A new policy brief from Paula Lantz, the James B. Hudak Professor of Health Policy at the Ford School, and U-M PhD student Sofia Hiltner analyzed the effects of Section 1115 Medicaid waivers on health-related social outcomes and offered recommendations to combat technical and policy challenges associated with evaluating 1115 waiver-authorized projects. Their research, published in Health Affairs, provides valuable insight into the changing policy landscape for state-based Medicaid interventions.
Section 1115 Medicaid waivers, issued by the Secretary of Health and Human Services (HHS), authorize state governments to design, test, and evaluate state-specific policy interventions for Medicaid participants using federal funding in nontraditional ways. Projects permitted by 1115 waivers target high-risk communities and aim to improve health-related social outcomes including stable housing, nutrition, and employment.
"Identifiable, high-risk beneficiary subgroups will continue to use expensive hospital and emergency care unless basic social risk factors for health such as housing, food, and other social welfare needs are better addressed," the authors stated. "The movement over the past decade, under both Republican and Democrat administrations, to encourage states to use 1115 demonstration projects to creatively address the medical and social needs of expensive patient subgroups is scientifically sound and likely produces benefits beyond Medicaid budgets."
Despite a recent surge in 1115 waiver projects approved by HHS, recent policy changes at the Centers for Medicare & Medicaid Services (CMS) and the White House have phased out most health-related social outcome projects and paused others, representing a move away from federally-funded projects targeting health-related social outcomes.
Lantz and Hiltner argue that policy shifts disregard the emerging evidence base demonstrating the effectiveness of health-related social-need interventions. They cite research showing the efficacy of interventions such as: nutrition support (23% reduction in hospitalizations), supportive housing (reduction in socioeconomic costs, hospitalizations, and emergency department visits), and medical respite care (improved health outcomes and cost savings).
Despite their effectiveness, Lantz and Hiltner note that states often lack the data, budget, and technical expertise to rigorously evaluate 1115 waiver projects. Additionally, stringent "budget neutrality" requirements—which mandate that federal spending on a given project cannot exceed the amount that would have been spent without a waiver—are hard for policymakers to meet, as the rules for calculating budget neutrality are not standardized across federal administrations and the high-use, high-need nature of 1115 waiver projects often means that interventions require higher levels of funding than permitted.
To combat these technical and administrative challenges, the authors recommend:
- Improved technical guidance from CMS, ensuring states have clear information regarding fiscal responsibility requirements;
- Policymakers and project managers at the state and federal levels work together to set realistic policy evaluation timelines; and
- Federal legal and regulatory changes, including expanding the criteria used in fiscal impact assessments, so evaluations can better reflect a project's socioeconomic impact as well as its traditional monetary impact.
The authors conclude: "Although there are myriad policy and technical challenges associated with the rigorous evaluation and budget neutrality expectations of 1115 waivers, evidence-based social needs waiver demonstrations have the potential to both effectively and efficiently improve health in state Medicaid populations."
