Medicaid Can Help Address Health-Related Social Needs

Access to affordable housing and nutritious foods can have a significant impact on a person’s physical and mental health and ability to thrive. A new CBPP paper highlights guidance from the Centers for Medicare & Medicaid Services (CMS) on how states can use Medicaid funds to help pay for clinically appropriate, evidence-based, and temporary services that address these health-related social needs (HRSN).

Due to systemic racism, people of color are more likely to have unmet housing or nutrition needs, which contributes significantly to health inequity. State requests coupled with recent attention to advancing health equity have resulted in CMS adopting new approaches to broaden allowable HRSN supports provided through Medicaid. The new options reflect increased flexibility to use Medicaid to help address unmet needs. They also include important guardrails to ensure both that Medicaid spending on HRSN does not displace Medicaid spending on traditional health care needs and that states continue other investments to support housing, nutrition, and other social needs.

Continuing work that has spanned multiple administrations, CMS recently described new flexibility for states to use waivers (called Section 1115 demonstrations) to cover services to address unmet HRSN, clarified Medicaid managed care organizations’ ability to provide “in lieu of services” to address HRSN, and clarified that Money Follows the Person (MFP) demonstration funds can be used to include temporary rental assistance and utility services for people transitioning from institutional settings to the community.

CMS has recently approved eight states’ waivers under the new standards and more states have pending waivers to use Medicaid to address HRSN. Policies CMS articulated in 2022 and summarized in a November 2023 bulletin to states significantly widened states’ flexibility to use waivers to address HRSN, while balancing that flexibility with guardrails that ensure Medicaid’s role as health coverage remains paramount:

• States may use Section 1115 demonstrations to cover up to six months of transitional housing for certain groups (including rent), up to six months of nutrition services (such as medically tailored meals, pantry stocking, or food boxes), or both, as long as the services are clinically appropriate.
• States can also use Medicaid funding to develop the infrastructure to effectively deliver social needs services.
• CMS has developed new methods to evaluate whether states meet long-standing budget neutrality requirements when they propose new spending on HRSN, likely making it more financially feasible for states to adopt these policies.
• In exchange for all of these new flexibilities, states will have to follow guardrails designed to make sure that new investments in HRSN spending don’t substitute for existing services or weaken investments in more traditional Medicaid services.
• To ensure that states are providing adequate access to key Medicaid services at the same time they are expanding HRSN spending, states are also required to ensure that provider payment rates in primary care, obstetrics care, and care for mental health and substance use disorders meet minimum levels — or they must commit to improving payment rates.

CMS’s new policies are designed to maximize Medicaid’s potential to help address social needs while preserving Medicaid’s primary role as a health care program. They give states the flexibility to forge cross-sector partnerships among human services programs and to responsibly leverage Medicaid as a bridge to other social supports, like rental or food assistance, but not as a substitute for services that other programs can and should provide on a longer-term basis. Still, a state’s decision to pursue new authority to address HRSN is only a first step; state Medicaid agencies must take care to implement the new authorities effectively, including by establishing and strengthening partnerships with other state agencies and social services providers.

Even states that fully leverage the new policies will not be able to address all HRSN for everyone enrolled in Medicaid. Significant needs for additional support for housing and nutrition lie outside Medicaid’s scope, and Medicaid alone cannot address food insecurity and significant shortfalls in assistance — such as housing vouchers — that make housing affordable for people with low incomes.

But CMS’s new policies allowing states to broaden Medicaid’s role in addressing HRSN will provide temporary supports and connections to services and may help build bridges among health, housing, food, and other systems to address unmet needs. This can make it easier for Medicaid enrollees to connect with housing supports and nutrition assistance that are critical for their health and well-being.