Dive Brief:
The CMS plans to end certain Medicaid demonstration waivers granting states more flexibility in how they administer Medicaid, in the Trump administration’s latest cutback of the safety-net insurance program.
On Thursday, the CMS sent letters to states notifying them that it doesn’t plan to approve any new waivers or extend existing ones that allow people to remain enrolled in the safety-net insurance for extended periods of time, along with waivers that let states use Medicaid dollars to fund job training.
The initiatives are tied to more than $1 billion in estimated federal spending, the CMS said. Cutting them is meant to help the government use taxpayer dollars more carefully and resituate Medicaid within its statutory limits. It could also lead to more Medicaid enrollees losing coverage.
Dive Insight:
The waivers, called section 1115 demonstrations, allow states to shape the Medicaid program around their own priorities. Nearly all states have an active section 1115 waiver, while some states have multiple.
Here, the CMS is targeting two types: those allowing continuous enrollment, which are currently in use in 17 states, and those using Medicaid funds for workforce initiatives, which are in five.
The CMS isn’t canceling existing waivers. However, refusing requests for extensions or new applications could have significant ramifications for states and their Medicaid beneficiaries.
Continuous enrollment, for example, is credited for reducing Medicaid disenrollment and churn, when people temporarily lose Medicaid coverage before reenrolling soon after.
Normally, states have to redetermine beneficiaries’ eligibility for Medicaid and CHIP, its sister program for children, once every year, or when beneficiaries have a change in circumstances that could affect their eligibility. But continuous enrollment waivers extend the amount of time people can stay on without the checks.
Nine states have the waiver to keep children enrolled for a longer time, including five approved by the Biden administration as recently as November. Eight states have them for adults (and some of those states have them for both adults and children). Adult waivers are normally to ensure coverage for vulnerable groups or populations that may rely more on coverage, like individuals leaving incarceration or parents and other caretaker relatives.
But now, the CMS is returning to minimum enrollment standards in the Consolidated Appropriations Act of 2023 and the American Rescue Plan Act of 2021, according to the letters sent to states.
The laws require states to provide one year of continuous eligibility for children, and give them the freedom to offer mothers one year of continuous eligibility after childbirth, respectively.
In a statement, CMS Administrator Dr. Mehmet Oz said the move restores “commonsense guardrails to Medicaid and CHIP.” The agency cited concerns about people who no longer qualify remaining on the coverage, diverting resources away from eligible individuals.
“For too long, Medicaid and CHIP have drifted away from their core mission of providing a safety net for the truly vulnerable — that ends now,” Oz said.
However, patient advocates and research groups note that the loss of more generous continuous eligibility waivers may cause such truly vulnerable populations to lose coverage.
“In the name of ‘protecting vulnerable Americans’ the Trump administration will rip away Medicaid coverage from babies and toddlers,” Joan Alker, the executive director of Georgetown University’s Center for Children and Families, wrote in a post on X.
Republicans frequently tout their belief that Medicaid has mutated beyond its original intent as a safety net for America’s neediest populations to justify steep cuts to the program.
The so-called “Big Beautiful Bill” signed into law by President Donald Trump earlier this month includes roughly $1 trillion in cuts to Medicaid, and institutes new work requirements mandating certain beneficiaries prove they’re working, volunteering or going to school for at least 80 hours each month in order to qualify for the coverage.
The law also increases Medicaid eligibility checks to every six months, instead of once a year; enacts cost-sharing for certain services; and restricts Medicaid coverage for immigrants.
Going after the section 1115 waivers is the Trump administration’s latest move to curtail Medicaid over concerns about inappropriate spending and enrollment. Also on Thursday, the CMS released research estimating that 2.8 million people could be improperly enrolled in Medicaid in multiple states, or be simultaneously enrolled in Medicaid and an Affordable Care Act plan.
