New Federal Guidance Aims to Streamline Section 1115 Demonstration and 1915 Waivers and State Plan Amendments Processes

On Monday, the Centers for Medicare & Medicaid Services (CMS) released two informational bulletins detailing a new, streamlined approach for the review and management of Section 1115 demonstrations and state plan amendments and 1915 waivers. The streamlined approach, which CMS promised to undertake last March, is significant for states because it may enhance their ability to design innovative health care delivery initiatives in their Medicaid programs. These changes come at a critical time as states develop new approaches to reduce health care costs and stem the opioid epidemic.

Overall, state health policymakers are expected to welcome CMS’ efforts to expedite the review of waiver applications, reduce reporting requirements, develop templates related to demonstration monitoring, and solicit state input regarding budget neutrality requirements. Below is a summary of the changes expected to impact states.

Section 1115 Waiver Demonstration Process Improvements
To improve the Section 1115 Waiver review and implementation process for states, CMS proposes the following measures:

Expedited Reviews

  • Revise and simplify the waiver demonstration application template, work closely with states to facilitate the waiver negotiation process and develop appropriate and flexible Special Terms and Conditions (STC), and offer standard approved STC language in similar demonstrations when appropriate.
  • Develop parameters for faster approval of certain demonstrations or elements of demonstrations that are substantially similar to ones already approved in other states.
    • For example, when possible and in accordance with public notice and transparency requirements, CMS may approve extensions of routine, successful and non-complex waiver and expenditure authorities in a state for a period of up to 10 years, and approve more complex authorities for shorter periods.
  • CMS has also created a “fast track” process for reviewing state proposals to extend established Section 1115 demonstrations that continue longstanding policies with confirmed program outcomes and meet certain criteria.
    • In some cases, extension requests may be segmented to expedite the approval of routine waiver and expenditure authorities while more complex elements are considered under traditional time frames.

Enhancing Transparency

  • Continue offering states technical assistance opportunities prior to submission of demonstration applications, inform states of any information gaps that need to be addressed, and provide states with a checklist to help them meet transparency requirements.
  • Implement a more formalized team approach to more efficiently coordinate federal efforts related to the demonstration approval process.
  • Work with states to determine if other federal Medicaid authorities could be used to meet state policy goals or if other federal funding sources could support efforts already underway (e.g. systems development).
  • Promote early discussions about expectations for states related to demonstrations and state capacity to provide data required for evaluations.

Budget Neutrality

  • Standardize budget neutrality STCs to clearly indicate which populations, services, and costs were included in the agreement, as well as what trend rates were used to project growth (e.g. a state’s historical trends or the President’s Budget trend rate).
  • Seeking state input: CMS acknowledges that budget neutrality can be complex and that additional written, formal guidance on policy and methodology for demonstrating neutrality may be provided to states at a later date. CMS welcomes state input on the development of this guidance, including the specific type of information that would be most useful and the challenges involved with budget neutrality calculations.

Demonstration Monitoring and Evaluation

  • Target resources to the most significant policy and program priorities, improve measurement set to facilitate state data collection and reporting, better identify challenges so that mid-course corrections can occur, and strengthen state evaluation designs to produce more robust analyses.
  • Minimize the reporting burden for states by reducing the number of monitoring reports for all demonstrations by combining the fourth quarterly reports with annual reports, and for certain demonstrations that meet specific requirements, further reduce the frequency of reports.
  • Develop standardized templates that will also be customizable to meet the needs of states’ specific demonstration designs, along with the development of core metric set for high priority demonstrations.
  • Provide general evaluation design and report guidance for all Section 1115 demonstrations, and where appropriate provide standardized monitoring and evaluation STCs.
  • Other enhancements to the evaluation process (which will be phased in to minimize disruption in existing evaluation plans) include encouraging states to use existing and nationally recognized metric sets when appropriate, consideration of quality measures that states already track and report and integration of these into demonstration population reporting, and providing states with technical assistance in development of milestones and performance metrics.

While states welcome the expedited process, some questions remain:

  • How will the expedited waiver review processes align with public comment requirements?
  • Would segmented waiver approval processes potentially be administratively burdensome for states?
  • How should budget neutrality be defined and will the baseline for determining it reflect the projected cost growth in a state?
  • Will the process to streamline approval of waivers that are substantially similar to approved waivers in other states be challenged by those concerned that 1115 Waivers are designed to test new approaches before replicating them?

State Plan Amendment and 1915 Waiver Process Improvement
To improve the efficiency of the State Plan Amendment (SPA) and 1915 waiver process for states, CMS proposes the following initial strategies:

Early SPA and Waiver Review

  • As of Oct. 1, 2017, CMS has held calls with states within 15 days of receipt of the SPA or Section 1915 waiver submission to discuss the overall intention of the submission, key timelines, and early identification of major policy issues.

SPA and 1915 Waiver Toolkits

  • Resources for states that will be regularly updated—such as templates, checklists, and preprints, available here on—to assist in the development of SPA and Section 1915 waiver submissions and ensure they are complete.

Reducing Pending SPA Backlog

  • CMS plans to establish a strategy with states to resolve the backlog of pending SPAs by providing states with information about any requests for additional information, and address the amendments in batches starting with the older SPAs.

Expand MACPro to Additional SPA Authorities

  • MACPro is CMS’ web-based submission and review system for SPAs, with Health Home SPAs the first ones processed through it. CMS recently expanded the use of MACPro for MAGI-based eligibility and administration SPAs, and is considering adding additional SPA authorities.

These proposed strategies will be helpful for states in streamlining the SPA and 1915 waiver approval processes. As noted in the guidance, CMS plans to make additional process improvements and expand resources for states in the coming months. States and CMS can continue to work together on these efforts to ensure they reduce burdens on states and increase efficiencies, and NASHP will track any further guidance related to these topics.