Leveraging Managed Care Contracts to Address Social Determinants

Medicaid programs across the country and our own Medicaid agency (AHCCCS) are increasingly considering how best to address the social factors, such as housing, healthy food, and economic security, that can affect health and medical expenditures (social determinants).

That’s because social determinants of health drive as much as 80% of population health outcomes.  It’s easy to see why there’s such an interest in addressing social determinants as Medicaid program administrators look for ways to contain costs.

Many Medicaid programs including ours have focused much attention on the social determinants that drive costs in expensive or high needs populations (e.g., people with disabilities or a mental illness or HIV/AIDs)… but as the knowledge about how profound social determinants are in terms of costs overall, many are now thinking about how they can address social determinants across the general Medicaid population.

An organization called State Health and Value Strategies has developed an Issue Brief that explores practices states are using to address social factors using Medicaid 1115 waivers and in their managed care contracts The issue Brief also includes steps states can take to implement these practices.

The issue brief includes a review of Medicaid managed care contracts in 17 states and Medicaid 1115 provisions in 6 states.  There are quite a few examples in the report- so I’ve just picked a couple to give examples:

Aligning financial incentives to support SDOH interventions.  States are deploying a range of tools to strengthen the financial incentive for plans to address SDOH. These include the use of withhold payments linked to SDOH-sensitive outcomes and allowing plans to count investments in high-impact social services toward the numerator of their medical loss ratio (MLR).

Creating opportunities for affordable housing. Medicaid does not directly pay for housing, but states are increasingly identifying new ways to connect people to housing resources; providing housing-related services that can be covered via Medicaid; and encouraging their Medicaid managed care plans to participate in broader, cross-sector initiatives to address the affordability and safety of housing.

Building a stronger network of community-based organizations and collaboration with providers. Recognizing that many community-based organizations operate on tight budgets and lack experience contracting with health care plans and providers, states are investing in community-based resources and fostering stronger working relationships between such organizations and health care plans/providers.