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Texas Requests Medicaid Waiver Extension for $6.2 Billion

Texas rejected the 2014 Affordable Care Act (ACA) Medicaid expansion, but has asked again for a Medicaid waiver extension and $6.2 billion in funding.

Texas requests second Medicaid extension

Source: Thinkstock

By Jesse Migneault

- Although Texas refused federal funds in the 2014 ACA Medicaid expansion, it has recently submitted documents requesting its second Medicaid waiver extension for $6.2 billion.  

Originally approved in 2011, the 1115 Medicaid Waiver was already extended in 2016, and is set to expire at the end of 2017.  If the second waiver extension is approved, it would provide federal funding until September 30, 2019.

If the waiver extension is not granted, officials are alarmed at the prospect of shuttering three main programs: Medicaid managed care, Uncompensated Care (UC), and the Delivery System Reform Incentive Payment (DSRIP) pools. 

“We believe this extension is necessary to allow the new administration and the 115th Congress to make changes to the nation's health care system, and the Medicaid program specifically, during 2017,” said Texas Health and Human Services in their waiver request letter.   “This extension would provide financial and operational certainty for Texas providers to continue serving Medicaid and low-income uninsured populations that benefit from the waiver.”

The total expenditures for the Texas Medicaid program currently sit at $29 billion. The program provides coverage to approximately 4.8 million residents. 

“This funding would provide time for Texas to develop a new, comprehensive waiver or block grant proposal to achieve increased program flexibility and efficiency,” said the extension request letter.  “Texas providers require a level of financial and operational certainty to continue serving Medicaid and low-income uninsured populations that benefit from the waiver.”

Texas currently leads the nation in having the largest percentage of uninsured residents at 20.5 percent, although that figure does represent a 6.5-percent reduction from 2013 levels.

When the waiver was first approved in 2011, it came with several healthcare requirements, such as benchmarking quality outcomes for providers.   Some observers at the time thought this would be a catalyst to move the state towards a full Medicaid expansion in 2014. It was not. 

Instead of using the funds to increase Medicaid coverage for uninsured adults, the state placed its existing Medicaid fee-for-service enrollees into managed care programs.

In total, Texas transferred close to one million Medicaid enrollees into private-payer managed care plans while still receiving federal matching funds.

According to a state of Texas HHS evaluation, the waiver funding has reaped mixed results for both Medicaid managed care, Uncompensated Care (UC), and the Delivery System Reform Incentive Payment (DSRIP) pools.    

“In expanding Medicaid managed care statewide as well as transitioning much of the funding historically allocated for uncompensated hospital care into an incentive payment pool, the state has transitioned to much more accountable uses of public dollars,” said the evaluation report.

A driving force behind the waiver extension request has been the increase in uncompensated care costs across the state.   Approximately half of the money from the waiver goes to the state’s UC fund. 

The DSRIP program, which has established 20 regional healthcare partnerships and hundreds of pilot community health programs, is focused on improving healthcare for the poor.  Despite its innovative approach and flexibility with patient outreach, the state evaluation determined the program lacked sufficient data to determine its effectiveness.

Across the state, providers remain uncertain as to how the projects would be funded without the continued Medicaid waiver funding.  The evaluation concluded that without waiver funding the programs would likely not continue. 

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