The Texas Supreme Court has temporarily blocked the Texas Health and Human Services Commission’s planned rate reductions for Medicaid home health services for severely disabled children, holding that a temporary injunction issued by a trial court enjoining the rate cuts from taking effect remains binding pending the issuance of a mandate by the Texas Third Court of Appeals reversing the trial court decision or further review by the Texas Supreme Court.

In 2015, the Texas Legislature enacted the General Appropriation Act, which included, among other things, a reduction in Medicaid funding and a requirement that at least $50,000,000 in savings per fiscal year be achieved through Medicaid rate reductions.  Starting in July 2015, the Texas Health and Human Services Commission (HHSC) proposed three different sets of cuts in reimbursement rates for home health speech, occupational, and physical therapy.  The Petitioners in the suit—representatives of disabled children receiving Medicaid home health services and healthcare providers delivering those services—claim that the proposed rate cuts were so severe that they would have forced providers to cease delivering services and would have deprived disabled children of their Medicaid benefits.  The Petitioners sued HHSC and its executive commissioner, alleging in part that HHSC failed to follow Texas law and its own rules in proposing the rate reductions.

After a two-day evidentiary hearing, the trial court enjoined HHSC from implementing the proposed rates.  HHSC appealed, and the Third Court of Appeals reversed and vacated the temporary injunction, but did not issue a mandate with its judgment.  The Petitioners sought an emergency stay from the Texas Supreme Court to stay the trial court’s injunction, contending that the trial court’s injunction remained in effect because the Court of Appeals’ judgment is not effective until a mandate has issued.  The Petitioners also indicated their intention to seek review of the case on the merits by the Texas Supreme Court.  HHSC countered that it had effectively superseded the injunction—meaning it was no longer in effect—and that the language contained in the Court of Appeals’ opinion removed any impediment on HHSC’s ability to supersede the injunction.  HHSC also argued that a stay of the trial court injunction would require it to continue to spend approximately $4,000,000 per month on Medicaid reimbursements that the Legislature never intended to spend.

The Texas Supreme Court agreed with the Petitioners.  The Court’s order did not address the merits of the case or the parties’ arguments regarding the motion for emergency stay, but simply held that the trial court’s temporary injunction remained binding pending issuance of the mandate from the court of appeals or further review from the Texas Supreme Court.