Manatt on Health: Medicaid Edition

Medicaid Coverage of Social Interventions: A Roadmap for States

By Deborah Bachrach, Partner | Jocelyn Guyer, Managing Director | Ariel Levin, Manager

Editor's Note: Faced with mounting evidence about the impact of social factors—such as income, access to food and housing, and employment status—on health outcomes, Medicaid agencies are looking for ways to integrate social interventions into their coverage, payment, and delivery models. In support of this objective, federal regulations and guidance have opened the door to Medicaid becoming a strong partner in community efforts to address social determinants of health—and Manatt Health explains how in a new issue brief, summarized below.

Prepared for the Milbank Memorial Fund's Reforming States Group, with support from the New York State Health Foundation, Manatt Health provides a practical guide for policymakers who want to know when and how states can use Medicaid to facilitate access to social services. It offers a roadmap of the legal authorities upon which policymakers can rely to extend Medicaid coverage to social interventions and provides examples from states that are already using Medicaid in creative ways to help vulnerable populations access needed social supports. Click here to download the full brief for free.



A growing body of evidence indicates that medical care is not the only factor that drives health outcomes. A person's economic circumstances, education level, family life, neighborhood and physical environment play an equal or even more significant role. The Commonwealth Fund reports that nearly 80% of physicians believe that addressing patients' social needs is as important to improving health outcomes as addressing their medical conditions.

As they explore if and how they should deploy interventions aimed at social and economic issues, Medicaid agencies face the reality that the United States has a relatively modest social safety net, particularly compared to its expansive healthcare system. The United States spends significantly more on healthcare than other countries ($9,086 per capita compared to the Organization for Economic Cooperation and Development (OECD) median of $3,661) but far less on social services. The relatively low level of spending on social support services in the United States creates additional pressure on Medicaid to provide these services—when possible and cost-effective—to improve health outcomes and prevent unnecessary medical expenditures.

Medicaid already has begun playing a role in connecting people to resources and helping to supplement the limited social safety net in the areas of noncovered social services, housing, employment, and peer and community supports. In recent years, the federal government has made a renewed commitment to help states navigate and finance this type of work through new guidance, technical assistance from the Innovation Accelerator Program, and funding from the Centers for Medicare & Medicaid Services (CMS) Innovation Center. In addition, some states are exploring ways to connect their Medicaid-funded work on social determinants with related work led by public health or social services agencies.

Legal and Regulatory Authorities for Medicaid Coverage of Social Supports

There are three routes to covering services in Medicaid that help address social factors that affect health:

1. State Plan Amendments (SPAs) can be used when the Medicaid statute directly allows for coverage of a particular service or activity. There are several SPA-based options available to states:

  • Case management and targeted case management. Case management services under Section 1095(b) and targeted case management (TCM) services under Section 1915(g)(1) are optional benefits in Medicaid. They allow states to use Medicaid to pay for the costs associated with helping beneficiaries gain access to needed medical, social, educational and other services. TCM consists of the same services as case management, but states are not obligated to provide it on a statewide basis or to all groups of Medicaid beneficiaries.

    Notably, federal law imposes a number of requirements on how case management and TCM can be deployed, including that beneficiaries cannot be obligated to use case management services, and if they do use them, they must have free choice of providers. States must develop care plans for individuals, meet recordkeeping requirements and ensure Medicaid is not financing costs more appropriately borne by other programs.
  • Preventive and rehabilitative services. States have the option to include preventive and rehabilitative services in their benefit packages. In the context of Medicaid, these terms are defined broadly and create the opportunity for states to cover an array of services (such as physical rehabilitative and behavioral health services, including mental health and substance use disorder treatment), as well as rely on community health workers or peer specialists to provide some of these services.
  • Habilitation services. States have the option under home and community-based services (HCBS) waivers authorized under Section 1915(c) and Section 1915(i) (a provision of the Social Security Act that allows states to provide HCBS waivers to Medicaid-eligible individuals even if they do not require an institutional level of care) to provide habilitation services to targeted populations, such as people with mental illness. These services can include a broad array of activities related to social support services and social factors that affect health, such as employment-related services.
  • Health Home services. States have the option under Section 1945 to establish Health Homes to provide expansive care coordination and management for beneficiaries with intensive needs. Health Homes are designed to provide personal and family-centered care that responds to an individual's social, emotional, physical and behavioral needs. Created by the Affordable Care Act (ACA), the option provides states with eight quarters of 90% federal match funding to establish Health Homes for beneficiaries who have two or more chronic conditions, one chronic condition and the risk of acquiring a second one, or one serious and persistent mental health condition. (In Medicaid expansion states, Health Home services provided to newly eligible adults will be subject to an enhanced federal match on an ongoing basis.)

Note that states now have the flexibility to target state plan services to any group of Medicaid beneficiaries. Specifically, they have two mechanisms to do so without violating Medicaid's statewide or comparability requirements:

  • 1915(i) option. The Section 1915(i) option allows states to provide any HCBS waiver to any group of Medicaid beneficiaries even if the beneficiaries do not require an institutional level of care. States cannot set numerical limits on how many people they will serve, but can target the services to defined groups.
  • Alternative benefit plan option. States have broad flexibility to set up alternative benefit plans (ABPs) for targeted groups of beneficiaries. ABPs must include all essential health benefits, but states have the flexibility to include additional habilitation services or other services that traditionally have been provided only to people with HCBS waivers and the 1915(i) program.

2. The Medicaid statute created a number of waiver opportunities, which provide states with additional flexibility to facilitate access to social supports:

  • Section 1115 demonstration program waivers. Under Section 1115, the Department of Health and Human Services (HHS) has broad flexibility to waive many provisions of the Medicaid statute in the interest of pursuing demonstrations that further the purposes of the Medicaid program. Increasingly, states are using 1115 waiver demonstrations to test new approaches to delivery system reform that include connecting people to social services and, to some extent, allow for flexible funding of social services that directly affect health.
  • Home and community-based service waivers. The HCBS waivers available under Section 1915(c) offer a way to provide a broader array of services to beneficiaries who otherwise would require institutionalized care. HCBS waivers authorize coverage of a range of medical and nonmedical services to address long-term care needs in home or community-based settings.

3. Under Medicaid managed care arrangements, state Medicaid agencies pay managed care organizations (MCOs) a capitated rate to cover a defined set of services. MCOs are obligated to cover case management and any other social supports that are built into the state's benefit package and the MCO contract. To cover additional social services, beyond those covered under the contract, MCOs have two potential pathways:

  • In lieu of services are services or settings that are not covered in a state plan or an MCO contract but are a medically appropriate, cost-effective alternative to a service that is covered. MCOs may offer these services to enrollees, provided the state has authorized the alternative.
  • Value-added services are services that are not, and generally cannot be, included in the state plan or under the managed care contract but that an MCO can elect to provide to improve the quality of care and/or reduce costs.

Both count as medical, not administrative, costs when calculating the plan's medical loss ratio (MLR).

Medicaid's Role in Specific Social Support Services

The following discusses four major areas of specific social support and other services that Medicaid may cover:

1. Linkages to noncovered social services. States have a number of ways to help low-income Medicaid beneficiaries connect with social services, such as the Supplemental Nutrition Assistance Program (SNAP) and other food supports, rental assistance, child care, legal assistance and help with utility bills. States and MCOs are increasingly recognizing that making such connections is an efficient use of Medicaid dollars. States can readily use the case management state plan option to provide case management services to finance the cost of linking beneficiaries to needed medical, social, educational and other services and supports.

2. Housing services. A large and growing body of research indicates that stable housing can help to reduce healthcare costs, particularly for high-risk individuals with mental health issues, substance use disorders or a history of homelessness. While Medicaid cannot pay for room and board, it can finance a range of services that support beneficiaries in finding and staying in housing. As clarified in a June 2015 Informational Bulletin from CMS, various Medicaid authorities can cover the following kinds of housing-related services or components of these services:

  • Transition services—activities that help beneficiaries transitioning from institutional living or homelessness to secure appropriate community-based housing.
  • Sustaining services—activities that support a beneficiary's ability to maintain a sustainable housing situation.
  • Housing-related collaborative services—activities such as working with state and local partners to advocate for and develop additional housing resources.

3. Employment services. States have the flexibility to provide case management services that connect people to employment resources. For beneficiaries with disabilities or major barriers to work, states have gone significantly further and used 1915(i) or HCBS waivers to provide more direct employment-related services, such as the following:

  • Prevocational services prepare people who otherwise would not work with the skills they need to find and keep a job. Services can include training in effective workplace communication, workplace conduct, and strategies for staying on task and following directions.
  • Support employment services assist individuals who otherwise would not work in obtaining and maintaining employment in a community setting. Services covered include job searching, employment planning, long-term job coaching and other accessible workplace support services.

4. Peer support services. Unlike clinical care, peer support services generally are aimed at helping individuals cope with social and emotional challenges. They are provided in the community by people who have themselves experienced an illness and are able to support an individual's recovery.


As the evidence continues to mount about the importance of looking beyond clinical interventions to improve the health and health outcomes of low-income populations, states are taking a renewed interest in Medicaid's role in addressing the social and economic challenges faced by beneficiaries. States have significant flexibility under Medicaid law and regulations, and clearly can assist people in securing and using social support services. To an extent not always recognized, states also may directly provide many employment- and housing-related services to a broad array of Medicaid beneficiaries. As states increasingly pursue value-based payments and delivery system reform models that prioritize outcomes and cost-effectiveness, they may find that there are even more ways to use Medicaid to address social issues when it is cost-effective to do so.



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