DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, Maryland   21244-1850 
 
 
CMCS Informational Bulletin  
 
 
DATE:    November 6, 2017  
 
FROM:    Brian Neale, Director  
      
SUBJECT:   Section 1115 Demonstration Process Improvements  
 
On March 14, 2017, Health and Human Services (HHS) and CMS issued a letter to the nations 
governors to affirm our partnership in improving Medicaid and the lives of those it serves, and 
committing to empower states to advance the next wave of innovative solutions that focus on 
improving quality, accessibility, and outcomes.  The letter noted key areas where we will improve 
collaboration with states and move towards more effective program management, while ensuring 
state accountability for the outcomes produced by the Medicaid program.  
 
This informational bulletin further describes a highlight of the letter  improving federal and state 
program management, specifically through improvements in the review, approval, monitoring and 
evaluation of section 1115(a) Medicaid demonstrations.  CMS recognizes the need to improve the 
section 1115 demonstration process to facilitate expedited approval of demonstration projects.  The 
process improvements described below are aimed at reducing burden, increasing efficiency, and 
promoting transparency in the review and approval of section 1115 demonstrations.  They were 
developed in partnership with states and after thorough review of the current approval process.    
 
The March 14 letter also acknowledged that, despite the significant investment by states and the 
federal government, Medicaids results should be better.  CMS is committed to ensuring that 
Medicaid achieves positive health outcomes for vulnerable individuals and families, including 
through the innovations implemented in section 1115 demonstrations.  Monitoring and evaluation 
are critically important for understanding the impacts of the state innovations being demonstrated. 
This informational bulletin describes a number of strategies CMS is implementing to strengthen the 
monitoring and evaluation of section 1115 demonstrations.  These improvement strategies will be 
implemented on an on-going basis.   
 
 
Background  
 
HHS and CMS are committed to working with states to bring additional flexibilities to Medicaid in 
ways that support both state objectives and the objectives of title XIX of the Social Security Act (the 
Act).  The cycle of section 1115 demonstrations  from design, application review, negotiations and 
approval, to implementation, monitoring, and evaluation  involves substantial time from CMS, other 
federal partners, and states.  To improve the section 1115 demonstration review process, while also 
assuring adequate federal oversight and evaluation, the Center for Medicaid & CHIP Services 
(CMCS) is implementing a number of strategies outlined in this bulletin.     
 
  Page 2  CMCS Informational Bulletin 
 
 
Section 1115 Application and Approval Process 
 
Reducing Burden 
 
CMS recognizes that the approval process for section 1115 demonstrations can be cumbersome and 
time consuming.  Reducing burden for states throughout the approval process is a key concern that 
CMS aims to address through the improvements outlined below.   
 
Review and Revision of Section 1115 Demonstration Application: CMS will revise the 
Demonstration Application template to streamline and simplify it. We will remove duplicative 
information, and ensure states are only required to provide information necessary to meet the 
regulatory requirements and allow CMS to adequately evaluate the proposal.   As needed, CMS will 
offer additional guidance and technical assistance on the demonstration application process, including 
guidance on the specific waivers and expenditure authorities states might need to meet their goals.    
Approval Timeline: Wherever possible, CMS will work with each state to develop a timeline for the 
approval process to include a regular schedule of meetings, topics to be discussed and anticipated 
deliverables.   This will help to ensure states understand the information needed to facilitate the 
negotiations during the approval process.   
Content of Special Terms and Conditions (STCs):  The STCs articulated in demonstration approval 
documents reflect the policy agreements between states and CMS, and describe the parameters of the 
authority granted to the state.  They are legally binding upon the state and are designed to clearly lay 
out the states commitment to its Medicaid stakeholders, and the states implementation and 
financing approach to medical assistance services under the demonstration authority.  The following 
strategies will apply to STCs: 
  
  CMS will continue to work with states to ensure that STCs reflect the policy agreements, 
o
and do not limit states abilities to operate their programs within the extent of flexibility 
permitted by law.   
  STCs will focus on policies with specific milestones, performance metrics, benchmarks, 
o
and anticipated outcomes through which the state will demonstrate its success.     
  CMS will offer standard approved STC language, when appropriate, across similar 
o
demonstrations. 
  States are invited to submit draft STC language pertinent to the application request. 
o
 
Where technical or operational information is requested by CMS, the state may, when CMS finds 
appropriate, instead provide assurances that the requested information and the underlying issues will 
be addressed with a set of goals and milestones that result in development of operational protocols 
and necessary data.  The STCs will contain such assurances and describe the milestones, and 
requirements to inform CMS about progress on the milestones, and any consequences if the state 
does not meet milestones. 
      Page 3  CMCS Informational Bulletin 
 
 
 
Increasing Efficiency 
 
CMS recognizes that increased efficiency during the approval process may allow states to implement 
their demonstrations and advance their innovations and system reforms more quickly.    
 
Expediting Approval Processes:  CMS remains committed to good faith negotiation and timely 
approval of demonstrations that meet states needs and further the objectives of the Medicaid 
program.  We will continue to work towards approval in such a way so as not to unnecessarily delay 
states implementation schedules through the following strategies: 
 
  CMS will develop parameters for expedited approval of certain waiver authorities under 
o
demonstrations (or particular elements of demonstrations) that are substantially similar to 
those approved in other states, while preserving Administration discretion to approve 
these demonstrations, recognizing that each state is unique and that similar provisions 
may be implemented and affect individual states differently. These parameters will 
reflect CMS judgment that demonstrations that fall within the parameters are generally 
presumed to be consistent with the statutory requirements for section 1115 
demonstrations (e.g., that they promote the objectives of the Medicaid statute, and 
qualify as a legitimate experiment or research project ).  Through the approval process, 
CMS will verify that the demonstration falls within these parameters and meets the 
statutory requirements in the given state. 
  CMS will provide technical assistance to states to ensure timely identification of novel 
o
elements of a demonstration proposal that might preclude use of expedited approval 
procedures. 
  Where possible, and subject to the public notice and transparency requirements, CMS 
o
may approve the extension of routine, successful, non-complex section 1115(a) waiver 
and expenditure authorities in a state for a period up to 10 years; with the flexibility to 
approve more complex waiver and expenditure authorities for shorter periods to allow 
CMS to assess the impact and continuation of these authorities.   
  To support and expedite state/federal negotiations, we invite states to submit draft STC 
o
language for CMS consideration in new or changing demonstrations.    
  To facilitate joint review and clarify understanding of STC language, CMS will offer to 
o
host virtual working meetings with states using a shared desktop or webinar format.   
  States and CMS share responsibility for good faith negotiations and both parties must 
o
commit to timely responses to requests for information.   
 
Supporting States to use Fast Track Process 
 
CMS has an established fast track process for reviewing proposals from states to extend established 
Medicaid and CHIP section 1115 demonstrations that reauthorize longstanding policies with proven 
program outcomes. 
 
      Page 4  CMCS Informational Bulletin 
 
    
  The fast track approach streamlines the federal review process to render decisions on 
o
certain demonstration extension requests in timeframes similar to Medicaid section 1915 
waivers or State Plan Amendments through the use of an abbreviated application 
template.  
  The fast track process is designed to expedite review of and decisions regarding state 
o
requests to extend established section 1115 demonstrations that meet specified criteria. 
  This process is  available for the renewal/extension of demonstration programs that:  
o
  have had at least one full extension cycle without substantial program changes;   
  are in compliance with reporting requirements, including submission of T-MSIS 
data; 
  are found by CMS to have positive monitoring and evaluation results that indicate 
that the demonstration is promoting the objectives of the Medicaid program and 
demonstrating positive health outcomes; 
  are not proposing major or complex changes; and,  
  are submitted using the fast track extension template developed by CMS for this 
purpose.   
  In order to ensure access to this mechanism for all states in appropriate circumstances, 
o
CMS will remove the requirement that states must have had at least one full extension 
cycle without substantial program changes. This change means that, at first extension 
(e.g., after demonstration year (DY) 4 or 6, instead of after DY9 at the end of the first 
extension), states would be eligible for fast track if the demonstration meets the other 
criteria.   
 
Separating Components of Complex Demonstrations: In some cases, if states and CMS agree,  
extension requests can be segmented to allow for the approval  of routine, non-complex waiver and 
expenditure authorities on an expedited timeframe, while more complex waiver and expenditure 
authorities would be considered under traditional section 1115 timeframes.  
 
Promoting Transparency 
 
Transparency in the Review Process: Transparency and consistency in communications are crucial to 
the success of the state/federal partnership.  States should be made aware of the demonstration 
approval process from beginning to end and should have sufficient time between approval and 
implementation of a demonstration action to facilitate success.  Therefore, CMS plans to implement 
the following:   
 
 
  CMS will continue to offer states the opportunity for technical assistance in advance of 
o
formal submission of a demonstration application as they are considering changes to their 
Medicaid programs.   
  CMS will post and share with states a transparency review checklist used to assess 
o
whether a demonstration request meets the transparency requirements.  This will assist 
      Page 5  CMCS Informational Bulletin 
 
states in ensuring that their demonstration proposals meet all of the transparency 
requirements. 
   When applicable during the demonstration review process, CMS will share a working 
o
list of open issues with states. This will help ensure that states are always aware of any 
gaps in information needed to process an action in an expeditious manner, and will serve 
as documentation of the final resolution on issues to mitigate any confusion in the future.   
  CMS will work with states on the development of demonstration-specific timelines, 
o
based on the states needs for demonstration approval, and will ensure that meetings with 
states to address demonstration issues have jointly defined agendas and expectations, 
including expectations related to follow up and accountability.  
 
Coordinated Efforts across CMCS: CMCS, like state Medicaid agencies, includes multiple 
components with expertise in the policy, implementation and performance-related complexities of 
Medicaid and CHIP.  As part of our efforts to improve the federal-state partnership, CMCS will 
implement a more formalized team approach with the goal of better and more efficiently coordinating 
federal efforts with respect to a demonstration proposal through the following strategies:     
 
  If a states demonstration action requires concurrent action across CMS (e.g., approval of 
o
a state plan amendment or a contract change), where possible, CMS will work to 
complete all actions on a coordinated and efficient timeframe that will be developed with 
the state and facilitated with the regional offices.   
  CMS will work with states to determine whether other federal Medicaid authorities (state 
o
plan amendment, section 1915 waivers) may be available, instead of or in combination 
with section 1115 authority, in order to meet state policy goals. 
  Where possible, CMS will work with the state to identify any other federal funding 
o
sources that may be available to support efforts already underway (e.g., systems 
development as approved in Advance Planning Documents (APD)).  
  CMS will encourage early discussions about expectations for demonstrations, and state 
o
capacity to produce and report required data and conduct evaluations.  CMS will provide 
targeted technical assistance as necessary. 
 
Budget Neutrality: Budget neutrality can be complex.  CMS will clarify expectations in this area and 
may provide additional written guidance to states on both policy and methodology for demonstrating 
budget neutrality.  Specifically, CMS will use the following strategies: 
 
  We will continue to offer technical assistance calls to any state that needs a budget 
o
neutrality overview, as well as address specific questions regarding budget neutrality.   
  The current budget neutrality template and budget neutrality policy (described in an easy-
o
to-follow slide deck) are available on Medicaid.gov.  
  CMS will standardize budget neutrality STCs to clearly state which populations, services 
o
and costs were included in the budget neutrality agreement, and whether the states 
historical trends or the Presidents Budget trend rate was used to project growth in the 
final agreement.  
 
      Page 6  CMCS Informational Bulletin 
 
CMS is interested in increased transparency in budget neutrality and is considering providing more 
detail on CMSs budget neutrality policies in formal guidance. We welcome states input in the 
development of this guidance. States are encouraged to reach out to us to specify the types of 
information that would be most helpful, and the challenges associated with the budget neutrality 
calculations.    
 
 
Demonstration Monitoring and Evaluation 
 
Consistent with HHS commitment to ensure state accountability for the outcomes produced by 
the Medicaid program, CMS has implemented several enhancements to the monitoring and 
evaluation of section 1115 demonstrations. These enhancements are designed to:  
 
  Target monitoring and evaluation resources to focus on the most significant program and 
policy priorities;  
  Improve and standardize measurement sets, where appropriate to facilitate state data 
development, collection and reporting capacity;  
  Strengthen CMS capacity to identify demonstration implementation challenges and focus on  
mid-course correction; and 
  Strengthen state evaluation designs to  
  produce more robust data and analyses; and 
o
  better understand demonstration impacts to inform future Medicaid policy within and 
o
across states. 
To inform the improvements in monitoring and evaluation, CMS implemented a State Technical 
Advisory Group (TAG).  This group of state-identified experts has advised CMS on monitoring and 
evaluation processes and on the development of standard metric sets for major categories of section 
1115 demonstrations.   
 
Demonstration Monitoring 
 
In order to minimize the reporting burden on states, CMS has reduced the number of monitoring 
reports for all demonstrations by combining the fourth quarterly reports with annual reports. CMS 
will further reduce the frequency of reports (i.e., from quarterly to semi-annual or annual) for selected 
demonstrations that meet the following requirements:  
 
1.  Are long-standing, non-complex, and unchanged 
2.  Have previously been rigorously evaluated and determined successful, without issues or 
concerns that would require more regular reporting; 
3.  Include a small number of enrollees (approximately 500 or less);  
4.  Have been operating smoothly without administrative changes; 
5.  Have been challenged in only a minimal number of appeals and grievances; 
6.  Have no state issues with CMS 64 reporting or budget neutrality; and/or 
7.  Do not have a Corrective Action Plan (CAP) in place. 
 
      Page 7  CMCS Informational Bulletin 
 
CMS is also working on standardized templates that will be customizable to meet the data, 
monitoring, and measurement needs of a states specific demonstration design, reducing the need for 
states to speculate about what information to provide to CMS.  
Core metric sets are also being developed for high priority demonstrations to further streamline the 
reporting requirements and improve transparency on reporting expectations 
 
Demonstration Evaluation 
 
CMS has generated general evaluation design and evaluation report guidance for all section 1115 
demonstrations and states will typically see standardized monitoring and evaluation STCs, where 
appropriate, in their demonstrations.  CMS will also provide technical assistance in the development 
of hypotheses and evaluation designs that reflect joint commitment to rigorous evaluation of and 
accountability for the results of demonstrations.    
 
Additional enhancements to evaluation include: 
 
  Encouraging states to use existing nationally recognized metric sets where appropriate, to 
o
support alignment across programs;   
  Consideration of quality measures states already track and report, integration of those 
o
measures into the reporting for demonstration populations;  
  Technical assistance in the development of milestones and performance metrics to fill 
o
gaps as needed. 
 
In order to minimize disruption in existing monitoring and evaluation plans under current 
demonstrations, the improvement strategies described above will be phased in as existing 
demonstrations are renewed and new demonstrations are approved by CMS.  
 
CMS looks forward to continuing to work with states to implement innovations and experiments, and 
to test new policies that promote the objectives of the Medicaid program.  If you have any questions, 
please contact Judith Cash, Acting Director, State Demonstrations Group, at 410-786-9686.