The Role of Medicaid in Addressing Social Factors in Health: MCO’s Community Investment Requirements | Manatt, Phelps & Phillips, srl
Increasingly, states are using their Medicaid Managed Care (MMC) contracts to define the role Medicaid and Medicaid managed care plans can play in addressing unmet social needs and promoting a “holistic” approach to care. A few prominent states are leveraging contracts with Medicaid Managed Care Organizations (MCOs) to require investment in the health plan in the community served. This article describes the background to these requirements and examples of approaches for state Medicaid agencies to integrate community investment strategies into MMC contracts.
Community investments are essential now, more than ever
It is increasingly recognized that socio-economic factors significantly affect health outcomes – research suggests that 80 percent of an individual’s health outcomes are attributable to non-medical factors.1 Often referred to as “drivers of health”, these factors refer to the “structural conditions in which people are born, grow, live, work and age” which have profound implications for the general well-being of an individual.2 Recognition of this reality is fueling new community investments and changes in health care delivery systems.
The COVID-19 crisis has highlighted the extent to which addressing health factors is integral to ensuring the health of vulnerable individuals and communities. Hardest hit by the pandemic are low-income communities and communities of color who have not only experienced higher rates of infection, hospitalization and death, but have also been disproportionately affected by loss of life. downstream jobs and socioeconomic instability.3, 4 The pandemic has underscored how essential the links between economic and social services and health care are to the well-being of individuals and their communities. The Biden administration has issued dozens of executive orders on strengthening Medicaid and the Affordable Care Act (ACA) and promoting “comprehensive human care,” now is the opportune time for states to ” assess opportunities to integrate these approaches into their Medicaid programs.
Medicaid Managed Care Provides Strong Foundation for Community Investment
Medicaid, which currently provides health coverage to one in seven adults and two in five children nationwide, is the biggest payer of health care for low-income populations.5 States are increasingly seeking to integrate strategies for meeting social health-related needs into their models of care delivery, including incorporating requirements into contracts with CMOs that address social factors of health. As evidenced by Manatt’s recent report and the corresponding 50-state survey titled “In Pursuit of Whole Person Health: A Review of Social Determinants of Health (SDOH) Initiatives in Medicaid Managed Care Contracts and 1115 Waivers”, a few leading states plan require MCOs to reinvest part of their income or income in the community served. Since the October 2020 publication of Manatt’s SDOH survey, community investment requirements have started to proliferate and are a way for states to push OLS to tailor their interventions to state-specific priorities defined by the government. community.
Examples of states requiring an MCO investment
The following states have ordered or encouraged MCOs to reinvest part of the income or profits in the communities they serve:
- Arizona obliges MCOs to invest a share of the profits in community services. Specifically, Arizona requires that its MMC plans devote six percent of annual profits to “community reinvestment activities” and regularly seek community input on local and regional needs before undertaking these activities.
- Nevada includes community reinvestment requirements in its recently released Request for Proposal (RFP) to re-acquire AGCs. In particular, the state requires MCOs to invest three percent of pre-tax profits in the community served. MCOs are required to submit a plan to the state detailing planned community reinvestment activities.
- North Carolina encourages reinvestment of health plans in the community served, by allowing plans that do not meet the enforceable medical loss ratio (MLR) standard to take some or all of the money they would otherwise need to return to government in the form of reimbursement and, instead, invest it in activities aimed at combating the social factors of health. Health plans that proactively reinvest in the community served can be rewarded with a 1% increase in their automatic allocation algorithm.
- Oregon requires its Coordinated Care Organizations (CCOs) to reinvest a portion of the net income from the previous year’s plan through the Oregon Capital and Equity Spending Program (known as the “Supporting Health for All through Reinvestment (SHARE)”) in local communities (ie reducing health disparities, tackling homelessness, offering parenting classes).
- Tennessee requires, as part of the recently released state OLS Replenishment RFP, that MCOs commit to a level of community reinvestment spending as part of their demand response. Upon award, this level of expenditure becomes the AGC’s minimum community investment requirement each year thereafter. In addition, respondents to the call for tenders will be rated based on their level of commitment to community investment.
States are in a unique position to promote a ‘whole person’ approach to health that encompasses the full continuum of care across physical health, behavioral health, and social and economic needs related to health through MCO contracts. Some states are leading the way by requiring or encouraging their MCOs to invest in local and community-defined “health priority drivers”. These types of requirements are likely to continue to proliferate, especially as more beneficiaries face the economic instability associated with COVID-19 and as the evidence documenting the impacts of these investments increases.
1 S. Artiga and E. Hinton. Beyond Health Care: The Role of Social Determinants in Promoting Health and Health Equity. Kaiser Family Foundation. May 10, 2018.Available here.
2 M. Marmot et al. Closing the Gap in a Generation: Health Equity through Action on the Social Determinants of Health. The Lancet. 372, no. 9650. November 8, 2008. Available here.
3 Human Rights Watch. United States: Solving impact of COVID-19 on the poor: Virus outbreak highlights structural inequalities. March 19, 2020. Available here.
4 Centers for Disease Control and Prevention (CDC). COVID-19 hospitalization and deaths by race / ethnicity. CDC control case, data and monitoring. September 9, 2021. Available here.
5 Kaiser Family Foundation. Fact Sheet: Medicaid in the United States. October 2019. Available here.