Advocacy

Section 1115 Waivers

The Medicaid program is a federal partnership with states that was created in 1965 to provide healthcare to low-income and disabled individuals.[i] The federal government funds 50-75% of states’ program costs and the state provides the remaining funds.[ii] The Medicaid program covers a set of federally-mandated benefits, although states have the option of covering certain benefits such as dental and prescription drug benefits.[iii] When a state wants to change administrative requirements of its Medicaid program such as provider payment rates or adding or eliminating services, they must submit a state plan amendment to the Centers for Medicare and Medicaid Services (CMS) for approval.[iv] A state amendment can modify optional benefits, but not federally-mandated requirements.[v] When a state wants to waive federally mandated requirements, they usually seek a Section 1115 Waiver.

What is a Section 1115 Waiver and why is it used?

The Secretary of Health and Human Services (the Secretary) is authorized by Section 1115 of the Social Security Act (the “Act”) to waive certain federal requirements of the Medicaid program as long as the proposals are “likely to assist in promoting the objectives of the Medicaid program.”[i] States use Section 1115 Waivers to waive federal requirements that cannot be waived by a State Plan Amendment. The Secretary can waive federal elements of the Medicaid program such as eligibility, benefits, cost sharing requirements, and provider payments.

 

What are some common examples of parts of the Medicaid program that the Secretary of HHS can waive? [vii]

  • Statewideness (Section 1902(a)(1)): The Secretary can allow the state to only operate a waiver in certain parts of a state.
  • Reasonable Promptness (Section 1902(a)(8)): The state can set a limit on the number of people who can participate in a Section 1115 Waiver demonstration.
  • Amount, Duration and Scope of Services (Section 1902(a)(10)(B)): The Secretary can allow the state to offer a different set of benefits and services to the 1115 Waiver population vs. the rest of the Medicaid population.
  • Rate-Setting/Payment Methodologies (Section 1902(a)(13) and (a)(30)): The state can implement different payment rates and alternative payment models for providers included in Section 1115 Waivers. For example, CMS could approve the state’s request that addiction specialists receive a higher reimbursement than general practitioners when providing care for substance use disorder (SUD).
  • Cost-Sharing Requirements (Section 1902(a)(14)): The Secretary could allow the state to charge Medicaid enrollees a copay when visiting the doctor, beyond what is currently allowed in statute.
  • Freedom of Choice (Section 1902(a)(23)(A)): States can limit which providers Medicaid enrollees are allowed to visit for healthcare.
 

Is there a cost requirement?

While not set in statute or regulation, CMS has set a policy that waivers be budget neutral.[i] This means that should a waiver be approved, the cost of administering benefits for the populations included under the waiver cannot be more than what it would have been without the waiver. In the approval of a waiver, CMS can grant the state spending authority to cover benefits that would not have been covered without a waiver.

 

What does this mean for addiction medicine?

The Section 1115 Waiver applications submitted by states are very broad and are focused on many different areas, including SUD. CMS recently administered new guidance for approving Section 1115 Waivers that focuses on SUD in residential settings and requires states to meet certain goals and milestones to qualify for a waiver. In some states, many individuals with SUD/behavioral health needs will now have access to care thanks to waivers that expanded Medicaid eligibility. Some states have pending or been approved for waivers that integrate physical and behavioral health benefits, allowing practitioners to provide care that more closely resembles the bio/psychological/social model of addiction treatment. Some waiver applications also expand the SUD care continuum and add certain benefits to the list of covered Medicaid benefits.

Most of the waivers that states are seeking or have been approved for allow states to use federal Medicaid funds to pay for residential treatment for non-elderly adults in facilities that have more than 16 beds (Institute of Mental Disease (IMD) exclusion waiver). ASAM is monitoring IMD exclusion waiver applications to ensure that residential treatment providers are able to deliver services consistent with the ASAM Criteria and provide evidence-based substance use disorder treatment, including FDA-approved agonist and antagonist medications for opioid use disorder treatment.

How long are waivers approved for?

CMS has generally approved Section 1115 Waivers for 5 years, but recently has articulated an interest in approving certain waivers for 10 years.

What positions has ASAM taken on these Section 1115 Waivers?

ASAM has largely commented on Section 1115 Waiver applications, amendments, and extensions concerning the IMD exclusion and work requirements. ASAM has supported the waiver of IMD exclusion for those residential treatment providers that are able to deliver services consistent with the ASAM Criteria and provide evidence-based substance use disorder treatment, including FDA-approved agonist and antagonist medications for opioid use disorder treatment.

We have opposed waivers that seek to implement work requirements as a condition of Medicaid eligibility given that many individuals with a SUD already have a problem accessing treatment and this would further impede their ability to do so. Furthermore, there are individuals who are unable to work due to their participation in a treatment program. Work requirements do not increase access to treatment and ASAM will continue to oppose state efforts to seek waiver authority to use them.

What is the approval timeline like?[ix]

What are some common themes?

Category

Approved

Pending

IMD Exclusion Waivers

CA, MD, MA, NJ, UT, VA, WV, KY, IN

AZ, IL, MA, MI, WI, KS, NM, NC

Physical and Behavioral Health Benefit Integration

AZ, CA, MA, NH, NY

 

IL, MI, NC

Work Requirements

KY, IN

UT, AZ, KS, AR, WI, ME, NH, MS

Some Use/Mention of ASAM Criteria

CA, UT, DE, VA, WV, IN

NM, IL

ASAM Levels of Care

MA, MD, NJ, VA, WV, IN

NM, IL

Modifying/Expanding Behavioral Health Benefits

DE, HI, MA, VA, WV, IN

KS, FL, HI, IL, NM

Drug Testing as Requirement for Eligibility

 

WI

Changes to Utilization Management Techniques

NH, VA

MI

Drug Formulary Changes

 

MA, AZ*

Source: ASAM Staff evaluation of approved and pending 1115 Waivers from the CMS State Waivers List, with consultation of the Kaiser Family Foundation’s Approved Section 1115 Medicaid Waivers and Pending Section 1115 Medicaid Waivers.

*AZ has declared interest in seeking changes to their prescription drug formulary, but has not submitted a waiver for this particular use.

Source: Kaiser Family Foundation, State Health Facts, Approved Section 1115 Medicaid Waivers and Pending Section 1115 Medicaid Waivers, January 24, 2018. https://www.kff.org/medicaid/issue-brief/which-states-have-approved-and-pending-section-1115-medicaid-waivers/

Notes: States with approved and pending status have waiver applications that have been approved and concurrently have pending waiver amendment or extension applications. States may seek Section 1115 Waivers for conditions or system delivery forms unrelated to behavioral health. This graphic is only representative of states seeking waivers related to behavioral health and is not intended to be representative of the entire Section 1115 Waiver landscape.

Disclaimer

The American Society of Addiction Medicine (ASAM) has developed this Section 1115 Waivers FAQs for informational purposes only. These FAQs have been developed by sources knowledgeable in their fields and have been reviewed by a committee. ASAM cannot guarantee that the information contained herein is in every respect accurate, complete, or up to date. 1115 Waivers vary by state and specific questions about the many aspects of a state’s waiver should be directed to CMS. ASAM, its committee members, authors or editors assume no responsibility for, and expressly disclaim liability for, damages of any kind arising out of or relating to any use, non-use, interpretation of, or reliance on information contained or not contained in these FAQs. In no event shall ASAM be liable for direct, indirect, special, incidental, or consequential damages arising out of the use of such information or material. For information about this FAQ or to provide feedback, please contact Corey Barton, Manager of ASAM Private Sector Relations at (301) 547-4106, or cbarton@asam.org.


[i] Medicaid 101. (n.d.). Retrieved January 29, 2018, from https://www.macpac.gov/medicaid-101/

[ii] Ibid

[iii] Ibid

[iv] Waivers. (n.d.). Retrieved January 29, 2018, from https://www.macpac.gov/subtopic/waivers/

[v] Ibid

[vi] About Section 1115 Demonstrations. (n.d.). Retrieved January 29, 2018, from https://www.medicaid.gov/medicaid/section-1115-demo/about-1115/index.html

[vii] List of Frequently Requested Waivers and Expenditure Authorities. (n.d.). Retrieved January 29, 2018, from https://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Waivers/1115/Downloads/List-of-Waivers-and-Expenditure-Authorities.pdf

[viii] About Section 1115 Demonstrations. (n.d.). Retrieved January 29, 2018, from https://www.medicaid.gov/medicaid/section-1115-demo/about-1115/index.html

[ix] 1115 Application Process. (n.d.). Retrieved January 29, 2018, from https://www.medicaid.gov/medicaid/section-1115-demo/how-states-apply/index.html

Last Updated 02/05/2018