Texas, Feds Agree to Renew Short-Term Medicaid Funds

By , The Texas Tribune, texastribune.org

The Obama administration has agreed to temporarily keep some federal Medicaid money flowing into Texas to help hospitals treat uninsured patients, a relief to health care providers that feared losing the funds over state leaders’ refusal to provide health insurance to low-income adults.

State health officials said Monday they have struck a deal with the federal Centers for Medicare and Medicaid Services to keep the program going for another 15 months, with hospital reimbursements remaining at their current level.

Those were the exact terms the Texas Health and Human Services Commission asked for last month. Agency leaders said the negotiations were a “big win for Texas.”

“We’re pleased these innovative programs will have the opportunity to continue,” Chris Traylor, the agency’s executive commissioner, said in a statement. “These programs are improving health care for Texas’ Medicaid clients and creating cost-savings for taxpayers.”

The agreement temporarily extends the life of what was supposed to be a temporary program that safety-net hospitals have relied on for five years to serve poor, uninsured Texans.

Federal health officials had signaled they were reluctant to continue handing out cash to reimburse hospital visits when that money could instead pay for low-income Texans to have health coverage under a Medicaid expansion. Still, the agreement does not include a reduction in the uncompensated care money, allowing hospitals to draw down some $3.1 billion in federal and local funds each year.

The program, known as the 1115 waiver, was originally intended to help Texas expand its privatized managed care health insurance system for Medicaid patients and to cover spiraling uncompensated care costs borne by hospitals.

A $29 billion pot of money paid to Texas health care providers over five years, about 40 percent of that money came from local funds — mostly property tax dollars — and 60 percent from the federal government. The Obama administration first approved the program in 2011, and it was set to expire in September.

The program initially offered $17.6 billion to reimburse hospitals for the uncompensated costs they accrued by caring for patients who could not afford to pay. Another $11.4 billion paid for certain health care initiatives that provide cost-effective care to high-risk populations, under a program known as the Delivery System Reform Incentive Payment model, or DSRIP.

The Obama administration had previously signaled it was likely to stop footing the bill for at least some of Texas’ uncompensated care costs. Under the Affordable Care Act, the president’s signature health law, Texas was encouraged to expand its Medicaid program to cover nearly 1 million additional adults living in poverty — a move that would have given more poor patients a means to pay for care. The state’s Republican leadership has vehemently opposed that option, criticizing Medicaid as an inefficient government program.

Federal health officials were unswayed by that argument, repeatedly telling state leaders they had no desire to use waiver funds to pay for costs that would otherwise be covered by a Medicaid expansion.

In Florida, the Obama administration recently agreed to extend a similar source of hospital funding in that state, but only for two years, and at a significantly reduced rate. That arrangement diminished the state’s low-income pool by about 50 percent for the first year and 70 percent for the second.

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