Insights

This blog post was written by Laura Pence and Sara Singleton on behalf of NASDOH, an alliance managed by Leavitt Partners. NASDOH is a multi-sector coalition of stakeholders seeking to make a material improvement in the health of individuals and communities by advancing the adoption of effective policies and programs to address upstream drivers of health, such as food insecurity, housing instability, interpersonal safety, and transportation insecurity. You can learn more about the alliance at www.nasdoh.org. 

Medicaid programs are the primary provider of healthcare benefits to tens of millions of Americans with limited incomes and resources, many of whom may experience food and nutrition insecurity and other health-related social needs (HRSNs), which have a significant impact on healthcare spending and health outcomes. Although more could be done, there has been bipartisan recognition in recent years that improving health outcomes and lowering healthcare costs—including in the Medicaid population—requires addressing the underlying causes of poor health outcomes. As a result of ongoing federal and state efforts as well as private sector innovations, a growing body of evidence shows that interventions addressing nutrition, housing, and other social drivers measurably improve health outcomes and reduce costly healthcare utilization. 

Background 

In 2021, the first Trump Administration released a letter to state health officials outlining the key authorities and consolidating state guidance around how these authorities may be used to address social needs, including:  

• in lieu of services (ILOS);  

• Medicaid managed care rule provisions that encourage or require Medicaid managed care organizations (MCOs) to address social needs;  

• Section 1915 Home- and Community-Based Services (HCBS) waivers, which may be used to address non-medical needs of individuals to facilitate their opportunity to live and work in the community if they would otherwise need institutional care;  

• 1915(i) state plan amendments that can be used to provide HCBS to people who meet state-defined needs-based criteria that are less stringent than institutional criteria; and  

• Section 1115 Demonstration waivers, which provide states flexibility to address or incorporate social needs interventions into their Medicaid programs. 

The Biden Administration expanded on this by issuing guidance on how states could use 1115 waivers to address HRSNs in Medicaid. More than 20 states have ongoing 1115 waivers that include efforts to address HRSNs such as housing, nutrition, and employment supports. Although the 1115 waiver guidance issued during the Biden Administration have now been rescinded,¹ several underutilized opportunities to address HRSNs still exist within the Medicaid program. 

Medicaid Opportunities 

Although 1115 waivers have become a prominent mechanism among states to advance efforts to screen for and address HRSNs, states and other stakeholders should consider previously underutilized authorities, including ILOS, state plan amendments, and managed care contracts. KFF’s Survey of Medicaid Officials indicated that in 2024, “39 states reported leveraging Medicaid MCO contracts to promote at least one strategy to address social drivers of health, including screening enrollees for behavioral health or social needs, providing referrals to social services, partnering with community-based organizations, and requiring providers to capture SDOH data and employ community health workers.” 

In addition, a dozen states address HRSNs through in lieu of services, 10 of which use ILOS to address nutrition. Although only 12 states have used this authority to address HRSNs, “35 states have authorized ILOS to address behavioral health, and fourteen states have authorized ILOS to address general medical needs,” reflecting that states have been able to more broadly use this authority to ensure their Medicaid programs can better meet the needs of their populations. States regularly use state plan amendments (SPAs) to provide coverage for designated services and populations using the following pathways: preventive services; targeted case management; rehabilitative services; early periodic screening, diagnosis, and treatment (EPSDT) for children; and HCBS. States should consider maximizing the use of these pathways to cover health-related social needs through SPAs. 

As states negotiate with the Centers for Medicare & Medicaid Services (CMS) over the expiration of current 1115 waivers that include HRSN provisions, they should consider how other authorities can be used to continue work that has an appropriate evidence base for lowering costs and improving health outcomes. Evaluations of the CMS Accountable Health Communities (AHC) model found that connecting Medicaid beneficiaries with unmet social needs to community resources led to a 3 percent reduction in hospitalizations, a 3 percent reduction in avoidable emergency department visits, and overall cost savings of more than $200 million. 

State Medicaid nutrition interventions show similar results: Research on medically tailored meals, which several states cover through Medicaid authorities including ILOS, estimates that these interventions can avert millions of hospitalizations nationally and generate net healthcare savings, while improving management of chronic conditions such as diabetes and heart disease. Together, these data demonstrate that when Medicaid addresses HRSNs, it can improve health outcomes, reduce avoidable utilization, and make more effective use of limited public resources. 

States should also consider proposing new HRSN interventions within 1115 waivers. Section 1115 waivers are intended to support “experimental, pilot, or demonstration project[s],” creating an opportunity for proposing innovative interventions rather than carrying out programs that have already developed an evidence base. For interventions that already have an evidence base, funding them through the other mechanisms described will ensure continued authority to provide them. 

Innovation Center Models 

In addition to Medicaid-specific authorities and flexibility, the CMS Innovation Center tests new payment models for Medicare and Medicaid, seeking to increase value and reduce healthcare costs. The center’s mission strongly aligns with the goals of screening for and addressing HRSNs—to support value-based care that improves health outcomes. The Innovation Center has been a leader in addressing HRSNs, beginning with the AHC Model, as well as the MA Value-Based Insurance Design model, and dozens of other frameworks that address HRSNs and SDOH. The upcoming MAHA ELEVATE, LEAD, and ASPIRE models all provide opportunities to address HRSNs. 

The Innovation Center continues to provide opportunities for research and evidence gathering on screening for and addressing HRSNs as a part of value-based care. Participation in voluntary models that involve screening for and addressing HRSNs provides an opportunity for stakeholders to receive reimbursement for these activities while generating data and resources to support other entities. States, providers, and community-based organizations can all participate in Innovation Center models to advance efforts that address SDOH. 

Rural Health Transformation Fund 

The Rural Health Transformation Fund also encourages states and stakeholders to address SDOH. The application instructions from CMS require states to describe SDOH in rural communities, including income levels, employment sectors, unemployment rates, education attainment, and availability of public transportation. 

In response, many states included proposals for addressing HRSNs in rural communities. For example, Alaska’s application recognized a need for “nutrition programs addressing food insecurity and teaching healthy eating habits” and proposed to use funding to support community wellness centers to create dedicated spaces for physical activity and nutrition education. Further, Georgia proposed increasing access to nutrition services for children with autism spectrum disorder and dietitian/nutritionist support for women aged 19–44 who meet certain clinical requirements. 

The Rural Health Transformation Fund (RHTF) allows states to pilot innovative interventions and address HRSNs that could later be included in the state’s Medicaid program.  

Conclusion 

Efforts to screen for and address HRSNs and SDOH remain possible and prevalent, including in Medicaid, CMMI demonstrations, and the Rural Health Transformation Fund. States and other stakeholders should consider the variety of authorities and programs that can be used to address SDOH. In addition, CMS should develop more guidance on activities that align with the agency’s goals, as well as examples for states to adopt. Appropriately addressing individual social drivers of health will require collaborative and innovative approaches across the private and public sectors.