HHS, CMS Aim to Improve Medicaid Social Determinants of Health ILOS Efforts

The Department of Health and Human Services (HHS) and CMS released guidance for state Medicaid programs’ in lieu of services or settings (ILOS) to improve the quality of Medicaid social determinants of health endeavors.

The guidance refers to an existing rule within the Medicaid and Children’s Health Insurance Program (CHIP) managed care final rule to shepherd states’ non-clinical, in lieu of a service or setting efforts.

“In partnership with CMS, states have been working hard to better meet the health-related social needs of people with Medicaid coverage,” CMS Administrator Chiquita Brooks-LaSure said in the HHS press release. “Today’s announcement is the next step in CMS’ effort to use every lever available to protect and expand coverage for all eligible individuals as we work with our state partners to offer whole-person care.”

Prior to this guidance, there were four requirements for the use of ILOSs, according to the original rule: the ILOS must be medically appropriate and cost-effective, it cannot be a requirement for enrollees, managed care plan contracts must identify the ILOS, and the utilization and actual cost of the ILOS must be factored into capitation rates.

The guidance establishes six principles to guide states’ ILOS efforts: Medicaid program alignment, cost-effectiveness, medical appropriateness, protection of enrollee rights, subjection to oversight and monitoring, and a retrospective evaluation.

First, the ILOS must contribute to the Medicaid program’s initiatives. This means that the ILOS cannot violate federal prohibitions or requirements.

The ILOS must be cost-effective as well as medically appropriate. Assessing cost-effectiveness involves an annual, actuarial estimation of the ILOS Cost Percentage. CMS will review the clinically oriented definitions for the ILOS target population or populations and the ILOS’s contractual requirement for consistent medical care.

The services that the ILOS delivers must not violate enrollee rights and protections. Enrollees must be able to decline ILOS services. Their care cannot depend on whether they have been offered an ILOS, are currently leveraging an ILOS, or have used an ILOS previously. According to this principle, states must have an appeal and grievance system for ILOS and other services that conforms to existing requirements.

Additionally, the ILOS must submit to oversight and monitoring as well as retrospective evaluation, primarily through a risk-based review process.

For the oversight and monitoring principles, states must submit an actuarial report certifying the ILOS Cost Percentage of each ILOS. They should also provide written notification within 30 days of an ILOS being determined non-compliant, an attestation to audits of enrollee rights and protection protocols, and utilization and cost documentation.

The retrospective evaluation should cover the utilization impact of ILOS, an assessment of cost-effectiveness and medical appropriateness through encounter data, the final annual ILOS Cost Percentage, reports on appeals, grievances, and state fair hearings data, and the health equity impact of each ILOS.

In order to comply with this new direction, states with existing ILOSs have until January 1, 2024 to submit evidence for their ILOS costs and ensure that these efforts are aligned with this guidance.

“We are deeply committed to strengthening Medicaid for the millions of Americans covered by it,” HHS Secretary Xavier Becerra said in the press release. “Today’s step ensures people with Medicaid receive the broader care they need to live safe and healthy lives. We call on all states to leverage these innovative options and stand ready to partner with them in providing essential health care services.”

CMS and its sister agencies have been vocal about addressing social determinants of health needs in Medicaid. The Centers for Medicare and Medicaid Innovation Center (CMMI) prioritized social determinants of health as well as health equity with models like the Accountable Health Communities model. CMS also released a roadmap for its social determinants of health efforts which incorporated value-based care efforts.