Issue Brief
  1. Major areas of focus of current approved state Section 1115 waivers include: financing changes; eligibility and enrollment restrictions; work requirements; benefit restrictions, copays and healthy behaviors; behavioral health; delivery system reform initiatives; authorization of the delivery of Medicaid long-term services and supports (LTSS) through capitated managed care; and other targeted eligibility changes.

    ← Return to text

  2. 42 U.S.C. § 1315.

    ← Return to text

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

    ← Return to text

  4. The Secretary’s waiver authority is limited to the provisions of 42 U.S.C. § 1396a, provided that waivers are demonstration projects that further Medicaid program objectives. 42 U.S.C. § 1315.

    ← Return to text

  5. In August 2018, CMS issued guidance related to Section 1115 budget neutrality, which outlined methodology adjustments to calculating “without waiver” expenditures that would be fully phased in for waiver extensions beginning January 1, 2021. Notably, these methodology changes restrict the ability of states with long-running demonstrations to roll over “unspent” budget neutrality savings and to extend baseline spending assumptions for years without adjustment. SMD # 18-009, Budget Neutrality Policies for Section 1115 (a) Demonstration Projects, https://www.medicaid.gov/Federal-Policy-Guidance/downloads/SMD18009.pdf.

    ← Return to text

  6. 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/.

    ← Return to text

  7. However, 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).

    ← Return to text

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

    ← Return to text

  9. 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/.

    ← Return to text

  10. 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.

    ← Return to text

  11. “About Section 1115 Demonstrations,” CMS, last accessed October 23, 2020, https://www.medicaid.gov/medicaid/section-1115-demo/about-1115/index.html.

    ← Return to text

  12. 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.)

    ← Return to text

  13. This approved waiver renewal for Indiana also includes a five-year extension of its SUD and SMI demonstrations as well as the waiver’s work requirements, disenrollment and lock-out period for non-payment of premiums, and lock-out period for failure to timely renew eligibility (conditional on the outcome of litigation that would allow these requirements to go forward).

    ← Return to text

  14. State applications for emergency COVID-19 Section 1115 waivers may have included requests for provisions that CMS approved under other emergency authorities.

    ← Return to text

  15. Washington had proposed using Medicaid funds to provide additional subsidies for people enrolled in Qualified Health Plans (QHPs) with income at or below 200% FPL to allow individuals to purchase and use Marketplace coverage with no or low out-of-pocket costs.

    ← Return to text

  16. Letter from Arizona Medicaid Director to CMS (Oct. 17, 2019), https://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Waivers/1115/downloads/az/Health-Care-Cost-Containment-System/az-hccc-postponement-ltr-ahcccs-works-10172019.pdf.

    ← Return to text

  17. While Indiana began work requirement implementation in 2019, no hours were required in the first 6 months. The phase-in of required hours begins in months 7-9 with a requirement of 5 hours per week. On October 31, 2019, the Indiana Family and Social Services Administration announced that it would temporarily suspend the enforcement of its work requirement, which was scheduled to begin January 2020, due to a pending legal challenge. The state noted that it was delaying benefits suspensions pending the outcome of the state’s work requirement legal challenge.

    ← Return to text

  18. Utah Department of Health, “Community Engagement Requirement Suspended,” https://medicaid.utah.gov/expansion/community-engagement-requirement-suspended/

    ← Return to text

  19. South Carolina's work requirement applies to traditional parent/caretaker relative enrollees up to 100% FPL, Transitional Medical Assistance enrollees, and a newly established Targeted Adult Group. The Targeted Adult Group includes certain childless adults experiencing homelessness, justice system involvement, and/or need for SUD treatment; a limited number of pregnant or postpartum women up to 194% FPL with SUD and/or serious mental illness; and a limited number of parents who have children in foster care, earn up to 138% FPL, are undergoing SUD treatment, and have not had their parental rights terminated.

    ← Return to text

  20. Georgia’s work requirement applies to adults up to 100% FPL who are not otherwise eligible for Medicaid coverage: parent/caretaker relative enrollees 35-100% FPL and childless adult enrollees 0-100% FPL.

    ← Return to text

  21. Nebraska’s work requirement applies to expansion beneficiaries (up to 138% FPL) who do not meet any exemptions. Non-participation in this work requirement does not affect overall Medicaid eligibility, but does limit access to covered benefits.

    ← Return to text

  22. Waiver provisions in some states may be approved but not implemented.

    ← Return to text

  23. In October 2017, CMS approved an amendment to Iowa’s waiver eliminating 3-month retroactive coverage for nearly all new Medicaid applicants. The 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. In 2018, the state restored retroactive coverage for nursing facility residents. CMS also approved retroactive coverage waivers in Florida (November 2018), New Mexico (December 2018), and Arizona (January 2019) which apply to waiver populations including seniors and people with disabilities. In June 2019, NM (under its new governor) submitted an amendment to CMS requesting to reinstate the full 90-day retroactive coverage period for all affected individuals. CMS approved the amendment request on February 7, 2020.

    ← Return to text

  24. In a CMS administrator letter to Kansas on May 7, 2018, CMS rejected Kansas’ proposal to impose a lifetime limit on Medicaid benefits for eligible beneficiaries.

    ← Return to text

  25. 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. In an 8/16/2019 letter to Utah, CMS indicated that it would continue not to approve state requests for the ACA enhanced matching rate unless the states covered the entire adult expansion group. CMS noted in the letter that it also would not approve an enrollment cap on the expansion population, as such a cap “would be tantamount to ‘partial expansion.’” In its January 2020 HAO guidance, CMS noted that states can continue to receive enhanced matching funds for ACA expansion adults only if they cover the full expansion population (all adults up to 138% FPL) without an asset test. Most recently, in October 2020, the administration declined to approve Georgia’s request for the ACA enhanced match rate for its expansion of Medicaid coverage to 100% FPL (with initial and continued enrollment conditioned on compliance with work and premium requirements), again emphasizing it would continue its policy of only providing this match for states that cover the full expansion population.

    ← Return to text

  26. Utah’s existing Section 1115 waiver was first approved in 2002 and included a pre-ACA coverage expansion (called the Primary Care Network, PCN) to parents 60%-100% FPL and childless adults up to 100% FPL, at the regular matching rate. The PCN coverage expansion provided a limited benefit package of primary and preventive services to a capped number of these adults and was funded by reduced benefits for traditional low-income parents. In March 2019, a waiver amendment moved Utah’s PCN adults to its “Adult Expansion Population.” In December 2019, Utah adopted the full ACA expansion and is now receiving the enhanced ACA matching rate for its expansion population. Still, while expansion adults receive full state plan benefits if they are childless or fall into the state’s Targeted Adult group, expansion parents receive a more limited benefit package than one designed to meet the alternative benefit package requirements for expansion adults under the ACA.

    ← Return to text

  27. 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.

    ← Return to text

  28. In an 8/16/2019 letter to Utah, CMS indicated that it would continue not to approve state requests for the ACA enhanced matching rate unless the states cover the entire adult expansion group.

    ← Return to text

  29. Maine and New Hampshire requested authority to impose asset tests for poverty-related pathways, and Maine and Utah requested approval to waive hospital presumptive eligibility. Arizona proposed to redetermine eligibility every 6 months for all expansion enrollees and every 3 months for individuals who have a change in circumstance that results in non-compliance with waiver requirements.

    ← Return to text

  30. In its rejection, CMS noted that it would only 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.

    ← Return to text

  31. The federal Substance Use Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities (SUPPORT) Act creates a state plan option, from October 2019 through September 2023, for states to receive federal Medicaid payments for non-elderly adults with SUD in an IMD up to 30 days per year.

    ← Return to text

  32. 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 be subject to a $5 million deferral per item for failure to comply with evaluation and reporting requirements.

    ← Return to text

  33. Federal law generally bars states from receiving “any such [federal Medicaid] payments with respect to care or services for any individual who has not attained 65 years of age and who is a patient in an [IMD].” 42 U.S.C. § 1396d (a)(29)(B).

    ← Return to text

  34. States also can offer a wide array of community-based behavioral health benefits under state plan authority.

    ← Return to text

  35. Waiving the IMD payment exclusion and expanding institutional services without also ensuring adequate access to community-based services could have implications for states’ community integration obligations under the Americans with Disabilities Act (ADA) if people with disabilities are inappropriately institutionalized. The Supreme Court’s 1999 Olmstead decision found that the unjustified institutionalization of people with disabilities violates the ADA. The ADA’s community integration mandate is separate from federal Medicaid law. However, states rely on Medicaid funding to help meet their ADA obligations, because Medicaid is the primary payer for long-term services and supports, including home and community-based services. See https://www.kff.org/medicaid/report/state-options-for-medicaid-coverage-of-inpatient-behavioral-health-services/.

    ← Return to text

  36. 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.

    ← Return to text

  37. In December 2017, CMS approved a five-year renewal of Texas’ Healthcare Transformation and Quality Improvement Program Section 1115 waiver. The waiver renewal decreases federal matching funds for the state’s DSRIP program between year one and year four, eliminating federal funding for DSRIP in the fifth year.

    New York requested a waiver amendment to continue its DSRIP program with additional funding. In a 2/21/2020 letter to New York, CMS noted that it was not approving the state’s requested extension of its DSRIP program.

    ← Return to text

  38. Despite the Trump administration’s decreased focus on DSRIP waivers, in December 2019, Colorado submitted a waiver request for a new hospital-based DSRIP program (still pending at CMS).

    ← Return to text

  39. Post-ACA Obama administration 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.

    ← Return to text

  40. On December 6, 2017, New Mexico requested five additional years of its uncompensated care pool with increasing funding, but CMS only approved one additional year. On December 20, 2017, Kansas requested an uncompensated care pool increase by $20 million per year, but CMS kept it at its current levels in a 1/15/2019 approval.

    ← Return to text

  41. 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.

    ← Return to text

  42. 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.

    ← Return to text

  43. Under Florida’s low income pool (LIP), funding was set at $1 billion in SFY 2016 and $608 million in SFY 2017. CMS indicated that 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, federally qualified health centers (FQHCs)/rural health centers (RHCs), and community behavioral health providers) to furnish uncompensated medical care for uninsured low-income individuals up to 200% FPL.

    ← Return to text

  44. See Former Vice President’s Joe Biden’s remarks at Cherry Health in Michigan, March 2020: https://www.youtube.com/watch?v=tO1CBDxRMus

    ← Return to text

The Henry J. Kaiser Family Foundation Headquarters: 185 Berry St., Suite 2000, San Francisco, CA 94107 | Phone 650-854-9400
Washington Offices and Barbara Jordan Conference Center: 1330 G Street, NW, Washington, DC 20005 | Phone 202-347-5270

www.kff.org | Email Alerts: kff.org/email | facebook.com/KaiserFamilyFoundation | twitter.com/kff

Filling the need for trusted information on national health issues, the Kaiser Family Foundation is a nonprofit organization based in San Francisco, California.