Blog: How Far Do Section 1115 Medicaid Experiments Designed to Restrict Eligibility and Enrollment Veer From the Norm? A 25-Year Perspective

By Alexander Somodevilla, Maria Velasquez, and Sara Rosenbaum

Introduction

Section 1115 of the Social Security Act grants the Health and Human Services Secretary unique powers to  approve  and fund state experimental or pilot demonstration projects that in his judgment are “likely to assist in promoting” Medicaid’s objectives. By law, Medicaid’s core objective is to furnish medical assistance to people whose income and resources are insufficient to cover the cost of necessary medical services.

The importance of 1115 experimental powers in shaping Medicaid on a national policy scale cannot be overstated. Today almost one-third of Medicaid program expenditures flow through 1115 demonstrations, and by the end of 2018, three-quarters of states operated at least some part of their Medicaid program as an 1115 demonstration.

In view of Medicaid’s core purpose and the value of experimentation and innovation in a program so vital to health care for the poor and medically vulnerable, it is hardly surprising that 1115 has played such a central role in testing innovations in eligibility, coverage expansion, and the organization and delivery of care itself. In 1982, Arizona used 1115 to launch its initial Medicaid program (known as AHCCCS) which, since its establishment, has operated as a statewide managed-care demonstration, presaging the current world in which Medicaid managed care is the norm. Since that time, and leading up to the beginning of the Trump administration, 1115 has been the driver of many of the policy breakthroughs that ultimately became part of the Medicaid statute through subsequent legislation.

To understand more systematically how 1115 has been used, we reviewed all 1115 demonstrations available on the CMS website’s waiver page that were approved prior to the beginning of the Trump administration, or prior to January 2017.  The 1115 demonstrations and subsequent amendments are summarized in this table.

We categorized the demonstrations as falling into one, or both, of two basic groups: 1) demonstrations that appear to involve expanding, improving, or facilitating access to medical assistance through modification of eligibility rules, benefits and coverage, or rules governing program administration and health care delivery; and 2) demonstrations that appear to include elements that limit medical assistance through eligibility restrictions or benefits and coverage limits. The first group would include demonstrations to liberalize eligibility in order to establish a pathway to coverage for otherwise-ineligible people; it would also include demonstrations that test expanded coverage of services so as to promote community-based care, or demonstrations that test new forms of enrollment and outreach. The second group might include restrictions on eligibility, such as elimination of retroactive eligibility (i.e., eligibility that actually begins prior to the date of application), additional cost-sharing requirements, or elimination of non-emergency medical transportation. It is possible that a single demonstration could fall into both categories – that is, it could expand or facilitate access to medical assistance in certain ways even as it limits access in others.  We categorized the 1115 demonstrations as falling under either, or both, of the two subgroups if at any point throughout the history of the demonstration project – initial approval, amendment, or renewal – the demonstration assumed the qualities of either, or both, subgroups.

Findings

Our review found 87 total 1115 demonstrations available on the CMS website.  Of those 87, 61 demonstrations expanded coverage to an otherwise ineligible population or provided services otherwise not provided under Medicaid (not including Family Planning).[i] Another 21 demonstrations were specifically designed to expand or extend eligibility for Family Planning services.[ii] Furthermore, 21 demonstrations implemented or expanded managed care,[iii] and 16 demonstrations implemented or built upon community-based services.[iv]

Our review also found that out of the 87 total demonstrations on the CMS website, 70 included elements that could be considered as limiting access to medical assistance.[v]  However, of these 70 demonstrations containing limiting features, all 70 were broader demonstrations that sought to enhance the program’s reach. In other words, our review found no demonstrations with the sole purpose or function of limiting medical assistance.

Conclusion

The history of Medicaid 1115 demonstration reveals a focus on experimentation with enhancing program reach.  This is consistent with the terms of 1115 itself, the legislative history behind 1115, and the core purpose of Medicaid.  Since the 1982 Arizona experiment, 1115 has emerged as a principal vehicle for testing program enhancements. There are numerous experiments approved prior to 2017 that contain experimental provisions aimed at restricting program reach.  But these experimental restrictions uniformly are coupled with experimental provisions aimed at strengthening and enhancing the program, and suggest a focus on net gains as to who the program reaches and the services it finances. In this regard, the Trump administration’s community engagement experiments, which are designed to introduce  benefit rollbacks coupled with multiple eligibility restrictions (the principal ones being work as a condition of eligibility, premiums, expanded reporting rules, and lengthy lock-out periods for non-compliance), represent a clear departure from historical 1115 practice under Republican and Democratic administrations alike. The number of approved community engagement experiments has reached 10 (Maine has withdrawn from the experiment), while another 13 are awaiting approval or moving toward formal submission. Looking at approved experiments over the 25 years leading up to the Trump administration, it is evident that its use of 1115 has no operational precedent.

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