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LAKEWOOD – Congresswoman Brittany Pettersen (CO-07) today announced her effort demanding answers from the Centers for Medicare & Medicaid Services (CMS) about new Trump Administration guidance that could jeopardize addiction treatment and other essential services funded through state Medicaid programs. In Colorado, those programs support residential and inpatient treatment, in large part because of Pettersen’s work as a state legislator.

Last year, Donald Trump and Congressional Republicans made a historic, nearly $1 trillion cut to Medicaid in their One Big Beautiful Bill Act (H.R. 1), provisions which Pettersen has introduced legislation to repeal. But now, Trump’s Centers for Medicare and Medicaid Services (CMS) has released guidance expressing the Administration’s intent to “reduce federal [Medicaid] outlays,” ringing alarm bells that the Administration is attempting to further cut Medicaid after devastating cuts could leave over 7 million people without health care. With changes potentially taking effect as early as January 1, 2027, Pettersen led eight other members in pressing CMS to preserve existing services and state flexibility—and provide clarification within 10 days of receiving their letter.

“Like so many Americans, my mom was overprescribed opioids when she hurt her back when I was just 6 years old, which led to a decades-long addiction. When she was cut off from her prescription opioids without access to treatment, my mom turned to heroin and fentanyl to avoid withdrawal. I watched her being turned in and out of the ICU from overdoses while begging for help with nowhere to go. In my fight to save my mom’s life, I saw firsthand how broken our healthcare system was,” said Congresswoman Brittany Pettersen.

Pettersen continued, “Medicaid did not cover treatment for those who were struggling with addiction, so I fought to change that —drawing down hundreds of millions of dollars a year for the critical care people desperately need. But everything we have done to address the opioid epidemic in this state is being dismantled by Trump and Republicans. That’s why I’m demanding answers and fighting back.”

This recent guidance from CMS is described as “early notice” ahead of forthcoming rulemaking, leaving states to prepare for potentially significant changes without these final requirements. States must navigate that uncertainty while implementing the broader Medicaid changes in H.R. 1. Pettersen and her colleagues are pressing CMS to explain its expectations before disrupted funding becomes disrupted care.

For more than six decades, Section 1115 Medicaid waivers have allowed states to test new approaches, expand benefits, and improve access to care. Colorado uses this flexibility to cover inpatient and residential substance use disorder treatment. Access to that care helps people recover while reducing costly emergency care and hospitalizations.

As a state legislator, Pettersen passed legislation directing Colorado to seek a waiver covering residential and inpatient addiction treatment. That waiver took effect in 2021. Today, up to an estimated 20,000 people annually access licensed residential and intensive substance use disorder services, with nearly 50,000 Coloradans receiving support across the continuum of care each year.

Over the program’s first five years, Colorado expanded its residential treatment provider network, integrated medication-assisted treatment and naloxone into emergency departments, primary care settings, and community health clinics, and expanded inpatient mental health coverage. Colorado has also reported a 35% decline in fentanyl-related deaths, highlighting the importance of sustaining efforts to prevent overdoses and connect people with treatment.

Nearly one-third of all Medicaid spending flows through these Section 1115 demonstration projects. Changes to their financing could affect care nationwide, including long-standing programs that patients and providers already depend on.

Inspired by her mom’s struggle, Congresswoman Pettersen has fought to expand access to treatment to help people like her mother receive the care they need. Pettersen is also a co-chair of the Bipartisan Mental Health and Substance Use Task Force, a coalition of over 100 members from both parties that work together to advance evidence-based policies that address the root causes and impacts of the mental health and addiction crises. 

See the full text of the letter HERE and below.

Dear Administrator Oz: 

We write today in response to the Centers for Medicare & Medicaid Services’ (CMS) June 11th,  2026 State Medicaid Director letter (SMDL) sent regarding “Budget Neutrality and Certification by the Chief Actuary of CMS for Section 1115 Medicaid Demonstration Projects.” This guidance was issued to implement a provision of H.R. 1 that requires the CMS Chief Actuary to certify that section 1115 demonstration projects are budget neutral – a standard all section 1115 demonstration projects have been required to meet. Concerningly, however, the guidance clearly states an intent to “reduce federal outlays” – in other words, proposing additional federal cuts to Medicaid beyond the nearly trillion dollars cut through H.R. 1.

Section 1115 demonstration projects are the backbone of many state Medicaid programs, and states have long been required to ensure that they are budget neutral. For over six decades, demonstration projects have ensured that states have the flexibility to be innovative and meet the needs of their residents. For example, states rely on these demonstration projects to provide enhanced benefits to enrollees, expand coverage, and improve delivery systems to ensure people are able to access the quality care they need and deserve, among other priorities. CMS’s June 11thSMDL and forthcoming rulemaking stand to undermine these initiatives by setting forth a framework for upending long-standing budget neutrality requirements, and leaving states with more questions than answers about what standards they will need to imminently conform to.

Given the unique nature of each state demonstration project and each state’s Medicaid population, regular collaboration between the states and CMS have always been pivotal to ensuring states’ continued adherence to budget neutrality requirements. Instead of allowing states to foster creative solutions to meet the needs of their unique Medicaid population, CMS’ new framework threatens to reduce state flexibility, limit innovation, and narrow the approval pathway for certain health care initiatives.

Additionally, this guidance prompts numerous questions notwithstanding an incredibly compressed implementation timeline. Now, while working to operationalize massive changes to Medicaid programs as established by H.R. 1, states will also be required to interpret this complicated new framework and evaluate the implications for their own existing or proposed demonstration projects—even without final, robust guidance from CMS. In addition to the complexities of this new proposal, CMS indicated that the SMDL would only serve as “early notice” to inform changes expected from CMS’ imminent notice of proposed rulemaking. Given the changes taking effect as early as January 1, 2027, this timeline imposes a severe administrative burden on states, and leaves them in an operational limbo. Nearly one-third of all Medicaid spending flows through section 1115 demonstration projects and changes to disrupt the financing of these programs will have a direct impact on the health care that Medicaid beneficiaries across the country may receive. 

Section 1115 demonstration projects have had a profound impact on our local communities nationwide. Given the importance of these programs, we ask that CMS carefully consider the implications of this guidance on states and their Medicaid beneficiaries. We have concerns that this new blanket framework will limit states’ ability to innovate and threaten existing services. Considering our concerns, we ask that the agency keep beneficiaries at the forefront, by preserving state flexibility to utilize section 1115 demonstration projects to best serve their residents. We also that the agency provide states with further clarification on the expectations of the June 11th guidance within 10 days of [receiving this letter]. 

We appreciate your attention to this matter.

Sincerely, 

U.S Representatives Brittany Pettersen (CO-07), Ritchie Torres (NY-15), Stephen Lynch (MA-08), Jonathan Jackson (IL-01), Shri Thanedar (MI-13), Joe Neguse (CO-02), Rashida Tlaib (MI-12), Adelita Grijalva (AZ-07), and Yvette Clarke (NY-1)

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