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CMS Approves Groundbreaking Section 1115 Demonstrations

Volunteers deliver boxes of foods to families on May 8, 2020 in Foxborough, Mass. The Centers for Medicare and Medicaid services recently approved section 1115 demonstrations in Massachusetts in three other states that include innovative funding for addressing social drivers of health, such as nutrition-related services. Photo: Maddie Meyer/Getty Images

Volunteers deliver boxes of foods to families in Foxborough, Mass., on May 8, 2020. The Centers for Medicare and Medicaid Services recently approved section 1115 demonstrations in Massachusetts and three other states that include innovative Medicaid funding for addressing social drivers of health, such as nutrition-related services. Photo: Maddie Meyer/Getty Images

Volunteers deliver boxes of foods to families in Foxborough, Mass., on May 8, 2020. The Centers for Medicare and Medicaid Services recently approved section 1115 demonstrations in Massachusetts and three other states that include innovative Medicaid funding for addressing social drivers of health, such as nutrition-related services. Photo: Maddie Meyer/Getty Images

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  • Newly approved state Medicaid demonstrations will focus on health-related social needs, including housing assistance and nutrition-related services

  • Medicaid enrollees in Arkansas, Arizona, Massachusetts, and Oregon could see their care and coverage transformed thanks to these states’ innovative 1115 waivers

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 section 1115 demonstrations for Arkansas, Arizona, Massachusetts, and Oregon, all of which include innovative features. 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. To varying degrees, these waivers promise to transform coverage and care while also signaling to other states the types of waiver policies CMS is prepared to allow.

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. At the most basic level, continuous enrollment — that is, keeping Medicaid coverage in place without regard to changes in circumstances or paperwork requirements — avoids disruptions in coverage and care. Notably, Oregon also 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

The evidence continues to mount on the impact of social needs on health. Arkansas, Arizona, Massachusetts, and Oregon each gained approval to finance a suite of services aimed at HRSN. The size of the investments varies according to the states’ Medicaid population and the differences in the population groups that are the focus of the interventions. But the new investments are significant — Arkansas, Arizona, Massachusetts, and Oregon are authorized to spend up to $84.5 million, $481.8 million, $687.9 million, and $904 million, respectively. 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 states 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, like air conditioners, humidifiers, and air filtration devices. Arkansas, Massachusetts, and Oregon will also offer nutrition-related services. Arizona and Oregon have authority to pay for up to six months’ rent to house 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 implementing a $250 million performance incentive program for primary care providers, behavioral health providers, and justice clinics3 targeted toward integrating HRSN into care delivery and advancing health equity.
  • Massachusetts 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 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 EPSDT4 services to youth with special health care needs up to age 26 with income up to 300 percent of the federal poverty level ($41,850 for a single person).

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. In an upcoming To the Point, we will explore CMS’s new approach to waiver financing. 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.”

NOTES
  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. Arizona defines justice clinics as “licensed and registered integrated outpatient clinics (including integrated clinics, federally qualified health centers, and rural health centers) with robust collaborative agreements with a justice partner, including but not limited to clinics colocated with or adjacent to probation and/or parole facilities, or probation and/or parole offices located with or adjacent to the integrated clinic.”
  4. 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.

Publication Details

Date

Contact

Mindy Lipson, Director, Manatt Health

Citation

Mindy Lipson and Cindy Mann, “CMS Approves Groundbreaking Section 1115 Demonstrations,” To the Point (blog), Commonwealth Fund, Dec. 7, 2022. https://doi.org/10.26099/r90e-km02