CMS has recently approved five-year extensions for Medicaid Demonstration Waivers under Section 1115 of the Social Security Act in New York and Arkansas. Both extensions allow each state to continue innovative pilot programs. For New York, the waiver allows the state to continue its Delivery System Reform Incentive Payment program (DSRIP), and also to expand the number of beneficiaries with disabilities or HIV who can receive funds to hire their own support staff. For Arkansas, the waiver allows the state to offer incentives to employers to pay for the insurance of employees who have agreed to drop out of Medicaid and to require unemployed people to seek jobs or job training to receive Medicaid.

Under Section 1115 of the Social Security Act, the Secretary of Health and Human Services can approve experimental, pilot or demonstration projects, such as those in New York, Arkansas and other states, that are otherwise not allowed under Medicaid program rules. Waivers allow states to implement pilot projects designed to promote Medicaid objectives by transforming delivery systems to provide more efficient and higher quality care, improving health outcomes for Medicaid beneficiaries and low-income populations, strengthening overall coverage, and increasing access to and strengthen provider networks.

New York

In New York, the state previously created a Medicaid Redesign Team, which has worked to create new ways to control Medicaid costs and improve the quality of care delivered to the state’s Medicaid beneficiaries. In particular, the state launched under a 1115 Waiver the DSRIP program, which focuses on the creation of provider networks that will provide better access to, and increase the quality of, care. According to Modern Healthcare, the state has 25 networks as of April 2016. Under the waiver, most of the state’s Medicaid beneficiaries were also brought under managed care. When the waiver expired two years ago, CMS granted temporary extensions.

Now, with the approved five-year extension, the federal government has provided a certain degree of predictability to, and support for, the state’s efforts to continue with the DSRIP program, to expand coverage, and to bring beneficiaries under managed care in order to better control the quality of care and continue increasing access to care through expanded provider options. As noted above, the recent renewal also allows New York to expand the number of individuals with disabilities and HIV to receive additional financial support to pay for home caregivers or other support staff.


For Arkansas, the renewal of its waiver serves a different objective and extends Arkansas Works, which subsidizes private health insurance for low-income patients and encourages cost sharing for beneficiaries. Specifically, those living between 100% and 138% of the federal poverty level (FPL) can be responsible for their monthly premiums up to 2% of their income pursuant to a tiered structure: beneficiaries living between 50-100% of the FPL contribute $5; those between 101-115% of the FPL contribute $10; those between 116-129% of the FPL contribute $17.50; and those between 130-133% of the FPL contribute $25.

CMS also granted the state authority under the waiver to work with employers and offer incentives to employers who help subsidize premiums for employees that drop out of Medicaid. Arkansas is also now able to require unemployed peoples to seek employment or participate in a job-training program to receive Medicaid.

The approach taken by Arkansas under the waiver is similar to that taken in other states, such as Indiana; and, while early indications are that the overall Arkansas approach may be consistent with goals being developed by the newly elected administration in Washington, it is not yet clear exactly how the new administration will exercise its discretionary authority under the law to grant Medicaid waivers. In particular, it is yet to be seen how such discretion will be exercised if the proposal to provide states with block grants is instituted. Notably, Arkansas Governor Asa Hutchinson supports the block grant proposal, and thinks that such grants would increase flexibility with cost sharing and Medicaid work requirements, such as those instituted in Arkansas.

Additional resources:

Modern Healthcare. “CMS renews key Medicaid waivers in New York and Arkansas.

Medicaid. “Section 1115 Demonstrations.