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November-December 2010 St@teside

Five-Year Waivers for Dual Eligibles

On November 9, 2010, the Centers for Medicare & Medicaid Services (CMS), issued a letter to State Medicaid Directors providing guidance about applying for five-year Medicaid waivers and demonstration programs targeted at individuals who are dually eligible for Medicare and Medicaid. This guidance responds to an Accountable Care Act provision allowing Medicaid waivers for dually-eligible beneficiaries to be approved or renewed for up to five years, rather than the shorter periods allowed under the Medicaid statute.

The Medicaid waivers and demonstration programs affected by the health care law are: 1) Section 1115 demonstration programs; and 2) Section 1915(b) and Section 1915(c) waivers. Section 1115 demonstration programs allow states to expand coverage to new groups of people, modify the delivery system, or change the benefit package design. Under the Medicaid statute, they are approved initially for a period of five years and extended for a period of up to three years. Section 1915(b) waivers allow states to develop managed care programs on a statewide or limited geographical area with mandatory enrollment. They are approved initially for two years and renewed for up to two-year periods. Section 1915(c) waivers, often combined with Section 1915(b) authority, allow states to provide long-term care services delivered in community settings as an alternative to institutional care. Under the Medicaid statute, they are approved initially for a three-year period and renewed for five-year periods.

To qualify for the extended approval periods, states must show that the waiver or demonstration includes a focus on the dual-eligible population, provide delivery system options or services that could not typically be provided to this population under the state plan, and are consistent with the coverage provisions of the health care law. In addition, states must meet applicable cost-neutrality, cost-effectiveness, or budget-neutrality requirements.