The Biden administration will drop its efforts to rescind a major waiver for Texas' Medicaid program following a loss in court.
In a letter (PDF) issued Friday, the Centers for Medicare & Medicaid Services (CMS) said it does not want to expend further resources to continue fighting the changes.
"CMS is withdrawing the April 2021 letter, as CMS has concluded that it is not the best use of the federal government’s limited resources to continue to litigate this matter," CMS Administrator Chiquita Brooks-LaSure wrote. "This should resolve the issue without the need for further litigation and will create no disruption to the people who rely on Texas’ Medicaid program."
In April 2021, CMS issued a letter to the state's Medicaid program that rolled back a waiver allowing for substantial changes, arguing the Trump administration approved it too hastily. The agency said the process did not allow for public comment, for instance.
Texas initially opened a comment period for the waiver in late 2020 but later made significant changes such as extending the expiration date by an additional three years to 2030, CMS argued. The waiver allowed the state to cap charity costs incurred by providers, among other changes.
About a month after CMS' decision to rescind the waiver, Texas challenged the agency in court.
“The Biden administration cannot simply breach a contract and topple Texas’ Medicaid system without warning,” said Texas Attorney General Ken Paxton in a statement at the time.
In August 2021, a federal judge issued a preliminary injunction against CMS, saying the agency did not offer Texas enough of a warning that it was reconsidering the Medicaid changes ahead of issuing the initial letter.
CMS added that it does not plan to challenge the program again based on the comment period.
"CMS will not re-issue a substantially similar letter or take any future action to rescind CMS’s January 15, 2021 approval of the THTQIP demonstration project based on failure to comply with public notice and comment requirements as set forth in the April 16, 2021 letter," Brooks-LaSure wrote.