Re-send: NY’s 1115 Waiver Approval: Pieces of the Pie

February 15, 2024

Good morning, 

Apropos of our discussion this morning, I wanted to re-circulate an email I sent last month re: two elements of the state’s recently approved 1115 Waiver.   I sent this email to NYS Council members about a month ago so I will check in with DoH leads to ascertain whether there is/could be any movement that would benefit NYS Council members re: the rate reform element of the Waiver.  

Stand by. L.
———- Forwarded message ———
From: Lauri Cole <>
Date: Sat, Jan 13, 2024 at 12:26 PM
Subject: 1115 Waiver Approval: Pieces of the Pie

IMD Waiver Approval in the 1115 Waiver Approval

In December, 2022, NYS filed a Waiver with CMS seeking flexibility from the federal Institutions of Mental Disease (IMD) Exclusion that prohibits certain state Medicaid Programs and Services with more than 16 beds from being eligible for Federal Financial Participation (FFP, or ‘federal share’).  This means that NYS has been unable to collect federal funds for Medicaid services provided in many larger institutional settings (state psychiatric hospitals, etc.).   And, to this point, the IMD regulations have also blocked some community-based OASAS bedded programs (with more than 16 beds) from being eligible for federal share.  Programs like the OASAS 820 Program are currently able to bill for these services through MCOs, but the state has been paying, utilizing state funds along with other funds realized through other federal insurance initiatives. 

CMS approval of the SUD portion of NY’s IMD Waiver means the state can now claim FFP for the community based OASAS 818, 816 and 820 (all levels in the 820).  And yes – the 820s will be able to bill FFS and the state can claim FFP.  We knew the approval was imminent when we made our request to carve out outpatient MH and SUD services from the Medicaid managed care program.The mental health portion of NY’s IMD Waiver application (applies only to state operated psych hospitals) is currently on-hold with CMS.  Apparently this is due to concerns over the ability to meet some of the Special Terms and Conditions (STCs) that come along with the Waiver  (specifically calls for a nationally recognized assessment tool to be used throughout the OMH system). 

More on this shortly.

1115 Waiver: Medicaid Rate Reform

The recently approved 1115 waiver includes an initiative designed to drive rate reform, bringing certain Medicaid rates up to 80% of Medicare rates in 3 distinct areas of healthcare: Primary Care, Obstetrics, and Behavioral Health.  This is a complicated provision with many Special Terms and Conditions (STCs) and we are still working to get more detail but generally, the state will be required to use up to $199M of the Waiver funds it receives to increase Medicaid rates in the 3 service areas to ensure Medicaid rates are not falling too far behind Medicare rates for the same services.  Of course, Medicare rates are quite low when compared to Medicaid rates paid for mental health services, so it is unclear whether this initiative will deliver any meaningful rate increases for mental health services.  On the OASAS side of things, Medicare does not currently pay for a wide range of services so there may be fewer opportunities to do the comparison between Medicaid and Medicare, using the 80% threshold analysis.  

The technical details we know:  I’m told that the state must analyze a bundle of rate codes in each of the 3 service areas (BH, Primary Care, Obstetrics) to see how they compare with Medicare rates, and then begin to raise the Medicaid rates that are not at 80% of Medicare by 2 percentage points per year for each of the 3 Waiver years, or until the rate under consideration is at 80% of the Medicare rate.  If there are funds left over after the state levels up the rates that are falling behind Medicare rates, it can use remaining funds to increase other Medicaid rates. 

I’ve already spoken to DoH just a bit about this. Leaders there are preparing for the executive budget release on Tuesday and the 2024 Health/Medicaid Legislative Budget Hearing that appears to be scheduled for January 23 (I haven’t seen written confirm yet but that’s the word on the street), so DoH needs to get through this very busy time period while it prepares educational materials re: various provisions of the waiver, for providers and other stakeholders.  So, the message is stand by. 

Note:  The information above is an early read mixed with several brief conversations I’ve had to date.  As such, it should be viewed as a ‘top of the trees’ early discussion that is subject to change. The other thing to know is the state has 30 days from the date of the Waiver approval (1/9/24) to seek technical changes to the approved waiver, so there may be some changes still to come.