THA advocates for Medicaid expansion, says Medicaid 1115 waiver extension will save hospitals from financial crisis


Soraya Marashi


Texas Hospital Association (THA) CEO John Hawkins emphasized the need for reinstatement of Texas’s 10-year Medicaid 1115 waiver extension in a press roundtable on Tuesday, highlighting that state and federal authorities’ failure to approve the waiver extension would result in the withholding of critical funding for Texas hospitals. 


Stay one step ahead. Join our email list for the latest news.



The waiver extension was rescinded in April 2021, and with Texas having resubmitted its extension request in July 2021, its final approval is currently uncertain.

The 1115 waiver financially enables supplemental payment programs and provides financial stability to Texas hospitals and the health care safety net by providing 95% of Medicaid services under managed care. Hawkins said this had benefits on the beneficiary side, from a care management standpoint, and on the state side, as it provided budget certainty.

He said the deadlocked status of the waiver was resulting in $7 million a day in payments not flowing to providers, particularly hospitals. Additionally, if the entire waiver were to be invalidated, between $9 billion and $9.7 billion in annual payments to hospitals would cease.

Last September at the 2021 North Texas State of Reform Health Policy Conference, the Health and Human Services Commission’s Cecile Young said her agency had been regularly meeting with the Centers for Medicare and Medicaid (CMS) for ongoing negotiations on the waiver, with the ultimate goal of extending the waiver to secure the next decade of Medicaid funding for the state.

Payments from two long-standing Medicaid programs totaling over $5 billion per year expired in fall 2021. Three directed payment programs were proposed to replace them in the state’s resubmitted extension request, but are still currently awaiting federal approval. These programs include:


  • Comprehensive Hospital Increase Reimbursement Program (CHIRP), which would provide hospitals $4.72 billion annually. 


  • Texas Incentives for Physicians and Professional Services (TIPPS), which would provide physicians $600 million annually. 


  • Rural Access to Primary and Preventative Services (RAPPS), which would provide rural health providers $11.2 million annually.


In an advocacy brief about this issue, THA stated the lack of these supplemental payments during a public health emergency is creating unprecedented challenges for hospitals and would have devastating results for health care access in the state, especially as Medicaid enrollment in Texas grew 27% during the pandemic while provider labor costs nearly doubled. 

“The continued absence of funding coupled with the lack of clarity regarding the future of these payment programs are creating tremendous financial stress on hospitals at a time when demand for medical care is at its most acute,” the brief said.

According to THA, the loss of this funding could lead to:

  • “Widespread hospital closures, particularly in rural areas.
  • Decreased essential service lines, including already reduced labor and delivery services and behavioral health.
  • Reduced ability for hospitals to weather pandemic-related financial challenges, like labor costs.
  • Increased costs passed to insured patients to offset loss.
  • Payment deficits offset as higher local taxes and insurance rates.”

Hawkins said extending the waiver would allow the state to reinvest the more than $6 billion a year in savings from managed care into Medicaid programs, health care infrastructure, physician services, public health services, and behavioral health services. However, he added that questions had come up over whether the state would need this supplemental payment waiver if the state legislature voted to expand Medicaid itself. 

Hawkins expressed THA’s support for Medicaid expansion in Texas, but maintained that waiver extension approval was also necessary to improve the Medicaid system overall, as expanding Medicaid would only cover a portion of the more than 5 million uninsured Texans.

“We would still need a robust supplemental payment waiver with an uncompensated care pool,” said Hawkins. “And again, these directed payment programs allow us to actually put money into our Medicaid program and build those Medicaid rates up, because Medicaid rates historically pay less than cost.”

He emphasized that expanding Medicaid in Texas made sense from both a clinical and fiscal perspective.

“I think there’s a lot of misinformation about [the coverage gap] population. I think a lot of legislators think it’s ‘dead beats’ for lack of a better term, but it really is the working poor folks that have [multiple] jobs, or they’re working in a low wage setting where their employer can’t afford to provide health insurance,” said Hawkins.

“If we could get them a medical home … we’ve got a better chance of managing their care. They’re not having to seek care in an emergency room, so it’s going to be better care management in a lower cost setting than a hospital emergency room. So our hope is that [Medicaid expansion] produces lower costs and it produces a healthier population.”

In addition to approval of the waiver extension and Medicaid expansion, THA mentioned several initiatives they’re advocating for in the coming year. These include hospital reimbursement payments closer to the actual cost of services, federal funding for pandemic staffing costs, funding to address heightened behavioral health needs, and programs to address the nursing shortage.