request did not explain why CMS concluded that the waiver should be extended, but it did offer that Texas has the opportunity to reapply for the extension within 18 months. “We stand ready to work with the state to accomplish state submission and CMS review of a complete extension application during the next eighteen months that the demonstration continues to be authorized,” the letter read. 

But there may be other factors at play. The waiver was extended in the dying days of the Trump administration—a surprise to some. While most agree that funding indigent care is necessary, proponents of Medicaid expansion said that the waiver was meant to pacify providers, who have been pushing for expanding Medicaid and reducing the number of uninsured Texans. The thinking is, if CMS extends the waiver, hospitals and clinics won’t be going bankrupt treating the uninsured, so they will be less vociferous in their advocacy toward expanding Medicaid—something most conservatives are against, despite broad popular support

DFW Hospital Council President and CEO Steve Love is confident that Texas’ reapplication will be successful, led by HHSC executive commissioner Cecile Young. “Ms. Young has a positive approach to solving problems and does so with no emotional or adverse reactions. I am confident that through her leadership, we can collaborate with CMS and remedy this rescinded renewal of the Medicaid 1115 Waiver,” Love says. 

But with the legislature currently in session deciding where to allocate funds, the lack of an extension may throw a wrench in the state’s budgeting process. The other question is how an extended waiver may be putting a Bandaid on, or even perpetuating, Texas’ nation-leading uninsured rate. If the feds continue to send Texas a big pool of money to pay for uninsured residents’ care but don’t address the root cause of the issue, (providing health insurance is both better for patients and saves money compared to the current system), they are missing an opportunity to solve the problem while saving money and reducing federal spending. “Should we now have a bi-partisan approach to explore Medicaid expansion in Texas in a very collaborative and meaningful way without any preconceived notions?” Love says. 

Texas Health and Human Services Commission “is currently reviewing the information and determining next steps,” according to a statement, and haven’t committed to reapplying. We will continue to follow the issue as developments ensue. 

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