From Health Plan Weekly: Judge Sides With Texas Over Biden in Medicaid Waiver Fight

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Judge Sides With Texas Over Biden in Medicaid Waiver Fight

Reprinted with AIS Health permission from Health Plan Weekly, August 27, 2021 Volume 31 | Number 34

A federal judge ruled on Aug. 20 that the Biden administration should not have cancelled Texas’ application for a Medicaid waiver that would give the state billions in federal funds to compensate providers for care provided to uninsured patients. While the ruling can be appealed, the future shape of Texas’ unexpanded Medicaid program remains unclear.

CMS on April 16 revoked an eleventh-hour Section 1115 waiver the Trump administration had granted to Texas. CMS had approved Texas’ waiver request on Jan. 15, less than a week before the end of the Trump administration. The waiver would have sent about $11.4 billion to Texas annually in order for the state to compensate providers for unreimbursed care. The Trump administration approved the waiver for 10 years, a term that experts say is unusually long. Health care insiders said in April that CMS’s move to cancel the waiver was an attempt by the Biden administration to push Texas to expand Medicaid — although the state’s legislature had recently voted down one such proposal.

However, U.S. — District Judge J. Campbell Barker in Tyler, Texas, who was appointed to the bench by former President Donald Trump, found that the termination of the 1115 waiver “is unlawful and must be set aside as in excess of statutory authority and as arbitrary and capricious.” The Biden administration cited the same “arbitrary and capricious” standard in its revocation of the original waiver.

Was CMS Justified in Pulling Waiver?

“I think CMS is on strong legal ground,” David Kaufman told AIS Health, a division of MMIT, in April.

Kaufman is a partner at Laurus Law Group LLC and former general counsel of Blue Cross Blue Shield of Illinois. The original waiver approval cited the COVID-19 pandemic public health emergency as the reason for bypassing Administrative Procedure Act requirements, which Kaufman found dubious.

“The extension was until Sept. 30, 2030,” Kaufman said. “They [Texas] waited until after the election to request the notice and comment period and the extension — their [original] extension request was to 2027, not 2030. Then, very quickly — two weeks later — CMS said their application was complete, and they were exempt from the notice and comment period. Then one month later, on Jan. 15, just five days before the inauguration, it was approved. And they approved it for even longer than Texas asked — until 2030….That takes you beyond eight years of a Democratic presidential term.”

In an Aug. 20 statement on the ruling, Texas Attorney General Ken Paxton, a Republican, called the waiver revocation a “disgusting power grab.” He added that “this deplorable attempt to force our state into expanding Medicaid — the Biden Administration’s ultimate goal — was illegal, and we will continue to fight against every political ploy this Administration throws at us.”

Gary Rosenfield, senior vice president for business development and strategy at ConsejoSano, tells AIS Health that it’s a bit rich for Paxton to accuse the Biden administration of playing politics. He argues that the intensifying Republican opposition to Medicaid expansion seems driven more by partisanship than policy.

“What can we do now that Medicaid has become completely political?” Rosenfield wonders. He expects that the Biden administration will appeal the decision, and suspects Medicaid managed care insurers will likely join as well.

In the meantime, “they still have their Medicaid managed care. So that will still run the way it runs.”

“Texas has one of the highest uninsured rates as it is,” Rosenfield observes. “It will just stay that way. It’s really just too bad because it’s really restricting the options for a lot of people. They’ve got almost 10 million people in that state [who] are uninsured. So now you have 10 million people whose access is really going to only be limited to either community health centers that provide charity care or going to hospitals.”

“This ruling is targeting underserved people of color,” Rosenfield adds. “[Medicaid] really is at the heart of our drive towards health equity. Because [not expanding is] really targeting all those people who either can’t afford insurance or don’t have the opportunity to have insurance because they have employers that don’t provide it. So it’s just it’s a shame.”

Contact Rosenfield via Joe Reblando at

by Peter Johnson