Texas Safety-Net Programs Tied to 1115 Waiver Get New Life – for One Year
By Sean Price

A key component of Texas’ safety net for low-income people remains intact – for at least another year – thanks to an agreement between the Texas Health and Human Services Commission (HHSC) and the Centers for Medicare & Medicaid Services (CMS) to extend three federally funded programs that were set to expire. 

The agreement kept in place the funding for the Delivery System Reform Incentive Payment (DSRIP) program, which is part of Texas’ Medicaid 1115 Transformation Waiver. Under the waiver’s current terms, funding for DSRIP would have expired this month. DSRIP aims to support innovative health care initiatives for Medicaid and low-income, uninsured populations. 

CMS offered to extend DSRIP funding for one extra year after declining to approve several other funding initiatives, known as Directed Payment Programs, that Texas submitted to CMS for approval this year. While not completely analogous to DSRIP, directed payment initiatives would have helped offset the loss of DSRIP dollars, providing critical uncompensated care funding to public health care professionals, including behavioral health professionals, as well as new incentive payments for certain physicians and health care professionals. 

The 1115 waiver – set to expire in September 2022 – brings as much as $11.4 billion in federal dollars to Texas each year. For a decade, it has helped pick up the tab for care Texas safety-net hospitals and their affiliated clinics deliver to Medicaid patients, as well as the uninsured and underinsured. 

The agreement also preserves $3.3 billion in funding for the Uniform Hospital Rate Increase Program (UHRIP) and $1.1 billion in funding for the Quality Incentive Payment Program, which are designed to improve access, quality, and innovation for hospitals and nursing homes, respectively. 

While these funding extensions are welcome, they are temporary, and the uncertainty makes it difficult for health care systems to sustain initiatives designed to improve access, says Helen Kent Davis, the Texas Medical Association’s associate vice president of governmental affairs. 

In August, a federal district judge temporarily reinstated the 10-year extension of the 1115 waiver through 2030. However, in its recission of the waiver, CMS already had agreed to keep the waiver in place through its current expiration date, she says. 

The 1115 waiver was first approved in 2011 to expand Medicaid managed care, offset rising hospital uncompensated care costs, and test innovative initiatives designed to improve access to and quality of care for Medicaid patients, including newly eligible low-income adults as required by the Affordable Care Act. Texas subsequently chose not to not expand Medicaid after the U.S. Supreme Court ruled in 2012 that states couldn’t be required to do that under the law. 

Late last year, Texas submitted a “fast track” proposal to extend the waiver another five years, which the Trump administration quickly approved in January, extending it not five years but 10. The Biden administration rescinded that extension, saying the approval process did not provide an adequate public comment period. 

The 1115 waiver remains in effect until it expires, but funding for DSRIP, UHRIP, and the quality incentive program were already set to expire on Sept. 30 under the terms of the waiver. 

Texas health care will feel the loss of the 1115 waiver money unless state policymakers come up with a solution to address the long-term problems, Ms. Davis says. 

TMA has called for CMS not just to reinstate the waiver extension but also to make a long-term commitment to Texas’ entire safety-net system by expanding the use of the money to a broader spectrum of safety-net programs. 

In testimony and a written letter to HHSC in June, TMA and specialty societies asked the agency to propose a broader version of the waiver to federal officials, including urging HHSC to establish a Texas-tailored solution for coverage expansion, a proposal medicine also unsuccessfully advocated for during this year’s regular session of the Texas Legislature. 

“Unless Texas prevails in court [in extending the waiver, it] will expire next year,” Ms. Davis said. “So it’s imperative that state and federal partners collaborate with stakeholders to develop a comprehensive solution, including extending coverage to the uninsured.” 

Many of the DSRIP programs already may have shut down in anticipation of losing their funding by Sept. 30. 

“But health systems have demonstrated during the pandemic the ability to change on a dime when they have to,” Ms. Davis said. “And everyone recognizes that access to care will be harmed if programs cannot be restarted.”

Last Updated On

September 10, 2021

Originally Published On

September 10, 2021

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Sean Price


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Sean Price is a reporter for Texas Medicine and Texas Medicine Today. He grew up in Fort Worth and graduated from the University of Texas at Austin. He's worked as an award-winning writer and editor for a variety of national magazine, book, and website publishers in New York and Washington. He's also helped produce Texas-based marketing campaigns designed to promote public health. Sean lives in Austin and enjoys hiking, photography, and spending time with his wife and two sons.

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