While federal Medicaid rules prohibit costs related to non-medical services, such as social determinants of health (SDoH), there are opportunities for state Medicaid programs to address enrollees’ social needs both within and outside of managed care, according to a new report by the Kaiser Family Foundation (KFF). In the brief, KFF discusses the options and federal Medicaid authorities that states can leverage to address enrollees’ SDoH, as well as examples of initiatives launched in response to the COVID-19 pandemic.
The KFF issue brief notes that research has indicated social and economic factors can influence an individual’s health behaviors and addressing SDoH is critical to improve health outcomes and reduce health disparities. Both health and non-health sectors have launched a range of initiatives targeting SDoH prior to COVID-19, including efforts within Medicaid, however, the pandemic has further exacerbated longstanding health disparities, particularly among communities of color, and added a layer of urgency to solve for SDoH.
State Medicaid programs can “play a supporting role” in identifying and addressing enrollees’ SDoH, according to KFF. In January, the Centers for Medicare & Medicaid Services (CMS) released guidance to states to encourage the adoption of targeted efforts to address SDoH in Medicaid and CHIP programs.
In its new report published this week, KFF explored several opportunities for state-driven Medicaid efforts to address SDoH for nonelderly enrollees who do not meet functional status or health need criteria for home and community-based services (HCBS) programs, including state plan authority, Section 1115 waivers, Medicaid Managed Care flexibility, and integrated care models.
Here’s a summary of the primary Medicaid authorities and flexibilities KFF outlined for states to address SDoH:
State plan authority
Under the Section 1905(a) State Plan authority, states can elect to include optional benefits that address SDoH, such as rehabilitative services including peer supports and case management services. Peer supports connect individuals with housing, transportation, employment, nutrition services, and other community-based supports by assisting individuals coordinate care and social supports and services. The case management services will help individuals access medical, social, educational, and other services.
States can also provide broader services to enrollees by utilizing the optional health homes state plan benefit option established by the Affordable Care Act (ACA), advised KFF. This would allow states to establish health homes to provide services such as care coordination, health promotion, comprehensive transitional care, patient and family support, and referrals to community services for individuals with chronic conditions. States receive a 90 percent federal match rate for qualified health home model costs for the first eight quarters under each health home state plan amendment, according to KFF.
Section 1115 waivers
Given approval, states can use Section 1115 demonstration waivers to test approaches for addressing SDoH, such as SDoH-related services and programs, and request federal matching funds so long as the efforts promote Medicaid program objectives. However, longstanding policy requires Section 1115 waivers are “budget neutral” for the federal government.
The Section 1115 waivers can be leveraged in different ways and is typically determined by a presidential administration’s priorities, noted KFF. Amid the COVID-19 public health emergency, states have proposed broader use of Section 1115 authority to address SDoH that were previously not approved, such as housing or additional nutrition services, however, under the Trump administration, CMS 
had announced it would not approve such waivers. “Other administrations have used Section 1115 authority more broadly in response to public health emergencies to expand coverage or support providers without regard to budget neutrality rules,” said KFF.
Medicaid Managed Care plan authority
Medicaid managed care organizations (MCOs) can be granted flexibility to pay for non-medical services under “in-lieu-of” authority and/or “value-added” services. “In-lieu-of” services qualify as a substitute for a covered service for the purposes of capitation rate setting when deemed as medically appropriate and cost effective by the state, whereas, “value-added” services are provided by MCOs voluntarily, explained KFF.
States can implement MCO contract requirements and quality measures related to SDoH, including screening for social needs, partnerships with community-based organizations, the employment of community-health workers, as well as incentive payments to reward plans for investments or improvements linked to SDoH.
KFF also noted that states can obtain CMS approval to require MCOs to implement value-based purchasing models for provider reimbursement or participate in multi-payer or Medicaid specific delivery system reform or performance improvement initiatives.
Integrated care models
Integrated care models, such as patient-centered medical home and Accountable Care Organizations, take a person-centered, comprehensive care approach and frequently involve community-based partnerships to address SDoH through a variety of services. The payment methods associated with integrated care models, including per member per month payments with or without quality or cost incentives and shared savings/risk models with quality requirements, can provide incentives for providers to address beneficiaries’ social needs.
“Although there are opportunities for states within Medicaid to help address SDOH, states also face challenges in designing programs and identifying “best practices” as well as in financing and scaling these efforts,” said KFF. “These initiatives require working across siloed sectors with separate funding streams, where investments in one area may accrue savings in another. The capacity of community-based organizations and local programs may not be sufficient to meet identified needs and data infrastructure may need to be improved to allow for data sharing across health care and social services settings.”
Elizabeth Hinton and Lina Stolyar, Medicaid Authorities and Options to Address Social Determinants of Health (SDOH), Kaiser Family Foundation, Aug. 5, 2021, https://www.kff.org/medicaid/issue-brief/medicaid-authorities-and-options-to-address-social-determinants-of-health-sdoh/ (Accessed: August 5, 2021)