Health News
Trump administration tightens oversight of state Medicaid demonstration programs
The Trump administration told states last week it will exercise more stringent financial oversight of waivers that states use to design pilot programs under Medicaid, the state-federal program for low-income people and those with disabilities. In letters sent to state…
By Nada Hassanein | Stateline
The Trump administration told states last week it will exercise more stringent financial oversight of waivers that states use to design pilot programs under Medicaid, the state-federal program for low-income people and those with disabilities.
In letters sent to state Medicaid directors, the administration announced the changes to Section 1115 “demonstration waivers,” which states apply for and use to test innovative pilot programs that expand Medicaid coverage or benefits. It’s the latest in a series of administration crackdowns on Medicaid spending.
The demonstration projects aim to improve health outcomes for Medicaid enrollees or the administration of the state’s overall Medicaid program. Waivers can involve changes to financing structures or implement special coverage benefits for specific populations.
For example, several states have been using demonstration waivers to help enroll soon-to-be-released incarcerated people in Medicaid. And in 2024, waivers were approved in four states that allowed for Medicaid coverage of traditional healing practices at tribal health facilities and urban Indian organizations.
But starting next Jan. 1, the administration said, applications won’t be approved unless the Centers for Medicare and Medicaid Services chief actuary “certifies” that waivers won’t result in more federal spending compared with what spending would be without the demonstration program.
Such budget neutrality was already required for waivers, and the applications were approved at the discretion of the Department of Health and Human Services secretary. But in its letters to states, the administration emphasized that the applications will also have to be approved by the CMS actuary.
As part of stricter oversight of states’ waiver applications, CMS says it will require more spending analyses and documentation from states, and implement more monitoring and evaluation of waivers to make sure they don’t differ from states’ calculated spending projections.
While CMS is preparing to formalize a rule cementing its revisions, it will already start applying such standards in its waiver reviews.
The new guidance also says that waiver applications won’t be approved unless they are in line with “promoting the objectives of the Medicaid statute.”
CMS did not respond to questions from Stateline before publication.
The announcement is the latest in reversals to the waiver program and a federal crackdown on state Medicaid spending.
Last year, the administration said it would no longer approve new Section 1115 waivers with workforce initiatives. It also rescinded aspects of a Biden-era expanded framework for waivers to address health-related social needs, such as housing.
The tax and spending law known as the One Big Beautiful Bill Act enacted last summer will cut over $900 billion from Medicaid, and is requiring states to implement work requirements for “able-bodied” enrollees.
Stateline reporter Nada Hassanein can be reached at nhassanein@stateline.org.
Originally published by Stateline — All States. Author: Nada Hassanein. Read the original story.
