The Centers for Medicare and Medicaid Services (CMS) on July 17, issued informal guidance to states on two separate flexibilities states can use 1115 waiver programs to support. The guidance came in the form of a ‘Dear Colleague’ letters instead of the more common and formal policy communication of a State Medicaid Director Letter.

The first letter informs states that CMS will no longer renew flexibilities to provide extended continuous coverage beyond what is required by the Medicaid or Children’s Health Insurance Program (CHIP) statutes. This guidance aligns with a provision in the recently enacted H.R. 1 that requires budget neutrality for 1115 waivers. CMS will not terminate existing approvals but does not anticipate renewing or approving future requests. This provision is likely to have little direct impact on providers, but signals further federal contraction of Medicaid coverage.

The second letter says that CMS will no longer cover workforce initiatives under 1115 authority. The letter calls out five programs that have received approval, and reiterates that CMS will neither approve new nor renew existing demonstrations. States will no longer be able to test out student loan repayment programs or workforce training initiatives with the use of Medicaid funds. While the new federal law requires Medicaid recipients to work to remain covered by Medicaid, this letter underscores that CMS will not allow Medicaid funds to be used by states to support workforce programs — either to help to beneficiaries fulfill the new work requirements or for other purposes. As this letter was very targeting in saying there are five demonstrations in which it sees problematic, it seems other programs offering employment programs for specific populations through waivers for individuals with disabilities should still be allowable and renewable.

LeadingAge will continue to monitor CMS policy changes relating to coverage and optional services.