AUSTIN (Nexstar) — The Biden administration removed a Trump-approved extension for Texas’ Medicaid program, explaining the federal government “materially erred” in granting the state’s request for a sped-up extension.

A spokesperson for the Centers for Medicare & Medicaid Services confirmed CMS erred in exempting the state from the normal public process, which the spokesperson described as a critical priority for soliciting stakeholder feedback and ensuring public awareness.

“Upon further review, we have determined that CMS materially erred in granting Texas’s request,” CMS Acting Administrator Liz Richter wrote in a letter to the state’s Medicaid Director Stephanie Stephens with the Texas Health and Human Services Commission.

“Rather, the erroneous initial determination to approve an exemption from the normal public notice and comment requirements was itself contrary to the interest of beneficiaries, as well as of Texas and CMS, because it deprived beneficiaries and other interested stakeholders of the opportunity to comment on, and potentially influence, the state’s request to extend a complex demonstration – already authorized through September 30, 2022 – into the next decade,” Richter wrote in a 669-page document sent to the state.

Texas is one of 12 states that has not adopted federal Medicaid expansion. Instead, through what’s known as a Medicaid 115 waiver, Texas was approved to run its Texas Healthcare Transformation and Quality Improvement Program tapping into federal and state funding. The program is worth worth more than $11 billion per year, according to the Texas Hospital Association.

Texas requested the waiver of section 1115 in November, asking for a five-year extension. CMS approved the application on Jan. 15 for a 10-year extension, doubling the five-year request from the state.

“The 10-year extension permits greater financial certainty for the state and its safety net providers
that serve Medicaid populations,” then-CMS Administrator Seema Verma wrote in a Jan. 15 letter to Texas HHSC.

Removing the extension would end the Texas Healthcare Transformation and Quality Improvement Program through Sept. 30, 2022 unless the plan was reapproved.

“Texas’s rationale for seeking exemption from the normal public notice process was premised on
the state’s conclusory assertion that healthcare providers in the state must have the financial
stability they need to prepare for and respond to the COVID-19 public health emergency, and
without an emergency approval of the extension request, the goals, purpose, and achievements
from the THTQIP demonstration would be undermined,” Richter wrote. “However, the state’s exemption request did not meaningfully explain why the extension request addressed the COVID-19 public health emergency or any other sudden emergency threat to human lives… why the circumstances constituted an emergency… or why delay would undermine or compromise the purpose of the demonstration or be contrary to the interest of beneficiaries…”

Gov. Greg Abbott issued a statement rebuking the decision Friday afternoon.

“By rescinding this waiver extension, the Biden administration is obstructing healthcare access for vulnerable Texans and taking away crucial resources for rural hospitals in Texas,” Abbott stated. “The State of Texas spent months negotiating this agreement with the federal government to ensure vital funds for hospitals, nursing homes, and mental health resources for Texans who are uninsured. With this action, the Biden administration is deliberately betraying Texans who depend on the resources made possible through this waiver.”

Texas Attorney General Ken Paxton, a regular critic of the Biden Administration both in court and out, said the decision “effectively blocked vulnerable Texans from accessing health care by stripping hospitals, nursing homes and mental health centers of critical resources that serve our most vulnerable populations.”

“Our state negotiated with the federal government for months in order to secure this necessary funding and, in the blink of an eye, President Biden grossly betrayed those who rely on our assistance the most,” Paxton stated. “Texas will not stand for this disgusting removal of resources, and I will use every legal tool available to regain the assistance Texans need.” 

The Texas Hospital Association, which represents more than 85% of the state’s acute-care hospitals and health care systems, criticized the move.

“With an ongoing pandemic and millions of uninsured Texans, Texas hospitals have been stretched like never before and clearly have a critical role in protecting the health and wellbeing of all Texans,” THA president & CEO Ted Shaw stated, in part. “This action undermines the safety net and hospitals’ ability to protect people.”

Shaw said the waiver extension would have helped the state to “seamlessly continue support for much-needed health care improvements and would have continued stable funding for hospitals that serve large numbers of uninsured patients.”

But Texas Congressman Lloyd Doggett, a Democrat representing parts of Austin and San Antonio, said the decision was an “important step in reversing Trump’s previous move to lock Texas into an uninsured future” which the previous administration had “rushed through” in the 11th hour.

“We commend CMS for upholding the public notice and comment requirement,” nonprofit public policy advocacy group Every Texan, tweeted Friday, in a thread about the action.

The Obama Administration somewhat held federal money back — for states like Texas that did not opt in to Medicaid expansion — to try to encourages state leaders to expand their own health care for poor Texans. When Trump took office, that changed.

State lawmakers could act this legislative session to supplement the funding or opt into the federal Medicaid expansion. Texas could also resubmit its plan for approval.

The Texas House Democratic Caucus said the waiver was originally intended to serve as a bridge until the state expanded Medicaid under the Affordable Care Act.

“It was originally meant to help transition Texas to coverage expansion, but then the Supreme Court ruled to make expansion optional,” State Rep. Garnet Coleman, D-Houston, stated Friday on behalf ot the caucus. “However, the Obama Administration graciously gave Texas to the best 1115 waiver of any state.”

“The 1115 Transformation Waiver has helped serve Texas’ uninsured population but it was never meant to be a permanent solution,” Coleman stated. “The Biden Administration has signaled to Texas that the Affordable Care Act is the preferred mechanism to provide health coverage for Texans.”

“We again have the opportunity to get a permanent solution by working with the Biden Administration and CMS to get the coverage expansion for Texans under the Affordable Care Act,” he added.