In an April 10 letter to state Medicaid directors, the Centers for Medicare & Medicaid Services (CMS) notified states that the agency will not approve or renew Medicaid Section 1115 waivers for designated state health programs (DSHPs) and designated state investment programs (DSIPs). This letter restores a policy the first Trump administration implemented in 2017 and the Biden administration repealed.
DSHPs are state-funded health programs that do not qualify for federal funding without a Section 1115 waiver. DSHP and DSIP pay for nonmedical services, such as public health initiatives or health-related social need services. Currently, eight states have DSHP authority: Arizona, California, Hawaii, Massachusetts, New York, North Carolina, Oregon, and Washington.
In the letter, CMS officials raise concerns that DSHPs and DSIPs increase costs to the federal government without requiring additional state funding. In addition, because DSHP and DSIP payments are not directly tied to Medicaid services, the administration argues that these programs are not critical components of Section 1115 waivers
Under the new policy, current DSHPs and DSIPs can continue for the remainder of their approval period.
Contact Director of Policy Rob Nelb, MPH, at rnelb@essentialhospitals.org or 202.585.0127 with questions.
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