The Centers for Medicare & Medicaid Services (CMS) is shifting its policy on Section 1115 Medicaid waivers.
In letters to states released Thursday, the agency said it won’t extend or grant waivers for continuous eligibility (PDF) in Medicaid or the Children’s Health Insurance Program (CHIP).
Additionally, programs using Medicaid funds (PDF) for job training or employment-related activities will see the same fate. These initiatives include strengthening primary care, behavioral health, dental care and home- and community-based services.
The shift is essential to save taxpayers money and protect the programs’ long-term future, the agency explained.
“For too long, Medicaid and CHIP have drifted away from their core mission of providing a safety net for the truly vulnerable—that ends now,” said CMS Administrator Mehmet Oz, M.D., in a statement. “CMS is restoring commonsense guardrails to Medicaid and CHIP, which will ensure that Medicaid remains a lifeline for those who are eligible and in need of quality health care.”
Section 1115 waivers give states the ability to test strategies in Medicaid. Dollars are often spent on health-related social needs (HRSNs) such as nutrition, housing and transportation.
Continuous eligibility lets people remain enrolled in Medicaid.
Under the Biden administration, the CMS approved waivers as recent as November allowing states to provide extra years of eligibility for children beyond the 12 months required by federal law. In several states, continuous eligibility was given for recently incarcerated individuals.
The previous administration argued this policy aided states in reducing administrative burden and helped families maintain healthcare coverage, even when they were suddenly ineligible after a change in income, for example. They pointed to evidence showing coverage leads to better health and educational outcomes, resulting in greater tax revenue and less reliance on federal programs.
But the Trump administration’s stance is states may be overpaying to provide continuous eligibility coverage for people that aren’t necessarily eligible.
“In some cases, children could have remained continuously enrolled in Medicaid or CHIP for up to six years, even if a change in their circumstances would have otherwise made them ineligible at some point,” the agency said in a news release. “In other cases, CMS has approved up to 24 months of continuous eligibility for adults or targeted adult subpopulations.”
As for workforce development programs, the CMS said more than $1 billion has been committed to five states: California, Massachusetts, New York, North Carolina and Vermont. But support will now be given to “actions that demonstrate clear health benefits, cost savings and strong accountability,” the agency said.
In April, the CMS restricted funds for designated state health and state investment programs under Section 1115 waiver authority. These funds prioritized rural broadband and student loan repayments and were not considered “integral components” of Medicaid waivers, the administration said.
The agency also pulled guidance on health equity for Medicaid waivers in March. One former Medicaid official under President Joe Biden warned “failing to finance HRSNs with Medicaid will disproportionately harm” people in Republican states.
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