Section 1915(b) of the Social Security Act, enacted in 1981 as part of the Omnibus Budget Reconciliation Act (P.L. 97-35), provides states with the flexibility to modify their delivery systems by allowing CMS to waive statutory requirements for comparability, statewideness, and freedom of choice. States typically use two provisions in the law to implement managed care delivery systems under the following authorities:
- 1915(b)(1)—Primary care case management or specialty service arrangement. This authority allows states to mandate enrollment in a managed care plan or a primary care case management (PCCM) program. Under both models, freedom of choice must be waived to limit the providers through whom enrollees access services.
- 1915(b)(4)—Restriction to specified providers. States may use waivers to limit the number or type of providers who can provide specific Medicaid services—for example, for disease management or transportation. This includes selective contracting by states paying providers on a fee-for-service (FFS) basis. Freedom of choice cannot be restricted for providers of family planning services and supplies.
Because these program designs restrict enrollees’ freedom of choice, Section 1915(b) waivers are often referred to as freedom-of-choice waivers. It is worth noting that managed care programs can also be implemented under state plan authority.
Process and requirements
Because Section 1915(b) closely outlines the standards for and content of the programs to be implemented under its authority, CMS requires states to use a preprint form in these waiver applications. The application requires states to show that the Section 1915(b) waiver will be cost effective, meaning that its use will not cause expenditures to be higher than they would have been without the waiver (42 CFR 431.55). To demonstrate cost effectiveness, states trend forward their historic Medicaid costs, and compare these costs to the projected costs of the managed care program.
The approval process for Section 1915(b) waivers has the same 90-day clock as SPAs and Section 1915(c) waivers. When a state requests a waiver, it sends to CMS an application with an official transmittal form (Form CMS-179). Once a Section 1915(b) waiver is submitted, the Secretary has 90 days to make a decision; otherwise the proposed change automatically goes into effect. However, the Secretary (or CMS, operating under the Secretary’s delegated authority) can “stop the clock” by writing to request additional information. Once the state submits the requested information, a new 90-day clock begins. CMS may stop the clock only once per waiver (§§1116 and 1915(f)(2), 42 CFR 430.16).
Section 1915(b) waivers are initially approved for two years, with renewals of up to two years. In the Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended), Congress authorized the Secretary to approve Section 1915(b) and (c) waivers, as well as Section 1115 waivers, for five years if they enroll individuals dually eligible for Medicare and Medicaid (§1915(h)(2)). To reduce the burden on states associated with the renewal process, in its March 2018 report, MACPAC recommended extending approval and renewal periods for all 1915(b) waivers from two to five years.
