Additional Guidance on Use of In Lieu of Services and Settings in Medicaid Managed Care

On January 5, 2023 CMS released a State Medicaid Director’s letter that provides a new reporting and oversight framework for states that permit managed care plans to deliver in-lieu-of services (ILOS) to their enrollees. ILOS are cost-effective substitutes for otherwise covered State plan services that may enhance enrollee’s health and wellbeing (for example, medically-tailored meals that enhance the ability of an enrollee to remain at home rather than in an institutional setting). States using ILOS will be required to limit them to no more than 5% of a managed care program’s total capitation payments and provide evaluative data to CMS about their effectiveness beginning in 2027.