A Medicaid waiver is an agreement between a state and the Federal Government that exempts the state from certain provisions of federal law. Sections 1915 and 1115 of the Social Security Act define specific circumstances under which CMS may approve a state's waiver requests. For example, most Medicaid benefits must be made available on a statewide basis, but a Medicaid waiver can allow a state to waive "statewideness" in order to implement some changes or offer some benefits in only part of a state.
Medicaid waivers under Section 1915 or 1115 allow some states to partner with managed care organizations or health plans to administer some of the benefits covered under their Medicaid state plan. Medicaid 1915(b) waivers allow states to implement managed care plans that may restrict the types of providers that people may use to get Medicaid benefits. A 1915(b)(3) waiver allows a state to use the savings achieved by a managed care delivery system to provide additional services. If a managed care delivery system is able to save money by improving care coordination and integrating services for people with complex health needs, this type of waiver will allow the state to use some of its savings to provide additional services, including services that are not explicitly part of the Medicaid state plan. An example of one state's use of this waiver appears in the text box on this page.
|Michigan used a 1915(b)(3) waiver to implement a managed care delivery system for Medicaid mental health and substance use disorder services, and to obtain approval to use savings for additional waiver services. Community Living Supports are covered among the additional waiver services and supports the state has made available to Medicaid beneficiaries whose needs exceed the benefits available from a Medicaid Health Plan. Community Living Supports are part of the services delivered in PSH for some people with mental illnesses who have experienced chronic homelessness.|
As described earlier, Medicaid 1915(c) waivers allow states to cover HCBS for people who would otherwise qualify to receive institutional care.
Section 1115 research and demonstration waivers can be used to give states broad flexibility to design and test innovative ways to deliver and pay for Medicaid coverage. At the discretion of the Secretary of HHS, an approved 1115 waiver can give a state the opportunity to implement projects that test policy innovations. States can use an 1115 waiver to obtain approval to use Medicaid funding to pay for the costs of services that would not otherwise qualify for federal match (known as "Costs Not Otherwise Matchable") but which further the goals of the Medicaid program. Before passage of the Affordable Care Act, several states used 1115 waivers to obtain Medicaid funding to expand coverage to people who would not otherwise meet Medicaid's categorical eligibility requirements, including adults without children. The waivers for two of these states are described below.
California's "Bridge to Reform" 1115 waiver allowed counties to expand coverage through a Low-Income Health Program. By providing federal funding to match county spending for medical care provided to previously uninsured patients, this coverage expansion (before Medicaid eligibility expansion in 2014) freed up some county funds to pay for other services, including services in PSH for people who are experiencing homelessness and receiving care in county hospitals and clinics. The Los Angeles County Department of Health Services is paying for services in PSH and partnering with public housing authorities and other local government agencies to create housing opportunities, with the goal of reducing avoidable hospitalizations and emergency room visits and improving access to more appropriate care to produce better health outcomes for people experiencing chronic homelessness.
Massachusetts has an 1115 waiver that includes provisions allowing the Massachusetts Behavioral Health Plan (the state's Medicaid behavioral health carve-out) to pay for diversionary services to reduce avoidable hospitalizations. These services are delivered through the Community Support Program for People Experiencing Chronic homelessness (CSPECH; described in more detail in Chapter 5).