In 2005, Massachusetts renegotiated with the federal government major provisions of the State’s Medicaid program governed by the MassHealth Waiver, which has been in effect since 1997. The new terms of the Waiver, which became effective July 1, 2005, are significantly different from the current terms, particularly in the details of how the program is financed. This issue brief describes the most significant changes in the Waiver agreement and identifies the major issues involved with state implementation.