Medicaid, our nation’s largest publicly funded health care program, covers more than 73 million people. Much like the rest of the health care system, most Medicaid services are delivered through managed care; more than 80 percent of beneficiaries receive at least some of their services through managed care. In 14 states, more than 90 percent of beneficiaries receive virtually all of them through managed care plans.
Most beneficiaries are enrolled in capitated managed care organizations (MCOs), which means that plans get a set payment for each enrollee, regardless of the amount of services provided. This allows states to better predict Medicaid expenditures than in a fee-for-service system. Managed care is also intended to provide a means to oversee and coordinate care to avoid waste and duplication. At the same time, however, the ceiling on payments to plans can encourage them to skimp on necessary care. That means that beneficiaries and their advocates must closely monitor Medicaid MCOs to ensure that plans aren’t denying medically necessary services to save money.
In recent years, the federal Centers for Medicare and Medicaid Services (CMS), which administers the Medicaid program, has encouraged states to use Medicaid-managed care for coverage of non-health services that can impact the social determinants of health. There are different options that enable states to go beyond providing health services to individuals in managed care. States may apply for special projects—known as 1115 waivers —that allow states to disregard certain Medicaid requirements in order to test innovative strategies in their Medicaid programs.
These waivers are commonly used to authorize states to provide health services through MCOs, but they can use them to introduce other innovations. CMS has granted permission to states to take steps to address social determinants of health through 1115 waivers. Last month, CMS approved North Carolina’s 1115 waiver which will transform the Medicaid program into a capitated managed care system. The waiver authorizes the state to run a pilot program to coordinate with organizations to provide non-medical care like housing supports, legal assistance, meal delivery and transportation assistance for victims of domestic and other violence.
Medicaid-managed care states that don’t have 1115 waivers also have additional flexibility to address social determinants of health. Notably, federal regulations authorize states to provide value added services that are not covered under Medicaid, such as installing a shower grab bar for an older adult or purchasing a window air conditioner for a child with asthma. These non-medical services cost a fraction of what a hospitalization would and avert harmful physical consequences. So, we should expect to see more states taking advantage of this flexibility.
This blog was prepared by Sarah Somers, Managing Attorney, Network for Public Health Law—Southeastern Region Office. The Network for Public Health Law provides information and technical assistance on issues related to public health. The legal information and assistance provided in this document does not constitute legal advice or legal representation. For legal advice, readers should consult a lawyer in their state.
Support for the Network is provided by the Robert Wood Johnson Foundation (RWJF). The views expressed in this post do not necessarily represent the views of, and should not be attributed to, RWJF.