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The letter was issued on August 22, 2018, by the Centers for Medicare & Medicaid Services (CMS). In the letter, CMS notified state Medicaid directors that it is phasing in adjustments to its methodology for calculating budget neutrality for Medicaid section 1115 demonstration projects, in order to strengthen fiscal accountability. The adjustments pose more rigorous tests to ensure that 1115 demonstration projects will be budget neutral. The adjustments limit savings rollover, rebase without waiver baselines, and limit upper payment limit diversionary spending. CMS intends to implement a phase down transition period of newly accrued savings . . .

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