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Executive Commissioner

Date: Dec. 12, 2011
Contact: Stephanie Goodman, 512-424-6951

Texas Gets Approval for Cost-Saving Medicaid Improvements

AUSTIN – Texas today received approval from the Centers for Medicare and Medicaid Services (CMS) for a waiver that allows the state to expand Medicaid managed care while preserving hospital funding, provides incentive payments for health care improvements and directs more funding to hospitals that serve large numbers of uninsured patients.

“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. “These reforms will allow us to ensure the best, most efficient use of Medicaid funding and improve services for Texans.”

HHSC applied for the waiver earlier this year, at the direction of Gov. Rick Perry and the Texas Legislature, to identify innovative, state-based solutions to Texas’ health care needs. Under the waiver, communities and hospitals will form regional health partnerships that support more localized health care solutions. The partnerships will identify ways to improve health services that address the specific needs of their region in order to qualify for incentive payments. These projects will be monitored and measured to ensure the funding is used efficiently and effectively.

Under managed care, the state pays a set fee each month to a health plan to provide care for a Medicaid client, who selects a primary doctor from the plan’s network to coordinate his or her care. This emphasizes more coordinated and efficient patient treatment. Federal rules generally mean that states that expand managed care will see a reduction in funding to hospitals under the Medicaid Upper Payment Limit program. This five-year waiver will allow for both, enabling Texas to continue receiving these federal funds while allowing for an expansion of managed care.

“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.”

Suehs thanked CMS for working with the state on the waiver and approving a solution that would help meet the unique health care needs of different regions of Texas. 

Hospitals providing care to uninsured patients will continue to receive funding to care for them, as well as physician, clinic and other services, and traditional inpatient costs. The waiver does not change who is eligible to get Medicaid or the services they can receive.