Medicaid State Plan Amendments and Waiver Authority


How Medicaid programs operate in each state is determined by two primary mechanisms. State plans serve as the contract between the Centers for Medicare & Medicaid Services and each state for the administration of Medicaid. While Medicaid waivers are a mechanism for states to seek flexibility from federal Medicaid mandates. They are often used to test new approaches.  

State plan amendments (SPAs): A state plan is a contract between a state and the federal government describing how the state administers its Medicaid program. It gives assurance that a state will abide by federal rules as a condition of receiving federal funding for its Medicaid program. The state plan specifies groups covered, services provided, and methods for provider reimbursement. 

Whenever a state makes changes to its Medicaid program, it sends a state plan amendment to the Centers for Medicare & Medicaid Services (CMS) for review and approval. For example, the state may wish to implement changes required by federal or state law, regulations, or court orders. States also have the flexibility to request permissible program changes, make corrections, or update their plan with new information. 

Medicaid waiver authority: Strategies to reform Medicaid at the state level sometimes require exemptions, or waivers, from certain federal laws and regulations. There are several types of waivers for which a state may seek federal approval, most commonly including: 

  • Section 1915(b) (Managed Care/Freedom of Choice Waivers): Generally used for implementing managed care. 
  • Section 1915(c) (Home- and Community-Based Services Waiver): Used by states to add home and community-based services as an alternative to institutional care to help enrollees stay in their homes. 
  • Section 1115 and demonstration waivers: Section 1115 and demonstration waivers are used to give states additional flexibility to implement and test state-specific policies that promote the objectives of the Medicaid program. These waivers require an independent evaluation. Section 1115 Demonstrations must be budget neutral, meaning they cannot cause federal spending to be higher than it would have been without the demonstration. States’ 1115 Waivers can vary greatly in scope. 

Many Section 1115 Waivers seek to expand benefits and coverage, implement delivery system changes, and restructure financing. Notable recent state 1115 Waiver proposals have included policies to impose higher than nominal premiums and cost-sharing, work requirements on certain enrollees, and lifetime limits on enrollment. While some of these proposals were initially approved (for example, work requirements), CMS later rescinded the approval or the state paused implementation due to legal challenges (see also this chapter’s section on Individual- and Employment-Based Group Plans)

Waiver programs are authorized for two to five years, depending on the waiver type, with a maximum three-year renewal. However, states can receive five-year waivers if the waiver enrolls dual-eligible beneficiaries under Social Security Act Section 1115 (Research and Demonstration Projects), Section 1915(b), Section 1915(c), and Section 1915(d) (Waivers). The law authorizes dual-eligible waivers to be conducted over longer periods and allows them to be renewed for five-year periods if certain conditions are met. 



Waiver authority

Waiving certain provisions of the Medicare and Medicaid statutes is appropriate and even desirable under some circumstances. However, prior to approving a waiver, the Centers for Medicare & Medicaid (CMS) must ensure that the state meets certain criteria to safeguard existing coverage and maintain important protections. 

States and CMS should publish responses to public comments, including how the comments were considered and (if appropriate) incorporated into the waiver. CMS should also publish a summary of how the state met each of the criteria used to evaluate the state’s application, reflecting the objectives of the Medicaid program. 

States should not use the waiver process to gain permission to disenroll people from Medicaid, deny services to eligible beneficiaries, impose lifetime limits on Medicaid eligibility, eliminate retroactive eligibility, limit or cap spending for important benefits or necessary care, or otherwise inappropriately restrict access to Medicaid. 

States should not achieve statutorily required budget neutrality in the waiver process by threatening existing services for eligible beneficiaries. 

The federal government should conduct rigorous oversight of Medicaid waivers. 


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

Federal and state governments must ensure that eligibility expansions are consistent with the principle of covering those more in need before those less in need. For example, Medicaid programs should not cover people with income at 200 percent of the federal poverty level unless they have extended coverage to those below that income level. 

Transparency in the waiver and state plan amendments (SPA) process

Federal and state governments must comply with the transparency requirements established by the Affordable Care Act (ACA). 

The transparency requirement should be extended to include amendments to waivers and SPAs. 

Beneficiary impact statement

States’ waivers and SPA applications should include a beneficiary impact statement that analyzes the expected effect of any change on all beneficiaries. Applications should also describe the state’s plan to monitor beneficiary impacts on a continuous basis. 


The federal government should not allow states to impose or enforce greater than nominal Medicaid premium- and cost-sharing on Medicaid beneficiaries. It should only be permitted if states and the federal government determine these changes will not deny access to needed care or increase barriers to receiving services. 


Federal and state governments must ensure that waivers cover all mandatory Medicaid services in the same amount, duration, and scope for all eligible beneficiaries. Benefit changes should not deny access to needed care. 

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

To the extent that waivers include Medicaid beneficiaries with disabilities, older adults needing LTSS, and people with mental illness or other complex health needs, federal and state governments must ensure adequate protections for these populations. This includes adequate provider networks. 

Federal and state governments must ensure waivers demonstrate adequate protections for vulnerable populations. That includes Medicaid beneficiaries with disabilities, older adults who need long-term services and supports (LTSS), and people with mental illness or other complex health care needs. The adequacy of provider networks must also be ensured. 

Maintaining strong provider networks is important to beneficiaries. Virtual providers and virtual networks should not completely replace local, in-person providers. Telehealth should be an additional tool for delivering care, not a replacement for in-person care. 

Access to 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 non-expansion populations. 

Waivers that include Medicaid beneficiaries with disabilities, older adults needing long-term services and supports, and people with mental illness or other complex health needs, federal and state governments must ensure adequate protections for these populations, including adequate provider networks. 

Work requirements and personal incentive programs

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

Receipt of Medicaid should also not be conditioned upon compliance with premium payment and other cost-sharing requirements. 

Medicaid beneficiaries should not be subject to work requirements. Waivers and SPAs that condition receipt of Medicaid on work, education, job search, volunteering, or any other activity are counter to the objective of the Medicaid statute. The statute describes that objective as “to furnish medical assistance on behalf of individuals whose income and resources are insufficient to meet the costs of necessary medical services.” 

If work requirements are imposed by a waiver or by a SPA, federal and state governments should ensure those work requirements or any personal incentive programs: 

  • 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, and 
  • exempt caregivers from work requirements, or if caregivers are not exempted, allow caregiving to count as work. 

Integration of health care and LTSS

Federal and state governments must ensure that existing Medicare and Medicaid waiver authority is used to integrate health care and LTSS under the following conditions. 

  • Beneficiaries must retain their rights to full Medicare and Medicaid benefits. Consumers’ ability to direct their own care must be ensured. 
  • Cost-sharing and other participation requirements must not result in coercive inducements to enroll or disenroll or be a barrier to receipt of services. 
  • 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 thorough and timely oversight. 
  • Consumers must have the opportunity to participate in the development, implementation, and oversight of the waiver program. 

Strong quality assurance standards must be in place, 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 is able to compete for the opportunity to manage the integrated systems. The organizations could include nonprofit, public, and community-based organizations; entities experienced in the delivery of LTSS; and managed care plans. 

Outreach and education

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

Quality and consumer protection

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

Research design

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