New Approaches for Medicaid: The 1115 Demonstration Evaluation

Prepared for
U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services, Center for Medicaid and CHIP Services

Federal law authorizes experimentation by state Medicaid programs (through Section 1115 of the Social Security Act) which allows states to implement and test new approaches to administering Medicaid programs that depart from existing federal rules yet stay consistent with the overall goals of the program. Mathematica's evaluation of Medicaid Section 1115 waiver demonstrations, approximately 40 in number, seeks to assess the implementation and outcomes of four different types of innovations and help CMCS shift toward data-driven decision making for future waiver approvals.

Recent demonstrations can be categorized according to whether they focus on delivery system reforms (Type 1), alternative ways to provide coverage to newly elgibile adults (Types 2 and 3), or expansions of managed care to serve people who are frail or disabled (Type 4). 

Type 1 states are implementing Delivery System Reform Incentive Payment (DSRIP) programs to reward providers for quality improvements. DSRIP is a federal pay-for-performance initiative financed by redirecting supplemental payments that have traditionally been available only to hospitals for the provision of uncompensated care. DSRIP enables states to use Medicaid funds to reward providers for successfully implementing projects that improve patient care, improve health outcomes, and reduce costs.

Type 2 states are using mandatory premium assistance as a method of expanding coverage to adult Medicaid populations newly eligible under the Affordable Care Act. These states use Medicaid funds to enroll adults in qualified health plans in insurance marketplaces.

Type 3 states are testing alternative ways of providing adult coverage by using incentives to encourage personal responsibility and healthy behaviors. Several of the demonstrations have introduced premium cost sharing that begins at lower income levels than have previously been permitted. Beneficiaries can reduce their payment requirements by adopting certain healthy behaviors.

Type 4 states are using Section 1115 demonstration authority to provide long-term services and supports through managed care programs (referred to as MLTSS arrangements).This group includes states that are consolidating operating requirements of MLTSS programs that were authorized through other vehicles, states that are expanding MLTSS programs to new populations and regions, and states that are replacing former pilot programs with larger, more permanent groups.

Mathematica's evaluation consists of four phases, as follows:

  • Data assessment and collection
  • Analysis
  • Reporting
  • Diffusion

All analyses and reporting will be conducted separately by waiver type and will rely primarily on secondary data sources. Results and reports will be disseminated through a dedicated online platform and stakeholder webinars.