We’ve already covered how Medicaid benefits are structured–mandatory versus optional–and the partnership between the federal government and the states in administering the program. But did you know that states can apply to the Secretary of Health and Human Services to waive certain requirements of Medicaid? Medicaid has not always been successful at serving its diverse and medically-complex population, including eliminating barriers to access and quality care and an inadequate focus on long-term health outcomes. Thus, federal law gives the Secretary of HHS the authority to grant Section 1115 waivers, also known as “Demonstration Project” waivers. [“1115” is the section of the Social Security Act that outlines the purpose and scope of these waivers.]
Section 1115 waivers can be approved for experimental, pilot, and demonstration projects in a variety of health programs, but are used predominantly to grant states additional flexibility in the design and implementation of their Medicaid program. A 1115 waiver must promote the objectives of the Medicaid program, which includes serving the health and wellness of our nation’s vulnerable and low-income individuals and families.Once a state develops a waiver request (this might include the state legislature and/or state health agency depending on state law), it is submitted to CMS, the agency within HHS responsible for the Medicare and Medicaid programs. In accordance with administrative procedure, states must hold a public comment period for 1115 waivers before submission to CMS. CMS then evaluates each waiver request on a case-by-case basis to determine if it aligns with the objectives of Medicaid and how it will affect enrollees.
“Demonstration projects” must be budget neutral to the federal government, meaning it cannot cost more than it would to not implement the “demonstration project.” CMS and the state requesting the waiver often engage in negotiations and the waiver can eventually be approved or rejected in whole or in part. In general, 1115 waivers are approved for five years, with the possibility of a three to five year extension.
Over time, 1115 waivers have been used to implement a wide range of state and CMS priorities. The fantastic folks over at Families USA have detailed explanations of the various categories of 1115 waivers that are currently approved or in the approval process.
Image from KFF.