CMS rule could strip Texas Medicaid of $8.4B, lawmakers say

Texas lawmakers have condemned a federal rule that could see the state lose about $8.4 billion in Medicaid funding, Allied News reported June 8. 

A memo published by CMS in February aims to end payment agreements between Texas and hospitals in the state. Texas taxes hospitals to pay for Medicaid costs, and then gives hospitals funds it receives from the federal government to cover the incurred taxes, according to the report. 

Texas hospitals also share their Medicaid funds to help hospitals that care for a higher proportion of low-income patients, but the federal memo targets this arrangement as illegal, according to NBC affiliate KXAN.

Texas is also the uninsured capital of the U.S., with more than 4.3 million Texans, 18.4 percent of residents, going without health insurance, according to the Texas Medical Association, which says state uninsurance rates — 1.75 times the national average — create significant problems in the financing and delivery of care.

"For 40 years, we’ve had a good system where the state and the federal government cooperate with healthcare providers to provide care," Texas State Sen. Bryan Hughes said during a June 7 news conference. "But now, because of changes proposed by unelected bureaucrats, this whole system is in jeopardy." 

In April, states began disenrolling people from Medicaid after the expiration of a COVID-19 policy that allowed for continuous enrollment. As a result, an estimated 18 million people across the country will lose Medicaid coverage by June 2024, and 3.8 million of those will become uninsured, according to the Urban Institute and the Robert Wood Johnson Foundation. More than 1.2 million Texas are projected to be disenrolled over the next 12 months. 

"CMS' proposed rule would devastate the healthcare safety net at the expense of Texas’'poorest residents, including low-income pregnant women, children and seniors," John Hawkins, CEO of the Texas Hospital Association, told Becker's. "Already navigating the challenge of carrying the nation's highest rate of uninsured residents, Texas relies on its Medicaid program to make sure low-income Texans can access care in all corners of the state. This rule is the latest in a series of attacks on long-standing methods CMS has permitted states to use to finance their Medicaid programs. We are unclear why CMS has chosen to revive this position after it withdrew the roundly maligned Medicaid Fiscal Accountability Rule in early 2021."


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