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The purpose of this bulletin is to announce that the Centers for Medicare & Medicaid Services (CMS) has approved the renewal of Virginia's Building and Transforming Coverage, Services, and Supports for a Healthier Virginia (BTCSSHV) Section 1115 demonstration on August 1, 2026. 

CMS allows 1115 waivers to consist of multiple distinct demonstrations within one 1115 Waiver. Therefore, this approval by CMS both renews the authority for the Addiction and Recovery Treatment Services (ARTS) program and coverage for eligible former foster care youth demonstrations through December 31, 2031, and expands the existing 1115 waiver to include new authority supporting treatment for individuals with Serious Mental Illness (SMI).

The renewed demonstration allows Virginia Medicaid to continue receiving federal funding for short-term residential and inpatient treatment for individuals with substance use disorders in Institutions for Mental Diseases (IMDs). The newly approved SMI component extends this authority to short-term psychiatric inpatient and residential crisis stabilization services for adults in IMDs, expanding access to clinically appropriate behavioral health treatment for the adult population. With a waiver of the IMD exclusion, Virginia will be able to develop a more coordinated and robust psychiatric service benefit structure for adult members.  While the demonstration will offer increased access to services for the adult Medicaid population, it does not change member eligibility rules or expand access to the Medicaid benefit for new member populations.   Due to CMS limitations, the new 1115 reimbursement flexibility will not be allowed in the state owned psychiatric facilities.

SMI 1115 Waiver Goals for System Changes

The demonstration supports Virginia's continued investment in a coordinated continuum of behavioral health services by:

• Continuing federal support for short-term residential and inpatient treatment for Medicaid members with substance use disorders.

• Expanding federal support for short-term psychiatric inpatient and residential crisis stabilization services for Medicaid members with serious mental illness.

• Expands potential for more co-occurring and co-located substance use and mental health treatment settings.

• Improving access to evidence-based behavioral health treatment and crisis services.

• Supporting better care coordination and smoother transitions from inpatient care back into community-based services.

• Maintaining Medicaid coverage for eligible former foster care youth who move to Virginia from another state.

Implementation 

The renewed demonstration is effective August 1, 2026, through December 31, 2031.

DMAS will continue working closely with providers, behavioral health partners, managed care organizations, and stakeholders to implement the approved SMI 1115 demonstration and strengthen Virginia's behavioral health continuum.  Future DMAS updates will describe in more detail the implementation timeline, program policy, operational changes and future provider enrollment opportunities related to these demonstration programs.

To avoid disruption to claims payment through FFS and the MCOs providers must periodically check the DMAS provider portal, also known as the Provider Services Solution (PRSS), to ensure that the provider's enrollment, contact information, and license information is up to date, for all of the provider's respective service locations. Under federal rules, MCOs and DMAS are prohibited from paying claims to network providers who are not enrolled in PRSS. Additional information is provided on the MCO Provider Network Resources webpage and includes links to resources, tutorials and contact information to reach Gainwell with any provider enrollment or revalidation related questions.  Dental providers should continue to enroll directly through the DMAS Dental Benefits Administrator, DentaQuest.