This study found ways states can leverage Medicaid to help nonprofits make society better


A new report details how states could further social services through Medicaid. (Illustration by Zach Williams/ NYN Media)

Medicaid can fund a lot of things besides doctor’s visits and medical care. And there can be monetary benefits for nonprofits who work with the state to provide patients social supports ranging from supportive housing to food benefits. Tucked between the lines of a new report from The Commonwealth Fund are suggestions that New York state could use to provide even more comprehensive care to its residents and help nonprofits make society better to boot. 

Although the name “Trump” only receives a single cursory mention, the “Enabling Sustainable Investment in Social Interventions: A Review of Medicaid Managed Care Rate-Setting Tools” study comes at a time when New York state has been pushing back at the federal government on multiple fronts, whether on taxes, or immigration, or even net neutrality – sometimes to a mixed reaction from the nonprofit sector.

Leveraging Medicaid funds and partnerships with social services providers to offer more comprehensive care may be yet another way the state can push back against the federal government’s looming cuts to nonprofits and the safety-net they provide.

Here are six quick takeaways from the report:

Use Medicaid to cover some social services

“States have some discretion to classify a range of social supports as Medicaid plan benefits. By doing so, states can include these services in plans’ benefit packages and build their cost into the states’ Medicaid managed care rates in the same way as hospital services, physician services, or other “traditional” medical services.” 

“States could opt to classify the cost of connecting families to the Supplemental Nutrition Assistance Program (SNAP) or other help finding adequate food as part of “case management” or “targeted case management,” which are both optional Medicaid benefits.”

Use section 1115 waivers to cover social supports

States also have the flexibility to pursue 1115 waivers, which offer broad authority to waive provisions of the Medicaid statute and to provide financing for services not otherwise included in Medicaid. They must further the purposes of the Medicaid statute and be budget-neutral to the federal government. “

Use value-based payments to cover social investments

Because value-based payments — whether paid by the plan or the Medicaid agency — are not linked to providing specific medical services, they can be used by providers for social investments even beyond those included in the Medicaid benefit package.”

Incentivize the use of social supports

A state might make such payments to plans that succeed in reducing unnecessary use of medical care by connecting beneficiaries to social supports; addressing food security, social isolation, or housing issues; or reducing disparities in outcomes. In addition, incentives and withholds can be combined (with the idea of using value-based payments to cover social investments) to reinforce plan incentives to participate in value-based purchasing arrangements.” 

… But don’t go overboard

The issue, of course, is whether a particular social intervention can be considered a quality improvement activity.”

“Classifying too many activities as part of “quality” could undermine more broadly the effectiveness of the MLR (medical loss ratio), which is designed to ensure that issuers do not use an undue amount of their capitation funds for administrative costs or profits.”

More results – more money

“Medicaid managed care rates include a nonbenefit component, which, in turn, includes a profit margin or, for nonprofit plans, a risk margin. States can elect to provide a higher profit and risk margin to plans that demonstrate they have lowered medical costs through investments in social interventions.”

“A related strategy is for the state to establish a (medical loss ratio) above the 85 percent required in regulation for rate-setting purposes, then offer relief from this higher standard to those plans that invest in social interventions and succeed in driving down medical utilization as a result. For example, a state might generally require plans to meet a (medical loss ratio) of 88 percent, but then allow plans that invest in social interventions and thus lower medical costs to receive an MLR of 85 percent.”

Social services organizations have long known that alleviating various problems that stem from poverty can result in direct health benefits. This report can help states leverage Medicaid dollars to better monetize that fact.

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