Key Themes in Capitated Medicaid Managed Long-Term Services and Supports Waivers


Medicaid MLTSS Authorities

Medicaid MLTSS involves combining authority for delivering services through Medicaid managed care with authority for providing Medicaid LTSS.  The various authorities available to states are described below and summarized in Table 1.

Medicaid Managed Care Authorities

Federal Medicaid law allows states to choose among different managed care arrangements.  These include managed fee-for-service models, such as primary care case management (excluded from this analysis), and capitated models, such as managed care organizations (MCOs), prepaid inpatient health plans (PIHPs), and prepaid ambulatory health plans (PAHPs).  Unlike PIHPs and PAHPs, MCOs have a comprehensive risk contract with the state Medicaid agency.   In exchange for a capitated payment, MCO contracts include at least one of the following services in addition to inpatient hospitalization, or three or more of the following services if inpatient hospitalization is not included:  outpatient hospital, rural health clinic, federally qualified health center, other laboratory and x-ray, nursing facility, Early Periodic Screening Diagnosis and Treatment, family planning, physician, and home health services.  PIHPs and PAHPs contract with the state Medicaid agency to provide specified medical services, which do not meet the scope of services required for a comprehensive risk contract, in exchange for a capitated payment; PIHPs include inpatient hospital or institutional services, while PAHPs do not.

Federal Medicaid law allows states to choose to deliver Medicaid benefits through one of these managed care arrangements and to require most beneficiaries to enroll in such programs, provided that certain beneficiary protections are met, by submitting a § 1932 state plan amendment.  However, § 1932 does not allow states to require children with special health care needs, dual eligible beneficiaries, and certain Native Americans to enroll in Medicaid managed care.  Examples of states using § 1932 Medicaid state plan managed care authority to establish capitated MLTSS programs include South Carolina, Virginia, and Washington.  These states are using § 1932 authority concurrent with § 1115A waivers to implement capitated financial alignment demonstrations for dual eligible beneficiaries that include MLTSS.1

Section 1932 and its implementing regulations at 42 C.F.R. Part 438 provide the basic framework for Medicaid managed care and include a number of beneficiary protections for managed care enrollees, including provisions regarding enrollment and disenrollment, network adequacy, beneficiaries with special health care needs, grievances and appeals, plan marketing, utilization controls, and the content, format, and accessibility of beneficiary notices.

States also may implement Medicaid managed care programs through various waiver authorities.  Section 1915(a) waivers allow states to establish managed care programs with voluntary enrollment, while states can require Medicaid managed care enrollment, with CMS approval, through § 1915(b) waivers or § 1115 demonstrations.  Section 1915(b) waivers are targeted to Medicaid managed care arrangements and allow CMS to waive state compliance with certain provisions of federal Medicaid law, such as those that otherwise require benefits to be provided statewide, comparability of benefits among different Medicaid populations, and beneficiaries’ free choice of provider.

In contrast to § 1915(b) waivers, § 1115 demonstration waivers that authorize Medicaid MLTSS programs often include other provisions, such as those aimed at other delivery system and financing reforms or eligibility or benefits for other populations, which may not be directly related to MLTSS.   Section 1115 demonstration waivers authorize “experimental, pilot, or demonstration projects” that, in the view of the Health and Human Services Secretary, “promote the objectives” of the Medicaid program.  Section 1115 allows CMS to waive state compliance with certain provisions of federal Medicaid law and also may include expenditure authority through which states can receive federal matching funds for costs that otherwise would not qualify for Medicaid funding.2  Newly proposed and applications to extend § 1115 waivers require public notice and comment periods,3 and under long-standing CMS policy, all § 1115 waivers must be budget-neutral to the federal government.

Medicaid HCBS Authorities

Similar to the Medicaid managed care authorities, federal Medicaid law allows states to provide HCBS through state plan or waiver authorities.4  With the exception of home health services for beneficiaries who qualify for nursing facility services, Medicaid HCBS are provided at state option.5  (Independent of their Medicaid Act obligations, states also must comply with the community integration mandate under the Americans with Disabilities Act (ADA) and the Olmstead decision.6)  In addition to the traditional state plan HCBS (listed in Table 1), the Affordable Care Act (ACA) created Community First Choice (CFC), a new state plan option to provide attendant care services and supports with enhanced federal matching funds.7   States also can elect to offer beneficiaries the option to self-direct their HCBS.

Section 1915(c) waiver authority allows states to provide HCBS to beneficiaries who qualify for an institutional level of care and would be financially eligible for Medicaid if institutionalized.  Under § 1915(c) waivers, states can target services to particular populations and provide services that are not strictly medical in nature (see Table 1).  The Deficit Reduction Act of 2005 established § 1915(i), new authority for states to provide HCBS through their Medicaid state plans instead of a waiver.  Section 1915(i) also allows states to provide HCBS to beneficiaries who meet functional eligibility criteria that are less stringent than the state’s institutional level of care criteria.  While enrollment can be capped in § 1915(c) HCBS waivers, states cannot limit the number of beneficiaries served or establish waiting lists under § 1915(i).  However, if a state exceeds its projected number of individuals expected to receive § 1915(i) HCBS, the state can then further restrict its § 1915(i) functional eligibility criteria with 60 days advance notice, provided that the previous criteria continue to apply to beneficiaries already receiving services.  The ACA expanded § 1915(i) to include state plan authority for all of the same HCBS available to states under § 1915(c) waivers.8  In addition to these authorities, states also may choose to provide HCBS through a § 1115 demonstration waiver, instead of or in addition to state plan or § 1915(c) waiver authority.

CMS has been moving toward increased standardization across all Medicaid HCBS programs.  For example, it issued regulations establishing person-centered planning and home and community-based setting requirements that apply uniformly to HCBS provided under the CFC, § 1915(i), and § 1915(c) authorities.9  CMS also has indicated that it will share elements from the universal needs assessment being developed by states in the Balancing Incentive Program with other states as an example for use in CFC and other HCBS programs that require functional needs assessments.10

Table 1:
Medicaid MLTSS Authorities
Authority Type Managed Care HCBS
State Plan § 1932 state plan amendment
Home health services
Personal care services
Private duty nursing services
Physical therapy and related services
Prosthetic devices
Other rehabilitative services
Case management services
§ 1915(i) HCBS state plan services*
§ 1915(j) self-direction option
Community First Choice attendant care services and supports
Waiver § 1915(a) managed care waiver
§ 1915(b) managed care waiver
§ 1115 demonstration waiver
§ 1915(c) HCBS waiver
§ 1115 demonstration waiver
NOTE:  *Section 1915(c) and (i) services include, at state option, case management, homemaker/home health aide and personal care, adult day health, habilitation, respite care, other services approved by the HHS Secretary, and day treatment/partial hospitalization, psychosocial rehabilitation, and clinic services for individuals with chronic mental illness.

CMS’s MLTSS Waiver Guidance to States

In May 2013, CMS issued guidance to states using § 1115 demonstrations or § 1915(b) waivers for MLTSS programs.  This guidance is based on CMS’s site visits and reviews of existing MLTSS programs as well as stakeholder input.  The guidance contains 10 “best practice” elements “inherent in a strong MLTSS program,” which CMS will use in its review, approval, and oversight of MLTSS programs under these authorities.11  Although CMS “expects to see [the 10 elements] incorporated into new and existing state Medicaid MLTSS programs,” it also notes that states have “many different options for how they address these elements” and that CMS’s evaluation of how the program features are met will be individual to each state.12

The 10 elements include:

  1. Adequate planning and transition strategies for the design and implementation of MLTSS programs.
  2. Stakeholder engagement in the planning, implementation, and oversight of MLTSS programs.
  3. Enhanced provision of HCBS that offer the “greatest opportunities for active community and workforce participation” and operate consistently with the ADA, the Olmstead decision, and CMS’s home and community-based setting requirements.
  4. Alignment of payment structures with MLTSS programmatic goals, such as community integration, and the inclusion of performance-based incentives and/or penalties.
  5. Support for beneficiaries, including conflict-free choice counseling, independent advocacy or ombudsman services, and enhanced opportunities for disenrollment.
  6. Person-centered processes, including needs assessments, service planning and delivery, and supports for self-direction.
  7. A comprehensive integrated service package, including physical, behavioral health, institutional, and HCBS.
  8. Qualified providers, including adequate capacity and expertise to provide services that support community integration.
  9. Participant protections, including safeguards to prevent abuse, neglect and exploitation and fair hearings with continuation of services pending appeal.
  10. Quality, including quality of life measures.



Introduction Key Themes

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