STEWART et al v. HARGAN et al

Filing 1

COMPLAINT against ERIC HARGAN, DEMETRIOS L. KOUZOUKAS, BRIAN NEALE, THE CENTERS FOR MEDICARE AND MEDICAID SERVICES, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, SEEMA VERMA ( Filing fee $ 400 receipt number 0090-5300365) filed by KATELYN ALLEN, SHAWNA NICOLE MCCOMAS, GLASSIE MAE KASEY, RONNIE MAURICE STEWART, DAVID ROODE, WILLIAM BENNETT, LAKIN BRANHAM, MICHAEL WOODS, AMANDA SPEARS, SHEILA MARLENE PENNEY, QUENTON RADFORD, ALEXA HATCHER, SHANNA BALLINGER, KIMBERLY WITHERS, DAVE KOBERSMITH. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Summons, # 6 Summons, # 7 Summons, # 8 Summons, # 9 Summons, # 10 Civil Cover Sheet)(Perkins, Jane)

Exhibit C

EPAR'| M EN'I' OF I-IEA L'I'I.I AN D I,I UMAN SERVICI]S
& Medicaid Services
7500 Security Boulevard. Mail Stop C5-21-17
Baltimore. MD 2l 244-l 850

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Centers f'or Mcdicare

clNtf ¡s Fo¡ M¡otc^rE& MtDtc to strvtcrs
CENÌEN fOR MEOICAID & CHIP SENVICES

JAil t 2 2010
Adam Meier
Deputy Chief of Staff
Ofhce of Governor Matthew Bevin
700 Capital Avenue, Suite 100
Frankfort, KY 40601
Dear Mr. Meier,

I am pleased to transmit to you the approval package for the Commonwealth of Kentucky's
section I I l5 demonstration project, entitled "Kentucky Helping to Engage and Achieve Long
Term Health (KY HEALTH) (Project Number I l-W-0030614 and 2l-W-00067/4). CMS
recognizes your efforts and those of your dedicated team in designing this project, as well as
Kentucky's ongoing commitment to improving the health and well-being of Medicaid
beneficiaries living in the Commonwealth.
Your substantial work will help inform future state demonstrations seeking to draw on
Kentucky's novel approaches to Medicaid reform, and CMS also looks forward to learning from
the outcomes of your demonstration project. I appreciate the spirit of partnership we have shared
over the course of the past year. It has been a pleasure to work with you and the entire Kentucky
team.

Attached is the approval letter signed by Demetrios L. Kouzoukas, Principal Deputy
Administrator, who is responsible for the disposition of all matters from which Administrator
Verma is recused. Please let me know if you have any questions or if I can be of assistance in
any way as the Commonwealth moves forward to implement KY HEALTH.

Sincerely

Brian Neale
Deputy Administrator

',:k

DEPARTMENT OF HEALTH & HUMAN

SERVICES

centers for Medicare & Medicaid Services

Depuly Admirtíslrolor
Washington, DC 20201

Stephen P. Miller
Commissioner
Cabinet for Health and Family Services
275 East Main Street, 6 West A
Frankfort, KY 40621

Dear Mr. Miller
The Centers for Medicare &. Medicaid Services (CMS) is approving the Commonwealth of
Kentucky's request for a new section I I l5 demonstration project, entitled "Kentucky Helping to
Engage and Achieve Long Term Health" (KY HEALTH) (Project Number I l-W-0030614 and
21-W-0006714).This statewide demonstration is approved under the authority of section I I l5(a)
of the Social Security Act (the Act), effective January 12,2018, through September 30,2023.

Extent and Scone of Demonstration
The KY HEALTH demonstration aims to transform the Kentucky Medicaid program to
empower beneficiaries to improve their health. The KY HEALTH demonstration broadly
encompasses several initiatives impacting a wide range of Kentucky Medicaid beneficiaries.
Consistent with the Secretary's authority and with standard practice, the demonstration is being
approved for a 5-year period, subject to the Special Terms and Conditions attached. Within KY
HEALTH is a program called Kentucky HEALTH, into which Kentucky will enroll adult
beneficiaries who do not qualify for Medicaid on the basis of a disability.
The Kentucky HEALTH program includes two consumer-driven tools, the My Rev,ards Account
and the Deductible Accounf , which encourage beneficiaries to maintain and improve their health

by providing incentives for healthy behavior. Beneficiaries will receive incentives in their My
Rewards Accounl that can be used to obtain enhanced benefits. Kentucky will implement the
Deductible AccounÍ as an educational tool to inform beneficiaries about the cost of healthcare.
In addition, Kentucky will implement a community engagement requirement as a condition of
19 to 64 in the Kentucky HEALTH program, with
exemptions for various groups, including: former foster care youth, pregnant women, primary
caregivers of a dependent (limited to one caregiver per household), beneficiaries considered
medically fiail, beneficiaries diagnosed with an acute medical condition that would prevent them
fiom complying with the requirements, and full time students. To remain eligible for coverage,
non-exempt beneficiaries must complete 80 hours per month of community engagement
activities, such as employment, education, job skills training, and community service.
Beneficiaries will have their eligibility suspended for failure to demonstrate compliance with the
community engagement requirement and will be able to reactivate their eligibility on the first day
of the month after they complete 80 hours of community engagement in a 30-day period or a

eligibility for adult beneficiaries ages

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Mr. Stephen P. Miller

state-approved health literacy or financial literacy course. Beneficiaries who are in an eligibility
suspension for failure to meet the requirement on their redetermination date will have their
enrollment terminated and will be required to submit a new application. Kentucky will provide
good cause exemptions in certain circumstances for beneficiaries who cannot meet requirements.

CMS is also authorizing additional waivers and expenditure authorities for the Kentucky
HEALTH program, including:
o Premiums for beneficiaries in the new adult group and section l93l parents and other
caretaker relatives (with exceptions for pregnant women, former foster care youth, and
those determined medically frail);
o Conseguences for beneficiaries who do not pay premiums after a 60 day payment period;
¡ Six month non-eligibility period for certain populations for failure to comply with the
redetermination process;
o Disenrollment and six month non-eligibility period for certain populations for failure to
report a change in circumstance that would affect Medicaid eligibility;
. Limiting managed care organization disenrollment without cause; and
o A waiver of retroactive eligibility for certain populations.
CMS is also approving the following additional waiver and expenditure authorities for the KY
HEALTH demonstration as a whole:
o A waiver of non-emergency medical transportation QTIEMT) for certain populations and

o

services; and

Alignment of a beneficiary's annual redetermination with their employer sponsored
insurance (ESI) open enrollment period, including any children enrolled in Medicaid or
CHIP and covered by a parent or caretaker's ESI.

The KY HEALTH demonstration will also include a substance use disorder (SUD) program
available to all Kentucky Medicaid beneficiaries to ensure that a broad continuum of care is
available to Kentuckians with SUD, which will help improve the quality, caÍe, and health
outcomes for Kentucky Medicaid beneficiaries.

Determination that the demonstration proiect is likely to assist in rrromoting Medicaid's
obiectives
Demonstration projects under section I I l5 of the Act offer a way to give states more freedom to
test and evaluate innovative solutions to improve quality, accessibility and health outcomes in a
budget-neutral manner, provided that, in the judgment of the Secretary, the demonstrations are
likely to assist in promoting the objectives of Medicaid.

While CMS believes that states are in the best position to design solutions that address the
unique needs of their Medicaid-eligible populations, the agency has an obligation to ensure that
proposed demonstration projects are likely to better enable states to serve their low-income
populations, through measures designed to improve health and wellness and help individuals and
families attain or retain capability for independence or self-care. Medicaid programs are complex
and shaped by a diverse set of interconnected policies and components, including eligibility

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Mr. Stephen P. Miller

standards, benefit designs, reimbursement and payment policies, IT systems, and more.
Therefore, in making this determination, CMS considers the proposed demonstration as a whole.

In its consideration of the KY HEALTH proposal, CMS examined whether the demonstration
was likely to assist in improving health outcomes; whether it would address behavioral and
social factors that influence health outcomes; whether it would incentivize beneficiaries to
engage in their own health care and achieve better health outcomes; and whether it would
familiarize beneficiaries with a benefit design that is typical of what they may encounter in the
commercial market and thereby facilitate smoother beneficiary transition to commercial
coverage. CMS has determined that the KY HEALTH demonstration is likely to promote
Medicaid objectives, and that the waivers and expenditure authorities sought are necessary and
appropriate to carry out the demonstration.

1.

The demonstration is likely to assist in improving health outcomes through
strategies that promote preventive care and SUD serices, and address certain
health determinants.

Kentucky HEALTH is designed to address the unique challenges the Commonwealth is facing as
it endeavors to maintain coverage and promote better health outcomes among its residents. For
example, Kentucky HEALTH is designed to incentivize more individuals to seek preventive care
through mechanisms like earning funds in the My Rewards Account for healthy behaviors.
During the first year of Kentucky's Medicaid expansion, fewer than l0 percent of beneficiaries
received an annual wellness or physical exam. Under Kentucky HEALTH, the My Rewards
Account incentives for healthy behaviors are expected to incentivize uptake of preventive
services, which we believe can help improve beneficiary health. In addition, the SUD program
supports Medicaid's objectives by improving access to high-quality services, and is critical to
addressing Kentucky's substance use epidemic.
Beyond promoting access to high-value health care services, the demonstration also supports
coordinated strategies to address certain health determinants, as well as promote increased
upward mobility, greater independence, and improved quality of life. Specifically, Kentucky
HEALTH's community engagement requirement is designed to encourage beneficiaries to obtain
employment and/or undertake other community engagement activities that research has shown to
be correlated with improved health and wellness. Kentucky will incentivize participation in
community engagement activities by making eligibility contingent on completion of certain
requirements.

CMS has long supported policies that recognize meaningful work as essential to the economic
self-suffrciency, self-esteem, well-being, and improved health of people with disabilities.
However, CMS has not previously approved a community engagement requirement as a
condition of eligibility. Given the potential benefits of work and community engagement, we
believe that Medicaid programs should be able to support these activities and test incentives that
are appropriate for this population and lead to improved health outcomes.
In the past, CMS has approved demonstrations which provided referrals to employment services
or encouragement to seek employment. We understand from some states that these incentives

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Mr. Stephen P. Miller

may not have been strong enough to influence individual beneficiary behavior. CMS and
Kentucky believe that Kentucky HEALTH's community engagement incentive is likely to be
more effective than other incentives or referrals to employment services, as it provides for the
consequence of eligibility suspension for non-compliance. Kentucky HEALTH will also provide
"on-ramps" to appropriately support individuals who have experienced a suspension or lapse of
eligibility in regaining access to the program's benefrts and resources. This is also likely to
further incentivize individuals who have had their eligibility suspended to quickly satisfy the
community engagement requirement and regain eligibility. The impact of this incentive, as well
as other aspects of the demonstration, will be assessed though an evaluation designed to measure
how the demonstration affects eligibility, behavior, and health outcomes over time for persons
subject to the demonstration's policies.
We anticipate that the incentives provided under the demonstration for healthy behaviors and
community engagement will promote Medicaid's objective of improving benefrciary health.
Further, if improved uptake of preventive care and access to SUD services results in lower
overall cost of care for Medicaid-eligible populations, the demonstration may also enable the
state to stretch its Medicaid resources as far as possible. Kentucky leaders have expressed the
importance of this demonstration as a means of preserving coverage for individuals.l Without
fundamental, sustainable reforms, the Commonwealth expressed that it would be unable to
maintain access for currently enrolled populations.

In addition to promoting improved health outcomes for Kentucky HEALTH benef,rciaries by
encouraging and supporting employment and other community engagement activities, the
demonstration may also promote individual independence and reduce reliance on public
assistance by creating incentives for individuals to obtain and maintain coverage through private,
employer-sponsored insurance. This policy goal also aligns with the authorizing language in
Section 1901 of the Social Security Act, which cites attaining or retaining independence as one
of the program's purposes. The Commonwealth will connect beneficiaries with opportunities
including education, job training, substance use disorder treatment, employment or volunteering.
This statutory objective supports Medicaid program designs that enable and encourage enrolled
individuals to seek economic selÊsufficiency, which this demonstration proposes to do through
employment and other community engagement activities.

2.

The demonstration is likely to strengthen engagement by benefüciaries in their
personal health care plan, and provide incentives for responsible decision-making.

Kentucky expects that the use of benefìciary-directed accounts, as well as redetermination and
reporting requirements, will also strengthen beneficiary engagement in their personal health care
plan and provide an incentive structure to support responsible consumer decision-making.
Prior evaluations of demonstration projects with beneficiary engagement components have
shown promise that these strategies can have a positive impact on beneficiary behavior.2 For
example, evaluations have shown that financial incentives for specific health behaviors can

2

https://www.in.qov/fssa/files/Lewin

lN%20HlP%202%200%20lnterim%2OEvaluat¡on%2OReport

FtNAL.pdf

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Mr. Stephen P. Miller

prompt beneficiaries to engage in those specific behaviors. Kentucky will include evaluation of
the outcomes associated with these requirements in its Evaluation Design to further enrich the
evidence regarding beneficiary engagement strategies.
Kentucky's use of beneficiary-directed services through the Deductible Account and My
Rev,ards AccounÍ is also designed to incentivize appropriate and responsible utilization of health
care services and to strengthen beneficiary engagement. The accounts are designed to encourage
beneficiaries to engage in healthy behaviors.
The approval of the waiver of retroactive eligibility encourages beneficiaries to obtain and
maintain health coverage, even when healthy. This is intended to increase continuity of care by
reducing gaps in coverage when beneficiaries churn on and off Medicaid or sign up for Medicaid
only when sick.

Imposition of a non-eligibility period for failing to complete timely redetermination of eligibility
encourages individuals to maintain compliance with longstanding beneficiary responsibilities
described in regulation that also protect program integrity.

Taken together, the evidence tying certain beneficiary behavior to improved health outcomes
supports the rationale that these requirements promote the objectives of the Medicaid program.
CMS has concluded that the demonstration will also meet several additional goals, including
encouraging responsible utilization of services, promoting continuity of care by reducing gaps in
coverage, and improving program integrity.

3.

The demonstration will remove potential obstacles to a successful beneficiary
transition to commercial coverage.

Kentucky HEALTH is designed to work more like insurance products sold on the commercial
market. Kentucky's application noted the significant number of individuals estimated to move
between Medicaid eligibility and Marketplace coverage. In order to ensure continuity of care,
which is important for improving health outcomes, Kentucky HEALTH seeks to provide
beneficiaries the tools to successfully utilize commercial market health insurance, thereby
removing potential obstacles to a successful transition from Medicaid to commercial coverage.
The demonstration includes several features that align with common features of commercial
market plans. For instance, Kentucky HEALTH includes premium payment requirements (with a
non-eligibility period for certain beneficiaries for non-payment, similar to provisions CMS has
approved in other states3), deductibles, and limited enrollment windows, all of which
beneficiaries are likely to encounter should they transition off of Medicaid and into commercial
coverage. Further, Kentucky HEALTH provides participants with an opportunity to use the My
Rev,ards Account, which can be used to access certain additional benefits in a manner similar to
a Health Savings Account available through many commercial plans.
The Deductible Accounr is also likely to prepare beneficiaries to manage their coverage in the
commercial market, where plans often impose deductibles.
3

https://www.medicaid.gov/medicaid/section-1L15-demo/demonstrat¡on-and-waiver-list/?entry=25478

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Mr. Stephen P. Miller

Similar to the standard commercial market policies, Kentucky HEALTH will require monthly
premiums for certain populations, and benefits will start prospectively from the initial premium
payment. Kentucky may adjust premium amounts incrementally over time as it evaluates the
outcomes of the demonstration, not to exceed statutory limitations.

Also, Kentucky HEALTH will require beneficiaries to complete the annual redetermination
process (with a non-eligibility period for non-compliance for certain populations), which will
help educate beneficiaries on the need to timely complete enrollment requirements because of
limited opportunities to enroll in coverage. While CMS previously did not approve a request
from another state for a similar non-eligibility period for failure to complete redetermination, it
believes that this policy should be evaluated and is likely to support the objectives of Medicaid to
the extent that it prepares individuals for a smooth transition to commercial health insurance
coverage and ensures that resources are preserved for individuals who meet eligibility

requirements.

Similar to how commercial coverage operates, coverage eligibility under Kentucky HEALTH
will be impacted for certain individuals for nonpayment of premiums, failure to report changes in
circumstances that affect eligibility, or failure to complete redetermination. However, the state
has provided for an "on-ramp" that enables these individuals to regain eligibility and
successfully access all of the benefits, resources, and tools of the Kentucky HEALTH program,
without waiting until the end of the non-eligibility period. CMS also notes that Kentucky has
taken steps to protect beneficiaries by exempting certain vulnerable populations, such as
pregnant women and individuals who are medically frail, from these policies, as well as by
allowing temporary good cause exemptions in certain circumstances for beneficiaries who
cannot meet the applicable requirement. Completion of timely redeterminations and reporting of
changes in circumstances that affect eligibility are also fundamental safeguards for purposes of
protecting program integrity.
Overall, CMS believes that Kentucky HEALTH has been designed to empower individuals to
improve their health and well-being. If successful in its objectives, Kentucky HEALTH would
improve health outcomes, promote increased upward mobility and improved quality of life,
increase individual engagement in health care decisions, and prepare individuals who transition
to commercial health insurance coverage to be successful in this transition. At the same time,
Kentucky HEALTH would ensure vulnerable individuals like people with disabilities and
pregnant women continue to receive medical assistance. By lessening dependence on
government assistance and promoting individual selÊsufficiency, Kentucky's efforts should also
help to promote the fiscal sustainability of the progr¿ìm to better protect services for the
Commonwealth's most vulnerable.

Consideration of Public Comments
Both Kentucky and CMS received a large volume of comments during the state and federal
public comment periods. Consistent with federal transparency requirements, CMS reviewed all
of the materials submitted by the Commonwealth, as well as all the public comments it received,
when evaluating whether the demonstration project as a whole was likely to promote the

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Mr. Stephen P. Miller

objectives of the Medicaid program, and whether the waiver and expenditure authorities sought
were necessary and appropriate to implement the demonstration. In addition, CMS took public
comments submitted during the federal comment period into account as it worked with the
Commonwealth to develop the special terms and conditions (STCs) that accompany this
approval, and that will bolster beneficiary protections, including specific state assurances around
these protections to further support beneficiaries.
Comments in support of the application noted its efforts to promote beneficiary responsibility
and accountability and enhance sustainability of the program in the long-term. Supporters noted
that beneficiary engagement provisions, such as the cost-sharing and premium requirements,
aligned with aspects of the private insurance market. Supporters also noted their agreement with
the principle that working-age able-bodied adults meet community engagement activities as a
condition of eligibility. Others supported the Commonwealth's efforts to expand services for
substance use disorder by lifting the IMD exclusion for substance use treatment.
Opposing commenters expressed general disagreement with efforts to modify the
Commonwealth's Medicaid expansion program. Some offered more specific feedback regarding
individual elements of the demonstration or the impact of certain provisions on distinct
populations. Some commenters expressed the desire to see greater detail regarding how the
program would be operationalized, particularly with respect to provisions like the community
engagement requirements. Other comments expressed concems that these requirements would be
burdensome on families or create barriers to coverage.

Many commenters who opposed the community engagement requirement emphasized that CMS
has rejected similar proposals in the past. Commenters reported that most non-disabled adult
Medicaid beneficiaries are already employed and that imposing this requirement would create
significant barriers to access for vulnerable individuals who are not able to work or otherwise
meet the requirements. To address these concerns, Kentucky has agreed to important protections
for vulnerable individuals, including maintaining a system that identifres, validates and provides
reasonable accommodations for those who may not be able to meet the requirements, or who
need assistance to do so, due to disability. Kentucky will also deem SNAP or TANF participants
who are exempt from SNAP or TANF work requirements to satis$ the Kentucky HEALTH
community engagement requirement. CMS also acknowledges comments from those concerned
that the majority of individuals who will be subject to the community engagement requirement
may already be working. CMS notes that beneficiaries who work at least 120 hours per month
are deemed to satisfy the community engagement reporting requirements. Moreover, CMS
believes that there would still be a significant number of individuals for whom the incentives
under this demonstration may spur new community engagement activity. Some commenters
cited evidence that, since an individual needs to be healthy to be able to work or look for a job, a
work requirement can prevent an individual from getting the health care they need to be able to
work. CMS and Kentucky acknowledged these concerns and Kentucky will be exempting from
the requirement those individuals who are medically frail, as well as those whom a medical
professional has determined are unable to work due to illness or injury. Finally, some
commenters questioned the efficacy of work requirements in other public programs. CMS has
considered those comments and decided to allow states to test the implementation of community

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Mr. Stephen P. Miller

engagement requirements in Medicaid, subject to the parameters set out in the January

X

state

Medicaid directors letter.
Several commenters noted that the lO-day requirement for reporting changes in circumstances
would present a substantial burden on beneficiaries and that the proposed period of noneligibility for beneficiaries who fail to report any change would have the potential to harm
individuals who would lose eligibility. CMS and the state have responded to those comments and
the state will impose a period of non-eligibility only where the unreported change in
circumstances would have resulted in loss of eligibility for Medicaid, had it been reported. In
addition, where an individual experiences a period of non-eligibility, Kentucky is providing

opportunities to return to eligibility.
Several commenters noted that the state's Medicaid offices, where many beneficiaries must go to
report those changes, and the phone lines used to call to report changes are already busy and the
calls and visits are time consuming. We understand that the state has made improvements in its
call center operations and beneficiaries are able to report changes both over the phone and
electronically. This is expected to reduce the burden of reporting and increase beneficiaries'
likelihood for success in meeting the requirements. CMS also will track beneficiary success in
meeting these requirements as part of ongoing demonstration monitoring. Additionally,
Kentucky will allow good cause exemptions in certain circumstances for beneficiaries who
cannot meet their requirement. Kentucky also will be required to provide reasonable
modifications for beneficiaries with disabilities

CMS recognizes that Kentucky was responsive to many concems raised through the public
notice and comment process by making several key changes to its demonstration application.
Kentucky exempted primary caregivers of a dependent from work and community engagement
requirements (one primary caregiver per household), and removed a proposed amendment to
eliminate allergy testing and private duty nursing as covered services, after public comments
indicated concern from consumers, beneficiaries, and others.
To help determine whether the demonstration is meeting its goals of improving quality,
accessibility, and health outcomes, Kentucky will submit, for CMS comment and approval, a
draft evaluation design with implementation timeline, no later than one hundred eighty (1S0)
days after demonstration approval. CMS will work with Kentucky to ensure that the comments
received also inform the monitoring and evaluation design and the necessary oversight is in place
to provide for program adjustments when necessary.

CMS' approval of this demonstration is conditioned upon compliance with the enclosed list of
waiver and expenditure authorities and the STCs defining the nature, character and extent of
anticipated federal involvement in the project. The award is subject to our receiving your written
acknowledgement of the award and acceptance of these STCs within 30 days of the date of this
letter. Your project officer for this demonstration is Ms. Andrea Casart. She is available to
answer any questions concerning your demonstration project under section I115 of the Act. Ms.
Casart's contact information is as follows:

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Mr. Stephen P. Miller

& Medicaid Services
Center for Medicaid and CHIP Services
Mail Stop: 52-03-17
7500 Security Boulevard
Baltimore, MD 21244- I 850
Email : Andrea. Casartr,iDcms.hhs. s,ov
Centers for Medicare

Official communications regarding program matters should be sent simultaneously to Ms. Casart
and Ms. Shantrina Roberts, Acting Associate Regional Administrator, in our Atlanta Regional
Offrce. Ms. Roberts' contact information is as follows:
Centers for Medicare & Medicaid Services
Atlanta Federal Center
6l Fors¡h Street, SW, Suite 4T20
Atlanta, Georgia 30303-8909
E-mail: Sh¿rntlina.Ro
hhs.gor'.

If you

have questions regarding this approval, please contact Ms. Judith Cash, Acting Director,
State Demonstrations Group, Center for Medicaid and CHIP Services, at [phone]. Thank
you for all your work with us, as well as stakeholders in Kentucky, over the past months on this

new demonstration.

Demetrios L.
Principal Deputy Administrator
Enclosures
cc

Shantrina Roberts, Acting Associate Regional Administrator, CMS Atlanta Regional

Office

CENTERS FOR MEDICARE & MEDICAID SERVICES
EXPENDITURE AUTHORITY

NUMBER:

11-W-00306/4 and 21-W-00067/4

TITLE:

KY HEALTH Section 1115 Demonstration

AWARDEE:

Kentucky Cabinet for Health and Family Services

Under the authority of section 1115(a)(2) of the Social Security Act (the Act), expenditures made
by the Commonwealth of Kentucky for the items identified below, which are not otherwise
included as expenditures under section 1903 of the Act, must, for the period beginning January
12, 2018, through September 30, 2023, unless otherwise specified, be regarded as matchable
expenditures under the state’s Title XIX plan but are further limited by the special terms and
conditions (STCs) for the KY HEALTH section 1115 demonstration.
As discussed in the Centers for Medicare & Medicaid Services’ (CMS) approval letter, the
Secretary of Health and Human Services has determined that the KY HEALTH Section 1115
demonstration, including the granting of the waiver and expenditure authorities described
below, is likely to assist in promoting the objectives of title XIX of the Social Security Act.
The following expenditure authorities shall enable Kentucky to implement the KY HEALTH
section 1115 demonstration:
1. Expenditures to the extent necessary to enable Kentucky to align a beneficiary’s annual
redetermination with their employer sponsored insurance (ESI) open enrollment period,
including any children enrolled in Medicaid and covered by a parent or caretaker’s ESI,
in a manner inconsistent with requirements under section 1943 of the Act as implemented
in 42 CFR 435.916(a).
2. Expenditures for otherwise covered services furnished to otherwise eligible individuals
who are primarily receiving treatment and withdrawal management services for substance
use disorder (SUD) who are short-term residents in facilities that meet the definition of an
institution for mental disease (IMD).
The following expenditure authorities shall enable Kentucky to implement the Kentucky
HEALTH program within the KY HEALTH section 1115 demonstration:
3. Expenditures under contracts with managed care entities that do not meet the
requirements in section 1903(m)(2)(A)(vi) of the Act insofar as that provision requires
compliance with requirements in section 1932(a)(4) of the Act, including as it is
implemented and interpreted in 42 CFR 438.56(c)(2)(i) that enrollees be permitted an
initial period to disenroll without cause, in order to permit the state to restrict this right
except in situations that are described in these STCs.

KY HEALTH
Approval Period: January 12, 2018 through September 30, 2023

Page 1 of 72

4. Expenditures for My Rewards Account incentives, which are limited to vision services,
dental services, over-the-counter medications, and limited fitness-related services, to the
extent that they are not included for beneficiaries receiving benefits under the alternative
benefit plan for Kentucky HEALTH program beneficiaries and/or in the Medicaid state
plan (state plan), and which are either determined by the Secretary to fall within the
definition of “medical assistance” at section 1905(a) of the Act, or are found by the
Secretary to be necessary for the proper and efficient administration of the state plan, to
be federally matched at the applicable matching rate under section 1903(a)(1) or
1903(a)(7) of the Act.

KY HEALTH
Approval Period: January 12, 2018 through September 30, 2023

Page 2 of 72

CENTERS FOR MEDICARE & MEDICAID SERVICES
WAIVER LIST

NUMBER:

11-W-00306/4 and 21-W-00067/4

TITLE:

KY HEALTH Section 1115 Demonstration

AWARDEE:

Kentucky Cabinet for Health and Family Services

Title XIX Waiver Authority
All requirements of the Medicaid program expressed in law, regulation and policy statement, not
expressly waived or identified as not applicable in accompanying expenditure authorities and/or
these STCs, shall apply to the demonstration project beginning January 12, 2018, through
September 30, 2023. In addition, these waivers may only be implemented consistent with the
approved STCs.
Under the authority of section 1115(a)(1) of the Social Security Act (the Act), the following
waivers of state plan requirements contained in section 1902 of the Act are granted for the KY
HEALTH section 1115 demonstration, subject to these STCs.
1. Methods of Administration

Section 1902(a)(4) insofar
as it incorporates 42 CFR
431.53

To the extent necessary to relieve Kentucky of the requirement to assure non-emergency
medical transportation to and from providers for all Medicaid beneficiaries to the extent the
non-emergency medical transportation is for methadone treatment services. The waiver does
not apply with respect to pregnant women or former foster care youth, and also does not
apply if the service is subject to early and periodic screening, diagnostic, and treatment
(EPSDT).
2. Provision of Medical Assistance

Section 1902(a)(8)
and 1902(a)(10)

To the extent necessary to permit Kentucky to limit the provision of medical assistance (and
treatment as eligible) for individuals described in the eligibility group under section
1902(a)(10)(A)(ii)(XX) of the Act and the state plan to only former foster care youth who are
under 26 years of age, were in foster care under the responsibility of another state or tribe on
the date of attaining 18 years of age (or such higher age as the state has elected), and who
were enrolled in Medicaid on that date.

KY HEALTH
Approval Period: January 12, 2018 through September 30, 2023

Page 3 of 72

The following waivers of state plan requirements contained in section 1902 of the Act are
granted for the Kentucky HEALTH program within the KY HEALTH demonstration, subject to
these STCs.
3. Retroactive Eligibility

Section 1902(a)(34)

To enable the state not to provide three months of retroactive eligibility for beneficiaries
receiving coverage through the Kentucky HEALTH program, except for pregnant women
and former foster care youth.
4. Premiums

Section 1902(a)(14) insofar
as it incorporates Sections
1916 and 1916A

To the extent necessary to enable Kentucky to require monthly premium payments, as
described in these STCs.
5. Comparability

Sections 1902(a)(10)(B) and
1902(a)(17)

To the extent necessary to enable Kentucky to vary premium requirements for different
Kentucky HEALTH program beneficiaries based on income and/or length of time enrolled in
Medicaid, and on other factors consistent with how premiums are permitted to vary in the
commercial insurance market in Kentucky, and in a manner consistent with all otherwise
applicable law, except that all beneficiaries, unless excepted, will be required to contribute, at
a minimum, a monthly $1 premium contribution as described in these STCs.
To enable the state to exempt Kentucky HEALTH program beneficiaries who pay premiums
from the cost sharing described in the state plan, and to enable the state to require Kentucky
HEALTH program beneficiaries with income under 100 percent of the federal poverty level
(FPL) to incur state plan cost sharing in lieu of paying premiums if they do not pay
premiums, (except former foster care youth, the medically frail, and pregnant women), as
described in these STCs.
To enable the state to offer different state plan benefits for different Kentucky HEALTH
program beneficiaries as described in these STCs.
6. Reasonable Promptness

Section 1902(a)(8)

To the extent necessary to enable Kentucky to start enrollment in the Kentucky HEALTH
program on the first day of the month in which a beneficiary makes his or her initial premium
payment, or, for beneficiaries at or below 100 percent of the FPL who fail to make an initial
premium payment within sixty (60) days following the date of invoice, the first day of the
month in which the sixty (60) day payment period expires, except for pregnant women,
beneficiaries determined medically frail, former foster care youth, and beneficiaries found
eligible through presumptive eligibility, as described in these STCs.
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7. Provision of Medical Assistance

Section 1902(a)(8)
and 1902(a)(10)

To the extent necessary to enable Kentucky to suspend eligibility for, and not make medical
assistance available to, Kentucky HEALTH beneficiaries who fail to comply with
community engagement requirements, as described in these STCs, unless the beneficiary is
exempted as described in STCs 44 or 47(a).
8. Eligibility

Section 1902(a)(10)
and (a)(52)

To the extent necessary to enable Kentucky to require community engagement as described
in these STCs.
To the extent necessary to enable Kentucky to prohibit re-enrollment, and deny eligibility,
for up to six months for Kentucky HEALTH program beneficiaries with income above 100
percent of the FPL who are disenrolled for failure to make their required premium
contributions within sixty (60) days of the date of invoice, subject to the exceptions and
qualifying events described in these STCs.
To the extent necessary to enable Kentucky to prohibit re-enrollment, and deny eligibility,
for up to six months following the end of the ninety (90) day reconsideration period for
Kentucky HEALTH program beneficiaries who are disenrolled for failure to provide the
necessary information for the state to complete an annual redetermination, subject to the
exceptions and qualifying events described in these STCs.
To the extent necessary to enable Kentucky to prohibit re-enrollment, and deny eligibility,
for up to six months for Kentucky HEALTH program beneficiaries who are disenrolled for
failure to timely and accurately report a change in circumstance affecting eligibility only in
such circumstances where a beneficiary would no longer be eligible for Medicaid under any
MAGI or Non-MAGI categories, subject to the exceptions and qualifying events described in
these STCs.
9. Methods of Administration

Section 1902(a)(4) insofar
as it incorporates 42 CFR
431.53

To the extent necessary to relieve Kentucky of the requirement to assure non-emergency
medical transportation to and from providers for the new adult group, as defined in 42 CFR
435.119, except that the state must provide non-emergency medical transportation for
beneficiaries who are medically frail; who are 19 or 20 years old and entitled to early and
period screening, diagnostic, and treatment (EPSDT); who are former foster care youth; or
who are pregnant women.

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CENTERS FOR MEDICARE & MEDICAID SERVICES
WAIVER LIST

NUMBER:

11-W-00306/4 and 21-W-00067/4

TITLE:

KY HEALTH Section 1115 Demonstration

AWARDEE:

Kentucky Cabinet for Health and Family Services

Title XXI Waiver Authority
All requirements of the Medicaid or Children’s Health Insurance Program (CHIP) program
expressed in law, regulation and policy statement, not expressly waived or identified as not
applicable in accompanying expenditure authorities and/or these STCs, shall apply to the
demonstration project beginning January 12, 2018, through September 30, 2023. In addition,
these waivers may only be implemented consistent with the approved STCs.
Under the authority of section 1115(a)(1) of the Act, the following waivers of the CHIP state
plan requirements contained in title XXI of the Act are granted for the KY HEALTH section
1115 demonstration, subject to these STCs.
1. Continuous Eligibility

Section 2107(e)(1)(R)

To the extent necessary to enable Kentucky to align a beneficiary’s annual redetermination with
their employer sponsored insurance (ESI) open enrollment period, including any children
enrolled in CHIP and covered by a parent or caretaker’s ESI, in a manner inconsistent with
requirements under section 1943 of the Act as implemented in 42 CFR 457.343 and 42 CFR
435.916(a).

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CENTERS FOR MEDICARE & MEDICAID SERVICES
SPECIAL TERMS AND CONDITIONS
NUMBER:

11-W-00306/4 and 21-W-00067/4

TITLE:

KY HEALTH 1115 Demonstration

AWARDEE:

Kentucky Cabinet for Health and Family Services

I.

PREFACE

The following are the Special Terms and Conditions (STCs) for the “KY Helping to Engage and
Achieve Long Term Health” (KY HEALTH) demonstration under section 1115(a) of the Social
Security Act (hereinafter “demonstration”) to enable Kentucky to operate this demonstration.
The Centers for Medicare & Medicaid Services (CMS) has granted expenditure authorities and
waivers of requirements under section 1902(a) and section 2107 of the Social Security Act (the
Act). These STCs set forth in detail the nature, character, and extent of federal involvement in
the demonstration and the state’s obligations to CMS during the life of the demonstration. The
KY HEALTH demonstration will be statewide and is approved from January 12, 2018 through
September 30, 2023. The demonstration includes a program entitled Kentucky HEALTH, which
will begin July 1, 2018, although roll out for portions of the Kentucky HEALTH program,
including the ability to earn credit for My Rewards activities, will begin April 1, 2018.
The STCs have been arranged into the following subject areas:
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
X.
XI.
XII.
XIII.
XIV.

Preface
Program Description and Objectives
General Program Requirements
Kentucky HEALTH Populations Affected
Benefits
Beneficiary-Managed Healthcare Accounts
Beneficiary-Required Contributions
Community Engagement Initiative
Delivery System
General Reporting Requirements
General Financial Requirements
Budget Neutrality
Evaluation
Opioid Use Disorder (OUD)/Substance Use Disorder (SUD)

Additional attachments have been included to provide supplementary information and guidance
for specific STCs.
 Attachment A: Developing the Evaluation Design
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




Attachment B: Preparing the Interim and Summative Evaluation Reports
Attachment C: SUD Implementation Protocol
Attachment D: SUD Monitoring Protocol
Attachment E: SUD Health Information Technology (Health IT)

At the state’s option, additional supplemental protocols describing various operational details of
the Kentucky HEALTH program may be submitted to CMS for approval and incorporation by
reference into these STCs.
II.

PROGRAM DESCRIPTION AND OBJECTIVES

This section 1115(a) demonstration, KY HEALTH, aims to transform the Kentucky Medicaid
program to empower beneficiaries to improve their health. “KY HEALTH” refers to the
demonstration collectively, and includes components of the demonstration that may impact
additional Kentucky Medicaid beneficiaries along with the eligibility groups specified in STC
17, Table 1. This includes beneficiaries impacted by the SUD program, the waiver of NEMT for
methadone treatment, and the alignment of a beneficiary’s annual redetermination with their
employer sponsored insurance (ESI) open enrollment period (including for any children enrolled
in Medicaid or CHIP and covered by a parent or caretaker’s ESI). “Kentucky HEALTH” refers
specifically to program components detailed in Sections IV through IX of these STCs, which
apply to the eligibility groups outlined in STC 17, Table 1.
The Kentucky HEALTH program includes two consumer-driven tools, the My Rewards Account
and the Deductible Account, which encourage beneficiaries to maintain and improve their health
by providing incentives for healthy behavior. Beneficiaries will receive incentives in their My
Rewards Account that can be used to obtain enhanced benefits. Kentucky will implement the
Deductible Account as an educational tool to inform beneficiaries about the cost of healthcare.
In addition, Kentucky will implement a community engagement requirement as a condition of
eligibility for adult beneficiaries ages 19 to 64 in the Kentucky HEALTH program, with
exemptions for various groups, including: former foster care youth, pregnant women, primary
caregivers of a dependent (limited to one caregiver per household), beneficiaries considered
medically frail, and full time students. To remain eligible for coverage, non-exempt
beneficiaries must complete 80 hours per month of community engagement activities, such as
employment, education, job skills training, and community service. Beneficiaries will have their
eligibility suspended for failure to demonstrate compliance with the community engagement
requirement, but will be able to reactivate their eligibility on the first day of the month after they
complete 80 hours of community engagement in a 30-day period, or a state-approved health
literacy or financial literacy course. Beneficiaries who are in an eligibility suspension for failure
to meet the requirement on their redetermination date will have their enrollment terminated, and
will be required to submit a new application, unless they can show they meet the requirement or
qualify for an exemption in the month of redetermination. Kentucky will provide good cause
exemptions in certain circumstances for beneficiaries who cannot meet requirements.
CMS is also authorizing additional waivers and expenditure authorities for the Kentucky
HEALTH program, including:
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






Premiums for beneficiaries in the new adult group and section 1931 parents and other
caretaker relatives (with exceptions for pregnant women, former foster care youth, and
those determined medically frail);
Consequences for beneficiaries who do not pay premiums after a 60 day payment period;
Six month non-eligibility period for certain populations for failure to comply with the
redetermination process;
Disenrollment and six month non-eligibility period for certain populations for failure to
report a change in circumstance affecting eligibility;
Limit to managed care organization disenrollment without cause; and
A waiver of retroactive eligibility for certain populations;

CMS is also approving the following additional waiver and expenditure authorities for the KY
HEALTH demonstration as a whole:
 A waiver of non-emergency medical transportation (NEMT) for certain populations and
services;
 Alignment of a beneficiary’s annual redetermination with their employer sponsored
insurance (ESI) open enrollment period, including any children enrolled in Medicaid or
CHIP and covered by a parent or caretaker’s ESI; and
 Extension of coverage to former foster care youth who were the responsibility of another
state.
The KY HEALTH demonstration will also include a substance use disorder (SUD) program
available to all Kentucky Medicaid beneficiaries to ensure that a broad continuum of care is
available to Kentuckians with SUD, which will help improve the quality, care, and health
outcomes for Kentucky Medicaid beneficiaries. Additionally, the demonstration also enables the
Commonwealth to provide Medicaid coverage to former foster care youth under age 26 who
were in foster care under the responsibility of another state or tribe when they turned 18 (or such
higher age as the state has elected for termination of federal foster care assistance under title IVE of the Social Security Act), and were enrolled in Medicaid at that time, and are now applying
for Medicaid in the Commonwealth.
Over the demonstration period, the state seeks to demonstrate several demonstration goals. The
state’s goals will inform the state’s evaluation design hypotheses, subject to CMS approval, as
described in these STCs. The state’s goals include, and are not limited to the following:






The Kentucky HEALTH program will strengthen beneficiary engagement in their
personal health care, and will provide incentives for responsible decision making;
A monthly premium contribution will result in more efficient use of health care services;
The incentives established in this demonstration for Kentucky HEALTH program
beneficiaries to engage in their communities and healthy behaviors will result in better
health outcomes, lower overall health care costs, and improved socio-economic
conditions for beneficiaries;
The community engagement requirement will assist Kentucky HEALTH program
beneficiaries in obtaining employment and transitioning to commercial health insurance
and thereby improve health outcomes; and

KY HEALTH
Approval Period: January 12, 2018 through September 30, 2023

Page 9 of 72



Increased access to certain SUD services through a comprehensive opioid/substance
abuse strategy including an expenditure authority covered services provided to Medicaid
eligible adults ages 21 through 64 will result in:
o Increased and improved SUD treatment outcomes and establishment of best
practices in treatment and accreditation processes.
o A reduction of overdose deaths
o A reduction of overall healthcare utilization (hospitals, urgent, etc.)
o A reduction of co-morbidities associated with Substance Use Disorder (NAS,
HIV, Hepatitis C, Hepatitis, Endocarditis) commodities associated with Substance
use disorder

III.

GENERAL PROGRAM REQUIREMENTS

1.

Compliance with Federal Non-Discrimination Statutes. The state shall comply with
all applicable federal statutes relating to non-discrimination. These include, but are not
limited to, the Americans with Disabilities Act of 1990, Title VI of the Civil Rights Act
of 1964, section 504 of the Rehabilitation Act of 1973, the Age Discrimination Act of
1975, and section 1557 of the Affordable Care Act.

2.

Compliance with Medicaid and Children’s Health Insurance Program (CHIP) Law,
Regulation, and Policy. All requirements of the Medicaid program and CHIP,
expressed in law, regulation, and policy statement, not expressly waived or identified as
not applicable in the waiver and expenditure authority documents (of which these terms
and conditions are part), apply to the demonstration.

3.

Changes in Federal Law, Regulation, and Policy. The state shall, within the
timeframes specified in the applicable federal law, regulation, or policy, come into
compliance with changes in federal law, regulation or policy affecting the Medicaid or
CHIP program that occur during this demonstration approval period, unless the provision
being changed is expressly waived or identified as not applicable as described in these
STCs. In addition, these STCs may be amended at the request of either CMS or the state
to reflect such changes and/or changes that the Secretary determines to be of an
operational nature without requiring the submission of an amendment to the
demonstration under STC 7. The requesting entity will notify the other 30 calendar days
in advance of the expected approval date of the amended STCs to allow for comment.

4.

Impact on Demonstration of Changes in Federal Law, Regulation, and Policy.
a. To the extent that a change in federal law, regulation, or policy requires a change in
federal financial participation (FFP) for expenditures made under this demonstration,
the state shall adopt, subject to CMS approval, a modified budget neutrality
agreement for the demonstration, as well as a modified allotment neutrality worksheet
as necessary to comply with such change. Further, the state may seek an amendment
to the demonstration (as per STC 7 of this section) as a result of the change in FFP.
b. If mandated changes in federal law require state legislation, unless otherwise
prescribed by the terms of the federal law, the changes must take effect on the day

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Approval Period: January 12, 2018 through September 30, 2023

Page 10 of 72

such state legislation becomes effective, or on the day such legislation was required to
be in effect under federal law, whichever is sooner.
5.

State Plan Amendments. The state will not be required to submit title XIX or title XXI
state plan amendments (SPAs) for changes affecting any populations made eligible solely
through the demonstration. If a population eligible through the Medicaid or CHIP state
plan is affected by a change to the demonstration, a conforming amendment to the
appropriate state plan may be required except as otherwise noted in these STCs. In all
such cases, the Medicaid state plan governs.
As outlined in CMS’ November 21, 2016 CMCS Informational Bulletin, Section 1115
Demonstration Opportunity to Allow Medicaid Coverage to Former Foster Care Youth
Who Have Moved to a Different State, the state shall submit a conforming amendment to
the state plan for the former foster care youth from another state affected by the
implementation of this demonstration indicating that the proposed effective date of the SPA
will be the effective date of this section 1115 demonstration project . After the associated
Medicaid SPA is effectuated, the state will not be required to submit any additional title
XIX SPAs for changes affecting this former foster care youth population made eligible
solely through this demonstration.

6.

Changes Subject to the Amendment Process. If not otherwise specified in these STCs,
changes related to eligibility, enrollment, benefits, beneficiary rights, delivery systems,
cost sharing, sources of non-federal share of funding, and budget neutrality that are
specifically authorized under the demonstration project shall be submitted to CMS as
amendments to the demonstration. All amendment requests are subject to approval at the
discretion of the Secretary in accordance with section 1115 of the Act. The state shall not
implement changes to these elements without prior approval by CMS either through an
approved amendment to the Medicaid or CHIP state plan or amendment to the
demonstration. Amendments to the demonstration are not retroactive and FFP will not be
available for changes to the demonstration that have not been approved through the
amendment process set forth in STC 7, except as provided in STC 3.

7.

Amendment Process. Requests to amend the demonstration shall be submitted to CMS
for approval no later than 120 calendar days prior to the planned date of implementation
of the change and may not be implemented until approved. CMS reserves the right to
deny or delay approval of a demonstration amendment based on non-compliance with
these STCs, including but not limited to failure by the state to submit required reports and
other deliverables in a timely fashion according to the deadlines specified herein.
Amendment requests shall include, but are not limited to, the following:
a.
b.

An explanation of the public process used by the state, consistent with the
requirements of STC 14, prior to submission of the requested amendment;
A data analysis worksheet which identifies the specific “with waiver” impact of
the proposed amendment on the current budget neutrality agreement. Such
analysis shall include total computable “with waiver” and “without waiver” status
on both a summary and detailed level through the current approval period using

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Page 11 of 72

c.
d.

e.

the most recent actual expenditures, as well as summary and detail projections of
the change in the “with waiver” expenditure total as a result of the proposed
amendment, which isolates (by Eligibility Group) the impact of the amendment;
An up-to-date CHIP allotment neutrality worksheet, if necessary;
A detailed description of the amendment including impact on beneficiaries, with
sufficient supporting documentation and data supporting the evaluation
hypotheses as detailed in the evaluation design in STC 82; and
If applicable, a description of how the evaluation design will be modified to
incorporate the amendment provisions.

8.

Extension of the Demonstration. No later than twelve (12) months prior to the
expiration date of the demonstration, the Governor of the state must submit to CMS
either a demonstration extension request that meets federal requirements at 42 CFR
431.412(c) or a phase out plan consistent with the requirements of STC 9.

9.

Demonstration Phase Out. The state may only suspend or terminate this demonstration
in whole, or in part, consistent with the following requirements.
a.

b.

c.

d.

Notification of Suspension or Termination. The state shall promptly notify
CMS in writing of the reason(s) for the suspension or termination, together with
the effective date and a transition and phase-out plan. The state shall submit a
notification letter and a draft plan to CMS. The state shall submit the notification
letter and a draft plan to CMS no less than six months before the effective date of
the demonstration’s suspension or termination. Prior to submitting the draft plan
to CMS, the state shall publish on its website the draft transition and phase-out
plan for a 30-day public comment period. In addition, the state shall conduct
tribal consultation in accordance with STC 14, if applicable. Once the 30-day
public comment period has ended, the state shall provide a summary of the public
comments received, the state’s response to the comment and the extent to which
the state incorporated the received comment into the revised plan.
Prior CMS Approval. The state shall obtain CMS approval of the transition and
phase-out plan prior to the implementation of the phase-out activities.
Implementation of activities shall be no sooner than 14 calendar days after CMS
approval of the plan.
Transition and Phase-out Plan Requirements. The state shall include, at a
minimum, in its plan the process by which it will notify affected beneficiaries, the
content of said notices (including information on the beneficiary’s appeal rights, if
any), the process by which the state will conduct administrative reviews of
Medicaid or CHIP eligibility prior to the termination of the program for the
affected beneficiaries, and ensure ongoing coverage for those beneficiaries
determined eligible, as well as any community outreach activities including
community resources that are available.
Phase-out Procedures. The state shall comply with all applicable notice
requirements found in 42 CFR 431.206, 431.210, and 431.213. In addition, the
state shall assure all applicable appeal and hearing rights afforded to
demonstration beneficiaries as outlined in 42 CFR 431.220 and 431.221. If a

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Page 12 of 72

e.

f.

demonstration beneficiary is entitled to and requests a hearing before the date of
action, the state shall maintain benefits as required in 42 CFR 431.230. In
addition, the state shall conduct administrative renewals for all affected
beneficiaries in order to determine if they qualify for Medicaid eligibility under a
different eligibility category.
Exemption from Public Notice Procedures 42 CFR 431.416(g). CMS may
expedite the federal and state public notice requirements under circumstances
described in 42 CFR 431.416(g).
Federal Financial Participation (FFP). If the demonstration is terminated or
any relevant waivers suspended by the state, FFP shall be limited to normal
closeout costs associated with terminating the demonstration including services,
continued benefits as a result of beneficiaries’ appeals and administrative costs of
disenrolling beneficiaries.

10.

Post Award Forum. Pursuant to 42 CFR 431.420(c), within six months of the
demonstration’s implementation, and annually thereafter, the state shall afford the public
with an opportunity to provide meaningful comment on the progress of the
demonstration. At least 30 calendar days prior to the date of the planned public forum,
the state shall publish the date, time and location of the forum in a prominent location on
its website. The state can either use its Medical Care Advisory Committee, or another
meeting that is open to the public and where an interested party can learn about the
progress of the demonstration to meet the requirements of this STC. Pursuant to 42 CFR
431.420(c), the state shall include a summary of the comments in the quarterly report
associated with the quarter in which the forum was held. The state shall also include the
summary in its annual report.

11.

Expiring Demonstration Authority. For demonstration authority that expires prior to
the demonstration’s expiration date, the state shall submit a transition plan to CMS no
later than six months prior to the applicable demonstration authority’s expiration date,
consistent with the following requirements:
a.

b.

Expiration Requirements. The state shall include, at a minimum, in its
demonstration expiration plan the process by which it will notify affected
beneficiaries, the content of said notices (including information on the
beneficiary’s appeal rights, if any), the process by which the state shall conduct
administrative reviews of Medicaid or CHIP eligibility for the affected
beneficiaries, and ensure ongoing coverage for eligible individuals, as well as any
community outreach activities.
Expiration Procedures. The state shall comply with all applicable notice
requirements found in 42 CFR, part 431 subpart E, including sections 431.206,
431.210, 431.211, and 431.213. In addition, the state shall assure all applicable
appeal and hearing rights afforded to demonstration participants as outlined in 42
CFR, part 431 subpart E, including sections 431.220 and 431.221. If a
demonstration participant requests and is entitled to a hearing before the date of
action, the state shall maintain benefits as required in 42 CFR section 431.230. In
addition, the state shall conduct administrative renewals for all beneficiaries in

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Page 13 of 72

c.

d.

Kentucky HEALTH in order to determine if they qualify for Medicaid eligibility
under a different eligibility category prior to termination as discussed in October
1, 2010, State Health Official Letter #10-008 and required under 42 C.F.R.
435.916(f)(1). For individuals determined ineligible for Medicaid, the state must
determine potential eligibility for other insurance affordability programs and
comply with the procedures set forth in 42 CFR 435.1200(e).
Federal Public Notice. CMS will conduct a 30-day federal public comment
period consistent with the process outlined in 42 CFR Section 431.416 in order to
solicit public input on the state’s demonstration expiration plan. CMS will
consider comments received during the 30-day period during its review and
approval of the state’s demonstration expiration plan. The state shall obtain CMS
approval of the demonstration expiration plan prior to the implementation of the
expiration activities. Implementation of expiration activities shall be no sooner
than 14 calendar days after CMS approval of the plan.
Federal Financial Participation (FFP). FFP shall be limited to normal closeout
costs associated with the expiration of the demonstration including services,
continued benefits as a result of beneficiaries’ appeals and administrative costs of
dis- enrolling participants.

12.

Withdrawal of Waiver Authority. CMS reserves the right to amend and withdraw
waivers or expenditure authorities at any time it determines that continuing the waivers or
expenditure authorities would no longer be in the public interest or promote the
objectives of Title XIX and Title XXI. CMS will promptly notify the state in writing of
the determination and the reasons for the amendment and withdrawal, together with the
effective date, and afford the state an opportunity to request a hearing to challenge CMS’
determination prior to the effective date. If a waiver or expenditure authority is
withdrawn or amended, FFP is limited to normal closeout costs associated with
terminating the waiver or expenditure authority, including services, continued benefits as
a result of beneficiaries’ appeals and administrative costs of disenrolling participants.

13.

Adequacy of Infrastructure. The state shall ensure the availability of adequate
resources for implementation and monitoring of the demonstration, including education,
outreach, and enrollment; maintaining eligibility systems; compliance with cost sharing
requirements; and reporting on financial and other demonstration components.

14.

Public Notice, Tribal Consultation, and Consultation with Interested Parties. The
state must comply with the state notice procedures as required in 42 CFR 431.408 prior to
submitting an application to extend the demonstration. For applications to amend the
demonstration, the state must comply with the state notice procedures set forth in 59 Fed.
Reg. 49249 (September 27, 1994) prior to submitting such request.
The state must also comply with tribal and Indian Health Program/Urban Indian Health
Organization consultation requirements at section 1902(a)(73) of the Act, 42 CFR
§431.408(b), State Medicaid Director Letter #01-024, and/or contained in the state’s
approved state plan, when any program changes to the demonstration, either through
amendment as set out in STC 6 or extension, are proposed by the state.

KY HEALTH
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Page 14 of 72

The state must also comply with the public notice procedures set forth in 42 CFR 447.205
for changes in statewide methods and standards for setting payment rates.
15.

Federal Financial Participation (FFP). No federal matching for service expenditures
for this demonstration will take effect until the effective date identified in the
demonstration approval letter or, if later, as expressly stated within these STCs.

16.

Common Rule Exemption. The state shall ensure that the only involvement of human
subjects in research activities that may be authorized and/or required by this
demonstration is for projects which are conducted by or subject to the approval of CMS,
and that are designed to study, evaluate, or otherwise examine the Medicaid or CHIP
program – including procedures for obtaining Medicaid or CHIP benefits or services,
possible changes in or alternatives to Medicaid or CHIP programs and procedures, or
possible changes in methods or levels of payment for Medicaid benefits or services. The
Secretary has determined that this demonstration as represented in these approved STCs
meets the requirements for exemption from the human subject research provisions of the
Common Rule set forth in 45 CFR 46.101(b)(5).

IV.

KENTUCKY HEALTH PROGRAM POPULATIONS AFFECTED

17.

Eligible Populations. Only individuals eligible for Medicaid under an eligibility group
listed in Table 1 are subject to the provisions of the Kentucky HEALTH program within
this demonstration.
Table 1. Medicaid Eligibility Groups Affected by the Kentucky HEALTH
Eligibility Group
New adult group
Parents and other caretaker
relatives
Transitional medical assistance

Pregnant women
Former Foster Care Youth

18.

Citations
1902(a)(10)(A)(i)(VIII)
42 CFR 435.119
1902(a)(10)(A)(i)(I)
1931(b) and (d)
42 CFR 435.110
408(a)(11)(A)
1931(c)(2)
1925
1902(a)(52)
42 CFR 435.116
42 CFR 435.150
42 CFR 435.218
1902(a)(10)(A)(i)(IX)
1902(a)(10)(A)(ii)(XX)

Effective Date of Coverage. All beneficiaries in the Kentucky HEALTH program, with
the exception of beneficiaries who are medically frail (under 42 CFR 440.315(f) and as
defined in the alternative benefit plan in the state plan), former foster care youth, and

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Page 15 of 72

pregnant women, are required to make monthly premium payments as described in STC
34. Individuals determined eligible for Kentucky HEALTH who are not otherwise
exempt from premiums will be required to make their first premium payment prior to the
start of coverage, except for beneficiaries found eligible through presumptive eligibility
who will transition directly to Kentucky HEALTH effective the first day of the month of
the state’s eligibility determination, with no gap in coverage, as described in STC 21.
Individuals will have sixty (60) days from the date of their premium invoice to pay the
premium payment. Once an individual pays the premium, coverage will begin the first
day of the month in which the payment was received.
a.

b.

Individuals with income above 100 percent of the FPL who do not make an initial
premium payment will not be enrolled in Kentucky HEALTH and will be
required to reapply should they wish to participate.
Individuals at or below 100 percent of the FPL who do not make an initial
premium payment will be enrolled in Kentucky HEALTH effective the first day
of the month in which the sixty (60) day payment period expired; however, once
enrolled, these beneficiaries will be subject to the requirements and conditions
outlined in STC 39(b).

As noted above, beneficiaries who are medically frail, former foster care youth, and
pregnant women are not required to make premium payments. As a result, pregnant
women and former foster care youth will be enrolled in the Kentucky HEALTH program
with effective dates consistent with Medicaid regulations. Beneficiaries who are known
to be medically frail at the time of application will be enrolled in Kentucky HEALTH
effective the first day of the month in which the beneficiary applied for coverage.
19.

Expedited Coverage. Individuals not yet determined eligible for the Kentucky
HEALTH program will be permitted to make an initial pre-determined premium prepayment to expedite coverage on the electronic application or through the member selfservice portal. This pre-payment amount shall not exceed the highest monthly premium
that could be required under these STCs (for an individual at 133 percent FPL). Once the
individual is determined eligible, coverage will begin the first day of the month in which
the initial premium pre-payment was made. Once a premium pre-payment has been
received, the beneficiary may not change managed care organization (MCOs) except for
cause prior to their annual open enrollment opportunity, as specified in STC 51(b). The
pre-determined premium pre-payment amount shall be determined by the state, and may
be modified in accordance with STC 34(a).
The premium pre-payment is optional and fully refundable if the individual is determined
not to be eligible for the Kentucky HEALTH program or if the individual is determined
to be in a group for whom premiums are optional and subsequently requests a refund.
Beneficiaries will remain responsible for the full amount of the monthly premium
payment, as described in STC 34, during the first month of coverage and such amount
will be included on the subsequent month invoice. If the beneficiary’s monthly premium
payment is less than the pre-payment, the remaining pre-payment amount must be
credited against the monthly premium due until the full amount of the premium pre-

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payment is exhausted. If the premium pre-payment is not exhausted after being credited
to the remainder of the benefit period, the beneficiary will be refunded the remainder. If a
beneficiary is determined presumptively eligible, s/he will not have the option to obtain
expedited coverage through a premium pre-payment, because the beneficiary would
receive expedited coverage through the state’s presumptive eligibility processes.
20.

Retroactive Eligibility. The state is not obligated to provide retroactive eligibility in
accordance with Section 1902(a)(34) for beneficiaries enrolled in Kentucky HEALTH,
except for pregnant women and former foster care youth.

21.

Presumptive Eligibility. Individuals found eligible through presumptive eligibility will
transition directly to the Kentucky HEALTH program copayment plan effective the first
day of the month of the state’s eligibility determination, with no gap in coverage under
which they may be required to make copayments for all services equal to the copayment
schedule in the Kentucky Medicaid state plan. Beneficiaries will have sixty (60) days
from the date of their premium invoice to pay the premium payment. Beneficiaries who
do not pay a premium at the end of the sixty (60) day payment period will be subject to
the penalties described in STC 39.

22.

Failure to Complete a Redetermination. Consistent with Medicaid regulations,
beneficiaries failing to provide necessary information or documentation to complete the
annual redetermination process will be disenrolled from Kentucky HEALTH.
Beneficiaries will be granted an additional ninety (90) day reconsideration period in
which to submit their redetermination paperwork to be reenrolled in Kentucky HEALTH.
Upon the expiration of the ninety (90) day reconsideration period, Kentucky HEALTH
beneficiaries, except those described in this STC 22(d), will be prohibited from reenrollment in the demonstration for up to six months, unless the individual meets a good
cause exception described in STC 23(d).
The state must provide reasonable modifications to the annual redetermination process to
beneficiaries with disabilities protected by the ADA, Section 504 of the Rehabilitation
Act, and Section 1557 of the Patient Protection and Affordable Care Act to enable and
assist them in completing the annual redetermination process.
a.

b.

c.

The state may not terminate eligibility if the beneficiary has provided
documentation that the state has not processed yet, provided the beneficiary
returned the required documentation no later than the last day of the
redetermination period.
The state may not apply the six-month non-eligibility period if the beneficiary has
provided documentation that the state has not processed yet, provided the
beneficiary returned the required documentation no later than the last day of the
ninety (90) day reconsideration period.
Following the ninety (90) day reconsideration period, disenrolled beneficiaries
subject to the non-eligibility period will be eligible for early re-enrollment at any
time prior to the end of the six month non-eligibility period consistent with STC
41.

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d.

e.

f.

23.

Pregnant women, former foster care youth, and beneficiaries determined
medically frail are exempt from this non-eligibility period. Any beneficiary who
becomes pregnant, is determined to be medically frail or otherwise becomes
eligible for Medicaid under an eligibility group not subject to the provisions of
this non-eligibility period can reactivate their eligibility with an effective date
consistent with the beneficiary’s eligibility category.
Beneficiaries who experienced a good cause exception that prevented the
completion of the annual redetermination requirements, as described in STC
23(d), will be permitted to re-enroll prior to the expiration of the six-month noneligibility period by providing verification of the exception.
The state may not terminate eligibility of any individual with a disability under
the ADA, section 504 of the Rehabilitation Act, or section 1557 of the Patient
Protection and Affordable Care Act for failure to submit redetermination
paperwork if the individual needed and was not provided with reasonable
modifications necessary to complete the process.

Failure to Complete Redetermination: State Assurances. The state shall:
a.
Maintain an annual renewal process, including ex parte renewals and use of prepopulated forms, consistent with all applicable Medicaid requirements, except
that, with respect to individuals receiving premium assistance, (including any
children enrolled in Medicaid or CHIP and covered by a parent or caretaker’s
ESI) Medicaid and CHIP eligibility re-determinations will be aligned with the
individual’s ESI open enrollment period.
b.
Maintain systems to complete ex parte renewals based on available information
for all beneficiaries, achieving successful ex parte renewal for at least 75 percent
of their Kentucky HEALTH beneficiaries, not including beneficiaries in a noneligibility period or suspension at the time of the redetermination.
c.
Maintain timely processing of applications to avoid further delays in accessing
benefits once the non-eligibility period is over.
d.
Include good cause exceptions to the non-eligibility period that would allow
beneficiaries to re-enroll under certain conditions without completion of early reenrollment requirements as described in STC 41 or waiting six months, including,
at a minimum, the following verified conditions:
i.
The beneficiary is hospitalized, otherwise incapacitated, or has a disability as
defined by the ADA, section 504 of the Rehabilitation Act, or section 1557
of the Patient Protection and Affordable Care Act and as a result was unable
to provide information necessary to complete the redetermination during the
entire redetermination and/or reconsideration reporting period, or is a person
with a disability who was not provided with reasonable modifications needed
to complete the process, or is a person with a disability and there were no
reasonable modifications that would have enabled the individual to complete
the process;
ii. A member of the beneficiary’s immediate family who was living in the home
with the beneficiary was institutionalized or died during the redetermination
reporting period or the immediate family member has a disability as defined
by the ADA, section 504 of the Rehabilitation Act, or section 1557 of the

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e.

f.

g.

h.

i.

j.

k.

Patient Protection and Affordable Care Act and caretaking or other disabilityrelated responsibilities resulted in an inability to complete redetermination;
iii. The beneficiary obtained or lost private insurance coverage during the
redetermination reporting period;
iv.
The beneficiary was evicted from home or experienced homelessness during
the redetermination reporting period;
v.
The beneficiary was the victim of a declared natural disaster, such as a flood,
storm, earthquake, or serious fire that occurred during the redetermination
reporting period; or
vi.
The beneficiary was a victim of domestic violence during the redetermination
reporting period.
Provide beneficiaries written notice of specific activities as described in STC 41
that would qualify them for early re-enrollment during a non-eligibility period and
assures that these activities are available during a range of times and through a
variety of means (e.g. online, in person) at no cost to the beneficiary.
Provide written notice to beneficiaries of any non-eligibility period exemptions
and good cause exceptions, as described in STC 22(d) and (e), that would allow
them to re-enroll during a non-eligibility period without completing early reenrollment requirements. Such notice must include an explanation of the
availability of good cause exceptions, as indicated in this STC.
Provide notice to beneficiaries, prior to adverse action, regarding the noneligibility period, and explaining what this status means, including but not limited
to: their right to appeal, their right to apply for Medicaid on a basis not affected
by this status, what this status means with respect to their ability to access other
coverage (such as coverage in a qualified health plan through the Exchange, or
access to premium tax credits through the Exchange), what they should do if their
circumstances change such that they may be eligible for coverage in another
Medicaid category, as well as any implications with respect to whether they have
minimum essential coverage.
Provide beneficiary education and outreach that supports compliance with
redetermination requirements, such as through communications or coordination
with state-sanctioned assistors, providers, MCOs, or other stakeholders.
Provide full appeal rights prior to disenrollment and observe all requirements for
due process for beneficiaries who will be disenrolled for failing to provide the
necessary information to the state to complete their redeterminations to allow
beneficiaries the opportunity to raise additional issues in a hearing, including
whether the beneficiary should be subject to the non-eligibility period and/or
provide additional documentation through the appeals process.
Provide beneficiaries with written notice of the rights of people with disabilities to
receive reasonable modifications that will assist them in meeting redetermination
requirements
Provide reasonable modifications to the annual redetermination process to
beneficiaries with disabilities protected by the ADA, section 504 of the
Rehabilitation Act, and section 1557 of the Patient Protection and Affordable
Care Act to enable and assist them in completing the annual redetermination
process.

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24.

Failure to Report a Change in Circumstance. Beneficiaries who fail to report changes
in circumstance in the required reporting period for changes affecting eligibility for
Medicaid under any modified adjusted gross income (MAGI) or non-MAGI rules will be
disenrolled. Disenrollment from Medicaid may only occur after the state conducts an
administrative renewal for the beneficiary and determines the beneficiary ineligible for
all other bases of Medicaid eligibility and reviews him/her for eligibility for other
insurance affordability programs in accordance with 42 CFR 435.916(f). Disenrollment
will be limited to circumstances in which the failure to report a change affected
eligibility; specifically if it led to additional month(s) of Medicaid eligibility during
which the member was not otherwise eligible. After disenrollment, the individual will be
prohibited from re-enrollment in the demonstration for up to six months.
a.

b.
c.

25.

Pregnant women, former foster care youth, and beneficiaries who are medically
frail are exempt from this six-month non-eligibility period. Any beneficiary who
becomes pregnant, is determined to be medically frail or otherwise becomes
eligible for Medicaid under an eligibility group not subject to the provisions of this
non-eligibility period can reactivate their eligibility with an effective date
consistent with the beneficiary’s eligibility category.
Disenrolled individuals will be eligible for early re-enrollment at any time prior to
the end of the non-eligibility period consistent with STC 25(b) and STC 41.
The state must provide reasonable modifications to the obligation to report a
change in circumstance for beneficiaries with disabilities protected by the ADA,
section 504 of the Rehabilitation Act, and section 1557 of the Patient Protection
and Affordable Care Act.

Failure to Report a Change in Circumstance: State Assurances. The state shall:
a.
Assure that beneficiaries identified as failing to have reported a change in
circumstance affecting eligibility for Medicaid under any MAGI or Non-MAGI
rules as outlined in STC 24 will have the opportunity to provide additional
clarifying information indicating the beneficiary did report the change in
circumstance or to support a good cause exception pursuant to 42 CFR
435.916(d)(1)(i) and further assures that it will observe all requirements for due
process, including adequate notice and appeal rights, in connection with any noneligibility period.
b.
Include good cause exceptions that would allow beneficiaries to re-enroll under
certain conditions without completion of early re-enrollment requirements as
described in STC 41 or waiting six months, including, at a minimum, the
following verified circumstances:
i.
The beneficiary is out of town, hospitalized, otherwise incapacitated, or
has a disability as defined by the ADA, section 504 of the Rehabilitation
Act, or section 1557 of the Patient Protection and Affordable Care Act,
and as a result is unable to report the change during the entire change in
circumstance reporting period as defined in the state plan, or is a person
with a disability who was not provided with reasonable modifications
needed to complete the process, or is a person with a disability and there

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c.
d.

e.

f.

g.

h.

were no reasonable modifications that would have enabled the individual
to report the required changes in circumstances;
ii.
A member of the beneficiary’s immediate family who was living in the
home with the beneficiary was institutionalized or died during the change
in circumstance reporting period or the immediate family member has a
disability as defined by the ADA, section 504 of the Rehabilitation Act, or
section 1557 of the Patient Protection and Affordable Care Act, and
caretaking or other disability-related responsibilities resulted in an
inability to report the change in circumstance;
iii.
The beneficiary was the victim of a declared natural disaster, such as a
flood, storm, earthquake, or serious fire that occurred during the change in
circumstance reporting period as defined in the state plan;
iv.
The beneficiary obtained or lost private insurance coverage during the
change in circumstance reporting period as defined in the state plan;
v.
The beneficiary was evicted from home or experienced homelessness
during the change in circumstance reporting period as defined in the state
plan; or
vi.
The beneficiary was a victim of domestic violence during the change in
circumstance reporting period as defined in the state plan.
Assure that the non-eligibility period would only apply to beneficiaries where the
unreported change in circumstance would affect eligibility as outlined in STC 24.
Provide written notice to beneficiaries of specific activities as described in STC
41 that would qualify them for early re-enrollment during a non-eligibility period
and assure that these activities are available during a range of times and through a
variety of means (e.g. online, in person) at no cost to the beneficiary.
Provide written notice to beneficiaries of any non-eligibility period exemptions
and good cause exceptions, as described in STC 24(a) and 25(b), that would allow
them to re-enroll during a non-eligibility period without completing early reenrollment requirements. Such notice must include an explanation of the
availability of good cause exceptions, as indicated in this STC.
Provide notice to beneficiaries, prior to adverse action, about the non-eligibility
period, and explaining what this status means, including but not limited to: their
right to appeal, their right to apply for Medicaid on a basis not affected by this
status, what this status means with respect to their ability to access other coverage
(such as coverage in a qualified health plan through the Exchange, or access to
premium tax credits through the Exchange), what they should do if their
circumstances change such that they may be eligible for coverage in another
Medicaid category, as well as any implications with respect to whether they have
minimum essential coverage.
Provide beneficiary education and outreach that supports compliance with change
in circumstance reporting requirements, such as through communications or
coordination with state-sanctioned assistors, providers, MCOs, or other
stakeholders.
Assure that disenrollment from Medicaid will only occur after an individual has
been screened and determined ineligible for all other bases of Medicaid eligibility

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i.
j.

and reviewed for eligibility for insurance affordability programs in accordance
with 42 CFR 435.916(f).
Provide beneficiaries with written notice of the rights of people with disabilities to
receive reasonable modifications related to reporting a change in circumstance.
Maintain a system that identifies, validates, and provides reasonable
modifications related to the obligation to report a change in circumstance to
beneficiaries with disabilities protected by the ADA, section 504 of the
Rehabilitation Act, and section 1557 of the Patient Protection and Affordable
Care Act.

V.

BENEFITS

26.

Kentucky HEALTH Program Benefits. Beneficiaries in the new adult group enrolled
in Kentucky HEALTH will receive benefits through an Alternative Benefit Plan (ABP)
that will be defined in the state plan. Benefits will remain consistent with the existing
state plan for all pregnant women, former foster care youth, beneficiaries who are
medically frail, and other traditional low-income (i.e., not in the new adult group)
Medicaid populations transitioning to Kentucky HEALTH. In these STCs, references to
a beneficiary’s “base benefit plan” refer either to the ABP or to state plan benefits,
depending on the beneficiary’s eligibility category. Beneficiaries receiving state plan
benefits will continue to receive covered vision services, dental services, and over-thecounter-medications in accordance with the state plan rather than through the My
Rewards Account. In addition, all beneficiaries under 21 years of age receiving services
through the demonstration will continue to receive all early and periodic screening,
diagnostic, and treatment (EPSDT) services.

27.

Non-Emergency Medical Transportation (NEMT).
a.
The state is not obligated to provide NEMT for any services provided to
beneficiaries enrolled in the new adult group as defined in 42 CFR 435.119 except
for beneficiaries who are medically frail, 19 or 20 year old beneficiaries entitled
to EPSDT services, former foster care youth, and pregnant women. Most
beneficiaries receiving state plan benefits will continue to receive non-emergency
transportation for all services, except for methadone treatment. However,
children under age 21 who are subject to EPSDT, former foster care youth, and
pregnant women will continue to receive NEMT for all services, including
methadone treatment, as specified in STC 92.
b.
Offering methadone through the state plan is contingent upon the waiver of
NEMT.

VI.

BENEFICIARY-MANAGED HEALTHCARE ACCOUNTS

28.

General Description. Beneficiaries enrolled in the Kentucky HEALTH program will be
provided with two member-managed health care accounts, one of which is a deductible
account, and the other of which is a My Rewards Account through which beneficiaries
accrue incentives that have a dollar value equivalent that can be used to access certain
approved additional items and services.

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29.

Deductible Account. All Kentucky HEALTH program beneficiaries (except pregnant
women, and beneficiaries receiving premium assistance) will have a deductible account.
At the beginning of each benefit year, the deductible account will reflect an initial dollarvalue equivalent of $1,000 which is available to cover a $1,000 value plan deductible that
is applicable to all non-preventive healthcare services. The deductible account acts as an
educational tool to encourage appropriate health care utilization. Beneficiaries will
receive monthly deductible account statements detailing the costs of utilized services and
including an account balance. If funds in the deductible account are exhausted before the
end of a beneficiary’s 12-month benefit period, the beneficiary will still be able to access
covered services without unreasonable delay.
a.
Balance Transfer Incentive. Beneficiaries with funds remaining in their
deductible account at the end of their 12 month benefit period may, at the end of
their 12 month benefit period, transfer up to 50 percent of the prorated balance of
their deductible account to their My Rewards Account. The amount will be
prorated based on the beneficiary’s number of active member months (months in
which a beneficiary is not disenrolled or in a suspension status) during the 12
month benefit period.

30.

My Rewards Account. All adult Kentucky HEALTH beneficiaries, including
beneficiaries receiving premium assistance, will be provided with a My Rewards Account
to access items and services not covered in a beneficiary’s corresponding Kentucky
HEALTH base benefit plan, as described in STC 26. The My Rewards Account acts as a
mechanism to encourage healthy behaviors and community engagement which earn
incentives that have a dollar-value equivalent that can be used to access certain approved
additional items and services.
a.

b.

Eligibility. My Rewards Accounts are available only to beneficiaries who remain
enrolled in Kentucky HEALTH and who continue to make required monthly
premium contributions consistent with STC 31 and 39, if applicable. Except for
pregnant women, in no event may a Kentucky HEALTH beneficiary have an
active My Rewards Account unless they are making monthly premium payments
of no less than $1.00.
Enhanced Benefits. Kentucky will assist beneficiaries with an active My
Rewards Account by covering benefits not included in the beneficiary’s
corresponding Kentucky HEALTH base benefits plan with amounts that have
accrued in the My Rewards Account. Items and services available through the My
Rewards Account will include only the following: vision services, dental services,
over-the-counter medications, and limited fitness-related services, such as a gym
membership. To help ensure that they have an opportunity to earn My Rewards
Account credits to access vision services, dental services, over-the-counter
medications, and limited fitness-related services, beneficiaries will be able to
accumulate dollars in their My Rewards Account prior to the implementation of
the Kentucky HEALTH program. Vision services, dental services, and over-thecounter medications will be covered through the My Rewards Account at the rate
in the Medicaid fee-for-service fee schedule. Coverage of vision services, dental

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c.
d.

e.

f.

g.

services, and over-the-counter medications through the My Rewards account will
be limited in scope to the services that would be covered under the Kentucky state
plan if the beneficiary was not receiving the Alternative Benefit Plan.
i.
State Plan Benefit Exception. Kentucky HEALTH beneficiaries
receiving state plan benefits (i.e. pregnant women, former foster care
youth, beneficiaries who are medically frail, and adults who are not in the
new adult group) will continue to receive state plan vision, dental, and
over-the-counter medication covered under the state plan through their
MCO rather than through the beneficiary’s My Rewards Account.
Healthy Behaviors. The state will provide earned incentives for certain statespecified healthy behaviors.
Community Engagement Activities. Completion of community engagement
activities will qualify for earned incentives only to the extent the activities exceed
the 80 hour per month minimum requirements established for the Kentucky
HEALTH community engagement initiative as detailed in STC 46.
Appropriate Healthcare Utilization. Beneficiaries will be eligible for an annual
contribution to their My Rewards Account for not having a non-emergent visit to
the emergency department (including for non-use of the emergency department)
during the 12 month benefit period.
Balance Accrual. My Rewards Account balances accrue continuously when the
account is active and the beneficiary is not otherwise suspended or disenrolled.
The My Rewards Account is not subject to any annual limits.
Balance Deduction. Deductions from the My Rewards Account will not apply
when a beneficiary’s My Rewards account is suspended. The My Rewards
Account may reflect a negative balance of up to negative $150 to reflect
cumulative deductions. A beneficiary’s My Rewards Account balance will be
reduced for the following:
i.
Non-payment of Premiums. Beneficiaries will have dollars deducted from
their My Rewards Account each time a beneficiary fails to meet their
premium payment obligation outlined in STC 39.
ii.
Non-emergent Use of the Emergency Department. My Rewards Account
dollars will be reduced for each non-emergent visit to the emergency
department, and the amount of the reduction may increase for each
subsequent non-emergent use. As the My Rewards Account deduction is
not a copayment, the amount is not subject to the limitations in 42 CFR
447.54(b). This reduction will be waived for any beneficiary who contacts
their MCO’s 24-hour nurse hotline prior to utilizing the hospital
emergency department. The beneficiary must receive an appropriate
medical screening examination under section 1867—the Emergency
Medical Treatment and Labor Act, or EMTALA, provision of the Act,
before their My Rewards dollars can be deducted. Notwithstanding the
fact that the My Rewards Account deduction is not a co-payment, the state
will ensure that hospitals comply with the requirements described in 42
CFR 447.54(d)(2) related to educating beneficiaries about appropriate

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Page 24 of 72

h.

alternative settings before the state deducts amounts from the My Rewards
Account for non-emergent use of the emergency department.
iii.
Missed Appointments. The state may evaluate whether, as a general
matter, beneficiaries participating in Kentucky HEALTH are missing
health care appointments. Based on that evaluation, the state may permit
beneficiaries to earn incentives for keeping all scheduled appointments in
the 12-month benefit period, or may deduct dollars from the My Rewards
Account for each healthcare appointment missed without adequate notice
of cancellation or good cause.
iv.
No Actual Charges to Beneficiaries. The state assures that at no time
would a beneficiary be required to make a monetary payment to the state
as a result of having a negative dollar balance in his or her My Rewards
Account.
Provider Reimbursement from My Rewards Account. When beneficiaries
seek to access benefits or services using the My Rewards Account, a Medicaidenrolled provider should follow a prior authorization process before providing the
benefit or service in order to assess whether the My Rewards Account contains an
amount sufficient to cover the cost of the benefit or service. If the provider
provides the benefit or service without checking available My Rewards Account
funds, the provider will be at risk that the benefit or service is not reimbursable
due to insufficient funds. Only if the My Rewards Account contains an amount
sufficient to cover the cost of the benefit or service may the provider receive
reimbursement under the demonstration. Notwithstanding the foregoing, in
limited circumstances where prior authorized benefits or services changed after
the hold on the My Rewards Account balance, the account balance will be
permitted to go negative in order to reimburse the provider in full for the benefits
or services rendered. All payments for My Rewards Account services will also
reduce the beneficiary’s My Rewards Account by the appropriate published state
plan reimbursement rate for the eligible service provided. For items or services
for which there is a state plan rate, reimbursement may not exceed the Medicaid
fee-for-service rate. For items or services for which there is not a state plan rate,
CMS must determine that reimbursement for the items and services is cost
effective and efficient. Nothing in this provision would prevent the beneficiary
from opting to self-pay the full cost of the benefit or service.

VII.

BENEFICIARY-REQUIRED CONTRIBUTIONS

31.

Premiums. All beneficiaries enrolled in the Kentucky HEALTH program, except
pregnant women, former foster care youth, and beneficiaries who are medically frail, are
required to pay monthly premiums of no less than one dollar per month, subject to
exemptions and limitations in STCs 34, 39, and 42.

32.

Notice. The state must notify Kentucky HEALTH beneficiaries of premium payment
requirements upon eligibility determination. The state must determine the amount of a
beneficiary’s monthly premium based on the beneficiary’s modified adjusted gross
income and will notify the beneficiary and MCO of this amount. The MCO must bill for

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and collect the premium from beneficiaries. Monthly invoices must include information
about how to report any change in income; the time period over which income is
calculated (e.g., monthly income); the deadline for reporting changes in circumstances;
the consequences of non-payment and failure to report changes in circumstance that
could affect eligibility; and that once the payment is made the individual may only
change MCOs for cause, except during the beneficiary’s annual enrollment opportunity.
33.

Beneficiary-Required Contributions: State Assurances. The state shall:
a.

b.

c.

d.

e.

f.
g.

h.

i.

Permit the MCO to attempt to collect the unpaid premiums from the beneficiary,
but the MCO may not report the premium amount owed to credit reporting
agencies, place a lien on a beneficiary’s home, refer the case to debt collectors,
file a lawsuit, or seek a court order to seize a portion of the beneficiary’s earnings
for enrollees at any income level. The state will not “sell” the obligation for
collection by a third-party. Further, while the amount is collectible by the state,
re-enrollment is not conditioned upon repayment, except in the event of early reenrollment described in STC 41.
Monitor that beneficiaries do not incur household cost sharing and premiums that,
combined, exceed 5 percent of the aggregate household income, in accordance
with 42 CFR 447.56(f), without regard to MCO enrollment of members in the
household. Once a household reaches the cap, the state assures that no further
copayments can be charged to beneficiaries, and the premium amount will be
reduced to $1.00 per month for the remainder of the quarter to retain access to the
My Rewards Account, except as outlined in STC 39.
Charge copayment amounts, if applicable, that do not exceed Medicaid cost
sharing permitted by federal law and regulation and the terms of this
demonstration.
Ensure that the state, or its designee, does not pass along the cost of any surcharge
associated with processing payments to the beneficiary. Any surcharges or other
fees associated with payment processing are considered an administrative expense
by the state.
Ensure that all payments from the beneficiary, or on behalf of the beneficiary, are
accurately credited toward unpaid premiums in a timely manner, and provide the
beneficiary an opportunity to review and seek correction of the payment history.
Ensure that the state has a process to refund any premiums paid for a month in
which the beneficiary is ineligible for Medicaid services for that month.
Ensure that a beneficiary will not be charged a higher premium the following
month due to nonpayment or underpayment of a premium in the previous
month/s, except that amounts outstanding and due from the previous month/s may
be reflected separately on subsequent invoices.
Ensure the state suspends monthly invoices of premiums to beneficiaries whose
eligibility has been suspended for failure to meet the community engagement
requirement, and provide written notice to prevent overpayment of premiums.
Conduct outreach and education to beneficiaries to ensure that they understand
the program policies regarding premiums and associated consequences for
nonpayment. Beneficiaries must be informed of how premium payments should

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be made; the potential impact of a change in income on premium payments owed;
the consequences of failure to report a change in income or circumstances that
affect eligibility; the time period over which income is calculated (e.g., monthly
income); the deadline for reporting changes in circumstances; and how to reenroll if disenrolled for non-payment of premiums.
j.
Provide good cause exceptions to the consequences for failure to pay premiums
described in STC 39 that would allow beneficiaries to re-enroll under certain
conditions without completion of early re-enrollment requirements or waiting the
full six (6) months, including, at a minimum, the following:
i.
The beneficiary was hospitalized, otherwise incapacitated, or has a
disability as defined by the ADA, section 504 of the Rehabilitation Act, or
section 1557 of the Patient Protection and Affordable Care Act and as a
result is unable to pay premiums during the entire sixty (60) day payment
period, or is a person with a disability who was not provided with
reasonable modifications needed to pay the premium, or is a person with a
disability and there were no reasonable modifications that would have
enabled the individual to pay premiums during the entire sixty (60) day
payment period;
ii.
A member of the beneficiary’s immediate family who was living in the
home with the beneficiary was institutionalized or died during the sixty
(60) day payment period, or the immediate family member has a disability
as defined by the ADA, section 504 of the Rehabilitation Act, or section
1557 of the Patient Protection and Affordable Care Act and caretaking or
other disability-related responsibilities resulted in an inability to pay the
premiums;
iii.
The beneficiary was evicted from their home or experienced
homelessness during the sixty (60) day payment period,
iv.
The beneficiary was the victim of a declared natural disaster, such as a
flood, storm, earthquake, or serious fire that occurred during the sixty (60)
day payment period; or
v.
The beneficiary was a victim of domestic violence during the sixty (60)
day payment period.
k.
Provide all applicants and beneficiaries with timely and adequate written notices
of any decision affecting their eligibility, including an approval, denial,
termination, or suspension of eligibility or a denial or change in benefits and
services pursuant to 42 CFR 435.917. The state will also provide availability and
accessibility resources to program information in accordance with 42 CFR
435.901 and 435.905. The state will provide beneficiaries with 10 days advance
notice for any adverse action prior to the date of action pursuant to 42 CFR
431.211.
l.
Provide beneficiaries written notice of specific activities that would qualify them
for early re-enrollment during a non-eligibility period, as described in STC 41,
and assure that these activities are available during a range of times and through a
variety of means (e.g. online, in person) at no cost to the beneficiary.
m.
Provide notice to beneficiaries, prior to adverse action, about the non-eligibility
period, and explaining what this status means, including but not limited to: their
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n.
o.

34.

right to appeal, their right to apply for Medicaid on a basis not affected by this
status, what this status means with respect to their ability to access other coverage
(such as coverage in a qualified health plan through the Exchange, or access to
premium tax credits through the Exchange), what they should do if their
circumstances change such that they may be eligible for coverage in another
Medicaid category, as well as any implications with respect to whether they have
minimum essential coverage.
Provide beneficiaries with written notice of the rights of people with disabilities to
receive reasonable modifications related to premium payment.
Maintain a system that identifies, validates, and provides reasonable
modifications related to the obligation to pay premiums to beneficiaries with
disabilities protected by the ADA, section 504 of the Rehabilitation Act, and
section 1557 of the Patient Protection and Affordable Care Act.

Premium Amounts. All Kentucky HEALTH beneficiaries, including beneficiaries
receiving premium assistance, with the exception of beneficiaries who are medically frail,
former foster care youth, and pregnant women, as described in STC 18 and 31, are
required to make premium payments at an amount established by the state. A premium
amount shall not exceed four (4) percent of household income, except that all
beneficiaries will be required to contribute, at a minimum, a monthly $1 premium
payment, unless exempt as described in STC 31. The state may vary premium amounts
for beneficiaries, including (but not limited to) based on household income or the length
of time a beneficiary is enrolled in Kentucky HEALTH, subject to the 4 percent of
household income limit on premiums. Other bases for varying premiums shall be
consistent with how premium requirements vary in the commercial insurance market in
Kentucky and with all otherwise applicable law. Beneficiaries who meet the 5 percent
aggregate household cap on premiums and cost sharing will pay a $1 premium (the
minimum) per month for the remainder of the calendar quarter, unless exempt as
described in STC 31.
a.

Changes in Premium Amount. The state may reduce a premium amount at any
time. The state will annually evaluate the premium rates and amounts, and
reserves the right to increase a premium amount within the limitations set forth in
these STCs in response to evaluation results on an annual basis. The state will
notify CMS of upcoming premium changes through the Annual Report described
in these STCs. The state will notify beneficiaries at least 60 days prior to
implementing a premium change.

35.

Household Limits. Premium payments apply towards all Kentucky HEALTH
beneficiaries, as described in STC 31, in the MAGI household enrolled with the same
MCO, such that premiums will not be collected on a per person basis, but rather on a per
MCO basis and will be applicable to all Kentucky HEALTH members enrolled in the
MCO.

36.

Recalculation of Premium Payments. At a minimum, at annual redetermination or any
time the state is made aware that a beneficiary’s household income has changed during

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the current eligibility period, the state must determine whether an adjustment to the
member’s monthly premium payment is necessary. Recalculated premium payments are
effective the first day of the month following the recalculation. When a beneficiary has a
change in circumstance, including household income, any overpayments made by the
member shall reduce the premium contribution obligation for the next month(s).
37.

Third Party Contributions. Third parties, except contracted MCOs, are permitted to
pay premiums on behalf of Kentucky HEALTH beneficiaries. There are no limits on the
amounts third parties can contribute. Such third party contributions offset required
beneficiary premium obligations only, and may not be used for any other purpose.
Payments that exceed such obligations will be returned to the contributing third party.
The payment must be used to offset the beneficiary’s required premium payment
obligation only, not the state’s share. Healthcare providers or provider-related entities
making premium payments on beneficiaries’ behalf must have criteria for providing
assistance that do not distinguish between beneficiaries based on whether or not they
receive or will receive services from the contributing provider(s) or class of providers.
Providers may not include the cost of such payments in the cost of care for purposes of
Medicare and Medicaid cost reporting and such payments cannot be included as part of a
Medicaid shortfall or uncompensated care.

38.

Payment Period. Kentucky HEALTH beneficiaries will have at least sixty (60) calendar
days from the date of the payment invoice to make the required monthly premium
payment to avoid non-payment penalties described in STC 39.

39.

Non-Payment.
a.
Beneficiaries with Income Above 100 percent of FPL.
i.
Following the sixty (60) day payment period, currently enrolled Kentucky
HEALTH members with income above 100 percent FPL who do not make
their premium payment will be disenrolled from Kentucky HEALTH and
will be prohibited from re-enrollment in the demonstration for up to six
months, unless the beneficiary completes the requirements for early reenrollment as described in STC 41. The state will provide beneficiaries
with 10 days advance notice for any adverse action prior to the date of the
eligibility action pursuant to 42 CFR 431.211.
ii.
Beneficiaries who re-enter Kentucky HEALTH after the six month period
will not be required to pay past premium debt as a condition of eligibility.
iii.
Beneficiaries will have dollars deducted from their My Rewards Account
pursuant to STC 30(g)(i).
iv.
Beneficiaries who meet the requirements for good cause exceptions
identified in STC 33(j) will be eligible to re-enter Kentucky HEALTH
before the end of the six month period without completing the early reenrollment requirements described in STC 41.
b.
Beneficiaries with Income At or Below 100 percent of FPL.
i.
Beneficiaries with income at or below 100 percent of the FPL who fail to
make premium payments will not be disenrolled.

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ii.

c.

40.

Beneficiaries who do not make their premium payment within the sixty
(60) day payment period will be required to make copayments for all
services equal to the copayments schedule in the Kentucky Medicaid state
plan.
iii.
Beneficiaries will have dollars deducted from their My Rewards Account
pursuant to STC 30(g)(i).
iv.
Beneficiaries will have their My Rewards Account suspended (i.e., may
not use or accrue incentive amounts) for up to six months.
v.
Beneficiaries may complete the requirements as described in STC 41 to
end the copayment requirement and reactivate their My Rewards Account
prior to the end of the six month period.
vi.
Beneficiaries whose My Rewards Accounts are reactivated after the six
month period will not be required to pay past premium(s) owed to
reactivate their account.
vii.
Beneficiaries who meet the requirements for good cause exceptions
identified in STC 33(j) will be eligible to resume premium payments
instead of copayments and access their My Rewards Account in the next
administratively feasible month without completing the requirements
described in STC 41.
Former Foster Care Youth and Beneficiaries Determined Medically Frail.
i.
Former foster care youth and Kentucky HEALTH beneficiaries who have
been identified as medically frail will have the option to pay premiums.
ii.
Former foster care youth and beneficiaries who are medically frail will not
be subject to copayments for services, and will not be subject to
disenrollment for nonpayment.
iii.
Beneficiaries who choose not to pay premiums (or who do not make a
premium payment within the sixty (60) day payment period) will have
their My Rewards Account suspended (i.e., may not use or accrue
incentive amounts) for up to six months.
iv.
Former foster care youth and beneficiaries who are medically frail may
reactivate their My Rewards Accounts by attending an early re-enrollment
educational course as described in STC 41(a)(ii). Former foster care youth
and beneficiaries who are medically frail will not be required to pay past
premiums owed to reactivate their My Rewards Account.
v.
Beneficiaries who meet the requirements for good cause exceptions
identified in STC 33(j) will be eligible to resume premium payments to
access their My Rewards Account in the next administratively feasible
month without having to attend an early re-enrollment educational course
described in STC 41(a)(ii).

Eligibility Review. For each Kentucky HEALTH beneficiary subject to disenrollment
for non-payment under STC 39, the state must review that beneficiary’s eligibility for all
other eligibility categories under the state’s Title XIX program including notifying the
beneficiary of the option of requesting a medically frail status review, pursuant to 42
CFR 435.916(f). The beneficiary’s Medicaid MCO must also provide at least two written
notices advising the beneficiary of the delinquent payment, the date by which the

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payment must be made to prevent disenrollment, and the option for medical frailty
screening. The first notice must be sent to the beneficiary on or before the seventh day of
the month of coverage for which the premium payment was to be applied and must
describe the consequences of nonpayment of required premiums. Notices must include
information about reporting any changes in circumstances, including household income.
41.

Early Re-Enrollment or Early Re-Activation of My Rewards Account. Kentucky
HEALTH beneficiaries subject to consequences for non-payment of premiums as
described in STC 39(a) or (b), for failure to complete a redetermination as described in
STC 22, or for failure to report change in circumstance as described in STC 24, will have
the opportunity to re-enter the program with full access to their MCO and My Rewards
Account benefits, or (in the case of beneficiaries described in STC 39(b)) the opportunity
to re-activate their My Rewards Account benefits, prior to the expiration of the applicable
six-month period. The early re-enrollment or My Rewards reactivation opportunity is
only available one time per 12 month benefit period per consequence type.
a.

42.

Beneficiaries seeking early re-enrollment following non-payment of premiums as
described in STC 39(a), early re-activation of their My Rewards Account as
described in STC 39(b), early re-enrollment following failure to complete a
redetermination as described in STC 22, or early re-enrollment following failure
to report change in circumstance as described in STC 24, must complete both of
the following:
i.
Pay the premium payment required for the first month of coverage to
restart benefits. Additionally, if the applicable six-month period is due to
premium non-payment, beneficiaries seeking early re-enrollment, or (in
the case of beneficiaries described in STC 39(b)) early re-activation of the
My Rewards Account, must pay a one-time payment equaling premium
payments owed for each month in which the member received healthcare
coverage during the sixty (60)-day payment period prior to the effective
date of the applicable six-month period.
ii.
Attend an early re-enrollment educational course. The course providers
will be certified by the state and offer members course options for early
re-enrollment on: (1) health literacy, and (2) financial literacy.

Exemptions. Pregnant women will be exempt from all Kentucky HEALTH premiums.
Kentucky HEALTH beneficiaries who are medically frail or former foster care youth will
not be required to pay premium payments as a condition of participation; however, these
beneficiaries must make premium payments in order to access the beneficiary’s My
Rewards Account, as described in STC 39(c). Kentucky HEALTH beneficiaries with
incomes at or below 100 percent FPL will not be disenrolled for non-payment of
premiums, but will be required to make copayments and will be subject to the additional
actions described in STC 39(b). Beneficiaries who are disenrolled and subject to a noneligibility period as a result of non-payment of premiums but during that period become
pregnant, are determined to be medically frail or otherwise become eligible for Medicaid
under an eligibility group not subject to the provisions of this non-eligibility period can
reactivate their eligibility with an effective date consistent with the beneficiary’s

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eligibility category. These beneficiaries may access their My Rewards Account if they
otherwise meet the requirements in STC 30.
VIII. COMMUNITY ENGAGEMENT INITIATIVE
43.

Overview. Kentucky will implement a community engagement requirement as a
condition of eligibility for adult beneficiaries in the Kentucky HEALTH program who are
not otherwise subject to an exemption described in STC 44 or 47(a). To maintain
program eligibility, non-exempt beneficiaries will be required to participate in specified
activities that may include employment, education, or community service.

44.

Exempt Populations. The following Kentucky HEALTH beneficiaries are exempt from
the community engagement initiative:
 Former Foster Care Youth;
 Pregnant women;
 Primary caregivers of a dependent, including either a dependent minor child or an
adult who is disabled (limited to only one exempt beneficiary per household);
 Beneficiaries identified as medically frail (under 42 CFR 440.315(f) and as
defined in the alternative benefit plan in the state plan);
 Beneficiaries diagnosed with an acute medical condition that would prevent them
from complying with the requirements (as validated by a medical professional);
 Full time students, as determined by the state; and
 Beneficiaries under the age of 19 or over the age of 64.
Beneficiaries meeting one or more of the above listed exemptions will not be required to
complete community engagement related activities to maintain eligibility.

45.

Qualifying Activities. Kentucky HEALTH beneficiaries may satisfy their community
engagement requirements through a variety of activities, including but not limited to:
 Job skills training;
 Job search activities;
 Education related to employment (e.g. management training);
 General education (e.g., high school, GED, college or graduate education, English
as a second language, etc.)
 Vocational education and training;
 Self-employment;
 Subsidized or unsubsidized employment;
 Community work experience;
 Community service/ public service;
 Caregiving services for a non-dependent relative or other person with a disabling
medical condition; and
 Participation in substance use disorder treatment.
Beneficiaries without an exemption must document their participation in any one or
combination of qualifying activities on at least a monthly basis.

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Notwithstanding the foregoing, some beneficiaries will be deemed to satisfy community
engagement requirements by virtue of their verified participation in the following
specified activities: (i) the beneficiary meets the requirements of the Supplemental
Nutrition Assistance Program (SNAP) and/or Temporary Assistance for Needy Families
(TANF) employment initiatives or is exempt from having to meet those requirements, (ii)
the beneficiary is enrolled in the state’s Medicaid employer premium assistance program
(a spouse or dependent of the beneficiary enrolled in the premium assistance program is
also exempt), or (iii) the beneficiary is employed at least 120 hours per calendar month.
Beneficiaries who are deemed to satisfy the community engagement requirements will
not be required to actively document their participation in qualifying activities, although,
like all beneficiaries, they will be required to timely report changes in eligibility to the
state consistent with the reporting rules under the Kentucky HEALTH Program.
46.

Hour Requirements. The community engagement initiative will require beneficiaries to
participate in 80 hours of community engagement activities per calendar month. The
community engagement requirement will be implemented on a regional basis following
implementation of Kentucky HEALTH. Kentucky HEALTH beneficiaries who have not
been subject to the Kentucky HEALTH community engagement requirement in the past
five years, will be given a three month period before being required to meet the
community engagement requirement. All other beneficiaries will be subject to the
consequences described in STC 47. Beneficiaries can demonstrate that they meet the
requirement, in a manner consistent with 42 CFR 435.945.
a.
Reasonable modifications: Kentucky must provide reasonable accommodations
related to meeting the community engagement requirement for beneficiaries with
disabilities protected by the ADA, Section 504 of the Rehabilitation Act, and
Section 1557 of the Patient Protection and Affordable Care Act, when necessary,
to enable them to have an equal opportunity to participate in and benefit from the
program. The state must also provide reasonable modifications for program
protections and procedures, including but not limited to assistance with
demonstrating eligibility for good cause exemptions; appealing suspensions;
documenting community engagement activities and other documentation
requirements; understanding notices and program rules related to community
engagement requirements; and other types of reasonable modifications.
i.
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. In addition, the state must evaluate individuals’
ability to participate and the types of reasonable modifications and
supports needed.

47.

Non-Compliance. Eligibility will be suspended, effective under the time frame
described in this STC 47(d), for beneficiaries who fail to meet required community
engagement hours for a month, unless the beneficiary requests and meets a good-cause

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exemption within the allotted time period or appeals the suspension prior to its effective
date, and will remain suspended until the first day of the month after the beneficiary
completes 80 hours of community engagement in a 30-day period or completes a stateapproved re-enrollment health literacy or financial literacy course. If a Kentucky
HEALTH beneficiary is in a suspension for failure to meet the requirement on his or her
redetermination date, and does not meet the requirement or qualify for an exemption
under STC 44 or 47(a) in the month of redetermination, Kentucky will deny that
beneficiary’s eligibility and terminate his or her enrollment at that time.
a.
Good Cause Exemption. The state will waive the suspension for beneficiaries
who failed to meet the community engagement hours due to a good cause
exemption for a circumstance that occurred in the month in which the beneficiary
failed to meet their required community engagement hours. Beneficiaries may
seek a good cause exemption up to 10 days prior to suspension. The recognized
good cause exemptions include, but are not limited to, at a minimum, the
following verified circumstances:
i.
The beneficiary has a disability as defined by the ADA, section 504 of the
Rehabilitation Act, or section 1557 of the Patient Protection and
Affordable Care Act and was unable to meet the requirement for reasons
related to that disability; or has an immediate family member in the home
with a disability under federal disability rights laws and was unable to
meet the requirement for reasons related to the disability of that family
member; or the beneficiary or an immediate family member who was
living in the home with the beneficiary experiences a hospitalization or
serious illness;
ii.
The beneficiary experiences the birth, or death, of a family member living
with the beneficiary;
iii.
The beneficiary experiences severe inclement weather (including natural
disaster) and therefore was unable to meet the requirement; or
iv.
The beneficiary has a family emergency or other life-changing event (e.g.
divorce or domestic violence).
b.
Opportunity to Cure. In the month immediately following the month in which a
beneficiary fails to meet the hours requirement, beneficiaries will have the
opportunity to avoid Kentucky HEALTH suspension for community engagement
non-compliance by being current on all hours for the current month, and, either:
(1) making up all deficit hours not completed in the prior month, or (2)
completing a state approved re-enrollment health literacy or financial literacy
course. The option to take a re-enrollment course to avoid suspension or re-enter
from suspension is only available one time per 12-month benefit period.
c.
Extra Hours. Unless a beneficiary is completing hours in accordance with
paragraph (b) above, beneficiaries who engage in more qualifying activities than
required in a month do not have the ability to apply the excess hours to any month
other than the current month.
d.
Suspension Effective Date. Suspensions for non-compliance with community
engagement requirements are effective the first day of the month following the
one month opportunity to cure.

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e.

48.

Re-activation Following Non-Compliance. Following suspension for
community engagement non-compliance, beneficiaries can re-activate eligibility
at any time during their 12-month benefit period by completing 80 hours of
community engagement in a 30-day period or completing a state approved reenrollment health literacy or financial literacy course. The re-enrollment course
to avoid suspension or for reactivation is only available one time per 12-month
benefit period. Benefits will be effective the first day of the month following
completion of the required hours or health literacy or financial literacy course.
During a suspension period, any beneficiary who becomes pregnant; is
determined to be medically frail; becomes the primary caregiver of a dependent
including either a dependent minor child or adult who is disabled (limited to only
one exempt beneficiary per household); becomes a full-time student; becomes
diagnosed with an acute medical condition that would prevent them from
complying with the requirements (as validated by a medical professional); or
otherwise becomes eligible for Medicaid under an eligibility group not subject to
the provisions of the community engagement suspension can reactivate their
eligibility with an effective date consistent with the beneficiary’s new eligibility
category or status.

Community Engagement: State Assurances. Prior to implementation of the
community engagement requirements as a condition of eligibility, the state shall:
a.

b.

c.

d.

Maintain system capabilities to operationalize the suspension and/or denial of
eligibility and the lifting of suspensions of eligibility once community
engagement requirements are met.
Maintain mechanisms to stop capitation payments to an MCO when a
beneficiary’s eligibility is suspended and to trigger payment once the suspension
is lifted.
Ensure that there are processes and procedures in place to seek data from other
sources including SNAP and TANF, and systems to permit beneficiaries to
efficiently report community engagement hours, and to permit Kentucky to
monitor compliance.
Ensure that there are timely and adequate beneficiary notices provided in writing,
including but not limited to:
i.
When the community engagement requirement will commence for that
specific beneficiary;
ii.
Whether a beneficiary is exempt, and under what conditions the
exemption would end;
iii.
A list of the specific activities that may be used to satisfy community
engagement requirements and a list of the specific activities that
beneficiaries can engage in to cure an impending suspension, as described
in STC 47(b);
iv.
Information about resources that help connect beneficiaries to
opportunities for activities that would meet the community engagement
requirement, and information about the community supports that are

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v.
vi.

vii.

viii.

ix.

e.

f.

g.

h.

i.

available to assist beneficiaries in meeting community engagement
requirements;
Information about how community engagement hours will be counted and
documented;
What gives rise to a suspension, what a suspension would mean for the
beneficiary, including how it could affect redetermination, and how to
avoid a suspension, including how to apply for a good cause exemption
and what kinds of circumstances might give rise to good cause;
If a beneficiary is not in compliance for a particular month, that the
beneficiary is out of compliance, and how the beneficiary can cure the
non-compliance in the immediately following month;
If a beneficiary has eligibility suspended, how to appeal a suspension, and
how to have the suspension lifted, including the number of community
engagement hours that must be performed within a 30 day period by the
specific beneficiary to have the suspension lifted, and information on the
option to take a re-enrollment course to have the suspension lifted; and
If a beneficiary has requested a good cause exemption, that the good cause
exemption has been approved or denied, with an explanation of the basis
for the decision and how to appeal a denial.

Ensure that specific activities that may be used to satisfy community engagement
requirements and specific activities that would allow beneficiaries to cure an
impending community engagement suspension (as described in STC 47(b)) are
available during a range of times and through a variety of means (e.g. online, in
person) at no cost to the beneficiary.
Provide full appeal rights as required under 42 CFR, Part 431, subpart E prior to
suspension and observe all requirements for due process for beneficiaries whose
eligibility will be suspended, denied, or terminated for failing to meet the
community engagement requirement, including allowing beneficiaries the
opportunity to raise additional issues in a hearing, including whether the
beneficiary should be subject to the suspension, and provide additional
documentation through the appeals process.
Assure that disenrollment or denial of eligibility will only occur after an
individual has been screened and determined ineligible for all other bases of
Medicaid eligibility and reviewed for eligibility for insurance affordability
programs in accordance with 42 CFR 435.916(f).
Establish beneficiary protections, including assuring that Kentucky HEALTH
beneficiaries do not have to duplicate requirements to maintain access to all
public assistance programs that require community engagement and employment.
Make good faith efforts to connect Kentucky HEALTH beneficiaries to existing
community supports that are available to assist beneficiaries in meeting
community engagement requirements, including available non-Medicaid
assistance with transportation, child care, language access services and other
supports; and make good faith efforts to connect beneficiaries with disabilities as
defined in the ADA, section 504 of the Rehabilitation Act, or section 1557 of the

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j.

k.

l.

m.

Patient Protection and Affordable Care Act with services and supports necessary
to enable them to meet community engagement requirements.
Ensure the state will assess areas within the state that experience high rates of
unemployment, areas with limited economies and/or educational opportunities,
and areas with lack of public transportation to determine whether there should be
further exemptions from the community engagement requirements and/or
additional mitigation strategies, so that the community engagement requirements
will not be impossible or unreasonably burdensome for beneficiaries to meet.
Ensure that the state will assess whether people with disabilities have limited job
or other opportunities for reasons related to their disabilities. If these barriers
exist for people with disabilities, the state must address these barriers.
Provide beneficiaries with written notice of the rights of people with disabilities to
receive reasonable modifications related to meeting community engagement
requirements.
Maintain a system that provides reasonable modifications related to meeting the
community engagement requirement to beneficiaries with disabilities as defined
in the ADA, section 504 of the Rehabilitation Act, or section 1557 of the Patient
Protection and Affordable Care Act.

IX.

DELIVERY SYSTEM

49.

Overview. Kentucky HEALTH will utilize the current statewide mandatory managed
care delivery system for all covered populations under the authority of the Kentucky
Managed Care Organization Program 1915(b) waiver. Only eligible members
participating in the employer premium assistance program will be exempt from
mandatory managed care enrollment.

50.

Managed Care Organizations (MCO). Beneficiaries shall be enrolled to receive
services through an MCO under contract to the state. The MCOs are subject to the
federal laws and regulations as specified in 42 CFR Part 438, unless specified otherwise
herein. Beneficiaries will be given an opportunity to select an MCO at the time of
application. A beneficiary who does not make an MCO selection at the time of
application may be auto-assigned to a MCO by the state.

51.

Beneficiary’s Right to Change MCOs.
a.

b.

A beneficiary may change MCOs without cause if the change is requested prior to
(i) the date the beneficiary pays their initial premium, or (ii) the date the
beneficiary has enrolled in Kentucky HEALTH after the sixty (60) day initial
payment period has expired. This does not apply to pregnant women and former
foster care youth who will be permitted to change MCOs without cause for 90
days after enrollment.
For Cause. A beneficiary may change MCOs for cause at any time and the state
will include this information in all communications about beneficiary
contributions. “Cause” is defined in 42 CFR 438.56(d)(2).

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c.

d.

e.

f.

g.
h.

The beneficiary must submit his or her request for change either orally or in
writing. The beneficiary shall still have access to the state’s normal grievance and
appeals process required under the managed care regulations.
If the state fails to make a determination by the first day of the second month
following the month in which the beneficiary files the request, the request for
change will be considered approved and the beneficiary will be transferred into
the new MCO.
If a beneficiary is transferred from the MCO, the MCO must refund any balance
of the beneficiary’s premium (if applicable) to the beneficiary within 30 days of
the last date of participation with the MCO.
The deductible account balance will transfer with the beneficiary to the new
MCO. The deductible account is a virtual account, and no funds are transferred
due to an MCO change. The transferring MCO shall provide the individual’s
current deductible account balance to the new MCO with the information needed
to properly track the beneficiary’s account balance for the remainder of the
benefit period.
The state shall ensure that all transferring beneficiaries receive coverage from
their new MCO promptly, and without any interruption in care
Excluded Services. Consistent with the state’s Kentucky Managed Care
Organization (MCO) Program §1915(b) waiver (KY.0007.R01.00), MCOs will
not be responsible for Kentucky HEALTH beneficiary nursing facility costs
during the first 30 calendar days the beneficiary is enrolled in the MCO; however,
if a member is admitted to a nursing facility, the MCO will be required to cover
the costs of any non-nursing facility covered health services provided to the
beneficiary while the beneficiary resides in the nursing facility, for up to 30
calendar days, after which, the MCO will not be responsible for the costs of the
beneficiary’s care for so long as the beneficiary is residing in the nursing facility
or enrolled in the MCO..

52.

Public Contracts. Payments under contracts with public agencies, that are not
competitively bid in a process involving multiple bidders, must not exceed the
documented costs incurred in furnishing covered services to eligible beneficiaries (or a
reasonable estimate with an adjustment factor no greater than the annual change in the
consumer price index).

X.

GENERAL REPORTING REQUIREMENTS

53.

Deferral for Failure to Submit Timely Demonstration Deliverables. CMS may issue
deferrals in the amount of $5,000,000 (federal share) per deliverable when items required
by these STCs (e.g., required data elements, analyses, reports, design documents,
presentations, and other items specified in these STCs (hereafter singly or collectively
referred to as “deliverable(s)”) are not submitted timely to CMS or are found to not be
consistent with the requirements approved by CMS. Similarly, deferrals of $5,000,000
per deliverable may be issued when the state does not demonstrate sufficient progress on
milestones in the SUD Implementation Protocol, as described in STC 93. Specifically:

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a.

b.

c.
d.
e.

f.

Thirty (30) days after the deliverable was due, CMS will issue a written
notification to the state providing advance notification of a pending deferral for
late or non-compliant submissions of required deliverables.
For each deliverable, the state may submit a written request for an extension to
submit the required deliverable. Extension requests that extend beyond the fiscal
quarter in which the deliverable was due must include a Corrective Action Plan
(CAP).
i.
CMS may decline the extension request.
ii.
Should CMS agree in writing to the state’s request, a corresponding
extension of the deferral process described below can be provided.
iii.
If the state’s request for an extension includes a CAP, CMS may agree to
or further negotiate the CAP as an interim step before applying the
deferral.
The deferral would be issued against the next quarterly expenditure report
following the written deferral notification.
When the state submits the overdue deliverable(s) that are accepted by CMS, the
deferral(s) will be released.
As the purpose of a section 1115 demonstration is to test new methods of
operation or services, and timely and complete submission of required
deliverables is necessary for effective testing, the state’s failure to submit all
required deliverables may preclude the state from renewing a demonstration or
obtaining a new demonstration.
CMS will consider with the state an alternative set of operational steps for
implementing the intended deferral to align the process with the state’s existing
deferral process, for example which quarter the deferral applies to, and how the
deferral is released.

54.

Submission of Post-Approval Deliverables. The state will submit all deliverables using
the process stipulated by CMS and within the timeframes outlined within these STCs.

55.

General Financial Requirements. The state shall comply with all general financial
requirements under Title XIX, including reporting requirements related to monitoring
budget neutrality, set forth in Section XI of these STCs.

56.

Reporting Requirements Related to Budget Neutrality. The state shall comply with
all reporting requirements for monitoring budget neutrality set forth in Section XII of
these STCs.

57.

Periodic Monitoring Calls. CMS will convene periodic conference calls with the state.
The purpose of these calls is to discuss ongoing demonstration operation, to include (but
not limited to) any significant actual or anticipated developments affecting the
demonstration; including planning for future changes in the program or intent to further
Kentucky HEALTH beyond September 30, 2023. CMS will provide updates on any
pending actions, as well as federal policies and issues that may affect any aspect of the
demonstration. The state and CMS will jointly develop the agenda for the calls.

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58.

Monitoring Reports. The state will submit to CMS a draft of proposed metrics for
quarterly and annual monitoring reports within 120 days after implementation of the
demonstration. CMS will then work with the state to jointly identify required metrics for
quarterly and annual reports. These metrics will reflect the major elements of the
demonstration, including but not limited to data that applies to the waiver and
expenditure authorities, and may include (but are not limited to): beneficiary engagement
through My Rewards Accounts, community engagement initiatives, and coverage of
substance use disorder services. Metrics may be identified through a variety of sources,
including but not limited to, the CMS Child and Adult Core Measure sets, HEDIS
measures, and NCQA measures, as well as proposed CMS metrics. CMS will combine
these programmatic metrics with general metrics aimed at monitoring beneficiary
enrollment, access to services, and the overall functioning of the demonstration.
The resulting performance metric set is one part of the quarterly and annual monitoring
report framework specified later in this STC. The state will submit three (3) quarterly
reports and one (1) compiled annual report each demonstration year (DY). The quarterly
reports are due no later than sixty (60) days following the end of each demonstration
quarter. The annual report is due no later than ninety (90) days following the end of the
DY. The reports will include all required elements as per 42 CFR 431.428, and should
not direct readers to links outside the report. Additional links not referenced in the report
may be listed in a Reference/Bibliography section. The Monitoring Reports must follow
the framework provided by CMS, which is subject to change as monitoring systems are
developed/evolve, and must be provided in a structured manner that supports federal
tracking and analysis.
a.
Operational Updates. Per 42 CFR 431.428, the monitoring reports must
document any policy or administrative difficulties in operating the demonstration.
The reports shall provide sufficient information to document key challenges,
underlying causes of challenges and how challenges are being addressed, as well
as key achievements and to what conditions and efforts successes can be
attributed. The monitoring reports should also include any lawsuits or legal
actions; unusual or unanticipated trends; legislative updates; and descriptions of
any public forums held.
b.

Performance Metrics. Per 42 CFR 431.428, the Monitoring Reports must
document the impact of the demonstration in providing insurance coverage to
beneficiaries and the uninsured population, as well as outcomes of care, quality
and cost of care, and access to care. This may also include the results of
beneficiary satisfaction surveys, if conducted, grievances and appeals. The
required monitoring and performance metrics must be included in writing in the
Monitoring Reports, and will follow the framework provided by CMS to support
federal tracking and analysis. The performance metrics should be included in the
first quarterly report following CMS approval of the metrics.

c.

Budget Neutrality and Financial Reporting Requirements. Per 42 CFR
431.428, the Monitoring Reports must document the financial performance of the
demonstration. The state will provide an updated budget neutrality workbook that

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includes established baseline and member months data with every Monitoring
Report. The budget neutrality workbook will meet all the reporting requirements
for monitoring budget neutrality set forth in Section XI. General Financial
Requirements of these STCs, including the submission of corrected budget
neutrality data upon request. In addition, the state will report quarterly
expenditures associated with the populations affected by this demonstration on the
Form CMS-64. Administrative costs should be reported separately.
d.

Evaluation Activities and Interim Findings. Per 42 CFR 431.428, the
Monitoring Reports must document any results of the demonstration to date per
the evaluation hypotheses. Additionally, the state shall include a summary of the
progress of evaluation activities, including key milestones accomplished, as well
as challenges encountered and how they were addressed.

59.

Compliance with Federal Systems Innovation. As federal systems continue to evolve
and incorporate 1115 demonstration reporting and analytics, the state will work with
CMS to:
a.
Revise the reporting templates and submission processes to accommodate timely
compliance with the requirements of the new systems;
b.
Ensure all 1115, T-MSIS, and other data elements that have been agreed to are
provided; and
c.
Submit the monitoring reports and evaluation reports to the appropriate system as
directed by CMS.

60.

Close Out Report. Within 120 days prior to the expiration of the demonstration, the
state must submit a draft Close Out Report to CMS for comments.
a.
The draft report must comply with the most current guidance from CMS.
b.
The state will present to and participate in a discussion with CMS on the CloseOut report.
c.
The state must take into consideration CMS’ comments for incorporation into the
final Close Out Report.
d.
The final Close Out Report is due to CMS no later than thirty (30) days after
receipt of CMS’ comments.
e.
A delay in submitting the draft or final version of the Close Out Report may
subject the state to penalties described in STC 6.

XI.

GENERAL FINANCIAL REQUIREMENTS

This demonstration is approved for Title XIX expenditures applicable to services rendered
during the demonstration period. This section describes the general financial requirements for
these expenditures.
61.

Quarterly Expenditure Reports. The state must report quarterly expenditures
associated with the populations affected by this demonstration on the Form CMS-64.

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62.

Reporting Expenditures under the Demonstration. The following describes the
reporting of expenditures subject to the budget neutrality agreement:
a.

Tracking Expenditures. In order to track expenditures under this demonstration,
the state must report demonstration expenditures through the Medicaid and state
Children’s Health Insurance Program Budget and Expenditure System
(MBES/CBES), following routine CMS-64 reporting instructions outlined in
sections 2500 and 2115 of the state Medicaid Manual. All demonstration
expenditures subject to the budget neutrality limit must be reported each quarter
on separate Forms CMS-64.9 WAIVER and/or 64.9P WAIVER, identified by the
demonstration project number assigned by CMS (including the project number
extension, which indicates the DY in which services were rendered or for which
capitation payments were made).

b.

Cost Settlements. For monitoring purposes, cost settlements attributable to the
demonstration must be recorded on the appropriate prior period adjustment
schedules (Form CMS-64.9P Waiver) for the Summary Sheet Line 10B, in lieu of
Lines 9 or 10C. For any cost settlement not attributable to this demonstration, the
adjustments should be reported as otherwise instructed in the State Medicaid
Manual.

c.

Kentucky HEALTH Premiums. Premiums from beneficiaries that are collected
by the MCO on behalf of the state from beneficiaries under the demonstration
must be reported to CMS each quarter on Form CMS-64 summary sheet line 9.D,
columns A and B. In order to assure that these collections are properly credited to
the demonstration, premium collections (both total computable and federal share)
should also be reported separately by DY on the form CMS-64 narrative. In the
calculation of expenditures subject to the budget neutrality expenditure limit,
premium collections applicable to demonstration populations will be offset
against expenditures. These section 1115 premium collections will be included as
a manual adjustment (decrease) to the demonstration’s actual expenditures on a
quarterly basis.

d.

Use of Waiver Forms. For each DY, separate Forms CMS-64.9 Waiver and/or
64.9P Waiver must be submitted reporting expenditures for beneficiaries enrolled
in the demonstration, subject to the budget neutrality limit. The state will
complete separate waiver forms for the following benefits/ waiver names:
i.
ii.

63.

“SUD” expenditures
“My Rewards” expenditures

Administrative Costs. Administrative costs will not be included in the budget neutrality
limit, but the state shall separately track and report additional administrative costs that are
directly attributable to the demonstration, using Forms CMS-64.10 Waiver and/or 64.10P
Waiver, with waiver name State and Local Administration Costs (“ADM”).

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64.

Claiming Period. All claims for expenditures subject to the budget neutrality limit
(including any cost settlements) shall be made within 2 years after the calendar quarter in
which the state made the expenditures. Furthermore, all claims for services during the
demonstration period (including any cost settlements) shall be made within 2 years after
the conclusion or termination of the demonstration. During the latter 2-year period, the
state shall continue to identify separately net expenditures related to dates of services
during the operation of the demonstration on the Form CMS-64 and Form CMS-21 in
order to properly account for these expenditures in determining budget neutrality.

65.

Reporting of Member Months. The following describes the reporting of member
months for the demonstration populations:
a.

b.

c.

For the purpose of calculating the budget neutrality expenditure cap and for other
purposes, the state will provide to CMS, as part of the quarterly report required
under STC 58, the actual number of eligible member months for the
demonstration populations. The state will submit a statement accompanying the
quarterly report, which certifies the accuracy of this information.
To permit full recognition of “in-process” eligibility, reported counts of member
months may be subject to revisions after the end of each quarter. Member month
counts may be revised retrospectively as needed.
The term "eligible member months" refers to the number of months in which
persons are eligible to receive services. For example, a person who is eligible for
three months contributes three eligible member months to the total. Two
individuals who are eligible for two months each contribute two eligible member
months to the total, for a total of four eligible member months.

66.

Standard Medicaid Funding Process. The standard Medicaid funding process must be
used during the demonstration. The state must estimate matchable demonstration
expenditures (total computable and federal share) subject to the budget neutrality
expenditure cap and separately report these expenditures by quarter for each federal fiscal
year on the Form CMS-37 for both the Medical Assistance Payments (MAP) and State
and Local Administration Costs (ADM). CMS will make federal funds available based
upon the state's estimate, as approved by CMS. Within 30 calendar days after the end of
each quarter, the state must submit the Form CMS-64 quarterly Medicaid expenditure
report, showing Medicaid expenditures made in the quarter just ended. CMS will
reconcile expenditures reported on the Form CMS-64 quarterly with federal funding
previously made available to the state, and include the reconciling adjustment in the
finalization of the grant award to the state.

67.

Extent of FFP for the Demonstration. Subject to CMS approval of the source(s) of the
non-federal share of funding, CMS will provide FFP at the applicable federal matching
rate for the demonstration as a whole as outlined below:
a.
Administrative costs, including those associated with the administration of the
demonstration. With respect to expenditures for items and services covered
through the My Rewards account, only those items and services that the Secretary

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b.
c.

68.

Sources of Non-Federal Share. The state must certify that the matching non-federal
share of funds for the demonstration is derived from state/local monies. The state further
certifies that such funds must not be used as the match for any other federal grant or
contract, except as permitted by law. All sources of non-federal funding must be
compliant with section 1903(w) of the Act and applicable regulations. In addition, all
sources of the non- federal share of funding are subject to CMS approval.
a.

b.

c.

69.

has found to be necessary for the proper and efficient administration of the state
plan may be claimed as administrative costs.
Net expenditures and prior period adjustments of the Medicaid program that are
paid in accordance with the approved state plan.
Medical Assistance expenditures made under section 1115 demonstration
authority, including those made in conjunction with the demonstration, cost
sharing, pharmacy rebates, and all other types of third party liability or CMS
payment adjustments. With respect to expenditures for items and services
covered through the My Rewards account, only those items and services that the
Secretary has determined meet the definition of medical assistance in section
1905(a) of the Act may be claimed as medical assistance expenditures.

CMS may review the sources of the non-federal share of funding for the
demonstration at any time. The state agrees that all funding sources deemed
unacceptable by CMS must be addressed within the time frames set by CMS.
Any amendments that impact the financial status of the demonstration shall
require the state to provide information to CMS regarding all sources of the nonfederal share of funding.
The state assures that all health care-related taxes comport with section 1903(w)
of the Act and all other applicable federal statutory and regulatory provisions, as
well as the approved Medicaid state plan.

State Certification of Funding Conditions. The state must certify that the following
conditions for non-federal share of the demonstration expenditures are met:
a.

b.

c.

Units of government, including governmentally operated health care providers,
may certify that state or local tax dollars have been expended as the non-federal
share of funds under the demonstration.
To the extent the state utilizes certified public expenditures (CPEs) as the funding
mechanism for Title XIX (or under section 1115 authority) payments, CMS shall
approve a cost reimbursement methodology. This methodology shall include a
detailed explanation of the process by which the state would identify those costs
eligible under Title XIX (or under section 1115 authority) for purposes of
certifying public expenditures.
To the extent the state utilizes CPEs as the funding mechanism to claim federal
match for payments under the demonstration, governmental entities to which
general revenue funds are appropriated shall certify to the state the amount of
such tax revenue (state or local) used to fund the non-federal share of

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d.

e.

demonstration expenditures. The entities that incurred the cost shall also provide
cost documentation to support the state’s claim for federal match.
The state may use intergovernmental transfers to the extent that such funds are
derived from state or local tax revenues and are transferred by units of
government within the state. Any transfers from governmentally operated health
care providers shall be made in an amount not to exceed the non-federal share of
Title XIX payments.
Under all circumstances, health care providers must retain 100 percent of the
reimbursement amounts claimed by the state as demonstration expenditures.
Moreover, no pre-arranged agreements (contractual or otherwise) may exist
between the health care providers and the state and/or local government to return
and/or redirect any portion of the Medicaid payments. This confirmation of
Medicaid payment retention is made with the understanding that payments that
are the normal operating expenses of conducting business (such as payments
related to taxes (including health care provider-related taxes), fees, and business
relationships with governments that are unrelated to Medicaid and in which there
is no connection to Medicaid payments) are not considered returning and/or
redirecting a Medicaid payment.

XII.

BUDGET NEUTRALITY

70.

Limit on Title XIX Funding. The state is subject to a limit on the amount of federal
Title XIX funding that the state may receive on selected Medicaid expenditures during
the period of approval of the demonstration. The limit is determined by using the per
capita cost method described in STC 71. The budget neutrality expenditure limits are set
on a yearly basis with a cumulative budget neutrality expenditure limit for the length of
the entire demonstration. The data supplied by the state to CMS to set the annual caps is
subject to review and audit, and if found to be inaccurate, will result in a modified budget
neutrality expenditure limit. CMS’ assessment of the state’s compliance with these
annual limits will be done using the Schedule C reports from the CMS-64.

71.

Risk. The state will be at risk for exceeding the limits on per capita cost (as determined
by the method described below) for the demonstration expenditures, as described in STC
72 and STC 73, and shall not be at risk for costs pertaining to the number of enrollees in
the demonstration population. By providing FFP without regard to enrollment in the
demonstration populations, CMS will not place the state at risk for changing economic
conditions that impact enrollment levels. However, by placing the state at risk for the per
capita costs of current eligibles, CMS assures that the demonstration expenditures do not
exceed the levels that would have been realized had there been no demonstration.

72.

Calculation of the Budget Neutrality Limit. For the purpose of calculating the overall
budget neutrality limit for the demonstration, separate annual budget limits will be
calculated for each DY on a total computable basis, as described in this STC 72(b). The
annual limits will then be added together to obtain a budget neutrality limit for the entire
demonstration period. The federal share of this limit will represent the maximum amount
of FFP that the state may receive during the demonstration period for the types of

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demonstration expenditures described below. The federal share will be calculated by
multiplying the total computable budget neutrality limit by the Composite Federal Share,
which is defined in STC 75. The demonstration expenditures subject to the budget
neutrality limit are those reported under the waiver names “My Rewards Expenditures”
and “SUD Expenditures”.
a.
The Medicaid Eligibility Group (MEGs) listed in the table below are included in
the calculation of the budget neutrality limit for the Kentucky HEALTH
demonstration.
b.
The budget neutrality cap is calculated by taking the per member per month
(PMPM) cost projection for the below groups in each DY, times the number of
eligible member months for that group and DY, and adding the products together
across DYs. The federal share of the budget neutrality cap is obtained by
multiplying total computable budget neutrality cap by the federal share.
c.
The state will not be allowed to obtain budget neutrality “savings” from these
populations.
73.

Substance Use Disorder Expenditures. As part of the SUD initiative, the state may
receive FFP for the continuum of services specified in Table 2 to treat OUD and other
SUDs that are provided to all Medicaid beneficiaries in an IMD as authorized by this
demonstration. These are state plan services that would be eligible for reimbursement if
not for the IMD exclusion. Therefore, they are being treated as hypothetical. The state
may only claim FFP via demonstration authority for the services listed in Table 2 that
will be provided in an IMD. However, the state will not be allowed to obtain budget
neutrality “savings” from these services. Therefore, a separate expenditure cap is
established for SUD services.
a.
The SUD MEG listed in the table below is included in SUD budget neutrality test.
b.
SUD expenditures cap are calculated by multiplying the projected PMPM for
each SUD MEG, each DY, by the number of actual eligible SUD member months
for the same MEG/DY—and summing the products together across all DYs. The
federal share of the SUD expenditure cap is obtained by multiplying those caps by
the Composite Federal Share (see STC 75).
c.
SUD budget neutrality test is a comparison between the federal share of SUD
expenditure cap and total FFP reported by the state for the SUD MEG.
Eligibility
group
SUD
PMPM
My
Rewards
PMPM

74.

Trend
Rate

DY 1

DY 2

DY 3

DY 4

DY 5

DY 6

5.0%

$1,430.
18
$10.26

$1,501.69

$1,576.77

$1,655.61

$1,738.39

$1,759.72

$10.77

$11.31

$11.88

$12.47

$12.62

5.0%

Former Foster Care Youth. CMS has determined that the provision of benefits and
services to this demonstration population is budget neutral based on CMS’ assessment
that the waiver authorities granted for this demonstration population are unlikely to result
in any increase in federal Medicaid expenditures, and that no expenditure authorities are

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associated with this demonstration population. There will be no budget neutrality
expenditure limit established for this demonstration population, and no further test of
budget neutrality will be required. Accordingly, the state will not be allowed to obtain
budget neutrality “savings” from this demonstration population. All expenditures
associated with this population will be reported on the CMS-64 base form(s) for
Medicaid State Plan populations in accordance with section 2500 of the State Medicaid
Manual.
75.

Composite Federal Share Ratio. The Composite Federal Share is the ratio calculated
by dividing the sum total of FFP received by the state on actual demonstration
expenditures during the approval period, as reported through the MBES/CBES and
summarized on Schedule C (with consideration of additional allowable demonstration
offsets such as, but not limited to, premium collections) by total computable
demonstration expenditures for the same period as reported on the same forms. Should
the demonstration be terminated prior to the end of the extension approval period (see
STC 9 and STC 11), the Composite Federal Share will be determined based on actual
expenditures for the period in which the demonstration was active. For the purpose of
interim monitoring of budget neutrality, a reasonable estimate of Composite Federal
Share may be developed and used through the same process or through an alternative
mutually agreed upon method.

76.

Enforcement of Budget Neutrality. CMS must enforce budget neutrality over the life
of the demonstration rather than on an annual basis. However, if the state’s expenditures
exceed the calculated cumulative budget neutrality expenditure cap by the percentage
identified below for any of the demonstration years, the state shall submit a corrective
action plan to CMS for approval. The state will subsequently implement the approved
corrective action plan.
DY
DY 1
{Approval}June 30 2018
DY 2
July 1, 2018June 30, 2019
DY 3
July 1, 2019June 30, 2020
DY4
July 1, 2020June 30, 2021
DY5
July 1, 2020June 30, 2022

Cumulative Target
Definition
Cumulative budget
neutrality expenditure cap
plus:
Cumulative budget
neutrality expenditure cap
plus:
Cumulative budget
neutrality expenditure cap
plus:
Cumulative budget
neutrality expenditure cap
plus:
Cumulative budget
neutrality expenditure cap
plus:

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Approval Period: January 12, 2018 through September 30, 2023

Percentage
2.0%

1.5%

1.0%

0.5%

0%

Page 47 of 72

DY6
July 1, 2022September 30, 2023

Cumulative budget
neutrality expenditure cap
plus:

0%

77.

Exceeding Budget Neutrality. If at the end of the demonstration period the cumulative
budget neutrality limit has been exceeded, the excess federal funds will be returned to
CMS. If the demonstration is terminated prior to the end of the budget neutrality
agreement, an evaluation of this provision will be based on the time elapsed through the
termination date.

78.

Impermissible DSH, Taxes or Donations. The CMS reserves the right to adjust the
budget neutrality expenditure limit in order to be consistent with enforcement of
impermissible provider payments, health care related taxes, new federal statutes, or with
policy interpretations implemented through letters, memoranda, or regulations. CMS
reserves the right to make adjustments to the budget neutrality expenditure limit if CMS
determines that any health care-related tax that was in effect during the base year, or
provider-related donation that occurred during the base year, is in violation of the
provider donation and health care related tax provisions of Section 1903(w) of the Act.
Adjustments to the budget neutrality agreement will reflect the phase-out of
impermissible provider payments by law or regulation, where applicable.

XIII. EVALUATION
79.

Independent Evaluator. Upon approval of the demonstration, the state must begin to
arrange with an independent party to conduct an evaluation of the demonstration to
ensure that the necessary data is collected at the level of detail needed to research the
approved hypotheses. The independent party must sign an agreement to conduct the
demonstration evaluation in accord with the CMS-approved Evaluation Design. When
conducting analyses and developing the evaluation reports, every effort should be made
to follow the approved methodology in the evaluation design, but the state may request,
and CMS may agree to, changes in the methodology in the appropriate circumstances.

80.

Draft Evaluation Design. The draft evaluation design must be developed in accordance
with Attachment A of these STCs. The state will submit, for CMS comment and
approval, a draft Evaluation Design with implementation timeline, no later than one
hundred eighty (180) days after demonstration approval. Any modifications to an
existing approved Evaluation Design will not affect previously established requirements
and timelines for report submission for the demonstration, if applicable. The state may
choose to use the expertise of the independent party in the development of the draft
Evaluation Design.

81.

Evaluation Design Approval and Updates. The state will submit a revised draft
Evaluation Design within sixty (60) days after receipt of CMS’ comments. Upon CMS
approval of the draft Evaluation Design, the document will be included as an attachment
to these STCs. Per 42 CFR 431.424(c), the state will publish the approved Evaluation
Design within thirty (30) days of CMS approval. The state will implement the evaluation

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design and submit evaluation implementation progress in each of the Monitoring Reports,
including any required Rapid Cycle Assessments. Rapid cycle assessments should
include any early or interim findings the evaluators have prior to evaluation reports being
due. Once CMS approves the evaluation design, if the state wishes to make changes, the
state must submit a revised evaluation design to CMS for approval.
82.

Evaluation Questions and Hypotheses. Consistent with Attachments A and B of these
STCs, the evaluation documents must include a discussion of the evaluation questions
and hypotheses that the state intends to test. The hypothesis testing should include,
where possible, assessment of both process and outcome measures. Proposed measures
should be selected from nationally-recognized sources and national measures sets, where
possible. Measures sets could include CMS’s Core Set of Health Care Quality Measures
for Children in Medicaid and CHIP, Consumer Assessment of Health Care Providers and
Systems (CAHPS), the Initial Core Set of Health Care Quality Measures for MedicaidEligible Adults and/or measures endorsed by National Quality Forum (NQF).

83.

Evaluation Design Elements. The following items must be specified for each
hypothesis:
a.
Quantitative and qualitative research methodologies;
b.
Proposed baseline and comparison groups;
c.
Proposed process and outcome measures and specifications;
d.
Data sources and collection frequency;
e.
Cost estimates; and
f.
Timelines for deliverables.

84.

Evaluation Data Sources. The Evaluation Design will incorporate multiple stakeholder
perspectives, including (but not limited to), surveys of beneficiaries (both enrolled and
those no longer enrolled), claims data, and national survey data (such as CAHPS).

85.

Evaluation Budget. A budget for the evaluation shall be provided with the draft
Evaluation Design. It will include the total estimated cost, as well as a breakdown of
estimated staff, administrative and other costs for all aspects of the evaluation such as any
survey and measurement development, quantitative and qualitative data collection and
cleaning, analyses and report generation. A justification of the costs may be required by
CMS if the estimates provided do not appear to sufficiently cover the costs of the
Evaluation Design, if CMS finds that the Evaluation Design is not sufficiently developed,
or if the estimates appear to be excessive.

86.

State Presentations for CMS. CMS reserves the right to request that the state present
and participate in a discussion with CMS on the final Evaluation Design, post approval,
in conjunction with these STCs. The state will present on its interim evaluation in
conjunction with these STCs. The state will present on its summative evaluation in
conjunction with these STCs.

87.

Cooperation with Federal Evaluators. As required under 42 CFR 431.420(f), should
CMS undertake a federal evaluation of the demonstration or any component of the

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demonstration, the state will cooperate fully and timely with CMS and its contractors’
evaluation activities. This includes, but is not limited to, commenting on design and other
federal evaluation documents and providing data and analytic files to CMS, including
entering into a data use agreement that explains how the data and data files will be
exchanged, and providing a technical point of contact to support specification of the data
and files to be disclosed, as well as relevant data dictionaries and record layouts. The
state will include in its contracts with entities who collect, produce or maintain data and
files for the demonstration, that they must make such data available for the federal
evaluation as is required by the state under 42 CFR 431.420(f) to support federal
evaluation. The state may claim administrative match for these activities. Failure to
comply with this STC may result in a deferral being issued as outlined in STC 53.
88.

Interim Evaluation Report. The state will submit an Interim Evaluation Report for the
completed years of the demonstration, and for each subsequent renewal or extension of
the demonstration, as outlined in 42 CFR 431.412(c)(2)(vi). When submitting an
application for renewal, the Interim Evaluation Report should be posted to the state’s
website with the application for public comment. Also refer to Attachment B for
additional information on the Interim Evaluation Report.
a.
The Interim Evaluation Report will discuss evaluation progress and present
findings to date as per the approved Evaluation Design.
b.
For demonstration authority that expires prior to the overall demonstration’s
expiration date, the Interim Evaluation Report must include an evaluation of the
authority as approved by CMS.
c.
If the state is seeking to renew or extend the demonstration, the draft Interim
Evaluation Report is due when the application for renewal is submitted. If the
state made changes to the demonstration, the research questions, hypotheses and
how the design was adapted should be included. If the state is not requesting a
renewal for a demonstration, an Interim Evaluation report is due one (1) year prior
to the end of the demonstration. For demonstration phase outs prior to the
expiration of the approval period, the draft Interim Evaluation Report is due to
CMS on the date that will be specified in the notice of termination or suspension.
d.
The state will submit the final Interim Evaluation Report sixty (60) days after
receiving CMS comments on the draft Interim Evaluation Report and post the
document to the state’s website.
e.
The Interim Evaluation Report must comply with Attachment B of these STCs.

89.

Summative Evaluation Report. The draft Summative Evaluation Report must be
developed in accordance with Attachment B of these STCs. The state will submit a draft
Summative Evaluation Report for the demonstration’s current approval period within 18
months of the end of the approval period represented by these STCs. The Summative
Evaluation Report must include the information in the approved Evaluation Design.
Refer to Attachment B for additional information on the Summative evaluation report.
a.
Unless otherwise agreed upon in writing by CMS, the state will submit the final
Summative Evaluation Report within sixty (60) days of receiving comments from
CMS.

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b.

The final Summative Evaluation Report must be posted to the state’s Medicaid
website within thirty (30) days of approval by CMS.

90.

Public Access. The state shall post the final documents (e.g., Quarterly and Annual
Monitoring Reports, Close-Out Report, approved Evaluation Design, Interim Evaluation
Report(s), and Summative Evaluation Report(s) on the state’s Medicaid website within
thirty (30) days of approval by CMS.

91.

Additional Publications and Presentations. For a period of twenty-four 24 months
following CMS approval of the final reports, CMS will be notified prior to the public
release or presentation of these reports and related publications (including, for example,
journal articles), by the state, contractor, or any other third party (an entity which is not
the state or contractor) over which the state Medicaid agency has control. Prior to release
of these reports, articles and other publications, CMS will be provided a copy including
any associated press materials. CMS will be given thirty (30) days to review and
comment on publications before they are released. CMS may choose to decline to
comment or review some or all of these notifications and reviews.

XIV. OPIOID USE DISORDER (OUD)/SUBSTANCE USE DISORDER (SUD)
Effective upon CMS’ approval of the SUD Implementation Protocol, as described in STC 93, the
demonstration benefit package for all Medicaid beneficiaries as authorized by this demonstration
will include OUD/SUD residential treatment, crisis stabilization and withdrawal management
services provided in IMDs, which are not otherwise matchable expenditures under section 1903
of the Act. Medicaid beneficiaries residing in IMDs under the terms of this demonstration will
have coverage of all benefits that would otherwise be covered if the beneficiary were not
residing in an IMD. Effective upon CMS’ approval of this demonstration, methadone treatment
services will be a covered service under the state plan for Medicaid beneficiaries.
The coverage of OUD/SUD residential treatment, crisis stabilization, withdrawal management
and methadone treatment services will expand Kentucky’s current SUD benefit package
available to all Medicaid beneficiaries as outlined in Table 2. Note: room and board costs are not
considered allowable costs for residential treatment service providers unless they qualify as
inpatient facilities under section 1905(a) of the Act.
Table 2: Kentucky SUD Benefits Coverage with Expenditure Authority
SUD Benefit

Medicaid
Authority

Costs Not
Otherwise
Matchable

Early Intervention (Screening, Brief
State plan
Intervention and Referral to Treatment) (Individual
services
covered)
Outpatient Therapy (Individual; Group; State plan
Family; Collateral)
(Individual

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Intensive Outpatient Program

Partial Hospitalization Treatment
(including Day Treatment for
children/youth under the age of 21)
Residential Treatment

Medically Supervised Withdrawal
Management
Medication-Assisted Treatment (MAT)
Methadone treatment for opioid
dependence

Peer Support (including Parent/Family
Peer Support)
Crisis Intervention (including Mobile
Crisis)

Residential Crisis Stabilization

92.

services
covered)
State plan
(Individual
services
covered)
State plan
(Individual
services
covered)
State plan
(Individual
services
covered)
State plan
State plan
State Plan
(contingent on
this 1115
demonstration
waiver of
NEMT)
State plan
State plan
(Individual
services
covered)
State plan
(Individual
services
covered)

Services provided to
individuals in IMDs

Services provided to
individuals in IMDs
Services provided to
individuals in IMDs
Services provided to
individuals in IMDs

Services provided to
individuals in IMDs

Services provided to
individuals in IMDs

Methadone Treatment Services. “Methadone Treatment Services” will be covered in
the Medicaid state plan. A waiver of the NEMT assurance is granted for Methadone
Treatment Services to allow the state not to provide NEMT for methadone services to all
Medicaid beneficiaries, except that NEMT for methadone services will be provided for
children under age 21 who are subject to EPSDT, former foster care youth, and for
pregnant women. (A waiver of the NEMT assurance for all other Medicaid covered
services is granted for beneficiaries eligible through the new adult group, as defined in 42
CFR 435.119, except for beneficiaries in that group who are under age 21 and subject to
EPSDT, pregnant, medically frail, or former foster care youth.)

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a.

93.

The components of Methadone Treatment Services are defined in the Medicaid
state plan.

SUD Implementation Protocol. The state must submit a SUD Implementation Protocol
within 120 calendar days after approval of this demonstration. The protocol must be
approved by CMS. The state may not claim FFP for services provided in IMDs until
CMS has approved the SUD Implementation Protocol. Once approved, the SUD
Implementation Protocol will be incorporated into these STCs, as Attachment C, and
once incorporated, may be altered only with CMS approval. After approval of the SUD
Implementation Protocol, FFP will be available prospectively, not retrospectively.
Failure to submit a SUD Implementation Protocol or failure to obtain CMS approval will
be considered a material failure to comply with the terms of the demonstration project as
described in 42 CFR 431.420(d) and, as such, would be grounds for termination or
suspension of the IMD expenditure authority. Failure to progress in meeting the
milestone goals agreed upon by the state and CMS will result in a funding deferral or
withholding.
At a minimum, the SUD Implementation Protocol will describe the strategic approach
and detailed project implementation plan, including timetables and programmatic content
where applicable, for meeting the following milestones that reflect the key goals and
objectives of the SUD component of this demonstration program:
a.

b.

c.

d.

Access to Critical Levels of Care for OUD and other SUDs: Service delivery
for new benefits, including residential treatment, crisis stabilization and
withdrawal management within 24 months of demonstration approval;
Use of Evidence-based SUD-specific Patient Placement Criteria:
Establishment of a requirement that MCOs and providers assess treatment needs
based on SUD-specific, multidimensional assessment tools, such as the ASAM
Criteria or other comparable assessment and placement tools that reflect evidencebased clinical treatment guidelines within 24 months of demonstration approval;
Patient Placement: Establishment of a utilization management approach such
that beneficiaries have access to SUD services at the appropriate level of care and
that the interventions are appropriate for the diagnosis and level of care, including
an independent process for reviewing placement in residential treatment settings
within 24 months of demonstration approval;
Use of Nationally Recognized SUD-specific Program Standards to set
Provider Qualifications for Residential Treatment Facilities: Currently,
residential treatment service providers must be accredited by the Commission on
the Accreditation of Rehabilitation Facilities and must be a licensed organization,
pursuant to the residential service provider qualifications described in the
Kentucky Medicaid state plan. The state will establish residential treatment
provider qualifications in licensure, policy or provider manuals, managed care
contracts or credentialing, or other requirements or guidance that meet program
standards in the ASAM Criteria or other comparable, nationally recognized, SUDspecific program standards regarding in particular the types of services, hours of

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e.

f.

g.

h.

i.
j.

94.

clinical care, and credentials of staff for residential treatment settings within 24
months of SUD program demonstration approval;
Standards of Care: Establishment of a provider review process to ensure that
residential treatment providers deliver care consistent with the specifications in
the ASAM Criteria or other comparable, nationally recognized SUD program
standards based on evidence-based clinical treatment guidelines for types of
services, hours of clinical care, and credentials of staff for residential treatment
settings within 12-24 months of SUD program demonstration approval;
Standards of Care: Establishment of a requirement that residential treatment
providers offer MAT on-site or facilitate access to MAT off-site within 12-24
months of SUD program demonstration approval;
Sufficient Provider Capacity at Critical Levels of Care including Medication
Assisted Treatment for OUD: An assessment of the availability of providers in
the key levels of care throughout the state, or in the regions of the state
participating under the demonstration including those that offer MAT, within 12
months of SUD program demonstration approval over the course of the
demonstration;
Implementation of Comprehensive Treatment and Prevention Strategies to
Address Opioid Abuse and OUD: Implementation of opioid prescribing
guidelines along with other interventions to prevent prescription drug abuse and
expand access to naloxone;
SUD Health IT Plan: Implementation of the milestones and metrics as described
in Attachment E; and
Improved Care Coordination and Transitions between levels of care:
Establishment and implementation of policies to ensure residential and inpatient
facilities link beneficiaries with community-based services and supports following
stays in these facilities within 24 months of SUD program demonstration
approval.

SUD Monitoring Protocol. The state must submit an SUD Monitoring Protocol within
150 calendar days after approval of the demonstration. The SUD Monitoring Protocol
must be developed in cooperation with CMS and is subject to CMS approval. Upon
approval, the SUD Monitoring Plan Protocol will be incorporated into these STCs, as
Attachment D. At a minimum, the SUD Monitoring Protocol will include reporting
relevant to each of the program implementation areas listed in STC 93. In addition, the
SUD Monitoring Protocol will include regular reporting by the state on access to
medication assisted therapy (MAT) in each county of the state, availability of MAT
providers in each county, the number of individuals accessing MAT including methadone
in each county, as well as the estimated cost of providing NEMT for accessing
methadone in each county. The protocol will also describe the data collection, reporting
and analytic methodologies for performance measures identified by the state and CMS
for inclusion in the protocol. The SUD Monitoring Protocol will specify the methods of
data collection and timeframes for reporting on the state’s progress on required measures
as part of the general reporting requirements described in these STCs. In addition, for
each performance measure, the SUD Monitoring Protocol will identify a baseline, a target
to be achieved by the end of the demonstration and an annual goal for closing the gap

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between baseline and target expressed as percentage points. Where possible, baselines
will be informed by state data, and targets will be benchmarked against performance in
best practice settings. CMS will closely monitor demonstration spending on services in
IMDs to ensure adherence to budget neutrality requirements.
95.

Mid-Point Assessment. The state must conduct an independent mid-point assessment
within ninety (90) days after the third year after approval of this demonstration. The
assessor must collaborate with key stakeholders, including representatives of MCOs,
SUD treatment providers, beneficiaries, and other key partners in the design, planning
and conducting of the mid-point assessment. The assessment will include an examination
of progress toward meeting each milestone and timeframe approved in the SUD
Implementation Protocol, and toward closing the gap between baseline and target each
year in performance measures as approved in the SUD Monitoring Protocol. The
assessment will also include a determination of factors that affected achievement on the
milestones and performance measure gap closure percentage points to date, and a
determination of selected factors likely to affect future performance in meeting
milestones and targets not yet met and the risk of possibly missing those milestones and
performance targets. For each milestone and measure target at medium to high risk of
not being achieved, the assessor will provide for consideration by the state,
recommendations for adjustments in the state’s implementation plan or to pertinent
factors that the state can influence that will support improvement. The assessor will
provide a report to the state that includes the methodologies used for examining progress
and assessing risk, the limitations of the methodologies, its determinations and any
recommendations. A copy of the report will be provided to CMS. CMS will be briefed
on the report.
For milestones and measure targets at medium to high risk of not being achieved, the
state will submit to CMS modifications to the SUD Implementation Protocol and SUD
Monitoring Protocols for ameliorating these risks subject to CMS approval.

96.

Deferral of Federal Financial Participation (FFP) from IMD Claiming for
Insufficient Progress Towards Milestones. Up to $5M in FFP for services in IMDs
may be deferred if the state is not making adequate progress on meeting the milestones
and goals as evidenced by reporting on the milestones in Table 2 and the required
performance measures in the Monitoring Protocol agreed upon by the state and CMS.
Once CMS determines the state has not made adequate progress, up to $5M will be
deferred in the next calendar quarter and each calendar quarter thereafter until the CMS
has determined sufficient progress has been made.

97.

SUD Evaluation. The SUD Evaluation will be subject to the same terms as the overall
demonstration evaluation, as listed in Section XIII of these STCs.

98.

SUD Evaluation Design. The state must submit, for CMS comment and approval, a
draft SUD Evaluation Design with implementation timeline, no later than one hundred
eighty (180) days after approval of the demonstration. Failure to submit an acceptable
and timely evaluation design along with any required monitoring, expenditure, or other

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evaluation reporting will subject the state to a $5 million deferral. The state must use an
independent evaluator to design the evaluation.
a.
Evaluation Design Approval and Updates. The state must submit a revised
draft SUD Evaluation Design within sixty (60) days after receipt of CMS’
comments. Upon CMS approval of the draft Evaluation Design, the document
will be included as an attachment to these STCs. Per 42 CFR 431.424(c), the
state will publish the approved SUD Evaluation Design within thirty (30) days of
CMS approval. The state must implement the SUD Evaluation Design and
submit a description of its evaluation implementation progress in each of the
Monitoring Reports, including any required Rapid Cycle Assessments specified in
these STCs.
b.
Evaluation Questions and Hypotheses Specific to the SUD Program. The
state must follow the general evaluation questions and hypotheses requirements as
specified in STC 82. In addition, hypotheses for the SUD program should include
an assessment of the objectives of the SUD component of this demonstration, to
include (but is not limited to) initiative and compliance with treatment, utilization
of health services (emergency department and inpatient hospital settings), and a
reduction in key outcomes such as deaths due to overdose. The SUD Evaluation
Design must include a discussion of the evaluation questions and hypotheses that
the state intends to test. Each demonstration component should have at least one
evaluation question and hypothesis. The hypothesis testing should include, where
possible, assessment of both process and outcome measures. The hypotheses
should include an assessment of the objectives of SUD section 1115
demonstrations, to include (but is not limited to): initiation and compliance with
treatment; utilization of health services including emergency department and
inpatient hospital settings; effectiveness of MAT; interaction of MAT impact and
access to NEMT; impact of the demonstration on key outcomes including deaths
due to overdose; and cost effectiveness of the demonstration, particularly services
provided in IMDs and the waiver of NEMT.
Proposed measures should be selected from nationally-recognized sources and
national measure sets, where possible. Measures set could include CMS’s Core
Set of Health Care Quality Measures for Children in Medicaid and CHIP,
Consumer Assessment of Health Care Providers and Systems (CAHPS), the
Initial Core Set of Health Care Quality Measures for Medicaid-Eligible Adults
and/or measures endorsed by National Quality Forum (NQF). Data to evaluate
the NEMT waiver impact on MAT shall include a beneficiary survey to be
approved by CMS.
99.

SUD Interim Evaluation Report. The state must submit a SUD Interim Evaluation
Report for the completed years of the demonstration, and for each subsequent renewal or
extension of the demonstration, as outlined in 42 CFR 431.412(c)(2)(vi). When
submitting an application for renewal, the SUD Interim Evaluation Report should be
posted to the state’s website with the application for public comment.
a.
The SUD Interim Evaluation Report will discuss evaluation progress and present
findings to date as per the approved evaluation design.

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b.

c.

d.

e.

100.

For demonstration authority that expires prior to the overall demonstration’s
expiration date, the SUD Interim Evaluation Report must include an evaluation of
the authority as approved by CMS.
If the state is seeking to renew or extend the demonstration, the draft SUD Interim
Evaluation Report is due when the application for renewal is submitted. If the
state made changes to the demonstration in its application for renewal, the
research questions and hypotheses, and how the design will be adapted, should be
included. If the state is not requesting a renewal for a demonstration, a SUD
Interim Evaluation report is due one (1) year prior to the end of the
demonstration. For demonstration phase outs prior to the expiration of the
approval period, the draft SUD Interim Evaluation Report is due to CMS on the
date that will be specified in the notice of termination or suspension.
The state must submit the final Interim Evaluation Report 60 days after receiving
CMS comments on the draft SUD Interim Evaluation Report and post the
document to the state’s website.
The SUD Interim Evaluation Report must comply with Attachment B of these
STCs.

SUD Summative Evaluation Report. The draft Summative Evaluation Report must be
developed in accordance with Attachment B of these STCs. The state must submit a draft
Summative Evaluation Report for the demonstration’s current approval period within 18
months of the end of the approval period represented by these STCs. The Summative
Evaluation Report must include the information in the approved Evaluation Design.
a.
Unless otherwise agreed upon in writing by CMS, the state shall submit the final
Summative Evaluation Report within 60 days of receiving comments from CMS
on the draft.
b.
The final Summative Evaluation Report must be posted to the state’s Medicaid
website within 30 days of approval by CMS.

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Attachment A: Developing the Evaluation Design
Introduction
For states that are testing new approaches and flexibilities in their Medicaid programs through
section 1115 demonstrations, evaluations are crucial to understand and disseminate what is or is
not working and why. The evaluations of new initiatives seek to produce new knowledge and
direction for programs and inform Medicaid policy for the future. While a narrative about what
happened during a demonstration provides important information, the principal focus of the
evaluation of a section 1115 demonstration should be obtaining and analyzing data on the
process (e.g., whether the demonstration is being implemented as intended), outcomes (e.g.,
whether the demonstration is having the intended effects on the target population), and impacts
of the demonstration (e.g., whether the outcomes observed in the targeted population differ from
outcomes in similar populations not affected by the demonstration). Both state and federal
governments need rigorous quantitative and qualitative evidence to inform policy decisions.
Expectations for Evaluation Designs
All states with Medicaid section 1115 demonstrations are required to conduct an evaluation, and
the Evaluation Design is the roadmap for conducting the evaluation. The roadmap begins with
the stated goals for the demonstration followed by the measurable evaluation questions and
quantifiable hypotheses, all to support a determination of the extent to which the demonstration
has achieved its goals. When conducting analyses and developing the evaluation reports, the
state must follow the approved methodology. However, the state may request, and CMS may
agree to, changes in the methodology in appropriate circumstances.
The format for the Evaluation Design is as follows:
A. General Background Information;
B. Evaluation Questions and Hypotheses;
C. Methodology;
D. Methodological Limitations;
E. Attachments.
Submission Timelines
There is a specified timeline for the state’s submission of Evaluation Design and Reports. (The
graphic below depicts an example of this timeline). In addition, the state should be aware that
section 1115 evaluation documents are public records. The state is required to publish the
Evaluation Design to the state’s website within thirty (30) days of CMS approval, as per 42 CFR
431.424(e). CMS will also publish a copy to the Medicaid.gov website.

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Required Core Components of All Evaluation Designs
The Evaluation Design sets the stage for the Interim and Summative Evaluation Reports. It is
important that the Evaluation Design explain the goals and objectives of the demonstration, the
hypotheses related to the demonstration, and the methodology (and limitations) for the
evaluation. A copy of the state’s Driver Diagram (described in more detail in paragraph B2
below) should be included with an explanation of the depicted information.
A. General Background Information – In this section, the state should include basic
information about the demonstration, such as:
1) The issue/s that the state is trying to address with its section 1115 demonstration and/or
expenditure authorities, the potential magnitude of the issue/s, and why the state
selected this course of action to address the issue/s (e.g., a narrative on why the state
submitted an 1115 demonstration proposal).
2) The name of the demonstration, approval date of the demonstration, and period of time
covered by the evaluation;
3) A brief description of the demonstration and history of the implementation, and
whether the draft Evaluation Design applies to an amendment, extension, renewal, or
expansion of, the demonstration;
4) For renewals, amendments, and major operational changes: A description of any
changes to the demonstration during the approval period; the primary reason or reasons
for the change; and how the Evaluation Design was altered or augmented to address
these changes.
5) Describe the population groups impacted by the demonstration.
B. Evaluation Questions and Hypotheses – In this section, the state should:
1) Describe how the state’s demonstration goals are translated into quantifiable targets
for improvement, so that the performance of the demonstration in achieving these
targets could be measured.

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2) Include a Driver Diagram to visually aid readers in understanding the rationale behind
the cause and effect of the variants behind the demonstration features and intended
outcomes. A driver diagram is a particularly effective modeling tool when working
to improve health and health care through specific interventions. The diagram
includes information about the goal of the demonstration, and the features of the
demonstration. A driver diagram depicts the relationship between the aim, the
primary drivers that contribute directly to achieving the aim, and the secondary
drivers that are necessary to achieve the primary drivers for the demonstration. For
an example and more information on driver diagrams:
https://innovation.cms.gov/files/x/hciatwoaimsdrvrs.pdf
3) Identify the state’s hypotheses about the outcomes of the demonstration:
a. Discuss how the evaluation questions align with the hypotheses and the goals of
the demonstration;
b. Address how the research questions / hypotheses of this demonstration promote
the objectives of Titles XIX and/or XXI.
C. Methodology – In this section, the state is to describe in detail the proposed research
methodology. The focus is on showing that the evaluation meets the prevailing standards
of scientific and academic rigor, and the results are statistically valid and reliable, and
that where appropriate it builds upon other published research (use references).
This section provides the evidence that the demonstration evaluation will use the best
available data; reports on, controls for, and makes appropriate adjustments for the
limitations of the data and their effects on results; and discusses the generalizability of
results. This section should provide enough transparency to explain what will be
measured and how. Specifically, this section establishes:
1) Evaluation Design – Provide information on how the evaluation will be designed. For
example, will the evaluation utilize a pre/post comparison? A post-only assessment?
Will a comparison group be included?
2) Target and Comparison Populations – Describe the characteristics of the target and
comparison populations, to include the inclusion and exclusion criteria. Include
information about the level of analysis (beneficiary, provider, or program level), and
if populations will be stratified into subgroups. Additionally discuss the sampling
methodology for the populations, as well as support that a statistically reliable sample
size is available.
3) Evaluation Period – Describe the time periods for which data will be included.
4) Evaluation Measures – List all measures that will be calculated to evaluate the
demonstration. Include the measure stewards (i.e., the organization(s) responsible for
the evaluation data elements/sets by “owning”, defining, validating; securing; and
submitting for endorsement, etc.) Include numerator and denominator information.
Additional items to ensure:
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a. The measures contain assessments of both process and outcomes to evaluate
the effects of the demonstration during the period of approval.
b. Qualitative analysis methods may be used, and must be described in detail.
c. Benchmarking and comparisons to national and state standards, should be
used, where appropriate.
d. Proposed health measures could include CMS’s Core Set of Health Care
Quality Measures for Children in Medicaid and CHIP, Consumer Assessment
of Health Care Providers and Systems (CAHPS), the Initial Core Set of Health
Care Quality Measures for Medicaid-Eligible Adults and/or measures
endorsed by National Quality Forum (NQF).
e. Proposed performance metrics can be selected from nationally recognized
metrics, for example from sets developed by the Center for Medicare and
Medicaid Innovation or for meaningful use under Health Information
Technology (HIT).
f. Among considerations in selecting the metrics must be opportunities
identified by the state for improving quality of care and health outcomes, and
controlling cost of care.
5) Data Sources – Explain where the data will be obtained, and efforts to validate and
clean the data. Discuss the quality and limitations of the data sources.
If primary data (data collected specifically for the evaluation) – The methods by
which the data will be collected, the source of the proposed question/responses, the
frequency and timing of data collection, and the method of data collection. (Copies
of any proposed surveys must be reviewed with CMS for approval before
implementation).
6) Analytic Methods – This section includes the details of the selected quantitative
and/or qualitative measures to adequately assess the effectiveness of the
demonstration. This section should:
a. Identify the specific statistical testing which will be undertaken for each
measure (e.g., t-tests, chi-square, odds ratio, ANOVA, regression). Table A is
an example of how the state might want to articulate the analytic methods for
each research question and measure.
b. Explain how the state will isolate the effects of the demonstration (from other
initiatives occurring in the state at the same time) through the use of
comparison groups.
c. A discussion of how propensity score matching and difference in differences
design may be used to adjust for differences in comparison populations over
time (if applicable).
d. The application of sensitivity analyses, as appropriate, should be considered.
7) Other Additions – The state may provide any other information pertinent to the
Evaluation Design of the demonstration.
Table A. Example Design Table for the Evaluation of the Demonstration

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Research
Question
Hypothesis 1
Research
question 1a

Research
question 1b

Hypothesis 2
Research
question 2a

Outcome measures
used to address the
research question
-Measure 1
-Measure 2
-Measure 3
-Measure 1
-Measure 2
-Measure 3
-Measure 4

-Measure 1
-Measure 2

Sample or population
subgroups to be compared

Data Sources

Analytic Methods

-Sample e.g. All attributed
Medicaid beneficiaries
-Beneficiaries with diabetes
diagnosis
-sample, e.g., PPS patients
who meet survey selection
requirements (used
services within the last 6
months)

-Medicaid fee-forservice and
encounter claims
records
-Patient survey

-Interrupted time
series

-Sample, e.g., PPS
administrators

-Key informants

Qualitative
analysis of
interview material

Descriptive
statistics

D. Methodological Limitations – This section provides detailed information on the
limitations of the evaluation. This could include the design, the data sources or collection
process, or analytic methods. The state should also identify any efforts to minimize the
limitations. Additionally, this section should include any information about features of
the demonstration that effectively present methodological constraints that the state would
like CMS to take into consideration in its review. For example:
1) When the state demonstration is:
a. Long-standing, non-complex, unchanged, or
b. Has previously been rigorously evaluated and found to be successful, or
c. Could now be considered standard Medicaid policy (CMS published
regulations or guidance)
2) When the demonstration is also considered successful without issues or concerns that
would require more regular reporting, such as:
a. Operating smoothly without administrative changes; and
b. No or minimal appeals and grievances; and
c. No state issues with CMS 64 reporting or budget neutrality; and
d. No Corrective Action Plans (CAP) for the demonstration.
E. Attachments
A. Independent Evaluator. This includes a discussion of the state’s process for
obtaining an independent entity to conduct the evaluation, including a description of
the qualifications that the selected entity must possess, and how the state will assure
no conflict of interest. Explain how the state will assure that the Independent
Evaluator will conduct a fair and impartial evaluation, prepare an objective
Evaluation Report, and that there would be no conflict of interest. This includes “No
Conflict of Interest” signed conformation statements.

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B. Evaluation Budget. A budget for implementing the evaluation must be provided
with the draft Evaluation Design. It will include the total estimated cost, as well as a
breakdown of estimated staff, administrative, and other costs for all aspects of the
evaluation. Examples include, but are not limited to: the development of all survey
and measurement instruments; quantitative and qualitative data collection; data
cleaning and analyses; and reports generation. A justification of the costs may be
required by CMS if the estimates provided do not appear to sufficiently cover the
costs of the draft Evaluation Design or if CMS finds that the draft Evaluation Design
is not sufficiently developed.
D. Timeline and Major Milestones. Describe the timeline for conducting the various
evaluation activities, including dates for evaluation-related milestones, including
those related to procurement of an outside contractor, if applicable, and deliverables.
The Final Evaluation Design must incorporate an Interim and Summative Evaluation.
Pursuant to 42 CFR 431.424(c)(v), this timeline should also include the date by which
the Final Summative Evaluation report is due.

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Attachment B: Preparing the Interim and Summative Evaluation Reports
Introduction
For states that are testing new approaches and flexibilities in their Medicaid programs through
section 1115 demonstrations, evaluations are crucial to understand and disseminate what is or is
not working and why. The evaluations of new initiatives seek to produce new knowledge and
direction for programs and inform Medicaid policy for the future. While a narrative about what
happened during a demonstration provides important information, the principal focus of the
evaluation of a section 1115 demonstration should be obtaining and analyzing data on the
process (e.g., whether the demonstration is being implemented as intended), outcomes (e.g.,
whether the demonstration is having the intended effects on the target population), and impacts
of the demonstration (e.g., whether the outcomes observed in the targeted population differ from
outcomes in similar populations not affected by the demonstration). Both state and federal
governments need improved quantitative and qualitative evidence to inform policy decisions.
Expectations for Evaluation Reports
Medicaid section 1115 demonstrations are required to conduct an evaluation that is valid (the
extent to which the evaluation measures what it is intended to measure), and reliable (the extent
to which the evaluation could produce the same results when used repeatedly). To this end, the
already approved Evaluation Design is a map that begins with the demonstration goals, then
transitions to the evaluation questions, and to the specific hypotheses, which will be used to
investigate whether the demonstration has achieved its goals. States should have a wellstructured analysis plan for their evaluation. As these valid analyses multiply (by a single state
or by multiple states with similar demonstrations) and the data sources improve, the reliability of
evaluation findings will be able to shape Medicaid policy in order to improve the health and
welfare of Medicaid beneficiaries for decades to come. When submitting an application for
renewal, the interim evaluation report should be posted on the state’s website with the
application for public comment. Additionally, the interim evaluation report must be included in
its entirety with the application submitted to CMS.
Intent of this Guidance
Title XIX of the Social Security Act (the Act) requires an evaluation of every section 1115
demonstration. In order to fulfill this requirement, the state’s submission must provide a
comprehensive written presentation of all key components of the demonstration, and include all
required elements specified in the approved Evaluation Design. This Guidance is intended to
assist states with organizing the required information in a standardized format and understanding
the criteria that CMS will use in reviewing the submitted Interim and Summative Evaluation
Reports.
The format for the Interim and Summative Evaluation reports is as follows:
A. Executive Summary;
B. General Background Information;
C. Evaluation Questions and Hypotheses;
D. Methodology;
E. Methodological Limitations;
F. Results;
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G.
H.
I.
J.

Conclusions;
Interpretations, and Policy Implications and Interactions with Other State Initiatives;
Lessons Learned and Recommendations; and
Attachment(s).

Submission Timelines
There is a specified timeline for the state’s submission of Evaluation Designs and Evaluation
Reports. These dates are specified in the demonstration Special Terms and Conditions (STCs).
(The graphic below depicts an example of this timeline). In addition, the state should be aware
that section 1115 evaluation documents are public records. In order to assure the dissemination
of the evaluation findings, lessons learned, and recommendations, the state is required to publish
the evaluation design and reports to the state’s website within thirty (30) days of CMS approval,
as per 42 CFR 431.424(d). CMS will also publish a copy to the Medicaid.gov website.

Required Core Components of Interim and Summative Evaluation Reports
The section 1115 Evaluation Report presents the research about the section 1115 Demonstration.
It is important that the report incorporate a discussion about the structure of the Evaluation
Design to explain the goals and objectives of the demonstration, the hypotheses related to the
demonstration, and the methodology for the evaluation. A copy of the state’s Driver Diagram
(described in the Evaluation Design guidance) must be included with an explanation of the
depicted information. The Evaluation Report should present the relevant data and an
interpretation of the findings; assess the outcomes (what worked and what did not work); explain
the limitations of the design, data, and analyses; offer recommendations regarding what (in
hindsight) the state would further advance, or do differently, and why; and discuss the
implications on future Medicaid policy. Therefore, the state’s submission must include:
A. Executive Summary – A summary of the demonstration, the principal results,
interpretations, and recommendations of the evaluation.
B. General Background Information about the Demonstration – In this section, the state
should include basic information about the demonstration, such as:
1) The issues that the state is trying to address with its section 1115 demonstration and/or
expenditure authorities, how the state became aware of the issue, the potential
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2)
3)

4)

5)

magnitude of the issue, and why the state selected this course of action to address the
issues.
The name of the demonstration, approval date of the demonstration, and period of time
covered by the evaluation;
A brief description of the demonstration and history of the implementation, and if the
evaluation is for an amendment, extension, renewal, or expansion of, the
demonstration;
For renewals, amendments, and major operational changes: A description of any
changes to the demonstration during the approval period; whether the motivation for
change was due to political, economic, and fiscal factors at the state and/or federal
level; whether the programmatic changes were implemented to improve beneficiary
health, provider/health plan performance, or administrative efficiency; and how the
Evaluation Design was altered or augmented to address these changes.
Describe the population groups impacted by the demonstration.

C. Evaluation Questions and Hypotheses – In this section, the state should:
1) Describe how the state’s demonstration goals were translated into quantifiable targets
for improvement, so that the performance of the demonstration in achieving these
targets could be measured. The inclusion of a Driver Diagram in the Evaluation
Report is highly encouraged, as the visual can aid readers in understanding the
rationale behind the demonstration features and intended outcomes.
2) Identify the state’s hypotheses about the outcomes of the demonstration;
a. Discuss how the goals of the demonstration align with the evaluation questions
and hypotheses;
b. Explain how this Evaluation Report builds upon and expands earlier
demonstration evaluation findings (if applicable); and
c. Address how the research questions / hypotheses of this demonstration promote
the objectives of Titles XIX and XXI.
D. Methodology – In this section, the state is to provide an overview of the research that
was conducted to evaluate the section 1115 demonstration consistent with the approved
Evaluation Design. The evaluation Design should also be included as an attachment to
the report. The focus is on showing that the evaluation builds upon other published
research (use references), and meets the prevailing standards of scientific and academic
rigor, and the results are statistically valid and reliable.
An interim report should provide any available data to date, including both quantitative
and qualitative assessments. The Evaluation Design should assure there is appropriate
data development and collection in a timely manner to support developing an interim
evaluation.
This section provides the evidence that the demonstration evaluation used the best
available data and describes why potential alternative data sources were not used;
reported on, controlled for, and made appropriate adjustments for the limitations of the
data and their effects on results; and discusses the generalizability of results. This section
should provide enough transparency to explain what was measured and how.
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Specifically, this section establishes that the approved Evaluation Design was followed
by describing:
1) Evaluation Design—Will the evaluation be an assessment of: pre/post, post-only,
with or without comparison groups, etc?
2) Target and Comparison Populations—Describe the target and comparison
populations; include inclusion and exclusion criteria.
3) Evaluation Period—Describe the time periods for which data will be collected
4) Evaluation Measures—What measures are used to evaluate the demonstration, and
who are the measure stewards?
5) Data Sources—Explain where the data will be obtained, and efforts to validate and
clean the data.
6) Analytic methods—Identify specific statistical testing which will be undertaken for
each measure (t-tests, chi-square, odds ratio, ANOVA, regression, etc.).
7) Other Additions – The state may provide any other information pertinent to the
evaluation of the demonstration.
E. Methodological Limitations
This section provides sufficient information for discerning the strengths and weaknesses
of the study design, data sources/collection, and analyses.
F. Results – In this section, the state presents and uses the quantitative and qualitative data
to show to whether and to what degree the evaluation questions and hypotheses of the
demonstration were achieved. The findings should visually depict the demonstration
results (tables, charts, graphs). This section should include information on the statistical
tests conducted.
G. Conclusions – In this section, the state will present the conclusions about the evaluation
results.
1) In general, did the results show that the demonstration was/was not effective in
achieving the goals and objectives established at the beginning of the demonstration?
2) Based on the findings, discuss the outcomes and impacts of the demonstration and
identify the opportunities for improvements. Specifically:
a. If the state did not fully achieve its intended goals, why not? What could be done
in the future that would better enable such an effort to more fully achieve those
purposes, aims, objectives, and goals?
H. Interpretations, Policy Implications and Interactions with Other State Initiatives –
In this section, the state will discuss the section 1115 demonstration within an overall
Medicaid context and long range planning. This should include interrelations of the
demonstration with other aspects of the state’s Medicaid program, interactions with other
Medicaid demonstrations, and other federal awards affecting service delivery, health
outcomes and the cost of care under Medicaid. This section provides the state with an
opportunity to provide interpretation of the data using evaluative reasoning to make
judgments about the demonstration. This section should also include a discussion of the
implications of the findings at both the state and national levels.
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I. Lessons Learned and Recommendations – This section of the Evaluation Report
involves the transfer of knowledge. Specifically, the “opportunities” for future or revised
demonstrations to inform Medicaid policymakers, advocates, and stakeholders is just as
significant as identifying current successful strategies. Based on the evaluation results:
1. What lessons were learned as a result of the demonstration?
2. What would you recommend to other states which may be interested in implementing
a similar approach?
J. Attachment
Evaluation Design: Provide the CMS-approved Evaluation Design

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Attachment C: SUD Implementation Protocol
[To be incorporated after CMS approval.]

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Attachment D: SUD Monitoring Protocol
[To be incorporated after CMS approval.]

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ATTACHMENT E: SUD Health Information Technology (Health IT)
Health Information Technology (“Health IT”). The state will provide CMS with an assurance
that it has a sufficient health IT infrastructure/”ecosystem” at every appropriate level (i.e. state,
delivery system, health plan/MCO and individual provider) to achieve the goals of the
demonstration—or it will submit to CMS a plan to develop the infrastructure/capabilities. This
“SUD Health IT Plan,” or assurance, will be included as a section of the state’s “Implementation
Plan” (see STC 93) to be approved by CMS. The SUD Health IT Plan will detail the necessary
health IT capabilities in place to support beneficiary health outcomes to address the SUD goals
of the demonstration. The plan will also be used to identify areas of SUD health IT ecosystem
improvement.
a. The SUD Health IT section of the Implementation plan will include implementation
milestones and dates for achieving them (see Attachment C).
b. The SUD Health IT Plan must be aligned with the state’s broader State Medicaid Health
IT Plan (SMHP) and, if applicable, the State’s Behavioral Health (BH) and/or BH “Health
IT” Plan.
c. The SUD Health IT Plan will describe the state’s goals, each DY, to enhance the state’s
prescription drug monitoring program’s (PDMP)1 ability to engage in interstate data
sharing among other state-based PDMPs in order to better track patient-specific
prescription data—and support regional law enforcement in cases of controlled substance
diversion.2
d. The SUD Health IT Plan will address how the state’s PDMP will enhance ease of use for
prescribers and other state and federal stakeholders.3 This will also include plans to
include PDMP interoperability with a statewide, regional or local Health Information
Exchange. Additionally, the SUD Health IT Plan will describe ways in which the state
will support clinicians in consulting the PDMP prior to prescribing a controlled
substance—and reviewing the patients’ history of controlled substance prescriptions—
prior to the issuance of a Controlled Substance Schedule II (CSII) opioid prescription.
e. The SUD Health IT Plan will, as applicable, describe the state’s capabilities to leverage a
master patient index (or master data management service, etc.) in support of SUD care
delivery. Additionally, the SUD Health IT Plan must describe current and future
capabilities regarding PDMP queries—and the state’s ability to properly match patients
receiving opioid prescriptions with patients in the PDMP. The state will also indicate
current efforts or plans to develop and/or utilize current patient index capability that
supports the programmatic objectives of the demonstration.
f. The SUD Health IT Plan will describe how the activities described in (a) through (e)
above will: a) support broader state and federal efforts to diminish the likelihood of longterm opioid use directly correlated to clinician prescribing patterns; and b) ensure
1

Prescription drug monitoring programs (PDMP) are electronic databases that track controlled substance
prescriptions in states. PDMPs can provide health authorities timely information about prescribing and patient
behaviors that contribute to the epidemic and facilitate a nimble and targeted response.

3

Ibid.

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g.

h.

i.

j.

Medicaid does not inappropriately pay for opioids and that states implement effective
controls to minimize the risk.4
In developing the Health IT Plan, states shall use the following resources.
1. States may use resources at Health IT.Gov
(https://www.healthit.gov/playbook/opioid-epidemic-and-health-it/) in “Section 4:
Opioid Epidemic and Health IT.”
2. States may also use the CMS 1115 Health IT resources available on “Medicaid
Program Alignment with State Systems to Advance HIT, HIE and Interoperability” at
https://www.medicaid.gov/medicaid/data-and-systems/hie/index.html. States should
review the “1115 Health IT Toolkit” for health IT considerations in conducting an
assessment and developing their Health IT Plans.
3. States may request from CMS technical assistance to conduct an assessment and
develop plans to ensure they have the specific health IT infrastructure with regards to
PDMP plans and, more generally, to meet the goals of the demonstration
The state will include in its monitoring Plan (see STC 94) an approach to monitoring its
SUD Health IT Plan which will include performance metrics provided by CMS or State
defined metrics to be approved in advance by CMS.
The state will monitor progress, each DY, on the implementation of its SUD Health IT
Plan in relationship to its milestones and timelines—and report on its progress to CMS in
in an addendum to its Annual Reports (see STC 58).
As applicable, the state should advance the standards identified in the ‘Interoperability
Standards Advisory—Best Available Standards and Implementation Specifications’ (ISA)
in developing and implementing the state’s SUD Health IT policies and in all related
applicable State procurements (e.g., including managed care contracts) that are associated
with this demonstration.
1. Where there are opportunities at the state- and provider-level (up to and including
usage in MCO or ACO participation agreements) to leverage federal funds associated
with a standard referenced in 45 CFR 170 Subpart B, the state should use the
federally-recognized standards, barring no other compelling state interest.
2. Where there are opportunities at the state- and provider-level to leverage federal
funds associated with a standard not already referenced in 45 CFR 170 but included
in the ISA, the state should use the federally-recognized ISA standards, barring no
other compelling State interest.

4

Shah, Anuj, Corey Hayes and Bradley Martin. Characteristics of Initial Prescription Episodes and Likelihood of
Long-Term Opioid Use — United States, 2006–2015. MMWR Morb Mortal Wkly Rep 2017;66.
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