Texas losing a Medicaid waiver at center of AG Paxton lawsuit against Biden Administration

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AUSTIN (KXAN) — The Biden Administration is facing a lawsuit from Texas after rescinding a Medicaid waiver extension put in place by the Trump Administration. The lawsuit claims the waiver’s removal makes it difficult for the state to plan long-term as it doesn’t know if funding will be in place for healthcare programs, and says the notification came too late for the Texas Legislature to respond with its own funding solutions.

Why does Texas need a Medicaid waiver?

Texas is one of 12 states that has not adopted federal Medicaid expansion. The Medicaid 115 waiver that was granted Jan. 15 allowed the state to tap into federal and state funding to run its Texas Healthcare Transformation and Quality Improvement Program, which has been in place since 2011. That program allows Texas to expand its existing Medicaid-managed care programs that serve low-income families and children as well as the elderly and those with disabilities.

According to the lawsuit, Texas offers Medicaid coverage to about 4.3 million people.

The Texas Healthcare Transformation and Quality Improvement Program also allowed the state to “finance a new safety net care pool to assist hospitals and other providers with uncompensated care costs and to promote health system transformation in preparation for new coverage demands,” according to the original application in 2011. Since then Texas has received three waiver extensions and increased the services affected under those waivers.

The Texas Hospital Association says the Texas Healthcare Transformation and Quality Improvement Program is worth more than $11 billion a year. The waiver would have extended the program to Sept. 30, 2030.

Why was Texas’ Medicaid waiver rescinded?

In April, the Centers for Medicare & Medicaid Services removed the extension, saying the federal government had “materially erred” in granting the request for a sped-up approval process that didn’t include public comment. It said the state hadn’t given a good enough reason for skipping the normal public notice process.

In the lawsuit, Texas Attorney General Ken Paxton says COVID-19 disrupted normal healthcare operations and made it difficult to measure key metrics the program was studying. It also put a financial strain on healthcare providers.

Texas’ response: Friday’s lawsuit

Paxton announced the state’s lawsuit Friday, saying, “The Biden Administration cannot simply breach a contract and topple Texas’s Medicaid system without warning.”

Paxton said there had been more than a month of negotiations before the waiver was approved in January. Paxton also claimed the motive behind the removal was to push Texas toward federal Medicaid expansion.

KXAN has reached out to the Centers for Medicare & Medicaid Services for a comment on the lawsuit and will update this story when it responds.

The lawsuit is requesting the court invalidate the April letter rescinding the extension and let the waiver remain in place. Without an extension, the Texas Healthcare Transformation and Quality Improvement Program ends Sept. 30, 2022.

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