The Rockefeller Institute has previously outlined key components of the One Big Beautiful Bill Act (hereafter referred to as HR1), perhaps the most significant piece of legislation to impact the Medicaid program in 2025 and beyond. The Institute’s work has also reviewed rules proposed by the Trump administration on healthcare financing and coverage for New York. However, a provision in HR1 that has received less attention relates to 1915c waivers. These types of Medicaid waivers are typically used by states to provide long-term services and supports. Although the Centers for Medicare and Medicaid Services (CMS) has not yet provided much guidance to date about the new 1915c waiver opportunity, which becomes effective for states in January 2028, there is still the potential it will provide new flexibility for the way states use the 1915c waiver to cover those who need ongoing services and supports to maintain their independence in the community.

If New York is interested in pursuing potential new opportunities in the HR1 1915c provision, however, it may require the state to consider preparatory investments in the upcoming budget year (that starts April 1, 2026).

Background on 1915c and New York’s Potential Opportunities With the New Provision in HR1

Historically, 1915c waivers have been and are available for people who meet the current functional need criteria, which is defined as a nursing home level of care need. New York already operates multiple 1915c waivers for nursing home level of care individuals. One example of such waivers is the Nursing Home Transition and Diversion Waiver, which allows the state to offer flexible programming for individuals in a nursing home who would like to transition back to the community or those who, absent the flexibility of waiver benefits, which include home and community-based services (HCBS), would have to live in a nursing home.¹

HR1 authorized CMS to approve 1915c waivers with new functional need criteria, allowing non-nursing home eligible persons to participate in a 1915c waiver. The newly targeted population includes people living in the community whose care needs are less than those of existing 1915c waiver participants, but are still eligible for Medicaid HCBS.

Long-term care has consistently been a significant driver of cost growth in the Medicaid program.² This level of growth is not expected to slow significantly given demographic trends.³ Accordingly, this new 1915c waiver option could be a potential way for the state to navigate aging demographic trends and the rising financial costs associated with caring for a growing number of seniors.

Policy Considerations

Among other factors and facets, we’ve identified the following six considerations as important ones for the State to take into account now in preparation for the new waiver flexibility. These include preparation and readiness considerations as well as certain program design elements and funding opportunities.

1. Electronic Health Records. The long-term care space is arguably among the least modernized of all healthcare providers in the transition to interoperable electronic health records.⁴ Even if such providers are using electronic health records, the operating systems used by such providers are not necessarily interoperable with large healthcare systems’ electronic health records, such as EPIC or Cerner.⁵ Because long-term care functions as part of the continuum of care, including serving patients as they transition from acute care settings into the community or a residential setting, it’s important that long-term care records are interoperable with acute care health records and capable of providing real-time records, consistent with the legislation.
2. Wait-Time Tracking. The new waiver design requires states to certify that participants experience wait times that are no greater than they would have experienced in the absence of the waiver. The waiver has the potential to coordinate with community-based organizations, including providers that operate through the state’s local area agencies on aging (AAA) or those providing services to people with intellectual and developmental disabilities, which function under the purview of the State Office for the Aging (SOFA) and the Office for People with Developmental Disabilities (OPWDD), respectively. Therefore, the state will need the functionality to track across multi-agency settings. Currently, wait times for aging programs are maintained at the local level, and no wait times are tracked for Medicaid programs. This new functionality will likely take some time to develop, especially given the multiple agencies involved.
3. Per Capita Spending. The new waiver requires that states certify that per capita spending on the waiver is no greater than it would have been in the absence of the waiver. While arguably the state can use existing data to develop this model, the format in which the reporting must occur to CMS is potentially not in a format that the state currently utilizes. Accordingly, developing the functionality to report as required by CMS is yet another consideration to ensure the state is ready to evaluate the new 1915c waiver should it apply.
4. Third-Party Benefits. Federal funds under the new 1915c waiver cannot be used for provider health insurance or skills training programs if Medicaid is the primary revenue source, which is the case for long-term care. Such insurance and training programs are currently included in some of New York’s existing Medicaid programs, such as the managed long-term care 1115 Waiver.⁶ Moving a portion of the existing HCBS population to a new 1915c waiver design could therefore have implications for such workforce-related funding streams. Given other changes in HR1, including changes to advanced premium tax credit funding, necessitating the State revert from the existing 1332 Waiver program back to the Essential Plan, individuals in the expanded income group (200-250% of the federal poverty limit) will no longer be eligible. The expanded eligibility group included health care professionals who otherwise met the financial considerations⁷ and who benefit from current workforce-related funding streams in managed long-term care.
5. Readiness Funding. CMS will make $50 million available in 2026 and $100 million available in 2027, allocated to states by their relative share of each state’s home and community-based long-term care population share, to help them get ready for implementation changes under the new 1915c provision. New York could receive up to $15 million from this funding over two years to support evaluation and readiness efforts.⁸
6. Opportunities for Dual Integration. A sixth consideration for the state is how to use any new flexibilities provided under the 1915c option to better integrate services and supports for individuals that are dually eligible for both Medicare and Medicaid. In March of 2022, New York State released a report/roadmap outlining the ways it could do so. Among other suggestions, the roadmap outlined ideas for streamlining enrollment, contracting, and appeals processes, at minimum. Recognizing the potential for the integration of services, supports, and payment, the federal Medicaid and CHIP Payment Advisory Commission (MACPAC) has been encouraging states to leverage additional ways to integrate such care. This includes encouraging states to contract with more dual-eligible special needs plans (D-SNPs), which specialize in integrating such care.

Looking to the Future

The new waiver program is available, if a state applies and is approved, for anyone who meets the new functional need criteria. This criteria now includes those in need of home and community-based care, but no longer requires nursing home level of care need for new waiver programs. The state currently uses 1915c waivers for a variety of populations that meet the current requirements. Leveraging this new 1915c waiver for programs may create new benefits that do not currently exist, as the lower functional need criteria could elicit alternative benefit design compared to the state’s existing waiver programs. Therefore, further evaluation is required, pending the issuance of CMS guidance. While a proposal for the 1915c waiver has the potential to expand the availability of services for certain populations in New York, it could also allow for a more efficient allocation of resources for certain populations.

Despite efforts to control spending in Department of Health (DOH) administered HCBS programs, the aging baby-boom population will continue to drive significant growth in long-term care spending into the future, as not all baby boomers will have reached age sixty-five until 2030.⁹ However, long-term care need comes significantly later in life. The State Office for the Aging (SOFA) reports that the average age of an assisted living resident in New York is eighty years old.¹⁰ The new 1915c waiver may present an opportunity in the home and community-based services arena to better tailor services according to needs.

Taking preliminary steps to prepare for a waiver proposal does not preclude the State from doing the necessary evaluation of this new program option when CMS issues complete guidance.  Certainly, however, in the interim, the State should think carefully about the potential options under the new waiver design and seek federal funding to support readiness, such that this option is available should the State want to use it. The Rockefeller Institute of Government will continue to monitor developments related to this waiver and other federal changes and report on impacts to New York State accordingly.

ABOUT THE AUTHOR(S)

Jillian Kirby Bronner is a special advisor to the New York State Budget Director and a guest author at the Rockefeller Institute of Government.

Courtney Burke is senior fellow for health policy at the Rockefeller Institute of Government.

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1. Recent administrative design changes in this waiver, and potentially others, caused significant spending growth. The state’s response to such growth should not dissuade stakeholders from considering this new option, as the considerations are entirely separate. ↩︎
2. See, for example, the Fiscal Policy Institute’s “Making Sense of New York’s Medicaid Long Term Care Spending.” ↩︎
3. Ibid. ↩︎
4. See, for example, “Health Information Technology Adoption and Utilization in Long Term Care and Post-Acute Care Settings”. a 2023 report prepared for the Office of the Assistant Secretary for Planning and Evaluation (ASPE) at the US Department of Health & Human Services. ↩︎
5. Ibid. ↩︎
6. See, for example, “How a Medicaid Program To Improve Nursing Home Care Ended Up Paying for Union Benefits.” Empire Center, 2024. ↩︎
7. See, for example, “State Offers Taxpayer-Funded Health Coverage to Unionized Home Care Workers,” Empire Center 2024.  ↩︎
8. Assuming 10% of national total, based on proportion of NY total spend to national Medicaid spending. HCBS spending in NY may be a greater proportion. ↩︎
9. United States Census, By 2030, All Baby Boomers Will be Age 65 Or Older. ↩︎
10. See New York State Office for the Aging website: Types of Housing. ↩︎