Issue Briefs | Feb 3, 2020

CMS Guidance Authorizes Medicaid Demonstration Applications That Cap Federal Funding: Implications for States

Allison Orris, Patricia Boozang, and Julian Polaris, Manatt Health

On January 30, 2020, the Centers for Medicare & Medicaid Services (CMS) issued a State Medicaid Director Letter (SMDL) inviting states to apply for Section 1115 demonstration projects that would impose caps on federal Medicaid funding for the adult expansion and some other adult populations in exchange for new programmatic flexibility. Referred to as “Healthy Adult Opportunity” by CMS, these demonstrations would allow states to choose between two types of capped funding arrangements: a per capita cap or an aggregate cap (i.e., a block grant). Our colleagues at Manatt Health examined the guidance in detail and put together an issue brief that reviews the key features of the proposed capped funding demonstrations and highlights the considerations for states.