According to a news item on the Husch Blackwell website, Texas filed suit against the federal government on December 11 to stop the recoupment of $83 million in Medicaid payments given to hospitals several years ago.
The issue revolves around a funding method called public-private partnerships, where local governments and private hospitals work together to secure extra federal money for Medicaid patients. Local governments contributed funds, which the federal government matched to help hospitals cover the costs of treating low-income patients.
However, the federal government (through CMS) now claims these partnerships broke Medicaid funding rules and wants the money returned, even though the payments happened between 2014 and 2017. Texas argues that these funds were given in good faith and that taking the money back now will harm hospitals and the patients they serve.
The lawsuit (Texas Health and Human Services Commission v. United States Department of Health and Human Services, Civil Action No. 1:24-cv-1520-RP), filed in federal court in Austin, seeks a restraining order to pause CMS’s actions until a similar, long-standing lawsuit in Dallas is resolved.
Ironically, Texas now finds itself in the same position as Medicaid providers, who often face unfair recoupment demands from DMOs and MCOs.