CMS Issues New Roadmap for States to Address the Social Determinants of Health to Improve Outcomes, Lower Costs, Support State Value-Based Care Strategies

The Centers for Medicare & Medicaid Services (CMS) issued guidance to state health officials designed to drive the adoption of strategies that address the social determinants of health (SDOH) in Medicaid and the Children’s Health Insurance Program (CHIP) so states can further improve beneficiary health outcomes, reduce health disparities, and lower overall costs in Medicaid and CHIP.  SDOH describe the range of social, environmental, and economic factors that can influence health status—conditions that can often have a greater impact on health outcomes than the actual delivery of health services. The new guidance describes how states can leverage existing flexibilities under federal law to tackle adverse health outcomes that can be impacted by SDOH and supports states with designing programs, benefits, and services that can more effectively improve population health and reduce the cost of caring for our nation’s most vulnerable and high-risk populations.

The United States spends more on health care than almost any other country yet often underperforms on key health indicators including life expectancy, reducing chronic heart disease, and maternal and infant mortality rates. According to the CMS Office of the Actuary, national health spending is projected to grow rapidly and reach $6.2 trillion by 2028.  For its part, in 1985, Medicaid spending consumed less than 10% of state budgets and totaled just over $33 billion dollars. In 2019 that number had grown to consume 29% of total state spending at a total cost of $604 billion dollars.

To address the contradiction between rising costs and low health outcomes, CMS has committed to accelerating the industry’s shift away from traditional fee-for-service payment models to value-based models that hold clinicians accountable for cost and quality. As part of its continued efforts to advance value-based care, CMS recently issued guidance to state Medicaid directors to encourage the incorporation of value-based strategies across their healthcare systems allowing states to provide Medicaid beneficiaries with efficient, high quality care, while lowering cost and improving health outcomes. The guidance also noted that the adoption of value-based care arrangements could better provide opportunities for states to address SDOH as well as disparities across the health care system.

“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,” said CMS Administrator Seema Verma. “Unfortunately, our fee-for-service system inherently limits the doctor-patient relationship to what can be accomplished inside the four walls of a clinician’s office. Today’s letter to state health officials highlights strategies by which states can promote a value-based system that fosters treatment of the whole person and lowers healthcare costs. Patients are more than a bundle of medical diagnoses, and it’s time our healthcare system treated them as such.”

With the release of today’s SDOH guidance, CMS acknowledges that an understanding of the social, economic, and environmental factors that affect the health outcomes of Medicaid and CHIP populations can be an integral component of states’ efforts to realign incentives, reduce costs, and advance value-based care in their health systems.

The guidance recognizes that Medicaid and CHIP beneficiaries face challenges related to SDOH, including but not limited to access to nutritious food, affordable and accessible housing, quality education, and opportunities for meaningful employment.

Growing evidence indicates that these challenges can lead to poorer health outcomes for beneficiaries and higher health care costs for Medicaid and CHIP programs and can exacerbate health disparities for a broad range of populations, including individuals with disabilities, older adults, pregnant women, children and youth, individuals with mental health and/or substance use disorders, and individuals living in rural communities.

SDOH can affect health care utilization and cost, health outcomes, and health disparities.  For example, the on-going COVID-19 pandemic has exacerbated long-understood disparities in health outcomes among low-income populations, particularly children.  Recent Centers for Disease Control and Prevention data indicate that counties with greater social vulnerability, including high poverty rates and crowded housing units were more likely to become COVID-19 hotspots, potentially putting those who experience economic and housing constraints at a higher risk of contracting the virus. Additionally, with many schools closed for in-person learning due to COVID-19 restrictions, some low-income children have less access to free non-academic supports that affect their health and well-being, including food assistance, counseling services, and homelessness and maltreatment interventions.  According to CMS’s own data, some children are also forgoing key services they might receive such as child screens and vaccinations prior to the start of the school year or in-school services such as speech therapy, physical therapy, and occupational therapy, demonstrating the influence that social networks and physical environment can have on children’s health.

Current research indicates that some social interventions targeted at Medicaid and CHIP beneficiaries can result in improved health outcomes and significant savings to the health care sector.  These investments can also prevent or delay beneficiaries needing nursing facility care by offering services to facilitate community integration and participation and help keep children on normative developmental trajectories in education and social skills.

The SDOH guidance details how state Medicaid and CHIP programs can utilize a variety of delivery approaches, benefits, and reimbursement methodologies to improve beneficiary outcomes. States can use different federal authorities that can provide them with flexibility to design an array of services to address SDOH and that can be tailored, within the constraints of certain federal rules, to address state-specific policy goals and priorities, including the movement from volume-based payments to value-based care, and the specific needs of states’ Medicaid and CHIP beneficiaries.

While states have flexibility to design a number of different services to address SDOH, the guidance focuses on a set of services and supports that states can cover under current law, including housing-related services and supports, non-medical transportation, home-delivered meals, educational services, and employment supports. CMS remains committed to partnering with states to address beneficiaries’ SDOH. When used in accordance with statutory and regulatory requirements, the Medicaid and CHIP programs are uniquely positioned to help states lower health care costs, improve health outcomes, and increase the cost-effectiveness of health care services and interventions for its beneficiaries.

CMS has placed an emphasis on addressing SDOH across all of its programs in its continued efforts to move toward a value-based model of care delivery.

To view the Opportunities in Medicaid and CHIP to Address Social Determinants of Health letter, please visit: