The purpose of Medicaid is to provide healthcare for low-income individuals and families. NHF opposes policies that make it more difficult or expensive for patients with chronic diseases to access Medicaid.

Section 1115 Waivers

Section 1115 of the Social Security Act gives the Secretary of Health and Human Services authority to approve experimental, pilot, or demonstration projects that are found by the Secretary to be likely to assist in promoting the objectives of the Medicaid program. The purpose of these demonstrations, which give states additional flexibility to design and improve their programs, is to demonstrate and evaluate state-specific policy approaches to better serving Medicaid populations (

Since 2017 the Center for Medicare and Medicaid Services has attempted to expand the use of waivers to allow states to limit enrollment in Medicaid. Using section 1115 waivers states have applied to impose work requirements for Medicaid beneficiaries, establish a closed formulary for prescription drugs, cap lifetime benefits on Medicaid enrollees, or require premium payments.   

In January 2020 CMS announced new guidance to states in support of limiting federal Medicaid funding through block grants.



Nineteen states have submitted waiver applications to CMS to establish work requirements.  Because of legal challenges no state has yet to implement a work requirement. CMS has rejected proposals to establish lifetime benefit caps and a closed formulary.

For more detailed information on state waiver applications please visit the Kaiser Family Foundation web site.




In February 2016 CMS released the Covered Outpatient Drug Rule requiring states to amend their Medicaid plans to adopt a new prescription drug reimbursement methodology based on Actual Acquisition Cost and a professional dispensing fee. States were required to submit their State Plan Amendments by April 1, 2017.

In face-to-face meetings with CMS, we expressed concern about the rule and the potential for states to set reimbursement rates so low that providers who dispensed anti-hemophilic therapies would lose money serving bleeding disorders patients and stop serving them. NHF was also concerned about how the rule would impact 340B pharmacies such as hemophilia treatment centers that rely on reimbursement for clotting factor to provide the comprehensive care that benefits bleeding disorders patients.


In 2019, California became the last state to comply with the COD Rule. Commercial specialty pharmacies challenged and delayed the final adoption of the SPA over concern that the proposed reimbursement rate was too low for them to remain profitable and serve bleeding disorders patients.   

States have implemented a variety of reimbursement methodologies consistent with the rule.

NHF remains concerned about the sustainability of some states’ reimbursement methodologies and continues to monitor their implementation.



Value-based Payments

On June 19, CMS released a proposed rule to “advance CMS’ efforts to support state flexibility to enter into innovative value-based purchasing arrangements (VBPs) with manufacturers, and to provide manufacturers with regulatory support to enter into VBPs with payers, including Medicaid.”  The rule issues new regulatory policies and clarifications that would allow manufacturers and payers to enter into VBPs consistent with the Medicaid Drug Rebate Program.


NHF provided comments to CMS offering tentative support to removing regulatory barriers to manufacturers and payers entering into VBPs.

NHF urged CMS to ensure that patient input – on patient needs, priorities, and outcomes – is incorporated into any VBP framework, and that VBP strategies neither lock in individuals or prevent them from choosing the best treatment or combinations of treatments in consultation with their physicians. It is also important that VBP strategies not unduly advantage novel therapies, leading to budgetary pressures and coverage cutbacks affecting patients who have opted to continue therapy with the existing armamentarium of products.


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