CMS Approves Groundbreaking Section 1115 Demonstrations

Health Highlights

Editor’s Note: Section 1115 demonstrations (also called waivers) allow states to test new ways to operate their Medicaid programs, typically on matters related to eligibility, benefits and care delivery. Recently, the Centers for Medicare and Medicaid Services (CMS) approved the renewal of and amendments to innovative section 1115 demonstrations for ArizonaArkansasMassachusetts and Oregon. These waivers focus on continuous Medicaid enrollment and social drivers of health—which CMS calls health-related social needs (HRSN)—along with other features promoting access, equity and delivery system reform. In a new blog post for The Commonwealth Fund, summarized below, Manatt Health shares highlights of the new waivers. Click here to read the full blog post.

To register for our upcoming webinar discussing how the innovative 1115 waivers that CMS approved articulate a new framework for waivers seeking to implement HRSN initiatives, click here. The webinar will feature a panel of state leaders from Arizona, Massachusetts and Oregon providing insights into the HRSN approval process—and real-world lessons for other states considering their own HRSN programs.

The recent waiver approvals in Arizona, Arkansas, Massachusetts and Oregon promise, in varying degrees, to transform coverage and care while signaling to other states the types of waiver policies CMS is prepared to allow. Key features of the approved waivers are described below.

Continuous Enrollment

Continuous enrollment in Medicaid, which was required by federal law as a condition of states’ receiving enhanced federal matching funds during the COVID-19 public health emergency, has focused attention on the value of stable coverage. Notably, Oregon found that continuous enrollment narrowed racial disparities in the state’s uninsurance rates. Building on that experience, under its new waiver approval, Oregon will be the first state to continuously enroll young children in Medicaid and the Children’s Health Insurance Program from the time they first enroll (e.g., at birth) until their sixth birthday. Older children and adults will be continuously enrolled for 24 months. Taking a more targeted approach, Massachusetts will provide 12 months’ continuous enrollment to individuals released from correctional facilities and 24 months to homeless individuals.

Addressing Health-Related Social Needs

Arizona, Arkansas, Massachusetts and Oregon each gained approval to finance a suite of services aimed at HRSN. The size of the investments varies, but they all are significant. Recognizing that many providers offering HRSN services are community-based organizations and need new capabilities to participate, all four states have approval to invest additional Medicaid funds in HRSN infrastructure, ranging from workforce to data systems.

While HRSN service offerings are different in each state, all four will provide housing-related services to help individuals secure housing, turn on utilities and avoid eviction. Massachusetts and Oregon also will pay for medically necessary supports to improve air quality, while Arkansas, Massachusetts and Oregon also will offer nutrition-related services. Arizona and Oregon have authority to pay for up to six months’ rent to qualifying individuals—a flexibility CMS has not previously permitted.

CMS approval comes with certain guardrails:

  • HRSN services must be evidence-based and “medically appropriate . . . based on clinical and social risk factors,” meaning that these services are not for everyone in the Medicaid program. For housing services, for example, individuals must have a clinical need in addition to being homeless or at risk of homelessness. States may define eligibility for HRSN services, subject to CMS approval.
  • To ensure that funding to address HRSN does not crowd out basic health care services, HRSN waiver funding is capped. States will not be able to obtain federal Medicaid matching funds for HRSN services or infrastructure for costs in excess of the cap.
  • These approvals are conditioned on states’ meeting certain parameters relating to Medicaid payment rates for primary care, behavioral health and obstetric care.1 If a state’s Medicaid rates for these services are less than 80 percent of Medicare rates, the state must increase its rates to narrow the gap.2
  • Finally, to ensure that waiver funding for HRSN services adds to the resources available to address social needs, the waivers do not permit states to supplant existing funding with the new waiver funds. States are required to show throughout the duration of the waiver that they are maintaining other funding at prewaiver levels.

Other Key Features

Additional initiatives in these waivers include:

  • Arizona is implementing a $250 million performance incentive program for primary care providers, behavioral health providers and justice clinics targeted toward integrating HRSN into care delivery and advancing health equity.
  • Massachusetts is pursuing delivery system reforms, including prospective (i.e., fixed upfront) per-member per-month payments to primary care providers for their attributed patients and a performance incentive program for private and public safety-net hospitals addressing quality and equity. The state’s waiver also allocates loan repayment to support the behavioral health and primary care workforce and for family nurse practitioner residency programs at community health centers.
  • Oregon is ensuring that young adults with significant health needs do not lose access to the broad array of services available to children enrolled in Medicaid. The state is extending coverage and EPSDT3 services to youth with special health care needs up to age 26 with income up to 300 percent of the federal poverty level.

Moving Forward

CMS is permitting substantial flexibility in programmatic design to allow states to undertake transformative initiatives. At the same time, by establishing new guardrails and conditions, CMS is balancing that flexibility with constraints and new obligations. The programmatic flexibility and substantial investments associated with these approvals will allow states to stabilize coverage, offer new benefits and services, and focus on “whole-person care.

1 Arkansas did not have to establish it met the payment standards, presumably because its waiver is focused on the adult Medicaid expansion population. In Arkansas, those individuals receive care through plans doing business on the marketplace, which generally pay higher rates to providers than Medicare.

2 This requirement is also a condition of implementing the provider performance incentive programs approved in Arizona and Massachusetts.

3 EPSDT refers to children’s entitlement under Medicaid to Early and Periodic Screening, Diagnostic, and Treatment benefits, which provides individuals under age 21 with a broad array of preventive and treatment services.



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