The Centers for Medicare & Medicaid Services today in a letter to state Medicaid directors outlined its current policies related to budget neutrality for Medicaid demonstration projects authorized under Section 1115 of the Social Security Act and provided states insights into the agency’s decision-making process. The letter also outlines recent changes that CMS made to its approach to budget neutrality for demonstration project extensions. “CMS welcomes smart new approaches to coverage and delivering care through Medicaid demonstration projects, but we won’t approve them without a careful analysis of their impact on taxpayers,” said CMS Administrator Seema Verma. “Federal spending on the program has increased, growing by over $100 billion between 2013 and 2016. Today’s guidance is a comprehensive explanation of how CMS and our state partners can ensure that new demonstration projects can simultaneously promote Medicaid’s objectives and keep federal spending under control.” Section 1115 waivers allow states to expand eligibility and services and test new service delivery approaches in their Medicaid and children's health insurance programs.

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