Issue Briefs | Jan 24, 2023

Recent Section 1115 Demonstration Approvals Highlight CMS and State Priorities

Patricia Boozang, Anne Karl, Mindy Lipson, and Cindy Mann, Manatt Health

Section 1115 demonstration authority is one of the most powerful vehicles available to states to test innovation in their Medicaid programs. Under section 1115 authority, states can waive provisions of Medicaid law and obtain federal approval to fund initiatives not otherwise coverable by Medicaid, provided that proposals are budget neutral to the federal government and further the goals of the Medicaid program. The federal government and states have used the flexibility available under section 1115 authority to advance shared priorities. In the past six months, the Centers for Medicare & Medicaid Services (CMS) has approved renewals and/or amendments to several long-standing section 1115 demonstrations, showcasing the Biden administration’s priorities for use of 1115 authority. This issue brief describes how recent approvals in Arizona, Arkansas, Massachusetts, Oregon, and Vermont highlight that states and CMS are leveraging 1115 demonstrations to implement new coverage strategies; address social drivers of health; strengthen the primary care and behavioral health delivery systems; institute value-based payment initiatives; and advance health equity.