CMS Offers State Medicaid Directors More Flexibility to Address SDOH

Medicaid contracted managed-care organizations (MCOs) can spend up to 5 cents of every premium dollar on SDOH needs. The new guidance says Medicaid MCOs can also reduce health disparities and address unmet health-related social needs such as housing instability and nutrition insecurity by adopting in lieu of services and settings (ILOS) to offer medically appropriate, cost-effective benefits to address beneficiaries’ unmet health-related social needs.

For example, under the new CMS guidance, states may adopt ILOS to offer medically appropriate, cost-effective tailored meals for people with severe, chronic health conditions made worse by poor diet, living in “food deserts,” or not having access to nutritious food choices. Each state determines what services are appropriate and cost-effective substitute for medical care.

According to Modern Healthcare, Medicaid MCOs spending at least 1.5% on alternative benefits must preemptively report to federal regulators how the benefits results in savings, and affected patient care and healthcare costs.

From the Jan. 4, 2023 letter to State Medicaid Directors,

For example, offering medically appropriate and cost effective ILOSs, such as medically tailored meals for a clinically-oriented target population, may improve health outcomes and facilitate greater access to care for home and community-based services, thereby preventing or delaying enrollees’ need for nursing facility care

The Commonwealth Fund is a big fan of the ILOS policy noting it paves the way for community-based organizations and nontraditional service providers to become part of the managed care network, “ideally working side-by-side with traditional healthcare providers.”

In September 2022, the Arizona Health Care Cost Containment System (AHCCCS) received the Robert Wood Johnson Foundation’s 2022 Medicaid Innovation Award in “Initiatives to Address Social Determinants of Health” for  its work on initiatives to address SDOH and their impact on whole person care.

Former AHCCCS Director Jami Snyder,

Our data demonstrates that we can be more impactful in providing quality care and bending the healthcare cost curve when we focus on innovation that not only addresses members’ clinical care needs but also economic and social drivers of health.