Bloomberg Law
April 16, 2021, 10:35 PM

Biden’s HHS Pulls Back 10-Year Extension of Texas Medicaid Plan

Christopher Brown
Christopher Brown
Staff Correspondent

The Department of Health and Human Services overturned Friday a last-minute approval by the Trump administration extending Texas’s Medicaid plan for 10 years.

The Centers for Medicare and Medicaid Services “materially erred” in allowing the state to bypass the normal notice-and-comment process for approval of Medicaid waivers under Section 1115 of the Social Security Act, the department said in an April 16 letter.

Texas claimed in its request that an exemption from the notice-and-comment process was necessary to give health providers and the state’s low-income health program financial stability amid the Covid-19 pandemic. But the state didn’t show that the exemption request was related to the public health emergency or that a delay would harm beneficiaries, the department concluded after further review.

The CMS approved the extension of the Texas waiver Jan. 15, just five days before President Joe Biden’s inauguration.

The current waiver will remain in effect through Sept. 30, 2022.

Section 1115 allows the federal government to waive Medicaid requirements for states testing new approaches to coverage and payment under the low-income health program, typically for a period of three to five years.

New Features

The lack of notice and comment deprived beneficiaries and stakeholders the opportunity to influence the state’s extension request, which included new programmatic features that the CMS had never before approved, the letter said.

One of those features was an uncompensated care pool to direct funds to providers to cover the cost of health care services for those unable to pay. That pool would have directed $1 billion to “selected providers in the state” just in the first two years, the letter said.

Gov. Greg Abbott (R) said the Biden administration’s action would harm rural hospitals and reduce access to health care. “The State of Texas spent months negotiating this agreement with the federal government to ensure vital funds for hospitals, nursing homes, and mental health resources for Texans who are uninsured,” Abbot said in a statement. “With this action, the Biden administration is deliberately betraying Texans who depend on the resources made possible through this waiver.”

More Conversation

But the HHS action doesn’t appear aimed at the substance of the Texas waiver request, which could be revived after an appropriate notice and comment period, according to Sidney Watson, director of the Center for Health Law Studies at the Saint Louis University School of Law.

“It wouldn’t be accurate to say that HHS withdrew approval for this waiver,” Watson said. “That would imply that the state was failing to comply with terms of the waiver, or that the waiver wasn’t likely to achieve its purposes. The letter focuses on something very much different, the lack of notice and comment. And it invites the state, should it want to have an extension of the existing waiver, to go through the public comment process.”

The HHS action is an opportunity for Texas to get an even better deal for Texas that pulls down more federal dollars and helps a greater number of vulnerable Texans, according to Patrick Bresette, executive director of the Children’s Defense Fund-Texas.

“The good news is that the waiver remains in place through at least Sept. 30, 2022, giving the state and stakeholders plenty of time to resubmit a waiver that reflects the best path forward for Texas while protecting crucial funding for our hospitals and health systems,” Bresette said in a statement.

The Texas Hospital Association said it was “extremely disappointed” by the HHS action. “This action undermines the safety net and hospitals’ ability to protect people,” the group said in a statement. “It puts the state’s health at serious risk and creates unprecedented levels of uncertainty for an industry that is charged with saving lives. The waiver extension would have helped the state to seamlessly continue support for much-needed health care improvements and would have continued stable funding for hospitals that serve large numbers of uninsured patients.”

To contact the reporter on this story: Christopher Brown in St. Louis at