Texas gets approval for waiver
to expand Medicaid managed care

posted 12.13.11

The Centers for Medicare and Medicaid Services has granted Texas a waiver allowing the state to expand Medicaid managed care without losing hospital funding from the Medicaid Upper Payment Limit program, according to an announcement by the Texas Health and Human Services Commission. The state requested the waiver earlier this year at the direction of the governor and the Legislature.

“This waiver will allow us to replace an archaic federal Medicaid funding system with one built around local solutions that rewards hospitals for patient care and innovation,” said Texas Health and Human Services Executive Commissioner Tom Suehs in a release dated Dec. 12, 2011. “These reforms will allow us to ensure the best, most efficient use of Medicaid funding and improve services for Texans.”

Managed care plans have handled Medicaid claims in Texas’ urban communities for years, and this past session, lawmakers sought to expand Medicaid managed care to border and rural communities as a cost-saving measure. Federal statute requires that some hospitals receive payment under the Medicaid Upper Payment Limit program to offset the cost of uncompensated care, but when states expand managed care Medicaid, they give up a sizeable portion of their UPL allotment.

The five-year waiver will allow Texas to explore Medicaid reforms designed to emphasize coordinated and efficient care without sacrificing UPL dollars the state would have received under the old fee-for-service system.

“It was critical we maintain those payments for our hospitals, but we also want to make sure we know how those tax dollars are being spent; our reform plan does both,” Suehs said. “Our plan ensures hospitals serving the most uninsured patients and providing the best services will get the most funding.”

Visit the Texas Health and Human Services Commission website for more information on the 1115 waiver.