Feds Signal To Texas That Renewing Medicaid 1115 Waiver Won’t Be Easy

It appears Texas lawmakers have entered into a standoff with the federal government, which is threatening more overtly than ever before to not renew an expiring waiver that funnels billions to state health providers for uncompensated care and projects that improve access.

The standoff has already boiled over in Florida, where Gov. Rick Scott has shouted his plans to sue the feds over what he purports to be an illegal strategy to force the state into expanding Medicaid, a tenet of President Barack Obama’s healthcare reform law that the Supreme Court left up to the states. The fight in Texas is appearing to follow the same trajectory; Gov. Greg Abbott immediately signaled his support of Scott, but stopped short of vowing to file suit. However, considering the then-attorney general once proudly stated “I go into the office, I sue the federal government,” it wouldn’t be a surprise.

“I commend Governor Rick Scott’s decision to take legal action to protect these important constitutional principles,” he said in a statement. “Texas will support Florida in its litigation against the federal government. Medicaid expansion is wrong for Texas. Florida’s approach should be determined by Floridians, not coerced by federal bureaucrats.”

At stake is $29 billion of federal Medicaid funds that will vanish if the Obama administration chooses to not renew the Medicaid 1115 waiver, which expires in September of next year—about a full year before the legislature will reconvene. Meaning, this 84th Lege must agree to a renewal plan and formally submit it to the feds for approval before it adjourns in June.

Inside that waiver are two pools of dollars. One, UC (Uncompensated Care) pays hospitals back that treat the uninsured. The other, DSRIP (Delivery System Reform Incentive Payments), sends money to hospitals that pitch plans that will boost access to care. First started in 2011, the five-year waiver will expire on Sept. 30, 2016.

Modern Healthcare got a few interviews (or statements, at least) with Dallas-area CEOs Barclay Berdan of Texas Health Resources and Joel Allison of Baylor Scott & White Health, who both praised the waiver as improving delivery of healthcare in the state. But perhaps most telling was what came from John Hawkins, the senior VP for advocacy and public policy at the Texas Hospital Association. He said cutting the waiver would likely mean the closure of already-strained rural providers.

The Centers for Medicare and Medicaid Services are essentially trying to link Medicaid expansion through the president’s healthcare reform law to the matching federal dollars that go toward paying for these access-driven DSRIP projects. State lawmakers have virulently denied to expand the program or flirt with an alternative. Which leads us to the fate of the DSRIP and UC money. Let the standoff begin.

Last month, Texas sent the feds a so-called “transition plan” that maps out the likely argument for renewal. Basically, the state needs the money because demand for uncompensated care is increasing and that implementation of the DSRIP projects was delayed, so they haven’t had a chance to actually impact access to care. Cutting the money would gut their efforts.

CMS has already talked with Texas health officials to let them know that it won’t be an easy route to renewal without expanding Medicaid. And Abbott has certainly been outspoken about his feelings on all this: “The Supreme Court made it very clear that the Constitution does not allow the federal government to use these coercive tactics against the states.”

There are 1,483 active DSRIP projects overseen by 305 providers, earning their operators about $4.5 billion since launch. The state says that the DSRIP program has spurred increased collaboration between health systems, community providers, criminal justice centers, and other providers throughout Texas’ 254 counties.

Posted in News, Public Health.