Order blocking state's Medicaid plans 'a victory' for South Texans

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A McAllen legislator is calling a Travis County judge's recent order a victory for low income South Texas families in need of affordable health care.

District Judge Laurie Eiserloh, of Travis County, issued a temporary injunction on Oct. 4 against the Texas Health and Human Services Commission, halting the agency from finalizing a proposal to change Medicaid contracts which would have impacted nearly 2 million people in the state.

Citing 13 "unlawful" actions by the state agency, Eiserloh's ruling will temporarily prevent the commission from dropping the Cook Children's Health Plan, the Driscoll Health Plan and the Texas Children's Health Plan — nonprofits which would have been replaced with Aetna, a for-profit company, in September 2025.

A hearing is now set for Nov. 3, 2025, to decide on the injunction.

Driscoll Health Plan CEO Craig Smith said the ruling reinforces concerns "about the negative impact of this procurement."

"This ruling is a validation of the concerns we've shared with our community from the beginning," Smith said in a statement Friday. "We continue to urge state lawmakers to examine the procurement process to ensure that communities have health solutions tailored to their unique needs and health plan partners with a track-record of high performance.

"As a high-quality plan that is the preferred choice of the members in our community, Driscoll is pleased that our members will still have the Driscoll choice available to them."

Earlier this year, the commission announced it would be awarding Medicaid contracts to Aetna, which would have impacted an estimated 1.8 million low-income Texans who have been under the health plans of nonprofits like the Driscoll Health Plan, a managed care organization which serves much of the South Texas region and the Rio Grande Valley.

Driscoll Health Plan has served 24 South Texas counties including Hidalgo, Cameron, Willacy and Starr for about 26 years.

Since 2000, Driscoll has provided coverage for approximately 89,000 STAR and CHIP recipients in the Nueces service area and about 336,000 recipients in the Hidalgo service area since 2012. STAR and CHIP provide care for children, pregnant women and families, respectively.

Currently, Driscoll insures 180,000 children and expecting mothers.

For state Sen. Juan "Chuy" Hinojosa, D-McAllen, the injunction is a positive step toward helping preserve access to care for low-income areas.

Hinojosa, along with his 19 fellow South Texas legislators, wrote a letter to Gov. Greg Abbott and asked him to intervene in the HHSC decision to award the STAR and CHIP Medicaid contracts to Aetna.

He argued that if the contracts were awarded to Aetna it would cause more harm than good in the Valley.

"This ruling is a victory for children and healthcare in our community," Hinojosa said via text on Wednesday. "I am committed to working with my colleagues in the upcoming session to improve the procurement process and provide the clarity and direction needed to ensure that our community health plans are not excluded."

Citing Texas Government Code in her order, the judge characterized the commission's proposal as unlawful for failing to "give preference to MCOs that have significant participation in their provider networks from each healthcare provider in the region who has traditionally provided care to Medicaid and charity care patients…"

Eiserloh's order also called the commission's contracts unlawful due to the HHSC sharing the proposals of respondents with a competitor in August 2023 and in October 2023.

The August disclosure included Aetna's legal counsel "while the procurement was ongoing and prior to completion of the oral presentations — thus, destroying any integrity of the procurement process and creating an unlevel playing field that cannot ensure fair consideration of all proposals."

She further said in the order that the disclosure "caused the decision by HHSC to not be consistent, uniform and transparent as required by the Texas Administrative Code."

Other aspects of the contracts that the judge considered unlawful included the proposal not helping to improve "the health of Texans by promoting continuity of care and provides a medical home for recipients," failing "to reduce administrative and other non financial barriers for recipients," and failing "to consider the need to use different managed care plans to meet the needs of different populations."

In May, Driscoll Children's Hospital Rio Grande Valley opened an eight-floor, 119-bed facility in McAllen, which local officials and legislators hailed as a pivotal moment for South Texas — one of the lowest-insured regions in the state and where the population struggles with diabetes and heart disease.

Matt Walthoff, Driscoll president in McAllen, called Eiserloh's ruling another important moment not just for the hospital system but the region.

"This is a good first step and means that the current enrolled beneficiaries of Driscoll Health Plan STAR and CHIP Medicaid Managed Care programs will not have to change health plans in September of 2025," Walthoff said via text. "We are cautiously optimistic that the state will take this opportunity to now reevaluate the procurement process and ensure this vulnerable population continues to have access to the high level of quality care and services they have become accustomed to with their local not for profit plans like Driscoll Health Plan."

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