Section 1115 programs have been a vital component of states' broader strategies to support vulnerable populations through upstream public health initiatives and social services, address health care provider shortages, and strengthen health system infrastructure. Medicaid is the nation's largest heawlth insurance program, so by narrowing the focus of the Medicaid program to only pay for downstream healthcare costs CMS risks slowing the broader progress of state and health plan-led innovation in using upstream interventions to lower health care costs and address health disparities.
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Department of Health and Human Services
An internal instruction issued by a government agency outlining policies, procedures, or actions to be followed by agency employees. While not legally binding outside the agency, these directives guide agency operations and decision-making.
Who It Impacts: Employees and divisions within the issuing federal agency. These directives guide how staff enforce regulations, allocate resources, and interpret laws. They may also affect industries regulated by the agency.
Who Is Not Impacted: The general public and businesses are not directly bound by agency directives, though these policies may indirectly influence enforcement practices that affect them.
Date Enacted
April 10, 2025
Last Updated
June 2, 2025
Policy Type
Healthcare Coverage
Healthcare Delivery, Services & Quality
Immigrant Health
Health and Disability
LGBTQI+ Health
Global Health
Children and Families
Summary
The Medicaid program is jointly funded by federal and state governments. For many years, states have relied on Section 1115 waiver authority to support state-based demonstration projects aimed at addressing social determinants of health. However, in a letter issued on April 10, CMS notified states that it will no longer approve new, or extend existing, state-based demonstration projects that use federal matching funds to support programs that address Medicaid recepients social needs as a strategy to improve health outcomes and reduce health care costs.
Impact Analysis
Legal Challenges
Take Institutional Action
The April 10th CMS letter to states does not immediately impact existing programs established under a Section 1115 waiver. States and administrators should continue to fully operate these previously approved initiatives. Additionally, since the letter’s guidance applies specifically to state Medicaid programs, health systems and insurance plans should maintain their investments in programs that address upstream drivers of health care costs — such as safe housing, nutritious food, and reliable transportation. Health care providers are encouraged to continue producing and publishing research on the effectiveness of these interventions to help build the case for CMS to reconsider its current policy stance. In the 25 states with active Section 1115 waivers addressing social determinants of health, health systems and providers should begin working closely with their governors and state legislatures to develop alternative strategies to sustain these programs in anticipation of the potential loss of federal matching funds.
