The Trump administration is readying guidance that could let states remodel their Medicaid programs to more closely resemble block grant proposals favored by Republicans during their failed effort to repeal the Affordable Care Act, according to people familiar with the discussions.

States would still have to adhere to certain requirements but could get far more leeway in how they design their programs, likely in exchange for some type of cap on federal funding, the people said. The guidance would lay out how states could satisfy federal requirements to get waivers to pursue the changes, they said.