The Biden administration on Friday unwound a 10-year extension of Texas' Medicaid waiver, arguing that the Trump administration should not have approved its more than $100 billion request without going through the usual notice and comment period.
Texas asked CMS to fast-track an extension of its Medicaid waiver, which mostly covers uncompensated care costs, in November. At the time, the state said it needed an exemption from the usual public comment period to ensure financial stability for providers and the state's Medicaid program during the COVID-19 public health emergency.
But CMS Acting Administrator Elizabeth Richter said Texas' request didn't meet the standard for emergency approval because it had already been approved through Sept. 2022, making an early extension unnecessary. Several leading healthcare organizations, advocacy groups and think tanks made a similar argument shortly after the Trump administration approved the extension in January.
"The erroneous initial determination to approve an exemption from the normal public notice and comment requirements was itself contrary to the interest of beneficiaries, as well as of Texas and CMS, because it deprived beneficiaries and other interested stakeholders of the opportunity to comment on, and potentially influence, the state's request to extend a complex demonstration," CMS' letter said.
Texas Governor Greg Abbott, a Republican, slammed the decision, arguing that the Biden administration's decision would threaten healthcare access and harm the state's rural hospitals.
"Texas spent months negotiating this agreement with the federal government to ensure vital funds for hospitals, nursing homes and mental health resources for Texans who are uninsured. With this action, the Biden administration is deliberately betraying Texans who depend on the resources made possible through this waiver," he said in a statement.
The Texas Hospital Association also said it was "extremely disappointed" in the reversal amid the COVID-19 pandemic.
"It puts the state's health at serious risk and creates unprecedented levels of uncertainty for an industry that is charged with saving lives," the association said in a statement. "The waiver extension would have helped the state to seamlessly continue support for much-needed health care improvements and would have continued stable funding for hospitals that serve large numbers of uninsured patients."
But critics of the waiver approval argue that it has enabled the state to get billions of dollars in federal funding for uncompensated care and sidestep Medicaid expansion. The Biden administration's latest move could encourage the state to expand its Medicaid program if it struggles to deal with uncompensated care costs absent another waiver approval.
Texas is one of 12 states that hasn't expanded Medicaid. According to the Kaiser Family Foundation, Texas had the highest uninsured rate for people under age 65 among any state in 2019 at nearly 21%.