Costs Not Otherwise Matchable (CNOM): Granted by Section 1115(a)(2) of the Act, CMS may approve the expenditure of federal funds for services that would not normally qualify as Medicaid expenditures. Examples of CNOM authority include the coverage of nondisabled adults without dependent children or the use of federal funds to offset state or local health care expenditures. (Note: CNOM is limited by the budget neutrality cap described above.)
Other Financing Methods: In addition to the budget neutrality requirement, another way of describing the financing of a Section 1115 waiver is how the state will raise the required non-federal share of the projected expenditures. The Medicaid program provides some tools for increasing the state funds available, such as through a tax or fee on providers.
Range of Options
The purpose of this section is to briefly describe some possibilities for waiver structure within the potential range of waiver options.
At one end of the spectrum is a narrow program that covers a specialized portion of Medicaid. One example of such a waiver is California’s Family Planning, Access, Care and Treatment (Family PACT) waiver, which provides family planning services to individuals not eligible for traditional Medicaid in an effort to prevent Medicaid-funded unplanned births. Another is a waiver program that enables participants in need of long term care to hire and direct their own assistance providers with a cash allowance (the so-called “cash and counseling” waivers).
A Section 1115 program can also cover a larger population (e.g., families and children, or the seniors or people with disabilities (SPD) population) for the purpose of enrolling them in mandatory managed care arrangements and using the program savings for other purposes, such as eligibility expansions. In the early 1990s these waivers were popular because few states had ventured into managed care for Medicaid, and there were significant savings to be accrued. Many of these waivers involved families and children and fewer covered the SPD population.
Similarly, the design of a Section 1115 waiver is driven by a very specific policy need, either on behalf of the state or of the Federal government. An example of this is California’s 2005 hospital waiver, which accomplished the federal goal of converting the state’s method of financing the non-federal share of inpatient hospital expenditures from an intergovernmental transfer (IGT) approach to certification of public expenditures (CPE).
At the opposite end of the spectrum from a specialized waiver, a state could conceivably put its entire program into a Section 1115 waiver. Including the entire Medicaid program, with DSH, in
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