Overview of Section 1115 Medicaid Demonstration Waivers

1. Overview of Section 1115 Medicaid Demonstration Waivers Samantha Artiga Kaiser Commission on Medicaid and the Uninsured Kaiser Family Foundation For National Academy of State Health Policy Annual State Health Policy Conference October 5, 2011 Kansas City, Missouri

2. What is a Section 1115 Medicaid demonstration waiver? • Authority within Section 1115 of the Social Security Act • Secretary of HHS may waive provisions of major health and welfare programs under the Act, including Medicaid • Secretary can use to allow for program changes beyond that allowed under current program options/flexibility • Intended for demonstration projects that, in the view of the Secretary, promote the objectives of the Medicaid program

3. How are Section 1115 Medicaid demonstration waivers approved? • Approved at discretion of the Secretary through negotiations between a state and CMS • Generally approved for an initial five-year period and then must be renewed • Significant variation in time to approve and the role of state legislatures • Concerns about transparency of approval process at both the state and federal level

4. How are Section 1115 Medicaid demonstration waivers financed? • Longstanding administrative requirement for budget neutrality • Federal spending under a waiver must not be more than projected federal spending in the state without the waiver • Budget neutrality is enforced through a cap on federal funds over the life of the waiver • Per capita: state at risk for higher than projected per person costs, but not for higher than anticipated enrollment • Global/aggregate cap: state at risk for higher than projected per person costs and enrollment

5. How have states used Section 1115 Medicaid demonstration waivers? • 30 states and DC operated one or more comprehensive Section 1115 Medicaid waivers as of June 2011 • Waiver uses and trends reflect state and Administration interests at the time of approval • States have used waivers for varied purposes • Coverage expansions • Delivery system and provider payment changes • Changes in benefits and cost sharing • Emergency coverage

6. How does the ACA impact Section 1115 demonstration waivers? • Does not change key provisions of Section 1115 • New transparency and public input requirements • New Section 1115A authority • Establishes the Center for Medicare and Medicaid Innovation • Intended to test, evaluate, and expand delivery and payment models that slow cost growth while preserving and enhancing quality of care • Provides $10 billion per year through FY2019 • Awarded 15 design contracts in April 2011 to integrate care for dual eligibles (CA, CO, CT, MA, MI, MN, NY, NC, OK, OR, SC, TN, VT, WA, WI) • New Section 1332 authority • Begins in 2017 • For non-Medicaid provisions of the ACA related to Exchanges, benefits, and cost sharing protections

7. What are the current directions in state Section 1115 demonstration waiver activity? • Approved Early Expansion Expansion Waivers • Early expansion to adults to prepare for reform • Will transition to Medicaid and Exchange coverage in 2014 • Expanding in ways that do not meet the rules of the early coverage state option • CA, DC, WA • Emerging Waiver Proposals and Concept Papers • Broad reforms with varied goals • Most still in development/review process • AZ, CA, FL, NJ, TX, UT, WA

8. Themes in Emerging Waiver Proposals • Eligibility, Benefits, Cost Sharing • Limiting eligibility/enrollment • Benefit restrictions • Increasing costs for beneficiaries (premiums, cost sharing) • Care Management • Expanded managed care, including long-term care services and supports • Health homes/medical homes • Behavior incentives/penalties • Focus on Dual Eligibles • Delivery and Payment Reforms • Maximizing Federal Funding

9. Looking Ahead: Key Questions to Consider • What kinds of changes require waiver authority? • What types of waiver changes will be approved? • What are the potential implications of proposed waiver changes for beneficiaries, providers, and states? • How transparent is the waiver approval process and how is public input being incorporated? • How will waivers be monitored and evaluated?