by Lisa C. Lindley, PhD, RN, FPCN, FAAN

March 2025

Medicaid is a joint federal-state program that provides health coverage to low-income individuals and families. While there are federal guidelines that govern the program, each state has the ability to manage its own Medicaid program within the parameters set by the federal government. A key mechanism that allows states to modify and enhance their Medicaid programs is the Medicaid State Plan Amendment (SPA).

In this blog, we’ll take a closer look at what Medicaid State Plan Amendments are, why they are important, and how they function in the broader context of Medicaid.

What is a Medicaid State Plan Amendment (SPA)?

A Medicaid State Plan Amendment (SPA) is a formal request submitted by a state to the federal government to make changes or modifications to its existing Medicaid program. The SPA allows a state to update the Medicaid State Plan, which is the document that outlines how the state will implement the Medicaid program. This plan includes details about who is eligible for Medicaid, what services will be provided, how much providers will be paid, and other key components of the program.

When a state wants to introduce new policies, adjust eligibility criteria, or change how services are delivered, it must submit an SPA to the Centers for Medicare & Medicaid Services (CMS) for approval. CMS reviews the amendment to ensure that it complies with federal laws and regulations.

Why Are Medicaid State Plan Amendments Important?

State Plan Amendments are crucial for several reasons:

1. Flexibility for States: While Medicaid must meet federal standards, each state has the flexibility to tailor its Medicaid program to meet the unique needs of its population. SPAs allow states to make these adjustments.
2. Expanding Coverage or Benefits: States can use SPAs to extend Medicaid eligibility to new groups or to introduce new services and benefits.
3. Cost Management and Efficiency: SPAs can also be used by states to make their Medicaid programs more cost-effective. States might submit a SPA to adjust reimbursement rates for healthcare providers or to change the way certain services are delivered in order to reduce costs.
4. Improving Healthcare Access: States can amend their plans to make Medicaid more accessible to underserved populations, such as by expanding eligibility, improving care coordination, or enhancing mental health services.
5. Complying with Federal Requirements: At times, federal policy changes require states to update their Medicaid plans. For instance, changes in federal funding or new regulations may necessitate a State Plan Amendment, such as pediatric concurrent hospice care (ACA, section 2302).

Common Reasons States Submit SPAs

There are several common reasons why a state might submit a Medicaid State Plan Amendment. Some of the most frequent include:

• Eligibility Changes: States may amend their plans to expand Medicaid eligibility to cover additional groups, such as low-income adults who were not previously covered or people in need of long-term services and supports (LTSS).
• Benefit Enhancements: If a state wants to introduce new benefits, such as pediatric concurrent hospice care, they would submit an SPA to ensure these services are covered under the state’s Medicaid plan.
• Payment and Reimbursement Changes: States might submit SPAs to adjust the rates they pay healthcare providers. This could involve changes in reimbursement rates for hospitals, doctors, or other healthcare providers.
• Managed Care Modifications: Some states use Medicaid managed care programs, where private insurers manage care for Medicaid recipients. A state may submit an SPA to modify its managed care programs, such as altering contract terms or expanding the role of managed care organizations.
• Program Integrity and Fraud Prevention: States may amend their plans to implement new measures to prevent fraud or ensure better program integrity, including improved oversight of services and eligibility determinations.

The SPA Approval Process

The process of submitting and approving an SPA typically involves the following steps:

1. State-Level Decision Making: The state Medicaid agency decides on the need for an amendment and formulates the changes to the plan. This often involves consultations with stakeholders, including healthcare providers, beneficiaries, and advocacy organizations.
2. Public Notice and Comment Period: Many states are required to offer a public notice period during which stakeholders can provide feedback on the proposed changes. This step ensures that the community has a voice in the process.
3. Submission to CMS: Once the state finalizes its SPA, it submits the proposed changes to CMS for approval. The state provides detailed information on the rationale for the changes and how they will affect Medicaid recipients and providers.
4. CMS Review: CMS reviews the proposed amendment to ensure compliance with federal regulations. This process can take several months. CMS may approve the SPA as is, approve it with modifications, or deny the request if the changes don’t comply with federal law.
5. Implementation: Once approved, the state can implement the changes outlined in the SPA, including informing Medicaid recipients and healthcare providers about new benefits, eligibility requirements, or payment rates.

Challenges and Considerations

While SPAs offer valuable flexibility to states, the process is not without its challenges. Some of these include:

• Complexity of Federal Regulations: States must navigate complex federal regulations when making changes to their Medicaid programs. Failure to comply with these regulations can result in delays or denials of SPAs.
• Stakeholder Buy-In: States must ensure they have broad support from healthcare providers, advocates, and other stakeholders, particularly when making significant changes to Medicaid benefits or eligibility.
• Fiscal Constraints: Medicaid is an entitlement program, meaning that federal and state governments are obligated to provide services to all eligible individuals. States must carefully consider the fiscal impact of proposed changes and ensure they can sustain the costs.

Conclusion

Medicaid State Plan Amendments are a vital tool for states to adapt and improve their Medicaid programs. By submitting SPAs, states can modify their programs to better serve their populations, improve healthcare delivery, and respond to changes in federal policy. While the approval process can be complex, the flexibility offered by SPAs is critical to ensure that Medicaid remains responsive to the needs of children at end of life.

Understanding the SPA process is important for anyone involved in Medicaid policy, healthcare, or advocacy. It’s a dynamic mechanism that shapes the future of healthcare for millions of Americans. As healthcare needs evolve and new challenges arise, SPAs will continue to play a key role in how states design and manage their Medicaid programs.