Texas Medicaid Section 1115 Waiver Drama: A Trilogy

The world of Section 1115 Medicaid waivers can be mysterious and weedy, arcane and annoying, boring and, at times, dramatic. And in recent years, the use of Section 1115 authority by the Trump Administration stretched all previously known boundaries and wound up in court on multiple occasions  – most famously in the Arkansas work requirements case – which is now pending with the Supreme Court.

While Medicaid work requirement waivers have attracted the most attention, there are many other important issues in Section 1115 waiver-land. Money flow is another key one – and as readers of SayAhhh! may remember, the Trump Administration approved three sizeable money dumps on Florida, Texas, and Tennessee in the very last two weeks of their term. Moreover, all three of these approvals were for ten-year periods (or thereabouts) – which (as we and others made clear in our public comments) does not comply with what the law specifies for length of waiver renewals (three years or in some cases five years).

This blog series examines where things stand in Texas – which has been the subject of many twists and turns. One can be excused from losing track! Texas Healthcare Transformation and Quality Improvement Program is the name of Texas’ Section 1115 waiver – which has been in existence since 2011 with various extensions. The waiver started out as a vehicle to expand the managed care delivery system, create an uncompensated care pool for providers, and create “incentive payments” to participating hospitals to implement and operate delivery system reforms. It was initially approved by the Obama Administration for five years prior to the Supreme Court’s rendering Medicaid expansion functionally optional. The class of waivers offering states funding to incentivize delivery system reforms was known as “DSRIPs.”

Fast forward to 2020. Although the demonstration was not expiring until the end of September 2022, the state rushed to file a “fast track” extension application on November 30th, 2020. The fast-track review process exists to “reauthorize longstanding policies” in demonstrations that “have had at least one full-extension cycle without substantial program changes.” It is debatable whether the application met all of the fast-track criteria; but in any event, Texas clearly didn’t need the fast-track process to renew it more than 20 months early. So why was the state filing so early and trying to fast-track it? Let’s look at what happened next.

On December 15th 2020, Trump’s Center for Medicare and Medicaid Services certified the state’s fast-track application as complete and, rather than opening the waiver for federal public comment as normally happens, waived the federal public comment period claiming that the public health emergency associated with the COVID-19 pandemic authorized them to do so. Federal public comment periods are 30 days; although taking comment would have added very little time to the waiver review process, it would have made it virtually impossible for the agency to get the application turned around before President Biden was sworn in at noon on January 20th. So the state and Trump CMS bent a few rules to sneak it in.

On one hand, to justify the “fast-track”, the state claimed its renewal was making no substantial changes. On the other hand, CMS scrapped the required federal comment period because of the public health emergency. But if it’s the same demonstration, and it wasn’t expiring for almost 2 more years, why the rush to reauthorize it and why is it urgently needed to fight COVID-19 a year into the pandemic?

And then lo and behold, on January 15th, just five days before leaving office, the Trump Administration approved the multi-billion agreement with Texas ($3.8 billion in annual uncompensated care funds alone). What’s more: Although the state had requested a five-year extension, the maximum time authorized by law, the Trump Administration approved the agreement through September 30, 2030!

It doesn’t take much digging to unmask this charade. Many states did request and receive emergency waivers that are in fact related to the pandemic in 2020 through a separate emergency waiver authority known as Section 1135. Texas itself did this four times in 2020 (and twice in 2021)! Every routine Section 1115 demonstration approved during the pandemic adhered to the normal public notice and comment process – except for Texas’s.1

This blatant attempt to disregard the proper procedures associated with Section 1115 processes by the Trump Administration, to inject billions of federal dollars into a red state for a decade on their way out the door, did not go unnoticed by the incoming Biden Administration. The stage was set for Part 2 of the Texas drama to unfold…

  1. Tennessee’s federal public comment process, while held, was rushed and had some procedural flaws.