CMS Halts New Medicaid 1115 Waivers for Workforce Initiatives

The Centers for Medicare and Medicaid Services (CMS) announced it will no longer approve new 1115 demonstration workforce initiatives or extend existing waivers, signaling a policy shift under the current administration. This change reverses prior Biden administration priorities focused on addressing provider shortages in Medicaid through these waivers. The 1115 waivers have been instrumental in enabling states to address workforce gaps in psychiatry, primary care, dentistry, and long-term care by funding initiatives such as loan repayment programs, recruitment bonuses, and residency expansions.

Since June 2022, several states including California, Massachusetts, New York, North Carolina, and Vermont received approvals for these workforce initiatives, reflecting a concerted effort to strengthen Medicaid provider capacity. These initiatives target providers with significant commitments to Medicaid and uninsured patient populations and have been particularly focused on behavioral health and primary care roles. However, the impact data is still emerging, given the recent nature of many waivers.

CMS has underscored ongoing provider shortages exacerbated by the COVID-19 public health emergency when approving these waivers but now appears to prioritize waiver actions demonstrating clear health benefits, cost savings, and accountability in federal spending. Most current workforce-related 1115 waivers are set to expire between 2027 and 2029, with no anticipated renewals or new approvals. This includes a pending request from Florida for federal funds to support workforce training and loan repayment programs in underserved areas.

The changes align with broader CMS efforts to curtail waivers adopted during the Biden administration, including discontinuing extensions of section 1115 continuous eligibility waivers and limiting waivers related to social determinants of health. Historically, section 1115 waiver priorities shift between administrations, with the current administration yet to publicly define its long-term policy direction. States may face growing challenges in addressing Medicaid provider workforce shortages without these federal waiver tools and flexibility.

Financially, approved workforce initiatives have included substantial federal and state investment, with at least $2.7 billion authorized. These projects rely on budget neutrality under 1115 waivers, requiring states to offset expenditures through other savings. Financing strategies have included leveraging federal matching funds and reallocating state health program resources.

Overall, the CMS guidance signals significant recalibration of Medicaid workforce development strategies, impacting states' capacity to pursue innovative solutions to provider shortages under Medicaid. The long-term implications may involve increased access gaps if states reduce payment rates or limit participation due to constrained funding avenues under the new federal policy framework.