Study: States lack guidelines for using Medicaid funding for social services

Dollar bill with a hole in Washington's face on it and the word "Medicaid" in its place
There are few guidelines for Medicaid spending on social services. (zimmytws/GettyImages)

Medicaid today not only has the ability to help low-income patients with medical needs, it can also be a source of funding for social needs—however, few policies exist to guide and support states when determining social interventions for health, a new study shows.

In fact, the use of Medicaid funds for social interventions is left up to the discretion of the state, along with additional services offered under Medicaid managed care organizations. A recent study sponsored by Project HOPE and published in the May edition of Health Affairs examined how Medicaid funding was used to support social initiatives in Oregon and California, both of which have used Section 1115 waivers to extend Medicaid’s role in addressing social needs.

For example, Oregon’s coordinated care organizations (CCOs) were established in 2012 to provide flexible funding for health-related social services, and payment was shifted from a per-visit model to a monthly fee. And in California, partnerships between county health departments, managed care plans, hospitals and the community were created in 2016, offering up to $1.5 billion in federal funding to these programs through 2021.

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In these states, funding from Medicaid and other sources was used to help care coordination, housing services, food insecurity programs and legal supports as part of community-based programs. The study’s researchers were able to identify several factors influencing program implementation, including the framework of the local health system.

"People across California and Oregon are overcoming a multitude of barriers to support patients’ medical and social needs," Laura Gottlieb, M.D., associate professor of family and community medicine at the University of California, San Francisco and co-author of the study, told FierceHealthcare. Gottlieb calls their creativity with limited resources "inspiring." 

RELATED: Kaiser Permanente launches network for social health services

For the study, Medicaid funding was separated into two categories: direct services (screenings and resources) and capacity building (investments in data sharing or new team members).

Across both states, care coordination was the most common intervention, which includes helping patients access housing, legal support and income assistance. For example, in Oregon, community health workers helped patients apply for one-time payments for nonmedical items or helped set up alternative payment methods for food or childcare. And in California, funding was used to create coordinated care for homeless patients, communicate with landlords and find employment.

Housing was also a big focus for both states. In Oregon, one CCO invested in supplying 20 homes for homeless people, and in California, counties used Section 1115 to widen funding for housing services.

All test sites looked at in this study described food insecurities as barriers to health. So in Oregon, the CCOs invested in vegetable delivery by a community health center.

In the ways of capacity building, one county was investing $2.4 million of Section 1115 waiver funding in each year of the pilot to train staff members, and in Oregon, and another CCO used the funding for health equity workshops for clinicians. Funding was also used to strengthen operating costs in both states for existing programs such as in-house nurseries or community engagement, such as conducting community-based health assessments.

Finally, sites in California invested in information technology infrastructure to improve their ability to identify patients in need of support and track the use of support between sectors.

All programs were separated into three funding sources: conventional options, alternative models and savings.

Looking at outcomes, when organizations were given greater flexibility over spending, leaders chose to invest in a wide range of services in both capacity building and community-based interventions. Plus, they used a mix of Medicaid funding to support social interventions including conventional options, alternative models and savings.

RELATED: Kaiser Permanente building infrastructure to 'connect the dots' for social determinants

The authors of the study come to several conclusions: First, Medicaid reforms in Oregon and California have blurred funding boundaries between healthcare and social services. Now, policymakers will need to decide if social investments like these should become the norm for Medicaid. And if not, policymakers would need to invest directly in housing and other social services directly.

Second, leaders in both states were concerned with their ability to sustain the use of Medicaid funds for social supports. For example, California’s Whole Person Care Pilots program will expire in 2021. The recently expanded definition of supplemental benefits in Medicare Advantage suggests that the Centers for Medicare & Medicaid Services may allow greater spending on social services over time, but even under more flexible payment models, investment in social interventions ultimately will depend on the choices of healthcare leaders.

Finally, findings from the study illustrate the importance of community-based organizations in delivering social interventions; therefore, healthcare organizations must work closely with these entities for program implementation.

"The dismantling of the US social safety-net cannot be fixed by the US health care system. But there are many health care leaders doing their very best to apply the equivalent of individual and system-level Band Aids where they can," Gottlieb said. "Those efforts are limited in two important ways: the healthcare safety-net is not replete with resources and there are still major barriers in how healthcare dollars can be used for what were traditionally considered 'non-healthcare' activities. The people in California and Oregon that we spoke with are trying to dismantle some of the barriers to spending flexibility, especially, by emphasizing that activities that help meet basic material needs like food and housing are foundational to health."

Gottlieb looks forward to seeing how other states continue to grow and learn from lessons in Oregon and California.

"We’ve been excited to see how much is happening in other states, not only under waivers (like in North Carolina) but also under other value based payment innovations," she added. 

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