The Centers for Medicare and Medicaid Services (CMS) has released a new guidance for states related to State Innovation Waivers granted under section 1332 of the Affordable Care Act (ACA). With this new guidance, CMS will now refer to these waivers as State Relief and Empowerment Waivers. CMS believes that this new guidance will give states increased flexibility and encourage them to adopt innovative strategies to reduce overall spending. The administration has cited increased flexibility as their reasoning for many recent actions related to health care.

Section 1332 waivers are controlled by both statutory requirements and existing guidance. Section 1332 of the law allows the Secretaries of Health and Human Services (HHS) and Treasury to use their discretion to approve a waiver request only if they determine that the following four requirements listed in the statute are met:

• Provide coverage that is at least as comprehensive in covered benefits
• Provide coverage and cost-sharing protections against out-of-pocket spending that are at least as affordable as without the waiver
• Provide coverage to at least a comparable number of state residents absent the waiver
• Does not increase the federal deficit.

To supplement these requirements, guidance was released in the years following passage of the law that offered information about how applications would be reviewed. This new guidance will supersede previous guidance that was published on December 16, 2015 during the Obama administration.

The new guidance from the Trump administration outlines five principles that will be considered when wavier applications are reviewed. Applications that advance some or all of these five principles will be reviewed favorably. The principles are:

• Provide increased access to affordable private market coverage
• Encourage sustainable spending growth
• Foster state innovation
• Support and empower those in need
• Promote consumer-driven healthcare

In order to increase access to affordable private market coverage, the guidance suggests state plans should “foster” coverage through competitive private coverage over public programs. This could include Association Health Plans (AHPs) and short-term, limited duration plans.  Additionally, the guidance instructs that the waivers should promote “more cost-effective health coverage” and limit growth in federal spending as ways to encourage sustainable spending growth. In order to support and empower those in needs, the guidance suggests that policies in the waiver should support the purchase of private coverage with financial assistance that meets a stat resident’s specific situation. Finally, the guidance specifically states that “instead of only offering a one-size fits-all plan proposal,” section 1332 plans should focus on giving residents the resources and information needed to purchase the most suitable private coverage.

The administration has determined that the analysis of comprehensiveness and affordability under a waiver should focus on availability of coverage. This is a shift from the previous guidance, which focused on the coverage that residents actually purchased. The administration believes that this more flexible interpretation will lower the barrier for innovation and allow for implementation of waivers that provide a variety of options in order to strengthen the marketplace.

The guidance is applicable as of October 22, 2018, however with open enrollment for the health exchanges beginning in just over a week, any waiver requests would likely be for years 2020 or later.  Comments on the guidance will be accepted through December 24, 2018.