News & Commentary

Managed Medicaid Ups SDOH Game

States want managed Medicaid insurers to do more to address the social determinants of health (SDOH), and the plans should use value-based payment as one way to do it, according to an issue brief by Manatt Health, a law firm that specializes in health care. Nearly all states are expected to renew Medicaid contracts in the next year and such bargaining will be an “opening [for states] to integrate SDOH strategies,” according to the issue brief.

The traditional “screen-and-refer” method is giving way to a “close loop” approach, where the insurer must follow up to see if a beneficiary’s health has actually improved as a result of being connected to a social or community organization.

“Recognizing that screenings and referrals can become a ‘check-the-box’ exercise, a number of states are establishing more robust MCO requirements to connect people to social supports,” according to the issue brief, which Manatt wrote for the Robert Wood Johnson Foundation.

Beneficiaries often deal with SDOH issues involving food, transportation, social isolation, housing, addiction, interpersonal violence, and even help for people recently released from prison.

But, as usual in health care, addressing those needs turns on the how-to-pay question, “which under­pins all of the trends discussed in this analysis,” the issue brief stated. (United­Healthcare’s effort in this area recently made news. It and the AMA have created nearly two dozen new ICD-10 codes related to SDOH.)

Health plans might naturally want to pay for approaches that address SDOH because of proponents’ claims about them being so cost effective. But the issue brief acknowledged the reality of churn, “that an enrollee may switch to another plan or move to another source of coverage before an SDOH investment pays off.”

The answer, again, lies in the contract, and 29 of the 39 states that use Medicaid managed care plans require the plans to base at least a portion of payments to providers on the value provided. Medicaid, as a federal-state program, allows each state to take a different approach to integrating a value-based payment scheme.

For instance, New York requires Medicaid insurers to provide start-up funding for the community-based organization or provider of an SDOH intervention.

Medicaid insurers are also starting to be reimbursed based on a shared-risk approach. Arizona, Michigan, and Virginia, for instance, tie plans to a shared-risk payment system that calibrates payment to how well they reduce hospital readmission, “an outcome that can be impacted by ensuring that someone has a safe place to live, access to food, and is not socially isolated after a hospitalization,” according to the issue brief.

The issue brief stated that the outcomes resulting from Medicaid’s greater focus on SDOH needs to be carefully tracked because they “may also benefit programs and entities outside of Medicaid.”


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