CMS Letter: Additional guidance on use of In Lieu of Services and Settings in Medicaid Managed Care

This guidance addresses an innovative option states may consider employing in Medicaid managed care programs to reduce health disparities and address unmet health-related social needs (HRSNs),1 such as housing instability and nutrition insecurity, through the use of a service or setting that is provided to an enrollee in lieu of a service or setting (ILOS) covered under the state plan.2 On January 7, 2021, the Centers for Medicare & Medicaid Services (CMS) published a State Health Official (SHO) letter (SHO#21-001)3 that described opportunities under Medicaid and the Children’s Health Insurance Program (CHIP) to better address social determinants of health (SDOH). Since CMS published that SHO, states have been working to implement changes in their Medicaid managed care programs to meet the HRSNs of Medicaid enrollees more effectively, including partnering with community-based organizations that routinely address HRSN. CMS is publishing this guidance to clarify an existing option that states can pursue to enhance and expand these efforts through the use of ILOSs.