CMS Will Not Approve Medicaid Waivers Seeking Federal DSHP Funding

January 2018 ~

CMS, in a letter to state Medicaid directors on December 15th, said it will no longer accept state Medicaid waivers seeking new or renewed federal matching funds for designated state health programs (DSHP).

Previously, Medicaid funds for DSHPs awarded to states through section 1115 waivers were intended to “ensure the continuation of these beneficial state programs while the state was incurring additional expenditures for health service delivery reform or expansion under the demonstration project.”

But following a review of the practice, federal DSHP funding has raised oversight concerns about its consistency with the federal-state financial partnership established under the Medicaid statute. The Agency found that many states are not contributing state funds toward these delivery system reform efforts, and instead “are primarily relying on dollars freed up by the federal Medicaid contribution to DSHP to draw down additional federal Medicaid matching expenditures to support delivery system reforms.”

CMS says it is unclear that the program is a good investment and that “current demonstrations have not made a compelling case that federal DSHP funding is a prudent federal investment” and determined that it will no longer accept state proposals for new or renewing section 1115 demonstrations that rely on federal matching funds for DSHP.

States with existing DSHP funding will continue to receive it until their waiver expires. No new demonstration projects which include it as a funding mechanism will be approved. CMS said it will work with states with pending DSHP funding proposals (AZ, CA, NY, NH, RI, and WA) to identify alternative options to support their Medicaid waivers.



Source(s): Centers for Medicare & Medicaid Services (CMS)Becker’s Hospital Review; Health Exec; Modern Healthcare;