DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, Maryland 21244-1850 
 
 Center for Medicaid and CHIP Services 
  
 
  SHO# 12-001 
 
  Re: Revised Review and 
Approval Process for Section 1115 Demonstrations  
 
April 27, 2012  
 
Dear State Medicaid Director: 
Dear State Health Official:  
 
The Centers for Medicare & Medicaid Services (CMS) is issuing this letter to provide further 
guidance to State Medicaid and Childrens Health Insurance Program (CHIP) agencies on the 
implementation of the revised review and approval process for section 1115 demonstrations in 
accordance with section 10201(i) of the Patient Protection and Affordable Care Act, P.L. 111-
148, as amended by the Health Care and Education Reconciliation Act of 2010; P.L. 111-152 
(the Affordable Care Act).  On February 27, 2012, CMS issued a final regulation, as described 
below, to implement the Affordable Care Act requirements.  This letter reviews the key 
provisions of the regulation and provides additional guidance on how these provisions will be 
operationalized, in particular with respect to amendments to ongoing demonstration projects. 
 
Background 
 
Section 1115 demonstrations can have a significant impact on beneficiaries, providers, States, 
Tribes and local governments. They can also influence policy-making at the State, Tribal and 
Federal level by introducing new approaches that can be models for other States and lead to 
programmatic changes nationwide.  In light of the potential impact demonstration projects can 
have, the Affordable Care Act made changes to the process by which States apply for 
demonstrations, and the Federal government reviews such applications, to ensure public input.   
 
The Affordable Care Act required the Secretary to set forth transparency and public notice 
procedures for experimental, pilot, and demonstration projects approved under section 1115 of 
the Social Security Act in order to increase the degree to which information about Medicaid and 
CHIP demonstration applications and approved demonstration projects is publicly available, as 
well as to promote public input as States develop and the Federal government reviews these 
demonstrations.  CMS issued a final regulation on February 27, 2012, outlining the new 
regulatory requirements for initial section 1115 demonstration applications and extension 
requests, public notice procedures, and reporting and evaluation requirements.  The rule can be 
found at http://www.gpo.gov/fdsys/pkg/FR-2012-02-27/pdf/2012-4354.pdf. The rule is effective 
April 27, 2012. 
 
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Provisions of the Final Regulation  
 
The final rule outlines the series of steps that States will need to complete during the course of 
submitting a demonstration application for review to CMS and the steps that will be taken once 
an application has been submitted to CMS. 
 
Standardized Application Elements  
To assure meaningful public input at the Federal level, and to facilitate the demonstration 
application process for States, the final rule standardizes demonstration application requirements 
so that the public and CMS can meaningfully assess States applications.  CMS is developing a 
standardized application template that will be available on Medicaid.gov and that States may use 
in developing their applications.  The template is designed to assist States in ensuring that their 
application includes all of the elements that CMS needs to review the application; however, if a 
State elects to not utilize the template, the State is responsible for ensuring that its application is 
complete and contains all of the required elements as described in section 431.412(a).  As 
always, CMS is available to provide technical assistance to States as they develop their 
applications, including the review of a pre-application concept paper as further described in 
section 431.412(a)(3).   
 
For new demonstration applications, the required elements are outlined in section 431.412(a)(1) 
and include: 
  A comprehensive program description of the application; 
  A description of the proposed health care delivery system, eligibility requirements, 
benefit coverage and cost sharing that will apply to individuals who will be impacted by 
the demonstration; 
  An estimate of expected annual enrollment and expenditures;  
  Current enrollment data and enrollment projections;  
  Other expected modifications to Medicaid or CHIP;  
  Requested waiver and expenditure authorities; 
  A description of the research hypotheses that the demonstration will test and a plan for 
evaluating the hypotheses; and 
  Written documentation of the States compliance with the public notice requirements.   
 
In addition, States must submit information related to the populations affected by and the 
financing of the demonstration, as well as budget neutrality information. 
 
For demonstration extension requests, similar elements are required, along with information 
outlined in section 431.412(a)(1) to enable CMS to assess the impact of the demonstration and to 
evaluate any changes that are proposed for the extension period.  
 
Public Input at the State Level Prior to Submission to CMS 
The final rule directs States to solicit meaningful public input in the development of a section 
1115 demonstration application or extension request.  The public will have a minimum of 30 
days prior to a demonstration application being submitted to CMS to provide comments, and the 
rule outlines several ways in which States will notify the public about their intent to submit a  Page 3  State Medicaid Director 
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demonstration application for CMS consideration, and how the public will be afforded the 
opportunity to provide comments:   
 
  Electronic Mailing List:  The State must use mechanisms in addition to published notices, 
such as an electronic mailing list, in order to notify the public of the States intent to 
submit an application to CMS.  
  
  Notices:  The State must publish a notice in either the States administrative record or in 
newspapers with the widest circulation informing the public that it is seeking public 
comment on its proposed demonstration application or extension request. This notice can 
be an abbreviated notice, but must contain a summary description of the proposed 
demonstration project, the location and times of two or more public hearings, even if the 
public hearing has already occurred, and a link to the States Web site where the 
application and the full public notice can be viewed.  The requirements for the full public 
notice are outlined further in section 431.408(a)(1).  At the States request, CMS will 
review a draft notice to ensure that these standards are met.   
 
  State Web site:  The State must post its full public notice on its Web site along with a 
demonstration application that has a sufficient level of detail to provide the public with an 
opportunity to review and provide meaningful input.  The State also must post 
information on public hearings to solicit feedback on the application.  
 
  Public Hearings: The State must hold at least two public hearings, which must be held at 
least 20 days prior to the States submission to CMS.  These hearings can include already 
existing forums for public input that would allow an interested party to learn about and 
comment on the demonstration application, as well as forums that may have occurred 
during the State legislative process.  
 
The State will compile a report of the issues raised through the public comment period and 
describe how the State considered those comments when developing its application for 
submission to CMS.  A State with Federally-recognized Indian tribes, Indian health programs, 
and/or urban Indian health organizations must consult with these entities as outlined in section 
431.408(b) and consistent with other tribal consultation policies in effect.  
 
Public Input at the Federal Level 
The final rule outlines steps that CMS will follow to facilitate public comment, as well as its own 
review of State proposals.  Once a State submits an application for a new demonstration or an 
extension, the following steps will occur:  
 
  Electronic Mailing List:  CMS will maintain its own electronic mailing list to notify 
interested parties when a States section 1115 demonstration application or extension 
request is available.  The public will be able to register for CMS electronic mailing list 
on the Medicaid.gov Web site. 
    
  Completeness Review: Upon submission of a States application, CMS will, within 15 
days, formally notify the State whether its application is complete.  CMS will determine  Page 4  State Medicaid Director 
               State Health Official 
 
if the application is complete by applying the criteria outlined in section 431.412(a)(1) of 
the final rule, including a review of the public notice process conducted by the State.  
CMS will send the State a written notification once it has determined that the application 
is in fact complete.  In cases where the application is not complete, CMS will notify the 
State in writing and will work with the State in an expeditious manner to resolve the 
outstanding items needed to complete the application. Significant changes or additions to 
the application may necessitate a new public notice process at the State level.    
 
Many existing demonstrations have a requirement in the Special Terms and Conditions 
(STCs) that States submit an extension request 12 months prior to the demonstrations 
expiration.  We recognize that in some cases the State may not be able to submit a 
complete application in this timeframe.  In the event that the State meets this requirement, 
but the extension request requires further information and/or development, CMS will 
send the State a written notification confirming receipt of the extension request and will 
hold the request for publication on Medicaid.gov until a revised request is submitted.  
Once an updated request has been received and determined to be complete, which will 
include compliance with the State public notice requirements outlined in 431.408, CMS 
will initiate the 30-day Federal public comment period.  CMS encourages States to 
submit a complete demonstration extension request in a timely fashion in order for CMS 
to have sufficient time to review the extension request prior to a demonstrations 
expiration.  Please note that CMS cannot render a decision until 45 days after an 
extension request has been determined complete. 
 
  Posting on Medicaid.Gov for 30-Day Public Comment Period:  Once CMS determines 
that an application is complete, CMS will post the States application on the 
Medicaid.gov Web site as well as any comments CMS receives.   While CMS will 
publish, review, and consider all comments, it will not provide written responses to 
them.   
 
  CMS Consideration of Public Comments:  In order to provide time for CMS to receive 
and consider all written public comments, CMS will not render a final decision on a 
demonstration application until 45 days, at a minimum, after the States application is 
complete.  
 
  Post-Consideration Public Record:  CMS will also maintain and publish on its Web site 
an administrative record that will include the demonstration application, public 
comments sent to CMS,  formal questions that are sent to the State, as well as the States 
responses, and, if the application is approved, the final special terms and conditions, and 
the States acceptance letter.  
 
Post Approval Requirements 
If CMS approves the demonstration or extension request, the State must convene a post-award 
implementation forum at least six months after approval in order to solicit public comment on 
implementation. 
 
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Public Notice Requirements for Section 1115 Demonstration Applications and Extension 
Requests Submitted Prior to April 27, 2012 
 
The final rule does not address public notice requirements for section 1115 demonstration 
applications and extension requests that were submitted to CMS prior to the final rules April 27, 
2012, effective date.  For States that submitted applications for a new demonstration or a request 
to extend an existing demonstration prior to the effective date of the final rule, CMS will not 
require the State to comply with the requirements as outlined under the final rule; however, 
States must continue to meet the public notice requirements outlined in the September 27, 1994 
Federal Register notice (59 FR 49249) on the 1115 process.  When such applications are 
received prior to the effective date of the final rule, CMS will solicit public input on the 
application by posting the States application on the Medicaid.gov Web site in order to initiate 
the 30-day Federal comment period so long as it will not delay the processing of the request.  For 
State applications that are currently under review, CMS will post the States application for 
public comment on the Medicaid.gov Web site with the caveat that CMS cannot assure that all 
comments received during the review process will be considered.   
 
Public Notice Requirements for Section 1115 Demonstration Amendments 
 
The final rule left open the question of public notice requirements for proposed amendments to 
existing demonstrations.  In order to ensure time to develop an appropriate policy related to 
amendments that would affect State processes, States do not need to comply at this time with the 
State public notice and comment process, as outlined in the final rule, with respect to amendment 
requests.   We encourage States to do so, however, particularly with respect to amendments that 
seek to modify benefits, cost sharing, or eligibility, or to make delivery system changes, such as 
mandatory managed care.   
 
We are committed to ensuring that the public is afforded the opportunity to provide comments on 
proposed amendment requests, and as such, beginning on the effective date of the final 
regulation (April 27, 2012), CMS will post and accept public comments on all amendments.  In 
collaboration with States and other stakeholders, CMS will evaluate the types of demonstration 
amendments that are submitted and issue further guidance in the future on how the notice and 
comment provisions would best be applied at the State and Federal levels to amendments that 
have a significant impact.   
 
Role of Medicaid.gov 
 
The Medicaid.gov Web site will be the mechanism that CMS uses to manage the Federal 
transparency requirements.  States applications will be included on the section 1115 
demonstration list as pending requests and they will be searchable, allowing CMS to create 
filters to list out only pending items for easier use by the public.  The Medicaid.gov Web site will 
also enable the public to filter those applications that are currently in the 30-day Federal public  
comment period and open to receive comments.  Amendment requests will also be posted to the 
Medicaid.gov Web site under the circumstances described above.  The Medicaid.gov Web site  Page 6  State Medicaid Director 
               State Health Official 
 
will also allow the public to register for the CMS electronic mailing list, e.g., Gov Delivery.  
Members of the public and stakeholders will be notified of incoming demonstration applications 
through the Gov Delivery notification system. Members of the public and stakeholders will be 
able to submit their comments through a web-enabled application on Medicaid.gov that will 
allow the public to submit individual comments or, if they prefer, to add their voice to an 
existing comment to indicate agreement or disagreement.  The public will also be able to submit 
unique comments in response to comments that have previously been posted. 
 
The Web site will also be used to maintain the administrative record for the demonstration, as 
required by the final rule.  The final rule specifies that final approval documents, as well as 
quarterly and annual reports will be included in the administrative record; however, CMS will 
also post on the Medicaid.gov Web site all formal correspondence regarding the demonstration.  
Formal correspondence will include formal letters received by CMS from the State, Members of 
Congress and stakeholders, as well as CMS response.  In addition, CMS recognizes that during 
the negotiation process programmatic changes can occur resulting in significant differences 
between the States application and the final STCs.  As such, CMS will also post all formal 
questions that are sent to the State, the States responses, and any amendments to the pending 
application submitted by the State. 
 
Section 1115 Demonstration Application and Extension Templates 
 
CMS is currently working to make available in early 2013 a web-based system that will enable 
States to submit section 1115 demonstration applications (as well as certain types of Medicaid 
and CHIP State Pan Amendments) electronically.  This system, entitled the Medicaid and CHIP 
Program System (MACPro) will streamline CMS review and adjudication of pending actions. 
 
As CMS progresses with the development and implementation of MACPro, an interim electronic 
(downloadable) section 1115 demonstration application will soon be available to States to use at 
their option.  States will be able to download the interim application template in an electronic 
format, complete the application and submit the application electronically to CMS. This template 
will be located at www.medicaid.gov.  Until the template is finalized, information on application 
requirements can be found at http://medicaid.gov/Medicaid-CHIP-Program-Information/By-
Topics/Waivers/1115/application.html to assist States as they develop their applications. 
 
I hope you will find this information helpful.  Please contact Allison Orris, Acting Director, 
Division of State Demonstrations and Waivers at 410-786-1597 or via email at 
allison.orris@cms.hhs.gov with any questions. 
 
            Sincerely, 
 
            /s/ 
 
            Cindy Mann 
            Director 
 
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cc:     
       
CMS Regional Administrators  
 
CMS Associate Regional Administrators  
Division of Medicaid and Childrens Health 
 
Matt Salo 
Executive Director 
National Association of Medicaid Directors  
 
Alan R. Weil, J.D., M.P.P. 
Executive Director 
National Academy for State Health Policy 
 
Ron Smith  
Director of Legislative Affairs  
American Public Human Services Association 
 
Joy Wilson 
Director, Health Committee 
National Conference of State Legislatures 
 
Heather Hogsett 
Director of Health Legislation 
National Governors Association 
 
Debra Miller 
Director for Health Policy 
Council of State Governments 
 
Christopher Gould 
Director, Government Relations  
Association of State and Territorial Health Officials