A Texas District Court judge granted Texas’ motion for summary judgment in the state’s lawsuit challenging two CMS Informational Bulletins and provisions in CMS’ 2024 Medicaid managed care rule that prohibit certain voluntary redistribution agreements among private parties participating in a Medicaid provider tax program.
The court’s order set aside CMS’ 2024 rule and related bulletins and permanently enjoined the agency from enforcing the CMS policy that expanded the regulatory definition of a provider tax “hold harmless” to prohibit these arrangements. In its opinion, the court explained that federal law only restricts a hold harmless by the state and does not address wholly private agreements. The court previously issued a preliminary injunction prohibiting CMS from applying the hold harmless interpretation in Texas only. The latest order applies nationally.
The court also held that a provision in CMS’ 2024 rule requiring state directed payment disputes to be heard by the Departmental Appeals Board (DAB) exceeded CMS’ statutory authority.
Eyman Partners is continuing to monitor the progression of the case, including whether CMS appeals the court’s decision to the Fifth Circuit Court of Appeals. If you have any questions about how this decision may impact you, please reach out to any Eyman Partners attorney to discuss.