Federal health officials on Friday restored $7 million a day in funding to Texas hospitals after stopping it six months ago over concerns about how the state pays for health care for uninsured Texans.
Until last September, Texas had tapped this funding, which comes through what is known as the 1115 Medicaid waiver, to reimburse hospitals for patients who use Medicaid. Most states are able to get these dollars by matching the federal dollars from their general revenue.
But Texas had come up with its own mechanism known as the Local Provider Participation Funds, in which private hospitals set up taxing districts and sent that money through local and state governments to the U.S. Centers for Medicare and Medicaid Services.
However, after it was discovered some hospitals profited from the Medicaid payments and covered the tax for other hospitals, CMS halted the payments in September while it argued with the state over whether that LPPF system is allowed.
Whether the system violates the rules of the state’s 10-year 1115 funding agreement with CMS remains an open question.