DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, Maryland   21244-1850 
 
 
               
SHO# 21-001
RE: Opportunities in Medicaid and CHIP 
to Address Social Determinants of Health 
(SDOH) 
 
January 7, 2021 
Dear State Health Official: 
The purpose of this State Health Official (SHO) letter is to describe opportunities under 
Medicaid and CHIP to better address social determinants of health (SDOH)1 and to support 
states with designing programs, benefits, and services that can more effectively improve 
population health, reduce disability, and lower overall health care costs in the Medicaid and 
CHIP programs by addressing SDOH. This letter describes: (1) several overarching principles 
that CMS expects states to adhere to within their Medicaid and CHIP programs when offering 
services and supports that address SDOH; (2) services and supports that are commonly covered 
in Medicaid and CHIP programs to address SDOH; and (3) federal authorities and other 
opportunities under Medicaid and CHIP that states can use to address SDOH. A table that 
summarizes the information on key federal authorities for addressing SDOH is also included in 
an appendix.  
 
Medicaid and the Childrens Health Insurance Program (CHIP) provide health coverage to over 
76 million low-income Americans, including many individuals with complex, chronic, and costly 
care needs. Many Medicaid and CHIP beneficiaries may face challenges related to SDOH, 
including but not limited to access to nutritious food, affordable and accessible housing, 
convenient and efficient transportation, safe neighborhoods, strong social connections, quality 
education, and opportunities for meaningful employment. There is a growing body of evidence 
that 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 
and postpartum women and infants, children and youth, individuals with mental and/or substance 
use disorders, individuals living with HIV/AIDS, individuals living in rural communities, 
individuals experiencing homelessness, individuals from racial or ethnic minority populations, 
                                                            
1 The Centers for Disease Control and Prevention (CDC) refers to SDOH as conditions in the places where people 
live, learn, work, and play that affect a wide range of health risks and outcomes. See 
https://www.cdc.gov/socialdeterminants/about.html for CDC information on SDOH, including research on the 
impact of SDOH on health outcomes and health care costs. Healthy People 2030, which is managed by the Office of 
Disease Prevention and Health Promotion in the U.S. Department of Health and Human Services (HHS), uses a 
place-based framework that highlights the importance of addressing SDOH. Healthy People 2030 was released in 
2020 and sets data-driven national objectives to improve health and well-being over the next decade. Healthy People 
2030 SDOH objectives can be found here.  Page 2  State Health Official 
  
and individuals with limited English proficiency. Examples of adverse health outcomes linked to 
social and economic factors include: asthma attributed to certain home environments; diabetes-
related hospital admissions related to food insecurity; falls due to physical barriers, safety 
hazards, or absence of needed home modifications; frequent use of the emergency department 
due to homelessness; and a risk of stress-related illness resulting from unemployment, among 
many others.2,3  
 
SDOH have been shown to impact health care utilization and cost, health disparities, and health 
outcomes.4 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.5 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.  
 
While many states, managed care plans, and providers have recognized the importance of 
addressing SDOH for Medicaid and CHIP beneficiaries, the growing shift towards alternative 
payment models and value-based care has accelerated the interest in addressing SDOH within 
Medicaid and CHIP in order to lower health care costs, improve health outcomes, and increase 
the cost-effectiveness of health care services and interventions. In addition to their key roles in 
providing access to health care for many Americans, state Medicaid and CHIP agencies are in a 
unique position to address SDOH for Medicaid and CHIP beneficiaries, due to the broad range of 
services and supports, including home and community-based services (HCBS), that can be 
covered within Medicaid and CHIP programs and the high number of Medicaid and CHIP 
beneficiaries who face challenges related to SDOH because of low income and other reasons.6   
 
This document is intended to supersede a 2015 CMCS Informational Bulletin on Coverage of 
Housing-Related Activities and Services for Individuals with Disabilities. This letter does not 
describe new flexibilities or opportunities under Medicaid and CHIP to address SDOH, but 
rather describes how states may address SDOH under the flexibilities available under current 
law. 
 
 
                                                            
2 Bachrach, D., Pfister, H., Wallis, K., Lipson, M., Addressing Patients Social Needs, An Emerging Business Case 
for Provider Investment, May 2014. The Commonwealth Fund. 
https://www.commonwealthfund.org/sites/default/files/documents/___media_files_publications_fund_report_2014_
may_1749_bachrach_addressing_patients_social_needs_v2.pdf 
3 Pynoos, J., Steinman, B., et al, Assessing and Adapting the Home Environment to Reduce Falls and Meet the 
Changing Capacity of Older Adults. J Hous Elderly. 2012; 26(1-3): 137155. Available from 
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6294465/pdf/nihms-953861.pdf  
4 Chisolm, D.J., Brook, D.L., Applegate, M.S. et al. Social determinants of health priorities of state Medicaid 
programs. BMC Health Serv Res 19, 167 (2019).  
5 Lipson, D., Medicaids Role in Improving the Social Determinants of Health: Opportunities for States, June 2017. 
National Academy of Social Insurance. Available at: https://www.nasi.org/research/2017/medicaid%E2%80%99s-
role-improving-social-determinants-health 
6 Braveman, P., S. Egerter, and D. Williams (2011). The Social Determinants of Health: Coming of Age. Annual 
Review of Public Health, 32:381-398. https://www.annualreviews.org/doi/10.1146/annurev-publhealth-031210-
101218?url_ver=Z39.88-2003&rfr_id=ori%3Arid%3Acrossref.org&rfr_dat=cr_pub++0pubmed 
The contents of this document do not have the force and effect of law and are not meant to bind the public in any way, unless specifically 
incorporated into a contract.  This document is intended only to provide clarity to the public regarding existing requirements under the law.  Page 3  State Health Official 
  
 
Overarching Principles 
State Medicaid and CHIP programs can utilize a variety of delivery approaches, benefits, and 
reimbursement methodologies to improve beneficiary outcomes and lower health care costs by 
addressing SDOH. Through several different federal authorities, CMS provides states with 
flexibility to design an array of services to address SDOH 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. There are, however, several overarching principles that states 
are required to adhere to within their Medicaid programs in the context of providing services to 
address SDOH: 
1.  As specified in sections 1915(c)(4)(B), 1915(i)(1)(D)(i), and 1915(k)(1)(A)(i) of the 
Social Security Act (the Act), and operationalized by state implementation of medical 
necessity criteria authorized under 42 CFR 440.230(d), services must be provided to 
Medicaid beneficiaries based on individual assessments of need, rather than take a one-
size-fits-all approach;  
 
2.  As required by section 1902(a)(25) of the Act and 42 CFR Part 433 Subpart D, Medicaid 
is frequently, but not always, the payer of last resort.7 This requirement ensures that 
Medicaid resources are not duplicating other available funding streams, including but not 
limited to certain other federal funding sources, and that Medicaid aligns with other 
programs and fills gaps where appropriate. Accordingly, states must assess all available 
public and private funding streams, including Medicaid, to cover assistance with unmet 
social needs such as housing, nutrition, employment, education, and transportation when 
developing a strategy for addressing beneficiaries SDOH8;  
  
3.  As required by section 1902(a)(30)(A) of the Act, Medicaid programs must ensure 
methods and procedures relating to the utilization of, and the payment for, care and 
                                                            
7 There are a few exceptions to the general rule that Medicaid is the payer of last resort. These exceptions generally 
relate to federally administered health programs. For a federally administered program to be an exception to the 
Medicaid payer of last resort rule, the statute creating the program must expressly state that the other program pays 
only for claims not covered by Medicaid; or, is allowed, but not required, to pay for health care items or services. 
For more information on these exceptions, see https://www.medicaid.gov/medicaid/eligibility/downloads/cob-tpl-
handbook.pdf.  
8 States are encouraged to review guidance and information from CMS, other federal agencies, and non-federal 
entities to learn more about other federal and non-federal funding sources that can address SDOH. For example, the 
Administration for Community Livings Strategic Framework for Action: State Opportunities to Integrate Services 
and Improve Outcomes for Older Adults and People with Disabilities 
(https://acl.gov/sites/default/files/programs/2020-
06/ACL_Strategic_Framework_for_Action_v1_%20June%202020_final_508_v2.pdf) provides information on how 
states can leverage federal and state funded programs to address SDOH through networks of community-based 
organizations.  As another example, the Joint HHS, Housing and Urban Development (HUD), and United States 
Department of Agriculture (USDA) Informational Bulletin, Living at Home in Rural America: Improving 
Accessibility for Older Adults and People with a Disability (https://www.medicaid.gov/federal-policy-
guidance/downloads/cib081920.pdf) is intended to support state agencies with more effectively coordinating 
existing federal resources related to home accessibility across multiple sectors as part of their efforts to increase 
home safety and accessibility for older adults and people with disabilities living in rural communities. 
The contents of this document do not have the force and effect of law and are not meant to bind the public in any way, unless specifically 
incorporated into a contract.  This document is intended only to provide clarity to the public regarding existing requirements under the law.  Page 4  State Health Official 
  
services are consistent with efficiency, economy, and quality of care. This requirement 
ensures that Medicaid programs expend resources in a prudent manner. States should 
ensure that services provided to address SDOH are limited to those expected to meet the 
beneficiarys needs in the most economic and efficient manner possible and are of high 
quality; and 
 
4.  42 CFR 440.230(b) requires that each Medicaid service be sufficient in amount, duration, 
and scope to reasonably achieve its purpose.  
 
Certain federal Medicaid authorities also have specific evaluation, measurement, reporting, or 
other related requirements. These requirements are discussed below in the section on federal 
authorities and other opportunities under Medicaid and CHIP that states can use to address 
SDOH. Beyond these specific federal requirements, CMS strongly encourages states to build in 
continuous evaluations of any services, interventions, or initiatives intended to address SDOH 
and to make changes, as needed and allowable under federal requirements, to meet programmatic 
goals. In addition, when requesting federal approval to cover services that address SDOH, such 
as when requesting federal waiver or demonstration authority, states should be prepared to 
support the request with evidence and explain how they will monitor and evaluate the 
effectiveness of the services, consistent with the requirements of the federal authority that the 
state is requesting to use to cover the services. These requests will be substantially strengthened 
if states can demonstrate that the services, programs, and interventions that they are proposing to 
cover have been demonstrated to improve quality of care, improve outcomes, and/or lower costs 
for Medicaid and CHIP beneficiaries. 
  
Services and Supports that Can Be Covered Under Medicaid to Address SDOH9,10 
States have flexibility to design an array of services to address SDOH. However, the services and 
supports that states can cover tend to fall within several categories of services, including 
housing-related services and supports, non-medical transportation, home-delivered meals, 
educational services, employment, community integration and social supports, and case 
management. This section provides a high-level description of these service categories. 
Additional information on the extent to which the services and supports described in this section 
can be covered under different federal authorities is provided in the next section. When 
developing and implementing a strategy to address SDOH, the state Medicaid agency should 
                                                            
9 Additional flexibilities are available to states during public health emergencies and in response to natural and 
manmade disasters. See https://www.medicaid.gov/resources-for-states/disaster-response-toolkit/coronavirus-
disease-2019-covid-19/index.html for guidance, resources, and other information available to states during the 
COVID-19 Public Health Emergency. See https://www.medicaid.gov/resources-for-states/disaster-response-
toolkit/index.html and https://www.cms.gov/About-CMS/Agency-Information/Emergency/EPRO/EPRO-Home for 
guidance, information, and other resources related to public health emergencies, natural disasters, and manmade 
disasters, generally. 
10 The information included in this section is not an exhaustive list of all services and supports that can be covered 
under Medicaid. There may be other opportunities for states to claim Medicaid reimbursement related to the delivery 
of benefits and services discussed in this letter, such as for the cost of interpreter and translation services that are 
provided to people with limited English proficiency. See https://www.medicaid.gov/medicaid/financial-
management/medicaid-administrative-claiming/translation-and-interpretation-services/index.html for more 
information.       
The contents of this document do not have the force and effect of law and are not meant to bind the public in any way, unless specifically 
incorporated into a contract.  This document is intended only to provide clarity to the public regarding existing requirements under the law.  Page 5  State Health Official 
  
work with other state agencies to leverage all federal funding the state receives to address 
SDOH. 
Except where noted, the Medicaid coverage options and services and supports described below 
can be utilized for children and youth, non-elderly adults (including adults with disabilities), and 
older adults. However, some services and supports are typically targeted at only certain 
populations or age groups, although they could be covered by states more broadly. In particular, 
home-delivered meals and some housing and tenancy supports are not generally targeted at 
children, employment supports are most commonly offered to non-elderly adults with 
disabilities, and educational supports are typically only available to children with disabilities and 
young adults with disabilities.   
 
Following this section is a description of applicable Medicaid coverage provisions that could be 
used by CMS to give a state authority to implement the services and supports described below. 
CMS notes that the following services and supports must be provided in accordance with the 
parameters of the individual benefit authorizing the activity. For example, any service and 
support authorized under HCBS waiver or state plan provisions at section 1915(c) or (i) of the 
Act, respectively, must be articulated in a state-approved person-centered service plan based on 
an individual assessment of need. CMS has also indicated in published guidance11 that services 
must be for the benefit of the Medicaid-eligible individual only, and not for general utility.12 
We further note the requirement at 42 CFR 441.301(c)(2)(xii) that the state-approved person-
centered service plan prevents the provision of unnecessary or inappropriate services. Additional 
benefit parameters will be discussed throughout the remainder of this document, and should be 
taken into account when proposing Medicaid coverage of these services and supports.  
 
A.  Housing-Related Services and Supports 
Federal financial participation is not available to state Medicaid programs for room and board 
(except in certain medical institutions13).14 However, federal financial participation is generally 
available under certain federal authorities for housing-related supports and services that promote 
health and community integration, including home accessibility modifications, one-time 
community transition costs, and housing and tenancy supports, including pre-tenancy services 
and tenancy sustaining services. 
1.  Home Accessibility Modifications 
Home accessibility modifications are either temporary or permanent changes to a homes interior 
or exterior structure to improve individuals ability to remain in their homes and 
                                                            
11 https://www.medicaid.gov/state-resource-center/downloads/covid-19-faqs.pdf; see page 41, question 4. 
12 Examples of items that are of general utility include phone cards and minutes and central air conditioning.  
13 Centers for Medicare & Medicaid Services. Institutional Long Term Care. 2019. Available at 
https://www.medicaid.gov/medicaid/ltss/institutional/index.html. Accessed on August 21, 2020. 
14 This is codified in multiple regulatory provisions. See, for example, 42 CFR  441.310(a)(2) and 42 CFR  
441.360(b). 
The contents of this document do not have the force and effect of law and are not meant to bind the public in any way, unless specifically 
incorporated into a contract.  This document is intended only to provide clarity to the public regarding existing requirements under the law.  Page 6  State Health Official 
  
communities.15,16 Depending on the homes structural characteristics, temporary modifications 
could include the installation of a wheelchair ramp outside the home or grab bars in the shower. 
Permanent modifications could include enlarging a doorway to allow wheelchair passage. Homes 
that are more accessible and usable facilitate independent living, reduce the risk of social 
isolation, improve quality of life, and promote community integration.17  CMS notes that these 
services and supports must be specific to the individuals needs based on his or her disabilities 
and/or health conditions and not of general utility in the home. 
2.  One-Time Community Transition Costs 
Community transition costs can help to facilitate individuals transitioning from an institutional or 
another provider-operated congregate living arrangement (such as a group home or homeless 
shelter) to a community-based living arrangement in a private residence where the person is 
directly responsible for his or her own living expenses.18 One-time community transition costs 
may include payment of necessary expenses to establish a beneficiarys basic living 
arrangement, such as security deposits, utility activation fees, and essential household 
furnishings, for example.  
3.  Housing and Tenancy Supports 
Housing and tenancy supports include both pre-tenancy services, which assist individuals to 
prepare for and transition to housing, and tenancy sustaining supports, which are provided once 
an individual is housed to help the person achieve and maintain housing stability. Examples of 
pre-tenancy services include: 
  conducting an individualized screening and community integration assessment that 
identifies the individuals preferences for, and barriers to, community residence 
including factors such as accessibility and affordability;  
  developing a community integration plan based on the community integration 
assessment; 
  assisting with the housing search, including training on how to: search for available 
housing; identify the adequacy and availability of public transportation in areas under 
                                                            
15 Depending on the type of home modification, three Medicaid coverage authorities could be relevant. Regulations 
at 42 CFR 440.70(b)(3)(ii) define medical equipment and appliances, as a component of the 1905(a) home health 
benefit, such that certain types of removable modifications could be encompassed when a beneficiary meets any 
state-defined medical necessity criteria.  In the HCBS waiver program, section 1915(c)(4)(b) of the Act authorizes 
the Secretary to approve other services such as home modifications when there is a determination that but for 
these services the individual would require institutional placement, as documented in an approved plan of care.  
Home modifications could also be approved under the 1915(i) state plan option, for individuals who meet the states 
established needs-based criteria, when based on an assessed need and documented in the individuals plan of care.   
16 Joint HHS, HUD, and USDA Informational Bulletin, Living at Home in Rural America: Improving Accessibility 
for Older Adults and People with a Disability, issued August 19, 2020, https://www.medicaid.gov/federal-policy-
guidance/downloads/cib081920.pdf.  
17 For more information on social isolation see: National Academies of Sciences, Engineering, and Medicine. 
2020. Social Isolation and Loneliness in Older Adults: Opportunities for the Health Care System. Washington, DC: 
The National Academies Press. https://doi.org/10.17226/25663. 
18 State Medicaid Director Letter SMD 02-008, Transition Costs Covered under Home and Community-Based 
Services Waivers, issued May 9, 2002, https://www.medicaid.gov/federal-policy-
guidance/downloads/smd050902a.pdf.  
The contents of this document do not have the force and effect of law and are not meant to bind the public in any way, unless specifically 
incorporated into a contract.  This document is intended only to provide clarity to the public regarding existing requirements under the law.  Page 7  State Health Official 
  
consideration; complete the application for housing assistance and for the residence 
itself; and review and sign a lease or rental agreement, consistent with the community 
integration assessment and plan; 
  ensuring that housing units are safe and ready for move-in;  
  assisting in arranging for and supporting move-in, including moving expenses and 
transportation expenses related to the move when necessary and unavailable through 
other resources and identified in the person-centered service plan; and  
  connecting the individual to community-based resources that provide assistance with 
activities such as securing required documents and fees needed to apply for housing 
and making any reasonable accommodation request(s) related to the individuals 
disability to a housing provider. 
Examples of tenancy sustaining services include: 
  providing early identification and intervention for behaviors that may jeopardize 
housing (e.g., lease violations);  
  education or training on the role, rights, and responsibilities of the tenant and landlord;  
  connecting the individual to community resources to maintain housing stability; and  
  individualized case management and care coordination (e.g., connecting the individual 
with needed Medicaid and non-Medicaid service providers and resources) in 
accordance with the person-centered care plan and the individual housing support plan.  
B.  Non-Medical Transportation19 
Individuals who need Medicaid-funded home and community-based services (HCBS) may lack 
transportation to access community activities and resources. States have the option to cover non-
medical transportation to enable individuals receiving Medicaid-funded HCBS to gain access to 
such activities and resources when other options, such as transportation by family, neighbors, 
friends, or community agencies, are unavailable. Examples include transportation to grocery 
stores and places of employment. 
C.  Home-Delivered Meals  
Older adults and individuals with disabilities who need Medicaid-funded HCBS may need 
additional assistance with meeting nutritional needs due to functional limitations or challenges 
that make it difficult to go shopping or prepare meals on their own. Home-delivered meals can 
                                                            
19 In addition to the opportunities for states to provide non-medical transportation that are described in this letter, 
states generally are required to assure necessary transportation to and from covered medical care. This does not 
necessarily mean the state is responsible for providing a ride, but unless this requirement has been waived or 
identified as inapplicable, the state must assure that a beneficiary without another reasonably available and 
appropriate means of transportation receives necessary transportation to and from covered services. Federal 
Medicaid regulations require states to detail the methods that the state will use to meet this requirement in the states 
approved state plan. Each state is responsible for determining how to structure and administer transportation under 
broad federal requirements. 
The contents of this document do not have the force and effect of law and are not meant to bind the public in any way, unless specifically 
incorporated into a contract.  This document is intended only to provide clarity to the public regarding existing requirements under the law.  Page 8  State Health Official 
  
help to supplement the nutritional needs of these individuals when there is an assessed need and 
the services are identified in the person-centered service plan.20,21   
D.  Educational Services 
Under the Individuals with Disabilities Education Act (IDEA), children with disabilities are 
eligible to receive educational and related services that will help them achieve their educational 
goals, as documented in the childs individualized education plan (IEP) or, for infants and 
toddlers (children under age three), the individualized family service plan (IFSP). These 
educational services can help children with disabilities achieve their educational goals. Medicaid 
reimbursement is available for covered services that are included in the childs IEP and IFSP 
provided to eligible beneficiaries by qualified Medicaid providers.22 States also have the option 
to cover Medicaid services furnished to eligible Medicaid beneficiaries in the school setting if 
the children are determined to need those services, the services are furnished by qualified 
Medicaid providers, and the services meet all of the requirements set forth in the State Medicaid 
Director Letter 14-006.23,24 
E.  Employment 
Employment can help to lift low-income individuals and families out of poverty and, in doing so, 
address a broad range of social needs that can impact health. As discussed in SMDL 18-002, 
CMS supports states efforts to improve Medicaid enrollee health and well-being through 
incentivizing work and community engagement among non-elderly, non-pregnant adult 
Medicaid beneficiaries who are eligible for Medicaid on a basis other than disability.25  States 
can test incentives that provide a pathway to coverage for certain individuals who may not be 
eligible for Medicaid through the state plan to opt into Medicaid coverage, or for some 
beneficiaries to receive enhanced benefits, through participation in work or other community 
engagement activities through a demonstration projects authorized under section 1115 of the Act. 
                                                            
20 As noted previously, federal financial participation is not available to state Medicaid programs for room and board 
(except in certain medical institutions).  CMS defines the term board to mean three meals a day or any other full 
nutritional regimen; see section 4442.3 of the State Medicaid Manual at www.cms.gov/regulations-and-
guidance/guidance/manuals/paper-based-manuals-items/cms021927. 
21 State NWD Systems employ person centered counselors that assist people in accessing home delivered meal 
programs and enrolling in Farmers Market voucher programs and other food and nutrition programs sponsored by 
the US Department of Agriculture and state Department of Agriculture programs.   
22 As noted earlier, there are a few exceptions to the general rule that Medicaid is the payer of last resort and these 
exceptions generally relate to federally administered health programs. For a federally administered program to be an 
exception to the Medicaid payer of last resort rule, the statute creating the program must expressly state that the 
other program pays only for claims not covered by Medicaid; or, is allowed, but not required, to pay for health care 
items or services. As indicated by section 1903(c) of the Act, Parts B and C of the Individuals with Disabilities 
Education Act (IDEA) is one example of this exception to the payer of last resort rule. 
23 State Medicaid Director Letter 14-006, Medicaid Payment for Services Provided without Charge (Free Care), 
issued December 15, 2014, https://www.medicaid.gov/federal-policy-guidance/downloads/smd-medicaid-payment-
for-services-provided-without-charge-free-care.pdf. 
24 Certain services authorized under sections 1915(c), (i), and (k) of the Act have restrictions on Medicaid coverage 
of educational services. 
25 State Medicaid Director Letter SMD 18-002, Opportunities to Promote Work and Community Engagement 
Among Medicaid Beneficiaries, issued January 11, 2018, https://www.medicaid.gov/federal-policy-
guidance/downloads/smd18002.pdf. 
The contents of this document do not have the force and effect of law and are not meant to bind the public in any way, unless specifically 
incorporated into a contract.  This document is intended only to provide clarity to the public regarding existing requirements under the law.  Page 9  State Health Official 
  
These measures may also enable states to stretch their resources further and enhance their ability 
to provide medical assistance to a broader range of persons in need, including by expanding the 
services and populations they cover, thereby maintaining the long-term fiscal sustainability of a 
states Medicaid program and enabling states to provide medical services to more Medicaid 
beneficiaries. 
In addition, for individuals with disabilities, who are less likely to be employed than individuals 
without disabilities,26 Medicaid-funded HCBS can provide supported employment services for 
individuals who need intensive on-going support to obtain and maintain a job in competitive or 
customized employment, or self-employment, in an integrated work setting. States may define 
other models of individualized supported employment that promote community inclusion and 
integrated employment.  Supported employment can vary substantially depending on the 
individuals needs and might include customized employment, job coaching to provide supports 
and services not specifically related to job skill training that enable the individual to successfully 
integrate into the job setting (e.g., instruction on how to ameliorate the impacts of a mental 
illness on the job), and personal care services to provide assistance at an individuals place of 
employment.  
Health care services and supports not generally available through programs other than Medicaid 
can constitute a barrier to employment. However, Medicaid buy-in programs, available in most 
states, and often described as Working Disabled programs, allow workers with disabilities 
access to Medicaid community-based services not available through other insurers, such as 
personal care attendant services, by paying into Medicaid on a sliding scale. These programs 
have higher (or no) asset limits to allow individuals with disabilities who need these services to 
retain them while working and earning salaries above the standard Medicaid limits.27 
F.  Community Integration and Social Supports 
Medicaid-funded HCBS provide opportunities for Medicaid beneficiaries to choose to receive 
services in their home or community rather than institutions. These programs serve a variety of 
targeted populations groups, such as older adults, people with intellectual or developmental 
disabilities, physical disabilities, and/or mental illnesses. Examples of HCBS that facilitate 
community integration include instruction on how to utilize public transportation, and 
companion services to accompany the individual into places in the community to provide 
assistance. HCBS in non-residential settings also afford individuals opportunities to participate in 
the community by providing and/or facilitating access to community-based activities with 
individuals not receiving Medicaid HCBS. For example, companion services can provide critical 
socialization supports to assist individuals as they integrate into their broader community and 
develop relationships.  
 
                                                            
26 Bureau of Labor Statistics, U.S. Department of Labor. Persons with a Disability: Labor Force Characteristics 
2019. February 26, 2020). https://www.bls.gov/news.release/pdf/disabl.pdf 
27 Section 201 of the Ticket to Work and Work Incentives Improvement Act of 1999 (TWWIIA) (P.L. 106-170) 
includes the Medicaid Buy-In provision for working individuals with disabilities between the ages of 18 and 64. 
Forty-six states currently have Medicaid buy-in programs. 
The contents of this document do not have the force and effect of law and are not meant to bind the public in any way, unless specifically 
incorporated into a contract.  This document is intended only to provide clarity to the public regarding existing requirements under the law.  Page 10  State Health Official 
  
G. Case Management 
Case management assists eligible individuals to gain access to needed medical, social, 
educational, and other services. Case management services are often a critical component of the 
services and supports described above, although case management can also be used to address a 
broader range of needs and to assist Medicaid and CHIP beneficiaries with accessing other 
Medicaid and non-Medicaid services.   
Opportunities to Address SDOH under Medicaid and CHIP Authorities  
Federal Medicaid law requires states to provide certain mandatory Medicaid state plan benefits 
under sections 1902(a)(10) and 1905(a) of the Act and 42 Code of Federal Regulations (CFR)  
440.210 and 440.220. Additionally, pursuant to section 1905(a)(4)(B) and (r)(5) of the Act, the 
Early and Periodic Screening, Diagnostic and Treatment (EPSDT) benefit requires that states 
provide all medically necessary section 1905(a) services coverable under the Medicaid program 
to eligible children and youth under age 21 in order to correct or ameliorate defects and physical 
and mental illnesses and conditions discovered by the screening services, whether or not such 
services are covered under the state plan. 
In addition, states can choose to provide optional benefits under state plan authority, as well as 
through waiver authority under section 1915 of the Act, or they can offer non-mandatory benefits 
under demonstration project waiver or expenditure authorities under section 1115 of the Act. 
States have a certain degree of flexibility in determining which non-mandatory benefits to 
provide under these authorities. In most cases, state flexibility is limited by section 1902(a)(1) of 
the Act and 42 CFR  431.50 (statewideness), section 1902(a)(17) of the Act and 42 CFR  
440.230 (requirements regarding the amount, duration, and scope of covered services), and 
section 1902(a)(10)(B) of the Act and 42 CFR  440.240 (comparability of services within and 
among eligibility groups), among other provisions. These requirements apply unless the statute 
makes them inapplicable to the specific benefit or CMS waives or makes them inapplicable.  
More information on some of these coverage authorities and how they can address SDOH, as 
well as other opportunities for states to address SDOH in their Medicaid and/or CHIP programs, 
is provided below. Except where noted or otherwise clarified, states can receive federal financial 
participation for the services, benefits, and other opportunities described in this section, 
assuming they meet the requirements of the coverage authority. It is important to note that many 
of the services outlined throughout this document may be provided using telehealth modalities in 
addition to in person visits.  States are strongly encouraged to assess their telehealth frameworks 
to determine if there are unnecessary restrictions preventing maximum utilization of telehealth 
for the services appropriate to be delivered via telehealth. 
Appendix A also provides a summary of key authorities, the characteristics of beneficiaries who 
are eligible to receive services under that authority, and the types of SDOH that each authority 
can be useful to address. Appendix B provides a summary of services and supports that can be 
covered under Medicaid and CHIP to address SDOH, including a description of the services and 
supports, examples, potential target populations, and federal authorities that can be used to cover 
the services and supports. States may have additional flexibility to cover additional services and 
supports under some of the authorities listed below, including section 1115 demonstrations, 
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managed care programs, CHIP Health Services Initiatives (HSIs), and the Money Follows the 
Person demonstration.  
A.  Section 1905(a) State Plan Authority 
Section 1905(a) state plan services can assist Medicaid-eligible individuals to gain access to 
needed medical and social services. The following are examples of section 1905(a) state plan 
services that can address SDOH for Medicaid-eligible individuals.  
1.  Rehabilitative Services Benefit 
Description: The rehabilitative services benefit is an optional Medicaid state plan benefit 
authorized at section 1905(a)(13) of the Act and codified in regulation at 42 CFR  440.130(d) 
as medical or remedial services recommended by a physician or other licensed practitioner of 
the healing arts, within the scope of his practice under State law, for maximum reduction of 
physical or mental disability and restoration of a beneficiary to his best possible functional 
level.  
Who Is Eligible: Individuals who meet any state-defined medical necessity criteria for covered 
services. 
How Rehabilitative Services Can Address SDOH: Rehabilitative services may include services to 
help eligible individuals regain skills and functioning necessary to address SDOH. For example, 
a Medicaid beneficiary may need help with restoring social interaction behaviors and problem 
solving. These skills are necessary when navigating the complexity of finding housing or 
employment, filling out paperwork, securing identification documents, negotiating with property 
owners or property managers, paying bills, and interacting with neighbors or co-workers.  
Practitioners who furnish rehabilitative services must meet a states qualifications, including any 
licensure, certification, education, training, experience and supervisory arrangements the state 
requires. 
Rehabilitative services may include services furnished by peers. For beneficiaries with serious 
mental illness (SMI) or substance use disorders (SUD) in particular, peer supports can be 
effective at helping individuals coordinate care and social supports and services. Peer supports 
can facilitate linkages to housing, transportation, employment, nutritional services, and other 
community-based supports. In addition to section 1905(a)(13) rehabilitative services, states 
may choose to deliver peer support services through section 1915(b) and 1915(c) HCBS waiver 
programs and under section 1115 authority.  
For additional information, CMS published State Medicaid Director Letter (SMDL) #07-01128 
in 2007, providing policy guidance on supervision requirements, care coordination, and 
minimum training criteria for peer support providers. 
State Example: New Jersey added peer support services to its rehabilitative services benefit 
(State Plan Amendment (SPA) 19-0015), which allows peer support specialists to provide 
                                                            
28 Centers for Medicare & Medicaid Services. State Medicaid Director Letter SMD 07-011, issued August 15, 2007. 
Available at https://www.medicaid.gov/federal-policy-guidance/downloads/SMD081507A.pdf   
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nonclinical assistance and support throughout all stages of the SUD or SMI recovery and 
rehabilitation process. Services include but are not limited to: participating in the treatment 
planning process; mentoring and assisting the beneficiary with problem solving, goal setting 
and skill building; initiating and reinforcing a beneficiary's interest in pursuing and maintaining 
treatment services; providing support and linkages to specialty support services; sharing 
experiential knowledge, hope, and skills; advocating for the beneficiary; and being a positive 
role model. 
2.  Rural Health Clinics/Federally Qualified Health Centers  
Description: Rural Health Clinic (RHC)/Federally Qualified Health Center (FQHC) services are 
defined in section 1905(a)(2)(B), 1905(a)(2)(C), and 1905(l)(1) and (2) of the Act, and include 
certain services listed in section 1861(aa) of the Act, as described in section 1905(l)(1) and (2). 
FQHC and RHC services are mandatory Medicaid state plan services for categorically needy 
populations. FQHCs and RHCs generally serve medically underserved populations and areas. 
Medicaid-covered services provided by FQHCs and RHCs include primary and preventive 
services provided by physicians, nurse practitioners, physician assistants, clinical psychologists, 
and clinical social workers, as well as other ambulatory services included in the state plan.  
Who Is Eligible: Individuals who meet any state-defined medical necessity criteria. FQHC and 
RHC services are mandatory for beneficiaries in the categorically needy eligibility groups.  
How RHCs/FQHCs Can Address SDOH: RHCs/FQHCs role as safety net providers presents 
a unique opportunity to adopt innovative strategies to improve care and reduce health costs for 
individuals with complex socioeconomic needs. For example, RHCs/FQHCs could be 
reimbursed under Medicaid to screen individuals to identify social needs, collect and analyze 
SDOH data to inform interventions, and co-locate social services, as long as these activities are 
delivered as part of a Medicaid-covered RHC/FQHC service (see the RHC/FQHC description 
above for more information).   
State example: Under Washington States approved section 1115 demonstration, entitled 
Medicaid Transformation Project-Foundational Community Supports, the state partners with 
FQHCs that administer Health Care for the Homeless29 programs to provide supportive housing 
and supported employment supports to eligible participants. These Foundational Community 
Supports, or FCS, are services that would otherwise be allowable under section 1915(c) or 
1915(i) of the Act.  
3.  Case Management and Targeted Case Management Services  
Description: Case management services, as defined under sections 1905(a)(19) and 1915(g) of 
                                                            
29 The Public Health Service Act, section 330(h), 42 USC 254b(h), provides that the U.S. Department of Health and 
Human Services, Health Resources Services Administration may award grants for the planning and delivery of 
services to a special medically underserved population comprised of homeless individuals, including grants for 
innovative programs that provide outreach and comprehensive primary health services to homeless children and 
youth, children and youth at risk of homelessness, homeless veterans, and veterans at risk of homelessness. Section 
330(h)(2) further provides that in addition to required primary health services, an entity that receives a grant under 
this subsection is required to provide substance abuse services as a condition of such grant. For a list of the more 
than 200 Health Care for the Homeless grantees, see: https://nhchc.org/directory/. 
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the Act and 42 CFR  440.169 and 42 CFR  441.18, assist Medicaid-eligible individuals in 
gaining access to needed medical, social, educational, and other services. Under 42 CFR  
440.169(d), case management services must include all of the following: comprehensive 
assessment and periodic reassessment of individual needs, to determine the need for any 
medical, educational, social, or other services; development and periodic revision of a specific 
care plan; referral to services and related activities to help the eligible individual obtain needed 
services; and monitoring and follow-up activities. Case management services can also include 
assisting individuals transitioning from a medical institution to the community. 
Who Is Eligible: Case management services are an optional Medicaid benefit. If a state elects to 
cover case management under the Medicaid state plan, the state can also opt to provide this 
benefit without regard to the statewideness and comparability requirements at section 
1902(a)(1) and (a)(10)(B) of the Act, in which case the benefit is referred to as targeted case 
management (TCM). As a result, states can target the benefit to specific populations, as 
described in section 1915(g)(1) of the Act, such as Medicaid-eligible individuals with SMI 
and/or SUD who are experiencing or at risk of experiencing homelessness, youth transitioning 
out of foster care, individuals transitioning from medical institutions, and older adults with 
chronic medical conditions. Additionally, states are not required to furnish TCM services 
statewide.  
How Case Management and Targeted Case Management Services Can Address SDOH: Case 
management services offer several flexible ways to assist individuals with medically and 
socially complex needs. As part of identifying the total needs of an eligible individual with 
significant social needs, case management services must include activities to help link the 
individual to community-based medical, social, and educational services. A multi-disciplinary 
team approach may be employed to furnish case management services. For example, case 
managers can coordinate the teams resources and expertise to inform a comprehensive, 
medical, educational, and social assessment, as well as to create and implement a 
comprehensive plan of care. States may also reimburse for services based on case or task 
complexity to reflect the need to draw on additional resources to develop and implement 
comprehensive assessments, care plans, and follow through services.  
State Example: Colorado added TCM services as a state plan benefit (SPA 18-0021) to provide 
case management to individuals who are transitioning from a nursing facility, intermediate care 
facility for individuals with intellectual and developmental disabilities (ICFs/IID), or Regional 
Centers, which serve people with intellectual and developmental disabilities who have intensive 
needs or who have recently transitioned to a community setting. The TCM services support 
individuals to successfully integrate into community living by facilitating linkages to needed 
assistance.  
B.  Home and Community-based Service (HCBS) Options 
Medicaid-funded HCBS provide opportunities for Medicaid beneficiaries to receive services in 
their own home or community rather than institutions. These programs serve a variety of targeted 
populations groups, such as older adults, people with intellectual or developmental disabilities, 
physical disabilities, and/or mental illnesses, and can be particularly effective in addressing 
SDOH for Medicaid beneficiaries.  For example, HCBS programs can play an important role in 
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coordinating medical and non-medical services and supporting an individual with achieving 
community living goals.  
Medicaids HCBS authorities require the development of a person-centered service plan, 
outlining an individuals goals and preferences, and their service and support needs to pursue 
them. Services and supports that may address SDOH are authorized based on an assessment of 
need and are identified in that person-centered service plan. The person-centered planning 
process reflects any needed services, including non-Medicaid community resources. 
States have options to determine the ways in which these optional HCBS are provided, and the 
role Medicaid beneficiaries play in the provision of those services. HCBS can be provided under 
agency-delivered models, in which the provider agency uses employed or contracted staff to 
furnish services. HCBS can also be provided under self-directed models. Self-direction allows 
individuals to have the authority to employ staff of their choosing and/or control a defined 
budget that can be used to purchase goods and services and hire direct service workers and other 
providers necessary to remain in community-based settings based on the goals in the person-
centered plan. 
As indicated earlier, HCBS authorities such as the section 1915(c) waiver and section 1915(i) 
state plan option include defined benefit parameters that must be met. Additional information is 
described in the following sections. 
1.  Section 1915(c) HCBS Waiver Program  
Description: Waiver authority found at section 1915(c) of the Act gives states the option to offer 
long-term services and supports (LTSS) in home and community-based settings to individuals 
who would otherwise require institutional care. States have broad latitude to determine the 
services to offer under waiver programs, consistent with the benefit package specified in section 
1915(c)(4)(B) of the Act. However, those waiver services must not cost more than what would 
have been incurred to care for waiver participants in an institution. 
Who Is Eligible: States can enroll individuals who meet the states institutional level of care 
(meaning individuals could be admitted to a nursing facility, hospital, ICFs/IID), and the need 
for services must be based on an assessed need and identified in a state-approved service plan. 
Section 1915(c) allows states to waive certain Medicaid requirements (i.e., statewideness, 
comparability, income and resource rules applicable in the community), and, thus, allows states 
to furnish services to target populations by age or diagnosis, including children, adults with 
physical disabilities, individuals with intellectual or developmental disabilities, individuals with 
traumatic brain injuries, individuals with mental illnesses, and older adults, among others.  
How Section 1915(c) Waiver Programs Can Address SDOH: Under section 1915(c) waiver 
programs, states can cover a range of services that address SDOH while supporting individuals 
to achieve community integration goals and to maximize independence and safety in the home. 
Examples of services that states can cover within section 1915(c) waiver programs to address 
SDOH include: 
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  Service coordination or case management in order to facilitate access to supports and 
services to address SDOH, including during transitions from hospital to home; 
  Home accessibility adaptations to the private residence of the beneficiary or his or her family 
that are required by the beneficiarys service plan and necessary either to ensure the 
beneficiarys health, welfare, and safety or to enable functioning with greater independence 
in the home30;  
  One-time community transition costs, which are non-recurring set-up expenses for 
individuals who are transitioning from an institutional or another provider-operated 
congregate living arrangement (such as a group home or homeless shelter) to a living 
arrangement in a private residence where the person is directly responsible for his/her own 
living expenses31;  
  Housing and tenancy supports to:  
  assess the individuals community integration needs and present options;  
o
  assist in finding and securing housing, including assistance in the completion of 
o
housing applications and in securing required documentation (e.g., Social Security 
card, birth certificate, prior rental history);  
  assist the individual in communicating with the property owner and/or property 
o
manager regarding the participants disability (if authorized and appropriate), 
detailing accommodations needed, and addressing components of emergency 
procedures involving the property owner and/or property manager; and  
  help the individual to remain in their community housing, such as through assistance 
o
with housing recertification, and assistance with dispute resolution with property 
owners and neighbors; 
  Habilitation services,32 which can include a wide variety of activities related to social 
supports and needs that impact health, such as interpersonal skills training to help an 
individual acquire and maintain employment or to successfully engage with the community-
based housing system, particularly when interacting with neighbors, negotiating with 
landlords, and managing a household budget. This may also include assistive technology that 
enable a person to acquire and/or maintain employment; 
  Non-medical transportation to support the individual with gaining access to home and 
community-based services, activities, and resources such as unpaid community supports 
                                                            
30 Such adaptations could include the installation of ramps and grab-bars, widening of doorways, modification of 
bathroom facilities, or the installation of specialized electric and plumbing systems that accommodate the medical 
equipment and supplies that are necessary for the welfare of the beneficiary. However, they may not include those 
adaptations or improvements to the home that are of general utility, and are not of direct medical or remedial benefit 
to the participant. 
31 One-time community transition costs may only be covered more than once in an individuals lifetime if s/he 
returns to an institutional and/or congregate setting and, as a result, loses the more integrated residence. Allowable 
expenses are those necessary to enable the person to establish a basic household that do not constitute room and 
board and may include: security deposits required to obtain a lease; essential household furnishings including 
furniture, window coverings, food preparation items, and bed/bath linens; moving expenses; set-up fees or deposits 
for utilities; services necessary for the individuals health and safety such as pest eradication; necessary home 
accessibility adaptations; and activities to assess need, arrange for, and procure needed resources. Please note that 
one-time transition costs under section 1915(i) state plan benefits are the same as under section 1915(c) waivers. 
32 Defined at section 1915(c)(5) of the Act, habilitation services means services designed to assist individuals in 
acquiring, retaining, and improving the self-help, socialization, and adaptive skills necessary to reside successfully 
in home and community-based settings. 
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which will assist the individual in establishing a presence in his/her community, consistent 
with and documented in his or her service plan33;  
  Home-delivered meals, including in home and community-based settings other than private 
residences (e.g., assisted living facilities), as long as the meals do not constitute a full 
nutritional regimen and the individuals receiving the service have an assessed need for home-
delivered meals documented in their person-centered service plan;  
  Supported employment services,34 which are ongoing supports to individuals who, because 
of their disabilities, need intensive on-going support to obtain and maintain a job in 
competitive or customized employment, or self-employment, in an integrated work setting.35  
  Assistive technologies to facilitate communication between the individual, the individuals 
support network, and the larger community. 
Under section 1915(c)(4)(B), states can also propose other types of services that may assist in 
diverting individuals from institutional placement and supporting community living for eligible 
individuals. These services can include a broad array of supports and activities designed to 
address social and economic factors that affect health. However, it is critical to note that 
Medicaid coverage does not extend to supporting room and board costs or other benefits that are 
not directly related to the provision of HCBS. CMS also notes that these services and supports 
must be specific to the individuals needs based on his or her disabilities and/or health conditions 
and not of general utility. 
State Example: Marylands section 1915(c) Community Supports Waiver targets individuals 
with developmental disabilities of all ages who have an Intermediate Care Facility for 
Intellectual Disabilities (ICF/IID) Level of Care (LOC). It is designed to provide support services 
to participants and their families, to enable participants to work toward self-determination, 
independence, productivity, integration, and inclusion in all facets of community life across their 
lifespans. The section 1915(c) Community Supports Waiver is the foundation for the Increased 
Community Services (ICS) program, which is authorized through the Maryland HealthChoice 
section 1115 demonstration. The ICS program mirrors the Community Supports Waiver in all 
aspects except eligibility. The Community Supports Waiver service package includes support to 
individuals with varying medical needs, support to individuals transitioning from institutional 
settings and significant employment support to uphold the states Employment First, Meaningful 
Day program outlook. Services can support integrated life domains that are important to a good 
quality of life, including daily life, safety and security, community living, healthy lifestyle, social 
and spirituality, and citizenship and advocacy. This waiver allows services to be delivered 
through both traditional and self-directed service delivery models. 
                                                            
33 Whenever possible, family, neighbors, friends, or community agencies that can provide this service without 
charge should also be utilized. 
34 See https://www.medicaid.gov/federal-policy-guidance/downloads/CIB-09-16-2011.pdf for more information. 
35 Some of these models can include evidence-based supported employment for individuals with mental illness, or 
customized employment for individuals with significant disabilities. States may define other models of 
individualized supported employment that promote community inclusion and integrated employment. Job coaching 
can also provide supports and services not specifically related to job skill training that enable the waiver participant 
to be successful in integrating into the job setting. For example, a job coach may provide instruction on how to 
ameliorate the impacts of a mental illness on the job. Additionally, personal care attendants may provide hands-on 
assistance at an individuals place of employment. 
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2.  Section 1915(i) State Plan Benefit 
Description: Section 1915(i) is an optional state plan benefit that allows states to provide HCBS 
to individuals who meet state-defined needs-based criteria that are less stringent than institutional 
criteria (and, if chosen by the state, target group criteria) as set forth in 42 CFR Part 441 Subpart 
M.  
Who Is Eligible: Under section 1915(i), eligible individuals are those who are eligible for 
medical assistance under the state plan, meet state-defined needs-based criteria, and reside in the 
community. Section 1915(i) also offers states the option to target the benefit to a specific 
population based on age, disability, diagnosis, and/or Medicaid eligibility group (e.g., pregnant 
women, individuals receiving Supplemental Security Income, children in foster care). The lower 
threshold of needs-based criteria must be less stringent than institutional and section 1915(c) 
HCBS waiver program level of care. Needs-based criteria are factors used to determine an 
individuals requirements for support that can only be ascertained for a given person through an 
individualized evaluation of need and may include but cannot only include state-defined risk 
factors, such as risk of or experiencing homelessness, risk of food insecurity for individuals with 
diabetes, or risk of social isolation for older adults with chronic conditions. Section 1915(i) 
services must be offered statewide.   
How Section 1915(i) State Plan Services Can Address SDOH: States have the option to cover 
any services permissible under section 1915(c) HCBS waivers, which include services necessary 
to live in the community (see Section 1915(c) HCBS Waiver Programs above for more 
information).36  
State Example: Minnesotas section 1915(i) State Plan Amendment (SPA 18-0008) covers 
housing stabilization services for individuals with disabilities who are experiencing or at risk of 
experiencing homelessness and individuals with a disability with mental illness or substance use 
disorders who are living in institutions or other segregated settings or are at risk of living in those 
settings. Under Minnesotas section 1915(i) SPA, housing stabilization services include supports 
that help people plan for, find, and move to homes of their own and supports that help a person 
to maintain living in their own home. Minnesotas needs-based criteria targets individuals who 
are assessed to require assistance with at least one need in the following areas resulting from the 
presence of a disability and/or a long-term or indefinite condition: communication, mobility; 
decision-making; and/or managing challenging behaviors and is experiencing (risk factor) 
housing instability. 
3.  Section 1915(j) Optional Self-Directed Personal Assistance Services 
Description: Section 1915(j) self-directed personal assistance services (PAS) means personal 
care and related services, or HCBS otherwise available under the state plan or a section 1915(c) 
waiver program that are provided to an individual who has been determined eligible for the PAS 
option.  
                                                            
36 The one-time transition costs under section 1915(i) state plan benefits are the same as under section 1915(c) 
waivers.  
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Who Is Eligible: Individuals must be eligible for state plan personal care services or a section 
1915(c) waiver program  
How Section 1915(j) Optional Self-Directed Personal Assistance Services Can Address SDOH: 
Self-directed PAS also includes, at the states option, items that increase the individuals 
independence or substitute for human assistance (such as a microwave oven, grab bars, or an 
accessibility ramp) to the extent that expenditures would otherwise be made for the human 
assistance. Individuals budgets may be used to purchase goods and services, supports, or 
supplies related to a need or goal identified in the individuals state-approved person-centered 
service plans. Services authorized under the section 1915(j) state plan option facilitate 
beneficiary autonomy and assist individuals in participating in their communities, thereby 
reducing the likelihood that individuals will experience challenges related to SDOH. 
4.  Section 1915(k) Community First Choice Optional State Plan Benefit   
Description: The section 1915(k) Community First Choice (CFC) state plan benefit provides 
certain individuals, who meet an institutional level of care, the opportunity to receive necessary 
personal attendant services and supports in a home and community-based setting. States receive 
an extra six percentage points of federal match for CFC state plan expenditures.  
Who Is Eligible: Individuals who meet the states institutional level of care (meaning the 
individual could be admitted to a nursing facility, hospital, ICF/IID) 
How Section 1915(k) Community First Choice Can Address SDOH: There are required services 
that must be included in all CFC programs, as well as additional services that may be included at 
the states option.37 States electing CFC are required to cover the following services, subject to 
the conditions described above: (1) services and supports to assist in accomplishing activities of 
daily living (ADLs), instrumental activities of daily living (IADLs) and health-related tasks, 
through hands-on assistance, supervision, and/or cueing; (2) acquisition, maintenance, and 
enhancement of skills necessary for the individual to accomplish ADLs and IADLs and health-
related tasks; (3) back-up systems or mechanisms to ensure continuity of services and supports; 
and (4) voluntary training on how to select, manage, and dismiss attendants. Section 1915(k) 
services must be offered state-wide. 
Optional services states may cover in their CFC benefit include: (1) expenditures for transition 
costs (such as first months rent and utilities, bedding, and basic kitchen supplies) necessary for 
an individual transitioning from an institutional setting to a home and community-based setting; 
and (2) expenditures relating to a need that increases an individuals independence or substitutes 
for human assistance, to the extent that Medicaid expenditures would otherwise be made for 
human assistance. 
As with section 1915(j), services authorized under the section 1915(k) state plan option facilitate 
beneficiary autonomy and assist individuals in participating in their communities, thereby 
reducing the likelihood that individuals will experience challenges related to SDOH. 
                                                            
37 For more information on section 1915(k), see https://www.medicaid.gov/medicaid/hcbs/authorities/1915-
k/index.html.  
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State Example: Connecticuts section 1915(k) Community First Choice SPA provides non-
recurring transitional services to enable a qualified individual transitioning from a nursing 
facility, institution for mental diseases, or ICF/IID to a home and community-based setting to 
establish a basic household. Services may include: essential household furnishings and moving 
expenses required to occupy and use a community domicile, including furniture, window 
coverings, food preparation items, and bed/bath linens; transportation expenses to pay for trips 
associated with locating housing; set-up fees or deposits for utility or service access, including 
telephone, electricity, heating, and water; and services necessary for the individual's health and 
safety such as pest eradication and one-time cleaning prior to occupancy. 
C.  Section 1115 Demonstrations 
Description: States can utilize section 1115 demonstration authority to test new strategies to 
promote the objectives of the Medicaid and CHIP programs, including certain strategies that are 
not available under other authorities. Under section 1115 authority, the Secretary may approve 
any experimental, pilot, or demonstration project that, in the judgment of the Secretary, is likely 
to assist in promoting the objectives of certain programs under the Act, including Medicaid and 
CHIP. Section 1115(a)(1) of the Act allows the Secretary to waive compliance with the Medicaid 
requirements of section 1902 of the Act, including but not limited to statewideness and 
comparability, to the extent and for the period necessary to carry out the demonstration project. 
In addition, section 1115(a)(2) of the Act allows the Secretary to provide federal financial 
participation for demonstration costs that would not otherwise be considered as federally 
matchable expenditures under section 1903 of the Act, to the extent and for the period prescribed 
by the Secretary.38 Pursuant to section 2107(e)(2) of the Act, section 1115 applies similarly to 
CHIP. Depending on the circumstances, states may seek section 1115 demonstration authority 
and also seek other authorities, as needed, or apply for a section 1115 demonstration without 
requesting flexibilities under other authorities.   
Currently, CMS will not approve a demonstration project under section 1115(a) of the Act unless 
the project is expected to be budget neutral to the federal government. A budget neutral 
demonstration project does not result in Medicaid or CHIP costs to the federal government that 
are greater than what the federal governments Medicaid or CHIP costs would likely have been 
absent the demonstration. Under a section 1115 demonstration, similar to any other claim for 
Medicaid and CHIP federal financial participation, states are required to provide the necessary 
state share, consistent with federal regulations and statute, in order to draw down federal 
financial participation in authorized spending. CMS currently approves section 1115(a)(2) 
expenditure authority for services or populations that could not be covered under other 
authorities, i.e., costs not otherwise matchable, only if the state identifies offsetting savings to 
ensure the demonstration remains budget neutral. In cases where expenditure authority is 
provided for coverage of populations or services that the state could have otherwise provided 
through its Medicaid or CHIP state plan or other title XIX authority, such as a waiver under 
section 1915 of the Act, CMS considers these expenditures to be hypothetical expenditures 
that do not necessitate savings to offset the otherwise allowable coverage.39 Section 1115 
                                                            
38 42 U.S.C.  1315. 
39 Centers for Medicare & Medicaid Services. SMDL #18-009. August 22, 2018. Available at 
https://www.medicaid.gov/federal-policy-guidance/downloads/smd18009.pdf.   
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demonstrations are usually approved for an initial 5-year period, with a possible 3-year or 5-year 
renewal period after the first 5 years. Subject to the public notice and transparency requirements, 
CMS may approve an extension for a period up to 10 years of routine, non-complex section 1115 
demonstration and expenditure authorities that have been proven successful based on monitoring 
and evaluation data.40  
Just as is the case for all section 1115 demonstrations, states that receive CMS approval for 
section 1115 demonstration authority to address SDOH are expected to conduct independent and 
robust evaluations of the demonstration. These evaluations generally draw on data collected for 
monitoring, as well as other data and information needed to support the evaluation that will 
describe the effectiveness and impact of the demonstration using quantitative and qualitative 
outcomes. An interim evaluation is generally completed one year before the expiration of the 
demonstration, and under 42 CFR 431.424(d) must be included as part of the states proposal to 
extend the demonstration. A summative evaluation is generally due 18 months after the 
demonstration period ends. States are also expected to submit an evaluation design, for CMS 
approval. CMS typically includes in special terms and conditions (STCs) for approved 
demonstrations a requirement that the state submit a monitoring protocol for CMS review and 
approval that describes the states plan to monitor the demonstration in accordance with CMS 
expectations.  
Who Is Eligible: States have significant flexibility in how they define target populations for 
demonstration services/activities, and states can determine their own states needs. For instance, 
states can target populations by age and/or defined risk factors for services. States can target 
section 1115 demonstration services to particular geographic areas and/or populations meeting 
defined characteristics. However, CMS currently will not approve a demonstration providing 
coverage of services consistent with those authorized under section 1915(c), (i), or (k) benefits 
unless the state agrees to adhere to programmatic requirements of individual assessments of need 
with respect to those services.  
How Section 1115 Demonstrations Can Address SDOH: Through section 1115 authority, states 
have the opportunity to test innovative approaches for addressing SDOH, subject to CMS 
approval, in ways that consider local challenges and response capabilities. States could, for 
instance, elect to pilot services that address SDOH for a specific target population or in a limited 
geographic area. Furthermore, states could choose to test services and supports that could 
address SDOH through expenditure authority. For example, states could test the effectiveness of 
providing: one-time community transition services for individuals experiencing or at risk of 
experiencing homelessness transitioning into supportive housing to increase housing stability, 
lower health care costs, and improve health outcomes for individuals who are experiencing 
homelessness or are at high risk for homelessness; or recurring chore or cleaning services to 
reduce asthma triggers in the home for individuals with poor asthma control. States can also test 
alternative payment methodologies that are designed to address SDOH. When assessing whether 
to approve a section 1115 demonstration, CMS would examine whether the demonstration is 
likely to assist in promoting the objectives of Medicaid or CHIP. In that assessment, CMS will 
                                                            
40 Centers for Medicare & Medicaid Services. Section 1115 Demonstration Process Improvements. CMCS 
Informational Bulletin. November 6, 2017. Available at https://www.medicaid.gov/federal-policy-
guidance/downloads/cib110617.pdf. 
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consider whether the demonstration is likely to furnish medical assistance in a manner that 
improves the sustainability of the safety net, such as if provisions influence health outcomes, 
improving beneficiaries physical and mental health, which may in turn cause them to consume 
fewer health care resources while they are enrolled in Medicaid. This may potentially reduce the 
need for future Medicaid enrollment or result in lower costs for states over the long-term, thereby 
sustaining the states Medicaid program. 
Evaluation designs for section 1115 demonstrations to address SDOH should consider the extent 
to which the provision of services addressing SDOH results in improved integration of all 
services, increased care coordination effectiveness, improved health outcomes, and reductions in 
unnecessary or inefficient use of health care. States will be expected to comply with CMS 
requirements for monitoring and evaluation, as applicable, and as specified in the states STCs.  
State Examples: Washington States approved section 1115 demonstration, entitled Medicaid 
Transformation Project, authorizes the provision of Foundational Community Supports, which 
include both housing-related and supported-employment services. The intended goals of the 
demonstration are to integrate behavioral health into the larger health care system and to address 
housing and employment needs as SDOH. The aim is to improve health outcomes and reduce 
unnecessary utilization of high-cost health care services such as emergency department visits and 
inpatient bed stays. In addition, the state has developed and implemented training for LTSS 
social workers/case managers through their Tailored Supports for Older Adults (TSOA) and 
Medicaid Alternative Care (MAC) initiative. The state developed training materials to train 
Senior Information and Assistance/Aging and Disability Resource Center, state, and Area 
Agency on Aging staff on the new benefit levels, eligibility, authorization and qualification of 
providers. 
North Carolinas approved section 1115 demonstration entitled North Carolina Medicaid 
Reform Demonstration authorizes the provision of the Enhanced Case Management and Other 
Support Services Pilot Program, to improve health outcomes and lower healthcare costs. The 
state is piloting evidence-based interventions, such as those for housing, transportation, and food. 
Beneficiaries eligible for enhanced case management are high-need adults age 21 and over, 
pregnant women, and children who must meet at least one state-defined needs-based criteria and 
at least one risk factor. Under the pilot program, North Carolina is developing an incentive 
payment fund to incorporate value-based payments to incentivize the delivery of high-quality 
care by increasingly linking payments for pilot program services to health and socioeconomic 
outcomes based on the pilot services provided during the demonstration and gathering the 
required data and experience needed for more complex risk-based models. 
D.  Section 1945 Health Homes 
Description: The optional health home state plan benefit authorized under section 1945 of the 
Act includes various services that help to ensure the coordination of all primary services, acute 
care services, behavioral health (including mental health and substance use) services, and LTSS 
for individuals with chronic conditions, and thus help to ensure treatment of the whole person. 
Section 1945 defines health home services as: comprehensive care management; care 
coordination and health promotion; comprehensive transitional care, including appropriate 
follow-up, from inpatient to other settings; individual and family support; referral to community 
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and social support services, if relevant; and use of health information technology to link services, 
as feasible and appropriate.41 CMS expects that health outcomes for Medicaid beneficiaries 
enrolled in health homes will improve and that health homes will result in lower rates of 
emergency department use, reduction in hospital admissions and readmissions, reduction in 
health care costs and reliance on long-term care facilities, and improved experience of care for 
Medicaid beneficiaries with chronic conditions.  
States implementing the section 1945 health home benefit receive enhanced federal matching 
funds for new health home programs or by adding health home services for new chronic 
conditions or expanding health home services to new geographic areas for an initial period (90 
percent federal match for health home services during the first 8 fiscal quarters that the approved 
health home SPA is in effect). States can request an additional two quarters of enhanced federal 
match under SUD-focused health home SPAs approved on or after October 1, 2018. After the 
period of enhanced federal match ends, services are matched at the states usual service rate.  
Who Is Eligible: Section 1945 of the Act specifies that the health home state plan optional 
benefit is for eligible individuals with chronic conditions, and gives states authority to target 
eligibility for services based on the chronic conditions a beneficiary has, notwithstanding the 
statewideness and comparability requirements in section 1902(a)(1) and (a)(10)(B) of the Act. 
CMS has explained in guidance that states can specify which chronic conditions their health 
homes will target, but are not permitted to limit the benefit to specific age groups. While all 
individuals served must meet the minimum statutory criteria, states may elect to target the 
population to individuals with higher numbers or severity of chronic or mental health conditions. 
The population must include all categorically needy individuals who meet the states criteria 
(including those eligible based on receipt of services under a section 1915(c) home and 
community-based services waiver), and at state option may include individuals in any medically 
needy group or section 1115 demonstration population.42,43 
To qualify for health home services, Medicaid beneficiaries must: (1) have two or more chronic 
conditions; (2) have at least one chronic condition and be at risk of developing another; or (3) 
have at least one serious and persistent mental health condition. Chronic conditions are specified 
in the statute to include, but not be limited to: mental health conditions, SUD, asthma, diabetes, 
heart disease, and being overweight (i.e., Body Mass Index over 25). States may propose to 
target one or more conditions from the list, or, with approval from CMS, may target other 
conditions, such as HIV/AIDS.  
How Section 1945 Health Homes Can Address SDOH: Among other things, health homes are 
responsible for connecting beneficiaries to other social services and supports. Under the section 
1945 health home option, states can provide comprehensive care management services that could 
include an assessment to identify the need for assistance with SDOH, such as housing, 
transportation, employment, or nutritional services, the results of which could then help the 
health home to refer an individual to community and social support services. Health home 
                                                            
41 For a definition of health home services, see https://www.medicaid.gov/sites/default/files/2020-02/health-homes-
section-2703-faq.pdf. 
42 https://www.medicaid.gov/sites/default/files/2020-02/health-homes-faq-12-18-17.pdf 
43 https://www.medicaid.gov/sites/default/files/Federal-Policy-Guidance/downloads/SMD10024.pdf 
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services must also include comprehensive transitional care, including appropriate follow-up, 
from inpatient to other settings, and can support individuals as they transition between settings.  
 
State Example: Maines section 1945 health home SPA assesses housing needs and provides 
assistance with coordination of resources that help participants in accessing and maintaining safe 
and affordable housing. California implemented a section 1945 health home SPA for individuals 
with chronic physical conditions and SUD, including individuals experiencing or at risk of 
experiencing homelessness. California utilizes a housing navigator that develops relationships 
with housing agencies and permanent housing providers, including supportive housing providers, 
in order to refer and link Medicaid-eligible participants with community-based housing 
resources.  
E.  Managed Care Programs  
Description: States may use a number of existing federal state plan and waiver authorities, 
including sections 1115(a), 1932, and 1915(b) of the Act, to authorize a risk-based managed care 
delivery system. These managed care authorities can be used by states to implement a managed 
care delivery system for state plan and waiver benefits. Under risk-based managed care 
arrangements, states provide some or all Medicaid covered benefits through a managed care 
organization, pre-paid inpatient health plan, or pre-paid ambulatory health plan, hereinafter 
referred to as a managed care plan. Managed care plans enter into contracted arrangements with 
state Medicaid agencies to provide all the services covered under the risk contract for a set 
amount, called a capitation payment (typically, per member per month, or PMPM), regardless of 
whether the enrollee uses services.  
Who Is Eligible: Individuals who receive services under Medicaid managed care contracts who 
meet any state-defined medical necessity criteria for the services covered under the contract. 
How Managed Care Can Address SDOH: There are a variety of mechanisms described in the 
Medicaid managed care statutes and regulations at 42 CFR part 438 that states may use to 
address SDOH. These include: 
  Section 1915(b)(3) Services: Section 1915(b)(3) of the statute allows a state to share the 
savings resulting from the use of more cost-effective care with Medicaid beneficiaries in the 
form of additional health-related services. These savings must be expended for the benefit of 
Medicaid beneficiaries enrolled in the section 1915(b)(3) waiver and may be used to provide 
services for enrollees to address a wide range of SDOH. For example, states could obtain 
approval to add housing-related services under section 1915(b)(3) authority and have 
managed care plans provide those services for enrollees to identify, transition to, and sustain 
their housing. States could also add home-delivered meals as a service under section 
1915(b)(3) authority and have managed care plans provide this service to individuals with 
chronic conditions, as long as the meals do not constitute a full dietary regimen and the 
individuals receiving the service have an assessed need for home-delivered meals 
documented in their person-centered service plan. As another example, states could add 
various environmental modifications as a service under section 1915(b)(3) authority and have 
managed care plans provide these services, such as humidifiers for individuals with asthma 
or other complicated respiratory conditions. 
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  State Directed Payments (42 CFR  438.6(c)): Federal Medicaid managed care regulations 
include requirements for how states may direct plans to implement specific delivery system 
and provider payment initiatives under Medicaid managed care. These types of payment 
arrangements permit states to direct specific payments (state directed payments) made by 
managed care plans to providers under certain circumstances44 and can assist states in 
furthering the goals and priorities of their Medicaid programs, including to reinforce a states 
commitment to addressing SDOH. For example, a state may require managed care plans to 
implement alternative payment models or incentive payments that incentivize providers to 
screen for socioeconomic risk factors, provided all regulatory requirements are met.  
  Managed Care Plan Incentive Payments (42 CFR  438.6(b)(2), 438.5(e)-(f), and 
438.7(b)(3)-(4)): States may use incentive payments to reward managed care plans that make 
investments and/or improvements in SDOH in line with performance targets specified in the 
managed care plan contract, including implementation of a mandatory performance 
improvement project under 42 CFR  438.330(d) that focuses on factors associated with 
SDOH. These incentive payments represent additional funds over and above the capitation 
rates. It is important to note that managed care plan contract payments that incorporate 
incentive payments may not exceed 105 percent of the approved capitation payments 
attributable to the enrollees or services covered by the incentive arrangement. 
In the 2016 managed care rule (81 FR 27530), CMS specified that incentive payments made 
to the managed care plan in accordance with  438.6(b)(2) should not be included in the 
denominator of the medical loss ratio (MLR) as such payments are in addition to the 
capitation payments received under the contract. However, these MLR standards can support 
states and managed care plans in their efforts to design and implement comprehensive 
strategies to address SDOH by ensuring amounts can be appropriately identified and 
classified within each managed care plans MLR. 
Under  438.5(e) and 438.7(b)(3), related to non-benefit costs, and  438.5(f) and 
438.7(b)(4), related to adjustments, states can develop specific assumptions and 
methodologies in capitation rate development related to profit margins and efficiency 
adjustments that are based on generally accepted actuarial principles and practices. An 
important principle of actuarial soundness is to ensure that rates paid to plans are appropriate, 
reasonable, and attainable. States may consider strategies to incentivize plan performance, 
such as by providing incentive payments to plans that achieve certain results, including lower 
costs and improved health outcomes. Such strategies could provide plans with an incentive to 
achieve improvement as a result of investments in SDOH. States could also consider other 
policy pathways for encouraging plans to invest in SDOH efforts. For example, some states 
                                                            
44 State directed payments must meet the requirements under 42 CFR 438.6(c), including obtaining prior approval. 
Approval under 42 CFR  438.6(c) provides authority for states to include contract requirements directing a plans 
expenditures. Among other requirements, the payments must tie to the delivery of services that occurs during the 
rating period (e.g. not historical utilization). Approval under  438.6(c) does not grant authority to cover services; 
states must already have Medicaid authority for the underlying services either under the Medicaid state plan or 
through a Medicaid waiver or demonstration program. Additional guidance and the preprint form states must use to 
obtain prior approval are available on Medicaid.gov: https://www.medicaid.gov/medicaid/managed-
care/guidance/state-directed-payments/index.html.  
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have established caps on plans profit margins and required that profits beyond the cap be 
reinvested in SDOH efforts.  
  Coverage of Waiver and Nontraditional Services. Under 42 CFR  438.3(c), the final 
capitation rate for each managed care plan must be based only upon services covered under 
the state plan and represent a payment amount that is adequate to allow the managed care 
plan to efficiently deliver covered services to Medicaid-eligible individuals in a manner 
compliant with contractual requirements. In the 2016 final rule (81 FR 27537), CMS clarified 
that services approved under a waiver (e.g., sections 1915(b)(3), 1915(c), or 1115 of the Act) 
are considered state plan services and are encompassed in the reference to state plan services 
in 42 CFR  438.3(c). Therefore, if services to address SDOH (e.g., peer support services, 
home-delivered meals) are approved under these waiver authorities for the state Medicaid 
program, and the services are included in the managed care contract; then the covered 
services must necessarily be incorporated in the final capitation rates as well as the numerator 
of a plans MLR.45  
  Managed Care Plan Contracting Strategies (42 CFR  438.208(b)). States may develop and 
implement specific managed care plan procurement and contracting strategies to incentivize 
care coordination across medical and nonmedical contexts, including to address SDOH. For 
example, states may require managed care plans, through their plan contracts, to assess 
enrollee needs related to SDOH using a standardized assessment instrument,46 refer enrollees 
to community-based supports and services as needed based on assessment results, track 
referrals to social services, include social or community health workers (CHWs) in care 
coordination teams, and other care coordination initiatives that promote holistic, person-
centered care across medical and nonmedical contexts. CHWs are typically trained 
practitioners who provide certain follow-up medical and remedial care, as well as screening 
and preventive services. They can be a valuable link between enrollees and needed health 
care services. States may also require managed care plans to contract with community-based 
organizations with expertise in addressing SDOH for coordination of care purposes. 
Additionally, if managed care plans implement SDOH activities that meet the requirements 
in 45 CFR  158.150(b) and are not excluded under 45 CFR  158.150(c), managed care 
plans may include the costs associated with these activities in the numerator of the MLR as 
activities that improve health care quality under 42 CFR  438.8(e)(3). States also may, as 
part of its procurement or pre-procurement strategies, encourage potential managed care 
plans to share promising practices and initiatives for addressing SDOH to encourage broader 
plan adoption of such practices and initiatives.  
Other examples of how states can leverage managed care to address SDOH include 
enrolling47 beneficiaries into a managed care plan with expertise and capacity to manage the 
                                                            
45 Under 42 CFR  438.8(e), the numerator of a managed care plans MLR for an MLR reporting year is the sum of 
the managed care plans incurred claims, the managed care plans expenditures for activities that improve health 
care quality, and fraud prevention activities. 
46 See, for example, the Accountable Health Communities Health-Related Social Needs Screening Tool 
(https://innovation.cms.gov/files/worksheets/ahcm-screeningtool.pdf).  
47 States must have an enrollment system for its managed care programs that complies with the requirements of 42 
CFR 438.54. States can use a passive enrollment process and/or a default enrollment process that would include 
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care of enrollees with complex SDOH needs (such as people who have a history of chronic 
homelessness), requiring managed care plans to focus on addressing SDOH in performance 
improvement plans, or requiring managed care plans to report on quality measures related to 
SDOH.  
  Quality Measurement and Improvement.48 States can leverage managed care quality 
requirements in 42 CFR  438.310 through 438.370, including Quality Strategies, quality 
assessment and performance improvement (QAPI) requirements, and external quality review 
to address SDOH within their managed care programs. States are required to develop, and 
update at least every three years, a managed care Quality Strategy. The Quality Strategy is 
the states public-facing vision statement and roadmap for improving quality and access to 
care within its managed care program. States are required to ensure through their managed 
care contracts that Medicaid and CHIP managed care organizations, prepaid health plans, and 
certain primary care case management entities implement quality assessment and 
performance improvement (QAPI) programs in order to carry out the types of performance 
measurement and performance improvement projects (PIPs) that are necessary to realize the 
goals and objectives articulated in the Quality Strategy. States are also required to conduct an 
External Quality Review (EQR) to validate managed care organization (MCO) performance 
measures and PIPs and include these findings in an annual EQR technical report, which 
states post on their websites annually. 
  States can require MCOs to focus on SDOH in their QAPI programs and/or PIPs. MCO 
performance in these QAPI programs and/or PIPs could also be integrated into the payment 
methodologies for certain managed care payments, such as managed care plan incentive 
payments. In addition, states can contract with external quality review organizations 
(EQROs) to conduct optional EQR-related activities, such as calculation of additional 
performance measures focused on SDOH or to conduct studies to gain a fuller understanding 
of how SDOH affect health outcomes among their beneficiaries. The Medicaid and CHIP 
Adult and Child Core Set measures are useful quality measures to demonstrate whether 
addressing SDOH has improved the health and health care of beneficiaries.49 
Managed care plans may also voluntarily choose to cover in lieu of services to address SDOH 
for their members: 
  In Lieu of Services. Managed care plans may cover, for enrollees, services or settings that are 
in lieu of services or settings covered under the state plan in accordance with 42 CFR  
438.3(e)(2), which requires: 
                                                            
criteria around the plans expertise and capacity to manage the care of enrollees with complex SDOH needs so long 
as the other criteria outlined in 42 CFR 438.54 were also met. 
48 The managed care quality strategy, QAPI, and EQR requirements are addressed in 42 CFR  438.310 through 
438.370. While these quality requirements are specific to managed care, states are encouraged to leverage similar 
activities within their Medicaid fee-for-service programs to ensure that all Medicaid beneficiaries receive quality 
services and have positive health outcomes, regardless of delivery system.    
49 https://www.medicaid.gov/medicaid/quality-of-care/performance-measurement/adult-and-child-health-care-
quality-measures/index.html 
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  The state determines that the in lieu of alternative service or setting is a medically 
o
appropriate and cost effective substitute for the covered service or setting under the state 
plan; 
  The enrollee is not required to use the alternative service or setting;  
o
  The approved in lieu of service is authorized and identified in the managed care plan 
o
contract and offered to enrollees at the option of the managed care plan; and  
  The utilization and actual cost of in lieu of services is taken into account in developing 
o
the component of the capitation rates that represents the covered state plan services, 
unless a statute or regulation explicitly requires otherwise.  
 
Under the 2016 final rule (81 FR 27526), CMS also clarified that all services under  
438.3(e), including approved in lieu of services  such as in-home prenatal visits for at-risk 
pregnant beneficiaries as an alternative to a traditional office visit  can be considered as 
incurred claims in the numerator for purposes of the MLR.50 
  Value-Added Services. Under 42 CFR  438.3(e), a managed care plan may voluntarily 
cover, for enrollees, services that are in addition to those covered under the state plan, 
although the cost of these services is not and may not be included in the capitation rate; these 
services are often referred to as value-added services. Such value-added services, such as 
installation of a shower grab bar or healthy play and exercise programs, are plan services that 
may not be included in the capitation rate. Under the 2016 final rule (81 FR 27526), value-
added services can be considered as incurred claims in the numerator for the purposes of the 
MLR calculation if the services are activities that improve health care quality under 45 CFR 
 158.150 and are not excluded under 45 CFR  158.150(c).  
Under value-added and in lieu of services, there are opportunities for states and managed care 
plans to provide coverage for services that support SDOH, as long as federal Medicaid managed 
care regulatory requirements are met. For example, a managed care plan may voluntarily 
provide, as a value-added service, supportive housing services for a beneficiary living with 
severe mental illness who would otherwise cycle between hospital stays and homelessness, 
although the cost of these services may not be included in the capitation rate.   
State Examples: Under the District of Columbias Managed Care Organization federal fiscal year 
2020 Contract, the QAPI language specifically addresses SDOH. The QAPI requires MCOs to 
analyze SDOH data to determine differences in quality of care and utilization, as well as the 
underlying reasons for variations in the provision of care to enrollees. MCOs identify and 
measure disparities in health services and health outcomes between subpopulations/groups 
(race/ethnicity and language), identify SDOH needs, and identify the causes for health 
disparities. MCOs then develop a plan of action and a timeline to remediate the SDOH and 
health disparities identified through targeted interventions. 
To focus Medicaid managed care plans on improving asthma care, Maryland established a 
statewide PIP using the Asthma Medication Ratio measure. Each Medicaid managed care plan in 
                                                            
50 Under 42 CFR  438.8(e), the numerator of a managed care plans MLR for an MLR reporting year is the sum of 
the managed care plans incurred claims, the managed care plans expenditures for activities that improve health 
care quality, and fraud prevention activities. 
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the state implemented several interventions to improve asthma care. Interventions that addressed 
social determinants included referring members to the Green and Healthy Homes Initiative to 
conduct home assessments of asthma triggers and minimizing barriers to transportation by 
providing transportation to office appointments, providing prescription pharmacy delivery, and 
offering asthma adherence monitoring through retail pharmacies.51   
To improve the states performance on the Postpartum Care Visit Core Set measure (PPC-AD), 
Michigan conducted a quality improvement project called the Maternal Infant Health Project 
(MIHP) that used a health equity focus, identifying racial or ethnic disparities in the PPC visit 
rate and identifying strategies to improve health equity. Four of Michigans 13 Medicaid health 
plans implemented enhanced care coordination and transportation benefit interventions. For 
example, they created a transportation worksheet which prompted plans to consider how the 
health plan, pilot clinics, and maternal infant health programs would refer patients for 
transportation scheduling assistance and how to track the transportation services. Women who 
participated in MIHP were 1.5 times more likely to receive an appropriately timed postpartum 
care visit than women who did not participate. This is important because the postpartum visit 
offers an important opportunity to (1) assess a womans physical recovery from pregnancy and 
childbirth, (2) provide breastfeeding support, (3) manage preexisting or emerging chronic health 
conditions, (4) evaluate her psychological and mental health status, and (5) discuss family 
planning options and set the stage for well-women care between pregnancies.   
F.  Program of All-Inclusive Care for the Elderly (PACE)52  
Description: Authorized under sections 1894 and 1934 of the Act and codified in regulation at 
42 CFR part 460, the Program of All-Inclusive Care for the Elderly (PACE) provides 
comprehensive medical and social services to certain frail elderly individuals, most of whom are 
dually eligible for Medicare and Medicaid benefits. Payment to PACE organizations is capitated, 
and provides PACE organizations with a single monthly payment in exchange for delivering all 
the services a participant needs rather than providing compensation only for those services 
covered under Medicare and Medicaid.  
PACE benefits also include all other services determined necessary by the participants 
interdisciplinary team to improve and maintain a participants health. PACE organizations 
provide services in an adult day health center as well as through in-home and referral services in 
accordance with the participants needs. 
Who Is Eligible: Medicaid beneficiaries can generally join PACE if they meet certain conditions: 
  Age 55 or older; 
  Live in the service area of a PACE organization; 
  Require a nursing facility level of care; and 
                                                            
51 External Quality Review Table 15. Progress on Childhood Asthma Performance Improvement Projects (PIPs), as 
Reported in External Quality Review (EQR) Technical Reports, 20182019 Reporting Cycle (n = 9 states, 23 PIPs) 
available at: https://www.medicaid.gov/medicaid/quality-of-care/downloads/2018-2019-chart-pack.zip (zip file).  
52 For more information on PACE, see https://www.medicaid.gov/medicaid/long-term-services-supports/program-
all-inclusive-care-elderly/index.html. 
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  Be able to live safely in the community. 
How PACE Can Address SDOH: An interdisciplinary team assesses each participants needs, 
develops care plans, and delivers coordinated care and services. The interdisciplinary team meets 
to ensure that the comprehensive medical and social needs of each participant are met. Teams 
typically meet daily to discuss the status of participants. At a minimum, the team is composed of: 
  Dietician; 
  Driver; 
  Home care coordinator; 
  Registered nurse; 
  Occupational therapist; 
  PACE center manager; 
  Personal care attendant; 
  Physical therapist; 
  Primary care provider; 
  Recreational therapist or activity coordinator; and 
  Masters-level social worker. 
The PACE organization must furnish comprehensive medical, health, and social services that 
integrate acute and long-term care. PACEs comprehensive benefit package includes (but is not 
limited to) all Medicare and Medicaid covered services.53 Among other benefits, this includes: 
meals and nutritional counseling,54 social work services, and transportation.55  
State Example: Uphams Corner Elder Service Plan, a PACE organization based in Dorchester, 
MA, partnered with the Mayor of Boston in an initiative to target chronically homeless seniors 
who have been without a home for a year or more and had some level of disability. This year, the 
PACE organization enrolled eight seniors who were matched with housing and approved for 
support services -- all in one day. The PACE team works closely with housing managers to 
address issues as they arise so participants do not face the loss of housing.  
 
 
                                                            
53 See 42 C.F.R.  460.92. See https://www.cms.gov/Regulations-and-
Guidance/Guidance/Manuals/Downloads/pace111c06.pdf for more information. 
54 Under 42 C.F.R.  460.78, the PACE organization must ensure, through the assessment and care planning process, 
that each participant receives nourishing, palatable, well-balanced meals that meet the participants daily 
nutritional/medical and special dietary needs. The PACE organization must provide nutrition support to meet the 
daily nutritional needs of a participant, if indicated by his or her medical condition or diagnosis.  Nutrition support 
includes tube feedings, total parenteral nutrition, or peripheral parenteral nutrition if indicated by the participants 
medical condition or diagnosis. 
55 Pursuant to 42 C.F.R.  460.76 and 460.106, transportation must be provided as indicated in a participants plan 
of care. 
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Other Opportunities under Medicaid and CHIP to Address SDOH56 
1.  Integrated Care Models 
Description: Integrated care models are care delivery and payment models that reward 
coordinated, high quality care.57 Integrated care models can include patient-centered medical 
homes (PCMHs), accountable care organizations (ACOs), or other models that emphasize 
person-centered, continuous, coordinated, and comprehensive care. These models typically 
include partnerships with community-based organizations, social service agencies, counties, 
and public health agencies. 
How Integrated Care Models Can Address SDOH: Integrated care models can support a variety 
of innovative approaches to addressing individuals with complex SDOH needs, such as 
interdisciplinary care teams and comprehensive care coordination services, while providing 
flexibility for states to develop payment mechanisms that support intensive care interventions 
such as tiered rate methodologies and shared savings models.  
Although there is no specific current statutory authority for ACOs within the Medicaid 
program, CMS released two letters to state Medicaid directors in 2012, providing guidance 
regarding Medicaid integrated care models, including ACOs and ACO-like models for payment 
and service delivery reform.58 CMS also released guidance in a Center for Medicaid and CHIP 
Services Informational Bulletin in 2013, Targeting Medicaid Super-Utilizers to Decrease 
Costs and Improve Quality, clarifying how care delivery models such as integrated care 
models can help states and Medicaid providers to meet the complex needs of the highest 
utilizers of acute care in Medicaid populations.59 Furthermore, integrated care approaches have 
been shown to improve health outcomes for individuals with behavioral health conditions. The 
Medicaid Innovation Accelerator Program (IAP) provides materials and resources on physical 
and mental health integration here.  
States typically use a per member per month (PMPM) payment model, with or without quality 
or cost incentives, in PCMH models, while they use shared savings and/or shared risk models, 
with quality requirements and/or incentives, to create a financial incentive for providers to 
                                                            
56 The information presented is not necessarily a complete list of all other opportunities to address SDOH under 
Medicaid and CHIP. For example, it does not include a discussion of current or future Center for Medicare and 
Medicaid Innovation (CMMI) Models that test models that incorporate strategies to address SDOH, as these are 
time-limited interventions and may not be available to states that are not currently participating. It also does not 
include a discussion of the ways in which states can partner with other state or local entities to implement 
coordinated strategies to address SDOH, as an extensive review of these strategies was beyond the scope of this 
letter. CMS is, however, available to provide technical assistance to states that would like assistance related to these 
or other topics. 
57 https://www.medicaid.gov/federal-policy-guidance/downloads/cib-07-24-2013.pdf  
58 Centers for Medicare & Medicaid Services. Integrated Care Models. July 10, 2012. Available at 
https://www.medicaid.gov/federal-policy-guidance/downloads/SMD-12-001.pdf; Centers for Medicare & Medicaid 
Services. Policy Considerations for Integrated Care Models. July 10, 2012. Available at 
https://www.medicaid.gov/federal-policy-guidance/downloads/smd-12-002.pdf.  
59 Centers for Medicare & Medicaid Services. Targeting Medicaid Super-Utilizers to Decrease Costs and Improve 
Quality. July 24, 2013. Available at https://www.medicaid.gov/federal-policy-guidance/downloads/cib-07-24-
2013.pdf.  
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deliver value over volume in ACO models. In some models, ACOs can also receive a PMPM 
payment to provide services and accept full financial risk for the health of their assigned or 
attributed population. CMS allows states considerable flexibility in structuring payment 
mechanisms for PCMH, ACO, and ACO-like models and encourages states to move from 
volume-based FFS reimbursement to integrated care models with financial incentives to 
improve beneficiary health outcomes. 
State Example: Under Rhode Islands Medicaid Managed Care Organizations sub-contract with 
Accountable Entities (which are integrated provider organizations responsible for the total cost 
of care and healthcare quality and outcomes of an attributed population), Accountable Entities 
must demonstrate the capacity to address SDOH, and they must identify three key domains of 
social need for each population that will advance the states three identified priority areas: 
housing insecurity, food insecurity, and safety and domestic violence.60 
2.  CHIP Health Services Initiatives (HSI) 
Description: States have the option under title XXI to develop state-designed HSIs to improve 
the health of low-income children. HSIs are permitted under section 2105(a)(1)(D)(ii) of the Act 
and are defined in the regulations at 42 CFR  457.10. Both direct services and public health 
initiatives are permitted under the statute and regulations. An HSI must directly improve the 
health of low-income children61 less than 19 years of age who are eligible for CHIP and/or 
Medicaid, but may serve children regardless of income. In addition, to the extent possible, the 
state should use its efforts through an HSI to enroll eligible but unenrolled children in Medicaid 
or CHIP. 
States finance the non-federal portion of HSI expenditures, and the federal portion is funded 
through a states available CHIP allotment for a fiscal year, as determined under section 2104 of 
the Act. HSI expenditures (including administration of the HSI itself) are subject to a cap that 
also applies to administrative expenses. Under section 2105(c)(2)(A) of the Act, claims for HSIs 
and administrative expenses together cannot exceed 10 percent of the total amount of title XXI 
funds claimed by the state each quarter. Within the 10 percent limit, states must fund costs 
associated with administration of the CHIP state plan first; any funds left over may be used for 
an HSI, subject to the 10 percent cap. In addition, states must assure in the CHIP state plan that 
they will not supplant or match CHIP federal funds with other federal funds, nor allow other 
federal funds to supplant or match CHIP federal funds. States should be able to demonstrate that 
they have a process for coordinating with other federal agencies and other federal funds.  
How CHIP Health Services Initiatives Can Address SDOH: Many of the SDOH described in this 
letter have been or could be addressed through CHIP HSIs. For example, states have used HSIs 
for lead abatement projects in the homes of Medicaid and CHIP eligible children, home visits 
and environmental modifications (e.g., high-efficiency particulate air filters) to reduce asthma 
triggers, emergency food relief for families, and youth violence prevention programs in schools 
and community-based organizations.  
                                                            
60 RIte Care Core MCO Contract Sections 1.127 and 2.01.0 
61 As defined in 42 CFR Section 457.10, a low-income child means a child whose household income is at or below 
200 percent of the federal poverty line for the size of the family involved. 
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State Example: New Yorks CHIP HSI (SPA #23) provides emergency food relief and nutrition 
services to food-insecure children receiving services through the Hunger Prevention Nutrition 
Assistance Program. The goal of the program is to increase access to safe and nutritious food and 
related resources, to develop and provide nutrition and health education programs, and to 
empower people to increase their independence from emergency food assistance programs.  
3.  Administrative Procedures  
Description: Federal matching funds under Medicaid are available for costs incurred by the state 
for administrative activities that directly support efforts to identify and enroll potentially eligible 
individuals into Medicaid and that directly support the provision of medical services covered 
under the state Medicaid plan, when those activities are performed either directly by the state 
Medicaid agency or through contract or interagency agreement by another entity.  
How Administrative Procedures Can Address SDOH:  
  Collaboration with Community-Based Programs 
Medicaid and CHIP can be an integral part of a collaboration with other community-based 
programs, including state and local housing agencies, social service organizations, programs 
funded by the Administration for Community Living,62 programs funded by the Administration 
for Children and Families,63 public health agencies, faith-based organizations, and other 
community-based entities that support an individuals ability to live and receive needed care in 
their chosen community setting. The effectiveness of these activities is based on collaboration 
across the many entities that serve low-income individuals with SDOH needs. State Medicaid 
agencies employing individuals to perform partnership building, such as with No Wrong Door 
System (NWD)64 lead agencies in the aging and disability networks, and collaboration activities 
may claim the 50 percent administrative claiming rate for these activities if the costs can be 
recognizable as allowable Medicaid administrative costs and only to the extent that the state has 
documented that the costs directly benefit the Medicaid program and are claimed consistent with 
federal cost allocation principles. For example, to address the housing needs of beneficiaries, a 
state could claim administrative match for activities, such as:  
                                                            
62 These programs include Area Agencies on Aging, Centers for Independent Living, and Aging and Disability 
Resource Centers, funded under the Older Americans Act and the Rehabilitation Act.  See, Strategic Framework for 
Action, https://acl.gov/sites/default/files/programs/2020-
06/ACL_Strategic_Framework_for_Action_v1_%20June%202020_final_508_v2.pdf.  
63 For example, the Community-Based Child Abuse Prevention (CBCAP) program (authorized by title II of the 
Child Abuse Prevention and Treatment Act (as amended by Public Law 115-271)) awards funding annually to every 
state, the District of Columbia, and Puerto Rico to support community-based efforts to implement effective family 
support and child maltreatment activities. More information on CBCAP can be found at www.friendsnrc.org. 
64 The State Medicaid Agency is part of the states Aging & Disability Resource Center/No Wrong Door 
(ADRC/NWD) System. Person centered counselors, a key part of a states ADRC/NWD System, facilitate 
assessment and service plan develop using a process that takes into account the individuals full array of resources, 
service needs, and service availability See also NWD System Medicaid Claiming Guidance and Tools. See 
https://nwd.acl.gov/sustaining-a-nwd-system.html.  
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  Developing formal and informal agreements and working relationships with state and 
o
local housing and community development agencies to help beneficiaries access 
existing and new housing resources; 
  Participating and contributing to the planning processes of state and local housing and 
o
community development agencies by collecting (e.g., through beneficiary surveys or 
claims data) and providing demographic, housing needs, and other relevant data for 
Medicaid eligible populations; and 
  Coordinating with available housing locator systems or listings, and developing 
o
and/or coordinating data tracking systems to include information on the availability of 
affordable and accessible housing. 
Administrative activities are focused on coordination between various agencies to increase 
access to community-based resources, in contrast to activities focused on helping beneficiaries 
connect to community resources such as housing or employment opportunities.  
  Data Integration and Information Sharing 
Integrated information systems and data sharing capabilities at the state level are critical to 
supporting the evolving role of states in assuring appropriate, accessible, and cost-effective care 
for individuals with complex social needs. Medicaid offers a variety of pathways to support the 
design and development of statewide data and analytic infrastructure to address SDOH. 
Leveraging Medicaid resources to support data integration and data sharing can assist state 
health systems to identify individuals with SDOH needs and link them to appropriate medical 
and social support services.  
Enhanced federal Medicaid matching funds (at 90 percent) are available for state expenditures to 
design, develop, install, or enhance Mechanized Claims Processing and Informational Retrieval 
Systems and (at 75 percent) to operate such systems, under section 1903(a)(3)(A)(i) and (B) of 
the Act and 42 C.F.R. part 433, subpart C.  
States are reminded that 42 CFR  433.112(b)(16) and 433.116(c) require, as a condition of 
receiving enhanced federal matching funds under 1903(a)(3)(A)(i) and (B) of the Act, that the 
Medicaid mechanized claims processing and information retrieval system be interoperable with 
human services programs, health information exchanges, and public health agencies, as 
applicable.   
In considering the technical infrastructure needed to administer programs focused on addressing 
SDOH among Medicaid beneficiaries, states should leverage any existing state and federal 
investments in care coordination hubs, such as Area Agencies on Aging,65 which coordinate and 
offer services that can help older adults remain in their homes, or Aging and Disability Resource 
Centers,66 which provide objective information, advice, counseling, and assistance to help older 
adults, people with disabilities, and their family members, regardless of income, with accessing 
LTSS. These entities are already well established across the country and have existing 
relationships with a broad range of local community-based resources that can help to address 
SDOH among Medicaid beneficiaries. Medicaid investments in connections and interoperability 
                                                            
65 https://acl.gov/programs/aging-and-disability-networks/area-agencies-aging  
66 https://acl.gov/programs/aging-and-disability-networks/aging-and-disability-resource-centers  
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with such systems can be supported with enhanced federal financial participation, subject to all 
applicable federal requirements, including compliance with the cost allocation principles in 45 
C.F.R. part 75, subpart E. In developing these connections, states are reminded of previous 
guidance explaining that states could comply with certain conditions of receiving enhanced 
federal matching funds under section 1903(a)(3)(A)(i) and (B) of the Act by implementing Open 
Application Program Interfaces (APIs) in the Medicaid enterprise.67 Additionally, pursuant to 42 
CFR 433.112(b)(12), as a condition of receiving enhanced federal matching funds under section 
1903(a)(3)(A)(i) and (B) of the Act, states must ensure alignment of their mechanized claims 
processing and information retrieval system with, and incorporation of, industry standards 
adopted by the Office of the National Coordinator for Health Information Technology in 
accordance with 45 CFR part 170, subpart B. CMS also encourages states to review the 
Interoperability Standards Advisory (ISA) published by the Office of the National Coordinator, 
which includes standards for representing food insecurity, housing insecurity, transportation 
insecurity, and other social data.68 Similarly, states are encouraged to review and participate in 
the ongoing work of the U.S. Department of Health and Human Services (HHS) supported 
Gravity Project69 which convenes developers and users of SDOH data in efforts to find 
consensus for future national standards.    
States should keep in mind that appropriate and effective investments in state health information 
technology (health IT) can be an important component of a states SDOH activities and strategy, 
and can be particularly helpful with regard to facilitating data integration and information 
sharing between the state and providers.  
  Outreach and Enrollment 
One way to efficiently connect individuals who are eligible for Medicaid or CHIP to other 
benefits that can address SDOH, such as the Supplemental Nutrition Assistance Program 
(SNAP), is by implementing multi-benefit applications. These applications may provide a 
streamlined opportunity to connect a beneficiary to multiple state benefits, thereby enhancing 
access to these benefits and increasing awareness of other benefit programs. Multi-benefit 
applications, in accordance with 42 CFR  435.907, may be used as an alternative Medicaid 
application so long as the application collects sufficient information to make a modified adjusted 
gross income (MAGI)-based determination and applicants are not required to answer questions 
not needed to make a determination for health coverage if they are not applying for any other 
benefit programs.70   
States can also use various enrollment strategies71 to make it easier for eligible individuals to 
enroll in Medicaid and CHIP coverage, including presumptive eligibility, Express Lane 
eligibility, continuous eligibility for children, and facilitating access to covered Medicaid 
                                                            
67 https://www.medicaid.gov/federal-policy-guidance/downloads/smd16010.pdf  
68 https://www.healthit.gov/isa/social-psychological-and-behavioral-data  
69 https://www.hl7.org/gravity/  
70 Guidance regarding Medicaid application development is located at 
https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/state-alt-app-guidance-6-18-
2013.pdf. 
71 For additional information on these and other enrollment strategies, see 
https://www.medicaid.gov/medicaid/enrollment-strategies/index.html.  
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services for eligible individuals prior to and after the period of time spent in a correctional 
facility: 
  Presumptive eligibility is a strategy that states employ to facilitate enrollment of 
o
individuals who are likely eligible for Medicaid or CHIP to access services without 
having to wait for their full application to be processed. States may authorize 
"qualified entities"  health care providers, community-based organizations, hospitals 
and schools, among others  to screen for Medicaid and CHIP eligibility and 
immediately enroll eligible individuals.  
  States may rely on eligibility information from "Express Lane" agency programs to 
o
streamline and simplify enrollment and renewal in Medicaid and CHIP. Express Lane 
agencies may include SNAP, School Lunch programs, Temporary Assistance for 
Needy Families (TANF), Head Start, and the Women, Infant, and Children's program 
(WIC), among others. States can also use state income tax data to determine Medicaid 
and CHIP eligibility for children.  
  States may provide children with 12 months of continuous coverage through 
o
Medicaid and CHIP, even if the family's income changes during the year. 
Guaranteeing ongoing coverage ensures that children receive appropriate care, and 
helps doctors develop relationships with children and their families. This option 
eliminates cycling on and off of coverage during the year. This also reduces state time 
and money that would be spent on unnecessary paperwork and preventable care 
needs. 
  The state Medicaid agency must accept applications from inmates to enroll in 
o
Medicaid or renew Medicaid enrollment during the time of their incarceration. If the 
individual meets all applicable Medicaid eligibility requirements, the state must enroll 
or renew the enrollment of the individual effective before, during, and after the period 
of time spent in the correctional facility. Once enrolled, however, the state may place 
the inmate in a suspended eligibility status during the period of incarceration, or it 
may suspend coverage.72 
4.  Medicare Savings Programs (MSPs) 
Description: Low-income Medicaid beneficiaries who are also enrolled in Medicare can qualify 
for Medicaid coverage of Medicare Part B premiums73 through the state-administered Medicare 
Saving Programs (MSPs).  
How Medicare Savings Programs Can Address SDOH: For many individuals who qualify, 
enrollment in a Medicare Savings Program expands their effective income by 10% or more  
income that can be used to buy food, access transportation, and stabilize housing. As such, MSPs 
functionally address SDOH by giving beneficiaries more control over how they use their 
resources to address their needs. However, in many states, enrollment of eligible Medicare 
beneficiaries in MSPs is low.74 As described in SMDL # 18-012,75 states have opportunities to 
                                                            
72 https://www.medicaid.gov/sites/default/files/Federal-Policy-Guidance/Downloads/sho16007.pdf  
73 https://www.cms.gov/newsroom/fact-sheets/2020-medicare-parts-b-premiums-and-deductibles 
74 https://www.macpac.gov/publication/medicare-savings-programs-new-estimates-continue-to-show-many-eligible-
individuals-not-enrolled/  
75 https://www.medicaid.gov/federal-policy-guidance/downloads/smd18012.pdf 
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streamline eligibility determination and enrollment into MSPs in ways that would reduce 
administrative burden and could improve the economic security of millions of Medicare 
beneficiaries. 
5.  Money Follows the Person Demonstration 
Description: The Money Follows the Person demonstration, first authorized by Congress as part 
of the Deficit Reduction Act in 2005 and since extended several times, is a long-standing grant-
funded initiative designed to shift Medicaids LTSS spending from institutional care to HCBS. 
Program goals include: increasing the use of HCBS and reducing the use of institutionally-based 
services; eliminating barriers in state law, state Medicaid plans, and state budgets that restrict the 
use of Medicaid funds to let people receive LTSS in the settings of their choice; strengthening 
the ability of Medicaid programs to provide HCBS to people who choose to transition out of 
institutions; and putting procedures in place to provide quality assurance and improvement of 
HCBS.  
How Can the Money Follows the Person Demonstration Address SDOH: Money Follows the 
Person provides critical tools to address gaps in the availability of community services for 
Medicaid-eligible individuals with disabilities and older adults. For example, Money Follows the 
Person grantees have built partnerships with housing agencies to increase the supply of housing 
options and resources, established community transition programs, and piloted the use of new 
services and supports (e.g., tenancy supports services, paying for one-time transition costs such 
as security deposits) to determine if they help to promote community living. 
Closing 
CMS remains committed to partnering with states to address beneficiaries SDOH through the 
appropriate use of the Medicaid and CHIP programs. When used in accordance with statutory 
and regulatory requirements, Medicaid and CHIP can be effective tools to lower health care 
costs, improve health outcomes, and increase the cost-effectiveness of health care services and 
interventions for Medicaid and CHIP beneficiaries. CMS encourages states to pursue innovative 
payment and delivery system approaches, along with strong quality oversight and evaluation 
strategies, to achieve these goals. If you have questions about this guidance, please contact 
Jennifer Bowdoin, Director of the Division of Community Systems Transformation in the 
Disabled and Elderly Health Programs Group at jennifer.bowdoin@cms.hhs.gov. 
 
Sincerely, 
 
 
 
            Anne Marie Costello 
            Acting Deputy Administrator and Director 
               
 
Enclosure
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incorporated into a contract.  This document is intended only to provide clarity to the public regarding existing requirements under the law.  Page 37  State Health Official 
  
Appendix A: Key Federal Authorities that Can Address Social Determinants of Health (SDOH) 
 
  Examples of How the Authority Can 
Federal Medicaid Authority  Who Is Eligible  Address SDOH 
Rehabilitative  Individuals who meet any state-defined medical  Regain skills and functioning to address 
Services Benefit  necessity criteria for covered services.  SDOH; peer supports to assist with linking 
(section  to social supports and services. 
1905(a)(13) and 42 
CFR  440.130(d)) 
Rural Health  Individuals who meet any state-defined medical  Screen individuals to identify social needs, 
Clinics (RHCs)/  necessity criteria.  This is a mandatory benefit for  collect and analyze SDOH data to inform 
Federally  the categorically needy.  interventions, and co-locate social services, 
Qualified Health  as long as these activities are delivered as 
Section  Centers (FQHCs)  part of a Medicaid-covered RHC/FQHC 
1905(a)  (section  service.  
State  1905(a)(2)(B), 
Plan  1905(a)(2)(C), and 
Authority  1905(l)(1) and (2) 
Case  Individuals who meet any state-defined medical  Linking/coordinating /referring to medical, 
Management/  necessity criteria. States can provide targeted case  educational, social, and other services; 
Targeted Case  management services to specific populations and  comprehensive care planning.  
Management  limit the services geographically.   
(sections 
1905(a)(19) and 
1915(g) and 42 
CFR  440.169 
and 441.18) 
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provide clarity to the public regarding existing requirements under the law.  Page 38  State Health Official 
  
Appendix A: Key Federal Authorities that Can Address Social Determinants of Health (SDOH) 
 
  Examples of How the Authority Can 
Federal Medicaid Authority  Who Is Eligible  Address SDOH 
Individuals who meet the states institutional level  Service coordination or case management, 
of care (meaning the individual could be admitted to  home accessibility adaptations, one-time 
a nursing facility, hospital, ICF/IID); need for  community transition costs, housing and 
services must be based on an assessed need and  tenancy supports, habilitation services, 
identified in a state-approved service plan. States  non-medical transportation, home 
Section 1915(c)  can target waivers to specific populations and limit  delivered meals, supported employment 
HCBS Waiver  waivers geographically.  services, assistive technologies to facilitate 
communication, other types of services 
that may assist in diverting individuals 
from institutional placement and 
supporting community living for eligible 
individuals.  
HCBS 
Individuals who are eligible for medical assistance  See section 1915(c) waivers. 
Options 
under the state plan, meet state-defined needs-based 
criteria, and reside in the community. Needs-based 
criteria are factors used to determine an individuals 
requirements for support that can only be 
ascertained for a given person through an 
Section 1915(i) 
individualized evaluation of need and may include 
HCBS State Plan 
but cannot only include state-defined risk factors, 
such as risk of or experiencing homelessness, risk of 
food insecurity for individuals with diabetes, or risk 
of social isolation for older adults with chronic 
conditions. Services must be offered state-wide, but 
states can target the services to specific populations.  
The contents of this document do not have the force and effect of law and are not meant to bind the public in any way, unless specifically incorporated into a contract.  This document is intended only to 
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Appendix A: Key Federal Authorities that Can Address Social Determinants of Health (SDOH) 
 
  Examples of How the Authority Can 
Federal Medicaid Authority  Who Is Eligible  Address SDOH 
Section 1915(j)  Individuals eligible for state plan personal care  Expenditures for goods and services, 
Optional Self- services or for a section 1915(c) waiver program.   supports, or supplies related to a need or 
Directed Personal  goal identified in the individuals state-
Assistance  approved person-centered service plan. 
Services 
Individuals who meet the states institutional level  Expenditures for transition costs (such as 
of care (meaning the individual could be admitted to  first months rent and utilities, bedding, 
a nursing facility, hospital, ICF/IID). Services must  and basic kitchen supplies) necessary for 
be offered state-wide.  an individual transitioning from an 
Section 1915(k)  institutional setting to a home and 
Community First  community-based setting; and expenditures 
Choice State Plan  relating to a need that increases an 
individuals independence or substitutes 
for human assistance, to the extent that 
Medicaid expenditures would otherwise be 
made for human assistance. 
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Appendix A: Key Federal Authorities that Can Address Social Determinants of Health (SDOH) 
 
  Examples of How the Authority Can 
Federal Medicaid Authority  Who Is Eligible  Address SDOH 
States have significant flexibility in how to define  Case management/care coordination; 
target populations for demonstration  tenancy supports; one-time transition costs; 
services/activities, which should be available based  non-medical transportation; home 
on individual assessments of need as defined by the  delivered meals; supported employment. 
state. States can target services geographically  States have flexibility to provide other 
and/or to populations meeting defined  state-defined direct services to address 
characteristics.  SDOH, subject to CMS approval.  
   
States can test incentives that provide a pathway to  Employment can help to lift low-income 
coverage for certain individuals who may not be  individuals and families out of poverty 
eligible for Medicaid through the state plan by  and, in doing so, address a broad range of 
requiring participation in work or other community  social needs that can impact health. As 
engagement as a requirement for Medicaid  discussed in SMDL 18-002, CMS supports 
eligibility or for receipt of additional Medicaid  states efforts to improve Medicaid 
Section 1115 Demonstration  benefits. This allows individuals to opt into  enrollee health and well-being through 
Medicaid coverage or receive enhanced benefits.   incentivizing work and community 
engagement among non-elderly, non-
pregnant adult Medicaid beneficiaries who 
are eligible for Medicaid on a basis other 
than disability.1 These measures may also 
enable states to stretch their resources 
further and enhance their ability to provide 
medical assistance to a broader range of 
persons in need, including by expanding 
the services (including those that address 
SDOH) and populations they cover, 
thereby maintaining the long-term fiscal 
sustainability of a states Medicaid 
program. 
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Appendix A: Key Federal Authorities that Can Address Social Determinants of Health (SDOH) 
 
  Examples of How the Authority Can 
Federal Medicaid Authority  Who Is Eligible  Address SDOH 
Beneficiaries who: (1) have two or more chronic  Comprehensive care management; care 
conditions; (2) have at least one chronic condition  coordination and health promotion; 
and are at risk of developing another; or (3) have at  comprehensive transitional care, including 
least one serious and persistent mental health  appropriate follow-up, from inpatient to 
condition. States can target eligibility for services  other settings; individual and family 
based on a beneficiarys chronic conditions, but are  support; referral to community and social 
not permitted to limit the benefit to specific age  support services, if relevant; and use of 
Section 1945 Health Home  groups. The population must include all  health information technology to link 
categorically needy individuals who meet the states  services, as feasible and appropriate. 
criteria (including those eligible based on receipt of 
services under a section 1915(c) home and 
community-based services waiver), and at state 
option may include individuals in any medically 
needy group or section 1115 demonstration 
population.   
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Appendix A: Key Federal Authorities that Can Address Social Determinants of Health (SDOH) 
 
  Examples of How the Authority Can 
Federal Medicaid Authority  Who Is Eligible  Address SDOH 
Depending on the authority used, examples 
include case management/care 
coordination; tenancy supports; one-time 
transition costs; non-emergency medical 
transportation; home-delivered meals; 
supported employment; other direct 
services to address SDOH. For those 
services the state has existing Medicaid 
authority to cover (e.g. state plan), the state 
can incorporate those as contractual 
Managed Care Programs  Individuals who meet any state-defined medical  requirements on the plan and incorporate 
(Sections 1115(a), 1932(a),  necessity criteria for the services covered under the  into the actuarially sound capitation rates. 
1915(a), and 1915(b))  contract.   Otherwise, states can explore coverage as 
an in-lieu of service or plans may 
voluntarily provide as a value-added 
service, provided all regulatory 
requirements are met. States can also 
leverage managed care quality 
requirements, including Quality Strategies, 
quality assessment and performance 
improvement (QAPI) requirements, and 
external quality review to incentivize 
managed care plans to address SDOH. 
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provide clarity to the public regarding existing requirements under the law.  Page 43  State Health Official 
  
Appendix A: Key Federal Authorities that Can Address Social Determinants of Health (SDOH) 
 
  Examples of How the Authority Can 
Federal Medicaid Authority  Who Is Eligible  Address SDOH 
Comprehensive care coordination and 
management, meals and nutritional 
Program of All-Inclusive Care  Individuals who: are age 55 or older; live in the 
counseling, social work services, 
for the Elderly (PACE)  service area of a PACE organization; require a 
transportation, and all other services 
(sections 1894 and 1934 and 42  nursing facility level of care; and are able to live 
determined necessary by the enrollees 
CFR part 460)  safely in the community. 
interdisciplinary team to improve and 
maintain an individuals health. 
 
 
   
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provide clarity to the public regarding existing requirements under the law.  Page 44  State Health Official 
  
Appendix B: Examples of Services and Supports that Can Be Covered under Medicaid and CHIP to Address SDOH76 
 
Federal Authorities 
that May Be Able to 
Services and  Potential Target  Cover the Services 
Supports  Description  Illustrative Examples  Populations  and Supports77,78 
Housing-Related Services and Supports     
 
Home  Temporary or permanent  Depending on unique structural  Children with  Section 1905(a)(7) 
Accessibility  changes to a homes  characteristics, temporary  special health  home health benefit; 
Modifications  interior or exterior  modifications could include the  care needs, adults  section 1915(c) HCBS 
structure to improve  installation of a wheelchair ramp  with disabilities,  waiver; section 1915(i) 
individuals ability to  outside the home or grab bars in the  older adults  HCBS state plan; 
remain in their homes  shower. Permanent modifications  section 1915(j) optional 
and community, if they  could include enlarging a doorway  self-directed personal 
choose.   to allow wheelchair passage.  assistance services; 
section 1115 
demonstration; 
managed care 
programs; PACE under 
sections 1894 and 
1934; CHIP HSIs. 
                                                            
76 The services and supports listed in this table align with those discussed in the section on Services and Supports that Can Be Covered under Medicaid and 
CHIP to Address SDOH and do not necessarily include all opportunities available under Medicaid and CHIP to address SDOH. See Opportunities to Address 
SDOH under Medicaid and CHIP Authorities for information on additional opportunities. 
77 See Opportunities to Address SDOH under Medicaid and CHIP Authorities and Appendix A for more information on the eligible populations and other 
information on what is allowable related to the services and supports under each applicable federal authority. 
78 Please note that all of the illustrative examples may not be coverable under all of the authorities listed in each row of this table.   
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provide clarity to the public regarding existing requirements under the law.  Page 45  State Health Official 
  
Appendix B: Examples of Services and Supports that Can Be Covered under Medicaid and CHIP to Address SDOH76 
 
Federal Authorities 
that May Be Able to 
Services and  Potential Target  Cover the Services 
Supports  Description  Illustrative Examples  Populations  and Supports77,78 
One-Time  Help to facilitate  Security deposits, utility activation  Children with  Section 1915(c) HCBS 
Community  individuals transitioning  fees, and essential household  special health  waiver; section 1915(i) 
Transition Costs  from an institutional or  furnishings.  care needs, adults  HCBS state plan; 
another provider- with disabilities,  section 1915(k) 
operated congregate  older adults  Community First 
living arrangement (such  Choice; section 1115 
as a group home or  demonstration; 
homeless shelter) to a  managed care 
community-based living  programs; PACE under 
arrangement in a private  sections 1894 and 
residence  1934. 
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provide clarity to the public regarding existing requirements under the law.  Page 46  State Health Official 
  
Appendix B: Examples of Services and Supports that Can Be Covered under Medicaid and CHIP to Address SDOH76 
 
Federal Authorities 
that May Be Able to 
Services and  Potential Target  Cover the Services 
Supports  Description  Illustrative Examples  Populations  and Supports77,78 
Housing and  Assist individuals to  Conducting an individualized  Adults with  Section 1905(a)(19) 
Tenancy  prepare for and transition  screening and community  disabilities, older  case management 
Supports: Pre- to housing  integration assessment that  adults  benefit; section 1915(c) 
tenancy Services  identifies the individuals  HCBS waiver; section 
preferences and any barriers to  1915(i) HCBS state 
community residence; developing a  plan; section 1115 
community integration plan based  demonstration; 
on the community integration  managed care 
assessment; assisting with the  programs; PACE under 
housing search and application  sections 1894 and 
process, consistent with the  1934. 
community integration assessment   
and plan; ensuring that housing   
units are safe and ready for move-
in; assisting in arranging for and 
supporting the details of move-in; 
and connecting the individual to 
community-based resources that 
provide assistance with activities 
such as securing required 
documents and fees needed to 
apply for housing and making any 
reasonable accommodation 
request(s) related to the 
individuals disability to a housing 
provider. 
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provide clarity to the public regarding existing requirements under the law.  Page 47  State Health Official 
  
Appendix B: Examples of Services and Supports that Can Be Covered under Medicaid and CHIP to Address SDOH76 
 
Federal Authorities 
that May Be Able to 
Services and  Potential Target  Cover the Services 
Supports  Description  Illustrative Examples  Populations  and Supports77,78 
Housing and  Tenancy sustaining  Providing early identification and  Adults with  Section 1915(c) HCBS 
Tenancy  supports are provided  intervention for any behaviors that  disabilities, older  waiver; section 1915(i) 
Supports:  once an individual is  may jeopardize housing; education  adults  HCBS state plan; 
Tenancy  housed to help the person  or training on the role, rights, and  section 1115 
Sustaining  achieve and maintain  responsibilities of the tenant and  demonstration; 
Services  housing stability  landlord; connecting the individual  managed care 
to community resources to  programs; CHIP HSIs; 
maintain housing stability; and  PACE under sections 
individualized case management  1894 and 1934. 
and care coordination (e.g., 
connecting the individual with 
needed Medicaid and non-
Medicaid service providers and 
resources) in accordance with the 
person-centered care plan and the 
individual housing support plan. 
Non-Medical  Can enable individuals  Transportation to grocery stores  Children with  Section 1915(c) HCBS 
Transportation  receiving home and  and places of employment.  special health  waiver; section 1915(i) 
community-based  care needs, adults  HCBS state plan; 
services to gain access to  with disabilities,  section 1115 
HCBS, activities, and  older adults  demonstration; 
resources  managed care 
programs; PACE under 
sections 1894 and 
1934. 
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provide clarity to the public regarding existing requirements under the law.  Page 48  State Health Official 
  
Appendix B: Examples of Services and Supports that Can Be Covered under Medicaid and CHIP to Address SDOH76 
 
Federal Authorities 
that May Be Able to 
Services and  Potential Target  Cover the Services 
Supports  Description  Illustrative Examples  Populations  and Supports77,78 
Home-Delivered  Help to address the  No more than two meals per day  Adults with  Section 1915(c) HCBS 
Meals   nutritional needs of older  provided to older adults in a states  disabilities, older  waiver; section 1915(i) 
adults and individuals  HCBS waiver program.  adults  HCBS state plan; 
with disabilities who  section 1115 
need Medicaid-funded  demonstration; 
home and community- managed care 
based services (HCBS)  programs; PACE under 
sections 1894 and 
1934. 
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provide clarity to the public regarding existing requirements under the law.  Page 49  State Health Official 
  
Appendix B: Examples of Services and Supports that Can Be Covered under Medicaid and CHIP to Address SDOH76 
 
Federal Authorities 
that May Be Able to 
Services and  Potential Target  Cover the Services 
Supports  Description  Illustrative Examples  Populations  and Supports77,78 
Educational  Help children with  Personal care services, physical or  Children with  Various section 1905(a) 
Services  disabilities achieve their  occupational therapy services  special health  state plan benefits 
educational goals. Under  provided to children by qualified  care needs, young  (such as the 
the Individuals with  providers in a school setting.  adults with  rehabilitative services 
Disabilities Education  disabilities  benefit in section 
Act (IDEA), children  1905(a)(13)); section 
with disabilities are  1915(c) HCBS waiver 
eligible to receive  (services may not 
educational and related  duplicate those required 
services that will help  under IDEA); section 
them achieve their  1915(i) state plan 
educational goals, as  (services may not 
documented in the  duplicate those required 
childs individualized  under IDEA). 
education plan (IEP) or, 
for infants and toddlers 
(children under age 
three), the individualized 
family service plan 
(IFSP). 
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provide clarity to the public regarding existing requirements under the law.  Page 50  State Health Official 
  
Appendix B: Examples of Services and Supports that Can Be Covered under Medicaid and CHIP to Address SDOH76 
 
Federal Authorities 
that May Be Able to 
Services and  Potential Target  Cover the Services 
Supports  Description  Illustrative Examples  Populations  and Supports77,78 
Supported  Ongoing supports to  Customized employment, job  Adolescents,  Section 1915(c) HCBS 
Employment  individuals who, because  coaching to provide supports and  working age  waiver; section 1915(i) 
of their disabilities, need  services not specifically related to  adults with  HCBS state plan; 
intensive on-going  job skill training that enable the  disabilities  section 1115 
support to obtain and  individual to successfully integrate  demonstration; 
maintain a job in  into the job setting (e.g., instruction  managed care 
competitive or  on how to ameliorate the impacts of  programs. 
customized employment,  a mental illness on the job), and 
or self-employment, in an  personal care services to provide 
integrated work setting  assistance at an individuals place 
of employment. 
Community  Medicaid-funded HCBS  Instruction on how to utilize public  Children with  Section 1915(c) HCBS 
Integration and  provide opportunities for  transportation, companion services  special health  waiver; section 1915(i) 
Social Supports  Medicaid beneficiaries to  to accompany an individual with  care needs, adults  HCBS state plan; 
choose to receive  disabilities into places in the  with disabilities,  section 1915(k); section 
services in their home or  community.  older adults  1115 demonstration; 
community rather than  managed care 
institutions  programs; PACE under 
sections 1894 and 
1934. 
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provide clarity to the public regarding existing requirements under the law.  Page 51  State Health Official 
  
Appendix B: Examples of Services and Supports that Can Be Covered under Medicaid and CHIP to Address SDOH76 
 
Federal Authorities 
that May Be Able to 
Services and  Potential Target  Cover the Services 
Supports  Description  Illustrative Examples  Populations  and Supports77,78 
Case  Assists eligible  Assessment and linkages to needed  Children with  Section 1905(a)(19) 
Management  individuals to gain access  services provided to individuals  special health  state plan case 
to needed medical,  who are homeless or at risk of  care needs, adults  management benefit; 
social, educational, and  homelessness.  with disabilities,  section 1915(c) HCBS 
other services  older adults  waiver; section 1915(i) 
HCBS state plan; 
section 1915(k); section 
1115 demonstration; 
section 1945 health 
home; managed care 
programs; PACE under 
sections 1894 and 
1934; CHIP HSIs. 
 
 
  
The contents of this document do not have the force and effect of law and are not meant to bind the public in any way, unless specifically incorporated into a contract.  This document is intended only to 
provide clarity to the public regarding existing requirements under the law.