GenIC # 58 (New): Medicaid Section 1115 Eligibility and Coverage Demonstration Implementation Plan and Monitoring Reports Documents and Templates

DEPART MENT OF HEALT H AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
7500 Security Boulevard, Mail Stop S2-26-12
Baltimore, MD 21244-1850

SMD: 18-002
RE: Opportunities to
Promote Work and
Community Engagement
Among Medicaid
Beneficiaries
January 11, 2018
Dear State Medicaid Director:
The Centers for Medicare & Medicaid Services (CMS) is announcing a new policy designed to
assist states in their efforts to improve Medicaid enrollee health and well-being through
incentivizing work and community engagement among non-elderly, non-pregnant adult
Medicaid beneficiaries who are eligible for Medicaid on a basis other than disability. 1 Subject to
the full federal review process, CMS will support state efforts to test incentives that make
participation in work or other community engagement a requirement for continued Medicaid
eligibility or coverage for certain adult Medicaid beneficiaries in demonstration projects
authorized under section 1115 of the Social Security Act (the Act). Such programs should be
designed to promote better mental, physical, and emotional health in furtherance of Medicaid
program objectives. Such programs may also, separately, be designed to help individuals and
families rise out of poverty and attain independence, also in furtherance of Medicaid program
objectives. 2
This guidance describes considerations for states that may be interested in pursuing
demonstration projects under section 1115(a) of the Act that have the goal of creating incentives
for Medicaid beneficiaries to participate in work and community engagement activities. It
addresses the application of CMS’ monitoring and evaluation protocols for this type of
demonstration and identifies other programmatic and policy considerations for states, to help
them design programs that meet the objectives of the Medicaid program, consistent with federal
statutory requirements.

1

States will have the flexibility to identify activities, other than employment, which promote health and wellness,
and which will meet the states’ requirements for continued Medicaid eligibility. These activities include, but are not
limited to, community service, caregiving, education, job training, and substance use disorder treatment.
2
Section 1901 of the Social Security Act authorizes appropriations to support State Medicaid programs: “For the
purpose of enabling each State, as far as practicable under the conditions in such State, to furnish (1) medical
assistance on behalf of families with dependent children and of aged, blind, or disabled individuals, whose income
and resources are insufficient to meet the costs of necessary medical services, and (2) rehabilitation and other
services to help such families and individuals attain or retain capability for independence or self-care[.]”

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Health Benefits of Community Engagement, including Work and Work Promotion
While high-quality health care is important for an individual’s health and well-being, there are
many other determinants of health. It is widely recognized that education, for example, can lead
to improved health by increasing health knowledge and healthy behaviors. 3 CMS recognizes
that a broad range of social, economic, and behavioral factors can have a major impact on an
individual’s health and wellness, and a growing body of evidence suggests that targeting certain
health determinants, including productive work and community engagement, may improve
health outcomes. For example, higher earnings are positively correlated with longer lifespan. 4
One comprehensive review of existing studies found strong evidence that unemployment is
generally harmful to health, including higher mortality; poorer general health; poorer mental
health; and higher medical consultation and hospital admission rates. 5 Another academic
analysis found strong evidence for a protective effect of employment on depression and general
mental health. 6 A 2013 Gallup poll found that unemployed Americans are more than twice as
likely as those with full-time jobs to say they currently have or are being treated for depression. 7
Other community engagement activities such as volunteering are also associated with improved
health outcomes 8, 9, and it can lead to paid employment.
CMS, in accordance with principles supported by the Medicaid statute, has long assisted state
efforts to promote work and community engagement and provide incentives to disabled
beneficiaries to increase their sense of purpose, build a healthy lifestyle, and further the positive
physical and mental health benefits associated with work. CMS supports state efforts to enable
eligible individuals to gain and maintain employment. Optional Medicaid programs such as the
Medicaid Buy-In, for example, allow workers with disabilities to have higher earnings and
maintain their Medicaid coverage. For beneficiaries who are able to work but have been unable
to find employment, some states encourage employment through concurrent enrollment in statesponsored job training and work referral, either automatically or at the option of the Medicaid
beneficiary. A number of states have also initiated programs to connect non-disabled Medicaid
beneficiaries to existing state workforce programs.
States also provide a range of employment supports to individuals receiving home and
community based services under section 1915(c) waivers or section 1915(i) state plan services.
These include habilitation services designed to “assist individuals in acquiring, retaining and
improving the self-help, socialization, and adaptive skills necessary to reside successfully in

3

Bartley, M and Plewis, I. (2002) Accumulated labor market disadvantage and limiting long term illness.
International Journal of Epidemiology 31:336-41.
4
Chetty R, Stepner M, Abraham S, et al. The association between income and life expectancy in the United States,
2001-2014. JAMA. 2016; 315(16):1750-1766.
5
Waddell, G. and Burton, AK. Is Work Good For Your Health And Well-Being? (2006) EurErg Centre for Health
and Social Care Research, University of Huddersfield, UK
6
Van der Noordt, M, Jzelenberg, H, Droomers, M, and Proper,K. Health effects of employment: a systemic review
of prospective studies. BMJournals. Occupational and Environmental Medicine. 2014: 71 (10).
7
Crabtree, S. In U.S., Depression Rates Higher for Long-Term Unemployed. (2014). Gallup.
http://news.gallup.com/poll/171044/depression-rates-higher-among-long-term-unemployed.aspx
8
United Health Group. Doing good is good for you. 2013 Health and Volunteering Study.
9
Jenkins, C. Dickens, A. Jones, K. Thompson-Coon, J. Taylor, R. and Rogers, M. Is volunteering a public health
intervention? A systematic review and meta-analysis of the health and survival of volunteers BMC Public Health
2013. 13 (773)

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home and community based settings."10 These activities have been historically focused on
services and programs for individuals with disabilities and receipt of these supports is not a
condition of eligibility or coverage.
The successes of all these programs suggest that a spectrum of additional work incentives,
including those discussed in this letter, could yield similar outcomes while promoting these same
objectives.
New Opportunity for Promoting Work and Other Community Engagement for NonElderly, Non-Pregnant Adult Beneficiaries Who Are Eligible for Medicaid on a Basis Other
than Disability
On March 14, 2017, the Department of Health and Human Services (HHS) and CMS issued a
letter to the nation’s governors affirming the continued commitment to partner with states in the
administration of the Medicaid program. In the letter, we noted that CMS will empower states to
develop innovative proposals to improve their Medicaid programs. Demonstration projects
under section 1115 of the Act give states more freedom to test and evaluate approaches to
improving quality, accessibility, and health outcomes in the most cost-effective manner. CMS is
committed to allowing states to test their approaches, provided that the Secretary determines that
the demonstrations are likely to assist in promoting the objectives of the Medicaid program.
Some states are interested in pursuing demonstration projects to test the hypothesis that requiring
work or community engagement as a condition of eligibility, as a condition of coverage, as a
condition of receiving additional or enhanced benefits, or as a condition of paying reduced
premiums or cost sharing, will result in more beneficiaries being employed or engaging in other
productive community engagement, thus producing improved health and well-being. To
determine whether this approach works as expected, states will need to link these community
engagement requirements to those outcomes and ultimately assess the effectiveness of the
demonstration in furthering the health and wellness objectives of the Medicaid program. 11
Today, CMS is committing to support state demonstrations that require eligible adult
beneficiaries to engage in work or community engagement activities (e.g., skills training,
education, job search, caregiving, volunteer service) in order to determine whether those
requirements assist beneficiaries in obtaining sustainable employment or other productive
community engagement and whether sustained employment or other productive community
engagement leads to improved health outcomes. This is a shift from prior agency policy
regarding work and other community engagement as a condition of Medicaid eligibility or
coverage,12 but it is anchored in historic CMS principles that emphasize work to promote health
and well-being.
We look forward to working with states interested in testing innovative approaches to promote
work and other community engagement, including approaches that make participation a
condition of eligibility or coverage, among working-age, non-pregnant adult Medicaid
beneficiaries who qualify for Medicaid on a basis other than a disability. Consistent with section
10

Social Security Act, section 1915 (c)(5)(A)
https://www.medicaid.gov/medicaid/section-1115-demo/about-1115/index.html
12
https://www.medicaid.gov/medicaid/section-1115-demo/demonstration-and-waiver-list/?entry=29927
11

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1115(a) of the Act, demonstration applications will be reviewed on a case-by-case basis to
determine whether the proposed approach is likely to promote the objectives of Medicaid. CMS
is also committed to ensuring state accountability for the health outcomes produced by the
program, and demonstration projects approved consistent with this guidance will be required to
conduct outcomes-based evaluations, based on evaluation designs subject to CMS approval.
We note that approved demonstration projects that promote positive health outcomes may also
achieve the additional goal of the Medicaid program to promote independence.
State Flexibility in Program Design
In its work with states, CMS has identified a number of issues for states to consider as they
develop programs to promote work and other forms of community engagement among Medicaid
beneficiaries. Each state is different, and states are in the best position to determine which
approaches are most likely to succeed, based on their specific populations and resources. In
drafting demonstration project applications, states should articulate the reasoning behind their
proposal. While CMS will evaluate each demonstration project application on its own merits, we
believe the following considerations will facilitate states’ work to develop proposals and allow
them to focus their resources on permissible areas of innovation while allowing CMS to maintain
its oversight and fiduciary responsibilities.
Alignment with Other Programs
Many states already have systems in place for implementing employment and community
engagement programs. For instance, beginning in 1996, welfare reform provided states with
more flexibility to manage their state welfare programs under the Temporary Assistance for
Needy Families (TANF) program consistent with the four statutory purposes of TANF.
Supplemental Nutrition Assistance Program (SNAP) rules require all recipients to meet work
requirements unless they are exempt. Exemptions may include, but are not limited to age,
disability, responsibility for a dependent, participation in a drug addiction or alcohol treatment
and rehabilitation program, or another state-specified reason.
CMS supports states’ efforts to align SNAP or TANF work or work-related requirements with
the Medicaid program as part of a demonstration authorized under section 1115 of the Act,
where such alignment is appropriate and consistent with the ultimate objective of improving
health and well-being for Medicaid beneficiaries. Based on states’ experiences with their TANF
or SNAP employment programs, they may wish to consider aligning Medicaid requirements with
certain aspects of the TANF or SNAP programs, such as:
• Excepted populations (e.g., pregnant women, primary caregivers of dependents,
individuals with disabilities or health-related barriers to employment, individuals
participating in tribal work programs, victims of domestic violence, other populations
with extenuating circumstances, full time students);
• Protections and supports for individuals with disabilities and others who may be unable
to meet the requirements;
• Allowable activities (e.g., subsidized and unsubsidized employment, educational and
vocational programs, job search and job readiness, job training, community service,
caregiving, and other allowable activities under TANF or SNAP) and required hours of
participation (e.g., hours/week, including hours completed under TANF or SNAP);

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•
•
•

Changes to requirements or allowable activities due to economic or environmental factors
(e.g., unemployment rate in affected areas);
Enrollee reporting requirements (e.g., frequency and method for reporting work
activities); or
The availability of work support programs (e.g., transportation or child care) for
individuals subject to work and community engagement requirements.

CMS will consider the extent to which proposed Medicaid community engagement or work
requirements align with features of the TANF or SNAP programs and whether that alignment is
consistent with Medicaid objectives. For example, aligning certain requirements across these
programs would streamline eligibility and could reduce the burden on both states and
beneficiaries and maximize opportunities for beneficiaries to meet the requirements. Many
states have already developed or are developing integrated eligibility systems, and have taken
advantage of the waiver of OMB Circular A-87 cost allocation rules (available through CY
2018) to support the integration of eligibility systems between health and human services
programs. These integrated systems may be poised to allow for alignment of eligibility
requirements for a segment of the Medicaid population, and to facilitate implementation of
streamlined application and verification processes. Where additional information technology
systems enhancements are required to support Medicaid demonstration activities, costs will be
expected to be reasonable and comply with Medicaid statute and regulations. Federal Medicaid
funding will be limited to allowable activities directly linked to Medicaid beneficiaries.
Individuals enrolled in and compliant with a TANF or SNAP work requirement, as well as
individuals exempt from a TANF or SNAP work requirement, must automatically be considered
to be complying with the Medicaid work requirements. To the degree that specific good cause
exemptions exist in a state TANF or SNAP program, the state should make a reasonable effort to
incorporate similar exemptions within a framework for a Medicaid community engagement and
work requirement. States should also describe how they will communicate to beneficiaries any
differences in program requirements that individuals will need to meet in the event they
transition off of SNAP or TANF but remain subject to a Medicaid community engagement or
work requirement.
Populations Subject to Work Promotion/Community Engagement Requirements
States should clearly identify the eligibility groups subject to the work and community
engagement requirements and included in the demonstration. States may consider submitting for
CMS consideration a proposal to tailor such requirements to adults within specific eligibility
groups or sub-populations within the eligibility group. CMS recognizes that adults who are
eligible for Medicaid on a basis other than disability (i.e. classified for Medicaid purposes as
“non-disabled”) will be subject to the work/community engagement requirements as described in
this guidance. These individuals, however, may have an illness or disability as defined by other
federal statutes that may interfere with their ability to meet the requirements. States must
comply with federal civil rights laws, ensure that individuals with disabilities are not denied
Medicaid for inability to meet these requirements, and have mechanisms in place to ensure that
reasonable modifications are provided to people who need them. States must also create
exemptions for individuals determined by the state to be medically frail and should also exempt

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from the requirements any individuals with acute medical conditions validated by a medical
professional that would prevent them from complying with the requirements.
States are required, in the design and administration of Medicaid demonstration projects, to
comply with all applicable federal civil rights laws, including the Americans with Disabilities
Act, Section 504 of the Rehabilitation Act, Section 1557 of the Affordable Care Act, Title VI of
the Civil Rights Act, the Age Discrimination Act, and other applicable statutes. The federal
disability rights laws are of particular importance, given the broad scope of protection under
these laws and the fact that disabilities can affect an individual’s ability to participate in work
and community engagement activities. States may not impose such requirements on individuals
classified as “disabled” for Medicaid eligibility purposes.
CMS recognizes that individuals who are eligible for Medicaid on a basis other than disability
(and are therefore classified for Medicaid purposes as “non-disabled”) may have a disability
under the definitions of the Americans with Disabilities Act and Section 504 of the
Rehabilitation Act of 1973, or section 1557 of the Affordable Care Act. States should include, in
their proposals, information regarding their plans for compliance with these requirements,
including provision of reasonable modifications in work or community engagement
requirements. The reasonable modifications must include exemptions from participation where
an individual is unable to participate for disability-related reasons, modification in the number of
hours of participation required where an individual is unable to participate for the required
number of hours, and provision of support services necessary to participate, where participation
is possible with supports. States may not receive Federal Medicaid match for such supportive
services for individuals enrolled in these Medicaid demonstrations. In addition, States should
evaluate individuals’ ability to participate and the types of reasonable modifications and supports
needed. CMS, in consultation and coordination with the HHS Office for Civil Rights, is
available to assist states in designing projects that comply with the civil rights laws.
CMS also recognizes that many states currently face an epidemic of opioid addiction, which has
been declared a national public health emergency by the Secretary. States will therefore be
required to take certain steps to ensure that eligible individuals with opioid addiction and other
substance use disorders (who may not be defined as disabled for Medicaid purposes but may be
protected by disability laws) have access to appropriate Medicaid coverage and treatment
services. States must make reasonable modifications for these individuals, consistent with states’
obligations under civil rights laws described above, and specifically identify such modifications
in their demonstration applications. Such modifications may include counting time spent in
medical treatment towards an individual’s work/community engagement requirements, or
exempting individuals participating in intensive medical treatment (e.g. inpatient treatment or
intensive outpatient treatment) for substance use disorder from the work/community
engagements requirements. CMS will also consider other reasonable modifications that states
may design and propose in furtherance of their obligations under disability laws. Finally, states
should identify, in their demonstrations, other strategies to support such individuals in meeting
the requirements, and in obtaining access to treatment when they are ready.

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Range of community engagement activities
We encourage states to consider a range of activities that could satisfy work and communityengagement requirements. Career planning, job training, referral, and job support services
offered should reflect each person’s employability and potential contributions to the labor
market. As many Medicaid beneficiaries live in areas of high unemployment, or are engaged as
caregivers for young children or elderly family members, states should consider a variety of
activities to meet the requirements for work and community engagement, including volunteer
and tribal employment programs, in addition to the activities identified to meet the requirements
under SNAP or TANF.
Beneficiary supports
States will be required to describe strategies to assist beneficiaries in meeting work and
community engagement requirements and to link individuals to additional resources for job
training or other employment services, child care assistance, transportation, or other work
supports to help beneficiaries prepare for work or increase their earnings. However, this
demonstration opportunity will not provide states with the authority to use Medicaid funding to
finance these services for individuals. Nothing in this letter changes the types of services eligible
for Federal match; states may only receive Federal Medicaid match for allowable services in
accordance with statute.
CMS expects that states will design their programs consistent with statutory and regulatory
procedural requirements, including through provisions to ensure Medicaid beneficiaries’ due
process rights are protected. States are encouraged to include procedures that allow for an
assessment of individuals’ disabilities, medical diagnosis, and other barriers to employment and
self-sufficiency in order to identify appropriate work and community engagement activities and
services, supports, and any reasonable modifications necessary for those individuals to
participate in work and community engagement activities and attain long-term employment and
self-sufficiency.
Attention to market forces and structural barriers
CMS recognizes that States will need flexibility to respond to the local employment market by
phasing in and/or suspending program features, as necessary. A state may need time to establish
supports for beneficiaries in regions with limited employment opportunities, for example, or
localities facing particular economic stress or lack of viable transportation. The state should
describe its plan for assessing and addressing these and related issues in its demonstration
application. In addition, the state should consider whether other circumstances may arise that
could prevent individuals from complying with a community engagement and work requirement.
States should detail how they would support individuals in meeting program requirements during
those periods, which may include incorporation of good cause exemptions similar to those used
in SNAP and TANF.
Transparency
CMS remains committed to supporting reasonable public input processes that provide states an
opportunity to consider the views of Medicaid beneficiaries, applicants, and other stakeholders
and gather input that may support continuous improvement of the program. Demonstration
projects under section 1115 of the Act intended to promote work and other community

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engagement are subject to all relevant public notice and transparency requirements, including
those described in 42 C.F.R. Part 431, subpart G. Where applicable, states will also be required
to comply with tribal consultation requirements and describe how they are responding to
comments received through the tribal consultation process.
Budget Neutrality
To promote long-term sustainability of the Medicaid program for states and the federal
government, we will continue to require states to demonstrate that projects authorized under
section 1115 of the Act are budget neutral. CMS will work with states to identify those
components of the demonstration that will be included in budget neutrality calculations and
provide technical assistance as needed in determining budget neutrality. States will not be
permitted to accrue savings from a reduction in enrollment that may occur as a result of using
this section 1115 authority. States will be required to document the financial performance of the
demonstration and track expenditures to ensure the demonstration does not exceed established
budget neutrality limits. States will provide updated budget neutrality workbooks with every
required monitoring report, and the specific reporting requirements for monitoring budget
neutrality will be set forth in the demonstration special terms and conditions (STCs).
Monitoring and Evaluation
CMS remains committed to ensuring state accountability for the health and well-being of
Medicaid enrollees. Monitoring and evaluation are important for understanding these outcomes
and the impacts of the state innovations being demonstrated. We are undertaking efforts to help
states monitor the elements of their programs, while giving them the flexibility to adapt to
changing conditions in their states. States will be required to develop monitoring plans and
submit regular monitoring reports describing progress made in implementing their requirements
for work and other community engagement activities. We will also undertake our own
monitoring and technical assistance efforts through regular communications with states and will
review written reports from states on a quarterly basis.
Monitoring
States approved to implement work and other community engagement requirements for
Medicaid beneficiaries will submit to CMS a draft of proposed metrics for quarterly and annual
monitoring reports, and CMS will work with the state to jointly identify metrics for these reports.
Metrics will reflect the major elements of the demonstration, including but not limited to data
that applies to the work and other community engagement initiatives. CMS will combine these
programmatic metrics with general metrics aimed at monitoring beneficiary enrollment and
termination for failure to meet program requirements, access to services for both beneficiaries
and individuals terminated for failure to meet the requirements, and the overall functioning of the
demonstration.
States will be subject to other monitoring and reporting requirements, consistent with regulations
in 42 C.F.R. § 431.420 and § 431.428. State reports will be required to provide sufficient
information to document key challenges, underlying causes of those challenges, and strategies
for addressing those challenges, as well as key achievements and the conditions and efforts that
lead to those successes. Specific details related to monitoring and reporting for each state’s
demonstration will be discussed with states and described in the demonstration STCs.

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Evaluation
States will also be required to evaluate health and other outcomes of individuals that have been
enrolled in and subject to the provisions of the demonstration, and will be required to conduct
robust, independent program evaluations. Evaluations must be designed to determine whether
the demonstration is meeting its objectives, as well as the impact of the demonstration on
Medicaid beneficiaries and on individuals who experience a lapse in eligibility or coverage for
failure to meet the program requirements or because they have gained employer-sponsored
insurance. A draft evaluation design should be submitted with the application, and the final
evaluation design will be submitted for CMS approval no more than 180 days after
demonstration approval.
Evaluation designs will be expected to include a discussion of the evaluation questions and
hypotheses that the state intends to test, including the hypothesis that requiring certain Medicaid
beneficiaries to work or participate in other community engagement activities increases the
likelihood that those Medicaid beneficiaries will achieve improved health, well-being, and (if the
State designs its program to pursue this additional goal) independence as contemplated in the
objectives of Medicaid. Evaluation designs will be expected to include analysis of how this
requirement affects beneficiaries’ ability to obtain sustainable employment, the extent to which
individuals who transition from Medicaid obtain employer sponsored or other health insurance
coverage, and how such transitions affect health and well-being.
The hypothesis testing should include, where possible, assessment of both process and outcome
measures, and proposed measures should be selected from nationally-recognized sources and
national measures sets, where possible. The evaluation design should use both quantitative and
qualitative methods, and will need to identify comparison groups and appropriate statistical
analyses to evaluate the impact of the demonstration. Evaluation designs should also include
descriptions of multiple data sources to be used, including but not limited to multiple stakeholder
perspectives, surveys of beneficiaries (both enrolled and those no longer enrolled as a result of
the implementation of program requirements), claims data, and survey data (such as Consumer
Assessment of Healthcare Providers and Systems (CAHPS)).
To the extent permitted by federal and state privacy laws, states should be prepared to track and
evaluate health and community engagement outcomes both for those who remain enrolled in
Medicaid, and those who are subject to the requirements but lose or experience a lapse in
eligibility or coverage during the course of the demonstration, and provide details on how they
will track these outcomes in their demonstration evaluation designs. Ongoing monitoring and
evaluation efforts will help CMS learn more about the challenges and successes states experience
while implementing innovative policies to increase productive community engagement, which
we will then be able to share with other states looking to achieve similar goals related to their
residents’ well-being.
We hope this information is helpful, and we look forward to continuing to work with states to
implement innovative solutions to improve their Medicaid programs. Questions and comments
regarding this policy may be directed to Judith Cash, Acting Director, State Demonstrations
Group, CMCS, at 410-786-9686.

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Sincerely,

/s/
Brian Neale
Director

Cc:
National Association of Medicaid Directors
National Academy for State Health Policy
National Governors Association
American Public Human Services Association
Association of State and Territorial Health Officials
Council of State Governments
National Conference of State Legislatures
Academy Health
National Association of State Alcohol and Drug Abuse Directors