In a nutshell...
Section 1115 dates to the 1960s and allows Medicaid program waivers, which usually originate in a State and are brought up to CMS for approval.
These have been loosely budget-neutral, but the Working Families Tax Cut WFTCL July 2025, beefs up its budget neutrality rules as SSA 1115(g). On June 11, CMS notified states in a 34-page letter, that some new rules are coming down the pike.
Section 1115A was created by the Affordable Care Act and launched the Center for Medicare and Medicaid Innovation, CMMI. This develops pilot projects that are then imposed on the Medicare program by CMS management.
They have always had a budget neutrality clause. CMMI programs often focus on Medicare but may include Medicaid, dual eligibles, etc.
###
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 1115A is TBD.
###
See uber-detailed sidebar.
###
See actual text of (g):
(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.
