Texas Medicaid Waiver Trilogy: The Final Installment

The drama over Texas’ Section 1115 Medicaid waiver has come to a somewhat surprising and precipitous close. On April 22nd, 2022 the Biden Administration decided to stop fighting the litigation brought by Texas Attorney General Paxon to reinstate the terms of the Trump Administration’s waiver approval issued on January 15, 2021 (i.e. just a few days before the Trump Administration left office). One of us called the timing, procedure, and some substantive aspects of the Trump approval “super sketchy.” The Biden Administration withdrew the Trump approval on April 16, 2021, citing procedural flaws in the process. You can catch up on Parts 1 and 2 of the trilogy for more detail.

Last month, in a short letter to the state, CMS reinstated the Trump January 15th approval citing an unwillingness to expend limited federal resources to continue to litigate the matter.

The judge that is presiding over the litigation, (a Trump appointee who previously represented the State of Texas against the interests of LGBT individuals and immigrants) has not shown himself to be impartial. His bias in the case was exposed early on: In reviewing Texas’s request for a preliminary injunction, he decided that the failure to hold a public comment period, as explicitly required by law, was insignificant, but granted the preliminary injunction for Texas because “CMS did not provide Texas notice of its intent to reconsider” the approval.

Perhaps more alarmingly, the judge has also at times exceeded his authority, using the case as leverage to pressure CMS on decisions outside the scope of the litigation. Under the circumstances (to sum up: a Trump appointee who represented the State of Texas, reviewing a Trump administration approval for Texas) and considering that any negative decision in the full case would be reviewed by the extreme 5th Circuit Court of Appeals, CMS likely concluded it made no sense to pursue the case – and that doing so might in fact invite the judiciary to further usurp agency decision-making authority.

CMS’s abandonment of the litigation, though rational and understandable, is disappointing. The failure to hold the required public comment period was bad enough, but there’s more. The Trump HHS approved Texas’s demonstration extension for 10 years, even though the longest extension allowed under the law is five years (and most extensions can only be up to three years). Consider the implications for good governance: Trump’s HHS approved a demonstration connected to billions of dollars for Texas, for double the legally allowed time period, and without the public notice and comment process.

Fortunately, the Biden CMS appears to signal that it will not inappropriately waive the federal public comment period. On this point, the CMS letter states:

CMS remains committed to working with states to conduct robust public notice and comment periods to receive feedback from Medicaid enrollees and other stakeholders on all 1115 demonstrations, in accordance with federal requirements.

We agree. Prior to the passage of more robust public notice and comment standards for Section 1115 demonstrations in the Affordable Care Act, there was a long history of waiver deals that lacked any real transparency or public input as documented by the GAO. Significant federal funds are at stake — not to mention health care for millions of vulnerable people. Regardless of what has happened in the Texas matter, Section 1115 policy should continue to be even more transparent going forward.