Introduction

As of October 2020, 44 states had a total of 57 approved Section 1115 Medicaid waivers, while 21 states had a total of 26 pending waivers (including new waiver requests and pending extensions of or amendments to existing approved waivers). These waivers range across a variety of categories and offer states flexibility to test new approaches in Medicaid that differ from what is required by federal statute. In general, waivers reflect priorities identified by states as well as changing priorities from one presidential administration to another. For example, the Trump administration has aimed to make sweeping changes to Medicaid using Section 1115 demonstration waivers, including provisions not previously approved by any administration.

This brief explores three key questions about the landscape of Section 1115 Medicaid waivers ahead of the 2020 election:

• What are Section 1115 waivers and how have they been used in the past?
• What are key waiver themes under the Trump administration?
• What might the future landscape of waivers look like?

What are Section 1115 Medicaid Waivers?

Section 1115 Medicaid demonstration waivers offer states an avenue to test new approaches in Medicaid that differ from what is required by federal statute. They can provide states additional flexibility in how they operate their programs, beyond the considerable flexibility that is available under current law. Waivers generally reflect priorities identified by states and the federal Centers for Medicare and Medicaid Services (CMS), as well as changing priorities from one presidential administration to another. Each administration has some discretion over which waivers to approve and encourage (see Figure 1 and Appendix A), but that discretion is not unlimited—for example, in February 2020, a unanimous federal appeals court upheld a district court decision that set aside the Trump administration’s work requirement waiver approval in Arkansas. The Trump administration is seeking Supreme Court review of this case. The most current state-by-state activity is contained in the KFF Medicaid waiver tracker,¹  which shows approved and pending waivers.

Authority and Purpose. Under Section 1115 of the Social Security Act, the Secretary of HHS can waive specific provisions of major health and welfare programs, including certain requirements of Medicaid and CHIP. Section 1115 permits the Secretary to allow states to use federal Medicaid and CHIP funds in ways that federal rules do not otherwise allow, as long as the Secretary determines that the initiative is an “experimental, pilot, or demonstration project” that “is likely to assist in promoting the objectives of the program.”²  States can obtain “comprehensive” Section 1115 waivers that make broad changes in Medicaid eligibility, benefits, provider payments, and other program rules across their programs.³  While the Secretary’s waiver authority is broad, it is not unlimited. The Secretary does not have authority to waive some elements of the program, such as the federal matching payment system for states, or requirements that are rooted in the Constitution, such as the right to a fair hearing.⁴  Additionally, as an appeals court recently affirmed in the case challenging Arkansas’s work requirement waiver, the Secretary must use Section 1115 authority to further Medicaid’s primary objective as set out by Congress: providing affordable health insurance coverage.

Financing. While not set in statute or regulation, a longstanding component of Section 1115 waiver policy is that waivers must be budget neutral for the federal government. As such, federal costs under a waiver must not exceed what federal costs would have been for that state without the waiver, as calculated by the administration. To date, the federal government generally enforces budget neutrality by establishing a per member per month cap on federal funds under the waiver, putting the state at risk for increases in per member per month costs but not for increased costs due to enrollment growth.⁵ 

Transparency, Public Input, and Evaluation. The Affordable Care Act (ACA) made Section 1115 waivers subject to new rules about transparency, public input, and evaluation. In February 2012, HHS issued regulations that require public notice and comment periods to occur at the state and federal levels before CMS approves new Section 1115 waivers and extensions of existing waivers.⁶  Although the final regulations on 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 as well.⁷  The ACA also implemented new evaluation requirements for Section 1115 waivers, including that states must have a publicly available, CMS-approved evaluation strategy.⁸  States have traditionally been required to submit quarterly reports as well as an annual report to HHS that describes the changes occurring under the waiver and their impact on access, quality, and outcomes.^9 ,10  Since taking office, the Trump administration has established new guidelines for waiver approval, reporting and evaluation, and renewals (Box 1). Notably, required rules related to transparency, public input and evaluation would be set aside should the Supreme Court invalidate the ACA.

What are Key Waiver Themes under the Trump Administration?

The Trump administration has aimed to make sweeping changes to Medicaid using Section 1115 demonstration waivers. While Congress fell short of passing legislation in 2017 to repeal and replace the Affordable Care Act (ACA) and to reduce and cap federal Medicaid financing, the Trump administration sought to make sweeping changes to Medicaid through the use of Section 1115 demonstration waivers as well as other administrative channels, including rulemaking and sub-regulatory policy guidance. CMS under the Trump administration has prioritized several areas of focus for Section 1115 waivers, some of which represent reversals of or departures from previous administrations’ policies (Figure 2). In particular, the Trump administration’s waiver policy has emphasized waivers that allow states to:

• Respond to the COVID-19 pandemic using emergency waivers.
• Condition Medicaid eligibility on meeting work requirements.
• Impose restrictions on eligibility, enrollment, and benefits.
• Not apply an array of federal rules in exchange for capped financing, as proposed under guidance inviting Health Adult Opportunity (HAO) demonstrations.
• Receive federal Medicaid funds for services delivered in an “institution for mental disease” for treatment of substance use disorder or serious mental illness.

Waiver submission activity has slowed, however, in the face of the COVID-19 public health emergency (PHE) and associated economic downturn. No states have newly requested waivers with work requirements, other eligibility and enrollment restrictions, or financing changes since February 2020. To access enhanced federal Medicaid funding during the PHE, states must meet “maintenance of eligibility” (MOE) conditions which limit state options to enforce new eligibility and enrollment restrictions. These conditions include ensuring continuous eligibility for current enrollees and prohibit states from increasing premiums or making eligibility standards, methodologies, or procedures more restrictive than those in effect on January 1, 2020, among other requirements. Further, some states are utilizing Medicaid emergency authorities to take additional actions to address the pandemic including expanding eligibility and making it easier to apply such as allowing for self-attestation of eligibility criteria; eliminating premiums; expanding the use of presumptive eligibility; and otherwise simplifying application processes. State interest in pursuing Medicaid financing changes that could shift fiscal risk to states such as the HAO option has been limited to date and is not expected to increase, given that the pandemic and economic downturn has resulted in increased Medicaid enrollment, adverse state budgetary impacts, and uncertainty about the future. Despite the slowdown in overall state waiver submission activity, in the weeks ahead of the November 2020 presidential election CMS approved new waivers in expansion (Nebraska) and non-expansion states (Georgia) with work requirements, eligibility, and benefit restrictions.

The following sections highlight major policy guidance, waiver decisions, and litigation challenges across several waiver categories. (For the most up-to-date list of pending and approved COVID-19 emergency waivers, see the KFF Medicaid emergency authorities tracker; for the most up-to-date list of other Section 1115 waivers, see the KFF Medicaid waiver tracker.)

COVID-19 Public Health Emergency

In response to the COVID-19 PHE, on March 22, 2020 CMS released a new Medicaid Section 1115 demonstration opportunity and application template intended to enable states to protect the health, safety, and welfare of individuals and providers affected by COVID-19. This template allows states to extend home and community-based services (HCBS) flexibilities available under Section 1915 (c) HCBS Appendix K to beneficiaries receiving long-term services and supports (LTSS) under state plan authorities. To further expedite the provision of services during the PHE, the template also allows states to accept applicant self-attestation of income and assets for the purpose of determining eligibility for individuals seeking LTSS. There are requirements for monitoring and evaluation, but CMS is not requiring states to submit calculations showing that the waiver would be budget neutral to the federal government like traditional waivers due to the emergency nature of the pandemic. These demonstrations can be retroactive to March 1, 2020 and will expire no later than 60 days after the end of the PHE (which is currently set to end on January 21, 2021).

To date, CMS has approved emergency COVID-19 Section 1115 waivers for eight states, although state websites indicate that many more states have submitted requests for these waivers.¹⁴  Most approved provisions relate to LTSS and follow the “pre-printed” waiver and expenditure authorities outlined in the CMS template. The most commonly-approved provision is the ability to make retainer payments to certain habilitation and personal care providers to maintain capacity during the public health emergency (five states are approved for this authority). Historically, states have used Section 1115 authority to expand coverage and/or provide uncompensated care to address the direct impact of natural disasters and public health emergencies (like New York City after 9/11, Hurricane Katrina, and Flint Michigan) on state Medicaid and Children’s Health Insurance Program (CHIP) programs; however, CMS has not approved similar requests in emergency COVID-19 waivers. For example, CMS did not approve Washington’s request to establish a temporary eligibility group for individuals with incomes at or below 200% FPL.¹⁵  CMS also noted in its April 2020 approval of Washington’s request that it was continuing to review the state’s request to create a Disaster Relief Fund to cover costs associated with the treatment of uninsured individuals with COVID-19, housing, nutrition supports, and other COVID related expenditures, but no additional approvals have been granted to date.

Work Requirements / Community Engagement

In January 2018, CMS issued guidance for Section 1115 waiver proposals that impose work and reporting requirements (referred to as community engagement) as a condition of Medicaid eligibility. This action reversed the positions of previous Democratic and Republican administrations, which had not approved such waiver requests on the basis that they would not further the Medicaid program’s purposes of promoting health coverage and access. The January 2018 guidance argues that such provisions would promote program objectives by helping states “in their efforts to improve Medicaid enrollee health and well-being through incentivizing work and community engagement.” In its HAO guidance, CMS also included work requirements as a policy provision that it would approve in those waivers.

As of October 2020, eight states have approved waivers with work requirements, seven have such waiver requests pending, and four other states (AR, KY, MI, and NH) have had work requirement waivers set aside by the courts; however, no states are currently implementing work requirements. After taking office in December 2019, Kentucky’s Governor rescinded the state’s waiver that the district court had set aside, and the appeals court case has been dismissed. States with approved waivers not set aside by courts have not yet implemented them (GA, NE, OH, SC, and WI) or have put implementation on hold due to pending litigation (AZ¹⁶  and IN¹⁷ ) or due to the coronavirus pandemic (UT¹⁸ ). In February 2020, a federal appeals court upheld the district court decision that set aside the work requirement waiver in Arkansas; in May 2020, the appeals court decided that the reasoning of its Arkansas decision required a similar outcome in a case challenging New Hampshire’s waiver approval. The court cited the Secretary’s failure to consider the waiver’s impact on Medicaid’s primary objective of providing affordable health coverage. These appeals court decisions—for which the administration is seeking Supreme Court review—could have implications for pending legal challenges to work requirements in other states. While these decisions did not directly invalidate work requirement approvals in other states, courts hearing similar cases are likely to consider these decisions when deciding challenges to other waiver approvals. To date, Arkansas is the only state to have implemented a waiver that conditioned Medicaid eligibility on meeting a work and reporting requirement, which resulted in over 18,000 people losing coverage from its implementation in summer 2018 by the end of that year before the waiver approval was set aside by the court.

Despite legal challenges, CMS has continued to approve work requirement waivers, including requirements that apply to low-income parents and others in non-expansion states (GA and SC) and a waiver that conditions access to certain benefits for expansion enrollees on meeting a work requirement (NE). CMS approved the first work requirement waiver for low-income parents and caretaker relatives in a non-expansion state, South Carolina, in December 2019. The waiver will apply primarily to low-income parents and is the first work requirement waiver to mandate that all new applicants comply with work requirements at the time of application to be enrolled in coverage.¹⁹  In October 2020, CMS approved a similar work requirement waiver for Georgia, another non-expansion state. Georgia’s waiver will apply to low-income parents and childless adults not otherwise eligible for Medicaid and, like South Carolina’s, conditions initial and continued enrollment on work requirement compliance.²⁰  Also in October 2020, CMS approved Nebraska’s request to require non-exempt expansion beneficiaries to meet work and other requirements in order to access certain state plan benefits (over-the-counter medication, vision, and dental coverage).²¹ 

Eligibility and Benefit Changes

States are implementing a range of demonstrations that include eligibility restrictions, some of which were approved for the first time under the Trump administration. Under the Obama administration, CMS approved certain eligibility- and enrollment-related waiver provisions as part of ACA Medicaid expansion waivers (e.g., charging premiums beyond what is allowed under federal law, eliminating retroactive eligibility for certain populations, making coverage effective on the date of the first premium payment instead of the date of application, and locking out certain expansion adults who are dis-enrolled for unpaid premiums). Under the Trump administration, CMS has allowed states to apply these previously approved provisions as well as new eligibility and enrollment restrictions to both expansion and traditional Medicaid populations (e.g., low-income parent/caretakers) (see KFF waiver tracker for details).

Prior to the pandemic, CMS approved the following eligibility and enrollment restrictions for the first time under the Trump administration:²² 

• Coverage lock-outs for failure to timely renew coverage or report changes affecting eligibility and for non-payment of premiums for non-expansion populations.
• Authority to charge premiums up to 5% of family income and to impose a premium surcharge for tobacco users.
• Elimination of retroactive coverage for nearly all Medicaid enrollees, including seniors and people with disabilities.²³ 
• Eligibility conditioned on the completion of a health risk assessment (HRA).

The current administration has also approved waivers that affect enrollees’ access to benefits and free choice of family planning providers. While the Obama administration had approved some benefit restriction provisions as part of ACA expansion waivers, the Trump administration has approved them for both expansion and non-expansion populations. Approved benefit restrictions under the current administration include elimination of non-emergency medical transportation (NEMT) and implementation of healthy behavior incentives (tied to premium or cost-sharing reductions). Nebraska has also received approval to require beneficiaries to meet healthy behavior, “personal responsibility,” and work requirements in order to access certain benefits. In January 2020, CMS approved Texas’ request to restrict enrollees’ free choice of provider for family planning services, a request that CMS had denied under the Obama administration. A few other states have pending waivers that would restrict enrollees’ free choice of provider for family planning services.

The Trump administration has not approved several other eligibility and benefit waiver provisions. CMS has declined to approve authority to impose lifetime limits on Medicaid benefits for eligible beneficiaries (KS);²⁴  condition coverage on drug screening, and if indicated, testing and treatment (WI); and to require stricter verification of U.S. citizenship and state residency than already required under federal law (NH).

As of October 2020, CMS is also considering requests to expand coverage for pregnant and postpartum women. These include requests that would maintain higher eligibility levels (above 138% FPL) for postpartum women in expansion states. Pending waivers include requests to expand eligibility to six (NJ) or twelve months (IL) postpartum, compared to the 60 days available under current law. Additional states have reported plans to apply for waivers that will expand postpartum coverage (GA and IN). In September 2020, the United States House of Representatives passed a bill that would allow states to extend postpartum Medicaid coverage to 12 months via a state plan option rather than through the waiver process.

Financing Changes

Some states have proposed waivers to make significant Medicaid financing changes, though none has been approved to date. These waivers include Utah’s request for a per capita cap funding structure — which remains formally pending at CMS, although the state has moved forward with full expansion — and Tennessee’s request for a modified block grant, which is pending at CMS. Several states²⁵  (AR, GA, MA, UT) have submitted waiver requests seeking to limit ACA expansion eligibility by setting the income limit at 100% instead of 138% FPL or capping enrollment while still receiving the enhanced ACA federal matching rate, though none have been approved.²⁶  Both the Obama²⁷  and Trump²⁸  administrations have issued policy guidance (although with different rationales) indicating that states cannot receive the enhanced federal matching rate unless they cover all newly eligible adults up to 138% FPL. CMS reiterated this policy in its HAO guidance but invited other limits on coverage (some of which have not been approved under other waivers to date) that would be permissible in an HAO demonstration under the regular matching rate (discussed below).

CMS published guidance on January 30, 2020, that introduced the option for states to pursue “Healthy Adult Opportunity” (HAO) demonstrations. The guidance would allow states “extensive flexibility” to use Medicaid funds to cover ACA expansion adults and nonelderly adults covered at state option who do not qualify on the basis of disability, without being bound by many federal standards related to Medicaid eligibility, benefits, delivery systems, and program oversight. In exchange, states would agree to an annual limit on federal financing in the form of a per capita or aggregate cap. States that opt for the aggregate cap and meet performance standards could access a portion of federal savings if they keep actual spending under the cap. In May 2020, Oklahoma submitted an 1115 request pursuing an HAO demonstration with a work requirement and other eligibility and benefit restrictions that would apply to a new expansion adult population; however, the state withdrew this application in August 2020 following a successful ballot measure adopting a traditional Medicaid expansion in June 2020. No other state has indicated pursuit of an HAO demonstration to date, and any such waivers are likely to face litigation if approved. State interest in pursuing Medicaid financing changes that could shift fiscal risk to states such as the HAO option has been limited to date and is not expected to increase, given that the pandemic and economic downturn has resulted in increased Medicaid enrollment, adverse state budgetary impacts, and uncertainty about the future.

The HAO demonstrations would allow states to not apply some provisions of federal law, consistent with earlier CMS approvals, as well as other provisions that CMS has not previously approved. The “menu” of provisions that CMS offers under HAO demonstrations includes those not approved by the current administration in previous state Section 1115 waiver requests (e.g., asset tests for populations whose financial eligibility is based on modified adjusted gross income, more frequent eligibility redeterminations, elimination of hospital presumptive eligibility, and closed prescription drug formularies).²⁹  In June 2018, CMS rejected Massachusetts’ request to adopt a closed prescription drug formulary.³⁰ 

Behavioral Health

States are using Section 1115 waivers to authorize Medicaid payment for substance use disorder (SUD), and, more recently, mental health treatment services, in “institutions for mental disease” (IMDs).³¹  While most recent activity involves states seeking IMD waivers, a few states are pursuing community-based behavioral health benefit expansions, targeted behavioral health eligibility expansions, or behavioral health delivery system reform. On November 1, 2017, CMS issued a state Medicaid director letter that revised guidance that the Obama administration issued in July 2015.³²  The revised guidance continues to allow CMS to approve IMD payment waivers for SUD³³  but makes other changes; for example, waivers under the 2015 guidance were contingent on states covering community-based SUD treatment services at the time of approval, while the 2017 guidance allows states up to two years after waiver approval to cover “critical levels of care.” As of October 2020, CMS has approved 28 IMD SUD waivers. Some of these waivers include community-based benefit expansions in conjunction with an IMD waiver.³⁴ 

On November 13, 2018, CMS issued guidance inviting states to apply for Section 1115 waivers authorizing federal Medicaid payment for mental health services provided to people in IMDs. These includes services for adults with a serious mental illness (SMI) or for children with a serious emotional disturbance (SED). This guidance reverses prior CMS policy not to use Section 1115 waiver authority to allow Medicaid payments for IMD services for non-elderly adults with a primary mental health diagnosis and could have implications for states’ community integration obligations under the Americans with Disabilities Act and the Supreme Court’s 1999 Olmstead decision.³⁵  In December 2019, CMS approved the first waiver (DC) to cover treatment of SMI and/or SED in an IMD under the November 2018 guidance. CMS also reapproved Vermont’s existing IMD mental health waiver in December 2019 under the new guidance and approved similar waivers for Indiana in January 2020 and for Idaho in April 2020. CMS has noted that states may participate in the SUD demonstration and the SMI/SED demonstration at the same time.

Delivery System Reform

In a shift from some of the Obama administration’s Section 1115 waiver initiatives, demonstrations designed to promote payment and delivery system reforms have not been a key priority of the Trump administration. For example, the Obama administration approved a number of Delivery System Reform Incentive Payment (DSRIP) waivers, which provided states with significant federal funding to support hospitals and other providers in changing how they provide care to Medicaid beneficiaries.³⁶  Although DSRIP funding was never intended to be permanent, the current administration has reduced funding for DSRIP renewals³⁷  and not approved new demonstrations.³⁸  Several states have used DSRIP demonstrations to address social determinants of health, although these demonstrations have not included federal funding to pay directly for non-medical services that target such needs. One exception is North Carolina’s “Healthy Opportunity Pilots” Section 1115 waiver, which CMS approved in October 2018. The demonstration authorizes $650 million in Medicaid funding over five years for a new pilot program to cover evidence-based non-medical services that address specific social needs (e.g., housing instability, food insecurity) linked to health/health outcomes. These services would be available for certain high-risk enrollees who meet physical or behavioral health and social risk factor criteria. Interested states are watching North Carolina’s implementation; however, the state has temporarily suspended these pilots due to the COVID-19 pandemic and CMS has not released formal guidance in this area or signaled that it will approve similar waivers. Finally, while the post-ACA Obama administration³⁹  was phasing down uncompensated care/low income pool funding because states could now obtain federal financing for covering expansion adults (which would lower state uncompensated care burdens), the Trump administration has shown willingness to continue such waivers. Although CMS did not approve requests for uncompensated care pool increases in New Mexico and Kansas in 2019,⁴⁰  the agency approved increases in such funding in two non-expansion states, Texas⁴¹  and Florida,^42 ,43  in December 2017.

What to Watch in Waivers Looking Forward

The future of the COVID-19 pandemic and associated economic downturn may impact the waiver landscape. Waiver submission activity slowed in the face of the pandemic as states faced increased Medicaid enrollment, adverse economic and state budgetary impacts, and uncertainty about the future. Further, the COVID-19 PHE has both limited state options to enforce new eligibility and enrollment restrictions (as states receive enhanced federal matching funds and meet MOE conditions) as well as resulted in states not enforcing existing restrictions in order to facilitate access to coverage and services during the pandemic. The future course of the pandemic as well as the duration of the PHE declaration and economic downturn may affect state decisions to pursue future Section 1115 waivers. Although CMS released a new emergency COVID-19 Section 1115 demonstration in March 2020, only eight states have received approvals to address the pandemic using these waivers, with most approvals to date limited to provisions in the template. These waivers will expire 60 days after the PHE’s current end date of January 21, 2021 unless HHS renews the PHE.

Under either a potential Biden or Trump administration, the Supreme Court’s decision on the future of the ACA will have far-reaching consequences that may impact Section 1115 waivers. Medicaid expansion could be eliminated if the Court overturns the entire ACA, which could impact state adoptions of Medicaid expansion with modifications through Section 1115 waivers. In this circumstance, both authority under federal law to cover expansion adults as well as the enhanced federal funding for this coverage would cease, requiring states to find savings elsewhere to finance this coverage. Many approved and pending waiver provisions modify Medicaid program requirements for expansion populations, such as imposing work requirements, charging premiums, and restricting benefits. These waivers could also be affected by the outcome of the Court’s ACA decision.

Looking forward, the future landscape of Section 1115 waivers also depends on the outcome of the November 2020 presidential election. Waivers generally reflect priorities identified not only by states but also by CMS (a federal agency within HHS administered by presidential appointees) and thus often reflect changing priorities from one administration to another.

• Under a second Trump administration, current priorities would presumably continue and the future of work requirement and financing changes would likely lie with the courts. The Trump administration is seeking Supreme Court review of two DC Circuit Court of Appeals decisions that found the Secretary’s work requirement waiver approvals in Arkansas and New Hampshire were unlawful. If Trump is reelected in November 2020, the future of Medicaid work requirements—as well as other administration priorities that could face legal challenges, such as HAO capped financing proposals—likely lies with the courts. After the expiration of the COVID-19 PHE and associated MOE requirements, a second Trump administration may also re-focus on additional waivers restricting eligibility, enrollment, and/or benefits.
• If former Vice President Joe Biden is elected, his administration would have the authority to rescind existing guidance and/or issue new guidance. Former Vice President Joe Biden is supportive of the ACA’s Medicaid expansion and has proposed using a federal public option to cover low-income Americans in states that have not expanded. While Biden’s formal campaign proposals are silent on Medicaid waivers, he has critiqued work requirements and pledged not to “undermine Medicaid.”⁴⁴  A potential Biden administration could potentially rescind work requirement and other guidance and/or issue new guidance. CMS also generally reserves the right to withdraw waiver and/or expenditure authorities at any time and could do so under a potential Biden administration, in which case states would have the opportunity to request a hearing to challenge CMS’s determination. Additionally, as Section 1115 demonstrations expire, a potential Biden administration would have opportunities to decline to renew or to renegotiate those waivers. Biden’s campaign has indicated that, if elected, his administration would provide federal support for state Medicaid programs during the COVID-19 economic crisis, which could also include approvals of more expansive emergency waivers to aid state responses to the pandemic during the PHE.

Appendix A

Appendix B

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. ↩︎
2. 42 U.S.C. § 1315. ↩︎
3. Some states have multiple waivers, and many waivers are comprehensive and may fall into a few different areas. ↩︎
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. ↩︎
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. ↩︎
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/. ↩︎
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). ↩︎
8. However, CMS relieved Montana from the requirement to evaluate its expansion waiver based on its participation in a cross-state federal evaluation. ↩︎
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/. ↩︎
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. ↩︎
11. “About Section 1115 Demonstrations,” CMS, last accessed October 23, 2020, https://www.medicaid.gov/medicaid/section-1115-demo/about-1115/index.html. ↩︎
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.) ↩︎
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). ↩︎
14. State applications for emergency COVID-19 Section 1115 waivers may have included requests for provisions that CMS approved under other emergency authorities. ↩︎
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. ↩︎
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. ↩︎
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. ↩︎
18. Utah Department of Health, “Community Engagement Requirement Suspended,” https://medicaid.utah.gov/expansion/community-engagement-requirement-suspended/ ↩︎
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. ↩︎
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. ↩︎
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. ↩︎
22. Waiver provisions in some states may be approved but not implemented. ↩︎
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. ↩︎
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. ↩︎
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. ↩︎
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. ↩︎
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. ↩︎
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. ↩︎
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. ↩︎
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. ↩︎
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. ↩︎
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. ↩︎
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). ↩︎
34. States also can offer a wide array of community-based behavioral health benefits under state plan authority. ↩︎
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://modern.kff.org/medicaid/report/state-options-for-medicaid-coverage-of-inpatient-behavioral-health-services/. ↩︎
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. ↩︎
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. ↩︎
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). ↩︎
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. ↩︎
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. ↩︎
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. ↩︎
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. ↩︎
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. ↩︎
44. See Former Vice President’s Joe Biden’s remarks at Cherry Health in Michigan, March 2020: https://www.youtube.com/watch?v=tO1CBDxRMus ↩︎

Over the last decade, Medicare Advantage, the private plan alternative to traditional Medicare, has taken on a larger role in the Medicare program. In 2020, more than 24 million Medicare beneficiaries are enrolled in a Medicare Advantage plan. This brief provides an overview of the Medicare Advantage plans that are available for 2021 and key trends over time.

Plan Offerings in 2021

Number of Plans

Number of Plans Available to Beneficiaries. For 2021, the average Medicare beneficiary has access to 33 Medicare Advantage plans, the largest number of options available in the last decade (Figure 1).

Among the 33 Medicare Advantage plans generally available for individual enrollment to the average Medicare beneficiary, 27 of the plans include prescription drug coverage (MA-PDs). These numbers exclude employer or union-sponsored group plans, Special Needs Plans (SNPs) and PACE plans, which are only available to select populations.

Total Number of Plans. In total, 3,550 Medicare Advantage plans are available nationwide for individual enrollment in 2021 – a 13 percent increase (402 more plans) from 2020 and the largest number of plans ever available (Figure 2; Appendix Table 1). The vast majority (89 percent) of all Medicare Advantage plans offered include prescription drug coverage in 2021.

.As in prior years, HMOs continue to account for about two-thirds (62%) of all plans offered in 2021. The availability of local PPOs has increased rapidly over recent years. In 2021, one-third of plans offered are local PPOs, compared to a quarter in 2018. Between 2020 and 2021, the number of regional PPOs has remained constant, while the number of private fee-for-service plans has continued to decline.

The growth in number of plans varies across states and counties, with the preponderance of the growth occurring in Florida and California (41 more and 30 more plans, respectively; data not shown). Virginia has 6 fewer plans available for 2021 than in 2020, while South Carolina has 3 fewer plans, and Maryland and Nebraska each have one fewer plan available in 2021 than in 2020.

While many employers and unions also offer Medicare Advantage plans to their retirees, no information about these 2021 plan offerings is made available by CMS to the public during the Medicare open enrollment period because these plans are not available to the general Medicare population.

One notable change for 2021 is that people with end-stage renal disease (ESRD) are eligible to enroll in Medicare Advantage plans. Prior to this change, people with ESRD were not able to enroll in most Medicare Advantage plans, subject to limited exceptions, such as C-SNPS for people with ESRD.

Special Needs Plans (SNPs). More SNPs are available for 2021 than in any year since they were authorized, increasing from 855 plans in 2020 to 975 plans in 2021, a 14 percent increase (Figure 3).

.The rise in SNPs for people who require an institutional-level of care (I-SNPs) has been particularly notable, more than doubling from 83 plans in 2017 to 174 plans in 2021. I-SNPs may be attractive to insurers because they tend to have much lower marketing costs than other plan types since they are often the only available option for people to receive their Medicare benefits in certain retirement communities and nursing homes. The number of SNPs for people dually eligible for Medicare and Medicaid (D-SNPs) has also increased sharply over the past five years, rising from 373 dual SNPs in 2017 to 598 dual SNPs in 2021, a 60% increase, suggesting insurers’ continue to be interested in managing the care of this high-need population.

The number of SNPs offered for people with chronic conditions (C-SNPs) is also increasing in 2021, most of which focus on people with diabetes, heart disease, or lung conditions, as has been the case since the inception of C-SNPs. For 2021, three firms are offering C-SNPs for people with dementia (the same as 2020), two firms are offering a C-SNP for people with mental health conditions (up one from 2020), three firms are offering C-SNPs for people with end-stage renal disease (one fewer than 2020) and two firms are offering C-SNPs for people with HIV/AIDS (similar to 2020).

Variation in the Number of Plans, by Geographic Area. On average, beneficiaries in metropolitan areas can choose from about twice as many Medicare Advantage plans as beneficiaries in non-metropolitan areas (36 plans versus 20 plans, respectively).

In 11 percent of counties (accounting for 41% of beneficiaries), beneficiaries can choose from more than 35 plans in 2021, including eleven counties in Ohio and five counties in Pennsylvania where more than 60 Medicare Advantage plans are available (Figure 4). In contrast, in 4 percent of counties (accounting for 1% of beneficiaries), beneficiaries can choose from two or fewer Medicare Advantage plans. The number of counties with no Medicare Advantage plans for 2021 is 82, similar to 2020. As in prior years, there are no Medicare Advantage plans offered in Alaska. Additionally, no Medicare Advantage plans are available in territories other than Puerto Rico.

.Access to Medicare Advantage Plans, by Plan Type

As in recent years, virtually all Medicare beneficiaries (99%) have access to a Medicare Advantage plan as an alternative to traditional Medicare, including almost all beneficiaries in metropolitan areas (99.9%) and the vast majority of beneficiaries in non-metropolitan areas (97.7%). In non-metropolitan counties, a smaller share of beneficiaries have access to HMOs (87% in non-metropolitan versus 99% in metropolitan counties) or local PPOs (89% in non-metropolitan versus 96% in metropolitan counties), and a slightly larger share of beneficiaries have access to regional PPOs (77% in non-metropolitan counties versus 72% in metropolitan counties).   

Number of Firms

The average Medicare beneficiary is able to choose from plans offered by 8 firms in 2021, one more than in 2020 (Figure 5). Despite most beneficiaries having access to plans operated by several different firms, enrollment is concentrated in plans operated by UnitedHealthcare, Humana, and Blue Cross Blue Shield affiliates.

More than one-quarter of beneficiaries (27%) are able to choose from plans offered by 10 or more firms. Fifteen or more firms are offering Medicare Advantage plans in three counties: Orange County, California and Summit and Medina Counties in Ohio. In contrast, in 109 counties, most of which are rural counties with relatively few Medicare beneficiaries (1% of total), only one firm will offer Medicare Advantage plans in 2021. Over the past several years, the number of counties with a single firm offering Medicare Advantage plans has fallen substantially. As recently as 2019, there was a single firm offering plans in nearly 200 counties.

UnitedHealthcare and Humana, the two firms with the most Medicare Advantage enrollees in 2020, have large footprints across the country, offering plans in most counties. Humana is offering plans in 84 percent of counties and UnitedHealthcare is offering plans in 66 percent of counties in 2021 (Figure 6). More than 8 in 10 (87%) Medicare beneficiaries have access to at least one Humana plan and 86 percent have access to at least one UnitedHealthcare plans.

.Most major Medicare Advantage firms have also expanded the number of counties where they are offering plans. UnitedHealthcare is offering plans in 2,117 counties in 2021, an increase of 245 from 2021, while Humana is offering plans in 2,703 counties in 2021, an increase of 33 from 2020. Centene is offering plans in 1,129 counties in 2021, an increase of 261 plans from 2020; Blue Cross Blue Shield Affiliates are offering plans in 1,181 counties, an increase of 152 plans; CVS Health is offering plans in 1,759 counties, an increase of 119 plans; and Cigna is offering plans in 369 counties, an increase of 67 plans. Kaiser Permanente had the smallest growth and is offering plans in 109 counties, an increase of 4 plans.

New Market Entrants and Exits

Medicare Advantage continues to be an attractive market for insurers, with 14 firms entering the market for the first time in 2021, collectively accounting for about 6 percent of the growth in the number of plans available for general enrollment and about 10 percent of the growth in SNPs (Appendix Table 2). Nine new entrants are offering HMOs available for individual enrollment. Five of the new entrants are offering SNPs; three firms are offering D-SNPs for people dually eligible for Medicaid, three firms are offering C-SNPs for people with select chronic conditions, and one firm is offering an I-SNPs Four of the new firm entrants are offering plans in California, two are offering plans in Indiana, and the remainder are offering plans in at least one of ten other states (Colorado, Georgia, Illinois, Mississippi, Missouri, Ohio, Texas, Utah, and Wisconsin).

Six firms that previously participated in the Medicare Advantage market are not offering plans in 2021. Two of the firms (ApexHealth, Inc. and Clarion Health) offered plans for the first time in 2020, but did not appear to enroll any participants. The other four firms had very low enrollment in 2020. Three of the six exiting firms offered plans in New York.

Premiums

The vast majority of Medicare Advantage plans for individual enrollment (89%) will include prescription drug coverage (MA-PDs), and 54 percent of these plans will charge no premium, other than the Part B premium, similar to 2020. More than nine out of ten beneficiaries (96%) have access to a MA-PD with no monthly premium in 2021. However, in Wyoming, beneficiaries do not have access to a zero-premium MA-PD, and in Idaho, less than half of beneficiaries have access to a zero-premium MA-PD.

In 2020, 60 percent of enrollees in MA-PD plans pay no premium other than the Medicare Part B premium of $144.60 per month. Based on enrollment in March 2020, nearly one in five enrollees (18%) pay at least $50 a month, and 6 percent pay $100 or more. CMS announced that the average monthly plan premium among all Medicare Advantage enrollees in 2021, including those who pay no premium for their Medicare Advantage plan, is expected to decrease 11 percent from 2020 to $21 a month. CMS does not disclose the methods or assumptions used in deriving their calculations, but since most Medicare Advantage enrollees pay no additional premium, the average they report is heavily influenced by zero-premium plans, and does not reflect the average premium paid by those who are in plans with an additional premium.

Extra Benefits

Medicare Advantage plans may provide extra benefits that are not available in traditional Medicare, are considered “primarily health related,” and can use rebate dollars (including bonus payments) to help cover the cost of these extra benefits. Beginning in 2019, CMS expanded the definition of “primarily health related” to allow Medicare Advantage plans to offer additional supplemental benefits. Medicare Advantage plans may also restrict the availability of these extra benefits to certain subgroups of beneficiaries, such as those with diabetes or congestive heart failure, making different benefits available to different enrollees.

Beginning in 2020, Medicare Advantage plans have also been able to offer extra benefits that are not primarily health related for chronically ill beneficiaries, known as Special Supplemental Benefits for the Chronically Ill (SSBCI). Information on the availability of SSBCI for 2021 has not yet been published by CMS, but may include services such as pest control, food and produce (beyond a limited basis), and non-medical transportation. Since plans are permitted to offer these benefits non-uniformly to enrollees, it will be important to examine how these benefits are distributed across subgroups of enrollees.

Availability of Extra Benefits in Plans for General Enrollment. Historically, the most offered extra benefits were fitness, dental, vision, and hearing; nearly two-thirds of plans (68%) provide all four of these benefits for 2021. Though these benefits are widely available, the scope of specific services varies. For example, a dental benefit may include cleanings only or more comprehensive coverage. As of 2020, Medicare Advantage plans have also been allowed to offer more telehealth benefits than traditional Medicare (though Medicare has temporarily expanded these benefits during the pandemic). The vast majority (98%) of Medicare Advantage plans are offering telehealth in 2021 (up from 91% in 2020) (Figure 7).

Other extra benefits that are frequently offered for 2021 include over the counter items (75%), meal benefits, such as a cooking class, nutrition education, or meal delivery (55%), and transportation benefits (36%).

Less than 10 percent of plans provide bathroom safety devices (6%) or in-home support (6%).

Availability of Extra Benefits in Special Needs Plans. SNPs are designed to serve a disproportionately high-need population, and a somewhat larger percentage of SNPs than plans for other Medicare beneficiaries provide their enrollees with over the counter items (91%), transportation benefits (85%) and meal benefits (63%). Similar to plans available for general enrollment, a relatively small share of SNPs provide bathroom safety devices (11%) or in-home support (18%).

Access to Extra Benefits. Virtually all Medicare beneficiaries live in a county where at least one Medicare Advantage plan available for general enrollment has some extra benefits not covered by traditional Medicare, with 98% having access to some dental, fitness, vision, and hearing benefits for 2021. The vast majority of beneficiaries also have access to telehealth benefits (99%), over the counter items (99%), transportation assistance (95%) and a meal benefit (98%), but far fewer have access to bathroom safety (55%) or in-home support (62%).

Discussion

More Medicare Advantage plans are being offered for 2021 than in any other year. Fourteen insurers are entering the Medicare Advantage market for the first time, and six insurers are exiting the market, suggesting thatMedicare Advantage remains an attractive, profitable market for insurers. As in prior years, some (mostly non-metropolitan) counties are less attractive to insurers, with fewer firms and plans available, though the number of areas where this is the case has declined over time. Overall, more than 99 percent of beneficiaries will have access to one or more Medicare Advantage plans in 2021, similar to prior years. With more firms offering SNPs and the number of SNPs rapidly growing, there may be greater focus on how well high-need, vulnerable beneficiaries are being served by Medicare Advantage plans, including SNPs as well as plans for general enrollment. As Medicare Advantage enrollment continues to grow, insurers seem to be responding by offering more plans and choices to the people on Medicare.

During the Medicare open enrollment period from October 15 to December 7 each year, beneficiaries can enroll in a plan that provides Part D drug coverage, either a stand-alone prescription drug plan (PDP) as a supplement to traditional Medicare, or a Medicare Advantage prescription drug plan (MA-PD), which covers all Medicare benefits, including drugs. Among the 46 million Part D enrollees in 2020, 20.2 million (44%) are in PDPs and 19.3 million (41%) are in MA-PDs (excluding the 7.0 million (15%) in employer-only group PDPs and MA-PDs). This issue brief provides an overview of Medicare Part D drug plans that will be available in 2021 and key trends over time.

Part D Plan Availability

The Average Medicare Beneficiary Has a Choice of Nearly 60 Medicare Plans with Part D Drug Coverage in 2021, Including 30 Medicare Stand-alone Drug Plans and 27 Medicare Advantage Drug Plans

A larger number of Part D plans will be offered in 2021 than in recent years. The average Medicare beneficiary will have a choice of 30 stand-alone PDPs in 2021, two more PDP options than in 2020, and eight more than in 2017, a 36% increase (Figure 1). Although the number of PDP options in 2021 is half of what it was at the peak in 2007 (when there were 56 PDP options, on average), this is the fourth year in a row with an increase in the average number of stand-alone drug plan options.

In 2021, beneficiaries will also have access to 27 MA-PDs, on average, a 71% increase in MA-PD options since 2017 (excluding Medicare Advantage plans that do not offer the drug benefit and plans not available to all beneficiaries; overall, an average of 33 Medicare Advantage plan options will be available in 2021).

Based on September 2020 enrollment, 8 out of 10 PDP enrollees (80%) in 2021 are projected to be in PDPs operated by just four firms: UnitedHealth, Centene (which acquired WellCare in 2020), Humana, and CVS Health (based on PDP enrollment as of September 2020). All four firms offer PDPs in all 34 PDP regions in 2021.

A Total of 996 Medicare Part D Stand-Alone Prescription Drug Plans Will Be Offered in 2021, a 5% Increase From 2020 and a 34% Increase Since 2017

A total of 996 PDPs will be offered in the 34 PDP regions in 2021 (plus another 11 PDPs in the territories), an increase of 48 PDPs (5%) over 2020, and 250 more PDPs (a 34% increase) since 2017 (Figure 2). This increase is primarily due to the Trump Administration’s elimination of the “meaningful difference” requirement for enhanced benefit PDPs offered by the same organization in the same region. Eliminating this requirement means that PDP sponsors no longer have to demonstrate that their enhanced PDPs offered in the same region are meaningfully different in terms of enrollee out-of-pocket costs. In 2021, 62% of PDPs (618 plans) will offer enhanced Part D benefits—a 60% increase in the availability of enhanced-benefit PDPs since 2017, when just over half of PDPs (387 plans) offered enhanced benefits.

The number of PDPs per region in 2021 will range from 25 PDPs in Alaska to 35 PDPs in Texas and will be the same or higher in 32 of the 34 PDP regions compared to 2020 (see map, Table 1).

 

Part D Premiums

The Estimated Average Monthly Premium for Medicare PDPs Is Projected to Increase by 9% to $41 in 2021, Based on Current Enrollment

The estimated national average monthly PDP premium for 2021 is projected to increase by 9% to $41, from $38 in 2020, weighted by September 2020 enrollment (Figure 3). It is likely that the actual average weighted premium for 2021, after taking into account enrollment choices by new enrollees and plan changes by current enrollees, will be somewhat lower than the estimated average. CMS reported that the average premium for basic Part D coverage offered by PDPs and MA-PDs will be an estimated $30 in 2021. Our premium estimate is higher because it is based on PDPs only (excluding MA-PDs) and includes PDPs offering both basic and enhanced coverage (enhanced plans, which account for 62% of all PDPs in 2021, have higher premiums than basic plans, on average).

Average Monthly Premiums for the 21 National Part D Stand-alone PDPs Are Projected to Range from $7 to $89 in 2021, with Higher Average Premiums for Enhanced Benefits and Zero-Deductible PDPs

PDP premiums will vary widely across plans in 2021, as in previous years (Figure 4, Table 2). Among the 21 PDPs available nationwide, average premiums will range from a low of $7 per month for SilverScript SmartRx to a high of $89 per month for AARP MedicareRx Preferred.

Changes to premiums from 2020 to 2021, averaged across regions and weighted by 2020 enrollment, also vary widely across PDPs, as do the absolute amounts of monthly premiums for 2021.

• The 1.9 million non-LIS enrollees in the largest PDP, CVS Health’s SilverScript Choice (which had a total of 3.9 million enrollees in 2020, including those receiving low-income subsidies) will face a modest $1 (2%) decrease in their average monthly premium, from $29 in 2020 to $28 in 2021.

• In contrast, the 1.8 million non-LIS enrollees in the second largest PDP, AARP MedicareRx Preferred, will face a $10 (12%) increase in their average monthly premium between 2020 and 2021, from $79 to $89. This is the highest monthly premium among the national PDPs in 2021.
• The 1.3 million non-LIS enrollees in the fourth largest PDP, Humana Premier Rx, will see a $7 (13%) increase in their monthly premium, from $58 in 2020 to $65 in 2021.

Most Part D stand-alone drug plans in 2021 (62% of PDPs) will offer enhanced benefits for a higher monthly premium. Enhanced benefits can include a lower (or no) deductible, reduced cost sharing, or a higher initial coverage limit than under the standard benefit design. The average premium in 2021 for enhanced benefit PDPs is $51, which is 55% higher than the monthly premium for PDPs offering the basic benefit ($33) (weighted by September 2020 enrollment).

In 2021, a large majority of PDPs (86%) will charge a deductible, with most PDPs (67%) charging the standard amount of $445 in 2021. Across all PDPs, the average deductible in 2021 will be $345 (weighted by September 2020 enrollment). The average monthly premium in 2021 for PDPs that charge no deductible is $88, nearly three times the monthly premium for PDPs that charge the standard deductible ($34) or a partial deductible ($31) (weighted by September 2020 enrollment).

Nearly 8 in 10 Part D Stand-alone Drug Plan Enrollees Without Low-income Subsidies Will Pay Higher Premiums in 2021 If They Stay in Their Current Plan

Most (78%, or 10 million) of the 13.4 million Part D PDP enrollees who are responsible for paying the entire premium (which excludes Low-Income Subsidy (LIS) recipients) will see their monthly premium increase in 2021 if they stay in their same plan, while 2.8 million (21%) will see a premium reduction if they stay in their same plan (Figure 5).

Nearly 2 million non-LIS enrollees (13%) will see a premium increase of $10 or more per month, while significantly fewer (0.2 million non-LIS enrollees, or 1%) will see a premium reduction of the same magnitude. One-third (34%) of non-LIS enrollees (4.6 million) are projected to pay monthly premiums of at least $60 if they stay in their current plans, and more than 230,000 (2% of non-LIS enrollees) are projected to pay monthly premiums of at least $100.

The Average Monthly Part D Premium in 2021 for the Subset of Enhanced Stand-alone Drug Plans Covering Insulin at a $35 Monthly Copay Is Substantially Higher Than Premiums for Other PDPs

New for 2021, beneficiaries in each state will have the option to enroll in a Part D plan participating in the Trump Administration’s new Innovation Center model in which enhanced drug plans cover insulin products at a monthly copayment of $35 in the deductible, initial coverage, and coverage gap phases of the Part D benefit. Participating plans do not have to cover all insulin products at the $35 monthly copayment amount, just one of each dosage form (vial, pen) and insulin type (rapid-acting, short-acting, intermediate-acting, and long-acting).

In 2021, a total of 1,635 enhanced Part D plans will participate in this model, which represents just over 30% of both PDPs (310 plans) and MA-PDs (1,325 plans) available in 2021, including plans in the territories. Between 8 and 10 enhanced PDPs in each region are participating in the model, in addition to multiple MA-PDs (see map). The average premium in 2021 for the subset of enhanced PDPs participating in the insulin $35 copay model ($59) is nearly twice as high as the monthly premium for basic PDPs ($33) and 61% higher than the average premium for enhanced PDPs that are not participating in the model ($37) (weighted by September 2020 enrollment).

 

Part D Cost Sharing

Part D Enrollees Will Pay Much Higher Cost-Sharing Amounts for Brands and Non-preferred Drugs Than For Drugs on a Generic Tier, and a Mix of Copays and Coinsurance for Different Formulary Tiers

In 2021, as in prior years, Part D enrollees will face much higher cost-sharing amounts for brands and non-preferred drugs (which can include both brands and generics) than for drugs on a generic tier, and a mix of copayments and coinsurance for different formulary tiers (Figure 7). The typical five-tier formulary design in Part D includes tiers for preferred generics, generics, preferred brands, non-preferred drugs, and specialty drugs. Among all PDPs, median standard cost sharing in 2021 is $0 for preferred generics and $5 for generics (an increase from $4 in 2020), $40 for preferred brands (a decrease from $42 in 2020), 40% coinsurance for non-preferred drugs (an increase from 38% in 2020; the maximum allowed is 50%), and 25% coinsurance for specialty drugs (the same as in 2020; the maximum allowed is 33%).

Among the 21 national PDPs, 13 PDPs, covering 9.3 million enrollees as of September 2020, are increasing cost-sharing amounts for drugs on at least one formulary tier between 2020 and 2021 (Table 3). Five PDPs are increasing copayments for generics, with increases ranging from $1 to $4; six PDPs are increasing copayments for preferred brands, with increases ranging from $3 to $10; and 10 PDPs are increasing coinsurance for non-preferred drugs, with increases ranging from 2 percentage points (e.g., from a 38% coinsurance rate to 40%) to 14 percentage points (e.g., from a 35% coinsurance rate to 49%).

Low-Income Subsidy Plan Availability

In 2021, 259 Part D Stand-Alone Drug Plans Will Be Premium-Free to Enrollees Receiving the Low-Income Subsidy (Benchmark Plans)

In 2021, a larger number of PDPs will be premium-free benchmark plans—that is, PDPs available for no monthly premium to Medicare Part D enrollees receiving the Low-Income Subsidy (LIS)—than in recent years, with 259 premium-free benchmark plans, or roughly a quarter of all PDPs in 2021 (Figure 8). Through the Part D LIS program, enrollees with low incomes and modest assets are eligible for assistance with Part D plan premiums and cost sharing. As of 2020, approximately 13 million Part D enrollees are receiving LIS, including 6.7 million (52%) in PDPs and 6.1 million (48%) in MA-PDs.

On average (weighted by Medicare enrollment), LIS beneficiaries have eight benchmark plans available to them for 2021, or about one-fourth the average number of PDP choices available overall. All LIS enrollees can select any plan offered in their area, but if they enroll in a non-benchmark plan, they must pay some portion of their chosen plan’s monthly premium. In 2021, 10% of all LIS PDP enrollees who are eligible for premium-free Part D coverage (0.6 million LIS enrollees) will pay Part D premiums averaging $33 per month unless they switch or are reassigned by CMS to premium-free plans.

The number of benchmark plans available in 2021 will vary by region, from five to 10 (see map). In 2020, 89% of the 6.6 million LIS PDP enrollees are projected to be in PDPs operated by five firms: CVS Health, Centene, Humana, UnitedHealth, and Cigna (based on 2020 enrollment).

 

Discussion

Our analysis of the Medicare Part D stand-alone drug plan landscape for 2021 shows that millions of Part D enrollees without low-income subsidies will face premium and other cost increases in 2021 if they stay in their current stand-alone drug plan. There are more plans available nationwide in 2021, with Medicare beneficiaries having 30 PDP choices during this year’s open enrollment period, plus 27 Medicare Advantage drug plan options. Most Part D PDP enrollees who remain in the same plan in 2021 will be in a plan with the standard $445 deductible and will face much higher cost sharing for brands than for generic drugs, including as much as 50% coinsurance for non-preferred drugs.

Some Part D enrollees who choose to stay in their current plans may see lower premiums and other costs for their drug coverage, but nearly 8 in 10 non-LIS enrollees will face higher premiums if they remain in their current plan, and many will also face higher deductibles and cost sharing for covered drugs. Some beneficiaries might find the best coverage and costs for their specific medications in a plan with a relatively low premium, while for other beneficiaries, a higher-premium plan might be more suitable. Because Part D plans vary in a number of ways that can have a significant effect on an enrollee’s out-of-pocket spending, beyond the monthly premium, all Part D enrollees could benefit from the opportunity to compare plans during open enrollment.

 

Long-term care facilities, such as nursing homes, have experienced a disproportionate share of deaths during the COVID-19 pandemic. The most recently available data show long-term care facilities account for 8% of all coronavirus cases but more than 40% of all COVID-19 deaths. Overall, COVID-19 has taken a disproportionate toll on communities of color. Black, Hispanic, and American Indian and Alaska Native (AIAN) populations have been shown to be at increased risk for cases, deaths, and hospitalizations. However, because the Center for Medicare and Medicaid Services does not require nursing facilities to report race/ethnicity data for COVID-19 cases and deaths, it is not possible to document the full scope of the pandemic on communities of color in nursing homes, or other long-term care settings. Only four states report cases and deaths in long-term care facilities by race/ethnicity (Iowa, Indiana, Louisiana, and Mississippi).

In the absence of these data, this analysis uses linked datasets – one with facility-level cases and deaths as of October 11^th and another with 2017 facility-level resident information by race/ethnicity – to examine cases and deaths based on racial/ethnic composition of nursing home residents. Specifically, it assesses whether nursing homes with relatively high shares of Black and Hispanic residents experienced a disproportionate burden of cases and deaths compared to those with lower shares of Black and Hispanic residents as well as a higher share of White residents. Data were not available to separately analyze cases and deaths for other racial/ethnic groups. The analysis is based on data from 13,982 nursing facilities nationwide (approximately 93% of all nursing facilities). In addition to national data, we present similar results at the state level, where sufficient data are available. See methods for more details on how nursing homes were categorized, data limitations, and analytic approach.

Deaths and Cases by Resident Race/Ethnicity

Nursing homes with relatively high shares of Black or Hispanic residents were more likely to report at least one COVID-19 death than nursing homes with lower shares of Black or Hispanic residents (Figure 1). Overall, within the 13,982 nursing homes included in this analysis, 12% of all nursing home residents are Black and 6% are Hispanic. Our analysis finds deaths due to COVID-19 were more common among nursing homes with relatively high shares of Black or Hispanic residents (defined in this analysis as 20% or greater). Nationwide, 63% of nursing homes with a relatively high share of Black residents reported one or more COVID-19 death, higher than the share reported by nursing homes with a lower share of Black residents (40%). Similarly, 55% of nursing homes with a relatively high share of Hispanic residents reported COVID-19 deaths, higher than the share reported by nursing homes with a lower share of Hispanic residents (44%).

Nursing homes with relatively high shares of Black or Hispanic residents were more likely to report coronavirus cases than other nursing homes, although the differences are narrower than for reported COVID-19 deaths (Figure 2). Nursing homes with a high share of Black residents were more likely to report coronavirus cases than nursing homes with a low share of Black residents (87% compared to 79%). Similarly, nursing homes with a relatively high share of Hispanic residents were more likely to report coronavirus cases (84%) than nursing homes with a lower share (81%).

Case Outbreak Severity by Resident Race/Ethnicity

Among nursing homes that had at least one case of coronavirus, nursing homes with relatively high shares of Black or Hispanic residents reported more severe case outbreaks than nursing homes with low shares of Black or Hispanic residents, as measured by confirmed or suspected cases as a share of nursing home beds (Figure 3). In nursing homes with a relatively high share of Black residents, positive cases among residents account for 29% of beds, as compared to 25% of beds in nursing homes with a relatively low share of Black residents. Similarly, among nursing homes with a relatively high share of Hispanic residents, positive cases among all residents account for 31% of beds, as compared to 25% of beds in nursing homes with a relatively low share of Hispanic residents.

Cases and Deaths by Resident Race/Ethnicity in Select States

National patterns of COVID-19 deaths and cases in nursing homes with relatively high shares of Black or Hispanic residents generally persist at the state-level, based on data from 21 states. State-level analysis allows for a better understanding of whether observed national racial disparities may be attributed to regional outbreaks and geographic variations in the composition of the population by race/ethnicity. This analysis is limited to the twenty-one states with a sufficient number of nursing homes that had either a high share of Black or Hispanic residents, as described in greater detail in the methods section. Among these states, the experience of nursing homes with a high share of Black or Hispanic residents generally mirrored the national pattern.

In 19 of the 21 states for which there were sufficient data, nursing homes with a relatively high share of Black or Hispanic residents were more likely to report one or more death than other nursing homes in the state (Appendix Table 1). In some instances, these differences were relatively large, some with a gap of 20 percentage points or more. For example, in Florida, the share of nursing homes reporting one or more death due to COVID-19 was substantially higher among nursing homes with a high share of Hispanic residents than in other nursing homes (85% vs 63%). A similar gap between nursing homes with high and low share residents of Black residents was observed in five states (Illinois, Maryland, Michigan, New York, and Pennsylvania), where the gap in the share that reported at least one death was equal to or exceeded 20 percentage points. In Michigan, for example, 64% of nursing homes with a high share of Black residents reported 1 or more death, as compared to 35% in nursing homes with a low share of Black residents. The gap in the share of reported at least one death was not as pronounced in all states. For example, the gap between nursing homes with high versus lower shares of Black residents was fewer than 10 percentage points in Alabama, Florida, and Ohio.

Similarly, differences in the share of facilities that reported at least one case and case severity by resident race/ethnicity seen nationally generally also held in these states. Like the national data, state data shows that nursing homes with relatively more Black or Hispanic residents were more likely to report at least one COVID-19 case, though differences were less pronounced than death patterns; the exception to this pattern is Florida, Louisiana, North Carolina, and South Carolina where nursing facilities with higher and lower shares of Black residents were either equally likely to report at least one case (Florida and South Carolina) or facilities with a lower share of Black residents were slightly more likely to report a case (Louisiana and North Carolina).

With respect to the severity of outbreaks at the state level, the pattern observed at the national level was generally evident at the state level. However, in a few states, including Arkansas, Georgia, Louisiana, New Jersey, Ohio, and South Carolina, facilities with low shares of Black residents had equal or slightly more severe outbreak severity as facilities with high shares of Black residents.

Discussion

These findings confirm that nursing homes with a relatively large share of Black or Hispanic residents have been disproportionately affected by COVID-19, as measured by the share reporting deaths, share reporting cases, and the severity of outbreak.  This analysis amplifies prior research that finds that the coronavirus has disproportionately impacted communities of color, including residents in nursing homes, potentially reflecting patterns of community transmission or nursing home quality. Research supports a strong relationship between nursing home cases and community transmission. There have been more mixed results when evaluating the relationship between nursing homes coronavirus outbreaks and nursing home quality, with some research finding a relationship and some not. Nursing homes are now required by the Center for Medicare and Medicaid services to report cases and deaths on a regular basis, but they are not required to report the data by race and ethnicity, and few states include such information in their own public reporting; such information is needed to document the direct impact of the pandemic on older residents of color, and the underlying factors that drive these disparities. Even without such data, this analysis makes it clear that residents in facilities that serve a relatively large share of Black and Hispanic residents have been disproportionately affected by the coronavirus.

Data Sources

This analysis draws on federal data published by the Center for Medicare and Medicaid Services (CMS)and additional facility-level data from Brown School of Public Health’s LTCfocus.org data, which includes summary-level information derived from 2017 MDS (Minimum Dataset) data.

data on cases and deaths

Data on coronavirus cases and deaths in nursing homes is from federal data published by the Center for Medicare and Medicaid Services (CMS). CMS requires all Medicare and Medicaid certified nursing facilities to report data on suspected and confirmed coronavirus cases and deaths for residents and staff. These data collection standards make the federal data more comparable across states than state-published data. Data in this paper reflects nursing home cases and deaths as of October 11, 2020. A major limitation of this data is the time period included: facilities were only required to report data starting May 8^th, 2020 and reporting cases or deaths prior to that date was not required. Thus, data may not be counting cases or deaths in facilities or states that experienced outbreaks earlier in spring 2020. For more information on the federal data, see KFF analysis comparing the state-reported data to the federal data.

In addition, some nursing homes in the CMS data report a greater number of cases and/or deaths than the total number of beds in the nursing home. We dropped approximately 1,000 nursing homes for which this was the case, leading to a final sample of 13,982 nursing homes. This sample is a subset of the approximately 15,000 nursing homes in the US.

Data on Race/Ethnicity of Residents

CMS does not require nursing facilities to report cases and deaths by race/ethnicity. Therefore, facility-level data on resident race/ethnicity was pulled from Brown School of Public Health’s LTCfocus.org data, which includes summary-level information derived from 2017 MDS (Minimum Dataset) data. MDS assessments are completed for all residents in nursing homes to identify each resident’s functional capabilities and help nursing home staff identify health problems. Demographic data, including race/ethnicity, is collected during this process as well. Brown School of Public Health provides summary data of MDS from 2010-2017, including facility-level data on the share of nursing home residents who are Black, White, or Hispanic. This analysis does not include data on staff cases and deaths since MDS does not collect data on racial makeup of nursing home staff, and we were unable to identify a data source for race/ethnicity of nursing home staff at the facility level.

The LTCfocus.org data censors data points representing fewer than 11 residents due to privacy standards set forth by CMS. Due to the small number of Black or Hispanic residents in many nursing homes, this created missing data points in nearly 9,000 nursing homes. For these “missing” data points, we imputed a value of 5.5 residents and calculated shares of residents based on the newly imputed value. We conducted a sensitivity analysis that showed that results were largely unchanged when the sample included and excluded the nursing homes with imputed data.

Classifying Facilities by Resident Race/Ethnicity

Overall, within the 13,982 nursing homes included in this analysis, 12% of all nursing home residents are Black and 6% are Hispanic. Nursing homes have a disproportionately low share of Hispanic residents when compared to total US population distribution by Race/Ethnicity. We categorized nursing homes where 20% or more of residents were Black or Hispanic as “High Share of Black Residents” or “High Share of Hispanic Residents.” This definition is based on the distribution of share of Black and Hispanic residents among the 13,982 nursing homes in our sample and a need to have adequate sample within each group. Many nursing homes reported extremely low shares of Black or Hispanic residents or zero Black or Hispanic residents. The following are the Ns for the groups reported in the paper:

Residents may be double counted in race/ethnicity data (for example, a resident could be counted as both “White” and “Hispanic”). Therefore, some facilities with a “high” share of Black or Hispanic residents may overlap with facilities with a “high” share White residents.

Choosing States for State-Level Analysis

State-level analysis was limited to the states with 50 or more facilities in the high share of Black or Hispanic residents categories, based on our definitions of “high share” described above. In total, we were able to provide state-level data on 21 states. California, Florida, New York, and Texas each had 50 or more nursing homes with a high share of both Black and Hispanic residents, and the remaining 17 states in the analysis had only a sufficient number of nursing homes with a high share of Black residents.