Medicaid MCOs: 4 Key Trends to Reduce Social Determinants of Health and Increase Care Coordination

Medicaid MCOs play a crucial role in the development of strategies to identify and address social determinants of health (SDOH), contributing significantly to the reduction of health disparities. The increasing focus of Medicaid Managed Care Organizations (MCOs) on addressing social determinants of health (SDOH) has led to significant improvements in overall health outcomes and a notable reduction in health disparities among Medicaid beneficiaries. 4 Key Trends of How MCOs Integrate SDOH Into Its Strategies 1. Regulatory Support and Incentives Recent regulations have provided states with clearer pathways to promote non-medical needs investments through Medicaid Managed Care plans. For instance, states can now implement alternative payment models (APMs) that incentivize providers to address social determinants such as food security, housing stability, and domestic safety. These models encourage managed care plans to incorporate broader community health interventions into their services. 2. Flexible Service Offerings Medicaid managed care plans are allowed to offer non-traditional services, which can be classified as "in-lieu-of" services (substituting standard services with alternatives that may better meet social needs) or "value-added" services (additional services beyond contractual obligations). For example, a plan might provide home visits for prenatal care instead of standard clinic visits or offer nutrition classes and home-delivered meals post-hospitalization to address broader health determinants. 3. Care Coordination Effective care coordination and case management are critical for addressing SDOH. Managed care organizations often focus on "hot spotting" to target individuals with complex care needs, ensuring they receive comprehensive housing, food, education, and employment support. This approach helps create stability and prevents serious health episodes by addressing the root causes of health issues. 4. Best Practices and Innovations During the COVID-19 pandemic, many Medicaid managed care organizations (MCOs) pivoted to address the immediate social needs of their members. The Institute for Medicaid Innovation (IMI) highlighted several innovative initiatives across 14 states that adapted to meet these needs. These initiatives ranged from partnering with community-based organizations to providing emergency food supplies and housing support, illustrating the critical role of MMC in addressing SDOH during crises. By integrating SDOH into their strategies, MCOs plans not only aim to improve individual health outcomes but also strive to enhance overall community health and reduce healthcare costs. This comprehensive approach is a powerful tool for creating a more equitable healthcare system. MCO Insights Under federal Medicaid managed care rules, Medicaid MCOs can be given flexibility to pay for non-medical services through “in-lieu-of” authority. States may allow Medicaid MCOs the option to offer (and provide beneficiaries the option to receive) services or settings that substitute for standard Medicaid benefits (referred to as “in lieu of” services (or “ILOS”)) if the substitute service is medically appropriate and cost-effective. For example, a state could authorize in-home prenatal visits for at-risk pregnant beneficiaries as an alternative to traditional office visits or services provided by peer supports, as an alternative to psychosocial rehabilitation services for members with behavioral health needs. The costs of the ILOS are built into managed care rates. Leveraging MCO Contracts to Promote SDOH Strategies In January 2023, CMS released guidance that paves the way for states to allow Medicaid MCOs to offer services, like housing and nutrition supports, as substitutes for standard Medicaid benefits. The new guidance establishes financial guardrails and new requirements for ILOS. It clarifies these substitute services can be preventive instead of an immediate substitute (e.g., providing a dehumidifier to an individual with asthma before emergency care is needed). Under federal rules, Medicaid MCOs can pay for non-medical services as “value-added” services. “Value-added” services are extra services MCOs voluntarily provide outside of covered contract services. These services cannot be built into managed care rates. Examples include safe sleeping spaces for infants, repairs, and cleaning services to reduce asthma triggers, installation of a shower grab bar, and health play and exercise programs. States may implement MCO procurement and contracting strategies, including quality requirements linked to SDOH. In a 2023 survey of Medical directors, most MCO states reported leveraging Medicaid MCO contracts to promote at least one strategy to address social determinants of health in FY 2023 (Figure 1). In FY 2023, most MCO states reported leveraging Medicaid MCO contracts to promote at least one strategy to address social determinants of health. More than half of MCO states reported requiring MCOs to screen enrollees for behavioral health needs, provide referrals to social services, screen enrollees for social needs, and partner with community-based organizations (CBOs). Fewer states reported requiring MCO community reinvestment (i.e., directing plans to reinvest a portion of revenue or profits into the communities they serve) compared to other strategies. States can use incentive payments or quality withhold arrangements to reward plans for investments and improvements in SDOH. For example, states may provide incentive payments to plans that screen enrollees for social needs or make other strategic investments in addressing health-related social needs or incentive payments to improve or maintain quality while lowering costs. Additionally, many plans have developed initiatives and engaged in activities to address enrollees’ social needs beyond state requirements; however, it is difficult to compile national data to reflect this. Looking Ahead In the Institute for Medicaid Innovation’s 2023 Medicaid managed care survey, plans indicated state Medicaid agencies could support MCO efforts to address enrollee social needs by improving data sharing (e.g., between the state and MCOs and between government agencies), increasing financial resources (including to support the facilitation of partnerships and new payment models), and facilitating contracting with CBOs. Download ArticleDownload the Entire Issue

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Medicaid MCOs: 4 Key Trends to Reduce Social Determinants of Health and Increase Care Coordination

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