Sneak Preview: CMS Provides New Section 1115 Guidance, Templates

Jerry Ashworth
March 29, 2019 at 08:48:12 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 Centers for Medicare and Medicaid Services (CMS) recently issued guidance to help states that have section 1115 Medicaid demonstrations to evaluate and report on the design of their programs, as well as templates to standardize how states report on Medicaid community engagement and efforts to monitor the program’s metrics. The guidance and templates were developed to help CMS determine whether reform demonstrations are achieving expected outcomes, while testing and evaluating new approaches to improving overall outcomes for Medicaid beneficiaries.

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, 31 states have active Medicaid demonstrations under section 1115. Medicaid policy requires that these demonstrations must be “budget neutral,” in that the federal government would spend no more on a state’s Medicaid program than it would have spent without the demonstration. In addition, CMS places limits on the amount of federal funds that states can spend over the life of a demonstration.

Section 1115 demonstrations specifically allow states to test new policy approaches such as requiring work or community engagement among working age adults, providing premium assistance to purchase private coverage, and engaging certain beneficiaries through incentives and disincentives for meeting certain program requirements. These programs are designed to determine whether such approaches lead to targeted outcomes like increased employment, successful transitions to private coverage, better financial independence, and improved beneficiary health and well-being.

(The full version of this story has now been made available to all for a limited time here.)

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