The Centers for Medicare and Medicaid Services has released nearly $12 billion of in-limbo supplemental Medicaid funding for Texas hospitals, Gov. Greg Abbott announced Thursday.
The news brought a sigh of relief from the state’s providers, who had previously said that withholding the pending funds translated to an estimated $27 million in missed payments.
The governor had also pleaded the providers’ case to Health and Human Secretary Robert F. Kennedy Jr. and CMS Administrator Mehmet Oz, M.D., in early August, writing in a letter obtained by the press that CMS’ hold was akin to an “economic gun to the head.”
“This funding is a major victory for Texas patients,” Abbott said in Thursday’s announcement. “It authorizes nearly $12 billion for hospitals, physicians, rural clinics, nursing facilities and behavioral health providers that serve patients in every region of our state. Emergency rooms will stay open, rural families will retain local care and Texans will have access to the treatment they need. I thank CMS and the Trump Administration for helping ensure Texans get the medical care they need.”
The money in question was tied to Texas’ Medicaid directed payment programs (DPPs). The program targeting hospitals alone, the Comprehensive Hospital Increase Reimbursement Program (CHIRP), reflects a hold of more than $9.1 billion, per the Texas Hospital Association (PDF).
Following months of uncertainty the funds were halted on Sept. 1 with the start of the state’s fiscal year—a first for the program. CMS had declined to re-up the programs due to a dispute between the agency and the Texas Health and Human Services Commission regarding how provider taxes (funds raised by states that are matched by the federal government and returned to providers, which are being limited under H.R. 1) were calculated, with both sides asserting the other was interfering with state or federal law.
The dispute has been closely watched by local healthcare organizations. The Texas Hospital Association had warned for weeks that withholding the funds would risk safety-net care, hamstring local economies and likely have forced hospitals to cut service lines like neonatal or obstetric care, let alone shutter their doors outright, if the hold persisted.
“We can breathe easier today,” John Hawkins, the association’s president and CEO, said in a Thursday statement. “The Medicaid crisis hanging over our heads has been averted. We are deeply grateful to Gov. Abbott and other state and federal leaders who listened, took our concerns seriously and acted with urgency to protect Texas patients.”
It is not immediately clear from the governor’s announcement how or when the funds would be calculated and distributed going forward, or whether providers would be back-paid for care during the two-and-a-half weeks in which the payments were not authorized.
States’ DPPs have become a forefront issue of federal health policy since last year’s landmark legislation imposed new limits to be phased in over the coming years. A recent analysis estimated those changes would trim some states’ Medicaid spend by as much as a quarter (and Texas by 17% to 20%) even before taking into account accompanying changes to provider tax collection and the more sweeping, industry-opposed supplemental payment cuts that have been proposed by CMS.