Section 1115 demonstration waivers

Under Section 1115 of the Social Security Act, the Secretary of the U.S. Department of Health and Human Services (the Secretary) can waive almost any Medicaid state plan requirement under Section 1902 of the Social Security Act to the extent necessary to carry out a demonstration or experimental project furthering the goals of the program. The Secretary can also permit federal financial participation for costs not otherwise matchable, allowing states to cover services and populations that are not included in the Medicaid state plan. States use Section 1115 demonstration waivers for a wide variety of different policies and purposes. These waivers can be comprehensive, covering the entirety of a state’s Medicaid program, or they can be narrow.

In the event of a disaster or an emergency, a state may request a new Section 1115 demonstration waiver or amend or extend an existing Section 1115 demonstration to adopt special policies to respond to the emergency, such as to provide coverage to additional populations or expedite enrollment.

Section 1115 demonstrations related to federally designated public emergencies are not subject to many of the process requirements that normally apply to Section 1115 demonstrations. Specifically, states are not required to demonstrate budget neutrality related to federally designated public emergencies. The Centers for Medicare & Medicaid Services (CMS) may waive, in whole or in part, the federal and state public notice and comment procedures to expedite a decision on the state’s Section 1115 request. To obtain an exemption from the public notice and comment procedures, a state must meet the following criteria: that it acted in good faith and in a diligent, timely, and prudent manner; that the circumstances constitute an emergency that could not have been reasonably foreseen; and that a delay would undermine or compromise the purpose of the demonstration and would be against the interest of beneficiaries. CMS publishes disaster exemption determinations within 15 days of approval, as well as the revised timeline for public comment or post-award processes, if applicable (CMS 2017).

COVID-19 Section 1115 demonstration waivers

CMS developed a special Section 1115 demonstration opportunity in response to the COVID-19 pandemic. Under this demonstration opportunity, approved flexibilities will expire within 60 days following the end of the public health emergency. States are not required to submit budget neutrality calculations or conduct a public notice and input process. Moreover, CMS is exercising its discretionary authority to expedite its normal review and approval process (CMS 2020).

As of October 27, states that have received approval for COVID-19 Section 1115 demonstrations include Hawaii, Michigan, New Hampshire, North Carolina, Rhode Island, Texas, and Washington. Several other states have made modifications to existing Section 1115 demonstrations through Appendix K. These modifications involve changes to home- and community-based services (HCBS). [1] At least 20 other states have submitted Section 1115 demonstration applications to CMS.

Approved demonstrations

Most states with approved COVID-19 Section 1115 demonstrations received approval for a relatively narrow set of authorities related to eligibility and enrollment for beneficiaries receiving long-term services and supports (LTSS) and HCBS and payment for HCBS and LTSS providers (CMS 2020 a, 2020b, 2020c, 2020d, CMD 2020e). Michigan also received approval to modify certain process requirements, including those related to telehealth, collection of data for quality measures, and incident reporting (CMS 2020f). Texas received approval to make changes to the inpatient hospital benefit for hospital stays related to COVID-19. These include extending the 30-day spell of illness limitation to allow a beneficiary to stay up to 60 days in the hospital, and lifting the $200,000 benefit limitation to allow coverage for hospital stays that exceed that cost. (CMS 2020g).

These states requested other authorities that CMS either denied or is still considering. For example, CMS denied Washington’s request to establish a temporary eligibility group for individuals with incomes at or below 200 percent of the federal poverty level and subsidize the cost of new or exchange plan coverage for this group.

However, CMS is still considering Washington’s requests to establish a disaster relief fund to cover costs associated with treatment for uninsured individuals with COVID-19, housing, nutrition support, and other COVID-related expenditures; to make retainer payments beyond the 30-day limit for HCBS providers, as well as payments to other provider types; and to allow transportation brokers to directly provide non-emergency medical transportation (CMS 2020 a). CMS is also still considering New Hampshire’s request to waive compliance with certain requirements related to liens, adjustments, and recoveries of medical assistance correctly paid, transfer of assets, and treatment of certain trusts (CMS 2020b).

For the most up to date information on approved state Section 1115 demonstration waivers, see CMS’s State Waivers List webpage and CMS’s Coronavirus Disease 2019 (COVID-19): Section 1115 Demonstrations webpage.

Other state requests

Among the outstanding state requests, some are in line with authorities outlined in the COVID-19 Section 1115 demonstration opportunity template, or are similar to those approved during past national emergencies. Others go beyond the scope of what CMS has previously approved under Section 1115 authority (as part of an emergency response or otherwise).

CMS has noted that some of these requests may be possible using other available sources of funding or other authorities. For example, in Washington’s demonstration approval letter and on stakeholder calls, CMS indicated that the agency will consider other available federal funds, including funds made available through the CARES Act, before approving certain state requests for expenditure authority (CMS 2020, Hinton et al. 2020). Additionally, CMS officials indicated that the agency will not approve expenditure authority for housing or additional nutrition service (Hinton et al. 2020). Several such requests, including requests to provide housing and nutrition support to certain beneficiaries, were included in North Carolina’s demonstration application; while these were not denied, the state withdrew the requests (CMS 2020c).

Examples of COVID-19 Section 1115 Demonstration Waiver Requests

Request type	Examples
Eligibility and enrollment	provide coverage for individuals who are uninsured for COVID-related testing, treatment, and care, up to 100 percent FPL (CA), 200 percent FPL (NC), or without regard to income (i.e., on the basis of uninsured status only) (CO, IL) expand use of presumptive eligibility (CO, IA, IL) allow Medicaid applicants to self-attest to elements of an application (CO, IL, MA, NC) waive or modify level of care requirements or annual level of care assessments (CO, NM, RI) delay redeterminations (CO, IL, NC) or provide continuous eligibility (IA) remove existing waiver of retroactive eligibility (MA)
Benefits	provide COVID-related testing and treatment services to individuals who are undocumented immigrants by designating those services as emergency services (CA) provide temporary housing for individuals with a COVID-19 diagnosis, known exposure, or other risk factors, who are experiencing homelessness (AZ, IL, NC, RI) provide coverage of certain other social supports, including meals or nutrition support during social distancing (AZ, IA, IL, NC, RI), child care for health care workers (RI), mobile phone minutes for beneficiaries experiencing homelessness (RI), and supplies and equipment to beneficiaries that prevent the spread of COVID-19 (CO) remove limitations on certain benefits, including spouse caregiver hour limits (AZ), limits on residential treatment (CA), and time limits on refilling current prescriptions (CO) remove or loosen telehealth restrictions (CO, RI) loosen IMD restrictions, provide coverage of IMD services to those under 65 (AZ, CA, MA, NC, RI)
Cost sharing	cover cost sharing for COVID-related treatment for insured individuals (IL) waive income deductibles upon request by those experiencing financial hardship (MA)
Provider payment	make retention payments to all provider types as appropriate, including but not limited to HCBS providers (AZ, RI, WA) make directed payments to behavioral health providers through MCOs without prior approval of a directed payment preprint (NC) increase payments to nursing facilities and ICF/IIDs (CO) and to opioid treatment program services (CA) provide incentive payments to certain providers that report sufficient and timely data (CA) increase payments to hospitals by waiving hospital upper payment (MA)
Delivery system	option to cover nursing facility or ICF/IID services provided by entities not meeting conditions of participation (CO) cover services provided to eligible inmates in inpatient medical facilities owned or operated by a state correctional facility (CA, IL, SC)
Other expenditure authority	establish a disaster fund to cover certain costs associated with prevention and treatment of COVID-19 (e.g., uncompensated care costs for hospitals and other providers, costs of environmental modifications to hospitals and health clinics, costs of developing health care infrastructure, and support for providers experiencing sharp declines in utilization) (AR, NC, NY, OR, TN, WA)

Notes: FPL is federal poverty level. IMD is institution for mental diseases. MCO is managed care organization. ICF/IID is intermediate care facility for individuals with intellectual disabilities. This table is intended to highlight examples of requested authorities; it is not exhaustive and does not capture all requests in all states. Because of waived public notice and transparency requirements, formal applications are not publicly available for all states that we know have submitted requests. For some states, summaries or plans for requests are available but formal applications are not. For other states, MACPAC has been unable to find information on the authorities requested.
Sources: MACPAC 2020 analysis of AHCCCS 2020, DHCS 2020, RI EOHHS 2020, HCPF 2020, HFS 2020, HSD 2020, IA DHS 2020, MA EOHHS 2020, NCDHHS 2020, OHA 2020, SCDHHS 2020, State of Arkansas 2020, State of Tennessee 2020, State of New York 2020, WA HCA 2020.

[1] Appendix K is typically used to modify Section 1915(c) HCBS waivers. However, states that provide HCBS through Section 1115 demonstrations may use Appendix K to amend HCBS policies in their demonstrations.