CMS’ new policy framework for section 1115 Medicaid demonstrations

States use section 1115 demonstrations (also known as “waivers”) to test innovations in their Medicaid programs. The U.S. Department of Health and Human Services (HHS) has discretion to approve these demonstration, and, as seen from the history of work-requirement waivers, each administration develops its own waiver policies and priorities. In recent waiver approvals for Arizona, Arkansas, Massachusetts, and Oregon, CMS established a new framework outlining how it will exercise discretion in three important areas:

• addressing social drivers of health, which CMS refers to as health-related social needs (HRSN)
• allowing federal Medicaid matching funds for health-related programs that were formerly exclusively state-funded, and
• achieving budget neutrality.

CMS intends to apply this new framework to other states seeking similar waiver flexibilities and funding.