A New Tool for Offering Home and Community-Based Services: CMS Issues Guidance on the New 1915(c) Waiver Flexibility

On November 18, 2025, the Centers for Medicare & Medicaid Services (CMS) released a Center for Medicaid and CHIP Services Informational Bulletin (CIB) providing initial guidance to states on implementation of the One Big Beautiful Bill Act (OBBBA), which CMS now calls the Working Families Tax Cut (WFTC) legislation. Among other things, the CIB describes the new standalone home and community-based services (HCBS) waiver option that will allow states, beginning in 2028, to offer services to individuals who do not yet meet a nursing facility level of care requirement.

This new authority creates the potential for states to strengthen access to HCBS earlier in the care continuum—helping delay or prevent institutionalization and promoting independence for older adults and people with disabilities. However, uptake of this waiver option will depend on state capacity, fiscal conditions, and alignment with broader program priorities.

Key Elements of the New Waiver Option

The new standalone HCBS waiver option (Section 71121 of OBBBA) establishes parameters and expectations that states must meet to qualify for approval. According to the CIB, participating states must:

• Demonstrate that the new waiver will not increase average wait times under any other approved 1915(c) waiver;

• Establish needs-based eligibility criteria that are more stringent than those used for determining institutional LOC;

• Maintain cost neutrality across their HCBS waiver programs; and

• Report annually on cost, utilization, and other quality metrics.

To help states prepare, $100 million in federal funds will be made available beginning in FY 2027 to strengthen HCBS data infrastructure and systems integration. CMS noted funds will be distributed based on each state’s proportion of 1915(c) or 1115 HCBS population compared to all states. However, the CIB does not describe any action steps states must take to obtain those funds.

Implementation Considerations for States

In the CIB, CMS encourages states to begin early planning and coordination across agencies and waiver programs to ensure smooth implementation. While this waiver flexibility may create new opportunities to reach individuals earlier, it will require careful coordination with existing waivers as well as data and administrative capacity.

States may consider opportunities to:

• Conduct crosswalks of existing 1915(c) waivers to identify where the new authority could complement current programs, HCBS populations, and strategic goals;

• Assess provider capacity and workforce readiness to support this new population;

• Review data and quality reporting systems to ensure the ability to meet new reporting requirements; and

• Engage stakeholders—including managed care plans, providers, and individuals who would be newly eligible for HCBS under this option—to understand needs and inform program design.

The new waiver flexibility may help build on states ongoing efforts to rebalance long-term services and supports toward HCBS. When implemented effectively, it may help individuals remain at home longer and improve HCBS program sustainability. Yet, the administrative complexity, cost neutrality requirements, and need for robust oversight may limit how broadly states can or will pursue this new option. States will also need to balance interest in offering HCBS to a new population with the practical realities of implementing new waiver structures and an evolving budget environment.

How Aurrera Health Is Supporting States

Aurrera Health is working closely with state and local partners to interpret CMS guidance, assess readiness, and identify operational impacts of the new waiver flexibility. For states that want to explore the new 1915(c) waiver option, Aurrera Health is available to support policy development, stakeholder engagement, program design and implementation tailored to your needs. Please reach out to Kristal Vardaman to learn more.

We’ll continue tracking CMS updates as they’re released and share practical takeaways. For details in this CIB on implementing Medicaid’s forthcoming community engagement and redetermination requirements, see our blog post here.

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Authors

Kristal Vardaman [Managing Principal]

Sara Bovat [Deputy Director] (Copy)