The Social Security Act includes a provision that allows the Secretary of Health and Human Services to approve pilot or demonstration projects for a state’s Medicaid program and “waive” some federal rules to provide the flexibility to cover more services that would otherwise be ineligible under the Medicaid program. Therefore, this authority allows a state to cover new or different and innovative services to improve healthcare access and quality, reduce the costs to the Medicaid system, and improve health outcomes.

Fundamentally, the service and flexibilities granted through a demonstration waiver are to target priority populations, geographic areas, or designated pilot initiative and demonstrate impacts. Allowable activities are authorized to receive federal match to offset state expenditures; this is only available for expenditures that would not otherwise be supported by other federal funding sources. 

In 2018, the State of Illinois received approval from the Centers for Medicaid and Medicare Services (CMS) to proceed with the design and implementation of the 1115 Behavioral Health Transformation Waiver. This original waiver included authorization for innovative Substance Use Disorder (SUD) services in the form of residential and inpatient treatment to be allowed at Institutes for Mental Diseases and SUD related case management. Additionally, supportive employment services were included in this demonstration.

As this demonstration period came to an end in 2023, the state decided to seek out an extension and amendment of the waiver to address recent guidance from CMS acknowledging the importance of health-related social needs (HRSN) and their links to health outcomes. HRSNs are an individual’s unmet, adverse social conditions that contribute to poor health; food insecurity, housing instability, unemployment, and lack of transportation all drive health disparities.

The state pursued a wide array of services to promote health equity and applied for this five-year extension that will focus on creating a fully sustainable, person-centered, and equitable healthcare system. The state’s application for the Healthcare Transformation Waiver included new services targeting HRSNs while sustaining existing pilots. In July 2024, CMS approved the state’s extension and amendments. In the approved Standard Terms and Conditions, Illinois was authorized to provide services to address the following: Health-Related Social Needs, Pre-release services in carceral settings, Violence Prevention and Intervention, and Non-Medical Transportation. 

The state intends on implementing the proposed benefits statewide through its Medicaid managed care program and will be working on a phased-approach of implementation. This approach will allow the state appropriate time to engage community partners in design and implementation of services that will best consider the capacity of their respective sectors.

In part of the state’s approval, there is an allowable match to support the capacity building initiatives that will be needed to build the infrastructure  to lift services. Concurrently, the state will need to review its current investments in other HRSN related activities and be cautious to not supplant any existing funding with these new initiatives. This means that the state is responsible for maintaining current investments and to work on catalyzing these initiatives to supplement existing funding sources. 

Overall, eligible customers would be those who are Medicaid customers enrolled in a managed care plan. Additionally, each specific service benefit will tie eligibility to specific clinical and social risk criteria that are consistent with federal CMS guidance and approved waivers. Understanding the vast set of health-related social needs, the state intends on taking a broad and inclusive approach in designing eligibility criteria.

Further information about eligibility and services can be found on CMS approved Operational Protocols. We encourage you to look at the CMS approvals to find the associated protocol with the benefit array of interest. 

As part of the design effort, those responsible for developing and implementing the policies that shape the service array understand there are specific nuances in existing sectors which may vary across region and are attempting to solicit feedback and guidance from stakeholders across the state. The goal is to better design service definitions that would account for existing practices, thereby avoiding the risk of inadvertently disqualifying an existing provider from being able to receive payment for services. That said, non-traditional Medicaid providers of community-based social care services are essential contributors to the design process.