In August 2018, CMS released new guidance outlining changes to how they will calculate “budget neutrality,” a key requirement of section 1115 demonstration projects. Specifically, CMS announced that they would limit the amount of savings that could be rolled over from one waiver approval period to the next, rebase “without waiver” baselines to reflect more recent state data, and phase-down newly accrued savings. These changes may impede states’ ability to finance longstanding 1115 waiver programs and launch new, innovative initiatives.
NAMD sent a letter to Administrator Brooks-LaSure requesting that CMS pause its new policy of rebasing “without waiver” baseline expenditures. During this pause, CMS should partner with states to identify long-term solutions to ensuring the fiscal integrity of 1115 waiver demonstrations while allowing for state innovation.