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New York’s Section 1115 Demonstration Amendment Approved and With It Comes Big Changes

Medicaid Transformation Designed to Bridge the Gap Between Healthcare and Social Services


New York Section 1115 Waiver

February 28, 2024 – The Centers for Medicare & Medicaid Services (CMS) approved New York’s Section 1115 Demonstration Amendment in January and the state recently included the Waiver Amendment in the 2025 New York State Executive Budget. This pivotal development aims to bring transformative changes to the state’s Medicaid program, enhancing its ability to meet the diverse needs of its beneficiaries. 

What is this demonstration, and how does it affect consumers? In this blog, we are going to look at the key components of New York’s Section 1115 Demonstration Amendment, its expected impact on beneficiaries and healthcare providers, and the broader implications for healthcare policy in New York. As advocates, we see the unique innovation in this demonstration in the direct linkages between SDOH and VBP, along with the utilization of a regional oversight committee to ensure that the unique needs of specific populations are being met. You can check out our full advocate’s perspective at the end of the blog to learn more on our thoughts of how this initiative will impact consumers and quality of care! 8

What are Section 1115 Waivers?

Section 1115 of the Social Security Act allows the Secretary of Health and Human Services to approve experimental, pilot, or demonstration projects that are likely to assist in promoting the objectives of the Medicaid program. Section 1115 Demonstrations serve as a mechanism for states to test and implement innovative approaches within their Medicaid programs that diverge from federal standards.

One unique way that states are using Section 1115 waivers is to address health related social needs, also called social determinants of health (SDOH). This is something we’ve covered in a recent blog. Under these waivers, states can request federal matching funds to test SDoH-related services and supports. North Carolina and Washington have innovative pilot programs to address SDOH. The majority of approved and pending Section 1115 waivers include social determinants of health provisions and North Carolina and Washington, among others, are examples of how Section 1115 waivers can be used to address SDOH. This is something that New York takes a stab at as well through their new initiatives.

What Does New York’s Section 1115 Waiver Entail?

The waiver amendment, while still subject to legislative approval, was approved by CMS and included in the 2025 New York State Executive Budget. It focuses on several key areas designed to improve the quality, accessibility, and efficiency of care for Medicaid beneficiaries across the state.

One of the primary objectives of New York’s 1115 waiver amendment is to address health-related social needs (HRSN). Also known as social determinants of health, these factors are non-medical, but still significantly impact patient outcomes. In addition to investing in Social Care Networks and Health Equity Regional Organization as new Medicaid initiatives, the Waiver Amendment also implements a Medicaid Hospital Global Budget Initiative (MHGBI) and aims to address the health care workforce shortages.

Another critical component of the waiver amendment is the focus on value-based payment models. New York is committed to shifting away from traditional fee-for-service payment structures towards models that reward providers for delivering high-quality, cost-effective care. This approach incentivizes healthcare providers to focus on patient outcomes and the overall efficiency of care delivery, ultimately aiming to improve health outcomes while containing costs.

Social Care Networks and Health Equity Regional Organization – What Does it Mean for Consumers?

Recognizing that healthcare extends beyond the clinical setting, the amendment seeks to integrate services that address health-related social needs like housing, food insecurity, and employment, among others. This is done through various mechanisms. 

The first way to address health-related social needs is through a two-tiered system. All beneficiaries receive Level 1 services that include assessment case management and referral of members to existing state, federal and local programs. Level 2 services go beyond this and include HRSN services and are targeted to 11 criteria-specific populations enrolled in Medicaid managed care organizations (MMCOs). The populations include high utilizers, those with substance use disorders, and children under six, among others. These Level 2 services are called Enhanced Services and include nutrition, housing, and transportation support, and are paid for primarily through managed care on a non-risk basis. 

How is this done? Through specialized Social Care Networks spread across nine regions throughout the state. These integrated systems connect healthcare providers with a wide array of social services, ensuring that patients’ non-medical needs are addressed alongside their clinical care. The goal is to create a seamless ecosystem where healthcare professionals can refer patients to social services within their community, facilitating access to essential resources such as food assistance, housing support, and job training programs. 

By acknowledging and addressing these social needs, SCNs aim to improve individual health outcomes and reduce healthcare disparities. While Community Based Organizations (CBOs) in the Social Care Network will be paid on a FFS basis, the SCN will receive a value-based Per Member Per Month payment from Medicaid managed care organizations. There will also be additional performance-based payments available, but those details have not yet been specified. 

The Section 1115 Amendment also includes $125 million to create a Health Equity Regional Organization (HERO). This is a contracted statewide entity that is tasked with developing regionally focused approaches to reduce health disparities and support the delivery of HRSN services. The HERO will collect, analyze, and report data on health outcomes and social determinants of health. It will also facilitate stakeholder sessions and make recommendations to support value-based arrangements that support the program initiatives. 

The introduction of SCNs and HEROs within New York’s Medicaid program is expected to have a profound impact on the quality of care and the patient experience. By integrating social services with healthcare in a regional, targeted manner, SCNs ensure that patients’ holistic needs are met. This can potentially lead to improved health outcomes and greater patient satisfaction.

Medicaid Hospital Global Budget Initiative Implementation

The Waiver Amendment also approves funding of a Medicaid Hospital Global Budget Initiative. This is designed to help financially struggling hospitals in the state that are transitioning from volume-based reimbursement models to value-based models. $2.2 billion has been approved by CMS to provide funding to private not-for-profit hospitals that serve patient populations with poor health outcomes. 

To receive funding, hospitals must commit to applying to CMS CMMI AHEAD model or implement a model consistent with AHEAD. This multi-payor value-based care model is designed to advance health equity with states acting as a value-based care hub that partners with hospitals and primary care providers as well as organizations addressing Health Related Social Needs.  In addition, the Medicaid Hospital Global Budget Initiative also includes incentive payments to hospitals to help them build out the infrastructure necessary to be successful under a value-based payment model.

Advocates Perspective

The approval of New York’s Section 1115 Waiver Amendment signifies an innovative step forward in redefining Medicaid’s role in the state. By integrating Social Care Networks and Health Equity Regional Organizations, New York is launching a comprehensive approach that addresses both the medical and social determinants of health. This whole person care strategy acknowledges the interplay between an individual’s health and their environment. It aims to bridge the gap between clinical care and essential social services and does so utilizing value-based payments and managed care organizations. As these initiatives unfold, they hold the promise of not only enhancing the quality of care for Medicaid beneficiaries but also of setting a precedent for other states to follow. While this looks promising, with such an intricate program and a short timeframe for implementation, there is the potential for limited effectiveness. And while the HERO is very well funded, it plays a massive role in oversight for the demonstration and will ultimately be responsible for both achieving and demonstrating effectiveness. This is something that the state needs to get right in order for the demonstration to find success. As the program rolls out, we will be following along closely and keeping an eye on progress to see if the Section 1115 Amendment has the intended results.


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About the Author

Fady Sahhar brings over 30 years of senior management experience working with major multinational companies including Sara Lee, Mobil Oil, Tenneco Packaging, Pactiv, Progressive Insurance, Transitions Optical, PPG Industries and Essilor (France).

His corporate responsibilities included new product development, strategic planning, marketing management, and global sales. He has developed a number of global communications networks, launched products in over 45 countries, and managed a number of branded patented products.

mandy sahhar

About the Co-Author

Mandy Sahhar provides experience in digital marketing, event management, and business development. Her background has allowed her to get in on the ground floor of marketing efforts including website design, content marketing, and trade show planning. Through her modern approach, she focuses on bringing businesses into the new digital age of marketing through unique approaches and focused content creation. With a passion for communications, she can bring a fresh perspective to an ever-changing industry. Mandy has an MBA with a marketing concentration from Canisius College.