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Texas lawsuit: Biden administration threatening funding to force Medicaid expansion

A new lawsuit, filed on Friday by Texas Attorney General Ken Paxton, claims that the Biden administration “unlawfully stripped away” the state’s Medicaid waiver extension in an attempt to force Texas into expanding Medicaid. Revoking the extension could cost the state about $30 billion in funding through 2030, Paxton said.

In April, the Centers for Medicare & Medicaid Services issued a notice stating it was revoking Texas’ 1115 Medicaid waiver extension, which had been approved Jan. 15 by the agency under the Trump administration. The waiver supports the state’s demonstration project, which was designed to expand managed care to additional populations and services and has been in place since 2011. It has been extended three times since.

Texas, which is one of 12 states to not expand Medicaid under the Affordable Care Act, relies on funds provided through the waiver to help care for the uninsured.

The most recent waiver extension was approved until September 2022. But Texas requested the Trump-era CMS to extend the waiver through September 2030 as the Covid-19 pandemic had made it difficult to measure the success of the project.

The Biden administration revoked the approval of the waiver extension to 2030, stating that Texas and CMS did not follow the requirements for the public comment period in the approval process. The previous waiver extension to 2022 was reinstated, and the current CMS is requiring Texas to gather public input while renegotiating a waiver extension.

But the government cannot rescind a demonstration project and “topple a state’s Medicaid system as a child might a sandcastle,” the lawsuit states.

The CMS notice was issued in violation of agency regulations, as CMS did not provide the state with prior notice or the required notice-and-comment that a regulatory action like this requires. Further, revoking the waiver extension would strip away $30 billion from the state’s budget over the next 10 years, depriving “millions of Texans of improved care coordination,” the suit claims.

The Biden administration had an ulterior motive for revoking the extension, and that is to “force Texas to adopt the Medicaid expansion,” the lawsuit alleges.

The CMS notice states that Texas has relied on waiver funding to address care gaps that result primarily from the state’s failure to expand coverage, and this implies that the administration wants to make Texas expand Medicaid under the ACA, according to the suit.

The move to revoke the waiver extension leaves medical providers facing uncertainty regarding the future of Medicaid and the demonstration project, the suit states. This uncertainty harms Texas Medicaid beneficiaries.

The state of Texas is asking the court to invalidate the CMS notice issued in April, prevent CMS or any other agency from enforcing the notice in any way and ensure that the Biden administration provides the funds needed by the state.

Photo: zimmytws, Getty Images

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