Waivers

Waivers, Program Administration

Medicaid waivers can be classified broadly as research and demonstration waivers (Section 1115 waivers) or program waivers (Section 1915(b) and Section 1915(c) waivers). Demonstration waivers allow a state to test new or existing approaches to program financing and delivery. Historically, they have been time-limited, research-oriented, and subject to evaluation (Dobson et al. 1992). Program waivers, on the other hand, have generally been designed to enable widespread replication of discrete, relatively formulaic program reforms (Andersen 1993-1994). Thus, program waivers are intended to expand the array of defined program options available to a state, rather than to provide an avenue of experimentation with new models.
Under these waiver authorities, states can receive permission to forgo various federal requirements for their Medicaid programs. Most commonly, states seek to waive these statutory principles:

  • 1902(a)(10)(B)—Comparability: A Medicaid-covered benefit generally must be provided in the same amount, duration, and scope to all enrollees. Waivers of comparability allow states to limit an enhanced benefit package to a targeted group of persons identified as needing it most and to limit the number of participants to implement a demonstration on a smaller scale.
  • 1902(a)(23)—Freedom of choice: All beneficiaries must be permitted to choose a health care provider from among any of those participating in Medicaid. Freedom of choice waivers are typically used to allow implementation of managed care programs or better management of service delivery.
  • 1902(a)(1)—Statewideness: Statute dictates that a state Medicaid program cannot exclude enrollees or providers because of where they live or work in the state. A waiver of statewideness can limit the geographic area in which a state is testing a new program, facilitate a phased-in implementation of a program, or reduce state expenditures by limiting eligible participants.

In exchange for the flexibility offered by waivers, states must meet budgetary criteria and provide regular reports and evaluations to CMS to show that the requirements of the waiver are being met. Unlike most state plan options, waivers require lengthy applications and must be renewed periodically.

Program waivers and demonstration waivers are all different ways a state can change its Medicaid program. Generally, the more flexibility allowed by a waiver compared to what is required by statute, the more requirements a state faces as a condition of that flexibility. Table 1 provides a side-by-side comparison of the requirements a state must consider when seeking to modify its Medicaid program.

Table 1: Comparison of Approval Process and Requirements Across Medicaid Waivers

§1115 §1915(b) §1915(c)
Format Use of CMS preprint form recommended Use of CMS preprint form required Use of CMS preprint form recommended
Public review Robust public process required, with additional requirements added by the ACA Public process encouraged; tribal input required Public process encouraged; tribal input required
Federal budget requirements Budget neutrality required Cost effectiveness required Cost neutrality required
Timeframe for approval No required timeframe for CMS approval 90-day clock 90-day clock
Monitoring and evaluation Annual state reports required; evaluations required Must monitor access; independent assessment required Annual state reports required
Approval period Initially approved for five years Initially approved for two years (up to five years if individuals dually eligible for Medicare and Medicaid are included) Initially approved for three years (up to five years if individuals dually eligible for Medicare and Medicaid are included)
Renewal Customarily up to three years (up to five years if individuals dually eligible for Medicare and Medicaid are included) Customarily up to two years (up to five years if individuals dually eligible for Medicare and Medicaid are  included) Customarily up to five years