On December 2, 2019, the Texas Health and Human Services Commission filed suit against HHS seeking reversal of an August 2018 DAB decision that upheld a $25 million disallowance against the state. The complaint, filed in D.C District Court, argues that the standard HHS applied in determining that the payments were impermissible provider-related donations was not in place at the time of the disallowance. The policy in question (the “net effects” standard) was included in CMS’ recently proposed Medicaid Fiscal Accountability Regulation. Texas claims that CMS’s intent to codify the standard in its proposed rule demonstrates that the Agency lacked the authority to enforce the standard against the state at the time.
