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1115 Waiver

In 2011, the Texas Health & Human Services Commission (HHSC) received legislative approval to apply for and accept a five-year project as allowed under Section 1115 of the Social Security Act. The "Transformation & Quality Improvement Program" (aka 1115 Waiver) allowed Texas to expand existing Medicaid managed care programs and to establish two funding pools to assist providers with uncompensated care costs and promote health system transformation. The 1115 Waiver redirects the supplemental payments that historically existed under the Upper Payment Limit (UPL) program in order to improve care delivery systems and capacity, while emphasizing accountability and transparency and requiring demonstrated improvements. These two pools of funding are Uncompensated Care (UC) and Delivery System Reform Incentive Payment Program (DSRIP). In 2016, the 1115 Waiver was extended for a sixth year at level funding.  In 2017, the 1115 Waiver was extended for 5 additional years.

The 1115 Waiver's benefits include the following:

  • Protects Texas UPL funds and makes available funding for system investment.
  • Allowed for legislatively directed managed care expansion while protecting vital hospital UPL funds.
  • Places decisions regarding healthcare delivery system improvements in the hands of local hospitals and hospital districts, rather than a top-down, one-size-fits-all approach.
  • Plan development, system improvement metrics, and reporting will serve as the basis for accountable, effective investments in healthcare and related 1115 Waiver payments.
  • Helps to drive down healthcare inflation by ensuring hospitals are paid based on actual uncompensated care costs, not charges.
  • Achieves accountability and transparency for billions of dollars in Texas UPL funding.