CMS sent a letter to Texas' Medicaid and Children's Health Insurance Program director April 22 to say that it would no longer work to rescind an extension of a Texas Medicaid waiver.
"CMS has concluded that it is not the best use of the federal government's limited resources to continue to litigate this matter," CMS Administrator Chiquita Brooks-LaSure said in the letter. "This should resolve the issue without the need for further litigation and will create no disruption to the people who rely on Texas' Medicaid program."
The move to revoke the waiver was first announced in April 2021 and would have halted billions of dollars in Medicaid funding to the state. The waiver reimburses Texas hospitals for uncompensated care for 10 years.
The revocation announcement sparked concerns from investment groups, who cited harm to urban and rural Texas hospitals if the waiver was not approved.
Texas sued CMS over the revocation in May 2021, claiming the agency lacked the authority to revoke the waiver.
In August 2021, a federal judge issued a preliminary injunction against CMS over the decision, arguing that the agency did not provide the state with enough prior notice before issuing the decision.
"The district court's order on the preliminary injunction did not address the underlying legal issues of whether CMS's January 15, 2021, approval was unlawful for failure to comply with public notice and comment requirements," Ms. Brooks-LaSure wrote.
Ms. Brooks-LaSure concluded the letter by writing that the agency does not plan to challenge the program again.