2025 SOA Health Meeting: Session 10A: In Lieu of Services - Addressing Health-Related Social Needs in Medicaid -06.25.25- Recording

The 2016 federal managed care final rule defined in lieu of services (ILOS) as a medically appropriate and cost-effective substitute for a state plan service. CMS issued guidance in January 2023 and provided clarification in the 2024 final rule preamble that ILOS can be an 'immediate or longer-term substitute' for Medicaid services or that 'can be expected to reduce or prevent the future need' for services.
By considering longer-term substitution and future needs, ILOS may address members' health-related social needs (HRSN) such as housing instability and food insecurity with funding provided through capitation rates paid to Medicaid managed care organizations. This may lead to improved population health, reduced health inequities, and lower overall health care costs in Medicaid.
As more states introduce these types of benefits, and to ensure appropriate and efficient use of Medicaid resources, actuaries should consider the factors involved in designing these benefits, determining eligibility, assessing their effectiveness, and pricing them.
Attending this session should help you understand how ILOS can help address members' HRSN to potentially reduce future costs and how to consider them in capitation rate development.