CMS Issues Updated Guidance on Medicaid Managed Care Programs

On January 4, the Centers for Medicare and Medicaid Services (CMS) published a letter to State Medicaid Directors regarding Additional Guidance on Use of In Lieu of Services and Settings in Medicaid Managed Care. The letter provides guidance for states utilizing managed care programs to address unmet health-related social needs (e.g., housing and food security) through the use of a service or setting provided to enrollees in lieu of a service or setting (ILOS) covered under the state plan. An example of an ILOS is mental health or substance use disorder treatment provided during a short-term stay in an institution.

This guidance builds on CMS’s January 7, 2021 letter that describes opportunities to better address social determinants of health. The new guidance provides that ILOSs must: advance the objectives of the Medicaid program, be cost effective, be provided in a manner that preserves enrollee rights and protections, be subject to oversight, be medically appropriate, and be subject to retrospective evaluation if applicable.