For more than fifty years, Medicaid Section 1115 demonstration waivers have given states flexibility to test new ideas and redesign how care is delivered. Over the past decade, they’ve become even more central to state strategy, shaping how coverage is expanded, how behavioral health needs are addressed, how new services are piloted, and how Medicaid programs modernize to meet changing needs. And although no two state programs look alike, the collective experience over the past decade tells a clear story: when used well, 1115 waivers can meaningfully strengthen access and improve care. But they also come with complexity, administrative demands, and growing scrutiny as federal policy evolves.
The Role and Limits of 1115 Flexibility
Section 1115 authority allows the federal government to waive certain Medicaid requirements, enabling states to experiment with new models. That flexibility enables states to restructure coverage, redesign delivery systems, and pursue reforms not supported under traditional rules. It’s also a mechanism states use to integrate behavioral health and substance use disorder (SUD) services, pilot nutrition and other health-related supports, and consolidate multiple initiatives under one overarching demonstration.
At the same time, the authority has boundaries. It cannot waive Medicare rules or certain Medicaid payment structures, and waivers must comply with federal guardrails like public transparency, independent evaluation, and budget neutrality, an increasingly important consideration as rules shift under new legislation. Waivers typically run for three to five years before needing renewal, and any amendment can trigger a broader federal review, creating additional stakes for states using 1115 as a comprehensive program framework.
How States Applied 1115 Authority Over the Past Decade
States used the last decade to pursue a mix of targeted, large-scale reforms. Some focused on narrower initiatives, such as Institutions for Mental Diseases (IMD) and SUD demonstrations, nutrition and “food as medicine” pilots, or limited-service expansions, such as adult oral health benefits. Others took a more comprehensive approach, using a single 1115 waiver as the operating authority for managed care, long-term services and supports (LTSS), and major delivery system changes. These models allowed states to bring together previously siloed waivers under a unified structure, though they also increased exposure when federal financing rules changed.
What the Evidence Shows: Access, Quality, and Cost
Across the past decade, the strongest results emerged in access. Many states reported increased SUD treatment utilization, greater use of primary and preventive care, and more stable pathways to coverage for people leaving incarceration. Quality results were more variable but still meaningful in several areas, including higher use of regular physician care, reductions in smoking, stronger care coordination, and increased preventive services. Some states also saw declines in hospitalizations and improved management of chronic and behavioral health conditions.
Initiatives related to nutrition and medically supportive meals grew considerably, reflecting broader interest in prevention-oriented approaches. At the same time, states encountered recurring challenges: inconsistent outcomes across programs, evaluation windows too short to demonstrate longer-term impact, and the substantial administrative burden of launching, operating, and sustaining 1115 initiatives, particularly when funding streams were time-limited.
The Weight of Evaluation Requirements
The evaluation rigor required under every 1115 demonstration is both a strength and a strain. Each waiver must undergo independent evaluation, quarterly and annual reporting, and continuous public transparency. These expectations promote accountability and support stronger policymaking, but they require time, expertise, and coordination across state agencies, health plans, providers, and independent evaluators. For states managing multiple demonstrations or large, multi-component waivers, the workload can be significant.
Budget Neutrality: A Defining Guardrail in Transition
Budget neutrality has long been a central feature of 1115 waivers, ensuring that federal spending under the waiver does not exceed what it would have been absent the waiver. Historically, neutrality was governed by CMS policy and negotiation, allowing room for interpretation. H.R. 1 changed that by codifying budget neutrality into statute. The shift means CMS must develop a formal methodology, and states should expect tighter, more prescriptive calculations during renewals and amendments. This transition may particularly affect states pursuing innovative delivery system reforms or using 1115 as the backbone of their entire Medicaid program.
The New Policy Landscape: What’s Driving Current Waiver Priorities
Recent policy shifts are reshaping 1115 activity nationwide. Guidance on health-related social needs was rescinded in March 2025, prompting greater emphasis on community engagement requirements, especially given H.R. 1’s mandate that Medicaid expansion populations meet new standards by 2027. At the same time, states are aligning waiver design with expanding federal investments in rural health infrastructure and telehealth. Parallel changes in financing oversight are prompting states to reassess how they structure delivery reform and payment strategies within their demonstrations.
State Examples: Different Paths to Innovation
Arkansas illustrates how states use 1115 authority both historically and in modern system reform. The state’s alternative expansion model—the “private option”—showed improvements in network adequacy, preventive care uptake, disease management, and emergency department use, even as results on pregnancy outcomes and mortality remained unchanged within the evaluation period. Arkansas continues to operate multiple waivers spanning behavioral health, SUD, social drivers of health, and justice-involved populations.
Nevada represents a different trajectory: historically, a more limited use of 1115 authority, but accelerated activity in recent years. The state adopted emergency flexibilities during the COVID-19 public health emergency, secured SUD and IMD approvals, expanded oral health benefits for adults with diabetes, and is pursuing additional waivers related to mental health, re-entry populations, and medical respite.
These examples underscore the variation in how states design, sequence, and build on 1115 authority depending on local needs and priorities.
The Role of Health Plans as Waiver Partners
Health plans can be essential partners in supporting waiver goals. Many contribute data, analytic capabilities, and care management models that strengthen evaluation and implementation. Plans often help connect state initiatives with community-based organizations, local health departments, and health systems, ensuring programs reach the people they aim to serve. In Maryland, for example, one plan described how integrated partnerships and shared data tools enabled rapid response to needs across behavioral health, maternal health, and justice-involved populations. The plan’s maternal health initiative—pairing nutritional coaching and food delivery with targeted evaluation metrics such as birth weight and NICU utilization—demonstrates the role plans can play in both innovation and evaluation readiness.
What Comes Next for 1115 Waivers
The decade-long review offers a clear set of implications for future waiver design. States will likely need more standardized evaluation measures to enable comparisons across programs and time. Greater alignment across Medicaid, Medicare, and commercial payers will be important for sustained impact, especially as delivery reform intersects with multi-payer initiatives. Many states will need stronger clinical data capabilities to support digital quality measurement, a trend gaining momentum across federal agencies. And sustainability planning, beyond time-limited funding, will remain a critical factor in determining which innovations can endure.
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