Section 1115 Waivers-What You Need to Know

What are Section 1115 waivers?

You no doubt have some idea of what these waivers are, but here’s an overview:

By Centauri Health Solutions Staff

• Section 1115 of the Social Security Act (SSA) gives the Secretary of Health and Human Services (HHS) authority to waive provisions of major health and welfare programs authorized under the Act, including certain Medicaid requirements, and to allow a state to use federal Medicaid funds in ways that are not otherwise allowed under federal rules. (The Henry J. Kaiser Family Foundation)
• According to the Centers for Medicare & Medicaid Services (CMS): “Section 1115 demonstration projects present an opportunity for states to institute reforms that go beyond just routine medical care and focus on evidence-based interventions that drive better health outcomes and quality of life improvements.”

Bottom line, the waivers allow states to test new or existing approaches to financing and delivering welfare-related programs; to bypass or substitute some requirement of the SSA.

Their history

So how did 1115 waivers come about?

Section 1115 Research & Demonstration waivers were introduced in 1962. States were encouraged to use them to test innovations in the 1980s and 1990s – and, in fact, more than 40 states waivers were approved during President Bill Clinton’s administration.

Prior to the 2014 passage of the Affordable Care Act (ACA), many states used the waivers to expand coverage to childless adults who, prior to the law, were ineligible for coverage.

Since the ACA, many states have used the waivers to implement Medicaid expansion, as well as to modify the usual federal requirements, such as charging premiums beyond what is allowed under federal law or implementing community engagement requirements for recipients.

The impact to you

Many of these pending or newly implemented modifications to participant requirements are expected to result in thousands of current Medicaid participants losing coverage due to non-compliance.

We know how concerning that is to hospitals, as loss of Medicaid coverage will result in higher uncompensated care burdens.

The approval process – and why the timeline matters

It’s important to understand the process – and to stay on top of opportunities throughout – to participate in the comment periods. Public comment is the most powerful way to take a stance and try to impact the government decision-making.

Here’s how it works. Final approval of Section 1115 waivers is at the discretion of the Secretary of HHS, after negotiations between a state and CMS.

Once a state drafts a waiver, it is required to go through a state public comment process. The comment period must be a least 30 days and be open to anyone. The state reviews the public comments, makes any changes to the waiver application and submits it to CMS.

Once CMS reviews the application and marks it complete, another public comment period begins. This time a 30-day federal public comment window, which is again open to anyone. At the end of that window, CMS reviews the comments – and can approve, reject or ask states to change specific elements of the waiver.

After CMS approves a waiver, it issues a letter to the state, along with attachments listing the specific sections of the SSA and applicable regulations that are being waived or modified, the types of expenditures allowed and terms and conditions of approval. In addition, a budget neutrality agreement is included (since the waiver rules require that federal spending under the waiver must not be more than projected federal spending in the state without it).

There is significant variation in the length of time it takes to get final approval – due in large part to the variation across states in the role of state legislators in the approval process. Many states require authorizing legislation for waivers and others have little/no involvement.

Monitoring Activity

To help our clients stay on top of the ever-changing 1115 waiver activity,  we’ll intend to post a blog providing a short snapshot of key Medicaid waiver activities.

We hope you find them helpful.

Centauri’s system – and teams – are poised to accommodate any future rulings regarding Medicaid coverage. We are a thought leader – and a partner in helping anticipate possible implications and solutions regarding impacts.