Groundbreaking Approvals for Medicaid and CHIP Coverage of Traditional Health Care

Health Highlights

October 30, 2024

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On October 16, CMS approved Section 1115 demonstration amendments in four states—Arizona, California, New Mexico, and Oregon—to authorize Medicaid and Children’s Health Insurance Program (CHIP) coverage of traditional American Indian/Alaska Native health care practices. These approvals mark the first time these services have been covered by Medicaid and CHIP. Through this action, CMS aims to improve access to culturally appropriate care and reduce existing disparities in access, quality of care, and health outcomes. Research has shown that American Indians and Alaska Natives often have poorer health status compared to other racial or ethnic groups—they have a higher prevalence of chronic conditions (e.g., diabetes, asthma), mental health conditions, and substance use disorders (SUDs), contributing to worse health outcomes and higher mortality rates. Nearly one out of five American Indian and Alaska Native individuals has health coverage through Medicaid or CHIP.

The four states’ approvals aligned with a policy framework for traditional health care practices that was released by CMS in April. As such, CMS has imposed similar, if not identical, terms across all four states:

Eligibility. Individuals must be Medicaid or CHIP beneficiaries and receive these services by or through Indian Health Service (IHS) facilities, Tribal facilities, or urban Indian organizations (UIO).
Providers and Facilities. Providers or practitioners delivering traditional health care practices must be employed by or contracted with IHS, Tribal, or UIO facilities.
Reimbursement. CMS will provide 100 percent federal medical assistance percentage for services provided to American Indian and Alaska Natives. For services offered to non-American Indian and Alaska Native individuals, states’ expenditures will be federally matched the “at otherwise applicable state service match.”
Infrastructure Funding. States may receive federal match for expenditures related to the development and implementation of traditional health care practices. Specifically, states may use these funds for technology, development of business or operational practices, workforce development, and outreach, education, and community engagement.

While the four states’ approvals generally align, some states requested and received approval for state-specific customizations to better meet the needs of their Medicaid and CHIP populations. For example, California will initially cover traditional health care practices for Medicaid and CHIP enrollees with SUD treatment needs. If desired, California has the option to expand to other populations in the future. New Mexico and Oregon are the only two states to take up CMS’ option for infrastructure funding to build state and provider capacity to implement traditional health care practices.

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