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The ACS data provided information regarding the number of PCR with and without health insurance by FPL and has been adjusted to reflect actual enrollment in South Carolina Healthy Connections Medicaid and private health insurance. Additionally, emerging enrollment was reviewed to understand the impact of the public health emergency and recent regulations by insurance coverage. The individuals eligible for Medicaid under the Palmetto Pathways to Independence waiver are assumed to not be currently eligible for Medicaid in South Carolina.

Cost Estimates per Member The per capita expenditures for the waiver population are developed from the state fiscal year (SFY) 2025 projected expenditures for individuals currently enrolled in the Healthy Connections Medicaid managed care program, adjusted to reflect pent-up demand and morbidity. Costs per member are assumed to increase at an annual rate of 6%, consistent with the president's trend used in the Congressional Budget Office's Medicaid expenditures projections.

The table below illustrates year one through five per member per month (PMPM) projections for the Palmetto Pathways to Independence waiver population.

Palmetto Pathways to Independence Waiver Projected PMPMs

Budget Neutrality The budget neutrality requirements for Section 1115 waivers ensure that Medicaid demonstration projects do not increase federal Medicaid spending beyond what it would have been without the waiver. As a result, states must design their 1115 waiver proposals so that the projected costs under the waiver are equal to or less than the expected costs to the federal government without the waiver. The budget neutrality formula compares Without Waiver (WOW) expenditures to With Waiver (WW) expenditures, ensuring that WOW costs are greater than or equal to WW costs using the PMPM methodology approach. • WOW expenditures, or baseline expenditures, represent the amount the federal government would have spent in the absence of the demonstration and form the basis for the budget neutrality expenditure limit. • WW expenditures, or actual expenditures, are the projected costs under the demonstration.

In accordance with CMS guidance, for the budget neutrality calculation associated with the community engagement population, hypothetical costs are used to estimate WOW expenditures for the 1115 Palmetto Pathways to Independence waiver since these members are not currently enrolled in Medicaid. In other words, these expenditures are based on anticipated costs rather than historical data. For purposes of the budget neutrality, Medicaid rates were applied to anticipated utilization for the PMPM projections.

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