(This story has been updated with a clarification.)
Texas officials and the Obama administration are nearing a showdown over Medicaid expansion that threatens billions of dollars of federal funding that helps healthcare providers care for low-income Texans and improve the quality of care.
Texas' five-year Medicaid waiver is on track to end in September 2016. Under the waiver, the state draws $4 billion a year that's combined with state matching funds and split into two pools—one for uncompensated care and another (known as the Delivery System Reform Incentive Payment, or DSRIP, program) to encourage providers to increase the quality and cost effectiveness of care by creating innovative programs.
The CMS notified state health officials in a call last week that the agency intends to use the same principles outlined in a recent letter to Florida regarding the future of that state's assistance for treating low-income patients. The letter prompted Florida Gov. Rick Scott to threaten a lawsuit alleging the Obama administration is trying to illegally coerce the state into expanding Medicaid eligibility.
Texas providers, which have struggled in vain to persuade state leaders to expand Medicaid, say the end of the federal assistance could be devastating.
"To tie DSRIP to Medicaid expansion would hurt the vulnerable population DSRIP was created to help," said John McWhorter, president of Baylor University Medical Center at Dallas. "The Texas Legislature has emphasized that Medicaid expansion will not occur in the state, which highlights how imperative the waiver and DSRIP are to providing access to the poor in Texas."
In the letter to Florida, CMS officials said “the future of the (low income pool), sufficient provider rates and Medicaid expansion are linked.”
A spokesperson for the CMS confirmed the call with Texas officials and said the CMS intends to take the approach articulated to Florida in other states with Medicaid waivers that provide assistance for low-income patients. “We will also use these principles in considering similar proposals in other states, but discussions with each state will also take into account state specific circumstances,” CMS spokesman Aaron Albright said.
With such huge uninsured populations in Florida and Texas, getting the states to expand Medicaid would be a big win for the Obama administration. As many as 1.1 million people would benefit in Texas and 800,000 in Florida.
“We will continue our discussions and negotiations in good faith,” Stephanie Goodman, a spokeswoman for the Texas Health and Human Services Commission, said in response to the phone call with the CMS.
Florida Gov. Rick Scott, a Republican, said tying the hospital assistance to Medicaid expansion violated the 2012 U.S. Supreme Court decision finding that the federal government could not make a state's Medicaid funding contingent on its willingness to expand eligibility.
Texas Gov. Greg Abbott, also a Republican, said Monday that he would support Scott's lawsuit against the CMS and reiterated that he has no interest in expanding Medicaid.
“The Supreme Court made it very clear that the Constitution does not allow the federal government to use these coercive tactics against the states,” Abbott said in a statement. Medicaid expansion is wrong for Texas. Florida's approach should be determined by Floridians, not coerced by federal bureaucrats.”
John Hawkins, senior vice president of advocacy and public policy at the Texas Hospital Association, said hospitals in rural areas would be forced to close and urban facilities would be forced to cut back services.
Hawkins also said the move could end of providers' attempts to care for people now in the coverage gap. Some hospitals are currently using some DSRIP funding to serve uninsured patients on a sliding scale.
"If the federal government allows us the additional flexibility we need, Texas can continue to improve our delivery system and provide access to healthcare needed for low-income patients,” said Barclay Berdan, CEO of Texas Health Resources. “The waiver is cost-effective, and its renewal will preserve budget predictability for the federal government, our state, and safety net providers, and will better serve Texas communities."
Complicating matters further is that the Legislature convenes only every two years and is scheduled to adjourn on June 1. Lawmakers won't return until January 2017, after the DSRIP waiver expires.
“We are hopeful state and federal officials will reach an agreement that allows the waiver to be renewed,” said Mike Malaise, interim senior vice president of external affairs at Parkland Health & Hospital System.
Despite the high stakes, George Masi, president and CEO of Harris Health, said he supports the CMS' efforts to push Texas toward expanding Medicaid.
“Nobody wins in a scenario where we aren't providing care to those who require it,” Masi said.
(This story has been updated to clarify the amount of federal funding Texas receives under its Medicaid waiver.)