These demonstration waivers, named after section 1115 of the Social Security Act, are designed to do any of the following: expand Medicaid or CHIP eligibility or services  or utilize innovation in service delivery that yields improved care, efficiency and reduced costs.

  • The Texas waiver is designed to 1) expand the Medicaid managed care model 2) provide funding to hospitals serving large proportions of uninsured patients in the form of uncompensated care (UC) pool funds and Delivery System Reform Incentive Payment (DSRIP) funds, and 3) to improve Texas Medicaid service quality, coordination, efficiency and patient health status and experience. Waiver projects must be budget neutral to the federal government. The Texas waiver was implemented beginning in 2011 and expired in 2016 and brought $29 billion to Texas hospitals and other providers. A temporary extension was granted in May 2016 that will terminate at the end of 2017 that will bring an estimated $7.8 billion in UC and DSRIP funds to the state. The Texas Health and Human Services Commission (HHSC) is now requesting an additional 21 months of level funding for the UC and DSRIP pools, and a continuation of the managed care provisions of the 1115 Waiver, through September 30, 2019.
  • Forty percent of waiver funds come from local funds – mostly property tax dollars – and 60 percent is funded by the federal government. Of the total $29 billion of the original waiver period (2011-2016), $17.6 B was for uncompensated care and $11.4 B was for DSRIP projects. The UC Pool provides funding to cover Medicaid shortfalls (Medicaid reimbursement rates are far lower than costs of care) and costs  to treat low-income, uninsured patients. The DSRIP Pool are incentive payments paid when metrics are met for improving cost, efficiency and patient outcomes within integrated, coordinated care systems for low-income and Medicaid recipients. Funding for the original waiver was heavily slanted toward UC (88 percent) for the first year of implementation, though the proportions of funding for UC and DSRIP reached 50/50 by the end of the first waiver and the temporary extension funding is 50 percent UC and 50 percent DSRIP as well.  The Waiver has been successful in Texas and met many of it’s stated goals, according to an HHSC interim charge report
  • Though the Centers for Medicare and Medicaid Services (CMS) granted the state a 15 month extension of their 1115 Medicaid waiver program, the Obama administration notified HHSC in April 2016 that it was reluctant to extend the waiver given the fact that the state elected not to expand Medicaid. CMS maintains that waiver funds are not to be used to provide coverage expansion allowed for under the Affordable Care Act (ACA).  Florida, for example, had its UC cut to fund care only for those that would not be covered in the event of an ACA Medicaid expansion (adults 18-64).