Sneak Preview: Additional Input Urged for Section 1115 Changes

Jerry Ashworth
May 30, 2019 at 14:27:32 ET
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(The following was excerpted from a recent article in the Federal Grants Management Handbook.) The Department of Health and Human Services (HHS) Centers for Medicare and Medicaid Services (CMS) plans to develop standards for determining when state-requested amendments to a pending Medicaid section 1115 demonstration application are so substantial that it would require additional public comment, but the Government Accountability Office (GAO) said the agency should issue policies seeking more public input prior to states submitting the changes to their applications to encourage transparency.

When administering their Medicaid programs, states have flexibility in establishing provider payment rates, and in covering many types of optional benefits and populations. Under section 1115 of the Social Security Act (Pub. L. 74-271), states may allow Medicaid providers to deliver care in innovative ways that fall outside of many of the program’s applicable requirements, and section 1115 demonstrations enable CMS to allow costs under Medicaid state projects that otherwise would not be covered. For example, states may use these demonstrations to test new approaches to delivering care to generate savings or efficiencies or improve quality and access.

Demonstrations are typically approved for an initial five-year period that can be renewed for additional demonstration periods. According to Medicaid.gov, 31 states have active Medicaid demonstrations under section 1115, and 43 states, as of November 2018, had operated at least part of the Medicaid programs under section 1115 demonstrations.

To ensure transparency for its demonstration programs, HHS developed policies in 1994 that require public input at the state and federal levels on proposed state demonstrations. The Patient Protection and Affordable Care Act (Pub. L. 111-148) required HHS to implement a broader set of transparency procedures and issue regulations establishing review and approval processes for demonstrations that would ensure a meaningful level of public input and transparency around demonstration goals and outcomes. In 2012, CMS issued regulations (42 C.F.R. Part 431, subpart G) that included transparency requirements for states seeking approval for new demonstrations and for extensions of existing demonstrations.

The regulations include details addressing the collection of public input at the federal level on demonstration applications, and for posting information on approvals and outcomes, such as monitoring and evaluation reports. However, neither the Affordable Care Act nor HHS’ 2012 regulations establish transparency requirements for amendments to new or existing demonstrations.

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