The CMS has awarded Texas a 15-month extension waiver that would help cover the unpaid bills of Medicaid-eligible and uninsured patients in the state.
The waiver provides $4 billion a year for the Texas Healthcare Transformation and Quality Improvement Program, which covers providers' uncompensated-care bills, and its Delivery System Reform Incentive Payment, or DSRIP, which encourages providers to adopt innovative programs that raise the quality and cost-effectiveness of care.
The 1115 waiver was originally set to expire at the end of September. It will now continue through Dec. 31, 2017. The extension prolongs a standoff between Texas and the White House which was hoping to instead see the state expand Medicaid.
"We're pleased these innovative programs will have the opportunity to continue," Texas Health and Human Services Executive Commissioner Chris Traylor said in a comment. "These programs are improving health care for Texas' Medicaid clients and creating cost-savings for taxpayers."
The state's hospitals rejoiced at the news. “Failure to extend the 1115 waiver would have resulted in near-catastrophic consequences for the state's most vulnerable populations,” said Ted Shaw, CEO of the Texas Hospital Association, in a statement.
The state had initially sought a five-year renewal of the waiver, but CMS officials appeared to reject that request.
In a meeting last month, Traylor told Texas lawmakers that he was optimistic about a short-term extension. Soon after, his department sent a letter to the CMS warning that without the extension millions of Medicaid beneficiaries and the uninsured would lose access to care as providers lost billions of dollars in reimbursement.
The conflict over a potential long-term renewal first erupted last November when CMS Medicaid Director Vikki Wachino wrote in the letter to the state's Medicaid agency that “coverage is the best way to assure beneficiary access to healthcare for low-income individuals ... uncompensated-care pool funding should not pay for costs that would otherwise be covered in a Medicaid expansion.”
The CMS last year sent nearly identical letters to California and Florida. The Obama administration is reluctant to make special payments for the Medicaid-eligible uninsured since most of them would have access to coverage if their states expanded the program.
In its extension notice (PDF), the CMS said that the temporary extension will provide the time needed for the state to submit and for the CMS to review an independent report analyzing the continued need of both an uncompensated-care and DSRIP pool.
As part of the agreement, the CMS will not renew the uncompensated-care pool in its current form should an alternative agreement not be reached by the time the extension expires. Instead, it will provide a smaller amount determined later that would cover the costs of uncompensated and charity care for low-income individuals who are uninsured and cannot be covered through Medicaid, even in the event of expansion, or other insurance programs.
In addition, absent an agreement, the DSRIP pool will phase down beginning at 25% in 2018, then by an additional 25 percentage points each year after that.
