1915(b) Freedom of Choice Waivers and Self-Direction

1915(b) Overview

In 1981, Congress authorized States to implement Section 1915(b) and Section 1115 Medicaid waivers to increase access to managed care and test innovative health care financing and delivery options. The U.S. Department of Health and Human Services granted these waivers to allow States to "waive" certain Medicaid requirements in Sections 1902 and 1903 of the Social Security Act and "mandate".enrol1ment of Medicaid eligibles in managed care programs.

Purpose of 1915(b) Waivers

Section 1915(b) of the Act permits certain provisions of section 1902 of the Act to be waived if necessary to implement a specific program to the extent that the Secretary finds it to be cost effective and efficient and not inconsistent with the purposes of title XIX.

The most frequently waived provisions of Section 1902 are freedom of choice (1902(a)(23)), Statewideness (1902(a)(I)), and comparability of services (1902(a)(10)). Provisions of Title XIX other than §1902 provisions may not be waived. Examples are §1903(m) requirements relating to health maintenance organizations and §1916 requirements relating to enrollment fees, premiums, cost sharing and other charges.

Section 1915(b) waivers may be granted only for one or more of the following purposes:

• Section 1915(b)(1) -- Primary Care Case Management Systems (PCCM) or Specialty Physician Services Arrangements

These systems or arrangements allow States to restrict the provider from or through whom a recipient can obtain medical care services. A PCCM program makes one person or entity responsible for locating, coordinating, and monitoring all primary care and other medical services on behalf of recipients involved in the program. The most common of these arrangements pays the case manager a monthly fee for coordinating care in addition to the usual fee for service reimbursement. A specialty services arrangement allows a State to restrict recipients of specialty services to designated providers such as restricting recipients in need of maternity related services to specific clinics.

Emergency services may not be restricted under these waivers, nor may the program impair recipients' access to quality service.

• Section l915(b)(2) -- Locality as a Central Broker

Under this provision, a locality may act as a central broker in assisting eligibleindividuals in choosing among competing health plans by providing recipientswith more information about the range of health care options available to them. The waiver may not impair recipients' access to quality services.

• Section 1915(b)(3) -- Sharing of Cost Savings

This provision allows for the sharing of cost savings resulting from the use of more cost efficient medical care for recipients by providing them with additional services. These services may be in the form of services not otherwise provided in the State plan or the elimination of service limitations. This waiver provision is not required if the Medicaid agency contracts on a prepaid basis for services over and above those offered in the State plan if the offer is consistent with 42 CFR 434.20(d) and 440.250(g).

• Section 1915(b)(4) Restriction of Recipients to Specified Providers

This provision requires recipients to obtain services only from specified providers who undertake to provide such services and meet reimbursement, quality, and utilization standards consistent with access, quality and efficient provision of covered care and services. This provision must be requested in order to waive section 1902(a)(23) of the state plan requiring that participants may obtain services from any qualified provider.  This provision must also be used if the State wishes to use competitive bidding in selecting the most cost effective and efficient providers of a service.

Self-Direction and 1915(b)

All policies pertaining to Independence Plus programs, self-directed care and Quality Management systems contained in the Section 1915 (c) application, instructions and guidance thereto; apply in a Section 1915(b) application.  Therefore, applicants must review the Section 1915 (c) waiver application for guidance in the preparation of a Section 1915(b) program. (See the link on this web page for the Section 1915 (c) waiver information.)

When providing opportunities for individual budgeting, states wishing to impose restrictions on freedom of choice under section 1915(b)(4), will need to consider how  participants may exercise full freedom of choice, particularly when the individual will be the employer of record.  For instance, an individual may want to hire a personal assistance worker who is not currently in the network.  While all credentialing and other provider qualifications still apply, the premise of self-direction is that the consumer may choose who provides the services, free from provider network restrictions imposed under 1915(b)(4). 

The use of cost savings through 1915(b)(3) authority may be an important source of funding for alternative services under self-direction.  Through the use of this authority, states can provide innovative services and supports which are not included in the state plan such as those found in Home and Community Based Waivers. 

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Page Last Modified: 12/16/2005 10:46:00 AM
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