So Much Uncertainty: Struggle to Renew Medicaid 1115 Waiver Endangers Behavioral Health Care for Low-Income
By Sean Price Texas Medicine November 2021

To the uninitiated, the Medicaid “1115 Waiver” might sound like a clause buried in an obscure legal document, but it’s actually the primary vehicle for providing federal funding designed to improve health care for low-income Texans – especially when it comes to behavioral health. 

The fate of the waiver, officially known as the 1115 Texas Healthcare Transformation and Quality Improvement Program, is currently up in the air, hung up in negotiations and legal action between the state and federal government.  

The program brings as much as $11.4 billion in federal dollars to Texas each year, and for the past 10 years, it has helped pick up the tab for care Texas safety-net hospitals and their affiliated clinics deliver to Medicaid patients. It also pays for care given to the uninsured and underinsured. 

Nov_21_TM_Econ_WaiverBut uncertainty over the waiver’s future has thrown confusion into many of the state’s biggest behavioral health efforts, says John Burruss, MD, CEO of Metrocare Services in Dallas, one of the state’s 39 community mental health centers that rely heavily on 1115 waiver money.  

In 2020 alone, programs funded by the waiver’s Delivery System Reform Incentive Payment (DSRIP) initiative received more than $367 million in federal funds for the public mental health system and represented 31% of mental health center expenditures, according to a June 28, 2021, report by the Texas Council of Community Centers (TCCC). It represents mental health centers in Texas’ public behavioral health system.  

“We see between 2,700 and 2,800 clinical encounters per day. And if you contemplate that about one-fifth of our resources come from DSRIP and waiver programs ... that’s a huge loss to Dallas. Now multiply that by every county,” Dr. Burruss said. 

As of this writing, the waiver was set to expire in September 2022. The behavioral health funding was caught up in the negotiations between the state and federal governments, and it was unclear when that would end or what final form the agreement would take. 

Assuming the worst – that the negotiations drag on too long or result in insufficient funding to keep current programs alive – hundreds of thousands of Texans will find out abruptly the direct impact these programs have had on their lives, particularly during a pandemic that has exacerbated mental health needs, Dr. Burruss says. 

“There are a lot of things that didn’t happened today because these programs were there – people who didn’t kill themselves, people who didn’t end up alienating their family or in incarceration because they were off their meds,” he said. “Yes, those things still happen. But if you take away a large portion of the safety net, it will happen tremendously more than it’s happening right now.” 

TMA has called for the Centers for Medicare & Medicaid Services (CMS) to reinstate the 1115 waiver extension for all programs aimed at Medicaid patients as well as those for the underinsured and uninsured. But TMA also has called on the agency to aim bigger and 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.  

“Both Texas and CMS understand how essential waiver dollars are to the state’s health care safety net,” said Helen Kent Davis, TMA’s associate vice president of governmental affairs. “So it’s imperative they continue to work together and with stakeholders to quickly develop a comprehensive solution before the waiver expires next year, including extending coverage to the uninsured.”  

No more safety net? 

Texas’ 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. That includes 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 Affordable Care Act.  

The waiver continued as a crucial part of funding for low-income health care in Texas, but it was designed from the start to be temporary. It had to be extended in 2016, 2017, and 2021. 

The program is set to expire on Sept. 30, 2022, and the DSRIP portion of it would have ended in September 2021 but for a one-year extension tentatively agreed to by CMS and the Texas Health and Human Services Commission (HHSC). 

In many cases, losing 1115 waiver funding will not result in services shutting down, but it will cause them to be scaled back, says Sylvia Muzquiz, MD, vice president of mental health medical services at The Harris Center, the community mental health center that serves Harris County. Among other things, those funds help the center increase capacity for addiction services, beef up mobile crisis outreach teams, and improve law enforcement collaborations. (See “How the Waiver Helps Behavioral Health,” below.) 

Medical institutions nationwide face staffing problems because of the surge of hospitalizations caused by COVID-19, and – like most other entities – psychiatric care is struggling to find and retain the counselors and social workers needed to guide patients, Dr. Muzquiz says. Uncertainty over the 1115 waiver makes that task much harder.  

“A lot of individuals are suffering and struggling with mental health issues, and they need more than just medications thrown at them,” she said. “We need therapy, we need help with housing, we need help with addiction health services. The comorbidities of mental health and substance use are significantly high. So we also need a lot of help with coordination.” 

Political ping-pong 

In November 2020, Texas submitted a “fast track” proposal to extend the 1115 waiver another five years, which the Trump administration quickly approved in January, extending it not five years but 10.  

Behavioral health professionals were happy with the January extension, Dr. Burruss says. It mostly kept in place funding for existing programs and added a pool of funds not to exceed $500 million for the first two years called the Public Health Provider Charity Care Program, according to the TCCC report. 

“It was a way for us to maintain and sustain and even grow the programs that we started under DSRIP,” he said. “When I knew that was in place, I was no longer as concerned.” 

But in April, the Biden administration rescinded that extension, saying the approval process did not provide an adequate public comment period. Withdrawing the extension “sent shockwaves throughout the state,” according to the TCCC report. 

The back-and-forth continued in August when a federal district judge temporarily reinstated the 10-year extension of the 1115 waiver through 2030. Nevertheless, the negotiations between the state and federal governments over what will succeed the waiver continue, says Danette Castle, executive director of TCCC. 

Meanwhile, the successor behavioral health programs for DSRIP – called directed payment programs – are still active, and the outlook for their continuation seems hopeful, she says. They have not been turned down by CMS, and the questions the agency has raised about these programs could be resolved easily. 

“[The exchanges so far] indicate to us that the state intends to get those directed payment plans approved,” she said. “Will that happen? I don’t know. Will it happen for some and not others? Maybe.” 

Meanwhile, the charity program funds largely have been approved by CMS, Ms. Castle says. 

In testimony and a written letter to HHSC in June, TMA and medical 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 ( 

 The state and federal officials working on this funding need to be reminded how much is at stake, Dr. Burruss says. 

Without a solution “there’s really the metaphorical cliff,” Dr. Burruss said. “If [this funding] just stops one day, you’re talking about a massive insult to health care delivery in Texas – particularly for people who don’t have any other resources.” 

“What do we do?” he said. “I don’t want to hire people to grow [programs] if that money isn’t going to show up. I don’t want to budget money that’s not going to be there, so am I going to have to prep people for furlough? There’s so much uncertainty; it’s very hard to know what to do. And what that means is, the programs we’ve spent [a decade] building are in jeopardy.”

Tex Med. 2021;117(11):40-42
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Last Updated On

October 31, 2021

Originally Published On

October 31, 2021

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