The Centers for Medicare & Medicaid Services (CMS) released new guidance explaining how budget neutrality will be evaluated and certified for Medicaid Section 1115 demonstrations, which allow states to test innovative approaches to delivering and paying for Medicaid services.
Per statute, beginning January 1, 2027, new, renewed, and amended Section 1115 demonstrations must be certified by the CMS Chief Actuary as not increasing federal Medicaid spending compared with what would occur without the demonstration. To help states prepare, CMS is providing this early notice of the approach it plans to propose and, until a final rule is in place, will use this guidance when reviewing and approving new, amended, and renewed Section 1115 demonstrations on or after January 1, 2027.