FederalHealthcareStatewide NewsBiden Administration Drops Challenge to $30 Billion Texas Medicaid Waiver

The letter brings an end to the year-long fight between the federal and state government, viewed as an effort to force Medicaid expansion.
April 22, 2022
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The Biden administration’s Centers for Medicare and Medicaid Services (CMS) announced that it would drop its legal challenge against Texas’ Medicaid Section 1115 waiver, worth $30 billion.

“CMS has concluded that it is not the best use of the federal government’s limited resources to continue to litigate this matter,” wrote CMS Director Chiquita Brooks-LaSure in a Friday letter, bringing an end to the year-long fight.

“This should resolve the issue without the need for further litigation and will create no disruption to the people who rely on Texas’ Medicaid program.”

This saga began one year ago when the then-newly instated Biden CMS administration retroactively rejected Texas’ application for a 10-year extension of the waiver. 

“The original rescission by the Biden administration last April obstructed healthcare access for vulnerable Texans and took away crucial resources for rural hospitals in Texas, and I am grateful that Texans will now continue to have access to the health care resources they need,” Governor Greg Abbott said in a statement. The waiver is worth over $3 billion per year during its 10-year lifespan.

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Section 1115 enables the state to be reimbursed for uncompensated health care for certain services. If a patient defaults on the amount owed to a hospital for services, the federal government will reimburse the hospital for those costs. Every decade it must be reapplied for to be renewed or tweaked.

In the final few months of the Trump administration, CMS approved the waiver’s extension. Months later, citing alleged failure to adhere to public notice and comment requirements, the Biden CMS retroactively pulled approval of the renewal and ordered the state government to reapply — a lengthy process.

At the time, many viewed the move as a full-court press to force Texas’ hand in expanding Medicaid, which it has refused to do in the decade since Obamacare’s passage. Shortly after, the effort for a soft-expansion of Medicaid failed in the Texas legislature.

Shortly after the recission, Attorney General Ken Paxton sued the Biden administration over the directive — on which it won a preliminary victory in August 2021, securing a temporary restraining order against the federal government.

During the saga, various Texas Democrats called on the administration to renege and restore the funding both at the state and federal levels.

“I’m glad they’ve now reversed themselves, but this was a boneheaded move that could have cost lives,” said Sen. John Cornyn (R-TX) of the decision. “The folks most hurt by this — which the Administration admitted was purely political — were the low income and uninsured Texans who depend on the Medicaid safety net. I’m glad the Administration has now reversed themselves, but this was a boneheaded move that could have cost lives.”

“By rescinding our Medicaid waiver, the Biden administration had needlessly threatened the healthcare of many vulnerable Texans,” Sen. Ted Cruz (R-TX) added, sharing Cornyn’s sentiment. “While it’s good to see this action today, our waiver never should have been rescinded in the first place.”

The 10-year renewal of Texas’ 1115 waiver will now become fully effective with the erasure of the ongoing legal dispute.

Editor’s Note:  This article was updated to include Governor Abbott’s and Sen. Cruz’s statements.

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Brad Johnson

Brad Johnson is an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.