CMS approves Texas 1115 Waiver demonstration extension

In a letter to Executive Commissioner Charles Smith and the HHSC, CMS announced their approval of Texas’ 1115 waiver extension. Through this agreement, Texas’ demonstration project, “Texas Healthcare Transformation and Quality Improvement Program,” will extend through September 30, 2022 and receive $25 billion in Medicaid funding.

The five-year extension will directly impact funding for Texas’ Delivery System Reform Incentive Payment (DSRIP) program. The DSRIP program aims to provide incentives to hospitals and providers to develop delivery reforms to improve the access and quality of healthcare for their beneficiaries. The agreement specifies that CMS will provide Texas with four years of federal matching funding for the program. The final two years will have decreased funding, with no federal funding in the fifth year. In the letter, CMS also states that the DSRIP program must move toward a focus on “health system performance measurement and improvement,” and changes in protocol must be made in order to claim these federal funds.

CMS will also provide Texas with five additional years of Uncompensated Care funding which helps health care providers offset the cost of providing care to uninsured or low-income individuals.

The agreement comes after a two-year effort of negotiation between Governor Abbott, Executive Commissioner Smith, and CMS.

In a letter to CMS Director Brian Neale, Executive Commissioner Smith accepted the extension and wrote,

“Our partnership with the federal government during the first six years of the waiver demonstrates what can be achieved through a comprehensive commitment of local, state, and federal resources. The extension of this Demonstration will allow the Texas Health and Human Services Commission to continue use of managed care to achieve program savings and improve the delivery of health care to Texans.”

In a press release, Gov. Abbott similarly expressed enthusiasm for the waiver extension.

“The new 1115 Waiver ensures that funding will remain available for hospitals to treat and serve people across our state who are in need of top-quality healthcare. I am proud of the work done by Commissioner Smith and thank the federal government for a willingness to work together to ensure all Texans are able to access care.”

This extension approval comes in the nick of time as CMS announced on December 15th that they would no longer accept new or renewing proposals for 1115 demonstrations that rely on federal matching funding. Current demonstrations will continue receiving funding until the end of their demonstration period, after which CMS will no longer extend or renew.