The Centers for Medicare & Medicaid Services (CMS) announced it is issuing new guidance about its plans to strengthen budget neutrality standards for Medicaid section 1115 demonstrations.

In the press release, CMS stated that part of the Working Families Tax Cut (WFTC) legislation requires the CMS Chief Actuary to certify that Medicaid Section 1115 demonstrations are budget-neutral. Beginning January 1, 2027, CMS will not approve new demonstrations, renewals, or amendments unless the CMS Chief Actuary certifies that the demonstration project is not expected to increase federal spending relative to the state’s Medicaid program without the demonstration. 

In a letter to state Medicaid directors, the administration announced the modifications to Section 1115 “demonstration waivers.”

Does this mean that it will be harder to get those Medicaid waivers accepted?

Advocates of Medicaid home- and community-based services (HCBS) providers have expressed concern that the recent guidance will inhibit states from using the waivers and ultimately reduce HCBS innovation, Liza Berger wrote for McKnights Home Care.

“[W]e are concerned that an overly restrictive budget neutrality framework could make it harder for states to test and sustain innovative Medicaid approaches that help older adults and individuals with disabilities remain safely at home,” Eric Reinarman, vice president of government relations for the Home Care Association of America, said in a statement to McKnight’s Home Care Daily Pulse.

Meanwhile, Kimberly Bonvissuto reported for McKnights Senior Living that the senior living industry backs the new CMS Medicaid waiver oversight rules. As reported by Bonvissuto, Argentum, a national trade association serving companies that own, operate, and support professionally managed senior living communities, shared that it supports CMS’s updated approach, calling the guidance a “constructive step to strengthen the long-term sustainability and integrity of the Medicaid program.”