HealthcareStatewide NewsTexas’ Medicaid Waiver Extension Rescinded by Biden Administration

The State of Texas' previously approved request for a waiver through its Medicaid program was retroactively denied by the Centers for Medicare and Medicaid Services.
April 16, 2021
Approval of an extension to a federal Medicaid program waiver was rescinded by the Biden administration months after it was approved by the Trump administration.

The waiver approves federal funding for uncompensated care for certain services — meaning, if a patient defaults on their amount owed the federal government will make up those costs for the hospitals otherwise facing a financial loss.

It further exempts certain regulations around which Texas has structured its Medicaid system. They include discretion over a particular area’s health care delivery system; expansion of hospital time-of-stay for those with certain mental illnesses; and the ability of the state to restrict “freedom of choice of provider” in certain plans.

Governor Greg Abbott decried the recission, stating, “By rescinding this waiver extension, the Biden administration is obstructing healthcare access for vulnerable Texans and taking away crucial resources for rural hospitals in Texas.”

“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. With this action, the Biden administration is deliberately betraying Texans who depend on the resources made possible through this waiver.”

The Texan Tumbler

Near the end of 2020, the Centers for Medicare & Medicaid Services (CMS) approved Texas’ request for a 10-year extension of the waiver and exempted it from the public notice and comment requirements within the typical federal rulemaking process.

On January 15, the Texas Department of Health and Human Services acknowledged the federal approval of a 10-year extension.

Both of those actions took place during the Trump administration.

Now, months later, CMS has reversed course. On Friday, it sent an over 650-page notice to the State of Texas explaining the rescission.

“Upon further review, we have determined that CMS materially erred in granting Texas’s request for an exemption from the normal public notice process,” the letter stated.

“We have determined that the state’s exemption request did not articulate a sufficient basis for us to conclude that approving the state’s emergency request for an exemption from the normal public notice process was needed to address a public health emergency or other sudden emergency threat to human lives.”

The state applied for exemption on the grounds that it was “substantially related to the public health emergency for COVID-19 or any other sudden emergency threat to human lives.” 

CMS has now deemed the state did not meet an adequate burden of proof for that claim.

Furthermore, CMS is retroactively ruling that “beneficiaries and other interested stakeholders” were deprived of the ability to submit public comment.

The current waiver runs through September 30, 2022, and CMS added the state could reapply for the waiver but must go through the rulemaking process.

Texas Attorney General Ken Paxton added, “The Biden Administration has effectively blocked vulnerable Texans from accessing healthcare by stripping hospitals, nursing homes, and mental health centers of critical resources that serve our most vulnerable populations.”

“Our state negotiated with the federal government for months in order to secure this necessary funding and, in the blink of an eye, President Biden grossly betrayed those who rely on our assistance the most.”

At the root of this issue is a potential vacuum of financial aid for hospitals treating uninsured patients who cannot pay their own medical bills and the continued use of per annum rule extensions.

In a statement, president of the Texas Essential Healthcare Partnerships Donald Lee, expounded on these potential consequences, saying, “The loss of this funding would create a cascading disaster as hospitals failed and Texans had no or limited access to hospital services. The impact will be felt most acutely in the inner city of our major metro areas, in our rural areas, and especially along the Texas-Mexico border.”

While lurking behind CMS’s action is the 800-pound gorilla in the room of Medicaid expansion, and Texas’ to-date refusal to trigger it. Should the waiver remain denied, the lost federal reimbursement will be difficult, if not impossible, for the state to shoulder.

And a larger, more existential political debate may add even more fuel to the fire.


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Brad Johnson

Brad Johnson is a senior reporter for The Texan and 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.