The Social Question

By Monica E. Oss, Chief Executive Officer, OPEN MINDS

Earlier this year, the Centers for Medicare & Medicaid Services (CMS) signaled plans to reduce reimbursement for health-related social needs (HRSNs). First there was the cancellation of previous guidance document about coverage of HRSNs in Medicaid waiver programs. The second was a letter to state the states outlining plans to ending coverage of non-medical benefits in 1115 waivers.

In March, CMS published a notice that rescinded two previously issued guidance documents about coverage of services and supports to address HRSNs. Going forward, CMS will consider states’ applications to cover these services and supports on a case-by-case basis.

Then in April, CMS sent a letter notifying states that it does not intend to approve or renew Medicaid Section 1115 waivers, specifically stating that 1115 waivers with designated state health programs (DSHP) and designated state investment programs (DSIP) would not be approved and/or renewed. This would curtail federal funding support for housing supports, nutrition programs, non-medical in-home services, high-speed internet for rural health care provider organizations, and workforce development initiatives. In the letter, CMS said that these programs are not “an integral part of an appropriate section 1115 Medicaid demonstration.

These decisions run contrary to the evidence about the excessive or unnecessary consumer health care costs due to unmet social needs. And there is significant evidence of the cost-effectiveness of addressing those needs.

For example, a recent study evaluated North Carolina Medicaid’s Healthy Opportunities Pilots (HOP)—a Section 1115 waiver pilot program initiative designed to address HRSNs by offering nonmedical services like food delivery and housing support to eligible Medicaid recipients. Prior to enrollment in the HOP pilot, average monthly Medicaid spending per beneficiary was $828. Upon enrollment, costs initially rose by $687 per beneficiary. However, this increase was followed by a downward trend in spending. Compared to projections for nonparticipants, monthly costs declined by $85 per beneficiary. By the eighth month after enrollment, spending dropped below expected levels. From a utilization standpoint, HOP participation was associated with a decline in emergency department visits, decreasing by six visits per 1,000 person-months and outpatient visits increased by one visit per 1,000 person-months.

The challenge for provider organizations is that the implications of the recent changes in CMS rules are unclear. The question is whether HRSNs will continue to be covered by CMS, by Medicaid, and/or by Medicaid or Medicare health plans. This state of uncertainty is problematic on a few levels. Over the past five years, many provider organizations have invested in both whole person care-oriented delivery system models and in HRSN service lines. Whether or not these services will be financially sustainable going forward is in question.

And whether HRSNs will be a reimbursable service in the future is likely dependent on the policies of individual health plans. This means that provider organizations are going to need to sharpen their pitch to health plans—with specific cost and return-on-investment data. Finally, it is most likely that HRSNs will be “financed” by provider organizations through risk-based contracts (such as case rates, bundled rates, or capitation) with some type of significant gainsharing and/or downside financial risk. Provider organizations would be “able” to provide HSRNs if they are cost-effective within the value-based reimbursement parameters. 

To gain more insights into HRSN strategies, I asked OPEN MINDS Senior Associate Deanne Cornette, and OPEN MINDS Chief Strategy Officer Paul Duck to share their thoughts on the topic. In Ms. Cornette’s view, while more organizations are screening for HRSN data, most hospitals are struggling to meaningfully integrate that data into their EHRs. “First, there’s no clear standard. Social needs data doesn’t have the same universal coding or formatting we’ve come to expect for lab results or prescriptions. That means organizations use different screening tools, document findings in different places, and often store the information in formats the EHR can’t easily interpret or share. Without a shared approach, it’s difficult to build workflows or analytics around this data,” she said. “Even when data is collected, it doesn’t always go anywhere useful. It may live in a standalone survey tool, or on a paper form, and never be fully integrated into the patient’s chart or shared with care coordinators and community partners. That lack of interoperability creates breakdowns across the care continuum.”

And Mr. Duck noted that the financial incentives haven’t caught up. “One of the most significant hurdles to scaling HRSN programs is the lack of stable, long-term funding mechanisms. While Section 1115 Medicaid waivers have become the go-to model for states to launch HRSN initiatives, this approach comes with serious limitations. Waivers are time-limited, administratively complex, and subject to political shifts at both the state and federal levels. As we’ve seen in New York and Hawaii, states are committing billions to HRSN through waivers—but sustaining those investments beyond the waiver period remains an open question—and the possible shift to block grants makes the waiver approach all that much more uncertain.”

From Mr. Duck’s perspective, what’s needed is a more durable financial architecture: “We’re starting to see alternative models emerge—particularly within value-based care arrangements and accountable care organizations (ACOs). In these models, there’s a clearer financial incentive to invest in non-medical interventions that reduce avoidable utilization. For example, a managed care organization operating under a capitated rate has every reason to address food insecurity or unstable housing if it keeps high-cost members out of emergency departments and inpatient units.”

Making these models work, Mr. Duck suggests, will require better data integration, shared risk frameworks, and clear attribution of outcomes. That’s where many provider organizations still face barriers—particularly in measuring and documenting the return on investment from HRSN services. “Ultimately, the path forward isn’t one-size-fits-all. It will likely require a mix of approaches: 1115 waivers to launch (or a modified approach if we move to Block Grants), value-based contracts to sustain, and ACO-style coordination to optimize. The organizations that succeed will be the ones that treat HRSN not as a compliance exercise, but as a core strategic pillar for both clinical and financial performance.”