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Section 1115 Medicaid Demonstration Waivers: The Current Landscape of Approved and Pending Waivers

Issue Brief
  1. Major areas of focus of current approved state Section 1115 waivers include: the implementation of alternative ACA Medicaid expansion models; eligibility and enrollment restrictions; work requirements; benefit restrictions, copays and healthy behaviors; delivery system reform initiatives; integrating physical and behavioral health or providing enhanced behavioral health services to targeted populations; authorizing the delivery of Medicaid long-term services and supports (LTSS) through capitated managed care; and responding to public health emergencies and providing coverage for other targeted groups.

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  2. Some states have multiple waivers, and many waivers are comprehensive and may fall into a few different areas.

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  3. Increasingly, states are using Section 1115 waivers to combine programs under one single authority (e.g., including authorities otherwise available under Section 1915 (b) managed care waivers and/or Section 1915 (c) home and community based services waivers, along with Section 1115 authority for other eligibility, benefits, delivery system, and payment reforms).

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  4. This CMCS Information Bulletin also outlines changes to the “fast track” federal review process for Section 1115 waiver extension requests, removing the requirement that states must have at least one full extension cycle without “substantial program changes” before they are eligible to be considered for the “fast track” review process. (The “fast track” process was designed to expedite the federal review of certain Section 1115 waiver extensions requests that meet specified criteria.)

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  5. On December 28, 2017, CMS approved the Mississippi Family Planning Medicaid Waiver extension for a 10-year period. Mississippi is the first state to receive a 10-year Section 1115 waiver extension under the new policy.

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  6. On August 22, 2018, CMS released a letter to state Medicaid directors describing current policies related to budget neutrality for Section 1115 Medicaid demonstration projects.

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  7. Kaiser Commission on Medicaid and the Uninsured, The New Review and Approval Process Rule for Section 1115 Medicaid and CHIP Demonstration Waivers, (Washington, DC: Kaiser Commission on Medicaid and the Uninsured, March 2012), http://kff.org/health-reform/fact-sheet/the-new-review-and-approvalprocess-rule/.

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  8. Indiana filed an amendment to its pending extension on May 25, 2017 and Kentucky filed an amendment to its pending application on July 3, 2017. Neither state held a state-level public comment period before submission to CMS. Although the final regulations involving public notice do not require a state-level public comment period for amendments to existing/ongoing demonstrations, CMS has historically applied these regulations to amendments. However, these amendments were not to ongoing demonstrations but to a new waiver request (KY) and extension request (IN).

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  9. However, CMS recently relieved Montana from the requirement to evaluate its expansion waiver based on its participation in a cross-state federal evaluation.

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  10. Robin Rudowitz, MaryBeth Musumeci, and Alexandra Gates, Medicaid Expansion Waivers: What Will We Learn? (Washington, DC: Kaiser Commission on Medicaid and the Uninsured, March 2016), http://kff.org/medicaid/issue-brief/medicaid-expansion-waivers-what-will-we-learn/.

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  11. The November 6, 2017 CMCS Information Bulletin (found at: https://www.medicaid.gov/federal-policy-guidance/downloads/cib110617-2.pdf) on Section 1115 demonstration process improvements also signaled CMS’s interest in moving toward reducing the frequency of reporting required for states to semi-annually or annually for certain demonstrations.

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  12. “About Section 1115 Demonstrations,” CMS, accessed December 6, 2017, https://www.medicaid.gov/medicaid/section-1115-demo/about-1115/index.html.

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  13. In October 2017, CMS approved an amendment to Iowa’s eliminating 3-month retroactive coverage for nearly all new Medicaid applicants. The new retroactive coverage waiver applies to all other state plan populations, including low-income parents, children over age 1, ACA expansion adults, seniors, and people with disabilities. Pregnant women and infants under age 1 still qualify for retroactive coverage in Iowa.

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  14. Uncompensated Care Pool funding was being phased down according to post-ACA guidelines established by the Obama Administration. These guidelines established that 1) uncompensated care pool funding should not pay for costs that would be covered in a Medicaid expansion, 2) Medicaid payments should support services provided to Medicaid beneficiaries and low-income uninsured individuals, and 3) provider payment should promote provider participation and access, and should support plans in managing and coordinating care.

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  15. Florida Managed Medical Assistance Program (MMA), Special Terms and Conditions, #11-W-00206/4, approved August 3, 2017, https://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Waivers/1115/downloads/fl/fl-medicaid-reform-ca.pdf.

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  16. Under Florida’s LIP, funding was set at $1 billion in SFY 2016 and $608 million in SFY 2017. CMS indicated the new LIP funding amount approved as part of the state’s extension request reflects “the most recent available data on hospitals' charity care costs.” Florida’s LIP funds may be used for health care costs incurred by the state or by providers (hospitals, medical school physician practices, and federally qualified health centers (FQHCs)/rural health centers (RHCs)) to furnish uncompensated medical care for uninsured low-income individuals up to 200% FPL.

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  17. Texas Healthcare Transformation and Quality Improvement Program, Special Terms and Conditions, # 11-W-00278/6, approved January 1, 2018 through September 30, 2022, https://hhs.texas.gov/sites/default/files//documents/laws-regulations/policies-rules/1115-waiver/waiver-renewal/1115renewal-cmsletter.pdf.

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  18. On November 1, 2017, CMS issued a state Medicaid director letter revising the July 2015 guidance. The revised guidance continues to allow states to use Section 1115 waivers to pay for IMD substance use treatment services and affirms many components of the earlier guidance. For example, it notes that “states should indicate how inpatient and residential care will supplement and coordinate with community-based care in a robust continuum of care in the state” and directs states to “demonstrate how they are implementing evidence-based treatment guidelines.” The revised guidance requires certain demonstration components, such as residential treatment provider qualifications and capacity, opioid prescribing guidelines, access to naloxone, prescription drug monitoring programs, and care coordination between residential and community settings. States must report on core and state-specific quality measures, perform waiver evaluations, and are subject to a $5 million deferral per item for failure to comply with evaluation and reporting requirements.

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  19. The Trump administration rejected Massachusetts’ request for partial expansion to 100% of the FPL using the ACA enhanced match on June 27, 2018. The current administration did not make a decision on Arkansas’ partial expansion request in its March 5, 2018 approval of the Arkansas Works waiver amendment request.

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  20. Utah’s pending waiver amendment (submitted in June 2018) requests authority for a partial expansion to 100% FPL using the ACA enhanced match, as well as authority to cap expansion enrollment if the state determines there are insufficient funds for program continuation.

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  21. The Obama Administration issued policy guidance, consistent with its legal interpretation of the ACA, indicating that states cannot receive enhanced federal ACA expansion funding unless they cover all newly eligible adults through 138% FPL.

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  22. In its rejection of Massachusetts’ prescription drug formulary proposal, CMS said it would be willing to consider a closed formulary proposal under which the state agrees to negotiate directly with manufacturers and forgo all manufacturer rebates available under the federal Medicaid Drug Rebate Program.

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  23. Originally, DSRIP initiatives were more narrowly focused on funding for safety net hospitals and often grew out of negotiations between states and HHS over the appropriate way to finance hospital care.

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  24. Texas Healthcare Transformation and Quality Improvement Program, Special Terms and Conditions, # 11-W-00278/6, approved January 1, 2018 through September 30, 2022, https://hhs.texas.gov/sites/default/files//documents/laws-regulations/policies-rules/1115-waiver/waiver-renewal/1115renewal-cmsletter.pdf.

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  25. Following the federal district court’s decision in Stewart v. Azar, CMS reopened the 30-day federal public comment period to accept comment’s on: 1) the state’s original KY HEALTH demonstration proposal (submitted August 24, 2016), 2) Kentucky’s revised KY HEALTH demonstration application (submitted July 3, 2017), and CMS’s approved KY HEALTH special terms and conditions (approved on January 12, 2018).

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