Section 1115(a) of the Social Security Act provides expenditure authority allowing state Medicaid programs to demonstrate the impact of proposed innovations that would otherwise not be allowed under traditional Medicaid rule. This authority gives the state flexibility to cover new or different services than would otherwise be allowed through Medicaid State Plan authority. 

1115 waivers do not operate like a grant to the state. Rather, 1115 waivers authorize federal matching to offset state expenditures on approved demonstration services and flexibilities. Federal matching is available for state expenditures that are not otherwise supported by another federal funding source. In State Fiscal Year 2026, the match rate in Illinois is 51.82%. This means for every $100 of state-only funding spent on the services approved in the 1115 waiver, the federal government will return $51.82 to the state. 

Learn more about 1115 waivers at Medicaid innovation pathway: How 1115 waivers work - National Association of Medicaid Directors

HFS received approval for several new benefits:

• Health Related Social Needs (housing supports, including medical respite, and food/nutrition services)

• Reentry Demonstration (ability to cover a set of services in a 90-day pre-release period from carceral settings)

• Violence Prevention and Intervention  

• Non-medical transportation 

HFS also received approval to continue existing authorities approved under the original Behavioral Health Transformation Waiver in 2018:

• SUD Case Management

• Residential and Inpatient Treatment for SUD (SUD services in Institutions for Mental Diseases (IMD) 

• Supported Employment Services for individuals living with substance use disorders, serious mental illness, and/or those physical, intellectual, or developmental needs.

The full approval document, known as the Special Terms and Conditions (STCs), is available online at: il-healthcare-trans-appvl-07022024.pdf (medicaid.gov) 

Generally, eligible customers will need to be Medicaid members (or Medicaid eligible) and enrolled in managed care plans (including dually eligible members enrolled in a plan). Each service or benefit under the 1115 waiver has additional qualifying criteria for each service array. 

• Health Related Social Needs (HRSNs) (housing supports, including medical respite, and food/nutrition services): Medicaid members must be enrolled in managed care and have both a clinical and a social risk factor to receive HRSN services. See below for a link to documents with more detail. 

• SUD Treatment in IMDs: available to Medicaid beneficiaries with an SUD or opioid use disorder (OUD) diagnosis who are short-term residents in an SUPR Licensed IMDs that are approved pilot sites with HFS.  

• SUD Case Management: Medicaid beneficiaries with an OUD/SUD diagnosis that qualify for diversion into treatment from the criminal justice system. 

• Re-entry Demonstration Initiative (Pre-Release Services): Available up to 90 days immediately prior to the expected release date to qualifying Medicaid individuals, who are residing in a correctional facility.  

• Supported Employment: Medicaid beneficiaries aged 18 or older who are enrolled in managed care, and meet at least one of the following health needs-based criteria:

• Serious and persistent mental health needs resulting from the presence of a mental illness. 

• Substance use needs, where an assessment using the ASAM criteria indicates that the individual meets at least ASAM level 1.0, indicating the need for outpatient SUD treatment; or

• Physical, intellectual, or developmental needs

• Violence Prevention & Intervention: Medicaid beneficiaries who are enrolled in managed care and who: 1) have survived violence; 2) are currently experiencing violence; or 3) are at risk of experiencing violence. 

• Non-medical Transportation (NMT): NMT services may be provided to Medicaid beneficiaries to and from HRSN and/or supported employment services.

For more information: Links to CMS approved documents and instruction on where to locate associated eligibility criteria for each service array are listed below: 

Approved HRSN Operational Protocol: 

This document contains more detailed eligibility criteria for nutrition, and housing-related services.

https://www.medicaid.gov/medicaid/section-1115-demonstrations/downloads/il-continuity-care-admin-protocol-approval-letter.pdf

Approved Standard Terms and Conditions (STC):

This document contains CMS specified eligibility and qualifying criteria for the entirety of services:

https://hfs.illinois.gov/content/dam/soi/en/web/hfs/sitecollectiondocuments/ilhealthcaretransappvl07022024.pdf

That is correct, HFS applied for an extension and amendment to include additional services through the previous Behavioral Health Transformation waiver that was originally approved in 2018. Two services that were covered and implemented under the original demonstration period will continue. Those services are the substance use disorder (SUD) pilots of SUD case management and residential and inpatient treatment for SUD (SUD treatment in Institutions for Mental Diseases). 

HFS launched the pilots of SUD services which includes 16 SUPR-licensed facilities participating in the SUD-IMD pilot and two SUPR designated providers participating in the SUD case management pilot. 

Supported employment was authorized under the original waiver but was not implemented during the original demonstration period. Illinois requested and received approval to continue this authority in this demonstration period. 

The Department discontinued one service that was approved under the original demonstration: Clinically Managed Withdrawal Management. This decision was due to the low uptake and change in ASAM treatment recommendations. 

Five of the services approved under the original waiver transitioned to permanent services under the Illinois Medicaid program:

• Peer Recovery Support

• Crisis Intervention

• Evidence Based Home Visiting

• Intensive In-Home Services (now part of the Pathways to Success Program)

• Respite (now part of the Pathways to Success Program)

HFS continues to operate two SUD pilots that were part of the original approval. For HRSN services, we have received approval for two critical documents, the operational protocol and implementation plan, that are required for the implementation of HRSN services.

HFS anticipates a phased-in roll out of newly approved HRSN and reentry (pre-release) services beginning in calendar-year 2026; exact timelines for these and the other approved services are being determined and may vary by service. 

The implementation plan for the services available 90-day pre-release was submitted in November and we are currently awaiting feedback and approval from CMS. HFS continues to work on the design and planning for implementation while waiting for approval. 

HFS received CMS approval for the Healthcare Transformation Waiver, as evidenced by the approved Standard Terms and Conditions, HRSN operational protocol and implementation plan. These approvals allow us to continue our work as planned. 

HFS is closely monitoring the changes occurring at the federal level and assessing how policy changes may impact our work. 

In March 2025, the federal Centers for Medicare and Medicaid Services issued a memo rescinding previous health-related social needs guidance. This recission does not negate the existing approval of Illinois’ Healthcare Transformation waiver. 

These services may be provided by organizations (healthcare, social service, et al) who meet the provider qualifications for these services as defined by the Department and who enroll as a Medicaid provider.  Broad qualifications are outlined in our approved HRSN operational protocol. As HFS continues to design and finalize service definitions, there will be more detailed requirements based on the type of service being provided. 

Please review the operational protocol to learn more about qualifications and to read a few examples of eligible providers. [ihtprotcolapplet.pdf]

The Special Terms and Conditions (the CMS approval letter) instructs that certain providers (e.g., reentry, violence prevention) must enroll as Medicaid providers. HFS continues to design provider enrollment requirements for HRSN providers during the implementation planning phase. We anticipate that providers will need to enroll as Medicaid providers to be able to provide waiver services.  HFS is exploring options to support providers in this process and provide different billing support mechanisms for non-traditional providers.

We have been learning from other states about the systems they have implemented to support CBOs and are assessing how Illinois can model these systems. We are exploring the use of technology and systems to assist in referral and access to services as well as billing processes for non-traditional Medicaid providers.  

We anticipate that CBOs will have varying levels of knowledge about how to enroll as a Medicaid provider and bill for services. HFS will leverage its partnership with the Medicaid Technical Assistance Center (MTAC), which is a part of the Office of Medicaid Innovation at the University of Illinois. We will use their existing training platform to tailor learning modules for CBOs and develop plans for ongoing technical assistance.

Understanding the needs and costs to CBOs, HFS is determining how best to invest into the needed infrastructure to implement the waiver services and support CBOs and other partners. 

HFS convenes monthly workgroups with various stakeholder groups to help inform our design and implementation work. Currently, we have been in regular consultation with healthcare systems, local non-for-profit organizations, professional associations, carceral systems, managed care organizations, and other content matter experts.  

Many (about 80%) Illinois Medicaid customers are enrolled in managed care. Illinois is seeking to leverage the MCO’s expertise in care coordination, resources, data, and technology infrastructure that have already been developed by Medicaid managed care plans to serve Medicaid customers and providers. We envision that MCOs will play a large role in the implementation of services. Additionally, we are assessing other mechanisms that would help bridge and coordinate services and administrative processes between community-based organizations and MCOs. 

All public record materials and additional resources are available on the HFS website at https://hfs.illinois.gov/medicalproviders/cc/1115demonstrationwaiverhome/1115demonstrationwaiverbhtfiveyearextension.html

HFS recently created an email listserv which will include regular updates. Additionally, if there are specific questions about the 1115 waiver implementation, we encourage you to contact us by emailing: HFS.1115waiver@illinois.gov  Please do not use this email address for customer case issues or other confidential communications. 

When benefits become available, HFS envisions a no wrong door path to services. A member may be referred to services from their healthcare provider, their managed care plan, or a community-based organization (e.g., social service organizations, food and nutrition organizations, homeless and housing organizations, Area Agencies on Aging). 

Customers will need to meet eligibility criteria based on service type. Service providers and MCOs will assist customers by connecting them to appropriate services.