State Plan Amendments and Waiver Authority

On this page: Medicaid

Background

State plan amendments—a state plan is a contract between a state and the federal government describing how that state administers its Medicaid program. It gives assurance that a state abides by federal rules and may therefore claim federal matching funds for its Medicaid program activities. The state plan specifies groups of individuals to be covered, services to be provided, and methodologies for provider reimbursement.

States send state plan amendments (SPAs) to CMS for review and approval. There are many reasons why a state might want to amend its plan. For example, the state may wish to implement changes required by federal or state law or regulations, or by court orders. States also have the flexibility to request permissible program changes, to make corrections, or to update their plan with new information.

Medicaid waiver authority—strategies to reform Medicaid at the state level rely in part on exemptions from certain federal laws and regulations. These exemptions are collectively known as Medicaid waivers.

Under Section 1115 of the Social Security Act (SSA), the Secretary of the Department of Health and Human Services (HHS) can waive certain federal Medicaid requirements in the context of research and demonstration projects that promote program objectives. Some  states are  seeking permission—through the section 1115 waiver process—to do the following:

  • impose higher than nominal premiums and cost sharing,
  • impose work requirements on certain enrollees,
  • deny access to Medicaid coverage for non-payment of cost sharing obligations and non-compliance with work requirements,
  • impose lifetime limits on enrollment and,
  • waive certain benefits like non-emergency transportation. 

In addition, some states are seeking to diminish access to services by asking for permission to eliminate retroactive eligibility (back-dated eligibility) and presumptive eligibility (an expedited enrollment process that ensures provider payments) for some or all populations. 

Since the enactment of the ACA, some states are seeking waivers to conduct their Medicaid expansions using marketplace-qualified health plans, or to impose higher cost-sharing on beneficiaries. (See this chapter’s section Health Care Coverage: Private Insurance—Individual- and Employment-Based Group Plans.)

Before the ACA, these waiver programs were authorized for two to three years, with a maximum three-year renewal. Under the ACA, new waiver demonstration authority is created for states to receive five-year waivers that provide Medicaid to dual-eligible beneficiaries under SSA Section 1115 (Research and Demonstration Projects), Section 1915(b) (Managed Care/Freedom of Choice Waivers), Section 1915(c) (Home- and Community-Based Services Waiver), and Section 1915(d) (Waivers). The law authorizes dual-eligible waivers to be conducted over longer periods of time and allows them to be renewed for five-year periods if certain conditions are met.

The ACA also created transparency and public-notice procedures for Section 1115 research and demonstration projects. The law increases the degree to which information about Medicaid and CHIP waiver applications and approved demonstration projects must be made available to the public. It also promotes greater transparency in the review and approval of waivers. The ACA transparency requirement does not apply to Medicaid state plan amendments.

Some states are using the Section 1115 waiver process to implement the state option to expand their Medicaid programs under the ACA. States with approved waivers will enroll their Medicaid-expansion populations in private insurance plans through the health insurance marketplaces.

Under federal law, states have the option to implement estate recovery for receipt of primary and acute-care services. Thus individuals who enroll in the Medicaid expansion could be subject to estate recovery rules (see Chapter 8, Long-Term Services and Supports).

 

State Plan Amendments and Waiver Authority

General

In this policy: FederalState

State waivers from certain aspects of the Medicare and Medicaid statutes are appropriate and even desirable under some circumstances. However, in order to safeguard existing coverage and maintain important protections, the criteria in this waiver program section must be met.

The waiver process should not be used to gain permission to disenroll or deny services to eligible beneficiaries, impose lifetime limits on Medicaid eligibility, or limit or cap spending for important benefits or necessary care.

Budget neutrality should not be achieved by threatening existing services for eligible beneficiaries.

The federal government should employ rigorous oversight of all Medicaid waivers.

Eligibility

In this policy: FederalState

The entitlement nature of Medicaid should apply to expansion populations. Current prohibitions against enrollment caps, exclusions for preexisting conditions, and waiting periods should not be waived. In addition, policies that allow for presumptive and retroactive eligibility for Medicaid should be maintained.

Eligibility expansions should be consistent with the principle of covering those who are more in need before covering those who are less in need. For example, programs should not extend coverage to some people with income at 200 percent of the poverty level unless they have also extended coverage to those below that level.

Transparency in the waiver and SPA process

In this policy: FederalState

Federal and state governments must comply with the transparency requirements established by the ACA.

The federal government should extend the transparency requirement to include amendments to waivers and SPAs.

Beneficiary impact statement

In this policy: FederalState

States’ waiver and plan-amendment applications should include a beneficiary impact statement that analyzes the application’s expected effect on all beneficiaries, and a detailed explanation of the state’s plan to monitor these effects continuously.

Cost-sharing

In this policy: FederalState

The federal government should not allow states to impose or enforce greater than nominal Medicaid premium- and cost-sharing on Medicaid beneficiaries.

Coverage

In this policy: FederalState

Federal and state governments must ensure that waivers provide for coverage of all mandatory Medicaid services in the same amount, duration, and scope for all eligible beneficiaries. Changes in benefits should not deny access to necessary care.

Federal and state governments should ensure that expansion populations have adequate access to the same or comparable provider networks as those available to nonexpansion populations.  

Federal and state governments must ensure that waivers that include Medicaid beneficiaries with disabilities, older adults who need LTSS, and people with mental illness or other complex health care needs demonstrate adequate protections for these populations, including the adequacy of provider networks.

Adequacy of provider networks

Federal and state governments should ensure that expansion populations have adequate access to the same or comparable provider networks as those available to nonexpansion populations.

Federal and state governments must ensure that waivers that include Medicaid beneficiaries with disabilities, older adults who need LTSS, and people with mental illness or other complex health care needs demonstrate adequate protections for these populations, including the adequacy of provider networks

Work requirements and personal incentive programs

In this policy: FederalState

The receipt of Medicaid should not be conditioned upon compliance with work requirements or requirements of personal incentive programs.

Medicaid beneficiaries should not be subject to work requirements.  Amendments that condition the receipt of Medicaid on work, education, job search, volunteering, or any other activity are counter to the Medicaid statute’s objective which states that the program’s core focus is to enable States “to furnish medical assistance on behalf of” individuals “whose income and resources are insufficient to meet the costs of necessary medical services” 42 U.S.C. § 1396-1(1)). 

 If work requirements are imposed by a waiver or by a state plan amendment, federal and state governments should ensure that those work requirements and/or any personal incentive programs created by amendment:

  • are not used to deny access to covered services to eligible individuals;
  • are not funded by money redirected from necessary services;
  • are not administered in ways that penalize people who do not participate in incentive programs such as, weight-loss or smoking cessation programs;
  • Define family caregivers as those caring for adults or children;
  • Exempt caregivers from any work requirement; or if caregivers are not exempted, allow caregiving to count as work under the requirement.

Integrating health care and LTSS

In this policy: FederalState

Existing Medicare and Medicaid waiver authority should be used to integrate health care and LTSS under the following conditions:

  • Beneficiaries must retain their rights to full Medicare and Medicaid benefits.
  • The ability of consumers to direct their own care must be ensured.
  • Cost-sharing should be permitted only if it is not a barrier to receipt of services.
  • Cost-sharing and other participation requirements must not result in coercive inducements to enroll or disenroll.
  • Strong consumer protections including an independent ombudsman program and external grievance and appeal procedures must be in place. In addition, beneficiaries must have access to independent enrollment counseling.
  • The state and CMS must provide strong and timely oversight.
  • Consumers must participate in the development, implementation, and oversight of the waiver program.
  • There must be strong quality assurance standards, including measures of functional and medical outcomes.
  • Eligibility criteria for LTSS should consider and appropriately measure the need for these services among people with physical impairments, mental impairments, and chronic illnesses. Determination of need should be based on measures of physical and mental functioning. Individuals should not have to meet medical criteria to be eligible for LTSS.
  • Contracting specifications should be adopted to ensure that a wide range of organizations are able to compete for the opportunity to manage the integrated systems. The organizations could include nonprofit, public, and community-based organizations; entities experienced in delivery of LTSS; and managed care plans.

Outreach and education

In this policy: State

The federal government should require states to demonstrate the ability to conduct robust outreach and education when they use waiver authority to enroll individuals who are eligible for the MAGI-related Medicaid expansion using qualified health plans in the health insurance marketplaces.

Quality and consumer protection

In this policy: FederalState

Quality assurance standards should include, at a minimum, internal and external quality review, meaningful grievance and appeals procedures, strong state monitoring and oversight (e.g., by an ombudsman), and strong sanctions for violations of quality standards.

Research design

In this policy: FederalState

The research design component of SSA Section 1115 waivers must be adequate to support independent waiver evaluation. At a minimum, states should be required to demonstrate that the research goals to be achieved through the waiver are measurable, that states are collecting relevant data, and that the data are being made available to the public.