Medicare and Medicaid

With Medicare and Medicaid providing more than half of most hospitals’ patient revenue, any changes to these government-sponsored programs have a significant impact on hospitals. Federal health care reform will change these programs significantly over the next decade, as well as make dramatic modifications to private insurance practices. The Texas Legislature sets the Medicaid program budget for each biennium, and also oversees the regulation of the state’s insurance industry through the Texas Department of Insurance. THA works with the Texas Legislature on legislation that affects health care financing. Through involvement with specific Medicaid advisory committees, the Texas Health and Human Services Commission and the Texas Department of State Health Services, THA helps shape the regulatory environment.


The Centers for Medicare & Medicaid on April 16 rescinded the 10-year extension of Texas’ Medicaid 1115 Waiver that the previous administration approved in January 2021. While the current waiver and its uncompensated care pool will continue through Sept. 30, 2022, THA continues its advocacy with state and congressional leaders in support of another extension.

Texas hospitals urge CMS to work with the state to reapprove its waiver extension and achieve the following outcomes: 

  1. Grant an equivalent or better budget neutrality determination.
  2. Sustain a strong hospital uncompensated care pool.
  3. Reinforce the behavioral heath safety net.
  4. Recognize the waiver as a building block to comprehensive health care coverage.
THA Update to Texas Congressional Delegation on Medicaid Supplemental Payments and 1115 Waiver (12/1/2021)
CHAT Update to Texas Congressional Delegation on Children’s Hospital Funding (11/30/2021)
CMS Letter to Texas on DPP Next Steps, Outstanding Issues (11/15/2021)
Teaching Hospitals of Texas Letter to CMS on 1115-Related Waiver Requests (11/5/2021)
CHAT Request to Texas Congressional Delegation Regarding DSH and UC Funding (10/30/2021)
CHAT Update to Texas Congressional Delegation on Waiver Negotiations (10/28/2021)
CHAT Comment Letter on Status of 1115 Waiver and Directed Payment Programs (10/26/2021)
Multi-Association Letter to CMS Regarding Continuation of DSRIP, UHRIP and QIPP Programs (10/25/2021)
Texas Hospitals Urge CMS to Approve Temporary Payment Programs for Current Fiscal Year (10/1/2021)
Texas Accepts Offer for FY 22 DSRIP, UHRIP, QIPP; Commits to Work on DPPs (9/7/2021) | HHSC
Texas Essential Healthcare Partnerships Letter to CMS on 1115 Waiver Extension (8/30/2021)
Teaching Hospitals of Texas Comment Letter to CMS on 1115 Waiver Extension (8/25/2021)
Federal Comments on Texas’ 1115 Waiver Extension Application (8/25/2021)
Action Alert: Provide Federal Public Comment on Texas Waiver Extension Application; Use THA’s Template (8/17/2021)
Template Letter for Public Comment on CMS’ Waiver Extension Application (8/16/2021) | THA
Multi Association Letter to CMS on Waiver and DPP Approval (7/26/2021)
Teaching Hospitals of Texas Letter to CMS on Texas’ Directed Payment Programs (7/14/2021)
Waiver Extension Application Cover Letter (7/14/2021) | HHSC
Waiver Extension Application Appendices (7/14/2021) | HHSC
Waiver Extension Application Preliminary Findings (Supplement A – Preliminary Draft Results) (7/14/2021) | HHSC
Comments on HHSC’s Medicaid 1115 Waiver Extension Application (6/24/2021) | THA
Action Alert: Provide Public Comment on Texas Waiver Extension Application; Use THA’s Template (6/3/2021) | THA
Template Letter for Public Comment on HHSC's Waiver Extension Application (6/3/2021) | THA
Multi Association Letter on Hospital Priorities for Potential Waiver Extension Negotiation (5/12/2021)
U.S. House Democrats Letter to CMS, HHS on Waiver Rescission (4/27/2021)
U.S. House Republicans Letter to HHS on Waiver Rescission (4/27/2021)
Letter to State Leaders - Hospitals Support the Waiver and Coverage Expansion (4/21/2021) | THA
Whitepaper: Losing Texas’ Waiver Extension Destabilizes the Health Care Safety Net (4/21/2021) | THA
Letter Rescinding 10-Year Extension of Texas' 1115 Waiver (4/16/2021) | CMS
Information Alert: CMS Rescinds 10-Year Extension of Texas' Medicaid 1115 Waiver (4/16/2021) | THA&
Statement on CMS Rescinding 10-Year Waiver Extension (4/16/2021) | THA
White Paper: 1115 Waiver Is a Building Block to Health Care Coverage (Feb. 12, 2021) | THA
Multi Association Thank you Letter to Gov. Abbott (Feb. 8, 2021)
Multi Association Thank You Letter to Commissioner Young (Feb. 8, 2021)
Information Alert: Summary of 10-Year Waiver Extension (Jan. 21, 2021) | THA
1115 Waiver Extension Presentation (Jan. 20, 2021) | HHSC
Letter Approving 10-Year Waiver for Texas (Jan. 15, 2021) | CMS
THA Comments on “Fast Track” Waiver Extension (Dec. 21, 2020)
Slides: Public Hearing on Fast Track Extension (Dec. 7, 2020) | HHSC
Extension Appendices (Dec. 1, 2020) | HHSC
Texas 1115 Waiver Extension Standard Terms & Conditions (Dec. 1, 2020) | HHSC
“Fast Track” 1115 Waiver Extension Application (Dec. 1, 2020) | HHSC
HHSC Requests DSRIP Extension (Oct. 16, 2020)
Update from the Executive Waiver Committee (Aug. 24, 2020) | HHSC
Hospitals, Health Care Providers Support DSRIP Extension (Aug. 10, 2020)
Health Care Advocates Request DSRIP Extension Due to COVID-19 (June 23, 2020)
HHSC Provides DSRIP Transition Update(April 23, 2020)
Joint-Association DSRIP Extension Request (March 25, 2020)
HHSC’s Consolidated Summary of DSRIP Transition Stakeholder Meetings (October 2019)
Slides from THHSC’s DSRIP Transition Webinar (Oct. 14, 2019)
Stakeholder Feedback on Draft DSRIP Transition Plan (Oct. 2, 2019)
HHSC’s DSRIP Transition Plan (Sept. 30, 2019)
CMS Approves $3.87 Billion UC Pool Size for FYs 2020-2022 (Sept. 26, 2019)
HHSC Announces Changes for Medicaid Supplemental Payment Programs (Sept. 17, 2019)
2019 HHSC DSRIP Statewide Learning Collaborative Summit Agenda (Sept. 4, 2019)
RHP Showcase Slides from the DSRIP Statewide Learning Collaborative (Sept. 4, 2019)
HHSC Slides From DSRIP Transition Stakeholder Meeting (Aug. 26, 2019)
Framing Post-DSRIP (Stakeholder Proposals & DSRIP Transition Plan Feedback) (Sept. 4, 2019)
THA Comment on DSRIP Transition Plan (Aug. 16, 2019)
Draft DSRIP Transition Plan (Aug. 2019)
Proposed changes to the MBP for DY7-10 (June 2019)
DSRIP Protocols Related Strategies (June 2019)
THA Comments on HHSC’s Request for DSRIP Transition Proposals (November 2018)
HHSC Request for DSRIP Transition Proposals (October 2018)
Joint Hospital Association Letter to Congressional Delegation on UC Pool Size (July 2018)
THA Whitepaper: Future of UC Funding for Texas Hospitals (Jan. 30. 2018) 
HHSC Summary on New Medicaid 1115 Waiver (Jan. 23, 2018)
THA Whitepaper: Milestones for Texas' New Medicaid 1115 Waiver (Jan. 22, 2018)
HHSC Presentation from 1115 Waiver Extension Kickoff Meeting (January 2018)
Texas Budget Neutrality Summary: March 2017 Forecast Update With 5 Year Waiver (Excel)
Texas Medicaid Waiver Renewal - Summary (Dec. 29, 2017)
CMS Letter Approving New Waiver (Dec. 21, 2017)
Congressmen Green, Doggett and Castro Letter 1115 Waiver Letter (June 6, 2017)
Texas Congressional Delegation 1115 Waiver, Disallowance Letter (June 7, 2017)
DY 7-8 DSRIP Webinar Presentation (Feb. 11, 2017)
Draft DY 7-8 DSRIP Protocol (Feb. 5, 2017)
DY 7-8 Measure Bundle Overview for Providers (Feb. 5, 2017)
HHSC 1115 Waiver Update Presentation (Feb. 5, 2017)
HHSC 21-Month Waiver Renewal Request (Jan. 26, 2017)
THA Takeaways: Implications of HHSC Uncompensated Care Study & 1115 Waiver Renewal (Sept. 2, 2016)
HHSC Study of Hospital Uncompensated Care Costs (September 2016)

The Departmental Appeals Board at the U.S. Department of Health and Human Services decided in early August 2018 to uphold CMS' earlier decision to disallow approximately $25 million in federal uncompensated care payments to private hospitals in the Dallas-Fort Worth area. At this time, the state Medicaid agency is considering its options and could accept the decision or appeal.


In September 2014, CMS notified HHSC that it was deferring $74 million in federal Medicaid funds tied to private hospital uncompensated care payments from 2013 under the waiver. While it did not accept the financial arrangement, CMS ultimately released the deferral in January 2015 and stated its willingness to work with HHSC before making a final determination.

In May 2015, HHSC and CMS revisited the issue. Shortly thereafter, CMS agreed that if changes to private hospital funding were required following the discussions, Texas would have until Sept. 1, 2017 to transition to other funding mechanisms without risk of disallowance on the same grounds as the 2014 deferral. Discussions concluded in September 2015 without CMS’ authorization of the private hospital funding arrangement in question.

In September 2016, CMS issued another disallowance notice to HHSC stating that $27 million in federal uncompensated care payments were being disallowed because they constituted “impermissible provider donations.” 

U.S. HHS Departmental Appeals Board Affirms Disallowance of Uncompensated Care Payments (Oct. 2, 2019)
CMS Letter to THHSC on LPPF Permissibility (Dec. 2018)
HHS DAB Decision Letter (Aug. 8, 2018)
HHS Department of Appeals Board Decision on Disallowance (Aug. 7, 2018)
CMS Disallowance Response from CMS Administrator Verma (Sept. 28, 2017)
Letter from HHSC EC Smith to CMS Administrator Verma re: Disallowance (Sept. 22, 2017)
HHSC Appellate Brief on UC Disallowance (June 2017)
Disallowance of Federal Uncompensated Care Payments for Texas Hospitals (April 17, 2017)
Joint Hospital Association Letter to Texas Congressional Delegation (March 13, 2017)
HHSC Letter to US HHS Secretary Tom Price (March 7, 2017)
CMS Affirms Disallowance (Dec. 21, 2016)
Final Reconsideration Letter (Oct. 28, 2016)
CMS Disallowance Response (Oct. 27, 2016)
CMS Letter Lifting UC Deferral (Jan. 2015)
CMS Notice of Deferral (Oct. 2014)
HHSC Notice of Deferral (Oct. 2014)
THA Letter to THHSC Executive Commissioner (Oct. 2014)
CMS is questioning the financing mechanisms being used based on guidance issued in a State Medicaid Director Letter #14-004 on May 9, 2014.
HHSC Letter to Cindy Mann – CMS (Nov. 2014)
Letter from HHSC to CMS on Waiver Extension (Aug. 19, 2016)
Medicaid Draft Report on Hospital UC Cost (July 19, 2016)
THA Takeaways: Waiver Extension & What It Means for Texas Hospitals, Patients (May 4, 2016)
Special Terms and Conditions for 15-Month Extension/DY 6 (May 2, 2016)
CMS - Request for 15-Month Extension of the 1115 Demonstration Waiver (April 7, 2016)
CMS Waiver Response to Rep. Eddie Bernice Johnson (Feb. 24, 2016)
Performance Bonus Pool
Transformational Extension Protocol Models (Jan. 26, 2016)
Transition Year Proposal for DY 6 (Jan. 22, 2016)
Delegation Waiver Letter of Support Signed (November 2015)
1115 Waiver Extension Comments to CMS (November 2015)
Congressional Letter of Support (November 2015)
Waiver Extension FAQs (October 2015)
Final 1115 Waiver Extension Application (Submitted September 2015)
Infographic: Uncompensated Care (Aug. 7, 2015)
THA Comments on HHSC's Draft Waiver Extension Request(Aug. 3, 2015)
THA Takeaways: Hospitals Support Waiver Continuation (July 8, 2015)
1115 Extension Application Draft (July 2, 2015)
Attachment A - Texas DSRIP Projects (July 2, 2015)
Attachment B - Quality Monitoring Reports and Deliverables (July 2, 2015)
Attachment C - Performance Indicator Dashboards and Pay-for-Quality Measures (July 2, 2015)
Attachment D - 1115 Waiver Extension Budget Neutrality Calculations (July 2, 2015)
Attachment E - STC Compliance (July 2, 2015)
Public Notice (July 2, 2015)
THA Takeaways: Waiver Renewal Discussion (April 2015)
Special Terms and Conditions 48 Requirement (March 23, 2015)
Special Terms and Conditions 48 Requirement Attachment A (March 23, 2015)
THA Comments on HHSC’s Draft Waiver Transition Plan (Feb. 13, 2015)
Supporting Web pages

Visit THA’s supporting Web pages for additional information on certain Medicaid and Medicare issues as well as hospital financing.



Jennifer Banda, senior vice president, advocacy and public policy, 512/465-1046

Anna Stelter, senior director of policy analysis, 512/465-1556


According to Texas Government Code 305.027, portions of this material may be considered “legislative advertising.” Authorization for its publication is made by Jennifer Banda, J.D., Texas Hospital Association, 1108 Lavaca, Suite 700, Austin, TX 78701-2180.