CMS News: CMS Reinforces Medicaid and CHIP Integrity by Strengthening Eligibility Oversight and Limiting Certain Demonstration Authorities

Centers for Medicare & Medicaid Services

FOR IMMEDIATE RELEASE
July 17, 2025

Contact: CMS Media Relations
(202) 690-6145 | CMS Media Inquiries

CMS Reinforces Medicaid and CHIP Integrity by Strengthening Eligibility Oversight and Limiting Certain Demonstration Authorities

The Centers for Medicare & Medicaid Services (CMS) is taking steps to restore accountability and safeguard the long-term integrity of Medicaid and the Children’s Health Insurance Program (CHIP). Through newly issued letters to states, CMS is emphasizing a clear shift away from policies that extend beyond statutory limits, specifically policies on continuous eligibility and workforce initiatives. This shift in approach reflects the agency’s commitment to preserving these vital programs for the most vulnerable Americans and using taxpayer dollars carefully. These initiatives require large investments of federal funds, estimated at more than a billion dollars. Specifically:

Expanded continuous eligibility allows some people to remain enrolled in Medicaid for a period of time, even if they are no longer qualified. As a result, states could be overpaying for coverage of individuals who would not normally be eligible for Medicaid or CHIP.
Workforce initiatives were intended to strengthen and build the workforce serving Medicaid through primary care, behavioral health, dental, and home and community based services (HCBS).

Ensuring responsible use of federal funding is vital to making sure Medicaid continues to be available to the people who need it most. “For too long, Medicaid and CHIP have drifted away from their core mission of providing a safety net for the truly vulnerable—that ends now,” said CMS Administrator Dr. Mehmet Oz. “CMS is restoring commonsense guardrails to Medicaid and CHIP, which will ensure that Medicaid remains a lifeline for those who are eligible and in need of quality health care.”

Ensuring Medicaid Focuses on Core Mission

Enrollment Integrity: CMS is issuing guidance to states making clear it does not anticipate approving new or extending existing section 1115 demonstration authorities that have allowed some individuals to remain enrolled in Medicaid or CHIP for extended periods of time, even if they may not have otherwise been eligible. In some cases, children could have remained continuously enrolled in Medicaid or CHIP for up to six years, even if a change in their circumstances would have otherwise made them ineligible at some point. In other cases, CMS has approved up to 24 months of continuous eligibility for adults or targeted adult subpopulations. When this is allowed in many states over time, this practice can affect millions of enrollees and could lead to unsustainable expenditures.

Spending Focus: Likewise, CMS does not anticipate approving new or extending existing Medicaid-funded workforce initiatives—programs that use Medicaid dollars to fund certain job training or employment-related activities—which to date have involved more than $1 billion in federal commitments across California, Massachusetts, New York, North Carolina, and Vermont. CMS will allow currently approved initiatives to run out their course but does not anticipate extending them nor approving new waivers. Going forward, CMS is focused on supporting actions that demonstrate clear health benefits, cost savings, and strong accountability for federal spending.

Today’s announcement reflects a recalibrated approach that reinforces statutory boundaries, enhances oversight, and helps ensure taxpayer-funded benefits go only to those who meet eligibility requirements. CMS’ shift in approach is expected to improve the stewardship of federal funds, help ensure redeterminations for millions of enrollees whose eligibility may have changed, and refocus future section 1115 funding on high value activities aligned with the core mission of Medicaid and CHIP. These safeguards will help ensure Medicaid and CHIP remain strong, solvent, and targeted to those truly in need, while protecting American taxpayers from avoidable costs.

For more information, visit:

Continuous Eligibility: https://www.medicaid.gov/resources-for-states/downloads/contin-elig-ltr-to-states.pdf

Workforce Initiatives: https://www.medicaid.gov/resources-for-states/downloads/workforc-ltr-to-states.pdf

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