CMS Issues New Guidance for States to Address Social Determinants of Health

Before discussing the new Medicaid guidance on social determinants of health, Medicaid and the Law would like to formally introduce its readers to Regina DeSantis, a new Law Clerk in the Washington, DC office who will become a regular contributor to the blog.

The social determinants of health (SDOH) describe the range of environmental, social, and economic factors that can impact health outcomes.  According to the Centers for Disease Control and Prevention (CDC), the conditions in which people live, work, and learn can impact a significant range of health risks and outcomes.  Lack of adequate resources can lead to poor health outcomes for low-income and vulnerable populations, and these health conditions can lead to higher costs for, among other payers, the Medicaid and the Children’s Health Insurance Program (CHIP).  The COVID-19 pandemic further exacerbated these disparities, with data showing that counties with higher poverty rates and crowded housing units were more likely to become COVID-19 hotspots.  While SDOH have long been identified as drivers of poor health outcomes and higher costs, particularly for the Medicaid patient population, the Medicaid program has not traditionally paid for the kinds of services and supports that directly address these concerns.

Earlier this month, the Centers for Medicare and Medicaid Services (CMS) issued guidance to help state health officials implement value-based care arrangements in Medicaid and CHIP.  Under the guidance, states can leverage existing flexibilities under Federal law to design benefits addressing access to healthy food, affordable housing, quality education, and employment, among others.  According to CMS, adopting value-based care arrangements into Medicaid and CHIP could help states address health disparities, improve outcomes for vulnerable populations, and reduce costs for the programs.

As we discussed in a previous blog, there have been challenges to incorporating innovative payment models into the Medicaid program.  Under the Medicaid statute, an expenditure is only reimbursable when the state or payer incurs an “expenditure for medical assistance.”  The statute specifically identifies 29 health services, including inpatient hospital care, physician services, and outpatient prescription drugs, among others, as “medical assistance.”  Payment for things like house repairs or air remediation do not clearly fall within any of these categories.  However, we noted that an amendment to Medicaid’s managed care regulation in 2016 allows a state to direct a payment model that is “intended to recognize value or outcomes over volume of services,” which is an exception to the prohibition against directing reimbursement models to managed care plans.

One example of this managed care exception is incorporating “Pay for Success” models, such as the Green & Healthy Homes Initiative (GHHI) model, into Medicaid managed care.  Under this GHHI model, a Medicaid managed-care plan would identify a private investor to pay a service provider to address asthma triggers in a beneficiary’s home.  With the asthma triggers gone, the beneficiaries would likely have fewer health issues and not require associated health services.  The Medicaid plan would reimburse the investor with a portion of the savings achieved as a result of this intervention.

In its new guidance document, CMS outlines Medicaid’s SDOH flexibilities by category, such as housing, non-medical transportation, educational services, and employment.  Although Medicaid programs usually cannot use Federal money to provide room-and-board for beneficiaries (for example), under the new guidance, Medicaid programs can receive Federal funding for initiatives like one-time community transitions for beneficiaries moving from homeless shelters to private homes.  These one-time transition costs can include security deposits, essential household items, and utility-activation costs.  Similarly, Federal funding can be used to cover pre-tenancy costs, such as assisting with housing searches, ensuring housing units are safe for move-in, and assisting with moving expenses.

The guidance also outlines examples of Federal authorities that state Medicaid directors can use to design specific SDOH-focused benefits.  For example, states can use §1115 demonstration waivers to implement care coordination and case-management support, non-medical transportation, and home-delivered meals, among others.  The §1905(a)(7) home health benefit, can support temporary or permanent home modifications, while the §1915(c) HCBS waiver could support customized employment of job-coaching services and physical or occupational-health care for children in school settings.  Eligible beneficiaries who meet states’ institutional level of care can use §1915(k) authorities to cover the above-mentioned transition costs like first month’s rent, utilities, bedding, and kitchen supplies.

While this guidance does not change the Medicaid statute, it can help state officials identify opportunities to address the SDOH through innovative payment arrangements and benefits. “The evidence is clear: social determinants of health, such as access to stable housing or gainful employment, may not be strictly medical, but they nevertheless have a profound impact on people’s wellbeing,” CMS Administrator Seema Verma said in a prepared statement, adding that CMS’s new guidance can help state health officials shift away from the traditional fee-for-service (FFS) model, which “limits the doctor-patient relationship to what can be accomplished inside the four walls of a clinician’s office.”

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