October 23, 2018

CMS and Treasury Issue Guidance for States Applying for Section 1332 Waivers

Holland & Knight Healthcare Blog
Miranda A. Franco

The Centers for Medicare & Medicaid Services (CMS) and the U.S. Department of Treasury released guidance relaxing a range of requirements for state waivers submitted under Section 1332 of the Affordable Care Act (ACA). Comments are due Dec. 23, 2018.

Initially enacted under the ACA, Section 1332 waivers allow states to bypass some of the ACA's rules as long as any coverage changes are at least as comprehensive and affordable to a comparable number of people. Currently, eight states are using waivers and primarily to institute reinsurance programs rather than alter the design of products sold in their markets.

The updated guidance supports the diffusion of Association Health Plans and short-term, limited-duration plans, and provides a pathway for states that have not adopted Medicaid expansion to instead provide private coverage for those below 100 percent of the federal poverty level. Notably, the guidance also allows states to submit Section 1332 waivers without approval from the state legislature. A state regulation or executive order will suffice, given the state statutorily authorizes enforcement of the ACA. Additionally, states would be able to use federal subsidy funding to help consumers purchase short-term health plans.

The guidance rewrites previous state innovation waiver guidance from December 2015 and changes the name of the waivers to "State Relief and Empowerment Waivers." The guidance also provides supplementary information about the requirements that must be met for the approval of a state waiver, the application review procedures, the calculation of pass-through funding, certain analytical requirements, and operational considerations.

The guidance goes into effect immediately, but will not impact the 2019 plan year; CMS expects it to impact open enrollment for 2020.

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