Centering Health Equity in Medicaid Section 1115 Waivers: A Road Map for States

Health Highlights

Editor’s Note: In a new issue brief for the Robert Wood Johnson Foundation’s State Health and Value Strategies program, summarized below, Manatt Health examines Medicaid’s role in promoting health equity and describes ways states can center and advance health equity and address structural racism through each Section 1115 demonstration’s life cycle stage, which include planning, implementation and monitoring, and evaluation. A companion issue brief, Centering Health Equity in Medicaid: Section 1115 Demonstration Strategies, provides insights into specific, innovative policies to advance health equity that states can implement through Section 1115 demonstrations. The insights and recommendations found in both documents are informed by recent interviews with federal and state policy makers and secondary research and analysis.

Long-standing structural racism and related health inequities experienced by people of color further laid bare by the COVID-19 pandemic have mobilized many state leaders to take action on health equity. Structural racism across and within systems and institutions in the United States has caused disproportionate health risks and poorer health for people and communities of color. Structural racism has further impeded people of color from accessing resources and opportunities, including homeownership, asset accumulation, employment, educational attainment, affordable and healthy foods, and clean air and water, all of which exacerbate these heightened health risks.

While addressing structural racism in health care requires collaborative and sustained efforts across state agencies, local governments, communities and other stakeholders, many states are looking to Medicaid as a critical lever for advancing health equity. Medicaid has a large coverage footprint in all states and, across the nation, broad coverage of Black, Latino(a) and other people of color. States seeking to test new or innovative ideas related to health equity in their Medicaid programs are increasingly tapping Section 1115 demonstrations as one key strategy.

Role of Medicaid in Advancing Health Equity

Medicaid is an important lever for advancing health equity because of the size, scale and demographics of its coverage footprint. Medicaid covers more than 80 million individuals, accounts for almost one-fifth of national health expenditures and is the single largest payer in many states. The racial and ethnic composition of Medicaid programs varies by state. However, people of color are disproportionately represented in the Medicaid program nationally and in many states. As a result, Medicaid is a critical tool for addressing racial and ethnic health inequities in access, quality of care and outcomes.

States have a range of Medicaid administrative and legal authorities to advance health equity priorities, including:

  • State regulation, which can be used to implement, interpret or further define Medicaid policies, procedures and requirements.
  • Managed care contracts, which set the terms between the state Medicaid program and managed care organizations (MCOs) for the delivery of services to members and allow states to legally require or encourage MCOs to perform certain activities.

Key Medicaid legal authorities include:

  • State Plan authority, which defines the scope of services covered for Medicaid enrollees, provider payment rates (in fee-for-service) and administration, consistent with permissible options and flexibility available under federal law.
  • Section 1915 waivers, which are specialized waivers that add to the options otherwise available to states to provide long-term care services and supports in home- and community-based settings, rather than in nursing homes or other institutional settings.
  • Section 1115 demonstrations, which allow states to use Medicaid funds for initiatives and services that extend beyond Medicaid benefits available and otherwise allowable through the state plan or other federal authorities.

Section 1115 of the Social Security Act permits states to waive certain Medicaid statutory requirements through demonstration projects that test innovative policies in Medicaid. Section 1115 authority is a powerful tool that states can use to advance health equity, in combination with other authorities, including through policy and expenditure authority related to eligibility, benefit design, affordability and payment, and delivery system reform. For any policy innovation, states have the opportunity to implement strategies that center and advance health equity at each stage of the Section 1115 demonstration life cycle: planning, implementation and monitoring, and evaluation. Using this staged framework, states can center and advance equity from conceptualization to design and execution of Section 1115 demonstrations.

The effectiveness of the design and implementation of Section 1115 demonstrations to advance health equity is predicated upon partnership and communication with those directly impacted. States are increasingly recognizing that true community engagement is not simply a “check the box” step in demonstration development and implementation, but rather a critical and sustained partnership with the community to design, implement and evaluate innovative policy to advance health equity.

Road Map to Center Health Equity Through the Section 1115 Demonstration Life Cycle

1.0: Strategies to Center Health Equity in 1115 Demonstration Planning and Design

Early planning can help states implement focused policy solutions that best address the needs of Medicaid enrollees. In partnership with communities, states can assess and prioritize health inequities experienced by Black, Indigenous, Latino(a) and other people of color, using available data; craft strategies to address their health equity priorities; and determine how to best use Medicaid to advance those strategies.

Strategy 1.1. Use Data-Driven Analysis to Identify Health Disparities and Establish Equity Priorities. States must be able to identify disparities and understand the underlying issues confronting Medicaid enrollees of varied racial and ethnic backgrounds in terms of coverage, access, quality and health outcomes, as well as social drivers of health that influence health and well-being. Data-driven analysis early in the planning process will provide insights on the magnitude and scale of the health inequities observed across a Medicaid population—by race, ethnicity, gender, age, geography and other factors—allowing the state to prioritize issues and shape actionable responses. In particular, states can use data-driven analysis to measure disparities experienced by people of color enrolled in their Medicaid programs, indicate potential systemic issues driving observed disparities, and prioritize strategies for addressing them in collaboration with the community, including defining specific actions and setting clear and measurable timelines and goals.

Strategy 1.2. Identify Policies to Address Health Equity Priorities. Once states identify and prioritize the health inequities they intend to address, they can develop strategies and policies to address these issues. For example, if a state identifies significant disparities in rates of health insurance coverage among people of color, the state might consider expanding Medicaid eligibility or implementing coverage affordability initiatives broadly or in a targeted fashion. States have an imperative to use both quantitative and qualitative data to model potential health equity implications of proposed policies—regardless of whether potential policies are explicitly equity-focused. Such considerations include examining the projected time frame for the Medicaid agency to accomplish demonstration goals, as well as the projected impacts of the policy on different population groups (e.g., stratified by race and ethnicity, rural versus urban geographies).

Strategy 1.3. Identify Policies that Require 1115 Demonstration Authority. After states determine their health equity priorities and identify potential policy solutions, they can determine the mechanism through which they will pursue those solutions. As part of this process, states will determine where Section 1115 demonstration authority is required to advance key policy approaches and how these demonstrations will relate to and interact with other authorities that the state identifies to advance health equity priorities in Medicaid.

Engage Community Stakeholders in Planning and Design

Beginning engagement and partnership with community members prior to the development of a Medicaid health equity strategy and designing a Section 1115 demonstration will promote equity-centered program design and community buy-in. Recognizing the challenges associated with obtaining meaningful stakeholder engagement, states should set aside ample time in the 1115 demonstration planning process to identify and engage a representative range of community members to review evidence of disparities in order to inform and deepen state policy makers’ understanding of the causes and impacts of these disparities and to identify impactful and appropriate policy solutions.

2.0: Strategies to Center Health Equity in 1115 Demonstration Implementation and Monitoring

If policies to drive health equity are not implemented appropriately (e.g., with cultural sensitivity and humility, with a person-focused approach, informed by engagement with communities impacted by the policies) and monitored in real time to gauge their impact, the demonstration may not achieve the policy goals set forth in the planning process.

Strategy 2.1. Ensure That the Implementation Team Understands the Health Equity Goals of the Demonstration. Often, the Medicaid agency team working on demonstration design and planning is different from the team charged with implementation. Strategies to facilitate effective implementation of Section 1115 demonstrations to advance equity include ensuring the implementation team is included in the demonstration design conversations and planning process and structuring teams to include individuals with lived experience in the impacted communities.

Strategy 2.2. Center Health Equity in Demonstration Implementation and Monitoring Protocols. In addition to a Section 1115 demonstration’s Special Terms and Conditions (STCs), the Centers for Medicare & Medicaid Services (CMS) requires that states provide additional detail regarding their implementation and monitoring approaches through separate protocols or plans. Implementation protocols include operational detail around key program features, including operational design decisions, steps for and approach to ensuring implementation readiness, strategies for communicating new policies to Medicaid enrollees, and timelines for meeting milestones associated with the policies, among other details. Monitoring protocols outline the key metrics through which states will track demonstration progress toward implementation milestones and goals. As part of these implementation and monitoring protocols, states should analyze and report on monitoring metrics by race, ethnicity and language (REL) demographics to inform state and CMS understanding of whether the demonstration is achieving the health equity goals the state seeks to advance; maintaining the status quo; or creating/exacerbating disparities in coverage, access or quality.

Engage Community Stakeholders in Implementation and Monitoring

States should maintain engagement with the community to inform implementation and monitoring of the demonstration. States can continue to hold forums and focus groups to get input on how programs should be implemented—including informing prerequisites for implementation; making program design decisions, such as eligibility criteria or services; and identifying monitoring metrics. Ongoing engagement with community members can also provide real-time and critical feedback on implementation.

3.0 Strategies to Center Health Equity in 1115 Demonstration Evaluation

Centering health equity in demonstration evaluation is critical regardless of whether the demonstration or specific policy flexibilities put forward are equity-focused.

Strategy 3.1. Center Health Equity in Demonstration Evaluation Design. States have a range of opportunities to center and incorporate health equity in Section 1115 demonstration evaluation design, including requiring that state evaluation contractors propose evaluation methodologies that incorporate health equity, have team members with expertise in health equity and have an evaluation team that is ethnically and racially diverse. Other opportunities include:

  • Developing specific evaluation measures that measure progress;
  • Signing evaluation approaches that combine qualitative and quantitative data and information collection;
  • Incorporating contingencies for course correction if a particular strategy is not having the intended impact or is harming a population; and
  • Broadly sharing evaluation findings with providers, MCOs, Medicaid enrollees, advocates and other stakeholders, as well as national audiences, to inform and improve future demonstration proposals and implementation practices.

Strategy 3.2. Invest in Data Needed to Evaluate Health Equity in Medicaid. To ensure that demonstration evaluation (and monitoring) data can provide insights into health equity and disparity impacts, states will need to invest in improving data collection and reporting of REL data for program enrollees and making that data available to evaluation researchers. In most states, this likely requires developing a thorough assessment of REL data gaps and developing a plan for addressing those gaps.


Section 1115 demonstrations are a powerful tool for states to advance health equity in Medicaid and across their populations. Demonstrations offer a broad range of flexibilities related to Medicaid eligibility, benefits, affordability, and payment and delivery system reform. Given these flexibilities, as well as the populations that Medicaid covers, Section 1115 demonstrations can be used to respond to health disparities and address health equity in a variety of ways. At the same time, innovative state demonstration policies—whether equity-focused or not—must be developed with an equity lens at every stage of the demonstration life cycle.

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