Medicaid serves vulnerable populations that experience deep health inequities and significant health-related social needs.Footnote 1 Medicaid has over the decades attempted to design its payment system to respond to those needs.Footnote 2 Recent analyses establish the troubling persistence of these inequities and needs, and cast about for methods for Medicaid to address them.Footnote 3 The use of value-based payments (“VBPs”) to support community intermediaries is a way forward.
This paper will describe the inequities and social care needs that impede beneficiaries from using their Medicaid benefits to improve their health status. Previous efforts to reform Medicaid to improve the health status of the most vulnerable have fallen short of the mark. Community Care Hubs (“CC Hubs”) have the capacity address the equity shortfall in current Medicaid. CC Hubs have existed for many years on a small scale and have had some success in connecting Medicaid payments to providers in a way that addresses some of the root causes of health inequity and social service deficits.Footnote 4
This is a systems problem. The theory of VBPs, through which payment for health services depends not on the volume of services provided but on the value of those services as defined by the payer can improve the functionality of Medicaid system.Footnote 5 A reconfiguration of the relationship between the payer and provider as mediated by CC Hubs has some promise to fill a gap that has frustrated reformers of Medicaid for decades.
In any health care finance and delivery system there is a payment to provider process. Funds for care are raised through taxes, insurance premiums, employer contributions, and out of pocket payments. The funds are then directed to pay for the cost of care provided to the beneficiaries of public or private systems of care. The mechanics of this translation from raising funds to laying on of hands is complex and varies from nation to nations and within the United States from payer to payer.Footnote 6 The way we pay for care matters. Effective throughput of funding to achieve equitable, appropriate care to those in need of services depends on many factors, including choosing appropriate participating caregivers,Footnote 7 designing an effective means of identifying those services subject to reimbursement,Footnote 8 and less formal influences such as the moral compass of caregivers reflected in professional ethics codes.Footnote 9
Part I of this paper will provide an overview of efforts to use VBPs to drive reimbursement toward payers’ economic and social goals. VBPs, like other means of addressing the payment to provision process, condition payment on provision of care consistent with payer preferences and leading to preferred outcomes.Footnote 10 This part will describe the means by which VBPs are intended to contain cost, improve equity in the health system, and expand wellness by encouraging attention to health-related social needs (“HRSNs”).Footnote 11 It also addresses concerns that VBPs are simply new wine in old bottles, especially those employed in the Medicaid setting. To the extent VBPs structure the payment process as a series of incentives to drive beneficial outcomes, they may recapitulate the mixed results of previous similarly motived efforts such as Medicaid managed care. Medicaid managed care programs were designed to contain cost but also to improve quality of care and address equity concerns with scant success.Footnote 12 Can VBP-driven Medicaid programs do better? This Part introduces CC Hubs as a mechanism capable of preventing frustration of the promise of VBPs, so long as their use is accompanied by appropriately sensitive regulatory oversight.
Part II more fully describes CC Hubs.Footnote 13 CC Hubs sit as intermediaries between upstream, large actors and providers of care. They contract with the moneyed actors such as managed care organizations, large hospital systems, and large self-funded health plans.Footnote 14 But they also contract with downstream, small actors, often community-based organizations (“CBOs”) focused on one or more aspects of social care responsive to patients’ HRSN, including housing supports, nutrition counseling, and employment counseling.Footnote 15 CC Hubs’ value lies in their ability to connect these two sets of entities. In VBP contractual settings featuring whole person care, the large actors have incentives to produce “value” extending to addressing patients’ HRSN, but little contact with community resources able to tackle those needs.Footnote 16 CBOs, on the other hand, have the capacity and the mission to address the identified social needs, but are not engaged in the payment system as are, for example, Medicaid providers.Footnote 17 CC Hubs can form relationships with CBOs and upstream providers to communicate service needs, success (or failures) to be documented, and steer funding to support the social services provided.
This part then describes the regulatory measures needed to ensure that VBPs in Medicaid, and specifically the use of CC Hubs, avoid the pitfalls that have bedeviled some previous attempts to drive payment systems to appropriate care. Attention to cost containment cannot be permitted to eclipse the goals of equity and whole person care, permitting the focus on HRSNs to fall by the wayside. The CC Hubs should be mission driven. Their limited role of providing funding and technical support to CBOs and connecting those CBOs to upstream actors can prevent the dilution of their attention and a drift to simple cost control.
Part III briefly addresses two sources of tension with the vision articulated in Part II. First, it addresses the “medicalization” criticism of many forms of whole person care.Footnote 18 The medicalization debate centers on whether engaging the health care delivery system and/or Medicaid to remediate social problems experienced by patients could have the detrimental effects of pathologizing conditions deriving from failed social systems and depriving advocates of improved housing, employment, and nutritional services of leadership roles that they have earned over years of hard work.Footnote 19 This part argues that these concerns can be exaggerated, and to the extent they point to real dangers, the CC Hub model’s focus on supporting CBOs ameliorates those dangers. Second, whole person care and the CC Hubs are threatened by regulatory shifts in the second Trump administration. While Medicaid support has not yet been withdrawn, guidance provided by the Centers for Medicaid and CHIP Services has raised concerns.Footnote 20 These regulatory indications are concerning, but with some funding adjustments the pilots advancing them may receive continued funding.
I. Can VBPs succeed where other methods have failed to drive equity and access in Medicaid?
A central problem in the U.S. health system is that high levels of spending on health care has not resulted in similarly high levels of population health status as compared to other nations’ experience.Footnote 21 How should our system change? Much of the scholarship on the health finance and delivery system in recent years has focused on front-end funding questions, often framed as a variant of “Medicare for All”: who pays for coverage, who gets covered, how a reformed national health system might be structured,Footnote 22 and what the normative principles of such reform should be.Footnote 23 Other have approached reform from the other end of the telescope: how should physician practices change their operations to improve the outcomes of care delivery.Footnote 24
This paper deals with a subset of this systemic problem in two senses: first, it addresses Medicaid as an (important) corner of the system. Second, it addresses not the “front end” (who pays for care) or the “back end” (how do physicians organize their practices), but rather the connection between these two nodes: how do payers transmit signals to providers as conditions of payment to encourage the results they seek?Footnote 25 I have previously referred to this as the “last mile” problem.Footnote 26 Payers are interested in cost control. But payers are increasingly focused on access to social care, in recognition that HRSNs are significant drivers of health access and equity gains for vulnerable populations including those served by Medicaid.Footnote 27 Successful systems responses to these problems require payment methods that signal a need to address health equity and HRSNs.
A. Medicaid managed care has not solved the equity problem
Medicaid managed care was intended to provide those signals but has had mixed results. A study-of-studies published in 2012 and funded by the Robert Wood Johnson Foundation reported that studies of Medicaid managed care found mixed evidence regarding increased access to care,Footnote 28 and little evidence of improved quality of care.Footnote 29 There may be a lag in the reporting of studies of Medicaid managed care. A 2023 publication of the Medicaid and CHIP Payment and Access Commission (“MACPAC”) found that even by that time “[i]t [was] not clear whether managed care provides better or worse access to care than” fee for service Medicaid, and that “[f]indings on Medicaid managed care quality outcomes are scarce and have mixed results.”Footnote 30
These studies of Medicaid managed care disclose that tools intended to improve program access, quality, and cost have not significantly advanced program quality and access.Footnote 31 Can VBP methods do any better at least in terms of improving health equity and access to social care necessary to improve health status? Under VBP models, providers’ payments are conditioned on “their performance on select quality and efficiency measures” through financial incentives.Footnote 32
VBPs “aim to drive system change towards greater efficiency and improved health outcomes. In contrast to traditional fee-for-service payment models that are based on the volume of care provided, value-based payment models reward providers based on achievement of quality goals and, in some cases, cost savings.”Footnote 33 Sylvia Burwell signaled a comprehensive turn to VBPs in 2015 when she announced that the Centers for Medicare and Medicaid Services was intent to “find better ways as a country to deliver care, pay providers, and distribute information” by “moving from volume to value in Medicare payments.”Footnote 34 Secretary Burwell expressed the belief that this movement to value was in line with innovations in state Medicaid programs, health insurers, and self-funded plans.Footnote 35
B. Properly regulated VBPs can improve equity in Medicaid
Medicaid managed care showed little benefit in terms of cost savings, patient access, or quality of care.Footnote 36 One reason for the small changes accomplished by shifting Medicaid to managed care is that managed care plans “have only a limited ability to change traditional delivery systems and an equally limited ability to respond to the social determinants of health that play a large role in the fragmented care Medicaid enrollees receive.”Footnote 37 As the system moves to VBP, in which the report of the delivery of particular quanta of value is a condition of payment, one risk is that there will be a skewing toward cost-saving and not equity and social care gains, as the measurement of the latter two goals is more difficult than measuring cost savings.Footnote 38
Early returns on the effects of VBP in Medicaid gives reason for concern. Researchers find little benefit to low-income and vulnerable populations, with some indication that, rather than improve equity and access, VBP methods have been harmful to vulnerable populations, even heightening inequities.Footnote 39 It may be that the fault continues to be an overemphasis on cutting costs,Footnote 40 which may unintentionally lead to underinvestment in the populations most in need.Footnote 41
Two problems must be addressed if VBP methods is to be more than Managed Care 2.0, with no more success in improving equity and addressing HRSNs that previous ventures in payment innovation. First, it is important for CMS and the states implementing novel systems to be clear on what they mean by “value.” A vague laundry list of values, including cost savings, may frustrate attempts to drive providers to addressing HRSNs and equity — which may be difficult to measure and produce when compared to cost. CMS and states must be clear in communication with community providers and partners whether they’re hunting for Snarks or Boojums.Footnote 42
Second, and the focus of the next part of this paper, is that CMS and states should focus not on general goals but instead on the structures of VBP systems. It may be more effective for states to evaluate providers and partners in VBP systems on their fidelity to structural design requirement, which can be evaluated readily, than on a list of general goals and standards, which can be difficult to administer.
The next part describes CC Hubs, which are a structural instantiation of the desire to connect vulnerable Medicaid beneficiaries with the social services that will advance equity goals and respond to their HRSNs.Footnote 43 A concrete structure devoted to connecting patients to the social services responsive to their particular vulnerabilities can advance the equity and whole person goals of Medicaid, minimizing the chance that those goals will be lost in the shadow of sometimes-more-salient cost issues.
II. CC Hubs
VBPs are a current iteration of desire to use the structure and signaling power of payment policy and implementation to drive improvements in health care delivery. Past efforts to engage in such signaling have fallen short in achieving the desired outcomes related to health equity and access to care for vulnerable populations in favor of cost containment.Footnote 44 This is not a surprising result; cost is and will continue to be an important goal for all health payers, and measuring cost containment is easier than measuring other desired outcomes.Footnote 45 There are, in addition, structural difficulties in driving health access and equity through payment mechanisms.
VBPs are more likely to succeed in driving the “softer” goals of equity and access if they include metrics for success that include measurable outcomes and processes indicative of attention to amelioration of HRSNs.Footnote 46 There has been some work in creating, testing, and organizing the development of information that can identify successes and failures in adding HRSN-related value to service delivery.Footnote 47 This paper addresses instead a structural issue: how can equity and access for vulnerable populations be centered in an aspect of the health care finance and delivery system such that it is less likely to be pushed to the side in VBP systems? An answer is CC Hubs.
A. CC Hubs as intermediaries
CC Hubs concretize what is often a general focus on equity and access issues by locating these functions in a structure dedicated to the resolution of HRSNs. They are conceptually and structurally between:
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• medical entities: hospitals and hospital systems, multispecialty physician practices, federally qualified health centers and other medical clinics, managed care entities and other health insurers, and self-funded health plans — all of which in a VBP world may have an incentive — even if not a mission — to seeing that patients’ HRSNs are addressed and remediated;Footnote 48 and,
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• social service community-based organizations (CBOs): low-income housing providers and homelessness services agencies, food pantries and nutritional counseling organizations, reentry programs dedicated to the reintegration of prisoners returning to their communities, juvenile support organizations specializing in services for juveniles disconnected from their families — all of which have an interest and usually a mission to address specific HRSNs.Footnote 49
CC Hubs bridge these two worlds. Health entities often have substantial organizational and technology capacities, tight health finance connections — health payers with large providers, and large providers with payers — and financing that through VBP conditions payment on metrics, including addressing HRSNs, but often poor connections to granular community-based services.Footnote 50 To put a finer point on it, a multi-hospital system is often poorly connected with the many small CBOs best able to address HRSNs.Footnote 51 CBOs on the other hand, are well-equipped to provide social services themselves or in collaboration with known community partners.Footnote 52 What they lack is systems sophistication. They are not familiar with National Provider Identifier Standards (NPIs),Footnote 53 often do not have the willingness or capacity to become an in-network providers in a Medicaid managed care plan,Footnote 54 and do not wish to take on the arduous responsibility of billing Medicaid or Medicare.Footnote 55
CC Hubs can address the shortfalls in both directions. For CBOs, CC Hubs
[O]rganize] and support[] a network of community-based organizations providing services to address health-related social needs. A CCH centralizes administrative functions and operational infrastructure, including, but not limited to, contracting with healthcare organizations, payment operations, management of referrals, service delivery fidelity and compliance, technology, information security, data collection, and reporting.
A CCH has trusted relationships with and understands the capacities of local community-based and healthcare organizations and fosters cross-sector collaborations that practice community governance with authentic local voices.Footnote 56
For health providers and payers, CC Hubs:
[C]an ease the implementation burden that would otherwise come with ad hoc partnerships between CBOs and health care organizations. [CC Hubs] relieve health care organizations of finding, contracting with and managing multiple independent CBOs, who are both sufficiently grounded in their local communities and collectively span the often-large geographic regions under the health care organization’s charge. CBOs can partner with multiple health care organizations with more consistent policies and systems through just one contract with the [CC Hub].Footnote 57
In addition, CC Hubs can serve as the “back office” for CBOs, providing personnel qualification information to health partners, receiving and transmitting payment for services, and gathering and transmitting data on “closed loops” — the successful provision of social services to patients.
CC Hubs provide the “connective tissue” to ensure good communications and proper coordination between medical and social providers. They take on administrative tasks, offering health care entities and CBOs a “single point of contact” into the cooperative relationship that can allow social care. This advances equity and access for vulnerable populations into a part of the VBP proposition.Footnote 58
To be clear, CC Hubs are more than just a convenient component of an organizational chart. Instead, they can be a visible, practical method of institutionalizing a connection between health care and social care such that equity and access issues are unlikely to fall by the wayside. The success of CC Hubs may vary, but they can occupy a systemic location that can become convenient for health providers responsible by contract to address HRSNs and mission sustaining for CBOs with expertise and willingness to address HRSNs but too little visibility and institutional support.
B. CC Hub example: New York State Social Determinant of Health Networks
Many state Medicaid reform efforts seek to address health outcomes by addressing access to HRSNs.Footnote 59 These efforts often involve VBPs, which make possible addressing social factors “that may be upstream from the clinical encounter.”Footnote 60 One challenge “to integrating social care into the health care setting is the administrative capacity of social services providers, which often are key to the delivery of social care.”Footnote 61 New York State in a recently approved § 1115 Medicaid waiver,Footnote 62 has taken on this challenge by empowering its version of CC Hubs.
The guiding conception of the current iteration of New York’s § 1115 Medicaid waiver was the revelation during and after the COVID-19 pandemic that health access and outcomes are unequal along class and racial lines in New York. To address these disparities will require attention to both health delivery and access to social services.Footnote 63 Equity concerns revealed by the COVID-19 crisis are a significant driver of the waiver:
Black and Latino/Latinx populations accounted for higher levels of COVID-19 related hospitalizations and mortality than white populations … . The higher rates of COVID-19 cases, hospitalizations, and deaths among people of color — due to their higher prevalence of chronic illness, overrepresentation in frontline and essential jobs, increased likelihood of living in multi-family or multi-generational housing, and other factors — have illustrated how pervasive health inequities remain.Footnote 64
Among the lessons drawn from the COVID-19 results was the importance of linking health care to social services, particularly for vulnerable populations. New York’s post-COVID lessons include the insight that attention to “sick care” and the restructuring of health and social services can “more successfully connect traditional health care services and SDH service systems, in order to take a more holistic approach to health care and address the health needs of the whole person.”Footnote 65
The delivery of this social care will be coordinated through two sets of entities: Health Equity Regional Organizations (“HEROs”) and Social Determinant of Health Networks, since renamed Social Care Networks. (“SCNs”).Footnote 66 HEROs are the planning organizations comprising “new or existing corporate entities” that can include local health departments and other regional health and social service organizations and will be responsible to create collaborations and “develop a range of VBP models or other targeted interventions suitable for the populations and needs of each region” of New York State.Footnote 67
The SCNs are versions of CC Hubs. They “consist of a network of CBOs in each region of the State.”Footnote 68 Their functions map onto the description of the intermediary roles of CC Hubs detailed above:
[Each of the nine SCNs] would be responsible for: 1) formally organizing CBOs to perform SDH interventions; 2) coordinating a regional referral network with multiple CBOs, health systems and other health care providers; 3) creating a single point of contracting for SDH arrangements; and 4) screening Medicaid enrollees for the key SDH social care issues and make appropriate referrals based on need. The SDHNs can also provide support to CBOs around adopting and utilizing technology, service delivery integration, creating and adapting workflows, and other business practices, including billing and payment. These SDHNs will coordinate and work with providers in MCO networks to more holistically serve Medicaid patients, particularly those from marginalized communities, effectively wrapping a social services provider network with existing MCO clinical provider networks.Footnote 69
The SCNs, then, will provide “back office” support for CBOs, freeing them from the contracting tasks otherwise inherent in dealing with Medicaid MCOs and providers.Footnote 70 They will organize referral networks, providing a “single point of contracting” for HRSN services, allowing Medicaid health providers easy access to providers of social services.Footnote 71 In addition, the New York § 1115 waiver program provides direct funding for some HRSN services, including:
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• Housing supports;
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• Pre-tenancy services;
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• Tenancy-sustaining services;
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• Housing transition navigation services;
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• Nutrition supports;
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• Case management; and
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• Transportation services.Footnote 72
If New York’s § 1115 waiver program is fully implemented and allowed to develop,Footnote 73 then, it will realize all the benefits of CC Hubs. In addition, it will include funding for some of the social services needed by Medicaid patients — but crucially, by directing the funding not to health providers (the “medical-industrial complex”), but to the CBOs that have been providing social services and will do so in conjunction with health services providers.Footnote 74
New York’s waiver program, then, will be, as § 1115 waiver programs are meant to be, a true experimental pilot program testing the utility of CC Hubs on a wide scale over a significant period.
III. Challenges to the use of hub models
A. Medicalization of health-related social needs
The devotion of time and resources to the use of CC Hubs in general, and New York State’s Social Care Networks in particular, is rooted in the recognition that individuals’ health status is proportionately more a product of their social circumstances and health-related social needs than to their access to medical care;Footnote 75 the percentages are variously estimated, but health services can be counted as only a ten to twenty percent causative factor in personal health.Footnote 76 As discussed above, efforts to integrate access to social and medical care are seen by many as essential to addressing health equity and improving the health status of vulnerable populations.Footnote 77
One important push-back to this movement to integrate medical and social care is to argue that this linkage threatens to “medicalize” concerns that have been regarded as properly located out of the health care delivery system and that properly lie outside the scope of medical care. “Medicalization” has been defined as “the process by which personal, behavioral, and social issues are increasingly viewed through a biomedical lens and ‘diagnosed and treated’ as individual pathologies and problem” rather than as problems for social actors separate from the health care system to address.Footnote 78 The integration of the social and medical in one health finance and delivery system is criticized on the grounds of inappropriate medicalization on three bases.
First, the therapeutic relationship initiated by a patient’s appointment with a physician is more complex where the diagnostic process considers both medical and social issues.Footnote 79 Physicians may be concerned that they are now expected to extend their expertise from the biomedical realm to the complex world of social services. While many medical schools have added a focus on social drivers of health,Footnote 80 physicians are not, and do not, feel capable of becoming experts in connecting patients to needed social services.
Many fundamental determinants of health are far upstream of health care and are deeply rooted in the distribution of money and power … .
[P]hysician engagement with the social determinants is different than physicians’ core role: providing health care to those who need it. Through necessity, clinicians must focus on the immediate illness or health problem and are not well positioned to coordinate longer-term population-level health improvement strategies.Footnote 81
The CC Hub model contains a structural response to that concern. The role of the physician and a social worker or care manager is limited to identifying the patient’s needs. It is the CC Hub that is responsible for accepting the referral for social care, referring it to a suitable CBO, and closing the loop with a report back to the referring health provider.Footnote 82 The burden on physicians, while not inconsequential, seems consistent with their current practices of including social issues in their diagnoses.
Second, “medicalization” is raised in concerns that linking assessment and referral for social services within the medical diagnosis and treatment setting will pathologize social conditions that are not intrinsic to the patient but rather the result of structural faults in social systems. Under this critique, identifying housing instability or poverty as drivers of health that are swept into the ambit of the “medical industrial complex”Footnote 83 can locate the problem (lack of housing) in the patient and not in society, with implications for both weakening the agency of the patient and increasing the power of the medical system at the expense of the patient’s liberty and autonomy.Footnote 84
The concerns about medicalization in this sense should not be minimized. Patient care, however, can be improved by thoughtful integration of medical and social drivers of health. Webb and Matthew argue that the path to allowing good medicalization while avoiding bad medicalization is to carefully medicalize not the person but the risk factors, which they refer to as “causes of the causes” of poor health:
Medicalization is most appropriately a descriptive and operative framework to understand the comprehensive range of contributors that cause the need for medical care and intervention in the first place … . By their very nature, incorporation of the social determinants of health into clinical settings results in the medicalization of these socially created risk factors for poor health - that is, we use the clinical encounter as an opportune setting in which to identify and coordinate the address poverty-driven needs.Footnote 85
Webb and Matthew see three benefits to this medicalization of risk factors: it permits more accurate assessment of the causes of poor health, combats the fragmentation of care by encouraging relationships between medical caregivers and social service providers, and creates a “business case for blending and braiding” funding for care.Footnote 86
The use of CC Hubs fits within this framework of medicalization as a positive factor. Utilizing CC Hubs provides tangible pathways to address HRSN thereby allowing medical caregivers to open the diagnostic lens to social needs,Footnote 87 encourage the interaction of providers of health and social services by engaging CC Hubs and their associated CBOs in care for the patient,Footnote 88 and (as described belowFootnote 89) increase the visibility of information about the benefits of engaging social care in the health care setting, supporting arguments for fuller funding for integrated care.
Third, medicalization of social services is argued to divert focus from the community-based providers of social services in favor of medical providers, thereby shifting attention and funding from organizations long-committed to advocating for and improving access to services such as housing and nutritional services.Footnote 90 Funding for housing services, for example, are grossly inadequate, with many families left to wait for many years for vouchers for subsidized housing.Footnote 91
The CC Hub model does not incorporate funding for social services support into the health delivery system.Footnote 92 Instead, it creates a mechanism to facilitate communication and collaboration between health providers and social service agencies in the community. An important aspect of the CC Hub model may, in fact, amplify the voice of social service providers seeking funding.
The CC Hub serves as an intermediary between the health system and the social service system. The intermediary function features important communication aspects. A service request originates in a health entity — a managed care plan, a hospital system, a physician practice, for example — in the form of an identification of a social service need of a patient of the health entity.Footnote 93 The Hub evaluates the service request and transmits it to a suitable CBO with expertise and community connections evidencing an ability to fulfill the request.Footnote 94 The CBO performs the work and “closes the loop” (that is, establishes not just a referral for services but the patient’s receipt of the social services requested) or reports an inability to close the loop.Footnote 95 The CC Hub then transmits the result to the health entity, which in turn submits payment to the CC Hub which then submits payment to the CBO.Footnote 96
This structure creates a golden opportunity for effective advocacy. The transactions provide information about whether resources are available to “close the loop” on a referral. Little tweaking would be required to include information about the reasons for failed referrals: lack of housing opportunities, restrictions on access to available services, or quality problems with available housing rendering it unsuitable for the patient referred. Such information can be gathered and transmitted to housing funders — local, state, and federal agencies and/or private philanthropies — to inform them of the gaps, inadequacies, and stumbling blocks in the local low-income housing market. The information flows both ways by virtue of the loop-closing mechanism of the CC Hub model, allowing nearly real-time reporting of the status and availability of the relevant services, and the steps necessary to fill gaps. The “medicalization,” then, can provide an opportunity for advocacy tied directly to active case studies.
Medicalization is an issue contested in its meaning and application in the integrated health setting. Care must be taken to avoid burdening overworked and ill-equipped health providers with the task of mastering social service referral opportunities, to avoid pathologizing social deficits external to the patient and traceable to social defaults, and to help rather than harm the ability of social service providers to flourish and obtain needed funding. The CC Hub model is structured in such a way as to tick these boxes, and to facilitate rather than impair the availability of social services in integrated settings.
B. The shifting CMS stance on supporting projects addressing health related social needs
States have long used Medicaid funding, and in particular the flexibility provided through § 1115 waivers, to address HRSN.Footnote 97 During the Biden Administration, CMS provided expansive guidance on the permissible uses of Medicaid for these purposes. In November 2023, a CMS Informational Bulletin encouraged states to use a number of Medicaid provisions, including § 1115 waivers, to connect beneficiaries to social services as necessary to meet those beneficiaries’ comprehensive health needs.Footnote 98 The Informational Bulletin highlighted the social services fitting within CMS’s universe of social services appropriate for coverage by various Medicaid authorities.Footnote 99 Those services are more fully described in an accompanying “framework of services” as including:
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• Housing supports including security deposits, utilities activation fees, moving costs, first month’s rent, home remediation (including mold removal and carpet replacement) and refrigerators; and
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• Nutritional counseling and education, assistance with health meal preparation, home delivered meals, and grocery provision.Footnote 100
The provision of these non-medical services through a § 1115 waiver would, of course, need to be approved by CMS and comply with all waiver requirementsFootnote 101 including budget neutrality as to federal expenditures, necessity to serve the research goals of the waiver, and consistency with federal requirements for Medicaid spending.Footnote 102
CMS followed up its 2023 guidance the following year, in which it further explained the importance of coverage of HRSN for the beneficiary populations:
Coverage of targeted HRSN services and supports is likely to assist in promoting the objectives of Medicaid because it is expected to help beneficiaries stay connected to coverage and access to needed health care. The housing and nutritional support services authorized in demonstrations are expected to stabilize the housing and nutritional situations of eligible Medicaid beneficiaries and thus increase the likelihood that they will keep receiving and benefiting from the Medicaid covered services to which they are entitled.Footnote 103
These encouragements to states to use Medicaid tools, including § 1115 waivers, to serve the HRSNs of Medicaid recipients is consistent with a broad vision of Medicaid’s purpose to improve health status and not simply to address discrete diseases. The encouragement led to states’ decisions to seek and gain approval for § 1115 waivers consistent with the CMS vision:
These waivers authorize evidence-based housing and nutrition services for specific high-need populations. Several approvals build on prior 1115 waiver initiatives … . Approvals include coverage of rent/temporary housing and utilities for up to 6 months and meal support up to three meals per day (for up to 6 months), departing from longstanding prohibitions on payment of “room and board” in Medicaid … . [O]ther states have approved 1115 waivers with SDOH-related provisions that pre-date the new Biden administration HRSN framework. These waivers are generally narrower in scope (services and target populations) or pilot programs targeting specific regions.Footnote 104
With the end of the Biden Administration and the second coming of the Trump administration, CMS has revised its guidance. On March 4, 2025, CMS published an Informational Bulletin titled, “Rescission of Guidance on Health-Related Social Needs.”Footnote 105 Unsurprisingly, this guidance reverses the agency’s course and eliminates the effect of the 2023 and 2024 guidance documents discussed above.Footnote 106 After recounting the previous guidance, this guidance announces:
To evaluate policy options consistent with Medicaid and CHIP program requirements and objectives, CMS is rescinding the November 2023 and December 2024 CIBs. CMS will consider states’ applications to cover these services and supports on a case-by-case basis … without reference to the November 2023 and December 2024 CIBs or the HRSN Framework.
CMS is committed to working with states to help identify strategies to support innovation and improvement in Medicaid and CHIP.Footnote 107
In an additional guidance document dated April 10, 2025,Footnote 108 CMS highlighted concerns with some states’ § 1115 waiver funding mechanisms.Footnote 109 The letter singled out “designated state health program” (“DSHP”) and “designated state investment programs” (“DSIP”) for opprobrium.Footnote 110 DSHP and DSIP funding have attracted attention in the past.
Medicaid’s shared funding system is premised, of course, on federal contributions pegged to the amount necessary to meet the needs of eligible beneficiaries in combination with state contributions pegged to the rate of low-income state residents.Footnote 111 Simply stated, Medicaid funding intends to include financial matches from the federal and state governments, accounting for varying poverty levels among the states.Footnote 112
In DSHP arrangements, states designate state-funded programs that “do not otherwise qualify for federal funding, … existed prior to 1115 waiver implementation, and often provide safety-net health care services for low-income or uninsured individuals (such as addiction recovery treatment or support for individuals with intellectual and developmental disabilities).”Footnote 113 DSIPs are a similar mechanism, in which the state arrangements that benefit low-income or uninsured individuals address technology or infrastructure needs, and not patient care.Footnote 114 Examples of DSHP and DSIP programs through which states counted their expenditures on state innovations as their Medicaid match for § 1115 waivers include: $20M for high-speed internet for rural health care providers in North Carolina;Footnote 115 student loan repayment programs in California designed to incentivize health care providers to practice in high-needs regions;Footnote 116 and a “diversity in medicine” program in New YorkFootnote 117 that “offers pathways to medical school for students who have demonstrated their commitments to improving health disparities and/or practicing medicine in underserved communities.”Footnote 118
Under previous practice, the funds states expended under DSHP and DSIP programs are counted as a state match for federal Medicaid funding for § 1115 waivers.Footnote 119 As the April 10 letter noted, “States with approved DSHP authority [for funding their § 1115 waivers] include: Arizona, California, Hawaii, Massachusetts, New York, North Carolina, Oregon, and Washington.”Footnote 120 The letter then drops the hammer on creative funding for § 1115 waivers:
CMS does not anticipate approving new state proposals for section 1115 demonstration expenditure authority for DSHP or DSIP or renewing existing section 1115 demonstration expenditure authority for DSHP or DSIP. As such, in addition to this letter, the Center for Medicaid and CHIP Services (“CMCS”) will conduct direct outreach to states with existing DSHP and DSIP authority to emphasize that the time-limited authority for DSHP or DSIP will not be extended beyond the currently approved demonstration period or, when current DSHP or DSIP authority concludes before the end of the demonstration’s approval period, the current end date for such authority.Footnote 121
In the first few months of the second Trump administration, then, CMS has rescinded previous CMS guidance advocating broad use of the Medicaid program to provide for the HRSNs of Medicaid beneficiaries and has called into question one long-standing method used by states to create programs under § 1115 waiver authority to use innovative programs and structures to improve the lives of vulnerable Medicaid beneficiaries.Footnote 122 It is unclear how far this disapproval will develop into a denial of state programs. As of this writing, no waivers have yet been rescinded, and no waiver applications for new programs or renewal of existing waivers have been denied. The guidance is worrying, but there is no indication of the extent to which care will be affected. The lasting the effects of CMS’s 2025 guidance are also unclear: will the position of CMS flip back in a future administration?
IV. Conclusion
Medicaid has struggled to couple its funding of services with a mechanism for ensuring that its goals and intentions in providing that funding are embraced and acted upon by the health providers with which it partners. No aspect of this mismatch is clearer than the unmet goals of increasing health equity and addressing Medicaid beneficiaries’ health deficits traceable to health-related social needs. Medicaid managed care, a dominant mechanism used by states to drive policy goals through to providers, garners little traction in addressing equity and HRSNs.
The fault in the connection between Medicaid managed care and providers may lie less in the goals set for the program and more in the complexity and confusion that arise when providers’ compliance is measured against Medicaid’s general goals for health finance and delivery.
The CC Hub mechanism described in this paper embodies a clear focus on equity and social care. In addition, however, it concretizes the goals by locating the mechanisms for achieving them in a single-purpose entity that integrates with but stands apart from hospital systems and managed care entities on the one hand, and the community-based organizations necessary to address equity and social service goals on the other. New York State’s § 1115 waiver program systemically created and supports these entities throughout the state and will test the model — should federal support continue to be forthcoming — perhaps allowing Medicaid to achieve long-sought goals of advancing the health status of its most vulnerable beneficiaries.
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