Medicaid is implemented through partnerships between states and the Federal Government, with each paying part of the cost. Each state must develop a State Medicaid Plan that describes the benefits its program will provide, and must have this plan approved by the U.S. Department of Health and Human Services (HHSs) Centers for Medicare and Medicaid Services (CMS). Federal law and CMS regulations prescribe a core set of benefits that each state must provide.2 States may decide to cover additional optional services,3 and may limit eligibility for certain additional services to specific groups of people. States may modify their Plans coverage of services beyond the federally-mandated core, including changes in provider qualifications, definitions of covered services, target populations, and payment mechanisms for optional benefits. States must obtain CMS approval for all such modifications through State Plan Amendments (SPAs).
Federal law also allows states to seek waivers of certain Medicaid rules and regulations. Two kinds of waivers are authorized under federal law--Section 1115 and Section 1915. States may apply for a Section 1115 waiver to obtain program flexibility to test new approaches to financing and delivering Medicaid. States may apply for Section 1915 waivers to introduce managed care arrangements (under 1915(b)) or to provide long-term care in home and community-based rather than institutional settings (under 1915(c)). Waivers have sometimes been used to expand Medicaid eligibility to people who otherwise were not eligible (prior to passage of the ACA), to implement changes in Medicaid payment and delivery systems through managed care, and/or to provide Medicaid coverage for some of the services that are needed by chronically homeless people and PSH tenants. Some examples of waivers that allow states to provide services to chronically homeless people and PSH tenants will be described in this paper.