On January 7, 2021, CMS issued a guidance letter to state health officials describing opportunities under Medicaid and the Children’s Health Insurance Program (CHIP) to address social determinants of health (SDOH). The guidance letter, entitled Opportunities in Medicaid and CHIP to Address Social Determinants of Health, purports to assist states in designing programs, benefits, and services to improve population health, reduce disability, and lower overall healthcare costs in the Medicaid and CHIP programs by addressing SDOH. The guidance letter supersedes a 2015 Information Bulletin focusing on housing-related activities and services for individuals with disabilities. The newly issued guidance letter does not provide new flexibilities or opportunities under Medicaid and CHIP to address SDOH but rather describes how states may address SDOH under current law.

The guidance letter describes the CDC’s definition of SDOH as “conditions in the places where people live, learn, work, and play that affect a wide range of health risks and outcomes.” The letter also acknowledges that some social interventions targeted at Medicaid and CHIP beneficiaries can result in improved health outcomes and significant savings to the healthcare sector.

According to CMS, addressing SDOH is part of its broader shift toward a value-based model of care delivery. According to CMS Administrator Seema Verma, “The evidence is clear: social determinants of health, such as access to stable housing or gainful employment, may not be strictly medical, but they nevertheless have a profound impact on people’s wellbeing.” The letter also cites evidence that challenges related to SDOH can lead to poorer health outcomes for beneficiaries and higher healthcare costs for Medicaid and CHIP programs, particularly with underserved and underrepresented populations.

According to CMS’s press release, the guidance letter details how state Medicaid and CHIP programs can use a variety of delivery approaches, benefits, and reimbursement methodologies to address SDOH in an attempt to improve beneficiary outcomes. The guidance letter acknowledges that states have flexibility to design programs and services to address SDOH while providing uniform services and supports that states can cover under current law. These include categories such as housing-related services and supports, non-medical transportation, home-delivered meals, educational services, and employment supports.

Providers that serve Medicaid and CHIP populations may realize additional reimbursement opportunities as state health agencies respond to the guidance letter.

CMS’s letter is available here. CMS’s press release is available here.