Inside The Medicaid Waiver Standoff, And What It Means For Texas

Another fight with the feds could jeopardize billions of dollars to provide healthcare for Dallas County’s poor.
Another fight with the feds could jeopardize billions of dollars to provide healthcare for Dallas County’s poor.

For the last four years, Texas healthcare providers have received billions of dollars from the federal government for treating the uninsured while implementing programs to keep them healthy. The state will need to ask for a renewal this year if it wants that money once the funds’ authorization expires in September 2016. And there’s no guarantee Texas will be given more money. 

The saga of the Texas Healthcare Transformation and Quality Improvement Program has incensed politicians, triggered nervousness in providers, and now has once again sparked a standoff of sorts between Texas and the Obama administration. Known technically as the Medicaid 1115 waiver—its name derives from Section 1115 of the Social Security Act that birthed it and its cousins in other states—the pot of money worth $29 billion was meant to offset the cost of uncompensated care and reform the way healthcare is delivered to Medicaid enrollees and the uninsured in Texas. 

Approved by the federal Centers for Medicare and Medicaid Services in 2011, the 1115 waiver created two pools of money. One goes toward paying for indigent care. The other pays for providers to create and implement programs that will keep poor people healthier and out of the ER. It hasn’t been without controversy, though. Especially in North Texas, which has pockets where the uninsured rate flirts with 40 percent. 

You aren’t remiss if you’re not familiar with the waiver. Since the U.S. Supreme Court ruling in 2012 that gave states the choice to expand Medicaid under the Affordable Care Act, Texas lawmakers have shouted their refusal to do so at such a volume that it has filled the echo chamber where healthcare and politics intersect. There’s hardly room for anything else.

The waiver was originally OK’d to help Texas weather increased capacity for Medicaid patients once the Affordable Care Act became law. But the high court’s ruling essentially made that moot, given Texas’ refusal to expand Medicaid. Instead, the 1115 waiver now has been helping hospitals offset sagging Medicaid reimbursement rates. According to the Texas Hospital Association, the Medicaid program reimburses providers 50 cents on the dollar for inpatient services and 72 cents for outpatient. 

“The 1115 waiver is incredibly important to Texas hospitals,” says Erol Akdamar, president of HCA North Texas, which counts 15 area hospitals in its portfolio. “We’re reimbursed roughly half of the Medicaid cost for inpatient care. The waiver provides some funding that is a supplement to the initial reimbursement.” 

The money doesn’t completely come from CMS. The waiver mandates that local governments put skin in the game by ponying up a portion of their own money, which the feds return and match at 60 percent. As a result, about $17 billion of the $29 billion came from CMS. And about $2.3 billion of that has poured into the Dallas area. 

The one pool for treating the uninsured—coined UC for Uncompensated Care—dwindles as the years progress. The other pool for the reform programs—coined DSRIP, for Delivery System Reform Incentive Programs—is heavier on the back-end. The idea is that poorer populations shouldn’t be receiving as much uncompensated care if the DSRIP projects are successful. Region 9, which includes Dallas County, has 131 active projects. They’ve birthed new clinics, paid salaries for specialists in underserved areas, and funded partnerships with providers and community groups.

This story originally appeared in the July-August issue of D CEO. You can read the entire piece at this link