5 Things to Know As Feds Question Texas’ Uncompensated Care Waiver

In a phone call to the state’s Health and Human Services Commission last week, the federal government told Texas  that its decision on continuing the “uncompensated care” portion of the 1115 Medicaid waiver will take into account uncompensated carewhether the state accepts new Medicaid funds. The Center for Public Policy Priorities has released a helpful fact sheet on the Texas 1115 Waiver and Texas Coverage Gap.

State leaders’ immediate reaction was to express their dissatisfaction with the federal government’s message, essentially saying they prefer to keep getting the smaller checks rather than larger checks and prefer more band-aids to a real solution.

Here are five key points to keep in mind:

1. The funding in question is “the Uncompensated Care” pool portion (about half) of the 1115 waiver, which is used to cover unpaid Texas hospital bills that are a result of the state’s high number of uninsured residents.

2. The waiver was always intended to be temporary, serving to build the capability to care for more Texans after Medicaid expansion and affordable private insurance coverage started in 2014.

3. The waiver does not cover uninsured Texans or fix all the state’s health care system woes. It does not include many rural hospitals, for example, which are closing and cutting back following the Legislature’s decision to reject Medicaid funds intended for them.

4. The federal government is essentially asking, Why should we keep covering your unpaid hospital bills when you refuse to take us up on our offer to connect more Texans with insurance, at a vastly better federal match rate, and avoid a lot of those unpaid bills in the first place? Why should we keep putting band-aids on the system instead of working with you to fix it?

5. There does not appear to be a question about continuing the other half of the 1115 waiver, known as the Delivery System Reform Incentive Pool (DSRIP), though federal Medicaid officials have been urging Texas for some time to integrate the DSRIP reforms fully into Texas’ mostly privatized Medicaid Managed Care system.

Written by Anne Dunkelberg, Center for Public Policy Priorities.

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