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CMS Issues Guidance to Address Health-Related Social Needs

In January 2023, the U.S. Department of Health and Human Services (HHS), through the Centers for Medicare and Medicaid Services (CMS), released guidance on an opportunity for states to address health-related social needs (HRSNs) for people with Medicaid coverage through the use of “in lieu of services and settings” (ILOSs) in Medicaid managed care.

Last year, CMS published a State Health Official Letter (SHO #21-001that described opportunities under Medicaid and the Children’s Health Insurance Program (CHIP) to better address social determinants of health (SDOH). Since CMS published that SHO, states have been working to implement changes in their Medicaid managed care programs to meet the HRSNs of Medicaid enrollees more effectively, including partnering with community-based organizations that routinely address HRSNs. CMS published this guidance to clarify an existing option that states can pursue to enhance and expand these efforts through the use of ILOSs.

According to HHS, this option will help states offer alternative benefits that take aim at a range of unmet HRSNs, such as housing instability and food insecurity, to help enrollees maintain their coverage and to improve their health outcomes.

In addition to outlining this opportunity for states, the guidance also establishes the requirements and guardrails states must meet to ensure that these innovations are cost-effective, are medically appropriate, preserve enrollee rights and protections, and fulfill the objectives of the Medicaid program. These requirements will allow CMS to ensure appropriate oversight and provide additional guidance to states on how to evaluate and monitor the impact of these ILOSs.

The following six principles apply to the use of ILOSs:

  1. ILOSs must advance the objectives of the Medicaid program;
  2. ILOSs must be cost-effective;
  3. ILOSs must be medically appropriate;
  4. ILOSs must be provided in a manner that preserves enrollee rights and protections;
  5. ILOSs must be subject to appropriate monitoring and oversight; and
  6. ILOSs must be subject to retrospective evaluation, when applicable.

As CMS explains in the new guidance, ILOSs provide "an existing option" for states and managed care plans to "strengthen access to care by expanding settings options" and HRSNs for certain Medicaid enrollees, thereby potentially reducing the need for "future costly state plan-covered services." Importantly, the updated guidance explains that Medicaid managed care plans and enrollees have the option to use ILOSs "as immediate or [longer-term] substitutes for state plan-covered services or settings, or when the ILOSs can be expected to reduce or obviate the future need to utilize state plan-covered services or settings.”

Contact: Meg Everett, meverett@leadingageny.org, 518-867-8871 or Darius Kirstein, dkirstein@leadingageny.org, 518-867-8841