Revoked Texas Medicaid waiver credit negative for hospitals

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A recent decision from the Biden administration to rescind an extension of Texas' Medicaid waiver is credit negative for hospitals in the state, according to Moody's Investors Service.

In an April 23 note, Moody's said children's hospitals and hospitals in high-need urban and rural areas will be especially hurt if a new extension for the waiver isn't approved. The funding in the rescinded waiver accounts for an average of 10 percent to 15 percent of revenue for large urban hospitals in Texas, according to the note.

Moody's note comes after CMS revoked its approval of the 10-year waiver extension in an April 16 notice to the Texas Health and Human Services Commission. CMS argued under the previous administration — which approved Texas' waiver to extend parts of its Medicaid program through September 2030 — CMS and Texas failed to adhere to public comment period requirements in the approval process. CMS said the public comment period is necessary for stakeholders to share feedback.

The revoked waiver, which will now expire in September 2022, has put about $11 billion in federal funding in limbo.

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