Centering Health Equity In Medicaid Section 1115 Waivers: A Road Map For States – Food, Drugs, Healthcare, Life Sciences

Editor’s Note: In a new issue brief for the Robert Wood Johnson
Foundation’s State Health and Value Strategies program,
summarized below, Manatt Health examines Medicaid’s role in
promoting health equity and describes ways states can center and
advance health equity and address structural racism through each
Section 1115 demonstration’s life cycle stage, which include
planning, implementation and monitoring, and evaluation. A
companion issue brief, Centering Health Equity in Medicaid: Section
1115 Demonstration Strategies
, provides insights into
specific, innovative policies to advance health equity that states
can implement through Section 1115 demonstrations. The insights and
recommendations found in both documents are informed by recent
interviews with federal and state policy makers and secondary
research and analysis.

Long-standing structural racism and related health inequities
experienced by people of color further laid bare by the COVID-19
pandemic have mobilized many state leaders to take action on health
equity. Structural racism across and within systems and
institutions in the United States has caused disproportionate
health risks and poorer health for people and communities of color.
Structural racism has further impeded people of color from
accessing resources and opportunities, including homeownership,
asset accumulation, employment, educational attainment, affordable
and healthy foods, and clean air and water, all of which exacerbate
these heightened health risks.

While addressing structural racism in health care requires
collaborative and sustained efforts across state agencies, local
governments, communities and other stakeholders, many states are
looking to Medicaid as a critical lever for advancing health
equity. Medicaid has a large coverage footprint in all states and,
across the nation, broad coverage of Black, Latino(a) and other
people of color. States seeking to test new or innovative ideas
related to health equity in their Medicaid programs are
increasingly tapping Section 1115 demonstrations as one key
strategy.

Role of Medicaid in Advancing Health Equity

Medicaid is an important lever for advancing health equity
because of the size, scale and demographics of its coverage
footprint. Medicaid covers more than 80 million individuals,
accounts for almost one-fifth of national health expenditures and
is the single largest payer in many states. The racial and ethnic
composition of Medicaid programs varies by state. However, people
of color are disproportionately represented in the Medicaid program
nationally and in many states. As a result, Medicaid is a critical
tool for addressing racial and ethnic health inequities in access,
quality of care and outcomes.

States have a range of Medicaid administrative and legal
authorities to advance health equity priorities, including:

  • State regulation, which can be used to
    implement, interpret or further define Medicaid policies,
    procedures and requirements.

  • Managed care contracts, which set the terms
    between the state Medicaid program and managed care organizations
    (MCOs) for the delivery of services to members and allow states to
    legally require or encourage MCOs to perform certain
    activities.

Key Medicaid legal authorities include:

  • State Plan authority, which defines the scope
    of services covered for Medicaid enrollees, provider payment rates
    (in fee-for-service) and administration, consistent with
    permissible options and flexibility available under federal
    law.

  • Section 1915 waivers, which are specialized
    waivers that add to the options otherwise available to states to
    provide long-term care services and supports in home- and
    community-based settings, rather than in nursing homes or other
    institutional settings.

  • Section 1115 demonstrations, which allow
    states to use Medicaid funds for initiatives and services that
    extend beyond Medicaid benefits available and otherwise allowable
    through the state plan or other federal authorities.

Section 1115 of the Social Security Act permits states to waive
certain Medicaid statutory requirements through demonstration
projects that test innovative policies in Medicaid. Section 1115
authority is a powerful tool that states can use to advance health
equity, in combination with other authorities, including through
policy and expenditure authority related to eligibility, benefit
design, affordability and payment, and delivery system reform. For
any policy innovation, states have the opportunity to implement
strategies that center and advance health equity at each stage of
the Section 1115 demonstration life cycle: planning, implementation
and monitoring, and evaluation. Using this staged framework, states
can center and advance equity from conceptualization to design and
execution of Section 1115 demonstrations.

The effectiveness of the design and implementation of Section
1115 demonstrations to advance health equity is predicated upon
partnership and communication with those directly impacted. States
are increasingly recognizing that true community engagement is not
simply a “check the box” step in demonstration
development and implementation, but rather a critical and sustained
partnership with the community to design, implement and evaluate
innovative policy to advance health equity.

Road Map to Center Health Equity Through the Section 1115
Demonstration Life Cycle

1.0: Strategies to Center Health Equity in 1115
Demonstration Planning and Design

Early planning can help states implement focused policy
solutions that best address the needs of Medicaid enrollees. In
partnership with communities, states can assess and prioritize
health inequities experienced by Black, Indigenous, Latino(a) and
other people of color, using available data; craft strategies to
address their health equity priorities; and determine how to best
use Medicaid to advance those strategies.

Strategy 1.1. Use Data-Driven Analysis to Identify
Health Disparities and Establish Equity Priorities. 

States must be able to identify disparities and understand the
underlying issues confronting Medicaid enrollees of varied racial
and ethnic backgrounds in terms of coverage, access, quality and
health outcomes, as well as social drivers of health that influence
health and well-being. Data-driven analysis early in the planning
process will provide insights on the magnitude and scale of the
health inequities observed across a Medicaid population—by
race, ethnicity, gender, age, geography and other
factors—allowing the state to prioritize issues and shape
actionable responses. In particular, states can use data-driven
analysis to measure disparities experienced by people of color
enrolled in their Medicaid programs, indicate potential systemic
issues driving observed disparities, and prioritize strategies for
addressing them in collaboration with the community, including
defining specific actions and setting clear and measurable
timelines and goals.

Strategy 1.2. Identify Policies to Address Health Equity
Priorities. 
Once states identify and prioritize the
health inequities they intend to address, they can develop
strategies and policies to address these issues. For example, if a
state identifies significant disparities in rates of health
insurance coverage among people of color, the state might consider
expanding Medicaid eligibility or implementing coverage
affordability initiatives broadly or in a targeted fashion. States
have an imperative to use both quantitative and qualitative data to
model potential health equity implications of proposed
policies—regardless of whether potential policies are
explicitly equity-focused. Such considerations include examining
the projected time frame for the Medicaid agency to accomplish
demonstration goals, as well as the projected impacts of the policy
on different population groups (e.g., stratified by race and
ethnicity, rural versus urban geographies).

Strategy 1.3. Identify Policies that Require 1115
Demonstration Authority. 
After states determine
their health equity priorities and identify potential policy
solutions, they can determine the mechanism through which they will
pursue those solutions. As part of this process, states will
determine where Section 1115 demonstration authority is required to
advance key policy approaches and how these demonstrations will
relate to and interact with other authorities that the state
identifies to advance health equity priorities in Medicaid.

Engage Community Stakeholders in Planning and Design

Beginning engagement and partnership with community members
prior to the development of a Medicaid health equity strategy and
designing a Section 1115 demonstration will promote equity-centered
program design and community buy-in. Recognizing the challenges
associated with obtaining meaningful stakeholder engagement, states
should set aside ample time in the 1115 demonstration planning
process to identify and engage a representative range of community
members to review evidence of disparities in order to inform and
deepen state policy makers’ understanding of the causes and
impacts of these disparities and to identify impactful and
appropriate policy solutions.

2.0: Strategies to Center Health Equity in 1115
Demonstration Implementation and Monitoring

If policies to drive health equity are not implemented
appropriately (e.g., with cultural sensitivity and humility, with a
person-focused approach, informed by engagement with communities
impacted by the policies) and monitored in real time to gauge their
impact, the demonstration may not achieve the policy goals set
forth in the planning process.

Strategy 2.1. Ensure That the Implementation Team
Understands the Health Equity Goals of the
Demonstration. 
Often, the Medicaid agency team
working on demonstration design and planning is different from the
team charged with implementation. Strategies to facilitate
effective implementation of Section 1115 demonstrations to advance
equity include ensuring the implementation team is included in the
demonstration design conversations and planning process and
structuring teams to include individuals with lived experience in
the impacted communities.

Strategy 2.2. Center Health Equity in Demonstration
Implementation and Monitoring Protocols. 
In addition
to a Section 1115 demonstration’s Special Terms and Conditions
(STCs), the Centers for Medicare & Medicaid Services (CMS)
requires that states provide additional detail regarding their
implementation and monitoring approaches through separate protocols
or plans. Implementation protocols include operational detail
around key program features, including operational design
decisions, steps for and approach to ensuring implementation
readiness, strategies for communicating new policies to Medicaid
enrollees, and timelines for meeting milestones associated with the
policies, among other details. Monitoring protocols outline the key
metrics through which states will track demonstration progress
toward implementation milestones and goals. As part of these
implementation and monitoring protocols, states should analyze and
report on monitoring metrics by race, ethnicity and language (REL)
demographics to inform state and CMS understanding of whether the
demonstration is achieving the health equity goals the state seeks
to advance; maintaining the status quo; or creating/exacerbating
disparities in coverage, access or quality.

Engage Community Stakeholders in Implementation and
Monitoring

States should maintain engagement with the community to inform
implementation and monitoring of the demonstration. States can
continue to hold forums and focus groups to get input on how
programs should be implemented—including informing
prerequisites for implementation; making program design decisions,
such as eligibility criteria or services; and identifying
monitoring metrics. Ongoing engagement with community members can
also provide real-time and critical feedback on implementation.

3.0 Strategies to Center Health Equity in 1115 Demonstration
Evaluation

Centering health equity in demonstration evaluation is critical
regardless of whether the demonstration or specific policy
flexibilities put forward are equity-focused.

Strategy 3.1. Center Health Equity in Demonstration
Evaluation Design. 
States have a range of
opportunities to center and incorporate health equity in Section
1115 demonstration evaluation design, including requiring that
state evaluation contractors propose evaluation methodologies that
incorporate health equity, have team members with expertise in
health equity and have an evaluation team that is ethnically and
racially diverse. Other opportunities include:

  • Developing specific evaluation measures that measure
    progress;

  • Signing evaluation approaches that combine qualitative and
    quantitative data and information collection;

  • Incorporating contingencies for course correction if a
    particular strategy is not having the intended impact or is harming
    a population; and

  • Broadly sharing evaluation findings with providers, MCOs,
    Medicaid enrollees, advocates and other stakeholders, as well as
    national audiences, to inform and improve future demonstration
    proposals and implementation practices.

Strategy 3.2. Invest in Data Needed to Evaluate Health
Equity in Medicaid. 
To ensure that demonstration
evaluation (and monitoring) data can provide insights into health
equity and disparity impacts, states will need to invest in
improving data collection and reporting of REL data for program
enrollees and making that data available to evaluation researchers.
In most states, this likely requires developing a thorough
assessment of REL data gaps and developing a plan for addressing
those gaps.

Conclusion

Section 1115 demonstrations are a powerful tool for states to
advance health equity in Medicaid and across their populations.
Demonstrations offer a broad range of flexibilities related to
Medicaid eligibility, benefits, affordability, and payment and
delivery system reform. Given these flexibilities, as well as the
populations that Medicaid covers, Section 1115 demonstrations can
be used to respond to health disparities and address health equity
in a variety of ways. At the same time, innovative state
demonstration policies—whether equity-focused or
not—must be developed with an equity lens at every stage of
the demonstration life cycle.

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