Federal Judge Overturns Medicaid Cost Rules

A Trump-appointed federal judge has struck down regulations regarding how the Center for Medicare & Medicaid Services (CMS) distributes Medicaid costs. This ruling came on Wednesday from Judge Jeremy Carnodol in Tyler, Texas.

The judge ruled against CMS’s attempt to alter the way states calculate certain Medicaid expenses. According to reports, he concluded that the agency had overstepped its authority by reinterpreting aspects of the provider tax arrangement under the 2024 Bloomberg Act, which he deemed to be an unacceptable “harmless” contract.

In April 2023, Texas Attorney General Ken Paxton announced that he filed lawsuits against the Biden administration’s Department of Health and Human Services (HHS) and CMS. His legal challenge focused on mandates requiring the Texas Health and Human Services Commission to disclose information about private mitigation strategies.

Paxton claimed that CMS’s actions threatened the state’s ability to fund local Medicaid providers effectively. He expressed concerns that the “illegal policy change” would jeopardize access to healthcare for Texans and undermine local providers’ capabilities.

CMS had alleged that these private arrangements resembled illegal holds and were problematic. There have been broader discussions about how CMS may be scrutinizing certain red states within its Medicaid program audits.

So far, neither Paxton’s office nor CMS has provided comments regarding this recent ruling.