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, CHIP and Survey & Certification 
 
                    SMDL # 11-005 
 
June 6, 2011 
Re:  Coverage and Service Design 
Opportunities for Individuals Living with 
HIV 
 
Dear State Medicaid Director: 
 
The purpose of this letter is to inform States of the opportunities available to provide Medicaid 
coverage to individuals living with HIV in support of President Obamas National HIV/AIDS 
Strategy (the Strategy).   
 
This guidance informs States on how to apply for opportunities in the Medicaid program that 
allow for flexibility to improve care and care coordination and offer options to treat individuals 
living with HIV (including individuals living with AIDS, which refers to individuals living with 
an advanced stage of the HIV disease) in the community.  Through the Medicaid program, there 
are numerous opportunities available for States.  These coverage and service design 
opportunities may assist States in increasing access to care for individuals living with HIV, 
provide alternatives that could alleviate the current burden to AIDS Drug Assistance Programs 
(ADAP), and help States make progress towards implementing the expansion of Medicaid 
required in the Patient Protection and Affordable Care Act of 2010, as amended by the Health 
Care and Education Reconciliation Act of 2010 (collectively referred to as the Affordable Care 
Act).  States may choose or apply for one or more options to extend coverage to individuals 
living with HIV:   
 
1.  Community First Choice;   
2.  Health Home for Enrollees with Chronic Conditions;  
3.  Section 1915(c) Home and Community Based Services (HCBS) Waiver;  
4.  Section 1915(i) State plan option;  
5.  The Money Follows the Person (MFP) Rebalancing Demonstration; and  
6.  Section 1115 Demonstrations.   
 
In addition, this letter provides guidance to States who wish to submit applications for section 
1115 demonstrations to cover individuals living with HIV who are not otherwise eligible for 
Medicaid.   
 
Background 
 
The United States is experiencing a domestic HIV epidemic that demands a renewed 
commitment, increased public attention and leadership.  More than 56,000 people become 
infected with HIV in the U.S. each year, and there are more than 1.1 million Americans with 
HIV.  The epidemic has claimed the lives of nearly 600,000 Americans, and affects many  
 
 
   
Page 2  State Medicaid Director  
 
more, including families and friends of those with the disease.1 Of those living with HIV, it is 
estimated that less than 17 percent have private health insurance and nearly 30 percent do not 
have any medical coverage. 2 
 
In response to this domestic epidemic, President Obama released the National HIV/AIDS 
Strategy, which aims to achieve three primary goals:  1) reduce HIV incidence;  
2) increase access to care and optimize health outcomes; and 3) reduce HIV-related health 
disparities.  In order to achieve the goal of increasing access to care and improving health 
outcomes for individuals living with HIV, the Strategy encourages Federal and private partners 
to take the following steps to improve service delivery for individuals living with HIV:   
 
1.  Establish a seamless system to immediately link individuals to continuous and 
coordinated quality care when they are diagnosed with HIV. 
 
2.  Take deliberate steps to increase the number and diversity of available providers of 
clinical care and related services for individuals living with HIV. 
 
3.  Support individuals living with HIV with co-occurring health conditions, and those who 
have challenges meeting their basic needs.     
 
Please visit: http://www.whitehouse.gov/administration/eop/onap/nhas to learn more about the 
Strategy. 
 
As part of the Strategys Federal Implementation Plan, the Centers for Medicare & Medicaid 
Services (CMS) and the Health Resources and Services Administration (HRSA) are tasked with 
initiating a dialogue on ways to support Medicaid and Medicare providers in order to engage 
vulnerable populations in HIV care.  To that end, CMS and HRSA strongly encourage Medicaid 
Directors to consult with and consider input from State Primary Care Association (PCA) 
Directors (http://www.bphc.hrsa.gov/technicalassistance/partner%20links/associations.html) and 
State AIDS Directors (http://www.nastad.org/about/res_state_Directory.aspx) to ensure that 
issues and concerns facing HRSAs Ryan White HIV/AIDS Programs and the federally-qualified 
health centers (FQHC) are addressed, since these providers are highly impacted by Medicaid 
policy.  We are also asking States to consider how demonstration projects could be designed to 
improve access to HIV testing, care, and treatment for individuals living with HIV and 
individuals at risk for HIV infection.  Please note that, in addition to the Web sites listed above, a 
list of PCA and State AIDS Director contacts can be obtained by emailing 
HIVandAIDS@cms.hhs.gov.  States can reach out to these stakeholders as waiver considerations 
are being explored. 
 
Medicaid is a major source of coverage for individuals living with HIV.  Before the Affordable 
Care Act, most individuals living with HIV were ineligible for Medicaid unless they had very 
low incomes, or were deemed permanently disabled, due to an AIDS diagnosis.  Starting in 
2014, section 2001 of the Affordable Care Act expands coverage to individuals with income  
 
                                                 
1 Centers for Disease Control and Prevention. HIV/AIDS Surveillance Report. 2007; 19:7 
Available at 
http://www.cdc.gov/hiv/surveillance/resources/reports/2007report/pdf/2007SurveillanceReport.pdf  
2 http://www.aids.gov/federal-resources/policies/health-care-reform/    
Page 3  State Medicaid Director  
 
under 133 percent of the Federal poverty level (FPL) and States have had the option to begin 
providing medical assistance to individuals eligible under this new expansion as of April 1, 2010.   
 
Under the law, for the first time since the Medicaid program was established, States can receive 
Federal Medicaid payments under their State Medicaid plans to provide coverage for the lowest 
income adults in their States, without regard to disability, parental status, or most other 
categorical limitations.  For more information regarding this option for coverage of individuals 
under Medicaid, please visit  
http://www.cms.gov/smdl/downloads/SMD10005.PDF.  The Affordable Care Act also includes a 
variety of options for States to offer services to help those who need long-term services and 
supports at home and in the community.    
 
Summaries of Medicaid service design and coverage opportunities that are available are outlined 
below. 
 
1.  Community First Choice  
 
Section 2401 of the Affordable Care Act creates a new State Plan option to provide home and 
community-based attendant services and supports (Community First Choice Option) through 
section 1915(k)of the Social Security Act (the Act).  This provision will be effective  
October 1, 2011.  Community First Choice utilizes a person-centered plan, and allows for the 
provision of services to be self-directed under either an agency-provider model or a traditional 
self-directed model with a service budget.  States can make available home and community-
based attendant services and supports to assist in accomplishing activities of daily living, 
instrumental activities of daily living, and health-related tasks through hands-on assistance, 
supervision, or cueing.  Community First Choice also allows for transition costs (such as security 
deposits for an apartment or utilities) and the purchase of bedding, basic kitchen supplies, and 
other necessities required for transition from an institution.  In addition, Community First Choice 
allows for the provision of services that increase independence or substitute for human assistance 
to the extent that expenditures would have been made for the human assistance, such as  
non-medical transportation services.   This option also allows for the purchase of back-up 
systems or mechanisms (such as the use of beepers or other electronic devices) to ensure 
continuity of services and supports.  States that elect to provide the Community First Choice 
option will receive an increase of 6 percent in their Federal Medical Assistance Percentage 
(FMAP) for the provision of these services.  For more information about Community First 
Choice, CMS has released a proposed rule.  Please visit http://www.gpo.gov/fdsys/pkg/FR-2011-
02-25/pdf/2011-3946.pdf for more information.    
 
2.  Health Home for Enrollees with Chronic Conditions 
 
Section 2703 of the Affordable Care Act (Health Home for Enrollees with Chronic Conditions) 
offers a new Medicaid State Plan option to provide coordinated care to individuals with chronic 
conditions, which may include individuals living with HIV.  As mentioned in the State Medicaid 
Director letter on health homes, issued on November 16, 2010, section 1945(h)(2) of the Act 
authorizes the Secretary to expand the list of chronic conditions reflected in this provision and 
the Secretary  will consider HIV/AIDS for incorporation into health home models. Since  
individuals with HIV may also be experiencing mental health and/or substance use issues, this 
provision offers important coordinated care opportunities for supporting physical and behavioral    
Page 4  State Medicaid Director  
 
health, as well as linkages to long-term supports, which are fundamental elements of a successful 
health home.  
 
However, a State cannot offer a health home to an individual solely on the basis of having an 
HIV diagnosis.  Per statutory requirement, the individual must have two or more chronic 
conditions (as defined by the State and approved by CMS), or have one chronic condition and be 
at risk of another.  If you have any questions about health homes, please refer to the State 
Medicaid Director letter at http://www.cms.gov/smdl/downloads/SMD10024.pdf.  You may also 
send any questions about health homes to the CMS health homes mailbox at 
healthhomes@cms.hhs.gov. 
 
3.  HIV Initiatives under Section 1915(c) HCBS Waivers 
 
Under section 1915(c) of the Act, States may design HCBS waiver programs.  The section 
1915(c) HCBS waiver program is the predominant Medicaid program for providing long-term 
services and supports in the community (non-institutional settings) as an alternative to an 
institutional setting, such as a hospital or nursing home.   
 
The section 1915(c) HCBS waiver program is used by a number of States to serve individuals 
with HIV in the community.  States may use additional targeting criteria to specifically design a 
waiver to serve individuals with HIV or they may define a broader target group into which 
individuals with HIV would be included. Thirteen States currently operate stand alone section 
1915(c) waivers for individuals with HIV.  Many others successfully serve individuals with HIV 
in their more broadly targeted waivers, which often offer a rich service package that can address 
diverse service needs. 
 
States offer a wide range of services under the section 1915(c) waivers, including those targeted 
solely for individuals with HIV.  Examples of services that States currently offer in section 
1915(c) HIV waivers include: Case Management, Attendant Care, Home Health, Specialized 
Medical Equipment and Supplies, Nutritional Consultation, Respite, Environmental 
Modifications and Supplies, Private Duty Nursing, Personal Care, Home Maker Services, 
Personal Assistance, and Home Delivered Meals.  To learn more about HCBS waivers or to 
submit an application on-line please visit https://www.hcbswaivers.net/CMS/faces/portal.jsp.  
 
4.  HIV Initiatives under Section 1915(i) State Plan Home and Community-Based Services 
 
Section 1915(i) of the Act (HCBS as a State Plan option) offers an unprecedented opportunity to 
serve individuals with HIV.  Section 1915(i) was modified through section 2402 of the 
Affordable Care Act with changes that became effective October 1, 2010.  CMS released a State 
Medicaid Director letter (http://www.cms.gov/smdl/downloads/SMD10015.pdf ) on  
August 6, 2010, discussing the changes to section 1915(i) of the Act, including expanded 
eligibility criteria, the ability for States to target the benefit to certain populations, and an 
expanded array of services.  HCBS can be an essential component of an individuals health care  
continuum, and can work to support and bolster clinical interventions.  Five States currently have 
approved section 1915(i) HCBS in their State plans. 
 
 
   
Page 5  State Medicaid Director 
 
This option provides more flexibility than the section 1915(c) HCBS waivers because it includes 
less restrictive cost neutrality and institutional level of care requirements, allowing States to 
provide HCBS to prevent or delay the need for institutional care.  The services that the States  
may offer now under the section 1915(i) benefit are the same as those available under section 
1915(c) of the Act, and can include personal care, nutritional counseling, anticipatory grief and  
bereavement counseling, nursing and other specialized supports that can be effectively tailored to 
meet the needs of an individual with HIV.   
 
5.  The Money Follows the Person Rebalancing Demonstration Program  
The Money Follows the Person (MFP) Rebalancing Demonstration Program was authorized by 
Congress in section 6071 of the Deficit Reduction Act of 2005, and was designed to provide 
assistance to States to balance their long-term care systems and to help Medicaid beneficiaries 
transition from institutions to the community.  Congress initially authorized up to $1.75 billion in 
Federal funds through fiscal year (FY) 2011 to: 
1.  Increase the use of HCBS, and reduce the use of institutionally-based services; 
 
2.  Eliminate barriers and mechanisms in State law, State Medicaid plans, or State budgets 
that prevent or restrict the flexible use of Medicaid funds to enable Medicaid-eligible 
individuals to receive long-term care in the settings of their choice; 
 
3.  Strengthen the ability of Medicaid programs to ensure continued provision of HCBS to 
those individuals who choose to transition from institutions; and 
 
4.  Ensure that procedures are in place to provide quality assurance and continuous quality 
improvement of HCBS. 
Section 2403 of the Affordable Care Act extended the MFP Demonstration Program for an 
additional 5 years through 2016, and appropriates an additional $450 million for each fiscal year 
2012 through 2016, totaling an additional $2.25 billion in Federal funds.  Funds awarded in 2016 
are available to States for expenditures until fiscal year 2020.  The extension of the MFP 
Demonstration Program offers States substantial resources and additional program flexibilities to 
remove barriers and improve an individuals access to community supports and independent 
living arrangements.  
MFP grantees may amend their Operational Protocols at any time during the demonstration to 
include individuals living with HIV as a target population for transition from qualified 
institutions to community-based settings.  For an individuals first 365 days in the community, 
MFP grantees may also include additional demonstration and supplemental services that can 
address the special needs of an individual with HIV.  For more information on the MFP 
Rebalancing Demonstration, please visit: http://www.cms.gov/DeficitReductionAct/20_MFP.asp   
6.  Section 1115 Demonstrations  
 
Section 1115 of the Act allows the Secretary of Health and Human Services (the Secretary) to 
waive certain provisions of title XIX of the Act for experimental, pilot, or demonstration projects  
   
Page 6  State Medicaid Director  
 
 (demonstrations).  When the Secretary finds that the demonstration project is likely to assist in 
promoting the objectives of Medicaid, section 1115 also provides for Federal Financial  
Participation (FFP) for demonstration costs which would not otherwise be considered as 
expenditures under the Medicaid State plan. 
 
An HIV section 1115 demonstration will allow States the flexibility to expand access to 
individuals with HIV and allow such individuals to become eligible for services through a 
demonstration, without having to be permanently disabled due to an AIDS diagnosis.  In 
addition, providing these services will help promote health and better health outcomes among 
individuals with HIV, helping them to lead healthier and longer lives.  The demonstration may 
be designed to provide more effective, early treatment of HIV by making available a limited or 
comprehensive package of services, which may include anti-retroviral therapies or case 
management to ensure treatment adherence.  Early treatment and case management services 
provided to individuals with HIV create efficiencies in the Medicaid program enabling the 
extension of coverage to individuals who would otherwise be without health insurance.   
 
Features of Existing Section 1115 HIV Demonstrations 
 
CMS has previously approved two section 1115 HIV demonstrations for the District of 
Columbia and Maine.  The District of Columbias HIV demonstration provided full Medicaid 
benefits to uninsured District residents who are HIV positive, and whose incomes are at or below 
100 percent of the FPL.  The goal of the demonstration was to provide more effective, early 
treatment of HIV utilizing discount drug pricing.  Through the Department of Defense drug 
pricing, only available to the District, and a limited pharmacy network, the District was able to 
provide anti-retroviral prescription drugs to demonstration enrollees at a significantly lower 
price.  One of the key features of the Districts Demonstration was that intake for the program 
was conducted by the HIV/AIDS Administration case managers, allowing individuals with HIV 
to be linked to all HIV programs available to them in the District.   
 
The Maine HIV Demonstration applies rigorous care protocols, along with case management, to 
disabled Medicaid recipients under 100 percent of the FPL with the goal of delaying the onset of 
full-blown AIDS, and using those savings to expand coverage to uninsured low-income 
individuals living with HIV who are at or below 250 percent of the FPL.  The expanded coverage 
provides a comprehensive benefit package, including anti-retroviral therapies to individuals not 
otherwise eligible for Medicaid, but who are HIV positive. 
 
Budget Neutrality for Section 1115 Demonstrations 
 
In addition to serving the purposes of the Medicaid program and improving care for low-income 
individuals, demonstrations must be budget-neutral.  This means that the proposed demonstration 
cannot cost the Federal government more than it would absent the demonstration.  In order to 
meet budget neutrality, CMS and the State establish a budget ceiling based on five years of 
historic State specific expenditure data for each individual population the State is going to cover  
under the demonstration.  This initial amount is then trended forward based on a negotiated trend 
rate for the approved demonstration period.  Administrative costs are not included in the budget 
neutrality limit, but the State must separately track and report additional administrative costs that 
are directly attributable to the demonstration.  When developing the budget neutrality models, 
the initial set of data that States should try to obtain are the historic enrollment and budgetary    
Page 7  State Medicaid Director 
 
data by eligibility category, then project future enrollment and per member per month costs of 
coverage for populations that would be covered in the waiver.  CMS has available data on HIV  
spending by State that States may use to facilitate the construction of budget neutrality.  These 
data can be obtained by contacting Mr. Richard Jensen (contact information included near end of 
letter).   
 
CMS will work with States to develop a streamlined and flexible approach to budget neutrality 
for these waivers.  We encourage States interested in applying for an 1115 demonstration to 
contact CMS to identify the most appropriate and efficient budget neutrality methodology for 
each State.  
  
Submission Process for Section 1115 Demonstrations 
 
To assist States in applying for section 1115 demonstrations to cover individuals with HIV, CMS 
has developed a draft application template for consideration.  Please review the instructions at 
the beginning and throughout the template for the portions that require the State to input 
information.  CMS hopes that this information is helpful to States for successful submission of a 
section 1115 demonstration.   
CMS must review and approve the request before it will be considered complete, even when a 
State uses the draft template.  For the purpose of initiating the Federal review process, States 
must provide the information listed below:  
  A demonstration program description, and goals and objectives that will be implemented 
under the demonstration project.  
  The description of the proposed health care delivery system, eligibility requirements, 
benefit coverage, and cost sharing (for example, premiums, copayments, and deductibles) 
required of individuals that will be impacted by the demonstration.  
  An estimate of the expected increase or decrease in annual aggregate expenditures by 
population group impacted by the demonstration.  If available, include historic data for 
these populations.  
  An estimate of historic coverage and enrollment data (as appropriate), and estimated 
projections expected over the term of the demonstration, for each category of beneficiary 
whose health care coverage is impacted by the demonstration.  For example, States may 
choose to have a certain benefit set for enrollees at or below a certain FPL and a different 
benefit package for those above that certain FPL.    
  Other demonstration program features that require the State to deviate from the 
provisions of the Medicaid and CHIP programs.  
  The types of waivers and expenditure authorities that the State believes to be necessary to 
authorize the demonstration.  
  The research hypothesis or hypotheses that are related to the demonstration's proposed 
changes, goals, and objectives, a plan for testing the hypotheses in the context of an 
evaluation, and, if a quantitative evaluation design is feasible, the identification of 
appropriate evaluation indicators.  
  CMS recommends that States seek consultation with the State Substance Abuse 
Authority, State Mental Health Authority, and other State Agencies that fund or oversee 
HIV treatment during the development of their HIV demonstration proposal.   
Page 8  State Medicaid Director  
Additionally, States must comply with the State Notice Procedures set forth in                                
59 Fed. Reg. 49249 (September 27, 1994), and the tribal consultation requirements pursuant to 
section 1902(a)(73) of the Act as amended by section 5006(e) of the American Recovery and 
Reinvestment Act of 2009.   In States with Federally recognized Indian tribes, Indian health 
programs, and/or Urban Indian organizations, the State is required to submit evidence to CMS 
regarding the solicitation of advice from these entities prior to submission of any demonstration 
proposal.    
Lastly, section 1115 demonstration applications may be submitted electronically to 
HIVandAIDS@cms.hhs.gov or by mail to: 
 
Mr. Richard Jensen   
Centers for Medicare & Medicaid Services  
Children and Adults Health Programs Group  
Mail Stop: S2-1-16 
7500 Security Boulevard 
Baltimore, MD 21244 
 
We hope this information will be helpful.  CMS is available to provide technical assistance to 
States regarding special Medicaid programs for HIV.  Questions regarding this guidance may be 
directed to Ms. Barbara Edwards, Director, Disabled and Elderly Health Program Group, or Ms. 
Vikki Wachino, Director, Children and Adults Health Program Group at (410) 786-5647.  We 
look forward to our continuing our work together. 
 
Sincerely, 
 
/s/ 
 
Cindy Mann 
Director 
 
Enclosure 
     
Page 9  State Medicaid Director  
 
cc:   
 
CMS Regional Administrators  
 
CMS Associate Regional Administrators  
Division of Medicaid and Childrens Health  
 
Matt Salo 
President  
National Association of Medicaid Directors  
 
Alan R. Weil, J.D., M.P.P.  
Executive Director  
National Academy for State Health Policy  
 
Director of Health Legislation  
National Governors Association  
 
Rick Fenton  
Acting Director  
Health Services Division  
American Public Human Services Association  
 
Christine Evans, M.P.H.  
Director, Government Relations  
Association of State and Territorial Health Officials  
 
Debra Miller  
Director for Health Policy  
Council of State Governments  
 
Joy Wilson  
Director, Health Committee  
National Conference of State Legislatures 
 
Julie M. Scofield 
Executive Director 
National Alliance of State & Territorial AIDS Directors 
 
 
 
 
 
 
 
 
 
 
   
Section 1115 Demonstration 
HIV and AIDS   
APPLICATION TEMPLATE 
 
Instructions:  Throughout the template you will see <instructions>; please complete with 
information that is unique to the States HIV (including individuals living with AIDS, which 
refers to individuals living at an advanced stage of the HIV disease) demonstration request.  
 
Demonstration applications may be submitted by electronically to HIVandAIDS@cms.hhs.gov 
or by mail to: 
 
Mr. Richard Jensen  
Centers for Medicare & Medicaid Services  
Children and Adults Health Programs Group  
Mail Stop: S2-1-16 
7500 Security Boulevard 
Baltimore, MD 21244 
   
The <insert State name>, <insert Medicaid State Agency name>, proposes this demonstration 
under the authority of section 1115(a) of the Social Security Act (the Act).  This demonstration is 
for the purpose of addressing the domestic HIV epidemic that demands renewed commitment to 
increasing access to care and improving health outcomes for individuals living with HIV. 
 
State Name:   
State Medicaid Director Name:   
Telephone Number:   
E-mail Address:  
Other Key Contacts:   
 
The State information above identifies contact information for CMS to use in discussing 
demonstration applications, as necessary. 
 
I.  GENERAL DESCRIPTION OF PROGRAM 
<Please add and/or change the description of the States program> 
The HIV section 1115(a) Demonstration expands access to certain individuals with HIV without 
health insurance who are not otherwise eligible for Medicaid, the Childrens Health Insurance 
Program (CHIP), or Medicare.  The Demonstration allows such individuals to become eligible 
for a targeted benefits package without having to spend down income or resources, and allows 
individuals with HIV to remain involved in gainful activity.  The Demonstration is designed to 
provide more effective, early treatment of HIV disease by making available a limited, but 
comprehensive, package of services, including anti-retroviral therapies.  The State believes that 
early treatment and case management services provided to individuals with HIV create 
efficiencies in the Medicaid program that enable the extension of coverage to certain individuals 
who would otherwise be without health insurance.   
 
 
 
1 
   
The Demonstration includes <insert number> eligibility group(s):  
 
Eligibility Group Name  Description  FPL 
<insert eligibility group   <insert eligibility group  <insert FPL level for 
name> Example:  Group A  description>  Example:   eligibility for Group A> 
Adults between the ages of 21  Example:  Above 100% but 
and 64.  below 133% 
<insert eligibility group   <insert eligibility group  <insert FPL level for Group 
name> Example:  Group B  description> Example:  B>  Example:  Above 133% 
Premium assistance  but below 250% 
 
 
States goal(s) in implementing the Demonstration is: 
 
 <insert goal(s)> 
 
 
 
 
 
 
 
0 
 
II.  ELIGIBILITY AND BENEFITS  
 
1.  Eligibility. <delete those that do not apply or insert additional requirements that will 
apply to the Demonstration> 
 
   Mandatory State plan groups described below are subject to all applicable 
Medicaid laws and regulations, except to the extent expressly waived, or listed as not 
applicable to demonstration expenditures, in the list of waivers and expenditure 
authorities issued with the award letter for this Demonstration.   
 
   Those groups described below who are made eligible for the Demonstration by 
virtue of the expenditure authorities expressly granted in this Demonstration are subject 
to Medicaid laws or regulations only as specified in the expenditure authorities for this 
Demonstration.   
 
The eligibility criteria for the HIV Demonstration are as follows: <insert eligibility 
criteria> 
 
Examples (not limited to list below): 
  Positive HIV status; 
  Completed information form related to other insurance, i.e., third party liability 
(TPL); 
  Payment of premiums (if applicable); 
  Have income above ### percent and at or below ### percent of the FPL; <insert 
FPL range>; 
  Be ages ## through ##; <insert age range>; 
  Be ineligible under other categories of Medicaid;  
  Be ineligible for Medicare;  
  Not reside in mental health, or penal institutions; 
  Other (please describe). 
2   
 
Demonstration Eligibility  Federal Poverty Level  Eligible Benefit 
Groups  (FPL) and/or Other 
Qualifying Criteria 
<insert information>  <insert information>  <insert information> 
     
 
 
2. Eligibility Exclusions (if applicable).  The following persons are excluded from the 
HIV Demonstration.  
 
<insert exclusionary criteria> 
 
 
  <Insert methodology for determining income>  
 
3. States HIV Demonstration Benefits.  The following categories of services are covered 
in the participant benefit package: <insert all benefit categories and descriptions to be 
included in the demonstration> 
 
 
General Category of Service  Specific Services Include 
Example:  Inpatient  Example:  Including medical/surgical, substance abuse, 
detoxification and psychiatric.   
 
 
The following categories of services not included in the participant benefit package. 
<enter all excluded benefit categories> 
 
General Category of  Services Do Not Include 
Service    
   
 
Example:  Consumer  Example:  Consumer Directed Services 
 
Directed Attendant 
 
 
 
 
 
 
 
III.  COST SHARING  
 
4.  Co-payments.  <insert co-payment requirements, if applicable, or delete if there will be 
 
no co-payments> 
 
 
 
      Demonstration participants pay a co-payment for physician services and 
 
pharmaceuticals (see table below): 
 
 
 
3   
 
Demonstration Co-Pays 
Services  Co-payment 
Example:  Prescription  Example:  $3.00, capped at $30 per month per member  
Drugs 
 
No co-payment may be imposed on demonstration eligibles with respect to the following 
services and populations:  
  Individuals under 21 years of age;  
  An individual who is an inpatient in a hospital, nursing facility, or other institution, 
and is required to spend all his/her income for costs of care, with the exception of a 
minimal amount for personal needs;   
  Pregnant women, and services furnished during the post-partum phase of maternity 
care, to the extent permitted by Federal law;  
  Emergency services, as defined by the States Medicaid department;  
  Services furnished to an individual by a Health Maintenance Organization, as defined 
in section 1903(m) of the Social Security Act, in which he/she is enrolled; and     
  Any other service or services required to be exempt under the provisions of the Social 
Security Act, Title XIX, and successors to it.   
 
   This Demonstration will be coordinated with the AIDS Drug Assistance Program 
(ADAP) that is funded through the Ryan White HIV/AIDS Program statute (codified in 
Part B of title XXVI of the Public Health Service Act), and will pay primary to the 
ADAP for covered benefits.  ADAP assistance may be available as a wrap-around 
benefit, for Demonstration participant liability for premiums and co-payments.  
Individuals may participant in both benefit programs.   
 
5.  Monthly Premiums.  <please delete if not applicable, otherwise please insert premium 
information based on FPL level> 
 
    Enrollees are responsible for payment of a monthly premium dependent on their     
      income level.   
 
Income Level  Monthly Premium 
<if applicable, create a row for each FPL range that has  <insert premium amount> 
a monthly premium> 
 
    Not applicable  
 
6.  Cost Sharing Protections.  In the event demonstration eligibles fail to pay premiums 
by the date on which they are due, the State will provide a reasonable grace period of 
no less than 30 days during which the demonstration eligibles may make the payment 
without termination from the program.  During the grace period, the State will notify 
the demonstration eligible that failure to make the required payment may cause  
termination from the program.  The State will give the individual the right to appeal any 
adverse actions for failure to pay premiums.  In addition, before final disenrollment can 
occur, the State will perform a Medicaid eligibility determination to ensure that the 
participant is not eligible for the State plan.  If the Medicaid eligibility determination   
 
4   
 
finds that the demonstration eligible is ineligible for Medicaid, the State will disenroll 
the participant. The individual may reenroll in the Demonstration as soon as the 
individual is able to pay the required premium, subject to enrollment limitations.   
 
IV.  SERVICE DELIVERY MODEL  
 
7.  Service Delivery.   
 
 
<insert service delivery model description> 
 
 
 
 
 
 
 
V.   BUDGET NEUTRALITY  
 
<please contact CMS to discuss your budget neutrality optionsl>  
 
 
<3end of application>   
                                                 
3 According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of 
information unless it displays a valid OMB control number.  The valid OMB control number for this information 
collection is 0938-NEW.  The time required to complete this information collection is estimated to average 40 hours 
per response, including the time to review instructions, search existing data resources, gather the data needed, and 
complete and review the information collection.  If you have comments concerning the accuracy of the time 
estimate(s) or suggestions for improving this form, please write to: CMS, 7500 Security Boulevard, Attn: PRA 
Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.   
 
5   
Attachment to Demonstration Application Template 
 
STANDARD TERMS AND CONDITIONS (STCs) 
 
(When developing your program, please note these terms and conditions which may apply to the 
Demonstration.  These terms and conditions are current as of March 2011.  Depending upon the 
Demonstration design, additional STCs may apply.)  
 
I.   GENERAL PROGRAM REQUIREMENTS 
 
1.  Compliance with Federal Non-Discrimination Statutes.  The State must comply with 
all applicable Federal statutes relating to non-discrimination.  These include, but are not 
limited to, the Americans with Disabilities Act of 1990, title VI of the Civil Rights Act 
of 1964, section 504 of the Rehabilitation Act of 1973, and the Age Discrimination Act 
of 1975. 
 
2.  Compliance with Medicaid Laws, Regulation, and Policy.  All requirements of the 
Medicaid program expressed in law, regulation, and policy statement, not expressly 
waived or identified as not applicable in the waiver and expenditure authority 
documents, must apply to the Demonstration.   
 
3.  Changes in Medicaid Law, Regulation, and Policy.  The State must, within the 
timeframes specified in law, regulation, or policy statement, come into compliance with 
any changes in Federal law, regulation, or policy affecting the Medicaid program that 
occur during this Demonstration approval period, unless the provision being changed is 
expressly waived or identified as not applicable.   
 
4.  Impact on Demonstration of Changes in Federal Law, Regulation, and Policy.   
 
a)   To the extent that a change in Federal law, regulation, or policy requires either a 
reduction or an increase in Federal financial participation (FFP) for expenditures 
made under this Demonstration, the State must adopt, subject to CMS approval, a 
modified budget neutrality agreement for the Demonstration, as necessary, to comply 
with such change.  The modified agreement will be effective upon the 
implementation of the change.  The trend rates for the budget neutrality agreement are 
not subject to change under this subparagraph.   
 
b)  If mandated changes in the Federal law require State legislation, the changes must 
take effect on the day such State legislation becomes effective, or on the last day such 
legislation was required to be in effect under the law. 
 
5.  State Plan Amendments.  The State will not be required to submit State plan 
amendments under title XIX or title XXI State plan amendments for changes affecting 
any populations made eligible solely through the Demonstration.  If a population 
eligible through the Medicaid State Plan is affected by a change to the Demonstration, a 
conforming amendment to the appropriate State Plan may be required, except as 
otherwise noted in these STCs. 
 
 
6   
6.  Changes Subject to the Amendment Process.  Changes related to eligibility, 
enrollment, benefits, cost sharing, sources of non-Federal share of funding, budget 
neutrality, and other comparable program elements must be submitted to CMS as 
amendments to the Demonstration.  All amendment requests are subject to approval at 
the discretion of the Secretary in accordance with section 1115 of the Act.  The State 
must not implement changes to these elements without prior approval by CMS.  
Amendments to the Demonstration are not retroactive, and FFP will not be available for 
changes to the Demonstration that have not been approved through the amendment 
process set forth in paragraph 7 below.   
 
7.  Amendment Process.  Requests to amend the Demonstration must be submitted to 
CMS for approval no later than 120 days prior to the planned date of implementation of 
the change and may not be implemented until approved.  Amendment requests must 
include, but are not limited to, the following: 
 
a)  An explanation of the public process used by the State, consistent with the 
requirements of paragraph 6, to reach a decision regarding the requested amendment; 
 
b)  A data analysis which identifies the specific with waiver impact of the proposed 
amendment on the current budget neutrality agreement.  Such analysis shall include 
current total computable with waiver and without waiver status on both a 
summary and detailed level through the current approval period using the most recent 
actual expenditures, as well as summary and detailed projections of the change in the 
with waiver expenditure total as a result of the proposed amendment, which isolates 
(by Eligibility Group) the impact of the amendment; 
 
c)  A detailed description of the amendment, including impact on beneficiaries, with 
sufficient supporting documentation; and 
 
d)  If applicable, a description of how the evaluation design will be modified to 
incorporate the amendment provisions. 
 
8.  Demonstration Phase-Out.  The State may suspend or terminate this Demonstration in 
whole, or in part, at any time prior to the date of expiration.  The State must promptly 
notify CMS in writing of the reason(s) for the suspension or termination, together with 
the effective date.  In the event the State elects to phase out the Demonstration, the 
State must submit a phase-out plan to CMS at least six months prior to initiating phase-
out activities.  Consistent with the enrollment limitation requirement in paragraph 9, a 
phase-out plan shall not be shorter than six months, unless such action is necessitated 
by emergent circumstances.  The phase-out plan is subject to CMS approval.  If the 
project is terminated, or any relevant waivers are suspended by the State, FFP shall be 
limited to normal closeout costs associated with terminating the Demonstration, 
including services and administrative costs of disenrolling participants.  
 
9.  Enrollment Limitation During Demonstration Phase-Out. If the State elects to 
suspend, terminate, or not renew this Demonstration as described in paragraph 8, during 
the last 6 months of the Demonstration, the State may choose to not enroll individuals  
 
 
7   
into the Demonstration who would not be eligible for Medicaid under the current  
Medicaid State plan.  Enrollment may be suspended if CMS notifies the State in writing 
that the Demonstration will not be renewed. 
 
10. CMS Right to Terminate or Suspend.  CMS may suspend or terminate the 
Demonstration (in whole or in part) at any time before the date of expiration, whenever 
it determines following a hearing that the State has materially failed to comply with the 
terms of the project.  CMS will promptly notify the State in writing of the 
determination and the reasons for the suspension or termination, together with the 
effective date.  
 
11. Finding of Non-Compliance.  The State does not relinquish its rights to challenge the 
CMS finding that the State materially failed to comply. 
 
12. Withdrawal of Waiver Authority.  CMS reserves the right to withdraw waivers or 
expenditure authorities at any time it determines that continuing the waivers or 
expenditure authorities would no longer be in the public interest or promote the 
objectives of title XIX of the Act.  CMS will promptly notify the State in writing of the 
determination and the reasons for the withdrawal, together with the effective date, and 
afford the State an opportunity to request a hearing to challenge CMS determination 
prior to the effective date.  If a waiver or expenditure authority is withdrawn, FFP is 
limited to normal closeout costs associated with terminating the waiver or expenditure 
authority, including services and administrative costs of disenrolling participants. 
 
13. Adequacy of Infrastructure.  The State must ensure the availability of adequate 
resources for implementation and monitoring of the Demonstration, including 
education, outreach, and enrollment; maintaining eligibility systems; compliance with 
cost sharing requirements; and reporting on financial and other Demonstration 
components. 
 
14. Public Notice, Tribal Consultation, and Consultation with Interested Parties.  The 
State must continue to comply with the State Notice Procedures set forth in 59 Fed. 
Reg. 49249 (September 27, 1994) and the tribal consultation requirements pursuant to 
section 1902(a)(73) of the Act, as amended by section 5006(e) of the American 
Recovery and Reinvestment Act (the Recovery Act) of 2009, when any program 
changes to the Demonstration, including (but not limited to) those referenced in 
paragraph 7, are proposed by the State.  In States with Federally recognized Indian 
tribes, Indian health programs, and/or Urban Indian organizations, the State is required 
to submit evidence to CMS regarding the solicitation of advice from these entities prior 
to submission of any demonstration proposal, amendment, and/or renewal of this 
Demonstration.   
 
15. FFP.  No Federal matching funds for expenditures for this Demonstration will take 
effect until the effective date identified in the Demonstration approval letter.   
  
 
 
 
 
8   
II.  ELIGIBILITY, BENEFITS, AND ENROLLMENT 
 
<unique to States approved program design> 
     
 
III.  COST SHARING 
 
<unique to States approved program design> 
 
IV.  DELIVERY SYSTEMS 
 
16. Contracts.  Procurement and the subsequent final contracts developed to implement 
selective contracting by the State with any provider group shall be subject to CMS 
approval prior to implementation.  Existing contracts with Federally Qualified Health 
Centers (FQHC) shall continue in force. 
 
 Payments under contracts with public agencies, not competitively bid in a process 
involving multiple bidders, shall not exceed the documented costs incurred in 
furnishing covered services to eligible individuals (or a reasonable estimate with an 
adjustment factor no greater than the annual change in the consumer price index). 
 
V.  GENERAL REPORTING REQUIREMENTS 
 
17. General Financial Requirements.  The State must comply with all general financial 
requirements under title XIX of the Act set forth in Section VI. 
 
18. <Delete if not applicable> Compliance with Managed Care Reporting 
Requirements.  The State does not currently use managed care for this Demonstration.  
If the State did use managed care, the State must comply with all managed care 
reporting regulations at 42 CFR 438, except as expressly identified as not applicable in 
the expenditure authorities incorporated into these STCs.  
 
19. Reporting Requirements Related to Budget Neutrality.  The State must comply with 
all reporting requirements for monitoring budget neutrality set forth in Section e)VII. 
 
20. Quarterly Calls.  CMS shall schedule Quarterly conference calls with the State.  The 
purpose of these calls is to discuss any significant actual or anticipated developments 
affecting the Demonstration.  Areas to be addressed include, but are not limited to, 
health care delivery, enrollment, cost sharing, quality of care, access, the benefit 
package, audits, lawsuits, financial reporting and budget neutrality issues, progress on 
evaluations, State legislative developments, and any Demonstration amendments, 
concept papers, or relevant State plan amendments the State is considering submitting.  
CMS shall update the State on any amendments or concept papers under review, as well 
as Federal policies and issues that may affect any aspect of the Demonstration.  The 
State and CMS shall jointly develop the agenda for the calls. 
 
21. Quarterly Reports:  The State must submit progress reports in the format to be 
provided at a later date no later than 60 days following the end of each quarter.  The  
 
9   
intent of these reports is to present the States analysis and the status of the various 
operational areas.  These quarterly reports must include, but are not limited to: 
 
a)  An updated budget neutrality monitoring spreadsheet;  
 
b)  An update on events occurring during the quarter or anticipated to occur in the 
near future that affect health care delivery, including, but not limited to:  
 
1.  Systems and Reporting Issues; 
2.  Approval and contracting with new health plans;  
3.  Benefits;  
4.  Enrollment;  
5.  Grievances;  
6.  Quality of care;  
7.  Access;  
8.  Health plan financial performance that is relevant to the Demonstration;  
9.  Pertinent legislative activity; and  
10. Other operational issues.     
 
c)  Action plans for addressing any policy and administrative issues identified; 
 
d)  The number of individuals enrolled in the HIV Demonstration by eligibility group 
(EG) and disease-stage-specific category, as well as in total; and 
 
e)  Evaluation activities and interim findings. 
 
o  Quarterly report for the quarter ending <insert month and day > is <insert month 
and day>   
 
o  Quarterly report for the quarter ending <insert month and day > is <insert month 
and day>   
 
o  Quarterly report for the quarter ending <insert month and day > is <insert month 
and day>   
 
o  Quarterly report for the quarter ending <insert month and day > is <insert month 
and day>   
 
22. Annual Report.  The State must submit a draft annual report documenting 
accomplishments, project status (including disease-stage-specific enrollment and per 
member per month (PMPM), quantitative and case study findings, interim evaluation 
findings, utilization data, progress on implementing cost containment initiatives (if 
relevant), policy and administrative difficulties in the operation of the Demonstration, 
and systems and reporting issues.  The State must submit the draft annual report no 
later than 120 days after the end of each Demonstration year <Insert month and day>.  
Within 30 days of receipt of comments from CMS, a final annual report must be 
submitted, and posted to the CMS Web site with prior permission.    
 
 
10   
23. <Delete if not applicable> AIDS Drug Assistance Program (ADAP).  By <insert 
date> the State will submit for CMS approval a proposed methodology to provide 
aggregate ADAP information on premium or co-payments provided to Demonstration 
participants.  ADAP is a separate Federal program for which CMS does not provide 
Federal match.  The State will begin to report this information with the quarterly report 
due <insert date>, and will continue to report this information on each quarterly report 
with a summary provided on the annual report. 
 
24. Transition Plan.  On or before July 1, 2012, the State is required to prepare, and 
incrementally revise, a transition plan consistent with the provisions of the Affordable 
Care Act for individuals enrolled in the Demonstration, including how the State plans 
to coordinate the transition of these individuals to a coverage option available under the 
Affordable Care Act, without interruption in coverage to the maximum extent possible. 
The plan must contain the required elements and milestones described in paragraphs 
24a-e outlined below.  In addition, the Plan will include a schedule of implementation 
activities that the State will use to operationalize the Transition Plan.   
 
a)  Seamless Transitions.  Consistent with the provisions of the Affordable Care Act, 
the Transition Plan will include details on how the State plans to obtain and 
review any additional information needed from each individual to determine 
eligibility under all eligibility groups, and to coordinate the transition of 
individuals enrolled in the Demonstration (by FPL or newly applying for 
Medicaid) to a coverage option available under the Affordable Care Act, without 
interruption in coverage to the maximum extent possible.  Specifically, the State 
must:  
 
i.  Determine eligibility under all January 1, 2014, eligibility groups for 
which the State is required or has opted to provide medical assistance, 
including the group described in section1902(a)(10)(A)(i)(VIII) of the Act 
for individuals under age 65 and regardless of disability status, with 
income at or below 133 percent of the FPL.   
 
ii.  Identify Demonstration populations not eligible for coverage under the 
Affordable Care Act, and explain what coverage options and benefits 
these individuals will have effective January 1, 2014.   
 
iii.  Implement a process for considering, reviewing, and making preliminarily 
determinations under all January 1, 2014, eligibility groups for new 
applicants for Medicaid eligibility. 
 
iv.  Conduct an analysis that identifies populations in the Demonstration that 
may not be eligible, for or affected by, the Affordable Care Act, and the 
authorities the State identifies that may be necessary to continue coverage 
for these individuals. 
 
v.  Develop a modified adjusted gross income (MAGI) calculation for program 
eligibility. 
 
 
11   
b)  Access to Care and Provider Payments and System Development or Remediation.  
As necessary to meet the States priorities, the State should ensure adequate 
provider supply for the State plan and Demonstration populations affected by the 
Demonstration on December 31, 2013.  Additionally, the Transition Plan for the 
Demonstration is expected to expedite the States readiness for compliance with 
the requirements of the Affordable Care Act and other Federal legislation.  
 
c)  Pilot Programs.  Progress towards developing and testing, when feasible, pilot 
programs that support Affordable Care Act-defined medical homes, 
accountable care organizations, and / or person-centered health homes to 
allow for more efficient and effective management of the highest risk individuals. 
 
d)  Progress Updates.  After submitting the initial Transition Plan for CMS 
approval, the State must include progress updates in each quarterly and annual 
report.  The Transition Plan shall be revised as needed. 
 
e)  Implementation.  
 
i.  By July 1, 2013, the State must begin to implement a simplified, streamlined 
process for transitioning eligible participants in the Demonstration to Medicaid, 
the Exchange, or other coverage options in 2014.  In transitioning these 
individuals from coverage under the waiver to coverage under the State plan, 
the State will not require these individuals to submit a new application. 
 
ii.     On or before December 31, 2013, the State must provide notice to the 
individual of the eligibility determination, using a process that minimizes 
demands on the participants.  
 
VI.  GENERAL FINANCIAL REQUIREMENTS  
 
25. Quarterly Reports.  The State must provide quarterly expenditure reports using Form 
CMS-64 to separately report total expenditures for services provided under the 
Medicaid program, including those provided through the Demonstration under the 
authority of section 1115 of the Act.  This project is approved for expenditures 
applicable to services rendered during the Demonstration period.  CMS shall provide 
FFP for allowable Demonstration expenditures only as long as those expenditures do 
not exceed the pre-defined limits on the costs incurred as specified in section VII. 
   
26. Reporting Expenditures Subject to the Budget Neutrality Cap.  The following 
describes the reporting of expenditures subject to the budget neutrality cap: 
 
a)  To track expenditures under this Demonstration, the State must report demonstration 
expenditures through the Medicaid and State Children's Health Insurance Program 
Budget and Expenditure System (MBES/CBES), following routine CMS-64 
reporting instructions outlined in Section 2500 and Section 2115 of the State 
Medicaid Manual.  All Demonstration expenditures claimed under the authority of 
title XIX of the Act must be reported each quarter on separate Forms CMS-64.9  
 
 
12   
Waiver and/or 64.9P Waiver, identified by the Demonstration project number 
assigned by CMS (including the project number extension, which indicates the 
Demonstration Year (DY) in which services were rendered, or for which capitation 
payments were made).  For monitoring purposes, cost settlements must be recorded 
on Line 10.b, in lieu of Lines 9 or 10.C.  For any other cost settlements (i.e., those 
not attributable to this demonstration), the adjustments should be reported on lines 9 
or 10.C, as instructed in the State Medicaid Manual.   
 
b)  For each demonstration year, separate forms CMS-64.9 Waiver and/or 64.9P 
Waiver will be submitted reporting expenditures for individuals enrolled in the 
demonstration and subject to the budget neutrality cap.  The State must complete 
separate forms for the following two enrollment categories:   
 
c)  For purposes of this section, the term expenditures subject to the budget neutrality 
cap shall include all Medicaid expenditures on behalf of the individuals who are 
enrolled in this Demonstration (as described in item 36 and who are receiving the 
services subject to the budget neutrality cap).  All expenditures that are subject to the 
budget neutrality cap are considered demonstration expenditures, and shall be 
reported on forms CMS-64.9 waiver and/or 64.9P waiver. 
 
d)  Premiums and other applicable cost sharing contributions from Enrollees that are 
collected by the State from Enrollees under the Demonstration must be reported to 
CMS each quarter on Form CMS-64 Summary Sheet line 9.D, columns A and B.  
Additionally, the total amounts that are attributable to the Demonstration must be 
separately reported on the CMS-64Narr report by Demonstration year. 
 
e)  Administrative costs will not be included in the budget neutrality limit, but the State 
must separately track and report additional administrative costs that are directly 
attributable to the Demonstration.  All administrative costs will be identified on the 
Forms CMS-64.10 Waiver and/or 64.10P Waiver. 
 
f)  All claims for expenditures subject to the budget neutrality cap (including any cost 
settlements) must be made within 2 years after the calendar quarter in which the 
State made the expenditures.  Furthermore, all claims for services during the 
demonstration period (including any cost settlements) must be made within 2 years 
after the conclusion or termination of the Demonstration.  During the latter 2-year 
period, the State must continue to identify separately net expenditures related to 
dates of service during the operation of the section 1115 Demonstration on the CMS-
64 waiver forms in order to properly account for these expenditures in determining 
budget neutrality.  
 
27. Reporting Member Months.  The following describes the reporting of member 
months subject to the budget neutrality gap: 
 
a) The term eligible member months refers to the number of months in which 
persons are eligible to receive services.  For example, a person who is eligible for 3 
months contributes 3 eligible member months to the total.  Two individuals who are  
 
 
13   
 
eligible for 2 months each contribute 2 eligible member months to the total, for a 
total of 4 eligible member months. 
 
b) For the purposes of this Demonstration, the term Demonstration eligibles excludes  
        unqualified aliens and refers to the Demonstration Populations described below: 
 
 
<Insert description(s)> 
 
 
 
 
 
 
   
   
   
   
 
c)  For the purpose of calculating the budget neutrality expenditure cap and for other 
purposes, the State must provide to CMS, as part of the quarterly report required 
under paragraph 25, the actual number of eligible member months for the 
Demonstration Populations defined in paragraph 27.  The State must submit a 
statement accompanying the quarterly report, which certifies the accuracy of this 
information. 
 
To permit full recognition of in-process eligibility, reported counts of member 
months may be subject to revisions after the end of each quarter.  Member month 
counts may be revised retrospectively as needed.  
  
28. Standard Medicaid Funding Process.  The standard Medicaid funding process shall 
be used during the demonstration.  The State must estimate matchable Medicaid 
expenditures on the quarterly form CMS-37.  In addition, the estimate of matchable 
Demonstration expenditures (total computable and Federal share) subject to the budget 
neutrality cap must be separately reported by quarter for each Federal fiscal year (FFY) 
on the form CMS-37.12 for both the medical assistance program and administrative 
costs.  CMS shall make Federal funds available based upon the States estimate, as 
approved by CMS.  Within 30 days after the end of each quarter, the State must submit 
the form CMS-64 quarterly Medicaid expenditure report, showing Medicaid 
expenditures made in the quarter just ended.  CMS shall reconcile expenditures 
reported on the form CMS-64 with Federal funding previously made available to the 
State, and include the reconciling adjustment in the finalization of the grant award to 
the State.   
 
29. Extent of Federal Financial Participation for the Demonstration.  Subject to CMS 
   approval of the source(s) of the non-Federal share of funding, CMS shall provide FFP 
at the applicable Federal matching rates for the Demonstration as a whole as outlined 
below, subject to the limits described in Section VII: 
 
a)  Administrative costs, including those associated with the administration of the 
Demonstration; and  
 
14   
b)  Net expenditures and prior period adjustments of the Medicaid program that are 
paid in accordance with the approved Medicaid State plan; and 
 
c)  Net medical assistance expenditures made under section 1115 Demonstration 
authority under the HIV Demonstration. 
 
30. Sources of Non-Federal Share.  The State certifies that matching the non-Federal 
share of funds for the Demonstration are State/local monies.  The State further certifies 
that such funds shall not be used to match any other Federal grant or contract, except as 
permitted by law.  All sources of non-Federal funding must be compliant with section 
1903(w) of the Act and applicable regulations.  In addition, all sources of the non-
Federal share of funding are subject to CMS approval.  
 
a)  CMS shall review the sources of the non-Federal share of funding for the 
Demonstration at any time.  The State agrees that all funding sources deemed 
unacceptable by CMS shall be addressed within the time frames set by CMS. 
 
b)  Any amendments that impact the financial status of the program shall require the 
State to provide information to CMS regarding all sources of the non-Federal share 
of funding. 
 
31. State Certification of Funding Conditions.  The State must certify that the following 
conditions for non-Federal share of Demonstration expenditures are met: 
 
a)  Units of government, including governmentally operated health care providers, may 
certify that State or local tax dollars have been expended as the non-Federal share 
of funds under the Demonstration. 
 
b)  To the extent the State utilizes certified public expenditures (CPEs) as the funding 
mechanism for title XIX (or under section 1115 authority) payments, CMS must 
approve a cost reimbursement methodology.  This methodology must include a 
detailed explanation of the process by which the State would identify those costs 
eligible under title XIX (or under section 1115 authority) for purposes of certifying 
public expenditures.  
 
c)  To the extent the State utilizes CPEs as the funding mechanism to claim Federal 
match for payments under the Demonstration, governmental entities to which 
general revenue funds are appropriated must certify to the State the amount of such 
tax revenue (State or local) used to satisfy Demonstration expenditures.  The 
entities that incurred the cost must also provide cost documentation to support the 
States claim for Federal match. 
 
d)  The State may use intergovernmental transfers to the extent that such funds are 
derived from State or local tax revenues and are transferred by units of government 
within the State. Any transfers from governmentally operated health care providers 
must be made in an amount not to exceed the non-Federal share of title XIX 
payments.  Under all circumstances, health care providers must retain 100 percent  
 
 
15   
 
of the claimed expenditure.  Moreover, no pre-arranged agreements (contractual or 
otherwise) exist between health care providers and State and/or local government to 
return and/or redirect any portion of the Medicaid payments.  This confirmation of 
Medicaid payment retention is made with the understanding that payments that are 
the normal operating expenses of conducting business, such as payments related to 
taxes, (including health care provider-related taxes), fees, business relationships 
with governments that are unrelated to Medicaid and in which there is no 
connection to Medicaid payments, are not considered returning and/or redirecting a 
Medicaid payment. 
 
32. Monitoring the Demonstration.  The State will provide CMS with information to   
effectively monitor the Demonstration, upon request, in a reasonable time frame.   
 
VII.  MONITORING BUDGET NEUTRALITY  
 
33. Limit on Federal Title XIX funding.  The State shall be subject to a limit on the 
amount of Federal title XIX funding that the State may receive on selected Medicaid 
expenditures during the period of approval of the Demonstration.  The limit is 
determined by using a per capita cost method, and budget neutrality expenditure caps 
are set on a yearly basis with a cumulative budget neutrality expenditure limit for the 
length of the entire Demonstration.  The data supplied by the State to CMS to set the 
annual caps is subject to review and audit, and, if found to be inaccurate, will result in a 
modified budget neutrality expenditure limit.  CMS assessment of the States 
compliance with these annual limits will be done using the Schedule C report from the 
CMS-64.   
 
34.  Risk.  The State shall be at risk for the per capita cost for Demonstration eligibles under 
this budget neutrality agreement, but not for the number of Demonstration eligibles.  
Because CMS provides FFP for all Demonstration eligibles, the State shall not be at 
risk for changing economic conditions that impact enrollment levels.  However, by 
placing the State at risk for the per capita costs for current eligibles, CMS ensures that 
the Federal Demonstration expenditures do not exceed the level of expenditures had 
there been no Demonstration.   
 
35.  Impermissible DSH, Taxes, or Donations.  The CMS reserves the right to adjust the 
budget neutrality ceiling in order to be consistent with enforcement of impermissible 
provider payments, health care related taxes, new Federal statutes, or with policy 
interpretations implemented through letters, memoranda, or regulations.  CMS reserves 
the right to make adjustments to the budget neutrality cap if any health care related tax 
that was in effect during the base year, or provider-related donation that occurred 
during the base year, is determined by CMS to be in violation of the provider donation 
and health care related tax provisions of section 1903(w) of the Act.  Adjustments to 
annual budget targets will reflect the phase-out of impermissible provider payments by 
law or regulation, where applicable. 
 
36. Enforcement of Budget Neutrality.   CMS shall enforce budget neutrality over the life 
of the Demonstration, rather than on an annual basis.  However, if the States  
 
16   
expenditures exceed the calculated cumulative budget neutrality expenditure cap by the 
percentage identified below for any of the Demonstration years, the State must submit a 
corrective action plan to CMS for approval. 
 
 
Year  Without Waiver  Allowed Margin 
 
DY 01 (2011)    <insert amount>  <insert percentage> 
DY 02 (2012)  <insert amount>  <insert percentage> 
DY 03 (2013)  <insert amount>  <insert percentage> 
 
             
37. Exceeding Budget Neutrality.  If, at the end of this Demonstration period, the 
cumulative budget neutrality expenditure cap has been exceeded, the excess Federal 
funds must be returned to CMS.  If the Demonstration is terminated prior to the end of 
the budget neutrality agreement, an evaluation of this provision shall be based on the 
time elapsed through the termination date. 
 
VIII.   EVALUATION OF THE DEMONSTRATION 
 
38. State Must Evaluate the Demonstration.  As outlined in the subparagraph below, the 
outcomes from the evaluation component must be integrated into a programmatic 
summary that describes whether the State met the Demonstration goal, with 
recommendations for future efforts regarding both components.  The State must submit 
to CMS for approval a draft evaluation design no later than <insert date>.  The 
evaluation must outline and address evaluation questions for the following: 
 
The HIV Demonstration.  At a minimum, the draft design must:  
 
  Include a discussion of the goals, objectives, and evaluation questions specific 
to the entire Demonstration.   
  Discuss the outcome measures that will be used in evaluating the impact of 
the Demonstration during the period of approval, particularly among the target 
population.   
  Discuss the data sources and sampling methodology for assessing these 
outcomes.   
  Include a detailed analysis plan that describes how the effects of the 
Demonstration shall be isolated from other initiatives occurring in the State. 
  Identify whether the State will conduct the evaluation, or select an outside 
contractor for the evaluation.  
  The evaluation report that encompasses the outcomes since the beginning of 
the demonstration must be submitted to CMS by <insert date>.  
   
39. Final Evaluation Plan and Implementation.  CMS shall provide comments on the 
draft designs within 60 days of receipt, and the State must submit a final plan for the 
overall evaluation of the Demonstration described in paragraph 38, within 60 days of 
receipt of CMS comments.  The State must implement the evaluation designs and  
 
 
17   
report its progress on each in the quarterly reports.  The State must submit to CMS a 
draft evaluation report 120 days prior to the expiration of the Demonstration.  CMS 
shall provide comments within 60 days of receipt of the report.  The State must submit 
the final report prior to the expiration date of the Demonstration. 
 
40. Cooperation with CMS Evaluators.  Should CMS conduct an independent evaluation 
of any component of the Demonstration, the State will cooperate fully with CMS or the 
independent evaluator selected by CMS.  The State will submit the required data to the 
contractor or CMS as requested. 
 
IX. SCHEDULE OF STATE DELIVERABLES FOR THE DEMONSTRATION 
EXTENSION PERIOD  
Date - Specific  Deliverable  STC Reference 
  Submit Draft Evaluation Plan, including  Section VIII, paragraph 
Evaluation Designs for the State HIV  38 
demonstration 
  Submit Draft Evaluation Report, including  Section VIII, paragraph 
preliminary analysis and recommendations  38 
related to the State HIV demonstration 
  Submit Final Evaluation Report  Section VIII, paragraph 
39 
 
 
  Deliverable  STC Reference 
     
Annual  By <insert date> Draft Annual Report  Section VII, paragraph 
22 
     
Each Quarter     
  Quarterly Operational Reports   Section VII, paragraph 
21 
  CMS-64 Reports   Section VIII, paragraph 
26 
  Disease-Stage Specific Eligible Member  Section VIII, paragraph 
Months   27 
 
 
 
 
 
 
 
 
 
 
 
 
 
18