How Do Medicaid Agencies Improve Substance Use Treatment Benefits? Lessons from Three States' 1115 Waiver Experiences

Abstract

Abstract Context: In 2015, the Centers for Medicare and Medicaid Services (CMS) urged state Medicaid programs to use 1115 waiver demonstrations to expand substance use treatment benefits. We analyzed four critical points in states' decision-making processes before expanding benefits. Methods: We conducted qualitative cross-case comparison of three states that were early adopters of the 1115 waiver request. We conducted 44 interviews with key informants from CMS, Medicaid, and other state agencies, providers, and managed care organizations. Findings: Policy makers expanded substance use treatment in response to “fragmented” care systems and unsustainable funding streams. Medicaid staff had mixed preferences for implementing new benefits via 1115 waivers or state plan amendments. The 1115 waiver process enabled states to provide coverage for residential benefits, but state plan amendments made other services permanent parts of the benefit. Medicaid agencies relied on interorganizational networks to identify evidence-based practices. Medicaid staff secured legislative support for reform by focusing on program integrity concerns and downstream effects of substance use rather than Medicaid beneficiaries' needs. Conclusions: Decision-making processes were influenced by Medicaid agency characteristics and interorganizational partnerships, not federal executive branch influence. Lessons from early-adopter states provide a road map for other state Medicaid agencies considering similar reform.