The Department of Health and Human Services announced on Thursday that it will cut off all Medicaid funding for family planning to the state of Texas, following Gov. Rick Perry's (R) decision to implement a new law that excludes Planned Parenthood from the state's Medicaid Women's Health Program.

Cindy Mann, director of the Center for Medicaid and State Operations (CMSO), wrote Texas health officials a letter on Thursday explaining that the state broke federal Medicaid rules by discriminating against qualified family planning providers and thus would be losing the entire program, which provides cancer screenings, contraceptives and basic health care to 130,000 low-income women each year.

"We very much regret the state's decision to implement this rule, which will prevent women enrolled in the program from receiving services from the trusted health care providers they have chosen and relied upon for their care," she wrote. "In light of Texas' actions, CMS is not in a position to extend or renew the current [Medicaid contract]."

The federal government pays for nearly 90 percent of Texas' $40 million Women's Health Program, and nearly half of the program's providers in Texas are Planned Parenthood clinics. But the new law that went into effect earlier this month disqualified Planned Parenthood from participating in the program because some of its clinics provide abortions, even though no state or federal money can be used to pay for those abortions.

According to Medicaid law, Mann said, a state cannot restrict women's ability to choose a provider simply because that provider offers separate services -- in this case, abortion -- that aren’t even paid for by the Medicaid program.

Perry wrote a letter to President Obama earlier this month accusing his administration of "mandating which health providers the state of Texas must use" in order to "continue to support abortion providers like Planned Parenthood." He vowed to continue the Women's Health Program in Texas without Planned Parenthood and without federal money, although he has yet to outline how his state will come up with money.

But an HHS spokesperson told reporters on Thursday that this was not Obama's decision and that the administration's hands are tied on the issue. “Medicaid law is very clear; a state may not restrict patients’ choice of providers of services like mammograms and other cancer screenings, if those providers are qualified to deliver care covered by Medicaid. Patients, not state government officials, should be able to choose the doctors and other health care providers that are best for them and their families. In 2005, Texas requested this same authority to restrict patients’ choices, and the Bush Administration did not grant it to them either.”

CORRECTION: An earlier version of this article said that Texas' Women's Health Program costs $40 billion. The correct number is $40 million. We regret the error.