SSA 1115A created the CMMI, which can develop programs it imposes on Medicare (or Medicaid, duals, etc). Older 1115 in contrast allows CMS to authorize waiver proposals that usually originate in state Medicaid programs.
1115 projects have been understood to be budget neutral, but recent legislation created 1115(g), more explicit and mandatory budget neutrality for Medicaid waivers, and inserting the CMS Actuary into the 1115 process.
Both SSA 1115(g) and SSA 1115A require budget-neutrality. CMS has never further defined this for 1115A, but CMS will now define the phrase in great detail for 1115(g). Whether there will be future cross-pollination in how CMS implements the same words "budget neutrality" in 1115 and in 1115A is TBD.
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CMS press release on new 1115(g) implementation
https://www.cms.gov/newsroom/press-releases/cms-takes-bold-new-approach-stewarding-medicaid-demonstration-project-spending
Medicaid.gov neutrality page
https://www.medicaid.gov/medicaid/section-1115-demonstrations/budget-neutrality
Essential Hospitals info
https://essentialhospitals.org/cms-publishes-section-1115-medicaid-demonstration-budget-neutrality-guidance/
Healthcare Dive
https://www.healthcaredive.com/news/cms-increases-oversight-of-state-medicaid-demonstrations/822778/
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You’re right to see two different “1115” worlds colliding. The key is that SSA §1115(a) (little a) is the old state Medicaid waiver/demonstration authority, while SSA §1115A (big A) is a separate ACA-created CMMI statute. The new development is not in §1115A; it is Public Law 119-21, §71118, which added a new §1115(g) budget-neutrality rule for Medicaid §1115 demonstrations. CMS calls that law the “Working Families Tax Cut” legislation, and CMS is now implementing it for approvals on or after January 1, 2027. (GovInfo)
1. SSA §1115: state Medicaid waiver / demonstration authority
Section 1115 is a broad demonstration statute. For Medicaid, it lets HHS/CMS approve state experimental, pilot, or demonstration projects that are likely to promote Medicaid objectives. It has two classic tools: CMS may waive certain Medicaid state-plan requirements, especially §1902 requirements, and may treat otherwise non-matchable demonstration costs as federally matchable Medicaid expenditures. (Social Security)
In practical Medicaid language, §1115 is where states go when they want a Medicaid waiver: eligibility changes, benefit experiments, delivery-system changes, managed-care structures, reentry services, HRSN/SDOH services, uncompensated care pools, or other Medicaid policy experiments. CMS reviews these state-by-state and historically attaches Special Terms and Conditions, including budget-neutrality terms. (Medicaid)
2. SSA §1115A: CMMI, not a state Medicaid waiver statute
Section 1115A was added by the ACA to create the Center for Medicare and Medicaid Innovation. Its purpose is to test payment and service-delivery models that reduce expenditures under Medicare, Medicaid, or both, while preserving or enhancing quality. Its “applicable individual” definition includes Medicare beneficiaries, Medicaid beneficiaries, and dual eligibles; its “applicable title” means Title XVIII, Title XIX, or both. (Social Security)
So yes, Medicaid appears in §1115A. But that does not make CMMI the same as a state §1115 Medicaid waiver. CMMI is a CMS model-testing platform. It may test Medicaid-focused models, dual-eligible models, all-payer models, and models “primarily on title XIX” in conjunction with CMCS, but it is structurally a federal Innovation Center model authority, not the ordinary state waiver pathway. (Social Security)
A helpful shorthand:
| Feature | §1115 Medicaid demonstrations | §1115A CMMI |
|---|
| Basic thing | State Medicaid waiver / demonstration | Federal Innovation Center model |
| Main applicant / actor | State Medicaid agency, negotiated with CMS | CMS/CMMI model, often with providers, payers, states, or plans |
| Program scope | Medicaid Title XIX demonstrations; sometimes CHIP under other provisions | Medicare, Medicaid, duals, and sometimes CHIP-like activities |
| Waiver power | Broad Medicaid waiver and expenditure authority | Model-specific, narrower waiver authority tied to testing |
| Budget test | Now being codified and tightened in §1115(g) | Built into ACA §1115A, but differently |
3. Were Medicaid §1115 waivers already budget neutral?
Yes, but with an important caveat: they were budget neutral by CMS policy and negotiated methodology, not by an explicit Medicaid §1115 statutory certification rule. CMS says it has long generally not approved §1115 Medicaid demonstrations unless expected to be budget neutral, using “without waiver” and “with waiver” calculations, spending limits, and post-period reconciliation. (Medicaid)
That is why the old statement “1115 waivers must be budget neutral” was true in practice. But it hid a lot of policy discretion. CMS and states negotiated the counterfactual: what would Medicaid have spent without the waiver? That counterfactual could depend on base years, trend rates, rebasing, savings rollover, and “hypothetical” expenditures. GAO described this as a system where CMS policy required budget neutrality, but the methods were not defined in statute or regulation and could substantially affect federal spending limits. (GAO Files)
That is the answer to the puzzled reader: 1115 projects were “budget neutral,” but “budget neutral” meant “within a CMS-negotiated counterfactual cap.” The new law tries to make it more like an independent, actuarial, pre-approval test.
4. What changed in §1115?
The legal change is P.L. 119-21 §71118, enacted in 2025. It added new SSA §1115(g). Beginning January 1, 2027, the Secretary may not approve a new Medicaid §1115 demonstration, renewal, or amendment unless the CMS Chief Actuary certifies that it is not expected to increase federal Medicaid expenditures compared with expenditures absent the demonstration. (GovInfo)
CMS’s June 2026 SMD letter says this is a major change because, before §1115(g), the Chief Actuary did not review or certify Medicaid §1115 budget neutrality, and the current application data and budget-neutrality test are not sufficient for actuarial certification. (Medicaid)
The biggest operational changes are:
Prospective certification. Old method: preliminary budget-neutrality estimate, then retrospective assessment against WOW/WW limits. New method: Chief Actuary certification before approval, amendment, or renewal. (Medicaid)
No classic expenditure cap as the core test. CMS’s table says the new approach would not use the old budget-neutrality expenditure limit or cap; instead, demonstrations projected to increase federal Medicaid spending would not be approved. (Medicaid)
Activity-by-activity analysis. States must classify and analyze individual demonstration activities, especially activities that can only be authorized under §1115. CMS expects actuarial, economic, statistical, or similarly rigorous analysis. (Medicaid)
MAPS replaces the old “hypothetical expenditure” concept. CMS will classify activities as either Medicaid Authorizable Populations and Services — populations/services the state could otherwise cover under the Medicaid state plan or other Title XIX authority — or §1115-only activities. The §1115-only activities drive the budget-neutrality calculation. (Medicaid)
Less room for manufactured savings. Under the new table, MAPS activities do not generate savings; savings rollover is limited to the current demonstration period plus prior-period savings limited to five years, rather than the older ten-year legacy-savings concept. (Medicaid)
Administrative costs count. CMS reads §1115(g)’s “federal expenditures” language to include administrative costs caused by the demonstration, unlike the current approach. (Medicaid)
GAO’s 2025 report helps explain the policy concern behind the change. GAO recommended that CMS stop treating costs for populations or services that could not otherwise have been covered under existing Medicaid authorities as “hypothetical” when setting spending limits, and instead require those costs to be offset by other reductions in demonstration spending. (GAO)
5. How this differs from CMMI §1115A budget neutrality
Here is the really important contrast: CMMI is not required to be budget neutral at the initial testing stage. Section 1115A expressly says the Secretary shall not require, as a condition for testing a model, that the model be budget neutral initially. But after testing begins, the Secretary must terminate or modify the model unless the Secretary determines, and the CMS Chief Actuary certifies, that it is expected to improve quality without increasing spending, reduce spending without reducing quality, or both improve quality and reduce spending. (Social Security)
For expansion of a CMMI model, the statute is stricter: the Secretary may expand a model only if it is expected to reduce spending without harming quality or improve quality without increasing spending; the Chief Actuary must certify that expansion would reduce or not increase net program spending; and the Secretary must determine that expansion would not deny or limit coverage or benefits. (Social Security)
So §1115A has always had statutory spending safeguards, but not in the same form as the new §1115(g). In fact, at the initial test stage, §1115A is more permissive than the new §1115(g). CMMI may test a model that is not initially budget neutral; Medicaid §1115(g), by contrast, will block approval of a Medicaid demonstration, amendment, or renewal unless the Chief Actuary certifies no expected federal Medicaid spending increase.
6. The clean way to explain it
For a puzzled reader, I would say:
Old Medicaid §1115 budget neutrality was a CMS policy discipline built around negotiated counterfactual spending limits. New §1115(g) turns that discipline into a statutory, Chief-Actuary-certified, pre-approval gate.
CMMI §1115A is different. It is an ACA Innovation Center statute for testing payment and delivery models in Medicare, Medicaid, or both. Its initial models need not be budget neutral at launch, but they must be evaluated, terminated or modified if they fail the statutory spending/quality tests, and actuarially certified before expansion.
The shared word “Medicaid” is the source of confusion. §1115 is Medicaid waiver law. §1115A is Innovation Center model law that can include Medicaid. They overlap in subject matter, but they are not the same pathway, and the new 2026 CMS activity is about §1115(g), not §1115A.
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1115A CMMI demonstrations are imposed by CMS management on the Medicare program, and I suppose when relevant, on the Medicaid (or duals) program. But 1115 demonstrations tend to originate IN the states and are brought to CMS for endorsement. Reasonable summary?
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Yes — that is a reasonable high-level summary, with one word softened.
I would say:
§1115A / CMMI demonstrations are generally CMS-originated payment or delivery models, selected and designed by the Innovation Center, and then applied to Medicare, Medicaid, dual-eligible, or multi-payer settings depending on the model. Some are voluntary; some Medicare models have been mandatory for selected providers or geographies.
§1115 Medicaid demonstrations, by contrast, usually originate with a state Medicaid agency. The state asks CMS for waiver and/or expenditure authority, and CMS approves, denies, negotiates, or conditions the project through Special Terms and Conditions.
The statutory language tracks that distinction. §1115A creates a Center inside CMS whose purpose is to “test innovative payment and service delivery models” under Medicare, Medicaid, or both; it defines applicable individuals to include Medicare beneficiaries, Medicaid beneficiaries, and duals.
By contrast, Medicaid §1115 is framed around a project “in a State or States,” under which the Secretary may waive state-plan requirements and treat otherwise non-matchable costs as expenditures under the state plan. CMS’s 2026 SMD letter also describes §1115 as giving states flexibility to design and improve their Medicaid programs, with CMS doing case-by-case review of each state proposal.
The caveat is that CMMI is not always simply “imposed.” Many CMMI models are voluntary or contractual. But the center of gravity is federal: CMS designs the model, chooses the model parameters, selects participants or regions, evaluates the model, and may waive certain Medicare/Medicaid rules solely to carry it out. For Medicaid-heavy or duals models, states often have to be partners, because Medicaid is jointly federal-state and operationally state-run.
So the clean formulation is:
CMMI §1115A is top-down federal model testing, sometimes with state or provider participation. Medicaid §1115 is bottom-up state waiver innovation, subject to CMS approval and federal guardrails.
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It sounds like the CMS Actuary for SSA 1115 Medicaid waivers, as enhanced by recent SSA 1115(g), makes the CMS Actuary a bit like the Senate Parliamentarian, standing at the gate with a red light and a green light. He's not always Mr. Popular.
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Yes — that’s a good analogy, with two refinements.
The CMS Chief Actuary becomes a gatekeeper, but only for one gate: federal Medicaid budget neutrality. Under new §1115(g), CMS says that beginning January 1, 2027, the Secretary may not approve a Medicaid §1115 application, amendment, or renewal unless the Chief Actuary certifies that it is not expected to increase federal Medicaid expenditures versus the no-waiver world. CMS also says the certification must be prospective and based on actuarial methods, not merely the older negotiated “with waiver/without waiver” bookkeeping.
So the “Senate Parliamentarian” analogy works in this sense: the actuary is not the politician, not the policy entrepreneur, and not the advocate. He or she stands at the procedural/technical gate and says, in effect, this proposal passes the required test or this proposal does not pass the required test.
But the analogy is not perfect. The Senate Parliamentarian is mainly interpreting chamber rules and reconciliation constraints. The CMS Chief Actuary is making a professional actuarial certification: are the assumptions, data, counterfactuals, activity classifications, administrative costs, and claimed savings credible enough to support “no expected federal spending increase”? CMS describes this as an independent actuarial determination and attestation based on sound methods and reasonable assumptions.
That is why the role can become unpopular. A state may have a politically attractive waiver; providers may love it; CMS leadership may favor the policy direction; advocates may say it improves access. But if the actuarial case does not work, the actuary’s answer can be: no certification, no approval.
In one respect, the §1115(g) actuary may be even more of a hard gate than the Parliamentarian. A Parliamentarian’s advice is institutionally powerful but formally advisory to the Senate’s presiding officer. Here, CMS is reading the statute as a legal prerequisite: without the Chief Actuary’s certification, the Secretary may not approve the Medicaid demonstration.
The crucial nuance is that the actuary does not decide whether the waiver is good Medicaid policy. CMS still says the Secretary must separately determine that the demonstration promotes Medicaid objectives. The actuary’s role is narrower but newly decisive: the fiscal green light.
For CMMI §1115A, the Chief Actuary also matters, but differently. CMMI models do not have to be budget neutral at initial testing; after testing begins, and especially before expansion, the statute brings in spending/quality findings and actuarial certification. For Medicaid §1115 after §1115(g), the actuary is moved much farther forward in the process — from a background fiscal discipline to a front-end statutory gate.
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SSA §1115 is much older than the ACA. It comes from the Public Welfare Amendments of 1962, Public Law 87-543, signed by President Kennedy on July 25, 1962. It was created as a general demonstration authority for federal-state public welfare programs — not originally as a Medicaid-specific authority, because Medicaid did not exist yet. (NCBI)
Then, in 1965, Congress created Medicare and Medicaid in the Social Security Amendments of 1965, Public Law 89-97. Medicaid became Title XIX of the Social Security Act, and §1115 was amended to include Title XIX demonstration authority. (GovInfo)
So the chronology is:
1935 — Social Security Act enacted.
1962 — §1115 demonstration authority added for public welfare programs.
1965 — Medicare and Medicaid enacted; Medicaid added as Title XIX; §1115 becomes available for Medicaid demonstrations.
2010 — ACA adds §1115A, creating CMMI.
The conceptual lineage is also different. §1115 was a Kennedy-era welfare-program flexibility tool, meant to let states test experimental or pilot approaches in federal-state assistance programs. §1115A was an ACA-era payment and delivery reform tool, meant to let CMS test Medicare/Medicaid innovation models through CMMI.
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Here is all of SSA §1115(g) as currently shown in the preliminary U.S. Code version of 42 U.S.C. §1315(g). It was added by Pub. L. 119-21, §71118(a), July 4, 2025, 139 Stat. 306. (U.S. Code)
(g) Requirement of budget neutrality for Medicaid demonstration projects
(1) In general
Beginning January 1 2027, the Secretary may not approve an application for (or renewal or amendment of) an experimental, pilot, or demonstration project undertaken under subsection (a) to promote the objectives of subchapter XIX in a State (in this subsection referred to as a “Medicaid demonstration project”) unless the Chief Actuary for the Centers for Medicare & Medicaid Services certifies that such project, or, in the case of a renewal, the duration of the preceding waiver, is not expected to result in an increase in the amount of Federal expenditures compared to the amount that such expenditures would otherwise be in the absence of such project.
For purposes of this subsection, expenditures for the coverage of populations and services that the State could have otherwise provided through its Medicaid State plan or other authority under subchapter XIX, including expenditures that could be made under such authority but for the provision of such services at a different site of service than authorized under such State plan or other authority, shall be considered expenditures in the absence of such a project.
(2) Treatment of savings
In the event that expenditures with respect to a State under a Medicaid demonstration project are, during an approval period for such project, less than the amount of such expenditures that would have otherwise been made in the absence of such project, the Secretary shall specify the methodology to be used with respect to the subsequent approval period for such project for purposes of taking the difference between such expenditures into account.
Note the odd-looking “January 1 2027” without a comma. That is how it appears in both the enacted Public Law text and the preliminary U.S. Code display.
