The Centers for Medicare and Medicaid Services (CMS) recently released guidance on the use of in-lieu-of services (ILOS) in Medicaid managed care service delivery systems. The sub-regulatory guidance provides additional clarification originally promulgated in the 2016 managed care rule that provided authority for ILOS. The guidance comes as states have sought to use ILOS authority in innovative ways to address beneficiaries’ health-related social needs (HRSNs). This paper:

• Provides a background on the ILOS authority
• Details the implications and potential approval requirements of ILOS
• Includes recent examples of ILOS
• Discusses considerations for states as they develop strategies to address HRSNs