CMS Revises Budget Neutrality Requirements For Medicaid 1115 Demonstrations

The Centers for Medicare & Medicaid Services (CMS) plans to change how it defines the budget neutrality requirements for approval of Medicaid Section 1115 waiver demonstrations. The primary change is that CMS will require more rigorous actuarial analysis and activity-level financial modeling in advance to ensure waiver services are not expected to cost the federal government more than the state’s Medicaid program would spend without the demonstration. The new budget neutrality analysis will also include administrative costs.

Previously, CMS reviewed budget neutrality in an initial analysis prior to approval. Actual budget neutrality has been assessed after the demonstration . . .