Enabling Sustainable Investment in Social Interventions: A Review of Medicaid Managed Care Rate-Setting Tools
It is widely recognized that social factors, such as unstable housing and lack of healthy food, have a substantial impact on health outcomes and spending, particularly with respect to lower-income populations. For Medicaid, now dominated by managed care, this raises the question of how states can establish managed care rates to sustain investments in social supports.
To explore practical strategies that states can deploy to support Medicaid managed care plans and their network providers in addressing social issues.
Literature review, interviews with stakeholders, and analysis of federal regulations.
FINDINGS AND CONCLUSIONS:
We identify the following options: 1) classify certain social services as covered benefits under the state’s Medicaid plan; 2) explore the additional flexibility afforded states through Section 1115 waivers; 3) use value-based payments to support provider investment in social interventions; 4) use incentives and withholds to encourage plan investment in social interventions; 5) integrate efforts to address social issues into quality improvement activities; and 6) reward plans through higher rates for effective investments in social interventions. More needs to be done, however, to assist interested states in using these options and identifying pathways to braid Medicaid dollars with other social services funding.
Overview of resource
Methods of resource
1) Classify certain social services (e.g., linkages to social service programs, peer support, stable housing support) as benefits under the state’s Medicaid plan; 2) Explore the additional flexibility afforded states through Section 1115 waivers; 3) Use value-based payment to support investments in social interventions; 4) Use incentives and withholds to encourage plan investment in social interventions; 5) Integrate efforts to address social issues into quality improvement activities; and 6) Rewards plans with effective investments in social interventions with higher rates. To maximize efforts and address the multipronged nature of social factors, these strategies will likely need to be used together
1) Considerations include that a) Social services must be provided on a statewide basis, which may be difficult because social service needs are highly community-specific; b) Unique requirements and obligations; and c) This is not a full solution (i.e., not all social supports can be classified as a Medicaid benefit);
2) Considerations include that waiver negotiation can be complex and time-consuming;
3) Considerations include that a) Future reimbursement rates will be based on lower medical costs without including social cost investments; b) Limited quality metrics that measure social factors; c) Need for system to track, monitor and build shared-savings; and d) Potential disincentivizing for providers to cut costs without delivering value;
4) Considerations include that incentive payments are “add-on” costs;
5) Considerations include that uncertainty remains around how social issues fall under CMS’ definition of quality improvement activities. States are currently not pursing this approach as suggested through lack of evidence in the literature review; and
6) Considerations include potential operational and political issues (e.g., need to establish which plans would receive a higher profit margin);