A federal judge ruled on Aug. 20 that the Biden administration should not have cancelled Texas’ application for a Medicaid waiver that would give the state billions in federal funds to compensate providers for care provided to uninsured patients. While the ruling can be appealed, the future shape of Texas’ unexpanded Medicaid program remains unclear.

CMS on April 16 revoked an eleventh-hour Section 1115 waiver the Trump administration had granted to Texas. CMS had approved Texas’ waiver request on Jan. 15, less than a week before the end of the Trump administration. The waiver would have sent about $11.4 billion to Texas annually in order for the state to compensate providers for unreimbursed care. The Trump administration approved the waiver for 10 years, a term that experts say is unusually long. Health care insiders said in April that CMS’s move to cancel the waiver was an attempt by the Biden administration to push Texas to expand Medicaid — although the state’s legislature had recently voted down one such proposal.

However, U.S. — District Judge J. Campbell Barker in Tyler, Texas, who was appointed to the bench by former President Donald Trump, found that the termination of the 1115 waiver “is unlawful and must be set aside as in excess of statutory authority and as arbitrary and capricious.” The Biden administration cited the same “arbitrary and capricious” standard in its revocation of the original waiver.

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