The funding, which comes through a 1115 Medicaid waiver, was halted in September 2021 over concerns about Texas’ method to fund the program.
Specifically, Texas funds the waiver through a program called the Local Provider Participation Funds. Under this method, private hospitals set up taxing districts, and local and state governments can use this money to pay for the non-federal portion of the Medicaid match. CMS halted federal match payments in September while it argued with the state if this method is allowed.
The March 25 decision to reinstate the federal payments comes as welcome relief from hospitals. The decision is retroactive to September 2021, meaning hospitals will receive payments they would have received over the last six months.
The end to the stalemate “has been desperately needed in the midst of an ongoing public health emergency,” John Hawkins, president and CEO of the Texas Hospital Association, said in a news release. “On behalf of our hospitals and patients, we are incredibly grateful.”
Although the payments are reinstated, HHS has ordered an audit of the Local Provider Participation Funds mechanism. If HHS determines the funding mechanism is against the rules, Texas will need to come up with a new way to fund the program to get matching federal funds, such as implementing a uniform statewide tax on hospitals or taking money from general revenue, according to the report.
Texas’ 1115 Medicaid waiver has brought about $30 billion in funding to the state in the last decade for uncompensated care, mental health programs and similar services, according to the report.
At the Becker's 11th Annual IT + Revenue Cycle Conference: The Future of AI & Digital Health, taking place September 14–17 in Chicago, healthcare executives and digital leaders from across the country will come together to explore how AI, interoperability, cybersecurity, and revenue cycle innovation are transforming care delivery, strengthening financial performance, and driving the next era of digital health. Apply for complimentary registration now.