CMS pulls major Texas Medicaid waiver over concerns Trump admin hastily approved it

A road sign reading "Welcome to Texas"
Texas Gov. Greg Abbott blasted a decision by the Centers for Medicare & Medicaid Services to pull a Medicaid program waiver approved in the waning days of the Trump administration. (miroslav_1/Getty)

The Biden administration has withdrawn a waiver that enabled several major changes to Texas’ Medicaid program, including a cap on charity care costs incurred by providers.

The decision, outlined in a letter (PDF) released Friday, is based on what the Centers for Medicare & Medicaid Services (CMS) called a flawed process that did not include time for comments from the public. The Trump administration approved the waiver Jan. 15, a few days before President Joe Biden was inaugurated.

CMS said in a letter to Texas that the state did not adequately explain why the normal public comment process was bypassed for the waiver extension, which was extended through 2030.

The waiver applies to Texas’ Healthcare Transformation and Quality Improvement Program, which expires Sept. 30, 2022, and provides benefits to Medicaid enrollees through the state’s managed care program.

Texas held a public comment period on its waiver request back in November 2020.

However, Texas modified the waiver application to include several major changes the public did not get a chance to comment on, CMS’ Friday letter said.

RELATED: CMS gives states more flexibility in setting Medicaid managed care capitation rates

Chief among the changes was to change the expiration date of the waiver from September 2027 to September 2030.

Another major change was to create an uncompensated care pool that would provide $1 billion to providers in the states for charity care payments for two years.

“Stakeholders, including beneficiaries and providers, were denied the opportunity to learn about how this new uncompensated care pool for certain providers would affect their interests,” CMS’ letter said.

The Trump administration granted Texas a fast-track approval process and cleared the new waiver application Jan. 15.

However, the Biden administration argues Texas’ waiver application did not meet the criteria for such fast-track status.

“There was adequate time at the time of application to conduct the state-level public notice process and submit a complete extension application to CMS, and for us to conduct the federal-level public notice process,” the letter said.

Texas argued the COVID-19 pandemic necessitated the need for the quick approval of the waiver. But the state did not establish that the request to extend the demonstration already authorized through next fall “was substantially related to the public health emergency for COVID-19,” the Biden administration said.

Texas Gov. Greg Abbott blasted the decision, saying it would harm Texans and providers.

“The state of 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,” Abbott said in a statement Friday.

The Texas Hospital Association said in a statement that it was "extremely disappointed" in the decision. "

"This action undermines the safety net and hospitals’ ability to protect people," said Ted Shaw, the president and CEO of the association. "It puts the state’s health at serious risk and creates unprecedented levels of uncertainty for an industry that is charged with saving lives."

But advocates who criticized the quick approval were happy with the decision.

“CMS notes correctly that the Trump approval was procedurally flawed as no federal public comment was taken,” tweeted Joan Alker, executive director of the Georgetown University Center for Children and Families.

The center had joined more than 20 groups who sent a letter to the Department of Health and Human Services on Jan. 11 asking for the waiver request to be struck down.

CMS' letter comes roughly a month after the American Rescue Plan Act was signed into law, which gives states that have not expanded Medicaid under the Affordable Care Act more money to do so. Texas is one of the states that has yet to expand under the law. 

CMS told Fierce Healthcare that it "remains committed to working with states—as it always has—on solutions that can meet the public’s expectations for transparency while strengthening Medicaid’s aims."

The Biden administration’s decision is the latest to pull back on waivers approved by its predecessors. CMS back in February alerted states that got approval to set up Medicaid work requirements that it is beginning the process of withdrawing such waivers.

The agency has already sent letters to Wisconsin, Michigan, New Hampshire and Arkansas withdrawing those waivers.