Texas Attorney General Ken Paxton has secured a significant nationwide legal victory, successfully striking down a rule from the Former Biden administration's Centers for Medicare & Medicaid Services (CMS) that would have expanded federal control over state Medicaid funding mechanisms.
The rule targeted Local Provider Participation Funds (LPPFs), arrangements that allow Texas hospital districts to collect payments from local providers to help cover the state's share of Medicaid costs. These agreements operate under existing federal law and do not involve state funds directly.
According to Paxton's office, the CMS rule and accompanying guidance would have forced states like Texas to regulate purely private contracts between healthcare providers. Paxton called the move a clear case of federal overreach.
If left in place, the rule could have led to a significant reduction in Medicaid funding for hospitals serving low-income patients.
"This is not only a win for the integrity of Texas health care, but it's also a defeat of Joe Biden's unlawful overreach," Paxton commented.
He accused the administration of using federal agencies like CMS to "target conservative states" and impose top-down regulations that undermine local control.
A federal court sided with Texas, ruling that CMS lacked the legal authority to restrict private provider agreements and that federal law applies only to contracts involving state governments.
The ruling preserves billions in potential Medicaid funding and protects Texas's ability to manage its healthcare system without federal interference.
