What states and actuaries should know about CMS’s emerging budget neutrality certification process.
CMS is moving toward a more detailed, activity-level review of Section 1115 budget neutrality. States may need to distinguish MAPS activities from Section 1115-only activities and provide stronger actuarial support for projected costs, savings, utilization changes, assumptions, and uncertainty.
DOWNLOAD NOWWho should read this:
- This white paper is intended for state Medicaid agencies, Medicaid actuaries, demonstration teams, policy leaders, and organizations affected by Section 1115 waiver development.
Key Findings:
- CMS Chief Actuary certification will become central to the approval process.
- Section 1115-only activities may receive more detailed financial review.
- States will likely need stronger evidence supporting actuarial assumptions.
- Sensitivity analysis may become increasingly important.
- Earlier actuarial planning could help reduce approval delays.
CMS’s approach to Section 1115 Medicaid budget neutrality is evolving. New statutory requirements and CMS State Medicaid Director Letter #26-003 point toward a more rigorous actuarial review process for new demonstrations, amendments, and renewals.
Rather than focusing primarily on aggregate budget neutrality projections, CMS is expected to place greater emphasis on the financial impact of individual demonstration activities. States may need to distinguish Medicaid Authorizable Populations and Services (MAPS) activities from Section 1115-only activities and provide stronger documentation supporting projected costs, savings, utilization changes, and other financial impacts.
This white paper examines the potential implications for states and their actuaries, including:
- The shift toward activity-level budget neutrality analysis
- The distinction between MAPS and Section 1115-only activities
- Documentation and support for key actuarial assumptions
- The role of comparable program experience and sensitivity analysis
- Why earlier actuarial planning may help reduce approval delays
While additional CMS guidance and regulations are forthcoming, states can begin preparing now by strengthening their data, methodologies, assumptions, and documentation.
Download the white paper to learn how the emerging CMS review process may affect Section 1115 demonstration planning and actuarial submissions.
Related resources:
Watch the recent Medicaid summer webinar series Understanding Work and Community Engagement Requirements and New Section 1115 Guidance.
Featured Authors:
Elrycc Berkman, Senior Consulting Actuary I, Wakely, an HMA Company
Rob Buchanan, Senior Principal, Health Management Associates
