News notes May 2025

The Centers for Medicare and Medicaid Services (CMS) published a set of rules for the delivery of Home and Community Based Services through Medicaid waiver programs. CMS aims to improve the experience of individuals in these programs by enhancing access to the community, promoting the delivery of services in more integrated settings, and expanding the use of person-centered planning. These rules will ensure individuals who have disabilities have the same access to the community as individuals who do not have disabilities.

Also, CMS is taking action to preserve the core mission of the Medicaid program by putting an end to spending that duplicates resources available through other federal and state programs or is not directly tied to healthcare services. Mounting expenditures covering housekeeping for individuals who are not eligible for Medicaid or high-speed internet for rural healthcare providers, distracts from the core mission of Medicaid.

Recently, CMS sent a letter to states notifying them that it does not intend to approve new or extend existing requests for federal matching funds for state expenditures on these two types of programs — designated state health programs (DSHP) and designated state investment programs (DSIP). DSHPs and DSIPs are state-funded health programs that, without “creative interpretations” of section 1115 demonstration authority, would not have qualified for federal Medicaid funding.

Federal DSHP funding has historically raised concerns from Congressional oversight committees and the GAO about whether DSHPs were linked to eligible populations and aligned with the federal-state financial partnership established under the Medicaid statute. In 2017, CMS acted to phase-out these expenditures, noting “demonstrations have not made a compelling case that federal DSHP funding is necessary to support the continuation of important programs previously operated by the state. DSHPs and DSIPs have grown from approximately $886 million in 2019 to nearly $2.7 billion in eligible expenditures in 2025,

The following programs do not tie directly to services provided to Medicaid beneficiaries: include:

· $11M in grants to a labor union in New York to reduce costs of health insurance for certain childcare providers.

· $241M for a program in New York for non-medical in-home services, such as housekeeping.

· $17M for a California student loan repayment program.

· $20M in grants to high-speed internet for rural healthcare providers in North Carolina; and

· $3.8M for a diversity in medicine initiative in New York.

As CMS continues to focus on the statutory objectives of the Medicaid program and improving health outcomes for the most vulnerable, the agency is refocusing its resources on Medicaid programmatic goals to safeguard the financial health of the Medicaid program. While CMS will continue to work with states on innovative state section 1115 demonstrations, those demonstrations should be focused on improving health outcomes of the most vulnerable dependent on Medicaid.

Best Regards,

Kevin McGuckin, CEO