How the Pandemic Continues to Shape Medicaid Priorities: Results from an Annual Medicaid Budget Survey for State Fiscal Years 2022 and 2023

Benefits

Context

State Medicaid programs are statutorily required to cover a core set of “mandatory” benefits, but may choose whether to cover a broad range of optional benefits. States may apply reasonable service limits based on medical necessity or to control utilization, but once covered, services must be “sufficient in amount, duration and scope to reasonably achieve their purpose.”¹ State benefit actions are often influenced by prevailing economic conditions: states are more likely to adopt restrictions during downturns and expand or restore benefits as conditions improve. However, during the COVID-19 pandemic, despite an early and deep economic downturn, additional federal funds and the goal to maintain access to needed services resulted in states using Medicaid emergency authorities to temporarily expand or enhance benefits. Similarly, in 2020 and 2021, permanent (i.e., non-emergency) benefit expansions continued to far outweigh benefit restrictions, consistent with prior years.

Recent trends in state changes to Medicaid benefits (both prior to and during the COVID-19 pandemic) include behavioral health service expansions as well as efforts to advance maternal and infant health. New federal legislation and requirements can also affect state Medicaid benefits; for example:

• The American Rescue Plan Act of 2021 included expanded federal funding for home and community-based services (HCBS).²
• The Bipartisan Safer Communities Act of 2022 aimed to improve and expand provision of the Medicaid EPSDT benefit and school-based Medicaid services by providing updated guidance for states. The Act also allocated grant funding for states to expand school-based Medicaid services.³
• The Inflation Reduction Act of 2022 requires Medicaid coverage of all adult vaccines recommended by the Advisory Committee on Immunization Practices (ACIP) without cost-sharing, beginning in 2023.⁴
• In July 2022, the federally mandated crisis number, 988, became available to all landline and cell phone users, per the National Suicide Hotline Designation Act of 2020.⁵ 988 provides a single three-digit number to access a network of over 200 local and state funded crisis centers. State Medicaid programs may participate in financing of services provided through 988.
• The Consolidated Appropriations Act of 2021 requires states to cover routine patient costs associated with participation in qualifying clinical trials, beginning January 1, 2022.⁶

This section provides information about:

• Non-emergency benefit changes
• Clinical trial participation coverage
• In lieu of services

Findings

Non-Emergency Benefit Changes

We asked states about non-emergency benefit changes implemented during FY 2022 or planned for FY 2023, excluding telehealth, pharmacy, and temporary changes adopted via emergency authorities in response to the COVID-19 pandemic but including emergency changes that have or will become permanent (i.e., transitioned to traditional, non-emergency authorities). Benefit changes may be planned at the direction of state legislatures and may require CMS approval.

The number of states reporting new benefits and benefit enhancements greatly outpaces the number of states reporting benefit cuts and limitations (Figure 7 and Table 2). Thirty-three states reported new or enhanced benefits in FY 2022 and 34 states are adding or enhancing benefits in FY 2023.⁷ Two states reported benefit cuts or limitations in FY 2022 and no states reported cuts or limitations in FY 2023. We provide additional details about several benefit categories below (Exhibit 4). In addition to these benefit categories, several states reported updated and expanded benefits in HCBS waivers (which may be reflected in other categories below); such expansions may take advantage of enhanced ARPA HCBS funding.

Behavioral Health Services
States continue to focus on behavioral health through the introduction of new and expanded mental health and/or substance use disorder (SUD) services in FY 2022 and FY 2023. States reported service expansions across the behavioral health care continuum, including institutional, intensive, outpatient, home and community-based, and crisis services (see Exhibit 5 for state examples). Many of these benefit expansions are targeted to specific populations, including notable expansions and programming for youth. A number of states reported benefits aimed to improve the integration of physical and behavioral health care, including adoption of Certified Community Behavioral Health Clinics (CCBHCs)⁸ or the Collaborative Care model (CoCM).⁹ State approaches to addressing SUD outcomes include coverage of opioid treatment programs, peer supports, and enhanced care management. At least ten states are expanding coverage of crisis services, which aim to connect Medicaid enrollees experiencing behavioral health crises to appropriate community-based care.¹⁰ These include mobile crisis response services and crisis stabilization centers. In many states, crisis service expansions require coordination with state behavioral health agencies, including related to the implementation and funding of the new national 988 crisis number.

Pregnancy and Postpartum Services
States continue to expand and transform care for pregnant and postpartum individuals to improve maternal health and birth outcomes. In April 2022, a temporary option to extend Medicaid postpartum coverage from 60 days to 12 months took effect. This option, included in the American Rescue Plan Act, is part of broader federal and state efforts to improve maternal and infant health outcomes and address racial/ethnic health disparities. Alongside this eligibility change, some states are enhancing Medicaid services available during the postpartum period. Additionally, nine states are adding coverage of services provided by doulas (California, District of Columbia, Illinois, Maryland, Michigan, New Mexico, Nevada, Rhode Island, and Virginia). Doulas are trained professionals who provide holistic support to individuals before, during, and shortly after childbirth. Seven states are investing in the implementation or expansion of home visiting programs to teach positive parenting and other skills aimed at keeping children healthy and promoting self-sufficiency (Alabama, Delaware, Illinois, Maryland, Ohio, Oregon, and Vermont). Other examples of expanded pregnancy and postpartum services include:

• In FY 2023, Illinois plans to expand services available during the postpartum period to include those provided by certified lactation counselors and consultants, public health nurses, and medical caseworkers.
• In FY 2022, Washington implemented a Newborn Administrative Day Rate to cover hospital stays up to five days for a postpartum parent who has been medically discharged, but whose newborn remains inpatient due to monitoring for neonatal abstinence syndrome (NAS) or neonatal opioid withdrawal syndrome (NOWS). The rate will provide daily reimbursement to help offset hospital costs of providing these postpartum parents with room and board and limited additional services centered on the care and well-being of the newborn, including medications to treat SUD.¹¹
• In FY 2023, West Virginia plans to implement its Drug Free Moms and Babies (DFMB) Program (previously a pilot project), an integrated comprehensive medical and behavioral health program for pregnant and postpartum individuals with SUD that provides a targeted case management benefit.¹²
• In FY 2023, Maine and Maryland are expanding their Maternal Opioid Misuse (MOM) Models, a Center for Medicare and Medicaid Innovation (CMMI) initiative for pregnant and postpartum women with opioid use disorder.

Preventive Services
Sixteen states reported expansions of preventive care in FY 2022 or FY 2023. Preventive care—including immunizations and regular screenings that permit early detection, treatment, and improved management of chronic conditions—improves the prospects for better health outcomes. States must cover certain preventive services for adults newly eligible under the ACA’s Medicaid expansion, but this coverage is not required for “traditional” Medicaid adults. (In contrast, states are required to provide comprehensive preventive care to children through the EPSDT benefit.) States reported enhancing a range of preventive benefits, especially for adult enrollees, in FY 2022 and FY 2023. For example, seven states are expanding services to prevent and/or manage diabetes, such as continuous glucose monitoring.¹³ Other reported preventive benefit enhancements relate to asthma services, vaccinations, and genetic testing and/or counseling.

Services Targeting Social Determinants of Health
Many states reported new and expanded benefits related to enrollees’ social needs. Social determinants of health (SDOH) are the conditions in which people are born, grow, live, work, and age that shape health; these include but are not limited to housing, food, education, employment, healthy behaviors, transportation, and personal safety. Generally, states have not been able to use federal Medicaid funds to pay the direct costs of non-medical services like housing and food.¹⁴ However, within Medicaid, states can use a range of state plan and waiver authorities to add certain non-clinical services to the Medicaid benefit package. Historically, non-medical services have been included as part of Medicaid HCBS programs for people who need help with self-care or household activities as a result of disability or chronic illness, and states have more limited flexibility to address SDOH outside of Medicaid HCBS authorities. CMS released guidance for states about opportunities to use Medicaid and CHIP to address SDOH in January 2021. In December 2021, CMS approved a California proposal to use “in lieu of” services (ILOS) to offer a menu of health-related services through managed care, and further guidance from CMS on the ILOS regulation is expected (also see ILOS section below).

In FY 2022 and/or 2023, twelve states reported new or expanded housing-related supports, as well as other services and programs tailored for individuals experiencing homelessness or at risk of being homeless.¹⁵ Some states reported enhancing benefits that target the social needs of enrollees receiving HCBS, such as home-delivered meals or supported employment. Examples of expanded services targeting SDOH include:

• California’s CalAIM initiative, which launched in January 2022, seeks to take the state’s whole person care approach statewide, with a central focus on improving health and reducing health disparities and inequities. Under CalAIM, Medi-Cal managed care plans will provide Enhanced Care Management (ECM) and Community Supports to targeted high-need beneficiaries.¹⁶ The new ECM benefit includes care coordination and comprehensive care management services to address clinical, behavioral, and social needs. Community Supports will address social drivers of health; examples include housing navigation services, recuperative care (medical respite), short-term post hospitalization housing services (up to six months), environmental accessibility adaptations, medically tailored meals, and sobering centers (also see ILOS section below).¹⁷
• Recently approved Section 1115 waivers in Arizona, Massachusetts, and Oregon allow the states to provide evidence-based health-related social needs (HRSN) services to certain high-need enrollees, when clinically appropriate, to address food insecurity and/or housing instability. HRSN services vary by state and include housing supports (such as eviction prevention, security deposits, housing transition navigation services, and medically necessary home modifications); short-term post-transition rent/temporary housing for up to six months (in Arizona and Oregon only); case management and linkages to other benefit programs; and nutrition supports (such as nutrition counseling and education, time-limited food assistance, and medically tailored meals) (in Massachusetts and Oregon only). Enrollees must meet health and risk criteria (which vary by state) to be eligible for HRSN services. For example, target populations include homelessness or risk of homelessness, justice-involvement, and behavioral health needs/diagnoses.¹⁸
• In FY 2022, Connecticut implemented its Connecticut Housing Engagement and Support Services (CHESS) initiative that provides eligible enrollees with supportive housing benefits under Medicaid, coordinated with Medicaid services and non-Medicaid housing subsidies.¹⁹ Beginning July 1, 2022, Connecticut is also covering Community Violence Prevention Services to promote improved outcomes, prevent injury, reduce recidivism, and decrease the likelihood that victims of violence will commit violence themselves.²⁰
• If approved by CMS, in FY 2023 Wisconsin plans to establish a new Section 1915(i) HCBS eligibility group of adults with certain health conditions who are experiencing homelessness and will provide these enrollees with housing support services such as housing consultation, housing transition and sustaining supports, and relocation supports.²¹
• Two states (Oregon and Wisconsin) reported coverage for interpretation services for enrollees with limited English proficiency (LEP). All Medicaid providers are obligated to make language services available to those with LEP; states are permitted but not required to reimburse providers for the cost of these services. Both Oregon and Wisconsin are adding reimbursement for the cost of ensuring access to interpreters in conjunction with a Medicaid-covered service.

Dental Services
States aim to improve oral health by expanding covered dental benefits and extending coverage to new populations. Nine states are adding comprehensive adult dental coverage,²² while additional states report expanding specific dental services for adults. Several states expanded dental services for certain populations, including pregnant individuals or people with disabilities. For example, in FY 2023, Nevada proposes to offer a limited dental benefit to adults with diabetes to address their unmet oral health needs, improve health outcomes, and lower overall costs for a population at higher risk for periodontal disease.²³ A few states are adding or expanding coverage of fluoride, including three states that are adding coverage of Silver Diamine Fluoride (SDF).²⁴ SDF is a topical agent that can be used to halt the development of cavities in children and adults.²⁵

Just two states reported benefit restrictions in FY 2022 and no states reported such restrictions planned for FY 2023. Benefit restrictions reflect the elimination of a covered benefit, benefit caps, or the application of utilization controls such as prior authorization for existing benefits. In FY 2022, Montana eliminated its Nurse Advice Line and Oklahoma eliminated its behavioral health ACA Health Home initiative. In both states, however, public documents suggest enrollees will continue to have access to similar services. For example, Montana acknowledged increased availability of telehealth in its state plan amendment to eliminate its Nurse Advice Line.²⁶ In Oklahoma, the Health Home population will continue to receive integrated services provided by Community Mental Health Centers (CMHCs) and through Certified Community Behavioral Health (CCBH) service delivery, as well as other care coordination models, with most Health Home providers transitioning to the CCBH model.²⁷

Clinical Trial Participation Coverage

Historically, state Medicaid programs were not required to cover costs associated with participation in clinical trials, even if such costs were for services that Medicaid would ordinarily cover. However, as documented in a State Medicaid Director letter, the Consolidated Appropriations Act of 2021 requires states to cover routine patient costs associated with participation in qualifying clinical trials beginning January 1, 2022. These costs include any item or service (such as physician, laboratory, or medical imaging services) provided to the individual under the qualifying clinical trial that would otherwise be covered under the Medicaid state plan or Section 1115 waiver.²⁸

Most states reported coverage of routine patient costs associated with participation in qualifying clinical trials prior to the new federal requirement. Thirty-three states (of 47 responding) indicated that at least some of these costs were covered prior to the requirement’s effective date of January 1, 2022. About one-quarter of all responding states noted operational challenges and other concerns. These included having to expand the benefit to cover additional costs (e.g., transportation and/or out-of-state coverage), increased administrative burden (e.g., new provider attestation requirements and/or the 72-hour coverage determination timeframe), and regulatory efforts (e.g., legislation, rulemaking, and/or provider manual updates needed). A small number of states reported other challenges, including difficulty identifying eligible populations and provider education and outreach needed to ensure awareness.

In Lieu of Services

States use a combination of fee-for-service and managed care arrangements to deliver care to Medicaid beneficiaries, with many services increasingly being provided by managed care organizations (MCOs). Under federal Medicaid regulations, states may allow MCOs the option to offer services or settings that substitute for those that are covered under the state plan, so long as the substitute service is determined to be medically appropriate and cost-effective.²⁹ If an MCO opts to offer in lieu of services (ILOS), the services must be identified in the MCO contract and enrollees may not be required to use them.³⁰ In recent years, states have increasingly used MCO “in lieu of” authority to cover services provided to nonelderly adults in “institutions for mental disease” (IMDs) that otherwise would be ineligible for federal Medicaid funding. The 2018 SUPPORT Act codified the existing Medicaid managed care regulation allowing capitation payments to include IMD services up to 15 days per month using “in lieu of” authority.

Most states reported allowing MCOs to use “in lieu of” authority to cover certain services, especially behavioral health services and services to address SDOH. Thirty-four of 39 responding MCO states indicated permitting at least one ILOS as of July 1, 2021; nearly all of these states reported that the permitted ILOS included certain behavioral health services. By far, the most commonly cited ILOS was services provided to nonelderly adults in IMDs, which are otherwise ineligible for Medicaid funding except through in lieu of or waiver authority. Some states mentioned other approved behavioral health services (including mental health and SUD services), such as mobile crisis and crisis stabilization services, outpatient treatment in lieu of hospitalization, and group or peer supports. Nearly one-third of states permitting ILOS reported that allowable ILOS include services to address SDOH, such as food and housing needs. For example, California’s Community Supports ILOS package builds on the state’s experience with Whole Person Care Pilots and includes housing transition navigation services, environmental accessibility adaptations (home modifications), asthma remediation, medically tailored meals, and sobering centers.³¹ Following the CMS approval of California’s Community Supports, guidance from CMS on the ILOS regulation is expected. Approximately one-quarter of states that permit ILOS reported leveraging this authority to provide coverage of HCBS, such as adult day care, homemaker services, and covered HCBS services in excess of established limits. At least one state acknowledged MCOs have been slow to take advantage of their optional ILOS authority, particularly for SDOH-related services, and the state will be evaluating updated approaches to ensure coverage in the future.