AHIP: Medicaid Managed Care Orgs Deserve Greater SDOH Flexibility

Given the positive social determinants of health impacts that Medicaid managed care organizations have achieved in Medicaid programs, policymakers should offer them greater flexibility to maximize that impact, America’s Health Insurance Plans (AHIP) argued.

“As the federal-state program providing access to essential health care to over 77 million low-income adults, children, pregnant women, elderly adults, and people with disabilities, Medicaid has a unique opportunity to address the social risk factors that disproportionately impact these vulnerable populations,” the brief argued.

Medicaid managed care organizations have proven effective in increasing Medicaid savings and controlling costs around social determinants of health.

One Medicaid managed care organization saved over $10,400 per member per year by integrating related services, AHIP pointed out. Others have lowered inpatient hospital admissions by 26 percent through screenings or increased member engagement by 56 percent despite the challenges of member engagement with the Medicaid population.

In order to strengthen Medicaid managed care organizations’ ability to tackle social determinants of health, AHIP offered five policy recommendations.

First, the payer organization suggested expanding Medicaid managed care organizations’ toolboxes for addressing social determinants of health by expanding Medicaid waiver flexibility.

Specifically, the payer organization requested the “modernization” of current Medicaid flexibilities.

The brief does not dive into details about what the payer is looking for in terms of bringing these policies up to date. However, by simply glancing at recent data, it is clear that Medicaid programs are prioritizing social determinants of health and are innovating new solutions.

According to a Manatt Health report, 27 state Medicaid programs screened for social determinants, 37 programs coordinated social services, and 35 programs referred beneficiaries to social services.

However, sustainability and data continue to handicap Medicaid programs’ ability to strategize around social determinants of health. Widespread though states’ interest in social determinants of health may be, Medicaid programs will have to modernize their approach in order to access real-time and historic data to both address individual needs and recognize population trends.

Second, the payer organization suggested creating a channel for forming interdisciplinary or interagency waivers. Policymakers might provide funding for Medicaid programs to partner with states’ housing, employment, or other departments in order to address social determinants of health.

“For example, a state’s Medicaid and Housing agencies could apply to CMS and the US Department of Housing and Urban Development for a joint waiver to provide integrated health homes for homeless individuals with severe mental illness, pairing comprehensive medical and behavioral health care with housing assistance,” the AHIP brief explained.

Third, social determinants of health interventions should count towards Medicaid plans’ medical loss ratios, AHIP stated. These initiatives are currently being categorized as administrative costs.

The medical loss ratio (MLR) is also known as the 80/20 rule, the medical loss trend, and the medical cost ratio. It sets the expectation for how much of a member’s premium dollar health plans will spend on the member’s healthcare claims, as opposed to administrative expenses.

States are not required to set an MLR for their Medicaid managed care plans, but under the Trump administration, CMS supported states’ decisions to do so as a quality measure. The minimum Medicaid MLR level for states that decide to impose an MLR requirement is 85 percent.

As of October 2019, only half of the states in the US required reimbursement from Medicaid managed care plans if they did not meet the MLR requirement.

However, in states that do take this approach, being able to include social determinants of health interventions in MLR calculations would help payers fulfill their MLR requirement and could incentivize them to focus even more heavily on such programs.

Fourth, Medicaid programs should have more flexibility when it comes to “in lieu of services” interventions, the payer organization asserted.

In lieu of services interventions refer to services that are not typically offered by the Medicaid program apart from the Medicaid managed care organization or that the managed care organization might substitute for a similar traditional service.

A Commonwealth Fund issue brief used the example of a managed care organization offering prenatal home visits for Medicaid beneficiaries that would serve as a substitute for a prenatal clinical visit. The visit would cover similar content but in a different location than the traditional service.

AHIP argued that expanding this flexibility would allow plans to become more innovative.

Lastly, the payer organization recommended expanding managed care organizations’ involvement in pooled funding arrangements, for example, by pooling social services funding across state agencies.